[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


 
                    THE IMPORTANCE OF TRADE TO U.S. 
                               AGRICULTURE

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

                                HEARING

                               BEFORE THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 18, 2015

                               __________

                            Serial No. 114-5
                            
                            
                            
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]



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                         agriculture.house.gov



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                        COMMITTEE ON AGRICULTURE

                  K. MICHAEL CONAWAY, Texas, Chairman

RANDY NEUGEBAUER, Texas,             COLLIN C. PETERSON, Minnesota, 
    Vice Chairman                    Ranking Minority Member
BOB GOODLATTE, Virginia              DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma             JIM COSTA, California
STEVE KING, Iowa                     TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama                 MARCIA L. FUDGE, Ohio
GLENN THOMPSON, Pennsylvania         JAMES P. McGOVERN, Massachusetts
BOB GIBBS, Ohio                      SUZAN K. DelBENE, Washington
AUSTIN SCOTT, Georgia                FILEMON VELA, Texas
ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHELLE LUJAN GRISHAM, New Mexico
SCOTT DesJARLAIS, Tennessee          ANN M. KUSTER, New Hampshire
CHRISTOPHER P. GIBSON, New York      RICHARD M. NOLAN, Minnesota
VICKY HARTZLER, Missouri             CHERI BUSTOS, Illinois
DAN BENISHEK, Michigan               SEAN PATRICK MALONEY, New York
JEFF DENHAM, California              ANN KIRKPATRICK, Arizona
DOUG LaMALFA, California             PETE AGUILAR, California
RODNEY DAVIS, Illinois               STACEY E. PLASKETT, Virgin Islands
TED S. YOHO, Florida                 ALMA S. ADAMS, North Carolina
JACKIE WALORSKI, Indiana             GWEN GRAHAM, Florida
RICK W. ALLEN, Georgia               BRAD ASHFORD, Nebraska
MIKE BOST, Illinois
DAVID ROUZER, North Carolina
RALPH LEE ABRAHAM, Louisiana
TOM EMMER, Minnesota
JOHN R. MOOLENAAR, Michigan
DAN NEWHOUSE, Washington

                                 ______

                    Scott C. Graves, Staff Director

                Robert L. Larew, Minority Staff Director

                                  (ii)
                             C O N T E N T S

                              ----------                              
                                                                   Page
Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................     1
    Prepared statement...........................................     2
Lujan Grisham, Hon. Michelle, a Representative in Congress from 
  New Mexico, submitted comment on behalf of David Sanchez, Vice 
  President, Northern New Mexico Stockmen's Association..........    49
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................     3

                               Witnesses

Stallman, Bob, President, American Farm Bureau Federation, 
  Washington, D.C................................................     4
    Prepared statement...........................................     5
Hill, D.V.M., Ph.D., Howard T., President, National Pork 
  Producers Council, Cambridge, IA...............................     9
    Prepared statement...........................................    10
Kappelman, Peter J., Chairman, International Trade Committee, 
  National Milk Producers Federation, Two Rivers, WI.............    16
    Prepared statement...........................................    17
Guenther, Robert L., Senior Vice President for Public Policy, 
  United Fresh Produce Association, Washington, D.C..............    22
    Prepared statement...........................................    24
    Supplementary material.......................................    49

                           Submitted Material

Ellis, Philip, President, National Cattlemen's Beef Association, 
  submitted letter...............................................    51


              THE IMPORTANCE OF TRADE TO U.S. AGRICULTURE

                              ----------                              


                       WEDNESDAY, MARCH 18, 2015

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 9:57 a.m., in Room 
1300 of the Longworth House Office Building, Hon. K. Michael 
Conaway [Chairman of the Committee] presiding.
    Members present: Representatives Conaway, Lucas, Thompson, 
Crawford, DesJarlais, Benishek, Denham, LaMalfa, Davis, Yoho, 
Rouzer, Abraham, Newhouse, Peterson, David Scott of Georgia, 
Costa, Walz, McGovern, DelBene, Vela, Lujan Grisham, Kuster, 
Nolan, Kirkpatrick, Aguilar, Plaskett, Adams, Graham, and 
Ashford.
    Staff present: Scott C. Graves, Jackie Barber, Bart 
Fischer, Matt Schertz, Mollie Wilkin, Caleb Crosswhite, Jessica 
Carter, Haley Graves, Ted Monoson, John Konya, Andy Baker, Liz 
Friedlander, and Nicole Scott.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE 
                     IN CONGRESS FROM TEXAS

    The Chairman. Good morning. We are going to call this 
hearing of the Committee on Agriculture to order, regarding the 
importance of trade to U.S. agriculture. Please come to order. 
I have asked David Scott if he would open us with a prayer. 
David?
    Mr. David Scott of Georgia. I want to first of all thank 
you. Thank you for the many blessings that you bestow upon us. 
Blessings, somehow, someway, dear God, that oftentimes we did 
not know how or where or what to ask for, but we thank you for 
your Holy Spirit that intercedes on our behalf with words that 
are often unheard. Dear God, as we, as your public servant, go 
forth in our duty to represent the people of our great nation, 
we simply ask you to bestow in our hearts, for us to do the 
things the right way with the right things, those things that 
your angels desire to look into. These and other blessings, we 
ask in your son, Christ Jesus', name. Amen.
    The Chairman. Amen. Thank you, David.
    I want to start by welcoming our witnesses and thanking 
them for taking time out of their schedules to come share their 
thoughts with us today.
    As those of us in the room are aware, America's farmers and 
ranchers are the most productive in the world. They have 
continuously proven their ability to meet rapidly-growing and 
ever-changing demands here at home, but their reach stretches 
well beyond the U.S. border. In fact, exports now account for 
almost \1/3\ of total U.S. farm income. In the case of 
commodities like cotton, tree nuts, rice, and wheat, over \1/2\ 
of total production is exported.
    Beyond the obvious benefits to producers, trade also helps 
support almost one million American jobs in production 
agriculture, and in related sectors like food processing and 
transportation. As a result, it is crucial, not only for 
American agriculture, but to the American economy as a whole to 
maintain and increase access to the world's consumers, 95 
percent of whom live outside our borders.
    To obtain that access, it is imperative that we work to 
reduce and eliminate international barriers to trade, so that 
our farmers and ranchers can compete globally on a level 
playing field. On that front, the U.S. is currently engaged in 
negotiations for the Trans-Pacific Partnership and the 
Transatlantic Trade and Investment Partnership. These 
agreements present opportunities for market access throughout 
Europe and Asia, and the Asia-Pacific region. TPP, for example, 
would connect 12 nations that account for nearly 40 percent of 
global GDP. But as history has shown, in one form or another, 
Trade Promotion Authority has played a critical role in 
completing and implementing past agreements. In fact, Congress 
has granted TPA to every President since 1974, and the 114th 
Congress should be no exception. TPA will provide our 
negotiators with the credibility necessary to conclude the most 
effective trade agreement possible, by making it clear to the 
rest of the world that Congress and the Administration are 
serious about this endeavor.
    That being said, the details of these agreements are of 
utmost importance. This Committee will do its part to ensure 
they are favorable to U.S. agriculture. At the end of the day, 
even with TPA in place, it is Congress who decides if trade 
agreements will be ratified, but passing TPA is an essential 
part of getting to that point. So, I look forward to hearing 
from our witnesses today about the role that both trade and TPA 
play in maintaining a strong and vibrant rural economy.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    I want to start by welcoming all of our witnesses and thanking them 
for taking time out of their busy schedules to come share their 
thoughts with us today.
    As those of us in this room are aware, America's farmers and 
ranchers are the most productive in the world. They have continuously 
proven their ability to meet rapidly-growing and ever-changing demands 
here at home. But their reach stretches well beyond the U.S. border. In 
fact, exports now account for almost a \1/3\ of total U.S. farm income. 
In the case of commodities like cotton, tree nuts, rice, and wheat, 
over \1/2\ of total production is exported.
    Beyond the obvious benefits to producers, trade also helps support 
almost one million American jobs in production agriculture and in 
related sectors like food processing and transportation. As a result, 
it is crucial--not only to American agriculture, but to the U.S. 
economy as a whole--to maintain and increase access to the world's 
consumers, 95 percent of whom live outside of our borders.
    To obtain that access, it is imperative that we work to reduce and 
eliminate international barriers to trade, so that our farmers and 
ranchers can compete globally on a level playing field. On that front, 
the U.S. is currently engaged in negotiations for the Trans-Pacific 
Partnership and the Transatlantic Trade and Investment Partnership. 
These agreements present opportunities for market access throughout 
Europe and the Asia-Pacific region. TPP, for example, would connect 12 
nations that account for nearly 40% of global GDP.
    But as history has shown, in one form or another, Trade Promotion 
Authority has played a critical role in completing and implementing 
past agreements. In fact, Congress has granted TPA to every President 
since 1974, and the 114th Congress should be no exception. TPA will 
provide our negotiators with the credibility necessary to conclude the 
most effective trade agreements possible, by making it clear to the 
rest of the world that Congress and the Administration are serious 
about this endeavor.
    That being said, the details of these agreements are of utmost 
importance. This Committee will do its part to ensure they are 
favorable to U.S. agriculture. At the end of the day, even with TPA in 
place, it is Congress who decides if trade agreements will be ratified. 
But, passing TPA is an essential part of getting to that point. So, I 
look forward to hearing from our witnesses today about the role that 
both trade and TPA play in maintaining a strong and vibrant rural 
economy.

    The Chairman. And with that, I recognize the Ranking Member 
for his comments.

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

    Mr. Peterson. Thank you, Mr. Chairman, and thank you for 
calling the hearing. And thanks to today's witnesses.
    And we all understand how important trade is to 
agriculture, and that most of the people that eat in the world 
live outside the United States, although a lot of them don't 
have a whole lot of money to buy anything, so we understand 
that it is important.
    But with regard to the Trade Promotion Authority, the TPP, 
I have been visiting with Ambassador Froman a considerable 
amount of time over some issues, and I am not totally to the 
point where I have gotten all the answers that I need. I am 
kind of waiting to see where I am going to end up on that, but 
what I am concerned about is that we don't cause problems in 
this agreement, like we did with NAFTA. Some of them, like the 
sugar thing, we knew was coming, but what a lot of people 
aren't focused on is what we did with poultry, eggs and milk in 
Canada. We basically let them keep their system up there. It is 
very profitable. There are some in the United States that would 
like to see that kind of a system in the U.S., but it is not 
going to happen. The system up there that limits the amount 
that they can produce, and their producers make a lot of money. 
You have to have quota in order to do it. It costs a fair 
amount to buy the quota, but what people haven't focused on is 
that when we started NAFTA, the Canadian ownership of our 
processing was not even on the radar screen. Now, the Canadian 
co-ops in Quebec; Agropur and Saputo, are the number one and 
number three owners of processing of dairy in the United 
States. And the reason for that is because they are making all 
this money, and they can't invest it in their own industry, and 
so they are investing it in the U.S. I am not sure that is what 
we intended or I am not sure that is a good thing. We need to 
get that straightened out in this deal. The Canadians are going 
to be in this deal. We need to get that straightened out. There 
are other issues in Japan and Mexico as well.
    Ambassador Froman assures me that they are going to get 
started on doing this. We will see. And we appreciate the 
people being here today to give us their point of view of how 
they think things are progressing with this agreement, and I 
look forward to their testimony.
    The Chairman. I thank the Ranking Member.
    I would like now to welcome our witnesses to the table. Mr. 
Bob Stallman. Bob, how are you doing? He is the President of 
the American Farm Bureau Federation here in Washington, D.C.; 
Dr. Howard Hill, National Pork Producers Council, Cambridge, 
Iowa; Mr. Pete Kappelman, National Milk Producers Federation, 
Two Rivers, Wisconsin; and Mr. Bob Guenther, Senior Vice 
President for Public Policy, United Fresh Produce Association, 
Washington, D.C. Gentlemen, thank you for being here this 
morning.
    And with that, Mr. Stallman, the microphone is yours.

  STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN FARM BUREAU 
                  FEDERATION, WASHINGTON, D.C.

    Mr. Stallman. Well, thank you, Mr. Chairman, Ranking Member 
Peterson, Members of the Committee, for holding today's hearing 
and for allowing the Farm Bureau to come present our views on 
the importance of trade to U.S. agriculture. The Farm Bureau 
strongly supports efforts to increase agricultural trade 
through comprehensive new trade agreements.
    America's farmers and ranchers exported more than $152 
billion worth of farm goods last year; a testament to their own 
hard work and productivity, as well as the positive impacts of 
opening new markets around the globe.
    Agricultural exports have grown about 40 percent over the 
past 5 years thanks to global economic growth, and a parade of 
agreements that have lowered tariffs and expanded tariff rate 
quotas. However, the United States has not concluded a new 
trade agreement since 2011. A major reason for this slowdown is 
that Trade Promotion Authority expired in 2007. TPA allows U.S. 
trade negotiators to present our best deal to trade partners, 
and receive our trade partners' best offers, all the while 
reserving Congress' right to a yea or nay vote on the final 
deal.
    New trade agreements cannot come soon enough. U.S. 
agricultural exports are projected to decline by as much as $9 
billion this year. Some of that decrease is due to lower 
commodity prices, but it is also due to non-science-based 
restrictions on one product or another, and high tariffs around 
the world.
    For America's farmers and ranchers to see continued export 
growth, we must pen deals that knock down those trade barriers, 
and giving the Administration Trade Promotion Authority is 
necessary to reach those market opening agreements. The U.S. 
should be planting seeds today for future growth in agriculture 
trade, and there are seeds that are ready to be planted. U.S. 
negotiators are working to conclude major regional trade talks 
with 11 other countries, including Japan, under the Trans-
Pacific Partnership. Japan is already a significant market for 
U.S. agriculture. It promises to be an even more important 
market if we can remove the barriers and high tariffs on a 
number of agricultural products as they try to protect their 
agricultural production.
    The Farm Bureau supports efforts to achieve a meaningful 
outcome from the TPP talks, meaning that all commodities are on 
the negotiating table, and the talks must not set up new 
barriers to U.S. exports. We also support efforts to increase 
agricultural trade with the countries of the European Union. 
The Transatlantic Trade Investment Partnership, or TTIP, gives 
us the opportunity to remove longstanding barriers to 
conventionally raised beef, remove restrictions against U.S. 
poultry and pork, and remove non-science-based actions that 
limit U.S. goods produced through biotechnology.
    The EU is the world's largest import market for food and 
agriculture commodities, and was once the top destination for 
U.S. agricultural exports. Today, it has fallen to number five 
on the list. If U.S. farmers and ranchers were able to compete 
on a fair and scientific basis, the EU once again could be a 
major growth market for us. The opportunities to resolve 
longstanding trade issues through TTIP is exciting for those 
who, like me, and I am sure many of you, have been frustrated 
for far too long by the EU's use of the precautionary 
principle, geographic indications, and other restrictions to 
limit access to its markets. We don't know if these 
negotiations will succeed. There are tough issues, and again, 
longstanding issues that must be dealt with. There must be 
positive outcomes for all sides, but we need to plant these 
seeds of future trade, and Trade Promotion Authority is the 
soil that allows new trade agreements to grow.
    When Congress extends TPA to the Administration, it also 
stipulates that U.S. trade negotiators must consult with 
Congressional committees. The Farm Bureau firmly believes this 
is vital to ensuring that Congress provides oversight on the 
conduct and outcomes of trade negotiations. This oversight role 
is bolstered by the ability of Congress to establish 
negotiating objectives for the Administration.
    I will close by reiterating that passage of TPA is critical 
to achieving our trade goals. The certainty of having TPA in 
place ensures that U.S. negotiators have the leverage to obtain 
the best agreement possible. Agricultural exports have a real 
impact on real farmers and ranchers. They create demand for our 
crops, meat, and other products, and they help sustain millions 
of American jobs. The Farm Bureau urges Congress to approve 
Trade Promotion Authority as a critical component for a 
successful trade policy agenda.
    Thank you, Mr. Chairman, for this opportunity to highlight 
the benefits of trade to America's farmers and ranchers.
    [The prepared statement of Mr. Stallman follows:]

  Prepared Statement of Bob Stallman, President, American Farm Bureau 
                      Federation, Washington, D.C.
    Good morning. I am Bob Stallman, a beef and rice producer from 
Columbus, Texas, and President of the American Farm Bureau Federation. 
Farm Bureau is the nation's largest general farm organization, 
representing farmers and ranchers of all farm sizes, producing every 
commodity, using a large variety of production methods, in every state.
    Farm Bureau strongly supports efforts to increase agricultural 
trade through comprehensive trade agreements. The $152.5 billion of 
U.S. agricultural exports in 2014 demonstrates the strength of U.S. 
agricultural productivity, the important contribution of trade to the 
economic well-being of farmers and ranchers, and the ability of the 
United States to provide competitive food and farm products to markets 
worldwide.
Trade Promotion Authority
    Farm Bureau has long supported Congress extending Trade Promotion 
Authority (TPA) to the President to provide U.S. trade negotiators the 
leverage they need to complete negotiations and set the stage to put 
into effect international trade agreements. Currently, TPA is important 
to ongoing work on the Trans-Pacific Partnership (TPP) and 
Transatlantic Trade and Investment Partnership (TTIP). For these 
negotiations to move forward while maintaining the focus on improving 
and expanding trade between our negotiating partners, we need to have 
TPA in place.
    TPA authorizes the President to negotiate and sets the stage for 
Congress to consider, without amendment, the trade agreements that the 
Administration reached with foreign trading partners. Typically, when 
Congress extends this authority, it also stipulates that U.S. trade 
negotiators must participate in consultations with interested 
Congressional committees and Members in an ongoing process as to how 
the negotiations are progressing. We firmly believe this is vital to 
ensuring that Congress has its hand in providing oversight on the 
conduct and outcomes of trade negotiations. This oversight role is 
bolstered by the ability of Congress to establish negotiating 
objectives for the Administration.
    For farmers and ranchers, this hearing is a clear example of how 
this Committee and your leadership enhances agriculture's participation 
by providing an opportunity for farm and commodity organizations and 
our respective members to work with you and our individual 
representatives to help them understand the necessity of expanding 
agricultural trade opportunities. The negotiating objectives of 
improved market access to foreign markets by tariff reduction and 
removal, along with the necessity of science-based standards for 
international agricultural and food trade, are critical to successful 
trade negotiation outcomes for agriculture.
    TPA establishes the support for and understanding of trade goals 
necessary for Congress and the Administration to achieve ambitious 
international trade agreements that work to the benefit of many sectors 
of the U.S. economy. For agriculture in particular, experience suggests 
that market access measures are usually finalized toward the end of 
negotiations. The certainty of having TPA in place ensures our 
negotiators have the leverage to obtain the best agreement possible 
because those on the other side of the table know it will not be 
amended by Congress--and just as important, it helps our side make the 
point that if Congress deems the agreement insufficient, it will not be 
ratified.
    We urge the House to promptly consider and approve Trade Promotion 
Authority as a necessary and critical component for a successful trade 
policy agenda.
Trans-Pacific Partnership
    A major regional trade effort for the United States is the TPP 
negotiations between Australia, Brunei, Canada, Chile, Japan, Malaysia, 
Mexico, New Zealand, Peru, Singapore, Vietnam and the United States.
    The addition of Japan to full participation in the TPP talks 
enhances the significance of the negotiations and makes the agreement 
much more encompassing of U.S. agricultures' goals for agricultural 
trade. Japan's inclusion has also fueled interest among other Asia-
Pacific nations for similar opportunities to improve trade relations 
with the U.S. and other participating countries.
    Japan is the fourth-largest agricultural export destination for the 
U.S. with more than $13.4 billion in sales in 2014. Despite the 
significance of this market, barriers exist that prohibit sales from 
reaching their full potential. Japan maintains several restrictive 
policies that inhibit U.S. exports, such as high tariffs on dairy, 
horticulture, rice and other products, along with various Sanitary and 
Phytosanitary barriers. By joining the TPP negotiations under the same 
conditions as other participants, Japan is negotiating to resolve long-
standing trade barriers for all agricultural products.
    Indications are that there will be a reduction in Japan's beef 
tariffs, reform of their gateway price system for pork, additional TRQ 
for rice and reduction in tariffs on dairy products.
    A recent USDA study indicates that 70 percent of agricultural 
export gains by the U.S. would be through increased sales to Japan. 
These increases depend upon Japan reforming its tariffs on agricultural 
imports.
    Discussions with Canada over import restrictions on dairy, poultry 
and eggs from the U.S. also must yield new access for U.S. farmers and 
ranchers into this market.
    The TPP will only fulfill its promise of improved and increased 
trade in the Pacific region by achieving commercially meaningful market 
access for agricultural products.
    We are looking for a substantive outcome for American agriculture 
from these talks. This can only be achieved by removing tariffs and 
other trade barriers that intentionally reduce U.S. agricultural 
opportunities to compete in export markets.
    We also believe that trade negotiations must not include new 
barriers to the competitiveness of U.S. agricultural products in 
foreign markets. Singling out a specific commodity for unique treatment 
will lead to a growth in trade barriers for other agricultural exports, 
something we have had to remind our own Administration of as these 
negotiations have progressed.
Transatlantic Trade and Investment Partnership
    Farm Bureau supports efforts to increase agricultural trade flows 
and remove trade barriers that currently exist between the United 
States and the European Union.
    The TTIP negotiations between the U.S. and the EU must deal with 
the many substantive issues that impede U.S.-EU agricultural trade, 
such as long-standing barriers against conventionally raised U.S. beef, 
ongoing restrictions against U.S. poultry and pork, and actions that 
limit U.S. exports of goods produced using biotechnology.
    The U.S. and the EU are major international trading partners in 
agriculture. U.S. farmers and ranchers exported more than $12.6 billion 
worth of agricultural and food products to the EU in 2014, while the EU 
exported more than $20 billion worth of agricultural products to the 
U.S. last year.
    The EU was the once the largest destination for U.S. agricultural 
exports. Today, it has fallen to our fifth-largest export market. The 
U.S. is losing market share in the world's largest import market for 
agricultural commodities and food. While EU agricultural imports have 
grown, according to USDA, U.S. market share has steadily declined to 
just seven percent--\1/2\ of the level achieved in 2000.
    Over the last decade, growth of U.S. agricultural exports to the EU 
has been the slowest among our top ten export destinations. If U.S. 
farmers and ranchers were provided an opportunity to compete, the EU 
market could be a growth market for them. However, regulatory barriers 
have become a significant impediment to that growth.
    Unless these trade barriers are properly addressed within the 
Transatlantic Trade and Investment Partnership or TTIP negotiations, 
they will continue to limit the potential for agricultural trade. It is 
imperative that TTIP be a high-standard trade agreement that covers all 
significant barriers in a single, comprehensive agreement. Scientific 
standards are the only basis for resolving these issues.
    Continuing barriers to the export of U.S. beef, pork and poultry, 
along with the slow approval process for biotech products, are major 
areas of interest to the U.S. in the TTIP negotiations. Both the U.S. 
and the EU adhere to the World Trade Organization's Agreement on 
Sanitary and Phytosanitary Measures, which states that measures taken 
to protect human, animal or plant health should be science-based and 
applied only to the extent necessary to protect life or health.
    The U.S. follows a risk-assessment approach for food safety. The EU 
is additionally guided by the ``precautionary principle,'' which holds 
that where the possibility of a harmful effect has not been disproven, 
non-scientific risk management strategies may be adopted.
    The use of the ``precautionary principle'' is inconsistent with the 
WTO SPS Agreement and is used as a basis for scientifically unjustified 
barriers to trade. The TTIP negotiations must result in a modern, 
science- and risk-based approach, based on international standards that 
can truly resolve SPS disputes. SPS issues must be directly addressed 
as a part of the negotiations, and these provisions must be 
enforceable.
    The EU approach for approving products of biotechnology combines a 
lengthy approval process with the ability of EU member states to ban 
approvals. The result is restrictive import policies and substantial 
reductions in U.S. exports of corn and soybeans to the EU.
    The EU system of geographic indications for foods and beverages 
designates products from specific regions as legally protected for 
original producers. The U.S. has opposed recognizing geographical names 
for foods when it would inhibit the marketability or competitiveness of 
U.S. products. The TTIP must not become an avenue to erect a new 
barrier to U.S. agricultural exports through the use of geographic 
indications.
    Negotiations on bilateral concerns move in both directions. There 
must be positive outcomes for all sides. The European Union has 
concerns about U.S. rules on EU beef and dairy products. An emphasis on 
finding trade-opening solutions to sanitary barriers will assist in 
resolving our many trade issues.
    The TTIP negotiation proposal calls for working toward the 
elimination of tariffs. The average U.S. tariff on imported 
agricultural products is five percent, with 75 percent of our tariff 
lines at between zero and five percent. For the EU, the average tariff 
is 14 percent, with 42 percent of tariff of lines at zero to five 
percent. In order to expand market opportunities for U.S. agricultural 
products in the EU, tariff reductions will be necessary.
    We call for an ambitious agreement that addresses the real barriers 
to the growth of agricultural trade between the United States and the 
EU.
Biotech
    American Farm Bureau Federation remains dedicated to resolving 
issues related to the approval of biotechnology products. Today we face 
a myriad of challenges, some old, others a bit more new.
    In the European Union implementation of the regulatory procedure 
for approving the import of new biotechnology products has been slow 
and suffered from political interference, which has led to large 
disruptions in the transatlantic trade in raw materials used by EU food 
and feed producers and increased costs for producers, the agricultural 
supply chains and EU consumers. European Commission President Juncker 
initiated a 6 month review of the EU's biotech import approval 
procedure which should be concluded by April 30, 2015. The review has 
introduced an additional level of uncertainty and risk to trade in 
crops imported by EU traders. Currently, thirteen new biotech products 
are pending final import approval in the EU. Farm Bureau is working 
through the U.S. Biotech Crops Alliance for EU regulations that are 
consistent with the EU's obligations under the WTO SPS agreement.
    In China, the timeline for biotech product approval for use as 
food, feed or processing has grown less certain and extended in 
duration since 2012. The divergences in U.S. and Chinese approvals have 
and will continue to put billions of dollars of U.S. exports at risk. 
While we welcomed the news that China approved three biotechnology 
products in December 2014, significant concerns remain with the 
approval of several events remains in question. At the December 2014 
Joint Commission on Commerce and Trade (JCCT) meeting the U.S. and 
China agreed to form the JCCT Strategic Ag Innovation Dialogue (SAID). 
Through this new dialogue between our two nations we hope that the 
important role that biotechnology plays in achieving food security, 
including timely approval of new products, will be a primary focus.
    USDA Export Promotion: Farm Bureau strongly supports the work of 
the USDA-funded export councils that assist agricultural commodity and 
product sales. The Market Access Program and the Foreign Market 
Development program are funded at $200 million annually for MAP and 
$34.5 million annually for FMD.
    West Coast Ports: Work has resumed as the two sides settled on a 
new contract, which has yet to be finally ratified. It is estimated 
that the situation in the West Coast ports cost agricultural shippers 
of containerized products over $1.7 billion per month and disrupted 
agricultural exports across the country.
    While not directly related to the West Coast port issue, it does 
serve to remind us all of the importance of a strong, robust commitment 
to upgrading and maintaining our nation's transportation 
infrastructure. As one of our specialty crops farmers shared with our 
Trade Advisory Committee not too long ago, sometimes our biggest 
obstacle to taking advantage of trade opportunities is getting our 
commodities and products to U.S. ports for shipment.
World Trade Organization
    As agricultural exporters, U.S. agriculture must continue to seek a 
commercially meaningful outcome through expanded market access from WTO 
negotiations. We must remain committed to advancing the goal of trade 
liberalization and increased opportunities for real trade growth.
    Farm Bureau wants an outcome to trade negotiations in the WTO that 
will open new markets around the world, produce new trade flows and 
grow the global economy. We can achieve this outcome by negotiating on 
the basis of a new agenda, not by reliving the failures of the past.
    For the ``post-Bali work plan'' the U.S. is pushing for a new 
agenda while developing countries are in favor of keeping the existing 
Doha Development Agenda and working from the 2008 agriculture draft. 
Farm Bureau supports a fresh approach, with updated information and 
having market access as the most important part of any future 
agricultural discussions. Starting again with the previous failed 
agenda that focused on domestic support reductions that are not 
balanced by increased market access, especially to developing 
countries, will not achieve a positive market opening result for U.S. 
agriculture.
Conclusion
    Farm Bureau members all across our nation know that expanding 
opportunities for agricultural trade is necessary to their continued 
success. We appreciate your leadership in holding this hearing and look 
forward to working with the Committee on advancing the progress of 
agricultural trade.
    And in that regard, as we have done in the past when negotiations 
on a particular trade agreement are concluded, we will conduct our own 
economic analysis of trade agreements and how they impact, positively 
or negatively, farmers and ranchers in a given state or region. I offer 
to all of you that when we have an agreement to analyze, we would love 
the opportunity to share the results of our analysis with you.
    Thank you Chairman Conaway, Mr. Peterson and Members of the 
Committee.

    The Chairman. Thank you, Mr. Stallman.
    Dr. Hill?

STATEMENT OF HOWARD T. HILL, D.V.M., Ph.D., PRESIDENT, NATIONAL 
             PORK PRODUCERS COUNCIL, CAMBRIDGE, IA

    Dr. Hill. Thank you, Mr. Chairman. I appreciate the 
opportunity to appear here on behalf of NPPC, National Pork 
Producers Council.
    Since 1989, when the United States began using bilateral 
and regional trade agreements to open foreign markets, U.S. 
agriculture exports have nearly quadrupled in value, and now 
stand at a record $150+ billion. Exports in 2014 supported more 
than a million full-time jobs, and more than \1/2\ of those 
jobs were created in the past 10 years. In 2014, the 
agricultural trade surplus is estimated to be around $40 
billion. Each and every one of the trade agreements that made 
these remarkable achievements possible were themselves made 
possible by the enactment of Trade Promotion Authority bills. 
This is why NPPC, and virtually every other agricultural 
organization in the United States, are in favor of Congress 
expeditiously moving TPA legislation.
    The key reason TPA is needed is so that the Administration 
can conclude the TPP negotiations. TPP has the potential to be 
the highest standard, most economically significant regional 
free trade agreement ever negotiated, and the United States is 
largely driving the proverbial bus on the trade talks. It is 
critically important that the United States gets TPP correct.
    U.S. trade negotiators will have the final leverage they 
need to close the TPP negotiation when Congress passes TPA. It 
will allow the nations to cut their bottom line negotiating 
position on TPP. But it gets better than that. Other nations 
already have lined up to come into the U.S.-led regional FTA. 
With the World Trade Organization Doha multilateral trade 
negotiation on life support, TPP clearly has the potential to 
become the de facto platform for future global trade expansion.
    If Congress does not pass TPA, the 11 TPP countries with 
which the United States is negotiating won't be empowered to 
get to a bottom line position. Instead, it will signal to those 
TPP partners in the Asia-Pacific region--which is the fastest 
growing economic area in the world--and to the rest of the 
world that the United States is turning its back on the Asia-
Pacific region, and that it is willing to allow other nations 
to write the rules of trade.
    There are a number of other FTAs under negotiation in the 
Asia-Pacific region that, if implemented, would undermine U.S. 
competitiveness in the region.
    Let me specifically talk about pork. The U.S. pork industry 
has benefited tremendously from trade agreements and expanded 
trade. As a result of trade agreements, exports have increased 
1,550 percent in value, and 1,268 percent in volume since 1989, 
the year the U.S. implemented the free trade agreement with 
Canada, and started opening international markets for value-
added agricultural products. The United States' pork industry, 
the number one pork exporter in the world, now exports more 
pork to the 18 FTA partners than to the rest of the world. 
According to a study conducted at Iowa State University, U.S. 
pork exports support more than 147,000 U.S. jobs.
    The benefits from TPA are expected to exceed the benefits 
delivered in past trade deals, representing, in the words of 
ISU, or Iowa State University, economist, Dr. Dermot Hayes, 
``the most important commercial opportunity ever for the U.S. 
pork industry.''
    My friends in the beef and poultry sector also have 
benefited significantly from free trade agreements. The United 
States exports almost as much beef, pork, and poultry to the 18 
nations in which we have FTAs as it does to the 148 nations in 
which we do not have FTAs. Additionally, the rate of trade 
growth is much faster to FTA nations than to non-FTA nations. 
Since 2000, pork, beef, and poultry meat exports to the 18 FTA 
countries increased by 273 percent, while exports to the 148 
non-FTA countries increased by just 126 percent.
    In summary, the U.S. pork industry, U.S. agriculture, 
indeed, the entire U.S. economy, needs TPA and we need it soon.
    Thank you.
    [The prepared statement of Dr. Hill follows:]

    Prepared Statement of Howard T. Hill, D.V.M., Ph.D., President, 
             National Pork Producers Council, Cambridge, IA
    The National Pork Producers Council (NPPC) hereby submits the 
attached written testimony to the U.S. House Agriculture Committee for 
its March 18, 2015, hearing on ``The Importance of Trade to U.S. 
Agriculture.'' This submission, submitted March 16, 2015, is for 
consideration by the Committee and for inclusion in the printed record 
of the hearing.
Introduction
    The National Pork Producers Council (NPPC) is an association of 43 
state pork producer organizations that serves as the voice in 
Washington, D.C., for the nation's pork producers. The U.S. pork 
industry represents a significant value-added activity in the 
agriculture economy and the overall U.S. economy. Nationwide, more than 
68,000 pork producers marketed more than 111 million hogs in 2013, and 
those animals provided total gross receipts of over $20 billion. 
Overall, an estimated $21.8 billion of personal income and $35 billion 
of gross national product are supported by the U.S. hog industry. 
Economists Daniel Otto, Lee Schulz and Mark Imerman at Iowa State 
University estimate that the U.S. pork industry is directly responsible 
for the creation of nearly 35,000 full-time equivalent pork producing 
jobs and generates about 128,000 jobs in the rest of agriculture. It is 
responsible for approximately 111,000 jobs in the manufacturing sector, 
mostly in the packing industry, and 65,000 jobs in professional 
services such as veterinarians, real estate agents and bankers. All 
told, the U.S. pork industry is responsible for more than 550,000 
mostly rural jobs in the United States.
U.S. Agriculture Benefits from Trade
    The economic well-being of American agriculture depends on 
maintaining strong export markets and creating new market access 
opportunities. Export markets are in large part the result of trade 
agreements negotiated over the past 2 decades. Since 1989, when the 
United States began using bilateral and regional trade agreements to 
open foreign markets, U.S. agricultural exports have nearly quadrupled 
in value and are now a record $150.5 billion. During that period, 
earnings from U.S. agricultural exports as a share of cash receipts to 
farmers have grown from 22 percent to 35 percent. Exports of high-value 
products such as pork have recently overtaken bulk products and now 
represent nearly \2/3\ of the total; 25 years ago it was the reverse.
    Farm and food exports have a positive multiplier effect throughout 
the U.S. economy. According to the Office of the U.S. Trade 
Representative, every $1 in U.S. farm exports stimulates an additional 
$1.22 \1\ in business activity. Off-farm activities and services 
include purchases by farmers of fuel, fertilizer, seed and other inputs 
and post-production processing, packaging, storing, transporting and 
marketing the products shipped overseas. Exports of $150.5 billion in 
2014, therefore, generated another $184 billion in economic activity in 
the United States, bringing a total benefit to the economy of $334 
billion. This economic activity creates jobs. Every $1 billion of U.S. 
agricultural exports requires the full-time work of approximately 7,580 
Americans throughout the economy. Exports in 2014, therefore, supported 
more than one million full-time jobs, and more than \1/2\ of those jobs 
were created in the past 10 years.
---------------------------------------------------------------------------
    \1\ ERS Agriculture Trade Multipliers were last updated February 
26, 2015.
---------------------------------------------------------------------------
    Agricultural exports also help offset part of the U.S. 
nonagricultural trade deficit. Agriculture has been a positive 
contributor to the nation's trade balance for more than 50 years. In 
2014, the agricultural surplus is estimated to be around $40 billion.
    Each and every one of the trade agreements that made these 
remarkable achievements possible were themselves made possible by the 
enactment of Trade Promotion Authority (TPA) bills. Those bills gave 
U.S. negotiators the ability to extract the best deals possible from 
other countries. Without it, no country would be willing to make the 
toughest concessions to the United States for fear that Congress could 
subsequently demand more. That is why NPPC and virtually every other 
agricultural organization in the United States are in favor of Congress 
expeditiously moving TPA legislation. Attached to this statement is a 
letter sent by NPPC and 70 other agricultural organizations in support 
of TPA.
    The key reason TPA is needed is so the Obama Administration can 
conclude the Trans-Pacific Partnership (TPP) negotiations. The TPP has 
the potential to be the highest-standard, most economically significant 
regional Free Trade Agreement (FTA) ever negotiated. And the United 
States is largely driving the proverbial bus on the trade talks. It is 
critically important that the United States get TPP right. While NPPC 
and most other private groups will make a determination on support for 
TPP once there is a final agreement to review, U.S. trade negotiators 
will have the final push they need to close the negotiations when 
Congress passes TPA. It will allow nations to cut to their bottom line 
negotiating position in TPP.
    But it gets better. Other nations already are lining up to come 
into this U.S.-lead regional FTA. With the World Trade Organization 
Doha multilateral trade negotiations on life support, TPP clearly has 
the potential to become the de facto platform for future global trade 
expansion.
    If Congress does not pass TPA, the 11 TPP countries with which the 
United States is negotiating won't be empowered to get to their last 
and best position. Instead, it will signal to those TPP partners, to 
the Asia-Pacific region--the fastest growing economic area in the 
world--and to all the world that the United States is turning its back 
on the Asia-Pacific region and that it is willing to allow other 
nations to write the rules of trade. There are myriad other FTAs under 
negotiation in the Asia-Pacific region. Some are small bilaterals, 
while others are large, such as the RCEP--Regional Comprehensive 
Economic Partnership, which involves the ten nations of the Association 
of Southeast Asian Nations (ASEAN) and Japan, South Korea, China, 
India, Australia and New Zealand--that, if implemented, would undermine 
U.S. competitiveness in the region.
    The U.S. pork industry, U.S. agriculture, indeed the entire U.S. 
economy needs TPA, and they need it soon.
The U.S. Meat and Poultry Sectors Benefits from Trade
    The United States exports almost as much meat and poultry to the 18 
nations with which it has FTAs as it does to the 148 nations with which 
it does not have FTAs. Additionally, the rate of trade growth is much 
faster to FTA nations than to non-FTA countries. Since 2000, pork, beef 
and poultry meat exports to the 18 FTA countries increased 273 percent, 
while exports to the 148 non-FTA countries increased by just 126 
percent. (See the chart below.)
Total U.S. Pork, Beef, Chicken, and Turkey Exports to FTA Countries and 
        Non-FTA Countries
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
Pork
    The U.S. pork industry has benefited tremendously from trade 
agreements and expanded trade. As a result of trade agreements, exports 
have increased 1,550 percent in value and 1,268 percent in volume since 
1989, the year the United States implemented the FTA with Canada and 
started opening international markets for value-added agriculture 
products. The U.S. pork industry, the number one pork exporter in the 
world, now exports more pork to the 18 FTA partners than to the rest of 
the world. Anyone who says that trade doesn't benefit the U.S. pork 
industry is either seriously ill informed--or lying.
    The benefits from TPP are expected to exceed the benefits delivered 
in past trade deals, representing, in the words of Iowa State 
University economist Dermot Hayes, ``the most important commercial 
opportunity ever for U.S. pork producers.''
Pork Exports and Free Trade Agreements
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Since 2000, pork exports to all 18 FTA countries increased 642 
percent. Pork exports to the 148 non-FTA countries increased by only 
245 percent. The accession of China and Taiwan to the WTO are included 
in the graph below, which details the tremendous pork export explosion 
that commenced in 1989, with the U.S.-Canada FTA.
U.S. Pork Exports
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: USDA GATS.

    Exports of pork have hit new records for 20 of the past 22 years. 
In 2014, the United States exported more than $6.6 billion of pork to 
more than 100 nations, which added about $62.45 to the price that 
producers received for each hog marketed. (That amount is significant 
given that the average price producers received for a market hog in 
2014 was $162.) According to a study conducted by economists Daniel 
Otto, Lee Schulz and Mark Imerman of Iowa State University, U.S. pork 
exports support more than 147,000 U.S. jobs. According to economist 
Dermot Hayes of Iowa State, the TPP has the potential to create 10,000 
more U.S. jobs through increased pork exports.
Beef
    The U.S. beef industry has gained incredible opportunities from 
trade agreements. Beef exports in 2014 reached a record high even with 
production being down 5.6 percent for 2013. Beef exports have been on 
an upward trajectory for the last 30 years. In 1984, the United States 
exported only 330 million pounds of beef (150,000 metric tons), which 
represented just 1.4 percent of total U.S. beef production; by 1988 
exports exceeded 1 billion pounds. Less than 10 years later, in 1997, 
exports exceeded 2 billion pounds. (That number would later decline to 
460 million pounds in 2004 because of the first case of BSE in the 
United States.) The industry was able to recover by 2010 to a record 
volume exports of nearly 2.8 billion pounds (1.267 million metric 
tons).
    In 2014, beef exports reached $7.13 billion, which accounted for a 
16 percent or a nearly $1 billion increase from 2013. Export volume was 
just under 1.2 million metric tons, and exports equated to 14 percent 
of total production and 11 percent of muscle cuts. The value per head 
averaged a record $297.68 last year, up $52.72 from the previous year. 
December export value was $340.69 per head, up $61.53 from a year ago.
Poultry
    The U.S. poultry industry also has seen tremendous gains from 
exports. Poultry meat and egg exports in 2013 reached a record high of 
$5.862 billion. Combined U.S. chicken and turkey export value climbed 
to $5.527 billion, egg exports reached a new record value of $335.4 
million and exports of broiler meat was valued at $4.3 billion. The top 
export markets for U.S. broiler meat (including paws) are Mexico, 
China, Russia, Angola and Hong Kong, which combined imported 3.6 
million tons valued at $4.6 billion in 2013.
    The industry also supports approximately 300,000 jobs at chicken 
processing plants nationwide and another 60,000 in feed mills, 
hatcheries, distribution centers, corporate headquarters and other 
locations.
    In recent years, exports of poultry products have increased with 
the success of various trade agreements such as the WTO Uruguay Round, 
NAFTA and CAFTA so that export sales now represent approximately 22% of 
production. However, successful exports of U.S. poultry can sometimes 
be frustrated by the sudden imposition of non-tariff barriers, such as 
those the United States has long faced in South Africa, and some that 
have recently been imposed in historically important markets such as 
China and Russia.
    The U.S. poultry believes that for the industry to be successful in 
the long term, it needs fair and open access to as many markets as 
possible. TPA will make it possible for the U.S. Government to pursue 
additional market opportunities in Asia, Europe and Canada where there 
are substantial opportunities for exports of U.S. products.
The U.S. Trade Balance
    Finally, much has been said about the impact of FTAs on the United 
States balance of trade in goods. As the chart below clearly 
demonstrates, FTAs do not have a negative impact on the overall trade 
balance of the United States. As noted previously, agriculture has been 
a positive contributor to the nation's trade balance for more than 50 
years. In 2014, the agricultural surplus is estimated to be around $40 
billion.
U.S. Trade Balances with FTA Countries and the Rest of the World
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Attachment
February 5, 2015

    Dear Member of Congress,

    The undersigned organizations strongly support the introduction and 
enactment of Trade Promotion Authority legislation as quickly as 
possible. The people we represent--American farmers, ranchers, food and 
agriculture companies, retailers and their workers--are heavily 
dependent on trade for their livelihoods. Their ability to compete in 
global markets is tied to the ability of the United States to eliminate 
impediments to international trade.
    As a result of trade agreements implemented since 1989, when the 
U.S. began using bilateral and regional trade agreements to open 
foreign markets to our goods, U.S. agricultural exports have nearly 
quadrupled in value and now stand at a record $152.5 billion (fiscal 
2014). During that period, earnings from U.S. agricultural exports as a 
share of cash receipts to farmers have grown from 22 percent to over 35 
percent.
    These farm and food exports have a positive multiplier effect 
throughout the U.S. economy. Every $1 in U.S. farm exports is estimated 
to stimulate an additional $1.27 in business activity. Off-farm 
activities and services include purchases by farmers of fuel, 
fertilizer, seed and other inputs as well as post-production 
processing, packaging, storing, transporting and marketing the products 
we ship overseas. Exports of $152.5 billion in fiscal 2014 therefore 
generated another $194 billion in economic activity in the U.S., 
bringing the total benefit to the economy to $347 billion.
    This economic activity creates jobs. Every $1 billion of U.S. 
agricultural exports requires the full-time work of approximately 6,600 
Americans throughout the economy. Exports in fiscal 2014 therefore 
supported over one million full-time jobs, and more than \1/2\ of these 
have been generated in the past 10 years as our exports have more than 
doubled in value.
    Each and every one of the trade agreements that delivered 
remarkable achievements was made possible by the enactment of Trade 
Promotion Authority bills. Those bills gave U.S. negotiators the 
ability, with clear direction and backing from Congress, to extract the 
best deals possible from other countries.
    Without TPA, our negotiating partners would be unwilling to make 
the toughest concessions, and why should they if they judge that the 
U.S. will be forced to backtrack on a ``final'' deal as a result of 
Congressional amendments to the implementing legislation? In short, 
trade agreements such as those being negotiated with 11 other countries 
under the Trans-Pacific Partnership (TPP) and with the European Union 
under the Transatlantic Trade and Investment Partnership (TTIP) cannot 
achieve U.S. goals without TPA.
    There are myriad trade deals under negotiation in the Asia-Pacific 
region, the fastest growing economic region in the world. TPP is not 
the only agreement under consideration, but it is the most important. 
In the TPP, the Administration is working hard to close a 
comprehensive, high-standard, 21st century deal that will eliminate 
barriers to our exports and raise standards within the TPP nations. 
Should Congress not pass TPA, it will signal to our TPP partners and to 
the world that we are turning our back on the fastest growing economic 
region in the world.
    TPP can become the most important regional trade negotiation ever 
undertaken if the result is truly comprehensive. But for TPP to become 
a reality, Congress needs to pass TPA. We urge you to vote for TPA.

Agribusiness Council of Indiana

American Farm Bureau Federation

American Feed Industry Association

American Peanut Council

American Peanut Product Manufacturers, Inc.

American Seed Trade Association

American Soybean Association

Animal Health Institute

Archer Daniels Midland Co.

Biotechnology Industry Organization

Blue Diamond Growers

Bunge North America

California Cherry Export Association

California Dried Plum Board

California Farm Bureau Federation

California Fresh Fruit Association

California Pear Growers

California Walnut Commission

Campbell Soup Company

Cargill, Incorporated

Commodity Markets Council

Corn Refiners Association

CropLife America

Distilled Spirits Council of the U.S., Inc.

Food Marketing Institute

Grain and Feed Association of Illinois

Grocery Manufacturers Association

Juice Products Association

National Association of State Departments of Agriculture

National Association of Wheat Growers

National Barley Growers Association

National Cattlemen's Beef Association

National Chicken Council

National Corn Growers Association

National Council of Farmer Cooperatives

National Fisheries Institute

National Grain and Feed Association

National Oilseed Processors Association

National Pork Producers Council

National Renderers Association

National Sorghum Producers

National Sunflower Association

National Turkey Federation

North American Blueberry Council

North American Equipment Dealers Association

North American Meat Institute

Northwest Horticultural Council

Ohio AgriBusiness Association

Oregon Potato Commission

Pet Food Institute

Produce Marketing Association

Sunmaid Growers of California

Sunsweet Growers Inc.

Sweetener Users Association

Texas Grain & Feed Association

Tyson Foods, Inc.

U.S. Apple Association

U.S. Apple Export Council

U.S. Canola Association

U.S. Dry Bean Council

U.S. Hide, Skin and Leather Association

U.S. Livestock Genetics Export, Inc.

U.S. Wheat Associates

United Egg Producers

USA Poultry & Egg Export Council

USA Rice Federation

Wal-Mart Stores, Inc.

Washington State Potato Commission

Western Growers Association

Wine Institute

WineAmerica

  

    The Chairman. Thank you, Dr. Hill.
    Mr. Kappelman?

           STATEMENT OF PETER J. KAPPELMAN, CHAIRMAN,
          INTERNATIONAL TRADE COMMITTEE, NATIONAL MILK
              PRODUCERS FEDERATION, TWO RIVERS, WI

    Mr. Kappelman. Good morning, Chairman Conaway, Ranking 
Member Peterson, and Members of the Committee. Thank you for 
inviting me today to testify on the vital importance of trade 
to the U.S. dairy industry. I am a fourth generation dairy 
producer from Two Rivers, Wisconsin, and I am Chairman of the 
National Milk Producers Federation International Trade 
Committee.
    National Milk member cooperatives produce the majority of 
the milk in the United States, making National Milk the voice 
of more than 32,000 dairy farmers from across the country on 
national issues. I would also add that I am a Board Member of 
the U.S. Dairy Export Council. National Milk coordinates 
closely with the Export Council, including its processor 
members, thereby helping the industry to speak with one voice 
on trade issues.
    In the past 15 years, U.S. dairy exports have grown by 625 
percent to a record $7.1 billion. The same trend holds true 
when looking at export volumes as well. Fifteen years ago, we 
were exporting five percent of our milk production, and a 
portion of that was with the assistance of export subsidies or 
food aid donations. Today, we are exporting three times that 
level with no government support, even as overall U.S. milk 
production has continued to grow. That equates to 1 day's milk 
production each week that ultimately ends up overseas, making 
exports critical to the health of my farm and our industry.
    It is not at all coincidental that the enormous growth over 
this period occurred during a time in which the U.S. was 
implementing a number of new market-opening, free trade 
agreements, each of which were concluded under and ultimately 
approved through the use of Trade Promotion Authority. These 
agreements removed tariff and often non-tariff barriers. In 
many cases, they also gave our products a preferential 
advantage over other supplying countries. In every case, our 
dairy exports to FTA partner countries have shown substantial 
and sometimes dramatic increases.
    The fact is that 96 percent of the world's population lives 
outside of our borders. That population is growing faster than 
ours, and that is where the output of our increasing dairy 
productivity must find a home. This means that for our farmers 
to continue to grow, and for our processing companies to 
continue to expand, overseas markets are critical.
    As a producer myself, I know firsthand what this means to 
me and my bottom line. When our exports increase, I benefit. 
When, for whatever reason, our exports are impeded or we give 
up market share, the effect is ultimately felt by the farmer in 
the price we receive. But it is not just dairy producers who 
are impacted. USDA estimates that each billion dollars of U.S. 
dairy exports generates 20,000 jobs in dairy processing and 
marketing. Therefore, our $7 billion of exports last year 
supported more than 140,000 incremental jobs here in the U.S., 
and generated nearly $20 billion in additional economic 
activity.
    When it comes to trade, those who stand still fall behind. 
Our competitors are negotiating trade agreements all over the 
globe. Unfair import barriers remain in place, and new ones are 
erected all the time. The TPA legislation introduced last year 
put a strong new priority on tackling non-tariff barriers which 
have been cropping up more and more lately, whether they take 
the form of SPS barriers or the abusive geographical 
indications to impede U.S. exports. We hope to see those 
provisions replicated in this year's bill.
    The reality is that if we aren't in the game actively 
negotiating on these issues, we are ceding ground to our 
competitors and those looking to make it tougher for us to do 
business in their markets. A case in point is that TPP 
negotiations significant access to the TPP's most protected 
dairy markets, Japan and Canada, is absolutely essential to us, 
and both of those countries have pointed to the importance of 
having a TPA in place as these TPP talks enter their final 
stage. Our negotiators have moved the ball forward on many key 
issues, but more work still needs to be done. To deliver an 
agreement that delivers net trade benefits for the U.S. dairy 
industry, we need to have TPA in place to get there.
    The U.S. dairy industry is thinking globally and prepared 
to do what our customers want and need. What we need now is for 
Congress to move forward with TPA so that the Administration 
can conclude high quality trade agreements that preserve our 
ability to compete and deliver net trade benefits to the U.S. 
dairy industry.
    I appreciate this opportunity today to provide comments on 
the important issue of trade. Thank you.
    [The prepared statement of Mr. Kappelman follows:]

Prepared Statement of Peter J. Kappelman, Chairman, International Trade 
     Committee, National Milk Producers Federation, Two Rivers, WI
    Chairman Conaway, Ranking Member Peterson, and Members of the 
Committee, thank you for inviting me to testify on the importance of 
trade to the U.S. dairy industry. My name is Pete Kappelman. I'm a 4th 
generation dairyman from Twin Rivers, Wisconsin and I'm Chairman of the 
International Trade Committee of the National Milk Producers Federation 
(NMPF).
    NMPF develops and carries out policies that advance the well-being 
of dairy producers and the cooperatives they own. NMPF's member 
cooperatives produce the majority of the U.S. milk supply, making NMPF 
the voice of more than 32,000 dairy producers on national issues. 
International trade is one of those issues and in recent years it has 
been one of the most important to our industry. NMPF works closely on 
international trade issues with the U.S. Dairy Export Council whose 
partnership between producers, proprietary companies, trading companies 
and others interested in supporting U.S. dairy exports, has contributed 
greatly to the success of the industry.
Introduction
    This industry has come a long way on trade in the past several 
years. Our nation has gone from exporting dairy products valued at less 
than $1 billion in 2000 to exporting a record $7.1 billion in 2014, an 
increase of 625 percent. That reflects not just a tremendous jump on a 
value basis but also a dramatic increase in the proportion of U.S. milk 
production that's finding a home overseas, as reflected in the chart 
below.
    Fifteen years ago we were exporting roughly 5% of our milk 
production, now we're at three times that level, even as overall U.S. 
milk production has continued to grow. That means that the equivalent 
of 1 day's milk production each week from the entire U.S. dairy 
industry ultimately ends up overseas, making exports integral to the 
health of my farm and our dairy industry at large.
U.S. Dairy Balance--20 Years
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    It is not coincidental that the enormous growth over this period 
occurred during a time in which the U.S. was implementing a number of 
market-opening free trade agreements, each of which were approved 
through the use of Trade Promotion Authority. These agreements lowered 
and ultimately removed tariffs and in many cases they gave our products 
a preferential advantage over other supplying countries. They also 
often helped remove technical and regulatory barriers to our trade. In 
every case, our dairy exports to countries with which we implemented 
free trade agreements have shown substantial, sometimes dramatic, 
increases (Attachment 1).
    The fact is that 96 percent of the world's population is overseas. 
That population is growing faster than ours and that is where the 
output of our increasing dairy productivity must find a home. This 
means that for our farmers to continue to grow and processing companies 
to continue to likewise expand, overseas markets are critical.
Concentration of World Population
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    As a producer myself, I know first-hand what this means to me and 
my bottom line. When our exports increase, I benefit. And when, for 
whatever reason, our exports are impeded or we give up market shares, 
the effect is ultimately felt by the farmer in the price we receive.
    But it is not just dairy producers who are affected for better or 
worse when exports rise or fall. USDA's Economic Research Service (ERS) 
estimates that each billion dollars of U.S. dairy exports generates 
20,093 jobs at the milk production level and that $2.76 of economic 
output are generated for each $1.00 of dairy exports. It is remarkable 
that, while for agriculture as a whole each billion dollars in exports 
generates 5,780 jobs,\1\ in the dairy sector each billion dollars in 
exports generates over three times as many jobs. Thus, the $7.1 billion 
that we exported in dairy products in 2014 supported more than 142,000 
U.S. jobs at the production level. And according to the ERS 
multipliers, those exports generated nearly $19.6 billion in additional 
economic activity at that level.
---------------------------------------------------------------------------
    \1\ http://www.ers.usda.gov/data-products/agricultural-trade-
multipliers/effects-of-trade-on-the-us-economy.aspx.
---------------------------------------------------------------------------
    At the manufacturing level, where the milk is turned into cheese 
and other processed dairy products, ERS estimates that each billion 
dollars of exports generates 3,150 jobs. So, our exports in 2014 
supported 22,300 jobs at the manufacturing level. This, in turn, 
generated additional economic activity of nearly $25 billion.
    Exports account for approximately 31.7 billion pounds of U.S. milk, 
equating to the milk from 1.4 million cows. As global demand for dairy 
continues to rise, U.S. dairy exporters are meeting the challenge by 
making the right products with the right packaging and the right 
specifications for each customer. The U.S. is now the world's leading 
single-country exporter of skim milk powder, cheese, whey products and 
lactose, thereby benefiting millions of customers in hundreds of 
countries around the world.
    To best understand the level of importance that exports have today 
for the U.S. dairy industry and farmers in particular, a key barometer 
is the percentage of incremental milk solids going to support U.S. 
dairy exports. Since 2003, total U.S. milk production increased by 
nearly 35.7 billion lbs. Over that time, 61 percent of the increase in 
U.S. milk solids produced was required to supply U.S. dairy product 
exports. That means that more than 21.8 billion lbs of the additional 
milk the U.S. has produced since 2003 has been devoted to exports. At 
the 2014 all-milk price of $24.00/cwt, this represents nearly $5.2 
billion in additional dairy farm revenue. That amount of milk also 
represents the amount that more than 4,800 average sized (i.e., 204 
cows per farm) dairy farms would produce.
    There is no doubt that exports will continue to play an 
increasingly important role within the U.S. dairy industry. Our future 
is dependent on continued growth in dairy exports.
    USDA's long-term baseline projects U.S. milk production to increase 
to 230.4 million lbs. by 2019, which represents an increase of 24.354 
million lbs. If 57% of new milk continues to supply export markets, an 
additional 13.882 million lbs will be used for exports. During that 
time period, milk production per cow is expected to increase to 24,580 
pounds per cow. That means that, without growth in dairy exports, 
623,676 fewer cows would be required to produce milk in the United 
States and 5,423 fewer average-sized farms would be needed to keep up 
with the supply and demand for U.S. milk. For U.S. milk producers to 
continue to see robust milk production growth, exports must increase in 
not only absolute terms, but also in relative terms because the rate of 
domestic consumption growth is insufficient to maintain milk production 
growth, as projected by USDA.
    When we talk about the importance of agricultural exports, or in my 
case, dairy exports, it is easy to wade too deeply into statistics, and 
for that I apologize. It is important to also stress that the benefits 
of agricultural exports go not just to the farmers in your districts 
back home. The benefits also go to the people who sell farmers fuel, 
fertilizer, seed and other inputs, and to the people involved in 
processing, packaging, storing, transporting and marketing the farm 
products that end up moving overseas. And, of course, the multiplier 
effect goes even farther--to the benefit of people in the communities 
where farmers buy goods and services, from school clothes to haircuts.
    I have painted a rosy picture so far of the potential trade offers. 
But when it comes to trade, those who stand still fall behind. Our 
competitors are negotiating trade agreements all over the globe. Unfair 
import barriers remain in place and new ones are erected all the time. 
These types of challenges are detailed in our 2014 National Trade 
Estimate comments. They range from unjustifiable health and safety 
measures to certification requirements to the more recent and extremely 
protectionist efforts by the EU to prevent the use of common cheese 
names--by misusing Geographical Indications to give its producers a 
lock on international markets. If we aren't in the game actively 
negotiating on these issues, we're ceding ground to our competitors and 
those looking to make it tougher for us to do businesses in their 
markets.
    That's why we need to continue to be able to use trade agreements 
to keep expanding export opportunities. Not one of the free trade 
agreements that have been so beneficial to us in the past has been 
implemented without some form of trade negotiating authority from 
Congress (TPA). Knowing that a trade agreement will be considered by 
Congress under such a process is what allows our negotiating partners 
to make their best offers on issues and products of greatest 
sensitivity. Inevitably, dairy and many other agricultural products 
fall into that category.
    A case in point is the Trans-Pacific Partnership (TPP) 
negotiations. Access to the TPP's most protected dairy markets--Japan 
and Canada--is essential to us and both countries have pointed to the 
importance of having TPA in place as TPP talks enter their final stages 
on agricultural negotiations. Our negotiators have moved the ball 
forward on many key issues but in order to ensure that we conclude a 
high-standard, balanced agreement that delivers net trade benefits for 
the U.S. dairy industry, we need to have TPA in place.
    We also see tremendous value in TPA's ability to not only spur our 
trading partners to make hard decisions in the final hours of trade 
negotiations, but also in its ability to highlight issues that Congress 
deems to be of critical importance in order to direct the 
Administration to focus on addressing those topics. The TPA legislation 
introduced last year included strong new provisions instructing U.S. 
negotiators to tackle sanitary and phytosanitary (SPS) measures in a 
heightened manner and address the abuse of geographical indications to 
impede U.S. exports. Both of these types of non-tariff barriers have 
posed sizable challenges to U.S. exports in fast-growing markets and we 
very much look forward to seeing TPA legislation introduced that 
retains a focus on addressing these critical issues.
    In addition, TPA has given U.S. negotiators the direction to 
prioritize products that are subject to significantly higher tariffs in 
major producing countries. This prioritization is extremely important 
for our industry since dairy tariffs, particularly into large and 
developed dairy markets, are often extremely high. A case in point is 
Canada where dairy tariffs typically range from 200%--300%. We want to 
ensure that our negotiators devote particular priority to the highest 
tariffs confronting U.S. agricultural exports and see TPA as a vital 
tool in ensuring that that appropriate focus is not lost.
    All of this is why TPA is so important in order to allow us to deal 
with these tough issues effectively via well-negotiated trade 
agreements. TPA is a clear directive to the Administration about what 
types of agreements will be acceptable to Congress and a reassurance to 
our trading partners that if they make tough calls to address those 
problems the U.S. has identified, they can take confidence in seeing 
the agreement get a fair hearing by Congress. That is why we sent the 
attached letter (Attachment 2) to Congress earlier this month to urge 
swift action on TPA.
In Conclusion
    The attached table, which I mentioned earlier, reflecting our dairy 
trade balance with all U.S. FTA partners in the past 2 decades, is 
strong evidence of the progress that can be made with TPA in place. We 
can be competitive & increase sales in markets as diverse as Latin 
America, the Middle East and Asia--what we need are well-negotiated 
agreements and the necessary avenue to achieve and implement them. TPA 
is that avenue. Without TPA, though, we run the risk of instead losing 
market share as our trading partners forge ahead with their own 
agreements that address their tariff and non-tariff concerns while at 
the same time putting us at a disadvantage.
    The U.S. dairy industry is thinking globally and it is prepared to 
do what our customers want and need. Our industry recognizes the market 
opportunities that exist overseas. We are prepared to capitalize on the 
good name that the U.S. has established as a reliable supplier of safe 
and nutritious products. Moreover, many throughout the U.S. dairy 
industry are undertaking significant long-term investment commitments 
in order to meet foreign demand.

    What we need now is for Congress to move forward with TPA so that 
the Administration can conclude high-quality trade agreements that 
preserve our ability to compete and deliver net trade benefits to the 
U.S. dairy industry.

    I appreciate the opportunity to provide comments on this important 
issue to this Committee. Thank you.
                              Attachment 1

           U.S. Dairy Exports to Free Trade Agreement Partners
------------------------------------------------------------------------
                              U.S. Dairy Exports
        Date Entered  ----------------------------------
 FTA     into Force      Year Before                          Growth
                          Agreement           2014
------------------------------------------------------------------------
                                Million Dollars                  Percent
------------------------------------------------------------------------
Mexi           1/1/94          252                1,586             +529
 co-
 -NA
 FTA
Cana           1/1/94           65                  343             +428
 da-
 -NA
 FTA
Jord         12/17/01            2                    7             +250
 an
 FTA
Sing           1/1/04            8                   98             +197
 apo
 re
 FTA
Chil           1/1/04            3                   59           +1,867
 e
 FTA
Aust           1/1/05            6                  171           +2,750
 ral
 ia
 FTA
El             3/1/06            5                   14             +180
 Sal
 vad
 or
 (CA
 FTA
 )
Hond           4/1/06            8                   23             +188
 ura
 s
 (CA
 FTA
 )
Nica           4/1/06            4                   19             +375
 rag
 ua
 (CA
 FTA
 )
Guat           7/1/06           30                   36              +20
 ema
 la
 (CA
 FTA
 )
Moro           1/1/06            0.1                 97          +96,900
 cco
 FTA
Bahr           8/1/06            0.6                 27          +44,000
 ain
 FTA
Domi           3/1/07           17                   75             +341
 nic
 an
 Rep
 ubl
 ic
Cost           1/1/09            3                   16             +433
 a
 Ric
 a
 (CA
 FTA
 )
Oman           1/1/09            0.6                  1              +67
Peru           2/1/09           20                   63             +215
Sout          3/15/12          220                  410              +86
 h
 Kor
 ea
Colo          5/12/12            8                   55             +588
 mbi
 a
Pana         10/31/12           32                   45              +41
 ma
------------------------------------------------------------------------
Source: USDA GATS.

                              Attachment 2
March 2, 2015

    Dear Member of Congress:

    The National Milk Producers Federation (NMPF) and the U.S. Dairy 
Export Council (USDEC) support the introduction and enactment of Trade 
Promotion Authority legislation as quickly as possible. Trade Promotion 
Authority (TPA) is a critical piece in the effort to secure and pass 
balanced, well-negotiated trade agreements.
    TPA legislation would be a vital step forward in strengthening 
Congress's role in trade negotiations. By having a clear framework 
through TPA for participating actively in the negotiating process, 
Congress increases its ability to influence the agreements as they are 
being written and to help craft a deal that will be beneficial for the 
United States. In this way, TPA plays a key part in supporting a strong 
trade policy agenda. That type of active trade policy agenda is 
particularly important to our industry in light of the fact that we are 
now exporting the equivalent of 1 day out of every week's milk 
production. Last year the U.S. dairy industry exported over $7 billion 
last year, making trade vital to our industry's future.
    At this stage of TPP, we have significant concerns regarding how 
critical elements of the TPP talks--particularly those related to dairy 
market access and the use of common food names--will ultimately be 
resolved in ongoing negotiations. Given the strong dairy export 
potential TPP could offer, it would do our companies and farmers a 
disservice to accept an agreement that could disproportionately 
increase imports while forgoing comparable export openings for the U.S.
    Our goal is an agreement that on balance offers net trade benefits 
to the U.S. dairy industry. To get there, market access into the 
region's most protected dairy markets--Japan and Canada--is imperative. 
Our negotiators have worked extremely hard and moved the ball forward 
on key issues such as expanding access to the Japanese market and 
improving safeguards surrounding the use of common food names in the 
face of the EU's abuse of geographical indications to erect barriers to 
U.S. exports. However, Japan needs to do more; in particular it needs 
to provide avenues for U.S. export growth in all areas. Likewise, 
Canada has yet to put forward an offer on dairy. In order for TPP to be 
successful and truly comprehensive, it is imperative that Canada 
provide significant market openings for the full range of U.S. dairy 
products.
    TPA support is not a blank check on TPP; TPP must be considered on 
its own merits. However, without TPA, we will not be able to seize the 
opportunities that well-negotiated agreements may ultimately present. 
That is why we urge Congress to move forward with TPA without delay and 
simultaneously actively engage in the final stages of TPP negotiations.
            Sincerely, 
            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            

 
 
 
Thomas M. Suber,                     James Mulhern,
President,                           President & CEO,
U.S. Dairy Export Council;           National Milk Producers Federation.
 


    The Chairman. Thank you, Mr. Kappelman.
    Mr. Guenther. Did I pronounce your name correctly?
    Mr. Guenther. Yes. Yes, you did.
    The Chairman. All right, 5 minutes, sir.

          STATEMENT OF ROBERT L. GUENTHER, SENIOR VICE
PRESIDENT FOR PUBLIC POLICY, UNITED FRESH PRODUCE ASSOCIATION, 
                        WASHINGTON, D.C.

    Mr. Guenther. Thank you, Chairman Conaway, and Ranking 
Member Peterson, for providing United Fresh Produce Association 
with the opportunity to share our perspective from the fresh 
fruit and vegetable sector about the importance of trade to our 
industry and to agriculture in general.
    Exports and imports are crucial to the viability of many of 
our member businesses, so we are very appreciative of having 
the chance to elaborate on why promoting trade is so important 
to U.S. agriculture. This hearing is particularly timely given 
the ongoing debate within Congress regarding renewing Trade 
Promotion Authority, and the U.S. efforts to negotiate trade 
deals such as the Trans-Pacific Partnership and the 
Transatlantic Trade and Investment Partnership.
    First, a bit of background about our organization. United 
Fresh Produce Association was founded in 1904, and we are the 
only trade association that represents all segments of the 
fresh fruit and vegetable production chain across the United 
States. While most of our members are based here in the U.S., 
export and import markets are essential to our members as they 
seek to ensure business viability and meet consumer demand.
    As with all agriculture sectors represented here today, the 
export and import situation for fresh fruits and vegetables is 
constantly evolving. Recent information from the Economic 
Research Service at USDA forecast fresh fruit and vegetable 
exports for Fiscal Year 2015 with a value of nearly $8 billion. 
Exports to key export markets such as Canada, Europe, and Japan 
are expected to continue expanding.
    Where we have seen the most difference in recent years, 
however, is in the area of imports. It is worth noting that 
while fruit and vegetable exports have doubled since the mid-
1990s, fruit and vegetable imports in the same time have nearly 
tripled. Factors that contribute to this include trade policies 
that do not address non-tariff trade barriers to U.S. exports 
of fruits and vegetables. We have experienced that as tariff 
levels have been brought down, there have been corresponding 
increases in non-tariff barriers. Examples of non-tariff 
barriers include, but are not limited to, restrictive import 
and administrative procedures, or product or processing 
specifications. Exports of commodities such as apples, pears, 
peaches, citrus, and potatoes to countries including Korea and 
Mexico have been limited due to non-tariff barriers, among 
other examples.
    If we are to ensure that export and import levels are put 
back on an even keel, United Fresh urges Congress and the 
Administration to ensure that any future trade deal creates new 
ways to break down these artificial barriers using sound 
science. We also urge the creation of a dispute settlement 
process that resolves non-tariff trade issues in a timely 
manner.
    We also know that promoting free trade can work for the 
fresh produce industry, and have seen results from a variety of 
trade agreements. One recent example is an announcement earlier 
this year by USDA's Animal and Plant Health Inspection Service 
that China has agreed to allow all apple varieties into the 
Chinese market, which is the largest destination for U.S. 
agriculture products. This announcement was a culmination of a 
sustained effort by a coalition of apple industry 
organizations, and provides apple growers with comprehensive 
access to this major market for the first time. But there are 
certainly other examples of how the fresh produce industry 
could benefit significantly from enhanced trade opportunities. 
For example, the National Potato Council estimates that the 
adoption of the Trans-Pacific Partnership trade agreement could 
increase fresh potato exports to Mexico by nearly $150 million 
a year, up from the current level of $39 million a year.
    The fresh produce industry knows that we must continue to 
be vocal about the need to improve trade relations and 
policies, members of the produce industry must do what they can 
to be ready to take advantage of business opportunities in 
foreign markets. Congress and the Administration need to do 
more. It is essential that the President and Congress have the 
necessary authority to promote robust trade policies that 
maintain current opportunities, and as in the case of fruits 
and vegetables, ensures trade equilibrium.
    United Fresh believes it is in agriculture's best interests 
for Congress to expeditiously enact TPA. Such action would 
allow these critical trade deals to move forward and provide 
producers with much-needed tools in their efforts to be 
successful in the marketplace.
    In conclusion, I would like to once again thank you, Mr. 
Chairman, Ranking Member Peterson, as well as the entire 
Committee for all you have done to ensure fresh fruit and 
vegetable producers have trade opportunities, as well as the 
tools to address a multitude of trade challenges. To build on 
the good work that you have done, United Fresh urges the 
Committee and the entire Congress to enact Trade Promotion 
Authority to maximize trade opportunities for America's 
agricultural producers. Thank you.
    [The prepared statement of Mr. Guenther follows:]

  Prepared Statement of Robert L. Guenther, Senior Vice President for 
   Public Policy, United Fresh Produce Association, Washington, D.C.
    Thank you, Chairman Conaway and Ranking Member Peterson, for 
providing United Fresh Produce Association with an opportunity to share 
our perspective from the fresh fruit and vegetable sector about the 
importance of trade to our industry and to agriculture in general. 
Exports and imports are crucial to the viability of many of our 
members' businesses, so we are very appreciative of having a chance to 
elaborate on why promoting trade is so important to U.S. agriculture. 
This hearing is particularly timely given the ongoing debate within 
Congress regarding renewing Trade Promotion Authority (TPA) and the 
U.S. efforts to negotiate trade deals such as the Trans Pacific 
Partnership (TPP) and the Trans-Atlantic Trade and Investment 
Partnership (TTIP).
    First, a bit of background about our organization. United Fresh 
Produce Association was founded in 1904. We are the only trade 
association that represents all segments of the fresh fruit and 
vegetable production chain across the United States. While most of our 
members are based here in the U.S., export and import markets are 
essential to our members as they seek to ensure business viability and 
meet consumer demand.
    As with all the agriculture sectors represented here today, the 
export and import situation for fresh fruits and vegetables is 
constantly evolving. Recent information from the Economic Research 
Service at USDA forecasts fresh fruit and vegetable exports for Fiscal 
Year 2015 with a value of nearly $8 billion. Exports to key markets 
such as Canada, Europe and Japan are expected to continue expanding. 
Where we have seen the most difference in recent years however, is in 
the area of imports. According to USDA statistics, horticultural 
produce imports are expected to exceed $50 billion in Fiscal Year 2015. 
Fresh fruit and vegetable imports account for more than \1/3\ of that 
total value.
    It is worth noting that while fruit and vegetable exports have 
doubled since the mid-1990s, fruit and vegetable imports in that same 
time period have nearly tripled. Factors that contribute to this 
include U.S. import policies that are beneficial to foreign commodities 
and continued non-tariff trade barriers to U.S. exports in some 
countries. Trade policies are essential to putting export and import 
levels back on an even keel. In particular, non-tariff trade barriers 
are becoming a growing problem. As tariff levels have been brought 
down, there has been a corresponding increase in non-tariff barriers. 
Examples of non-tariff barriers include, but are not limited to, 
restrictive import and administrative procedures or product or 
processing specifications. Exports of commodities such as apples, 
pears, peaches, citrus and potatoes to countries including Korea and 
Mexico have been limited due to non-tariff barriers, among other 
examples. With respect to produce, United Fresh urges Congress and the 
Administration to ensure that future trade deals create new ways to 
break down these artificial barriers using sound science. We also urge 
the creation of a dispute settlement process that resolves non-tariff 
trade issues in a timely manner.
    On a separate but relevant topic, I would like to also add that the 
ability of producers to move commodities in and out of our nation's 
ports in a timely manner is also crucial to achieving a trade balance 
for fruits and vegetables. We at United Fresh are hearing increasingly 
from our members about port delays that are due at least in part to 
inadequate resources or lack of personnel at port facilities to 
complete examinations of shipments expeditiously. Our members have also 
raised questions about examination procedures and logistics and their 
impact on the movement of product. We welcome the opportunity to work 
with Members of this Committee to address funding shortfalls and policy 
priorities that affect ports operations to ensure perishable fruits and 
vegetables move safely and quickly. We also welcome the opportunity to 
work with you and others on how best to address issues such as the 
recent slowdown in operations at West Coast port facilities to ensure 
that commodities continue to move through our nation's ports.
    Another issue relevant to the movement of fresh produce into the 
United States is a recent proposal by the Animal and Plant Health 
Inspection Service (APHIS) to replace the region- and commodity-
specific phytosanitary import requirements that are currently codified 
in the U.S. Code of Federal Regulations. APHIS proposes to use general 
phytosanitary requirements or performance standards that can be applied 
to all fruit and vegetable commodities. We appreciate the work that the 
agency has made to help interested stakeholders understand the nature 
of the proposal and how it would be implemented. However, many of our 
members continue to have concerns about this proposal and how it could 
affect the potential introduction of pest and disease risks into the 
United States. We pledge to do all we can to work with our members, 
APHIS and the Members of this Committee to ensure that U.S. import 
policies enhance the safety of fruits and vegetables imported into the 
United States, while also promoting economic opportunities and meeting 
consumer demand.
    We know that promoting free trade can work for the fresh produce 
industry and have seen the results from a variety of trade agreements. 
For example, since the full implementation of the North American Free 
Trade Agreement in 2009, U.S. exports to Canada and Mexico have grown 
more than 50 percent to a current level of over $41 billion--fresh and 
processed fruit exports grew from less than $2 billion to more than $3 
billion in 2014. Furthermore, export markets are essential to the 
economic well-being of many of America's key fruit and vegetable 
production areas. Just two states provide striking evidence of that. 
For the U.S.'s top exporter of agricultural products, California, 
exports were valued at nearly $20 billion in 2013 and supported almost 
150,000 jobs. Another top producing state, Florida's, exports were 
nearly $4.5 billion in 2013 and supported almost 33,000 jobs.
    Leveling the playing field of specialty crop exports and imports is 
highly beneficial to our industry and the overall economy. And we 
believe this Committee has demonstrated a recognition of this position. 
This Committee has already made a major commitment to promoting 
balanced agricultural trade through provisions of the 2014 Farm Bill. 
United Fresh is the coordinating body of the Specialty Crop Farm Bill 
Alliance, a coalition of over 120 specialty crop organizations that 
came together in 2002 to assess farm bill programs. For each successive 
farm bill, the Alliance has provided a set of recommendations about how 
those programs could maximize the ability of specialty crop producers 
to be successful in providing Americans and others around the world 
with an abundant supply of our commodities. The Alliance is grateful 
that in the 2014 Farm Bill this Committee acted on our recommendations 
to enhance and facilitate trade. More specifically, as the Alliance 
recommended, the 2014 Farm Bill reauthorized and maintained funding of 
$200 million annually for the Market Access Program to encourage 
exports and promotion of foreign market activities. The farm bill also 
reauthorized the Technical Assistance for Specialty Crops program for 
$9 million annually to addresses sanitary and phytosanitary issues, as 
well as technical barriers to U.S. exports, which I mentioned is one of 
the leading factors in the current difference between exports and 
imports of fresh fruits and vegetables. In addition, the Alliance 
supported the farm bill provision authorizing the position of Under 
Secretary of Agriculture for Foreign Agricultural Affairs to focus on 
agriculture trade priorities. These programs are key to helping 
specialty crop producers be innovative and proactive in pursuing 
foreign market opportunities. Furthermore, these farm bill provisions 
send a strong signal that this Committee recognizes how essential trade 
policy is to the success of specialty crops and to agriculture broadly.
    And our industry is being proactive in pursuing opportunities in 
international markets. One recent example is the announcement early 
this year by USDA's Animal and Plant Health Inspection Service (APHIS) 
that China has agreed to allow all apple varieties into the Chinese 
market, which is the largest destination for U.S. agriculture products. 
This announcement was the culmination of a sustained effort by a 
coalition of apple industry organizations and provides apple growers 
with comprehensive access to this major market for the first time. But 
there are certainly other examples of how the fresh produce industry 
could benefit significantly from enhanced trade opportunities. For 
example, the National Potato Council estimates that adoption of the 
Trans-Pacific Partnership trade agreement could increase fresh potato 
exports to Mexico by nearly $150 million a year, up from the current 
level of $39 million.
    The fresh produce industry knows that we must continue to be vocal 
about the need for improved trade relations and policies. But as 
members of the produce industry must do what they can to be ready to 
take advantage of business opportunities in foreign markets and meet 
consumer demand here at home, Congress and the Administration need to 
do more. It is essential that the President and the Congress have the 
necessary authority to promote robust trade policies that maintain 
current opportunities and, as in the case of fruits and vegetables, to 
ensure trade equilibrium. As we speak, Congress has the opportunity to 
pass Trade Promotion Authorization (TPA), crucial legislation that 
would allow the White House to submit trade agreements to Congress for 
a straight up or down vote, without adding amendments. Historically, 
every President dating back to FDR has been granted authority to 
negotiate trade agreements. TPA was last enacted in 2002 and expired in 
2007.
    Spurring interest again this year in TPA are major trade deals in 
the works that have industry groups, business executives, consumer 
advocates and Members of Congress weighing in with various 
perspectives. The Trans-Pacific Partnership (TPP), a massive trade deal 
in which the U.S. is looking to enter with 11 other Asia-Pacific 
countries, would be the largest trade deal in history, opening markets 
and expanding access to U.S. agriculture exports to more than 800 
million people. So massive, TPP would account for nearly 40 percent of 
the global economy.
    The U.S. is also negotiating the Transatlantic Trade and Investment 
Partnership (TTIP) with the European Union, an agreement that would 
expand access to Made-in-America goods and services through strategic 
partnerships in European markets. The relationship between the U.S. and 
EU is the largest in the world, with $1 trillion of goods and services 
traded and nearly $4 trillion invested in each other's economies--all 
of which supports about 13 million jobs on both sides of the Atlantic. 
Facing opposition in Europe from various environmental, progressive and 
national entities, European agriculture officials met recently here in 
Washington, D.C., with the Administration and key Congressional leaders 
to further reiterate the significance of the deal and immediate need 
for action. United Fresh believes it is in agriculture's best interest, 
including fresh fruits and vegetables, for Congress to expeditiously 
enact TPA. Such action will allow these critical trade deals to move 
forward and provide our producers with a much-needed tool in their 
efforts to be successful in the marketplace. We urge Congress to pass 
TPA now.
    In conclusion, I would like to once again thank you Mr. Chairman 
and Ranking Member Peterson, as well as the entire Committee for all 
you've done to ensure that fresh fruit and vegetable producers have 
trade opportunities, as well as the tools to address a multitude of 
trade challenges. To build on the good work that has been done by you, 
United Fresh urges the entire Congress to support Trade Promotion 
Authority to maximize trade opportunities for America's agriculture 
producers.
    Thank you for holding this hearing and allowing United Fresh to 
share our perspective on this important issue. I look forward to 
answering any questions and United Fresh looks forward to working with 
you on this and other crucial issues.

    The Chairman. Thank you, Mr. Guenther. I appreciate it. I 
appreciate all of your presentations.
    I would remind Members that they will be recognized for 
questioning in order of seniority for Members who were here at 
the start of the hearing. After that, Members will be 
recognized in the order of their arrival, and I appreciate the 
Members understanding.
    With that, I recognize myself for 5 minutes.
    Again, thank you, gentlemen, for being here.
    Mr. Stallman, you mentioned in your conversation with us 
certain uncertainties with respect to TTIP, and the things that 
are going on. There are those who oppose TPA that are using 
those uncertainties as a reason to shy away from passing TPA. 
Can you respond to their arguments?
    Mr. Stallman. Well, Mr. Chairman, I would argue just the 
opposite. I think you have a lot more certainty on a couple of 
fronts if you have TPA in terms of completing a successful 
negotiation. First, the Congress gets to define what they want 
in terms of a consultative role in that they get to define what 
they would like to see in terms of negotiating objectives. That 
provides more certainty from a policy perspective. But even 
more importantly, during the negotiations--and now, negotiation 
is a continuum. It goes a long time, like any other 
negotiation, back and forth, offers, counteroffers. But 
countries aren't going to put their best offers on the table 
unless they have a certainty, or feel like they have a 
certainty, that the U.S. is committed to completing the 
negotiation and the trade agreement. And so the certainty of 
having a good agreement is certainly enhanced, I believe, by 
having Trade Promotion Authority in place.
    The Chairman. All right, thank you.
    This question is for any of you who want to take it on. All 
four of you have mentioned in one form or another, the 
importance of passing TPA. Can you comment about what the 
impact would be if we don't pass TPA?
    Dr. Hill. Well, as I pointed out in my comments, that if we 
don't pass TPA, the likelihood of passing TPP is dramatically 
reduced. And if that happens, other countries in the Asian 
region will do bilateral agreements and multilateral 
agreements, and we will be left out, and it will put us, not 
only the pork industry but all of agriculture and our whole 
economy, at a great disadvantage as far as being able to trade 
with those Asian-Pacific countries.
    Mr. Guenther. Well, I would say personally, it does not 
allow our negotiators the strongest possible tools to be able 
to negotiate a strong trade agreement that can be the best 
benefit for our members in the fresh produce industry.
    As I mentioned before, these issues related to non-tariff 
trade barriers are extremely important that we bring these 
down, because they are the major reason preventing increased 
exports for fruits and vegetables around the world. And without 
having TPA, it does not put our negotiators in a position to be 
able to strongly negotiate with their counterparts in that area 
as well.
    Mr. Kappelman. I would agree with all the comments. Case in 
point, when we did the free trade agreement with Korea, we were 
put in the driver's seat because we were first. As we are 
standing still and not signing new agreements, we are put in a 
less advantageous position.
    Mr. Stallman. Well, I certainly concur with my colleagues 
here at the table. Not having TPA is going to cause the U.S. to 
be left out of trade negotiations to a great extent. We may 
engage in trade negotiations, but completing successful 
negotiations will be extremely difficult, if not impossible, 
without having TPA because the other countries are going to 
believe we are not serious about a trade agenda, and it is very 
important that that is a component of the discussion as you go 
into the tough negotiations it takes to get a good deal.
    The Chairman. TPA basically allows for an up-or-down vote 
on the agreement that was made. If I am a country other than 
the United States, and I am looking at 535 additional 
negotiators without TPA, is that an impact? In other words, if 
our trade representatives are trying to negotiate a deal, and 
the people on the other side know that that deal has to come to 
Congress so we can amend it, change it, are they likely to make 
a deal with our trade rep without TPA?
    Mr. Stallman. If I were sitting across the table, I 
wouldn't do it. And let me give you Japan as an example. They 
are trying to reform their agricultural sector to rationalize 
it, and in the process, they know that they are going to have 
to create greater access to their markets, but those are very 
politically-difficult decisions. What elected leader in Japan 
is going to take those politically-difficult decisions, take 
all the heat from that, and then with the prospect of the 
agreement coming back over here after they have laid it on the 
table, and being basically chopped up by amendment and turned 
into something that is unacceptable.
    The Chairman. All right. Thank you gentlemen.
    With that, I recognize the Ranking Member for 5 minutes. 
Mr. Peterson.
    Mr. Peterson. Thank you, Mr. Chairman.
    Mr. Kappelman, are we still in the situation where our 
dairy products going to Canada still has tariffs on it?
    Mr. Kappelman. Well, actually, if you look at some of the 
numbers, it will show that there is quite a bit of product 
moving to Canada, but that is actually under a processing 
agreement where it moves and then comes right back. So that is 
where some of those--and there is actually very little product 
going into Canada because they were, I guess, excluded--dairy 
was excluded in NAFTA.
    Mr. Peterson. Right. But coming this way, there are 
basically no tariffs on the Canadian dairy coming this way.
    Mr. Kappelman. Exactly.
    Mr. Peterson. That has been one of my real burs in my 
saddle over the NAFTA agreement. And whether, politically they 
are going to be able to move the Canadians where they need to 
go, I am right, am I, that these Canadian co-ops are buying 
up--and they just bought Davisco in Minnesota here a few months 
ago. And one of them is now the number one processor in the 
U.S., from the information that I have gotten.
    Mr. Kappelman. Yes, in my neighborhood, I have two 
Canadian-owned facilities; one by a co-op, one by a 
proprietary, Agropur and Saputo. And it is interesting because 
if I were a Canadian dairy producer, they are thinking totally 
defensive. And they need to think a little bit offensively 
because they have tremendous opportunity to produce milk. Their 
processors want to grow their industry, and yet they said they 
want to come to the table or play the game with TPP, but on 
dairy, they are standing on the sideline. They haven't put on a 
uniform yet. So we would be very, very hesitant to support TPP 
if Canada cannot bring to the table anything on dairy.
    Mr. Peterson. So your position is that something has to be 
done.
    Mr. Kappelman. Absolutely.
    Mr. Peterson. And, Mr. Stallman, you are a rice farmer, 
right?
    Mr. Stallman. Yes.
    Mr. Peterson. So Mr. Froman has told me that he thinks they 
are going to get some access for rice in Japan. Do you think 
that is realistic?
    Mr. Stallman. I believe they will get some additional 
access. Rice is the most sensitive product in Japan and 
protected the most. There is no question about it.
    Mr. Peterson. Some additional access. What does that mean? 
Like----
    Mr. Stallman. More than we have now. And actually, if we 
can get more than we have now, that would be a start in that 
effort.
    Mr. Peterson. Yes. And that is my concern, that we need to 
make some progress in Japan. We need to make progress in Mexico 
for sure in the supply managed areas. Having watched the NAFTA 
situation, the side agreements and how they weren't enforced 
and so forth, I am concerned about where we would end up, at 
the end of the day. Are we going to get traded off for auto 
manufacturing or whatever? What I have been looking for is some 
pretty good assurance that we are going to make progress in 
those areas because I am skeptical, having met with Canadians 
and Japanese. I don't know, I mean I hope that we can get 
movement but I am skeptical.
    So I guess that is my main point, and I yield back.
    The Chairman. The gentleman yields back.
    Mr. DesJarlais, for 5 minutes.
    Mr. DesJarlais. Thank you, Mr. Chairman. And thanks to our 
panel. It is a great hearing today.
    I represent Tennessee's fourth Congressional district, and 
it happens to be home to the largest Farm Bureau in the nation. 
Mr. Stallman, I am sure you know Lacy Upchurch and Joe Pearson, 
they were up to visit a couple of weeks ago and asked to send 
their regards to you.
    Like many other individuals here, I come from a rural area 
with a largely agriculture-based economy, and just literally 
over the past week or 2, we have been visited by Tyson Foods, 
soybean growers. I was in a visit with McKee Bakery, makers of 
products like Little Debbie. Their interest in the sugar trade. 
Charles Hord of the Cattlemen's Association has been in contact 
with me. So great interest from our state in regards to today's 
topic. The farmers and ranchers everywhere I go have been very 
outspoken in their support of the commercial opportunities that 
this trade deal presents, especially regarding the potential 
increase in access to the Japanese markets.
    Mr. Stallman, I believe you stated in your testimony that 
U.S. agriculture exports to Japan exceeded $13.4 billion in 
2014, this despite Japan's high tariffs and restrictive 
policies that inhibit U.S. exports. What outcomes do you, or 
anyone else on the panel, foresee in the negotiations with 
Japan in regards to overcoming these trade barriers?
    Mr. Stallman. Well, some economists are basically saying 
that our growth in agricultural exports, that if we have a 
successful TPP agreement, that 70 percent of our ag export 
gains will be in the Japan market. And because it is a high-
value market, they have a very strong economy, and when you 
talk about the meat sector particularly, that makes a big 
difference. And they have protected those industries with high 
tariffs and import restrictions for so long, and now they are 
trying to figure out a way to engage in the negotiations and 
provide some offers that are meaningful. If all that occurs and 
it remains to be seen, but we are on the right path, if all 
that occurs, that could be a huge increase for the U.S. ag 
export market, and they could move up the list. They are number 
four now, but they could move up the list to being an even 
larger importer of our products, of our exports.
    Mr. DesJarlais. Okay. Does anyone else on the panel have a 
comment?
    Dr. Hill. That $13 billion you referred to, over $2 billion 
of that was pork. As you know, when these negotiations got 
started, Japan really just wanted to throw us a bone, which we 
didn't accept, and we--I guess you could say we raised Cain 
about it. To the credit of our trade negotiators, there has 
been a lot of progress made. We reserve the right to see what 
the final outcome is, but we are confident that we will not get 
a TPP deal if we don't have TPA.
    I know Congressman Peterson has gone, he had another 
meeting but when we use the word negotiation, that is what it 
means, negotiating. We can't fix everything. We have to 
negotiate. And I agree, we need a better deal with Canada, but 
I hope we don't hold the negotiations and hold one issue up and 
miss the big picture here when we try to get TPA and TPP 
passed, because it is a huge, huge opportunity for the U.S. 
economy.
    Mr. DesJarlais. Okay. Mr. Kappelman, or, Mr. Guenther, did 
you have anything to add?
    Mr. Kappelman. Yes, I would. In regards to Japan, first of 
all, I agree that TPA is going to be absolutely critical 
because we have very little access to Japan. Limited TRQs. They 
have a fairly substantial dairy industry, but every country 
really protects their dairy industry. They want milk for their 
kids. And we understand that, but at the same time, their 
Administration knows their farming population is aging, and 
that land has other uses, and the Administration, we believe, 
wants to start opening the door. But, they can't lay all their 
cards out if they know they are going to get left high and dry. 
And that is where TPA really comes in.
    Mr. DesJarlais. Okay. Gentlemen, I thank you all for your 
comments.
    And, Mr. Chairman, I yield back the balance of my time.
    The Chairman. The gentleman yields back.
    Mr. Scott, for 5 minutes.
    Mr. David Scott of Georgia. Thank you, Mr. Chairman.
    Let me first start off with dairy. Could you tell us who 
are the largest countries that are exporters of dairy into the 
United States?
    Mr. Kappelman. Well, I would say that in the top five is, 
number one, New Zealand. New Zealand, and it is no surprise, 
they export over 90 percent of their production. New Zealand's 
industry, by the way, is only about as large as California's 
dairy industry, so----
    Mr. David Scott of Georgia. Yes.
    Mr. Kappelman.--they export a lot. We see them as a giant 
because it is most of their production. So they have about $750 
million of exports to the U.S.
    Mr. David Scott of Georgia. Okay.
    Mr. Kappelman. And then we have, from Europe, it is mostly 
specialty cheeses coming from European countries.
    Mr. David Scott of Georgia. All right. Let me ask you then, 
do you see any reason for us to be concerned that TPP may 
provide these countries with greater access to the United 
States market and, therefore, having some downward pressure on 
our own industry in this county?
    Mr. Kappelman. That is the worry, because with TPP, we have 
in those 12 nations, we have dairy's biggest opportunities in 
Japan and Canada, and we have dairy's biggest threat which 
might be New Zealand. And that is why, when we are opening the 
doors to trade, you might open the door in your house and let 
the cat out, but sometimes the dog will come in.
    Mr. David Scott of Georgia. Yes.
    Mr. Kappelman. It is important: 15 years ago, this dairy 
industry in the U.S. was intimidated by global trade. We are 
not anymore. We can compete. We can compete at a high level, 
but on a level playing field. So that is why getting this good 
agreement and TPP is important. We are willing to compete, but 
we need access and exchange.
    Mr. David Scott of Georgia. All right.
    Thank you very much, Mr. Chairman. I yield back the balance 
of my time.
    The Chairman. The gentleman yields back.
    Mr. LaMalfa, for 5 minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman.
    A lot of talk about Japan here, and concern about how they 
will act. For everybody on the panel, I will probably start 
with Mr. Guenther, but, with the access we have been looking 
for for rice, pork, beef, wheat, dairy, do you see that the 
opportunities are really going to open up, ongoing, is it going 
to be a true negotiation that results in significant tangible 
new markets for our American products?
    Dr. Hill. Well, I can speak for pork. The answer is 
absolutely yes. And we can say that for a lot of our other 
industries, particularly in agriculture, we typically develop 
new technology, adopt new technology, and become the most 
efficient producers in the world of agricultural products. So 
as was just pointed out, there is no fear that we can't compete 
and be low-cost, efficient producers. So I would say that the 
potential is, again, huge for not only pork, but agricultural 
products and for other products that we produce in the United 
States.
    Mr. Guenther. Yes, I would agree with those comments. I 
think that when you look at the robust economy of Japan that 
the potential for increased access for fruits and vegetables is 
there, and we certainly want to continue to push forward in 
that way.
    Mr. LaMalfa. Mr. Stallman?
    Mr. Stallman. Well, absolutely. I think that there is great 
promise in the TPP negotiations with Japan, as you referenced, 
but also we have talked about Canada, both highly developed 
countries, citizens with good incomes, good appetites, and as 
the world's greatest competitor in the agricultural sector, we 
can get our products in there as long as the playing field is 
level. But until we have TPA, and we can complete the 
negotiation, we can't get to that point where the playing field 
will be leveled sufficiently to allow additional exports into 
those markets.
    Mr. LaMalfa. Well, speaking of rice, just for an additional 
minute here, how much rice do you think is sitting in cold 
storage in Japan right now?
    Mr. Stallman. There is probably some. There has been ever 
since they were required to take the quota. Rice is a difficult 
subject. First, most U.S. rice is not of the type that the 
Japanese eat. California has the opportunity to provide some 
that they do. And so our goal has always been to try to expand 
those quotas as much as we can to get rice in because, once you 
get in, establish a market, and more importantly, hopefully 
giving their consumers a choice about what products they are 
able to buy, and let them try other rice from other countries 
that eventually we can expand that.
    They are going to have to rationalize their whole 
protection and subsidy system over there before we can make 
great inroads, but they are in the process of doing that. So it 
is slow, but we are making progress. And directionally it is 
correct, and we need to expedite that process with a successful 
conclusion for TPP.
    Mr. LaMalfa. Okay. Gentlemen, thank you.
    Dr. Hill. Could I just follow up by pointing out that when 
we trade with foreign countries, a lot of times we are 
trading--I will take the pig as an example. We trade parts of 
that pig that are not valued in our domestic market. In the 
U.S., we value the muscle meats, the bacons, the loins, 
shoulders, but we export all the parts of the pig that we don't 
value to these foreign markets, where they are sometimes 
considered delicacies, and we get higher value for them than we 
do for the muscle cuts.
    Same in the poultry industry. I mean if you go to China, 
you eat chicken feet. I don't think they serve very many of 
those in the United States.
    It is estimated that offal and these snouts and feet and 
tails, and all that come off of that pig that we export, adds 
almost $9 to every pig that we raise in the United States. So 
it is a very, very important market for us.
    Mr. LaMalfa. Okay. Mr. Kappelman? And, just comment if you 
would.
    Mr. Kappelman. Yes, and so, first of all, Canada is--Japan, 
we think we are starting to make some progress. I already 
referred to Japan, but Canada is obviously a prime market for 
us. They are right there. Their dairy segment escaped the first 
time with NAFTA, and we have to make sure that with TPP that 
doesn't happen again.
    Mr. LaMalfa. Yes, it seems the U.S. is the one that absorbs 
most of that trade deficit, and we have to do better next time 
around.
    The Chairman. The gentleman's time has expired.
    Ms. Adams, for 5 minutes.
    Ms. Adams. Thank you, Mr. Chairman.
    Agriculture is very important to North Carolina. It is an 
important industry for our state that must be supported through 
policies that promote good job growth, but in North Carolina we 
still remember the more than 200,000 jobs that were lost in the 
state from NAFTA. Job losses were certified under the trade 
agreement assistance programs as loss to offshoring or imports 
since NAFTA. So any new agreements must carefully be considered 
in order to ensure that our workers will see an improvement in 
their livelihoods.
    Mr. Hill, my question to you, I was looking at the graphs 
in your testimony. They show the volume of pork exports has 
overall increased since 1989. Does the data that you show here, 
does this data show if the growth in exports came from new 
markets or was simply from increased demand by countries that 
were already trading with the U.S.?
    Dr. Hill. Most of that increase in exports is the result of 
free trade agreements with now 18 different countries. We send 
more pork to those 18 countries with free trade agreements than 
we do the other 148 countries that we do business with. So it 
just shows the importance of free trade agreements, in my 
opinion.
    Ms. Adams. Okay. Mr. Guenther, North Carolina is a growing 
state with specialty crops. How will supporting TPP promote 
opportunities for growers in our state?
    Mr. Guenther. Well, as we mentioned before, having the 
ability to increase different market opportunities for 
different products and specialty crops, and fruits and 
vegetables in particular, is going to be critical. And TPP 
allows that opportunity because that is such a robust potential 
market for fresh produce in terms of commodities that are 
available there, or can be available there. So that is one 
reason why we are very supportive of the effort.
    Ms. Adams. Okay. To follow up, what is your understanding 
of the TPP's rapid settlement mechanism, and are you concerned 
that other countries could use this provision to undermine U.S. 
laws?
    Mr. Guenther. I am not familiar with that at this point, 
ma'am, but we can certainly get you an answer for that.
    Ms. Adams. All right. I would appreciate that.
    Mr. Chairman, I yield back.
    The Chairman. The gentlelady yields back.
    Mr. Crawford, for 5 minutes.
    Mr. Crawford. Thank you, Mr. Chairman. Gentlemen, I 
appreciate you being here today.
    I want to start with Mr. Stallman. I am concerned about 
some of the things that our trading partners do to get around 
their obligations, without triggering WTO enforcement remedies. 
I will give you an example. Obviously, we know that China is 
subsidizing cotton at levels that manipulate global prices, and 
there is just not a whole lot we can do about that. Do you 
think TPA should include some provisions that strengthen the 
enforcement remedies under our trade laws to make sure that 
U.S. industries have some recourse when our trading partners 
evade their trade obligations?
    Mr. Stallman. Well, as a general principle, all trade 
agreements should have enforcement mechanisms, otherwise, the 
terms are fairly meaningless. And what we have always asked for 
are for those enforcement mechanisms to be transparent, to be 
timely, that is two main items which, in many cases, with 
current dispute settlement procedures, that is not the case. 
And so we always want to see those in the trade agreements as 
we get them, and that certainly has been one of the negotiating 
objectives.
    Mr. Crawford. We have had about a 40 percent decline in 
cotton acres in my district. I don't know if that is consistent 
with nationwide cotton producers, but I am sure that what is 
going on in China has a large impact on our planting decisions 
in my district in Arkansas.
    Let me sort of expand on an issue that Congressman LaMalfa 
addressed, and that is with regard to rice. I know the American 
Farm Bureau Federation is an advocate for all production 
agriculture, and in the South Korea Free Trade Agreement, the 
rice industry was somewhat excluded. I know there are some 
cultural sensitivities with regard to rice. You addressed that 
as it applies to Japan with regard to the short grain market 
that they have, whereas we do produce a lot of long grain, 
medium grain, certainly in my part of the country. But I am 
concerned that rice could possibly be left out again in the 
TPP, or become somewhat of a sticking point. What position will 
the American Farm Bureau Federation take if that should happen, 
or with any other commodity for that matter?
    Mr. Stallman. Well, since American Farm Bureau Federation 
is a general farm organization, so we strongly support the 
negotiations, but we reserve the right to do an economic 
analysis of those negotiations once they are completed to 
determine their impact on American agriculture. We obviously 
analyze the impact on various commodities, but at the end of 
the day, the impact has to be positive overall for American 
agriculture for us to support the final agreement. That has 
been an operational policy of ours for well over a decade now.
    And so to get to the crux of the question, we seek gains 
for all commodities, and we want our negotiators to strongly 
pursue those, but at the end of the day, we have to look at 
what the overall impact of the trade agreement is before we 
decide whether to support it or not.
    Mr. Crawford. I appreciate that. My concern is that, as was 
the case in Korea, that the rice industry will say, ``We are 
going to take one for the team to get this deal done,'' with 
the long-term vision being that it is important for us to do 
this in order for the next step to take place with TPP.
    Mr. Stallman. I think we have made the strong point to the 
Administration, to our negotiators, that we didn't want to see 
a repeat necessarily as to what happened in South Korea that 
Japan should reform its protected agricultural sector. Part of 
that reform should be to allow products in for those sensitive 
products, and rice is certainly one of those. We are going to, 
as I already said, we will get some additional access. How 
much, is still on the negotiating table.
    Mr. Crawford. Okay. And the last point. Have we resolved 
the issue with Vietnam that may have been a problem there as 
far as TPA is concerned, or do you not see that being a 
problem?
    Mr. Stallman. I don't know the answer to that question. I 
do not know.
    Mr. Crawford. Okay.
    All right, I yield back. Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Ms. Plaskett, for 5 minutes.
    Ms. Plaskett. Thank you, Mr. Chairman. Good morning, 
gentlemen.
    I had a great interest in the discussion you were having, 
in particular, Mr. Guenther, about fresh fruit and vegetables. 
Coming from the Virgin Islands, that is the product that we 
hold very dear, and are interested in increasing in exports. 
You talked about TPP and the impediments that non-tariff trade 
barriers had. I know that some of those include restrictive 
import and administrative procedures, but what are some of--can 
you give us examples of how this has been a difficulty for that 
area?
    Mr. Guenther. Yes. Usually, when we talk about things like 
this, these are really pest or disease-type barriers that are 
happening where there are phytosanitary-type issues. Where you 
can see things related to that is when you are looking at these 
types of decisions that are made that are based on potential 
problems that may or may not be in terms of the barriers, but 
also in terms of what is the best process to address these 
barriers, and whether it is bringing people here to the U.S. to 
address them in terms of science and understanding what is 
happening here in terms of protocols, or the other way around 
in terms of other countries bringing a product here to the 
United States. We have to make sure that these processes 
related to whether they are phytosanitary pest and disease-type 
issues, are addressed in the most scientific way that we are 
ensuring that there is not an evasiveness in terms of bringing 
them here to the United States.
    Ms. Plaskett. So would that not be an impediment to imports 
coming into this country, as opposed to----
    Mr. Guenther. It goes both ways, yes, ma'am.
    Ms. Plaskett. And are they more restrictive in the import 
market or----
    Mr. Guenther. I would say that certainly, when both sides 
of a negotiation in terms of countries trying to bring product 
here into the United States, and us getting access to other 
countries, there are certain protocols that each country has 
that allows that process to move forward.
    I think that when you look at, in terms of the way that we 
have seen imports come here to the United States that we feel 
very strongly that our process is working, but also we need to 
have access to other countries as well.
    Ms. Plaskett. So if it works both ways--I am just trying to 
understand why our numbers, the American exports, have not 
grown as quickly as the imports coming in here.
    Mr. Guenther. Sure.
    Ms. Plaskett. If theirs have tripled, and we have the same 
restrictions based on tests----
    Mr. Guenther. Yes.
    Ms. Plaskett.--then it has to be some other impediment, 
right, or barrier?
    Mr. Guenther. Well, I think that some of it is tariff----
    Ms. Plaskett. It is a process, administrative process?
    Mr. Guenther. Just some of it is tariff barriers, okay, so 
they have tariff barriers that come down here in the United 
States.
    Ms. Plaskett. When you say tariff barriers, what do you 
mean specifically that is causing that?
    Mr. Guenther. Basically, there are trade agreements that 
have happened over the past----
    Ms. Plaskett. Yes.
    Mr. Guenther.--NAFTA, for instance, trade agreements with 
Chile, Peru, major countries that we have imports in, so those 
tariffs have come down. We have not seen reciprocal barriers 
come down in terms of those areas--or in those countries as 
well. That is one area we have to look at, but also the 
continued non-tariff trade barriers, as I mentioned in my 
testimony, of exports into countries that are not tariff-based.
    Ms. Plaskett. How much of it is based on consumer demand 
or----
    Mr. Guenther. A lot of it is based on consumer demand as 
well. It is a very good point to point out because what we have 
seen here in this country is we now have a consumer demand of 
year-round supplies of products, so the kind of seasonal issues 
that related to that where we are not producing certain 
commodities here in this country, and other countries can 
provide that, is an important area as well that we have seen 
increases in imports.
    Ms. Plaskett. And what countries do you find is the 
greatest opportunities for exporting?
    Mr. Guenther. I think we continue to see the Asian 
communities, European communities as well, when--and some--when 
we look at these trade agreements that we are currently looking 
at. Mexico and Canada continue to be a viable market as well 
for our exports. We continue to try to increase access there--
--
    Ms. Plaskett. Okay.
    Mr. Guenther.--because they are trading partners.
    Ms. Plaskett. Thank you. Thank you very much.
    I yield the balance of my time.
    Mr. Crawford [presiding.] The gentlelady yields back.
    The gentleman from Michigan is recognized for 5 minutes.
    Mr. Benishek. Thank you, Mr. Chairman. Welcome, gentlemen. 
I appreciate you being here. I represent the northern half of 
Michigan, so I work with our Michigan Farm Bureau. And, Mr. 
Kappelman, I am a Packer fan, so I know you live near Green 
Bay. And we produce in northern Michigan quite varied products 
throughout my district especially.
    And I have been listening to the debate here. I am a 
surgeon, I am not a farmer, and I know how important this trade 
is. You have all been advocating for it and it all sounds good, 
but I do have a few specific questions that I would like to 
ask.
    Mr. Guenther, we produce a lot of fruit and vegetables in 
northern Michigan. Where are the--particular to fruit and 
vegetables, which we do a lot of great stuff in Michigan, 
apples, cherries, as you probably know, can you give me just a 
brief--how is the free trade agreement, specific to those 
commodities, going to help us in Michigan?
    Mr. Guenther. Well, when you look at the export 
opportunities such as for apples and cherries, the Asian market 
in particular can be very beneficial, and those are important 
areas that we can focus on. Those are areas we are really going 
to try to spend a lot of time on in terms of increasing access 
to those areas.
    Mr. Benishek. Mr. Kappelman, something came up which I 
wasn't really aware of, the Ranking Member mentioned the 
Canadian NAFTA agreement excluded the dairy situation, and he 
was concerned about their dairy industry becoming pretty strong 
and we are not able to compete with them very well. What is the 
input to the negotiators? How does this happen that here is a 
major--where it is a--American milk producers are involved with 
the NAFTA agreement, how does this happen?
    Mr. Guenther. Well, I was in high school at the time.
    Mr. Benishek. Yes, but how does this happen where we are 
talking about negotiating free trade agreements that are fair, 
and it all sounds positive, but here is this thing that 
happened that is not all that positive, so what happens, and--
    Mr. Guenther. Well, I----
    Mr. Benishek.--do you have input to that process?
    Mr. Guenther. I understand that issue goes back to the 
original Canada-U.S. Free Trade Agreement, which was a 
predecessor to NAFTA, and dairy was left out of that. And then 
they left dairy out of NAFTA again.
    And, it goes back to their code of system. They put up 
really tall walls around their dairy industry, and they are 
really trying to protect it, and they just are standing by 
their producers.
    Mr. Benishek. Well, Mr. Stallman, what does the input that 
the industry has, towards the negotiations, with the 
Administration given negotiating this trade authority, right, 
how do they know your interest? What is the communication 
process there?
    Mr. Stallman. Well, there are a variety of ways, and I am 
going to just speak about what we do in Farm Bureau----
    Mr. Benishek. Okay.
    Mr. Stallman.--because our colleagues in the other 
commodity groups do the same thing. There are trade advisory 
committees that advise our negotiators directly. We, as well as 
our colleagues, have very direct discussions and consultations, 
and----
    Mr. Benishek. Does this happen in real-time?
    Mr. Stallman. Yes.
    Mr. Benishek. Okay.
    Mr. Stallman. Real-time. There are those of us who have 
security clearances, we get real-time phone calls from our 
negotiators if issues are coming up that they want to have 
input on. We provide input ahead of time about the things that 
we would like to see. So I feel like we have a great deal of 
input.
    Mr. Benishek. Well, Michigan not only has a great 
agriculture industry, it has an automotive industry as well. 
You were talking about Japan a little bit, and I want to see 
our stuff being able to be sold in Japan, our ag stuff, but 
also our car stuff. So it concerns me that there is--talking 
about one sector or the other maybe having favorability in the 
agreement. I want to support an agreement because I believe in 
free trade, but I want to have a fair deal too. So I am just 
trying to find out how this all works better so I can support 
both those industries in my state, and not have one agree to 
one and then ditch the other, like what happened with the milk 
guys. So do we all have input to that? Anybody familiar with 
any of these agreements personally?
    Dr. Hill. I would say that everybody has the opportunity 
for input. Some organizations, some groups are more active than 
others. We have been very active. The pork industry has been 
very active.
    I don't know if you are aware but in your state, they just 
announced that there is going to be a new packing plant. I am 
not sure if it is in your district or not, but it is partially 
owned by producers, and they will slaughtering pigs and they 
will want to export product from that facility in the 
international market.
    The Chairman [presiding.] The gentleman's time has expired.
    Mr. Costa, for 5 minutes.
    Mr. Costa. Thank you very much, Mr. Chairman. And I thank 
Representative Kuster for allowing me go as I have an 
appointment I need to go to.
    Gentlemen, I appreciate your testimony, and these two trade 
agreements both with our Asian trading partners and the 
Europeans are both very important to the country as a whole, 
but also to American agriculture. A lot of detail, not a lot of 
time to ask questions. I will submit some later on, and I would 
hope to get a written response. We have both the tariff and the 
non-tariff barriers that we are dealing with in agriculture. I 
would like to quickly ask each of you which do you think are of 
greatest concern to you, the tariff or the non-tariff barriers, 
as it relates to agriculture? And I know there are two 
different sets of negotiations going on.
    Mr. Stallman. I think it depends on the market. That varies 
by market.
    Mr. Costa. Right, and commodity.
    Mr. Stallman. Yes, and commodity. In general, we knew that 
when the Uruguay Round was completed, and there were reductions 
in tariffs, everyone suspected that the non-tariff barriers 
would rise to the forefront as being some of the strongest 
impediments to increased imports, and that has happened. I 
would suggest that the EU at this point, in terms of non-
scientific-based trade barriers, is probably one of the main 
struggles that we face in agriculture----
    Mr. Costa. Right. And we are----
    Mr. Stallman.--and as tariff----
    Mr. Costa. And we are stressing best use of science. They 
have made some progress on GMOs. Obviously, we are still having 
difficulty with poultry, as an example, but yet they use it on 
fresh fruit and vegetable products, which is inconsistent, I 
think. And then, of course, the naming rights which are--I love 
parmesan, but I mean whether parmesan is made in California or 
whether it is made in Italy, it is still parmesan. I mean that 
is like name branding pizza, seems to me. But these are issues 
we have to work for.
    Would some of the three of you like to make a comment?
    Dr. Hill. Well, I would say that removing the tariffs or 
lowering tariffs is probably key to getting into those markets, 
but the SPS issues are equally important, and those are what 
come back to haunt us later, and that is why the SPS chapter in 
TPP is so important because it will strengthen the enforcement.
    Mr. Costa. Mr. Stallman said he thought they were getting 
good access in this process. How about yourself? In terms of--
--
    Dr. Hill. Well, we have had----
    Mr. Costa.--negotiations.
    Dr. Hill. We have had very good input. We have worked 
closely with the----
    Mr. Costa. Go ahead.
    Dr. Hill.--TPA--or the----
    Mr. Costa. Mr. Kappelman, because of my time.
    Mr. Kappelman. Yes. So I am going to say that, first of 
all, for us with TPP access, increased TRQs with Canada and 
Japan or lower tariff, and the non-trade barriers.
    Mr. Costa. Well, and some of our trading partners like to 
play it both ways, as you know.
    Mr. Kappelman. Right, yes. So we have to be ready for both.
    Mr. Costa. Yes. Mr. Guenther?
    Mr. Guenther. As tariffs continue to come down on fresh 
fruits and vegetables, the non-tariff trade barriers are the 
ones that are probably most critical to success of equilibrium 
of trade for fresh fruits and vegetables.
    Mr. Costa. Do any of you care to comment on the fact that 
some of the opposition, obviously, is coming from the area of 
Trade Promotion Authority, when you look at the history, I 
don't know how we pass a major trade agreement unless we have 
some version of Trade Promotion Authority. What is your view on 
that? I mean do you think we could have these two trade 
agreements with, I don't know, shall we say an open rule on the 
House floor, but I mean give me your thoughts.
    Mr. Stallman. I think it would be virtually impossible to 
complete and sign off on trade agreements without trade 
promotion.
    Mr. Costa. Yes.
    Dr. Hill. I would agree.
    Mr. Kappelman. Yes, also.
    Mr. Guenther. Yes.
    Mr. Costa. Dr. Hill, do you have any further points you 
would like to make on the issue of the geographical indicator 
issues?
    Dr. Hill. Of the what issues?
    Mr. Costa. Geographical indicator issues like parmesan like 
I mentioned a moment ago
    Dr. Hill. No.
    Mr. Costa. Okay. Mr. Guenther, beyond the various Federal 
programs that you mentioned in your testimony, obviously, 
specialty crops are not only big in California but elsewhere 
throughout the country. Are there other things that you think 
we should be looking at as it relates to these negotiations 
that not only for California but for other states that are 
engaged in your products, that we can pursue?
    Mr. Guenther. Well, making sure that we have increased 
access, you are talking about 300 different commodities grown 
here in the United States.
    Mr. Costa. Right.
    Mr. Guenther. And it is very difficult to balance out all 
that when you are talking about trade agreements, so that is 
why we think TPA is a very important component or tool for the 
Congress. But what I would say in terms of that is that we need 
to make sure that these trade barriers, I continue to go back 
to that, we have a fair, good, scientific and expeditious 
process when these come up that is consistent, because that is 
what they are getting when they come here to U.S.
    Mr. Costa. All right.
    My time has expired, Mr. Chairman. Thank you very much. The 
question I am going to send to you is what happens if we don't 
have a trade agreement, i.e., the status quo? I think we need 
to look at that as well. Thank you.
    The Chairman. The gentleman's time has expired.
    Mr. Newhouse, for 5 minutes.
    Mr. Newhouse. Thank you, Mr. Chairman. Thank you all four 
for being here this morning.
    I am from Washington State, one of the most trade-reliant 
states in the country, so this is a very important topic for me 
and my producers in Washington.
    I would first like to direct a question to Mr. Stallman, if 
I may. You all are well aware, those of us in the Pacific 
Northwest, all along the West Coast experienced significant 
damage due to the West Coast ports labor dispute, significant 
market shares have been lost by our farmers because we couldn't 
get access to those markets. Could you perhaps discuss some 
opportunities that TPP might help us in reclaiming those 
markets?
    Mr. Stallman. Well, I believe it would just on the general 
principle that we have more opportunity if we complete a 
successful TPP. With more opportunity, that should increase the 
trade flows into those markets, and should help us recapture 
some. I mean the fundamental issue with the transportation was 
there was just a delay and a shut off of the transportation of 
those products, to the extent the countries went to other 
sources. I still think that being as competitive as we are in 
the U.S., we can get them back. It is not a desirable 
situation, I might add, but if we work at it, we can get those 
back. We just don't need any more shutdowns like that.
    Mr. Newhouse. To follow up on that, do you think programs 
such as MAP, Market Access Program, foreign market development 
under a TPP agreement, would those be useful tools?
    Mr. Stallman. I think they continue to be useful. I am not 
sure, depending on what the outcome of the TPP agreement would 
be in terms of opening up markets, what that would mean for 
those specific programs, but those specific programs have been 
very instrumental in improving our exports over the years.
    Mr. Newhouse. Okay. Good.
    Mr. Guenther. I am sorry. I was going to just interject on 
this as well. When you look at the cost of $1.7 billion in lost 
agriculture sales exports out of this country, certainly a TPP 
is going to help bring back some of that business, because I 
know in the fruit and vegetable world, we are seeing losses in 
customer confidence, in the ability to export because of what 
happened since October and March.
    Mr. Newhouse. Actually, Mr. Guenther, I was going to turn 
to you next: speaking about specialty crops, so that is a good 
segue. My state produces a lot of them; 300 different crops 
from the State of Washington, and fresh fruits, vegetables, 
apples, cherries, hops, you can name it, we can do it. Could 
you maybe discuss specifically some of the opportunities in 
some of those crops, what the trade agreement might present for 
growers?
    Mr. Guenther. Well, in the apples and cherries and those 
types of tree fruits, it has a great advantage and opportunity 
to have increased access. They are already doing a fair amount 
of exports over there, but certainly this will be helpful in 
those areas as well.
    Mr. Newhouse. Mr. Kappelman, welcome. We talked a lot about 
Japan and Canada, as it relates to dairy products, so if you 
were able to, what instructions would you give our trade 
delegation as it relates to getting milk products into these 
countries?
    Mr. Kappelman. Well, actually, I sit on the Ag Policy 
Advisory Committee for the Administration, and my coaching all 
along has been don't let dairy lag, because we have in the 
past.
    Nations are very protective of their milk supply. It is one 
of the staples that----
    Mr. Newhouse. Yes.
    Mr. Kappelman.--nations want to protect, and I think that 
it is just that, for us as an industry that was protectionist, 
we found that opening the door a little bit was okay. The water 
was fine. And that would be my message to Canada if I were a 
negotiator, that you need to open the door a little bit because 
the water will be fine.
    Mr. Newhouse. Okay. All right.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    The Chairman. The gentleman yields back.
    Ms. Kuster, 5 minutes.
    Ms. Kuster. Thank you, Mr. Chairman. And thank you all of 
you. This is an important issue facing all of us in the 
Congress, and I really appreciate your time.
    I want to direct my question to Mr. Kappelman. I appreciate 
the work that you do on behalf of the nation's dairy farmers. 
New Hampshire and New England are home to many small family-run 
dairy operations right in my district that are vulnerable to 
price fluctuations.
    Mr. Kappelman. Yes.
    Mr. Kuster. And one concern that I have about the TPP is 
the impact on increased foreign dairy imports that we have been 
talking about this morning on these small dairy farmers. So 
could you please elaborate further on the challenges posed to 
our American dairy farmers from the New Zealand exports, and 
the you talked about the opportunities in dairy, Japan and 
Canada, and just how we might balance this in terms of what the 
impact could be and, in particular, we are talking about the 
TPP, I am trying to figure out the impact here in northern New 
England----
    Mr. Kappelman. Right.
    Ms. Kuster.--and so if you can give a sense on that, it 
would be very helpful.
    Mr. Kappelman. Well, there are a couple of--thank you for 
the question, by the way. And there are some thing, because I 
represent, as a Land O' Lakes Board member, I represent a lot 
of family-sized operations----
    Ms. Kuster. Yes.
    Mr. Kappelman.--family-sized from 30 cows to thousands of 
cows, and first of all, I want to thank Congress for passing a 
farm bill where we have a margin protection program, an 
insurance program that helps guarantee in times of--because 
what we are seeing now is that we have seen a precipitous drop 
in milk prices over the last 4 months, 40 percent drop. Now, 
they were at all-time highs, and we are falling back into a low 
range, so we need a safety net, and we appreciate that.
    Opening the markets really has done a lot of things for us, 
and getting rid of our price support programs. We are creating 
new products in the industry that the world wants. We used to 
produce products that we could sell to the government if we had 
to.
    Ms. Kuster. Yes.
    Mr. Kappelman. So if everything went bad all at once, we 
could sell butter, we could sell powder, we could sell cheddar. 
Well, the world doesn't buy 80 percent butter, they buy 82 
percent fat butter. They don't buy nonfat dry milk, they buy 
skimmed milk powder, and they don't generally buy cheddar, 
although we did sell some cheddar to England, which is kind of 
interesting.
    Ms. Kuster. Well done.
    Mr. Kappelman. Yes. Not a lot but we got it done. But they 
sell a lot of Gouda and----
    Ms. Kuster. Yes.
    Mr. Kappelman.--other products. So by moving to a market-
oriented system, we are now creating products that the world 
wants, and we are now trading some of those products. We are 
also developing a great artisan market for a lot of--just like 
the microbrews have opened up the brewing industry, same thing 
is happening in cheeses.
    Ms. Kuster. We are seeing some great cheese in New 
Hampshire, and it is all small, small operators.
    Mr. Kappelman. And that is going to do a couple of things. 
First of all, I have friends in Wisconsin who produce farmstead 
cheese and are exporting it. But it also keeps some of those 
artisan cheeses from coming in from Europe. When you go to the 
dairy case now in the supermarket, you see a lot of American 
artisan cheeses.
    Ms. Kuster. Yes.
    Mr. Kappelman. You don't have to just buy cheddar to 
mozzarella. We have a lot of opportunities now.
    Ms. Kuster. That is great. That is very, very helpful. 
Thank you very much.
    And then this is just a general question for the group, one 
concern that I have heard from many of my constituents is that, 
in the past, the Administration has not always been aggressive 
enough in enforcing trade agreements, and I wouldn't single out 
this Administration; I would say Administrations generally, 
from hardwood forest products, another big issue in my 
district, to aluminum extrusions. China and other countries 
have unfairly subsidized their exports, harming manufacturers 
in my state. What steps should be taken to better enforce our 
trade agreements and hold our trade partners accountable for 
violations so that we can better protect American agricultural 
producers and manufacturers? I just would open this up, maybe 
if you just want to go left to right, or my left to right, and 
that would be great if you could start.
    Mr. Stallman. Well, as I referenced earlier, the first 
thing we need to do in trade agreements is be sure that we have 
enforcement provisions that are transparent, that are timely, 
that you can move forward with to address these situations.
    We will have a lot of issues with China, and one of the 
moves to get them into the WTO was to make them subject to a 
lot of the world trading rules that exist. We probably can 
always do better with enforcement, but it is not always easy 
when you file cases, it is not always easy to win cases and it 
takes a long time, but we continue to urge this Administration, 
and past Administrations, to do as much as they can to enforce 
trade agreements.
    Ms. Kuster. Thank you.
    And my time is up so we won't have the opportunity. Thank 
you very much.
    The Chairman. The gentlelady yields back.
    Mr. Davis, for 5 minutes.
    Mr. Davis. Thank you, Mr. Chairman. Thank you, panelists.
    I just wanted to address a few things about my home State 
of Illinois. And, Mr. Kappelman, do you see me behind Mr. 
Rouzer? Okay, perfect. He is a great block here. Illinois is my 
home state, and is the number one soybean producer in the 
nation, and we are the number two corn-producing state. Forty-
four percent of the grain produced in Illinois is for exports. 
Trade is crucial to my district. My state ranks third in ag 
exports with $8.2 billion in exports. The Farm Progress Show, I 
will invite you all there, is going to be held September 1, 2 
and 3, Decatur, Illinois. I would love to be able to have you 
there, along with the gentleman sitting behind me, whom I 
invited yesterday.
    Obviously, the issues you have been addressing are 
extremely important to my district, but also extremely 
important to this country. And several of you commented in your 
written statements about the multiplier effect that exports 
have, specifically, on rural communities. Can you highlight 
some of those examples? I will start with Mr. Guenther there 
since he has had to see me more so than the rest of you lately.
    Mr. Guenther. I think that when you look at how many jobs 
that we produce in terms of exports, two states that are very 
important, critical to fruits and vegetables, for instance, is 
California. They exported nearly $20 billion in 2013, which 
supports almost 150,000 jobs. And then another top-producing 
state is Florida, where they export nearly $4.5 billion in 
2013, which supports over 33,000 jobs. So when you look at the 
export opportunities and what they mean to the agriculture 
community, the fruit and vegetable community in particular, I 
mean it is an important tool in the toolbox. And you look at, 
in terms of our risk management portfolio, and what things we 
have and don't have based on farm bills and exports is a 
critical part of our business model.
    Mr. Davis. I mean it is important to remember what you are 
saying is you are not growing fruits and vegetables in urban 
areas. These are rural communities, and the ag sector is such 
an important and vital part of our rural communities that I 
serve.
    Mr. Guenther. Yes, sir.
    Mr. Davis. Mr. Kappelman?
    Mr. Kappelman. Yes. Multiplier effect for dairy is nothing 
short of miraculous. First of all, our growth in our industry 
will mostly be exported. We are growing our domestic 
consumption, but a lot of it is going overseas. And that 
multiplier effect of, basically, for economic activity, 2.75, 
so every dollar of export dairy, we are generating $2.75 of 
economic activity in the U.S., but bigger than that is the 
jobs. The amount of dairy exports we have grown over the last 
15 years, 140,000 incremental U.S. jobs. And we are not done 
growing yet. This industry can grow if we are given the tools 
to export.
    Mr. Davis. Thank you. Thank you, sir.
    Dr. Hill?
    Dr. Hill. I think the best way I can answer your question 
is to use my own farming operation as an example. I have a 
relatively small farm. We have 350 sows and we farm about 3,000 
acres, but this operation has three full-time people and a 
couple of part-time people. I don't write checks to any of 
those, my accountant does that, but I have enough Scotch in me 
that I still want to write the checks to everybody else, so I 
do that. And I write about 40 checks a month, and those checks 
go to the local hardware stores in a town of 5,000, a hardware 
store in a town of about 300 people, welding shop, seed, 
fertilizer, I do business with a local co-op. Those are the 
people that are out there that I do business with, and they are 
all in the rural area. And in order for us to maintain our 
market, we have to rely on exports, and that is why I keep 
going back to the fact that we need TPP, we are not going to 
get TPP if we don't get TPA. We have to have TPA.
    Mr. Davis. Well, thank you.
    Now, Mr. Stallman.
    Mr. Stallman. Just a couple of numbers. First, every 
additional $1 billion in ag exports generates 7,300 jobs. Every 
dollar in additional ag exports generates $1.27 worth of 
additional economic activity. I mean you have the processing, 
packaging, transportation sector. It boggles my mind that there 
are entities and groups of workers in this country who oppose 
trade agreements, when these same trade agreements are going to 
create jobs in transportation and for port workers. I don't 
understand it, but it happens.
    Mr. Davis. Well, thank you all very much. It is a very 
important issue being addressed today.
    And thank you, Mr. Chairman. My time has expired.
    The Chairman. The gentleman's time has expired.
    Mr. Yoho, for 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman. Gentlemen, thank you for 
being here, and I look forward to moving forward with TPA and 
TPP as long as it is in the best interest of America. As we 
move forward, we are all for balance and fair trade, and being 
who I am, a Republican and a capitalist and all that, we just 
hope our deal is a little bit better for us. I am okay with 
that. But again, balance and fair trade, because as you brought 
up, Dr. Hill, everything you do, the jobs it creates, and as 
you brought up, every job or every time we export, it creates 
more jobs here in America. And as we move forward, what we saw 
in these multinational agreements, like with NAFTA and what 
happened on the Sugar Program and how it paid off, that we 
prevent those type of trade situations where it cost the 
American taxpayers $250 million, and that we have in place a 
way to recoup those losses, and that we can do that. And as we 
move forward with TPP, how do you see that working to where we 
have those negotiations, if somebody violates that, is there a 
way to resolve that without the WTO? Can there be an agreement 
within the trade agreement? We will start with you, Mr. 
Stallman.
    Mr. Stallman. Yes. I mean it is anticipate that the TPP 
agreement would have specific dispute settlement processes, 
enforcement mechanisms under that agreement itself. The 
countries still fall under, in general, the rules of the WTO 
for those that are WTO members, but we should have a specific 
set of enforcement mechanisms for the TPP.
    Mr. Yoho. All right. Dr. Hill?
    Dr. Hill. Yes, I don't think we can foresee every pitfall 
that occurs, but if it is a major problem, then we have to take 
it to the WTO. We have to enforce our rights, and some think 
that maybe we are not as aggressive enough there. Probably 
others think that maybe we are too aggressive. I am not sure, 
but that is what we have to do.
    Mr. Yoho. Well, again, when we negotiate these, and when 
there is a violation, we need to be forthright and forthcoming, 
and we need to do it quick. You do need to stand strong, 
because you are talking about, not just the trade imbalance, 
but you are also talking national security and what is best for 
America. And it is time we take a strong stand on that.
    Mr. Kappelman?
    Mr. Kappelman. Yes, I agree totally with my fellow 
testifiers here.
    Mr. Guenther. I mean, yes----
    Mr. Yoho. Same thing.
    Mr. Guenther.--I would agree with everything.
    Mr. Yoho. Okay. And then one of the things that we hear a 
lot about is the GMO and the restrictions put on American 
products, whether it is the GMO or the EPA, like the 
neonicotinoids that are used, and the restrictions put on our 
products. What are your feelings on that in this negotiation? 
Can we negotiate strongly on those to where we can put some 
kind of a pressure on the EU to accept those products with the 
research and development that have gone into those products, 
whether it is the neonicotinoids on pesticides, or the 
genetically-modified products that we produce that have gone 
through rigorous testing, and before they get released, they 
have already gone through that testing and they have years, and 
millions if not billions of dollars into that. How can we work 
with that negotiation where it is based on science and not on, 
I don't know if this is the right word, but environmental 
McCarthyism maybe, to where they are attacking this because it 
is this ``GMO'' with quotes around it.
    Dr. Hill. Well, in the case of TPP, a lot of that has 
occurred, and we have made significant progress. With TTIP, I 
am not as convinced that we will ever get the Europeans to back 
off the issues, as you pointed out, I don't think they have 
negotiated in good faith to this point. That is why I am 
skeptical that TTIP will see the light of day, at least in the 
near future. TPP though can.
    Mr. Yoho. Okay. Anybody else have a different opinion or 
comment?
    Mr. Stallman. No, it is not an opinion, we just have to 
address those in the agreements themselves. I would concur that 
TTIP is going to be much more problematic in that regard. I get 
to meet with the negotiators from other countries, including 
the EU negotiators that come over and tell me all the things 
they are not going to be able to do in this negotiation related 
to agriculture, and I point out to them, well, if there is not 
going to be anything changed, then why should we be supportive 
of it?
    Mr. Yoho. You know, and I like that because don't tell me 
what you can't do, tell me what we can do so we can do that. 
And I appreciate you being forthright on that, and I thank you 
for your time.
    And, Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back.
    Mr. Rouzer for 5 minutes.
    Mr. Rouzer. Thank you, Mr. Chairman. I think maybe perhaps 
I am the last Member. Maybe one more. Anyhow, here at the very 
end, I can assure you the record is going to show that all of 
you are in support of TPA and trade agreements in general.
    I want to focus my line of questions, and just a couple of 
them, to Dr. Hill. I have a very strong pork producing district 
in southeastern North Carolina. Obviously, pork is a critically 
important commodity to the State of North Carolina and to the 
country as a whole. And it occurs to me that we have had a 
significant amount of growth in exports probably since the late 
1990s directly related to the opening of new markets, and I 
thought maybe it might be instructive for the Committee and 
others in the public to have a good sense of that history. Can 
you provide that?
    Dr. Hill. Yes. Well, up until about 1992, 1993, the United 
States was a net importer of pork. And as we developed these 
free trade agreements and started opening markets, we have 
successfully increased the amount of pork that we have exported 
every year but 1, year over year. And last year volume was down 
slightly. Value was higher than 2013. But we export 
approximately 24 percent of all the muscle meat, and another 
roughly three percent of variety meats, which would include the 
offal and everything that I mentioned before, which that 
variety meat adds significantly to the value of the pig that 
eventually goes back to the producer. And as you said, North 
Carolina is, of course, they have the largest number of sows, 
and it is obviously very important. And now with Smithfield 
having that inroad into China, it is extremely important for 
them. And, China is one of those countries that we think 
eventually may want to join the TPP.
    Mr. Rouzer. We have been told that TPP will create 
significant business opportunities across the board for the 
pork industry, in particular for the State of North Carolina. 
Has there been any economic analysis in terms of jobs created? 
My district is one of those districts that has an above average 
unemployment rate, and the pork industry is critical to my 
district, so any new jobs we can create as it relates to this 
trade agreement, I would be most interested in.
    Dr. Hill. Yes, there absolutely has. Dr. Dermot Hayes, who 
is an ag economist at Iowa State University has done a study, 
and his predictions are that if we implement TPP, that it will 
create, just in the pork sector, another 10,000 full-time jobs.
    Mr. Rouzer. Any other comments that you would like to have 
in the last 1 minute and 49 seconds? This is your opportunity.
    Dr. Hill. We need TPA.
    Mr. Rouzer. I thought you were going to say that.
    I yield back my time, Mr. Chairman.
    The Chairman. The gentleman yields back.
    G.T. Thompson for 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman. More than happy to 
play cleanup here. Thank you for hosting this hearing. 
Gentlemen, great to see you. Thanks for being here. I 
appreciate what you do here in the hearing room and what you do 
back home.
    Dr. Hill, I wanted to follow up on what my colleague was 
talking about. Would you agree then that the hog industry, 
where it was, that the fact of responding to export demand and 
opportunity in the 1990's really has stimulated growth in the 
hog industry, and quite frankly, created jobs?
    Dr. Hill. Yes, it absolutely has, and of course, it not 
only helps the pork industry but it helps the corn producers, 
it helps the soybean producers, and helping all.
    Mr. Thompson. I think that is a great point that is missed, 
because sometimes we think about trade, about just meeting the 
needs of current workers, current agricultural products, 
current farmers, ranchers, and the fact is that it seems like 
that these trade agreements have--really have stimulated future 
growth as well.
    You had referenced Dr. Hayes from the Iowa State University 
in your testimony, and you made reference to him with something 
else he had said in the previous line of questioning. The 
comments about the TPP, Dr. Hayes said comments that the TPP 
may be the most important commercial opportunity ever for U.S. 
pork producers. Can you elaborate on that?
    Dr. Hill. Well, the countries that are represented, the 12 
countries represented in TPP, account for about 40 percent of 
the global market, and so it is going to open up a lot of 
opportunities. We exported about $2 billion of product to 
Japan. We don't know exactly, it depends on what happens with 
the tariffs and everything, but we expect that that market can 
be significantly increased. We expect Vietnam and Australia 
also, and if China comes in eventually we look for China to be 
a huge market. China, of course, produces more pork than just 
about the rest of the world, but they have an increasing 
population and developing a middle-class that wants that 
protein.
    Mr. Thompson. Right.
    Now, Mr. Kappelman, keeping agriculture products moving now 
demands not only work by our trade agencies, such as USTR and 
FAS, but also regulators, given that often countries are 
looking for assurances about the safety of the products we are 
shipping. Now, for your business and the dairy business 
specifically, is this a process that works, and are our 
regulators sufficiently prioritizing trade issues?
    Mr. Kappelman. Thank you for the question. Because in dairy 
the rapid growth and trade is new, we are not staffed up. New, 
I say 10 years old, right. So we have had 10 years to figure 
this out, but we are not staffed up to meet the needs that we 
have to step up to certify our products to some of these 
countries. For instance, with Chile, we had the agreement made 
but then they said, ``Okay, great, we need to get your plants 
certified.'' And to the FDA, it is like, well, we are not 
staffed for that yet. So that whole FDA staffing, and for us it 
is--a lot of it is plant certification that we are certified to 
export, but we are not there yet.
    Mr. Thompson. Yes. And and I apologize, I was coming in 
late, but I heard this being asked to another Member of the 
panel, something similar, and Mr. Kappelman, I wanted to see if 
you can respond to this. Can you please discuss the importance 
to U.S. agriculture of preventing restrictions on the use of 
the generic food names?
    Mr. Kappelman. That is an interesting concept. Of course, 
TTIP and Europe is front and center in that, and they think 
that a lot of their products they should have rights to those 
products. And unfortunately for them, a lot of our cheese 
makers came from Europe and we're making the cheeses that they 
made three or four generations ago, and we have not only been 
manufacturing them, we have been promoting them, we have been 
marketing them, we have been building the market for those 
categories of cheese. So we have been building the global 
market, and now they want to take that back. Well, I don't 
think Parma can make enough parmesan to feed the world. So we 
absolutely need to stand firm in those GIs.
    Mr. Thompson. Very good.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Gentlemen, thank you for coming this morning and visiting 
with us, and getting a couple of things on the record: your 
clear support for TPA, and why that is necessary in order to 
get these broader agreements done. It is important that you 
have access to our negotiators, as well as negotiators on the 
other side of these deals so that everybody understand what is 
in the best interests of the entire agreement, and that you all 
reserve the right to support or not support the ultimate trade 
agreements based on the impact that you see on not only your 
particular industry, but also the broader impacts. I would be 
remiss if I didn't recognize that today is National Agriculture 
Day, and so having this hearing on a topic so vital to the 
agricultural economy is serendipitous. I would like to say I 
planned months ago that we would have trade discussed on 
National Agriculture Day, especially given the level of 
exports, the jobs created, the wealth created, and the 
improvement in the U.S. economy that is associated with 
exporting things that we grow that other people want to eat or 
wear.
    So with that, under the rules of the Committee, the record 
of today's hearing will remain open for 10 calendar days to 
receive additional materials and supplemental written responses 
from the witnesses to any questions posed by a Member.
    This hearing of the Committee on Agriculture is adjourned. 
Thank you, gentlemen.
    [Whereupon, at 11:41 a.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
 Submitted Comment by Hon. Michelle Lujan Grisham, a Representative in 
 Congress from New Mexico; on Behalf of David Sanchez, Vice President, 
               Northern New Mexico Stockmen's Association
    The following comments were sent to our office by the Northern New 
Mexico Stockmen's Association (NNMSA) on March 13, 2015. The attached 
comments detail NNMSA's concerns regarding USDA's proposed rule to 
allow livestock imports from Brazil.
Department of Agriculture
Animal and Plant Health Inspection Service
9 CFR Part 94
[Docket No. APHIS-2009-0017]
RIN 0579-AD41
Importation of Beef From a Region in Brazil
    [FR Doc. 2013-30464 Filed 12-18-13; 8:45 a.m.]
    Northern New Mexico Stockman's Association, represent approximately 
twenty thousand ranchers and farmers in New Mexico and Colorado. The 
majority of our producers are minorities, Hispanic and Native American 
(Indians). On behalf of our minority families are comments are the 
following:

  1.  We do not support USDA in their proposed rule to allow the import 
            of ``Brazil Beef'' into the United States.

  2.  We are very concerned about the health risks this process would 
            impose on our people and livestock industry.

  3.  We believe this USDA Rule and proposed Brazil Beef import would 
            damage the economy of our rural communities and our 
            minority producers ability to sustain themselves.

  4.  We are very disappointed that USDA and the current Administration 
            would propose and support the Brazil Beef Import.

  5.  We believe that the USDA proposed Rule and effort is a violation 
            of our ``Civil Rights'' as minority livestock producers 
            socially and economically.

  6.  We are very concerned that USDA is not protecting our rights to 
            fair trade for minority producers and the ability to better 
            themselves.

  7.  American Beef is Safe and that is what we demand for our families 
            and foremost our children ``in our communities and across 
            the nation''.

    Note: I'm the Vice President of NNMSA.
                                 ______
                                 
  Supplementary Material Submitted by Robert L. Guenther, Senior Vice 
     President for Public Policy, United Fresh Produce Association
March 25, 2015

  Hon. K. Michael Conaway,
  Chairman,
  House Committee on Agriculture
  Washington, D.C.;

  Hon. Collin C. Peterson,
  Ranking Minority Member,
  House Committee on Agriculture
  Washington, D.C.

    Dear Chairman Conaway and Ranking Member Peterson:

    On behalf of United Fresh Produce Association, I would like to 
thank you for allowing me the opportunity to share United Fresh's 
perspective on the importance of trade to agriculture during the 
Agriculture Committee hearing on March 18. In addition to my prepared 
statement, I would also like to submit these comments, which elaborate 
on the potential benefits of trade policies and agreements currently 
under discussion to the fruit and vegetable sector, for the hearing 
record.
    As Members of the Committee are well aware, there is ongoing debate 
within Congress and among interested stakeholders about granting Trade 
Promotion Authority (TPA) to the President. This debate is happening at 
the same time that the United States is negotiating two key trade 
agreements. First, The Trans-Pacific Partnership (TPP) is intended to 
open up trade opportunities in the Asia-Pacific region. Secondly, the 
Transatlantic Trade and Investment Partnership (TTIP) would establish a 
free-trade area between the United States and the European Union (EU). 
The fruit and vegetable sector does have a significant interest in the 
passage and implementation of each of these proposals.
    As I mentioned in my written statement and oral testimony, export 
and import markets are both crucial to our members' ability to succeed 
and meet year-round consumer demand for nutritious fresh fruits and 
vegetables. Focusing on exports, an indication of how fruit and 
vegetable exports could increase through free trade agreements (FTA) is 
shown through recent information from USDA. According to the 
Department, U.S. imports of horticultural products, including fresh 
fruits and vegetables, from current FTA partners were twice the level 
of exports to those same countries in 2009-2011. While our written 
testimony and Committee discussion focused a lot of attention on non-
tariff trade barriers, another major impediment that has led to this 
imbalance is the high tariffs placed by TTP and TTIP countries on 
exports of fresh fruits and vegetables from the United States.
    For example, U.S. exports of fresh fruits to the TPP partners of 
Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, 
Peru Singapore and Vietnam face tariffs as high as 40 percent. Under 
the TPP, these tariffs would be cut, allowing for and increase to the 
current $3.1 billion in U.S. fresh fruits exports to the TPP region. 
Furthermore, exports of U.S. fresh vegetables to the TPP region face 
tariffs of up to 90 percent. Cuts to these tariffs as part of the TPP, 
would allow U.S. vegetable producers to grow the nearly $5 billion in 
fresh and processed vegetables currently exported to the TPP region. 
Similarly, the terms of TTIP seek to increase the $10 billion in 
agriculture commodities the United States currently exports to the 
European Union. United Fresh agrees with the Administration's assertion 
that this number can and should be higher.
    For top fruit and vegetable producing states represented on the 
Committee, the potential for growth in exports under trade agreements 
currently being negotiated is significant. For example, agriculture 
exports from Michigan generated nearly $2.8 billion in the most recent 
information from the Michigan Department of Agriculture and Rural 
Development, and fruit accounts for nearly $200 million of that amount. 
Among the top export markets for the state of Michigan are the TPP 
counties of Canada, Mexico and Japan. Under TPP, tariffs for top 
Michigan crops such as apples and cherries will be cut, thereby opening 
up key foreign markets even further, helping the state of Michigan 
reach their stated goal for 2015 of doubling agriculture exports. 
Similarly, countries such as Canada, Mexico and Japan are among the top 
five export markets for the state of North Carolina, which counts 
apples among its top producing crops. It should also be noted that USDA 
estimates that agriculture exports support nearly 26,800 jobs and 
28,200 jobs in Michigan and North Carolina, respectively, both on the 
farm and in related industries.
    During the hearing several Members raised the issue of non-tariff 
barriers to trade. While tariff levels are often an impediment to 
foreign market opportunities for fresh fruit and vegetable providers, 
non-tariff barriers can be just as detrimental. For fresh produce 
providers to be able to take full advantage of opportunities overseas, 
it essential that trade policies address non-tariff issues such as 
inputs, production, processing and mitigation. These measures can also 
include restrictive import and administrative procedures, bans on 
products from specific producing regions, and product and/or processing 
specifications, among others. Both TPP and TTIP seek the elimination of 
unwarranted, non-tariff measures that serve as trade barriers. United 
Fresh supports efforts to negotiate agreements that address non-tariff 
barriers in a way that is science-based, ensures product safety and 
also promotes opportunities for America's fresh produce producers.
    In conclusion, Mr. Chairman and Ranking Member Peterson, United 
Fresh believes that trade agreements such as TPP and TTIP hold great 
promise for not only ensuring continued opportunity and job growth here 
at home through imports but also to provide a level playing field for 
U.S. fruit and vegetable exports into key foreign markets. Furthermore, 
we would like to reiterate our support for the passage of Trade 
Promotion Authority to facilitate the expeditious approval of trade 
agreements. We believe that such actions will enhance the work done by 
America's fruit and vegetable producers to make the most of export and 
import opportunities that meet consumer demand and promote business 
growth. United Fresh stands ready to assist you in promoting sound 
trade policies that benefit America's agriculture sector.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Robert Guenther,
Senior Vice President, Public Policy,
United Fresh Produce Association.
                                 ______
                                 
Submitted Letter by Philip Ellis, President, National Cattlemen's Beef 
                              Association

 
 
 
Hon. K. Michael Conaway,             Hon. Collin C. Peterson,
Chairman,                            Ranking Minority Member,
House Committee on Agriculture       House Committee on Agriculture
Washington, D.C.;                    Washington, D.C.
 

Philip Ellis, President, National Cattlemen's Beef Association
Submission for the Record

    Chairman Conaway, Ranking Member Peterson, and Members of the 
Committee, on behalf of the U.S. beef industry, I thank you for holding 
this hearing on the importance of trade to U.S. agriculture. My name is 
Philip Ellis, and I am a cattleman from Chugwater, Wyoming. I am the 
President of the National Cattlemen's Beef Association (NCBA), the 
nation's oldest and largest trade association representing the U.S. 
beef industry and I am honored to share with you the pros and cons of 
trade that we have experienced as an industry over the years.
    Cattlemen and women support open markets, level playing fields, and 
science-based standards when it comes to international trade. We do not 
support trade based on politics and protectionism where governments, 
not consumers, determine demand. Simply put, when governments get in 
the business of picking winners and losers, everybody loses. The U.S. 
beef industry has been both the beneficiary and victim of trade policy 
and it is important that Congress and the White House get it right the 
first time.
    Beef demand around the world continues to grow at a strong and 
steady pace. In order to keep up with demand we rely on science and 
technology to assure our natural resources are efficiently used. We 
also rely on proper conservation practices to make sure our pasture and 
grazing lands remain healthy even in tough times like these. The 
judicious use of scientific interventions such as antibiotics, pest 
control, and growth promotants allow me and other producers to compete 
with beef producers across America and around the world for a growing 
consumer base that is hungry for the safe and delicious beef we 
produce. It is very important to me and many other ranching families 
that we do everything possible to ensure that the next generation will 
have the opportunity to continue providing high quality beef to 
consumers around the world. While government incentives for young and 
beginning producers may sound good in theory, the truth is nothing 
attracts workers like the promise of the almighty dollar. I believe 
that exports will help provide the real economic incentive needed to 
stem the tide of disappearing farmers and ranchers needed to continue 
providing safe and affordable food to a growing global consumer base.
    The elimination of tariff and non-tariff trade barriers is a top 
priority for the U.S. beef industry. I strongly encourage you to work 
with President Obama to craft current and future trade agreements based 
on free market, science-based principles that will resolve the limited 
market access we face due to tariff and non-tariff barriers. It is my 
hope that this information will highlight expanded trade opportunities 
as well as the barricades to trade that we continue to face in the U.S. 
beef industry.
Overview of U.S. Beef Industry and Exports
    According to the U.S. Department of Agriculture, the U.S. beef 
industry consists of nearly 915,000 cattle and calf operations with a 
national herd size of 89 million head of cattle, with 90 percent of cow 
herds consisting of less than 100 head (average is 44 cows per 
operation). In 2013, the U.S. beef industry generated $44 billion in 
farm gate receipts and the average American spent approximately $300 
per capita on U.S. beef products. Without question, our domestic market 
is our largest consumer base and the focus of most of our marketing 
campaigns. Americans love beef, and we enjoy a dominant share of the 
domestic market place. At the same time, international consumers are 
often willing to pay premiums for cuts and variety meats such as 
tongue, livers, short ribs, skirts, and stomachs that are not as 
valuable in the U.S. market.
    The U.S. beef industry has traditionally exported 10 to 15 percent 
of our products and we expect that percentage to rise as more consumers 
are exposed to U.S. beef in other countries. In 2014, foreign consumers 
purchased 1.2 million metric tons of U.S. beef and beef products at a 
total of $7.1 billion. In addition to beef and veal, we also export 
hides and skins, tallow, live cattle, semen, embryos, and even rendered 
cattle. If there's a market demand for any part of the animal we do our 
best to meet it. According to CattleFax, a global leader in beef 
industry research, analysis, and information, exports accounted for 
$350 per head of fed cattle in 2014. Beef and beef products are the 
largest segment of our export portfolio. According to the U.S. Meat 
Export Federation, our top five export markets in 2013 were: Japan 
($1.58 billion, 241,129 metric tons), Mexico ($1.17 billion, 242,566 
metric tons), Hong Kong ($1.15 billion, 154,420 metric tons), Canada 
($1.03 billion, 137,532 metric tons), and Korea ($847 million, 117,567 
metric tons).
U.S. Beef Industries Export Values
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Livestock Marketing Information Center I-N-70, 02/25/15.
          Data Source: USDA-FAS, Compiled & Analysis by LMIC.
Success Stories for U.S. Beef Trade
    Quite possibly one of the greatest success stories for the U.S. 
beef industry has been the North American Free Trade Agreement (NAFTA). 
In 1993, the pre-NAFTA level of U.S. beef exports to Mexico were 39,000 
tons valued at $116 million. As a result of NAFTA, Mexico eliminated 
its 15 percent tariff on live cattle slaughter, the 20 percent tariff 
on chilled beef and the 25 percent tariff on frozen beef. Fast forward 
to 2014--Mexico was our second largest export market, valued at over $1 
billion. With the announcement that Mexico lifted the 30 month age-
based restriction on U.S. beef products, we anticipate further growth 
in our exports to Mexico. Meanwhile, Canada has traditionally been our 
largest export market for U.S. beef, but finished fourth overall with a 
remarkable $1.03 billion in sales. Having two large export markets at 
our borders has greatly benefited the U.S. beef industry.
    Not only do we trade beef with Mexico and Canada, the live cattle 
trade is also a very lucrative business for all three nations. In 2014, 
we imported over one million head of cattle from Canada and over one 
million head of cattle from Mexico. Mexican-born and Canadian-born 
cattle are a critical component to the success of the U.S. beef 
industry, something on which U.S. cattlemen depend in order to 
supplement our herd shortage.
    Likewise, our trade agreements with other countries in the western 
hemisphere have proven to be very successful for the U.S. beef 
industry. After 10 years under the terms of the Central American Free 
Trade Agreement (DR-CAFTA) where we are experiencing the benefits of 
elimination of 15-40% tariffs over 15 years and the strengthening of 
SPS measures.
    Of course, we are very excited to see the growth and opportunities 
that have been created with the implementation of the free trade 
agreements with Korea, Colombia, and Panama. Korea is a top five market 
for U.S. beef exports and the 15 year phase out and elimination of the 
40 percent tariff on U.S. beef allows us to sell more U.S. beef to more 
Korean consumers. We currently enjoy an eight percent tariff rate 
advantage over Australia and Canada because Congress implemented our 
agreement before Australia and Canada. In recent years critics 
questioned whether the Korea FTA was beneficial to the beef industry 
because sales were not as high as the year before the FTA was 
implemented. One important fact they do not take into account is that 
prior to the implementation of the FTA, Korea was suffering from a 
massive shortage in their domestic livestock production due to animal 
health issues that led to a spike in beef imports. Domestic production 
in Korea has been recovering at a rapid pace, and even in spite of 
that, 2014 was a record year for beef sales in Korea at $874 million.
    While elimination of Korea's massive 40 percent tariff is 
important, equally as important are the strong sanitary and 
phytosanitary standards (SPS) in the Korea FTA. The Korea FTA's SPS 
agreement is considered the gold standard of SPS agreements and is 
something we want reflected in all future agreements. Similarly, the 
SPS agreements in the Colombia and Panama FTAs are also very strong.
    One market that has been beneficial for U.S. beef exports is Hong 
Kong. The cause of this increase in sales has not had as much to do 
with the removal of tariff barriers as the removal of a non-science 
based, age-based restriction on U.S. beef. In May 2013, the U.S. was 
designated as ``negligible risk status'' for bovine spongiform 
encephalopathy (BSE) by the World Organization for Animal Health (OIE). 
Under a previous agreement Hong Kong agreed to grant full market access 
(no more restriction on age) for U.S. beef. In 2008, Hong Kong 
purchased $43 million in U.S. beef. In 2014, that number grew to $1.15 
billion.
    Without question, one of the greatest developments for the U.S. 
beef industry was Japan lifting their age-based restriction on U.S. 
beef from 20 months to 30 months on February 1, 2013. Prior to that 
time Japanese protocol limited imports of beef from the U.S. to cattle 
slaughtered before they reached 21 months of age. The removal of that 
arbitrary trade barrier caused the sale of U.S. beef to climb from $4 
million in 2004, to $1.6 billion in 2014. Japanese consumers want U.S. 
beef, and the removal of the age-based restriction will further 
encourage our sales to grow.
Hindrances to U.S. Beef Trade
    Unfortunately we continue to face many unnecessary barriers from 
tariffs, tariff rate quotas, and non-science based non-tariff barriers. 
Many of these restrictions have been the result of government reaction 
to cases of BSE.
China
    China's market remains closed to U.S. beef since the 2003 discovery 
of a Canadian-born cow infected with BSE in the U.S. Since 2003, China 
has continuously used non-science based standards to ban imports of 
U.S. beef, a product that is recognized internationally as a safe 
product. Arbitrary guidelines not based on science have resulted in 
lost profits for U.S. beef exports across the globe. According to 
CattleFax, the U.S. beef industry lost nearly $22 billion in potential 
sales through 2010 due to BSE bans and restrictions around the world.
    The U.S. beef industry has taken great strides to open markets and 
promote U.S. beef in Asia. As the middle-class grows throughout Asia, 
consumers are switching to a protein-based diet. There are tremendous 
opportunities for beef, pork, and poultry in China, a place with a high 
population and a growing demand for protein. It has been estimated that 
U.S. beef sales in China could exceed $300 million annually if given 
access.
    U.S. beef isn't the only industry to suffer from these non-science 
based trade restrictions. On a larger scale, the elimination of China's 
tariffs and other trade restrictions could lead to an additional $3.9 
to $5.2 billion in U.S. agricultural exports to China, according to a 
study by U.S. International Trade Commission.
    One of the greatest hindrances for the U.S. beef industry has been 
China's reluctance to embrace internationally recognized science-based 
standards for beef such as those standards recommended by the World 
Organization for Animal Health (OIE) and the Codex Alimentarius 
(Codex).
    According to a March 2011 report by the United States International 
Trade Commission, U.S. and Chinese officials have been unable to reach 
an agreement on requirements for trade in a variety of beef products, 
owing to China's regulations related to BSE. In June 2006, China agreed 
to allow imports of boneless U.S. beef from cattle less than 30 months 
of age. However, approval was subject to a number of stipulations, many 
unrelated to BSE risk, and an agreement has not been reached.
    On May 29, 2013, the OIE upgraded the United States' designation 
for BSE from controlled-risk to negligible risk for BSE. The negligible 
BSE risk distinction applies to cattle and commodities from countries 
or zones that pose a negligible risk of transmitting the BSE agent as 
demonstrated by: (1) a risk assessment; (2) the appropriate level of 
BSE surveillance; (3) one of the following: no BSE cases, only imported 
BSE cases or indigenous BSE cases born no more recently than 11 years; 
(4) an existing education and reporting program; and (5) a feed ban 
that has been in place for at least 8 years if an indigenous or 
imported case or other risk factors exist.
    Negotiators were able to reach agreement on trade in several other 
bovine products that present a low risk of BSE (bovine semen and 
embryos), but were unable to reach an agreement on trade in beef 
tallow. Today, in order to export U.S. beef to China the product must 
meet all 22 requirements set by the Chinese government.
    It is unfortunate that China will import beef from other countries 
that have negligible risk status, such as Australia and New Zealand, 
and even from countries such as Canada that have controlled-risk 
status, a lesser status in the OIE scale of designations, but not from 
the U.S. NCBA encourages U.S. and Chinese negotiators to develop a beef 
protocol based on sound science and commercial feasibility instead of 
political interests.
    Another area of concern is China's opposition to the proper use of 
internationally-approved technologies, particularly beta agonists such 
as ractopamine. Beta agonists are fed to cattle (steers and market 
heifers) in feedlots during the last 28 to 42 days of the finishing 
period to safely increase carcass gain, feed efficiency and carcass 
leanness while maintaining beef's natural taste, tenderness and 
juiciness. The Codex Commission, the international food standards-
setting body recognized in the WTO-SPS Agreement, has established a set 
of Maximum Residue Levels (MRLs) widely accepted in international 
trade. On July 5, 2012, Codex adopted standards for maximum residue 
levels for ractopamine. The establishment of international standards 
for veterinary drugs like ractopamine is important since many countries 
rely on science based food standards to ensure that the food they are 
importing is safe. U.S. agricultural exporters and consumers worldwide 
benefit from the adoption of international standards for food safety. 
Unfortunately, China continues to find reasons to delay approval of 
technologies like ractopamine, instead of incorporating into their 
protocol the proven scientific standards of the international 
community. Other countries have changed their beef protocols in the 
wake of the Codex approval. NCBA encourages China to do the same. As 
the global population continues to grow, and as a result a growth in 
the demand for protein, food production must adapt through the use of 
safe technological advances that rely on fewer available natural 
resources.
Russia
    Prior to 2013, Russia was the fifth largest market for U.S. beef 
exports with Russian consumers purchasing more than $300 million of 
U.S. beef in 2012. Unfortunately, at the end of 2012 Russia closed its 
doors to beef from the United States, Canada, Mexico, and Brazil due to 
non-science based concerns over production technologies used in each of 
those countries. While the impact of unnecessarily closing a $300 
million market to U.S. beef has impacted our industry, this unfortunate 
move by the Russian government did not come as a surprise.
    On August 22, 2012, Russia officially joined the WTO. As part of 
Russia's accession agreement with the U.S., Russia agreed to expand 
market access for U.S. beef to 60,000 metric tons (frozen beef) and an 
unlimited supply of High Quality beef at a 15 percent tariff rate. Even 
though the U.S. beef industry raised concerns with our government over 
Russia's history of implementing market-disrupting non-science based 
trade barriers, the increase in available quota for U.S. beef was 
viewed as a promising move for U.S. beef producers and Russian 
consumers who continually purchased more U.S. beef year after year 
(2010: $152 million in annual sales/57,453 metric tons; 2011: $256 
million in annual sales/72,797 metric tons; 2012: $307 million in 
annual sales/80,408 metric tons).
    Prior to Russia joining the WTO, the U.S. beef industry had not 
been a target for Russia's non-science-based market closures suffered 
by other U.S. meat industries like pork and poultry. Russian consumers 
had not raised concerns about the safety of U.S. beef, nor had the 
Russian government. Even after Russia voted in opposition of the Codex 
Alimentarius' (Codex) establishment of a maximum residue level (MRL) 
for ractopamine, Russia continued to import record amounts of U.S. beef 
through 2012. It was not until the end of 2012, that Russia announced 
it would no longer accept beef and pork that was not certified as 
``ractopamine-free''. Unfortunately, Russia has yet to provide any 
science-based standards to justify this action and has provided little 
direction to the U.S. beef industry on how to meet their demands for 
ractopamine-free beef.
    Unfortunately, Russia continues to find reasons to delay approval 
of technologies like ractopamine instead of incorporating into their 
protocol the proven scientific standards of the international 
community. Other countries have changed their beef protocols in the 
wake of the Codex establishment of a MRL for ractopamine and NCBA 
encourages Russia to do the same.
Hindrances to U.S. Beef Trade Caused By U.S. Policy
    Unfortunately, there are some policies enacted that have managed to 
restrict the U.S. beef producer's ability to sell beef in some 
countries.
    One situation that is still fresh on our memories is the trade 
retaliation that resulted from the U.S. Government failing to enact a 
cross-border trucking program with Mexico. While the U.S. may have been 
the first country to implement carousel retaliation schemes, other 
countries have picked up on the idea and are becoming experts at 
innovating its implementation. Fortunately U.S. beef was not on the 
first retaliation list for Mexico during the trucking dispute, but we 
are very confident that we will be on the top of the list for both 
Mexico and Canada following the decision from the World Trade 
Organization (WTO) regarding the U.S. mandatory Country-of-Origin 
Labeling (COOL) program.
    The WTO has continuously ruled that the U.S. COOL program violates 
international trade laws and if the U.S. does not change its law Canada 
and Mexico will most likely be authorized to sue for relief against the 
U.S., most likely in the form of retaliatory tariffs. If the WTO rules 
against the U.S., then Mexico and Canada will start the process toward 
retaliation. Rest assured, U.S. beef and cattle will be at the top of 
the list for retaliatory tariffs, followed by a long list of other 
agricultural and manufactured goods. The only way to resolve this 
potential trade war is to repeal COOL and allow the beef industry to 
market our product competitively.
NCBA Supports Science-Based and Market-Driven Trade Opportunities
Trans-Pacific Partnership
    The Trans-Pacific Partnership (TPP) is an ambitious, 21st-Century 
trade agreement that includes Australia, Brunei Darussalam, Canada, 
Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, 
and the United States. NCBA believes that the TPP has the potential to 
open a number of export opportunities for U.S. beef and expand our 
presence in Asia. NCBA has been strong supporter of our government's 
efforts to push for tariff elimination and strong science-based 
standards among all TPP nations for as long as the U.S. has been part 
of TPP. We encourage our negotiators to remain vigilant and to continue 
to push the Japanese on beef access because the U.S. beef industry 
cannot afford to be handed a deal that resembles anything close to the 
terms given to the Australians. Under the Japan-Australia agreement, 
Japan will reduce its massive 38.5 percent tariff on frozen beef to 
19.5 percent over 18 years, and reduce the tariff on chilled beef from 
38.5 to 23.5 percent over 15 years.
    We have always supported our government and we appreciate the hard 
work of our negotiators, but NCBA's ultimate support for the TPP hinges 
on the terms of the deal. Make no mistake; the U.S. has been accused of 
taking similar action on sensitive products. And we know exactly what 
happens in this situation, beef always gets the short end of the stick.
NCBA Supports Renewal of Trade Promotion Authority
    NCBA supports the timely renewal of Trade Promotion Authority 
(TPA). Every United States President from Gerald Ford to George W. Bush 
has been able to negotiate under TPA, and this expired policy is long 
overdue for renewal. Opponents of free trade are throwing everything 
they can in front of TPA efforts in an attempt to derail future trade 
agreements from being finalized. Some of these groups have made claims 
that previous trade agreements are a prime example of why future trade 
agreements should not be allowed. They have used unsubstantiated 
arguments to support their false claims and have tried to convince the 
public that previous trade agreements are not delivering on promises 
previously made. To those critics I would like to point out that trade 
agreements do not guarantee success, but they do remove barriers to 
trade and allow us to compete fairly for consumers overseas. For 
example, trade agreements negotiated under TPA achieved the following:

   Korea-U.S. FTA: Elimination of 40% tariff over 15 years; 
        inclusion of strong SPS* measures.

   Colombia-U.S. FTA: Elimination of 80% tariff over 15 years; 
        inclusion of strong SPS* measures.

   Panama-U.S. FTA: Elimination of 30% tariff over 15 years; 
        inclusion of strong SPS* measures.

   DR-CAFTA-U.S. FTA: Elimination of 15-40% tariffs over 15 
        years; inclusion of strong SPS* measures.

   Chile-U.S. FTA: Elimination of price-band system; 
        recognition of U.S. beef standards.

   Peru Trade Promotion Agreement: Re-opened market to U.S. 
        beef, eliminated 25% tariff; inclusion of strong SPS* measures.

    Meanwhile, some elected officials have criticized TPA as granting 
additional constitutional powers to the President or claiming that 
supporting TPA is essentially the same as abandoning their 
Congressional responsibilities. In fact, TPA is legislation that 
ensures our government is working together to finalize trade agreements 
that provide greater market access for U.S. goods and services. TPA 
affirms Congressional authority by establishing negotiation objectives 
and by requiring the President to consult with Congress during 
negotiations with the guarantee that Congress can either approve or 
reject the final deal, but not amend it.
    But why is TPA so important for trade? The U.S. import market is 
one of the most open markets in the world. The only way to level the 
playing field for U.S. exports is to negotiate increased market access 
and tariff elimination/reduction for our exports via trade agreements. 
TPA ensures that the U.S. has the credibility to conclude the best deal 
possible at the negotiating table.
    We need Congress to act immediately to renew TPA so that our 
negotiators and our trading partners can finalize good trade deals in 
good faith. And for those who want to delay action on TPA until there 
is a new President in the White House be sure to keep in mind that for 
every day that passes, our competitors are finalizing trade agreements 
and taking market share away from Americans.
Conclusion
    With 96 percent of the world's consumers living outside of the 
U.S., access to foreign markets for our beef and beef products is 
significantly important for our industry to grow. Exports are vitally 
important for the future success of U.S. beef producers and rural 
America. Future growth of the U.S. economy depends upon our ability to 
produce and sell products competitively in a global marketplace. 
Economic globalization is not simply a matter of ideological or 
political preference; it is a fundamental reality that will determine 
whether America remains an economic super-power or becomes a secondary 
economic force.
    We support President Obama's effort to double U.S. exports and 
create jobs in rural America. On behalf of NCBA and many other 
stakeholders of the U.S. beef industry, I thank you for your continued 
efforts to open and expand market access for U.S. beef producers.
            Sincerely,

Philip Ellis
President, NCBA

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