[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


    THE STATE OF U.S. AGRICULTURAL PRODUCTS IN INTERNATIONAL MARKETS

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

                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON LIVESTOCK AND FOREIGN AGRICULTURE

                                 OF THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 11, 2019

                               __________

                            Serial No. 116-9
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

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

                               __________
                               

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                        COMMITTEE ON AGRICULTURE

                COLLIN C. PETERSON, Minnesota, Chairman

DAVID SCOTT, Georgia                 K. MICHAEL CONAWAY, Texas, Ranking 
JIM COSTA, California                Minority Member
MARCIA L. FUDGE, Ohio                GLENN THOMPSON, Pennsylvania
JAMES P. McGOVERN, Massachusetts     AUSTIN SCOTT, Georgia
FILEMON VELA, Texas                  ERIC A. ``RICK'' CRAWFORD, 
STACEY E. PLASKETT, Virgin Islands   Arkansas
ALMA S. ADAMS, North Carolina        SCOTT DesJARLAIS, Tennessee
    Vice Chair                       VICKY HARTZLER, Missouri
ABIGAIL DAVIS SPANBERGER, Virginia   DOUG LaMALFA, California
JAHANA HAYES, Connecticut            RODNEY DAVIS, Illinois
ANTONIO DELGADO, New York            TED S. YOHO, Florida
TJ COX, California                   RICK W. ALLEN, Georgia
ANGIE CRAIG, Minnesota               MIKE BOST, Illinois
ANTHONY BRINDISI, New York           DAVID ROUZER, North Carolina
JEFFERSON VAN DREW, New Jersey       RALPH LEE ABRAHAM, Louisiana
JOSH HARDER, California              TRENT KELLY, Mississippi
KIM SCHRIER, Washington              JAMES COMER, Kentucky
CHELLIE PINGREE, Maine               ROGER W. MARSHALL, Kansas
CHERI BUSTOS, Illinois               DON BACON, Nebraska
SEAN PATRICK MALONEY, New York       NEAL P. DUNN, Florida
SALUD O. CARBAJAL, California        DUSTY JOHNSON, South Dakota
AL LAWSON, Jr., Florida              JAMES R. BAIRD, Indiana
TOM O'HALLERAN, Arizona              JIM HAGEDORN, Minnesota
JIMMY PANETTA, California
ANN KIRKPATRICK, Arizona
CYNTHIA AXNE, Iowa

                                 ______

                      Anne Simmons, Staff Director

              Matthew S. Schertz, Minority Staff Director

                                 ______

           Subcommittee on Livestock and Foreign Agriculture

                    JIM COSTA, California, Chairman

ANTHONY BRINDISI, New York           DAVID ROUZER, North Carolina, 
JAHANA HAYES, Connecticut            Ranking Minority Member
TJ COX, California                   GLENN THOMPSON, Pennsylvania
ANGIE CRAIG, Minnesota               SCOTT DesJARLAIS, Tennessee
JOSH HARDER, California              VICKY HARTZLER, Missouri
FILEMON VELA, Texas                  TRENT KELLY, Mississippi
STACEY E. PLASKETT, Virgin Islands   JAMES COMER, Kentucky
SALUD O. CARBAJAL, California        ROGER W. MARSHALL, Kansas
CHERI BUSTOS, Illinois               DON BACON, Nebraska
JIMMY PANETTA, California            JIM HAGEDORN, Minnesota

                Katie Zenk, Subcommittee Staff Director

                                  (ii)
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................     8
Costa, Hon. Jim, a Representative in Congress from California, 
  opening statement..............................................     1
    Prepared statement...........................................     5
Cox, Hon. TJ, a Representative in Congress from California; Hon. 
  Josh Harder, a Representative in Congress from California, 
  joint submitted letter.........................................    47
Hagedorn, Hon. Jim, a Representative in Congress from Minnesota, 
  submitted letter...............................................    55
Marshall, Hon. Roger W., a Representative in Congress from 
  Kansas; on behalf of Ben Scholz, President, National 
  Association of Wheat Growers, submitted statement..............    53
Rouzer, Hon. David, a Representative in Congress from North 
  Carolina, opening statement....................................     6
    Submitted letter.............................................    48

                               Witnesses

McKinney, Hon. Ted, Under Secretary for Trade and Foreign 
  Agricultural Affairs, U.S. Department of Agriculture, 
  Washington, D.C................................................     9
    Prepared statement...........................................    11
    Submitted questions..........................................    56
Doud, Hon. Gregory, Ambassador and Chief Agricultural Negotiator, 
  Office of the U.S. Trade Representative, Washington, D.C.......    14
    Prepared statement...........................................    16
    Submitted questions..........................................    57

 
    THE STATE OF U.S. AGRICULTURAL PRODUCTS IN INTERNATIONAL MARKETS

                              ----------                              


                         TUESDAY, JUNE 11, 2019

                  House of Representatives,
         Subcommittee on Livestock and Foreign Agriculture,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Jim 
Costa [Chairman of the Subcommittee] presiding.
    Members present: Representatives Costa, Brindisi, Hayes, 
Cox, Craig, Harder, Vela, Plaskett, Carbajal, Panetta, Peterson 
(ex officio), Rouzer, Thompson, Hartzler, Kelly, Marshall, 
Bacon, Hagedorn, and Conaway (ex officio).
    Staff present: Malikha Daniels, Matt MacKenzie, Katie Zenk, 
Bart Fischer, Callie McAdams, Ricki Schroeder, Patricia 
Straughn, Dana Sandman, and Jennifer Yezak.

   OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    The Chairman. The Subcommittee on Livestock and Foreign 
Agriculture will now come to order. This is another one of a 
series of Subcommittee hearings that we are holding to deal 
with our appropriate role in terms of our oversight, as well as 
to try to find ways in which we can cooperate with the 
Administration to solve problems on behalf of our country, and 
specifically, American farmers, growers, ranchers, dairymen and 
women throughout the country. This morning, we are going to 
talk about the challenges dealing with the trade issues that 
the Administration is engaged in as it relates to products that 
we all grow and international markets that we rely upon in 
terms of our access to those markets, and to have a level 
playing field to the degree that we can, and fairness in 
implementing changes that are necessary that I think on a 
bipartisan level, we all agree that we have to deal with. We 
sometimes disagree on the strategies on how to get there in 
terms of the best way to reflect the needs of American 
agriculture.
    Let me begin with my opening statement. I want to thank all 
of you who are here this morning. I hope we get a chance to get 
some answers to questions on how we are really dealing with 
U.S. agricultural trade policy and its impacts on the lives and 
the livelihoods of not only farmers, ranchers, and countless 
others who rely on American agriculture, but our farm 
communities, because the ripple effect in our farm communities 
directly impacts employment. It impacts our schools. It impacts 
our way of life, and some of you have heard me say it before, 
nobody does it better than the American farmer that puts an 
abundance of food of the highest quality for health purposes 
anywhere in the world, on America's dinner table every night.
    I am going to start off by reflecting--and you will get a 
sense from my comments--a show that many of us grew up with as 
kids that I reflect upon on occasion, and that is Dragnet. How 
many of us remember Dragnet as a kid and used to watch it? What 
Sergeant Friday used to always say, ``Just the facts, ma'am.'' 
Okay. Well, I am going to talk about this morning in my opening 
statement just the facts as I see them.
    Trade is especially crucial in California where we export 
over 40 percent of this incredible cornucopia that we produce, 
about $50 billion a year at the farm gate. In 2017, over $20 
billion of that was reliant upon our ability to export to 
Mexico, to Canada, to China, to India, all around the world. We 
are very good at growing things. We have been blessed with an 
abundance of good farm country.
    Today, Members of the Subcommittee, we have a very good 
distinguished group of individuals who I have worked with and 
many of you know. We have Ambassador Gregg Doud of the Office 
of the U.S. Trade Representative, and we have USDA Under 
Secretary for Trade and Foreign Agricultural Affairs Ted 
McKinney, who many of us have worked with over the years. These 
two gentlemen have a wealth of experience of working here on 
the Hill, and this, as we like to say, isn't their first rodeo. 
We believe that these two individuals are the most directly 
involved in the Administration's discussion on agricultural 
trade policy, so we are very glad that they would take the time 
to update the Subcommittee on the challenges we face.
    Given the ups and downs of the trade discussion in recent 
months, we are all interested in where we are today and where 
we are going. That is what my farm country wants to talk about.
    We know that farm bankruptcies are the highest that they 
have been in a decade. After record highs in 2013, farm income 
is forecasted to fall below $70 billion for the third straight 
year. Crop prices in many areas have cratered from record highs 
within the last decade to generational lows. Dairy and 
livestock farmers are struggling. California wine exports to 
Europe are down 15 percent and down 25 percent to China. And 
the target of California-grown fruits and nuts--and we produce 
half of the nation's fruits and vegetables and 70 percent of 
the world's almonds and 50 percent of the world's pistachios--
is projected to cost our growers this year over $2.64 billion. 
That is just in the specialty crop in California for almonds, 
pistachios, and leafy greens.
    As a matter of fact, according to the USDA's Economic 
Research Service, imports of agriculture goods increased by six 
percent between 2017 and 2018, and while exports, exports that 
are all part of this trade discussion, only grew at one 
percent. As you can see on the screen, and I have it up there--
and for Members of the Committee, these factors have led to the 
U.S.'s smallest agricultural trade surplus in over a decade. 
That is what this chart shows. And we have always enjoyed--
again, because of successive Administrations--a surplus in our 
agricultural trade. But this is the narrowest it has been since 
2004 and 2006, and we are all concerned about that. That is why 
this hearing is so important.
    And then, there is something that none of us can control, 
right? It is just the nature of farming, and that is the 
weather. Flooding continues to ravage prime corn and soybean 
regions in the Midwest. Hurricanes have battered cotton and 
rice and specialty crop producers in the South. Drought has had 
a particular impact on livestock and row crop farmers in the 
southern Great Plains, and throughout eastern California. And 
of course, we have wildfires again. We had an abundance of snow 
in the mountains, and we have a pretty good water year in 
California, and now we have wildfires. It seems to be either 
feast or famine that have taken a disproportionate toll on 
timber and our wine grape growers in northern California.
    And so, in my view, the Administration's trade policies, 
even though with the best of intentions, have made these 
difficult times that deal with a lot of factors that are out of 
our control more difficult for farmers and ranchers. I am glad 
that the President has abandoned what I felt was an ill-
conceived plan to put new tariffs on Mexico. I have talked with 
a number of our Senators, Republican and Democratic alike, and 
they had many concerns over the last 10 days about these 
proposed tariffs. But I do remain concerned about the drag that 
this exercise has created in slowing down the momentum that 
existed after the Administration agreed to lift the section 232 
tariffs, which was an important step, and Ambassador Lighthizer 
had indicated to many of us was part of a series of milestones 
that needed to be achieved to bring the USMCA, the U.S.-Canada-
Mexico Agreement before us.
    While we made progress 2 weeks ago, I think the last week 
has been a step backwards, and I hope there will be no more 
policy surprises as we attempt to work on a bipartisan basis to 
move this trade agreement forward.
    I am also concerned about the lack of a resolution with the 
situation with China. We are eager to see our farmers and 
ranchers on a level playing field, not only with China, but 
with Japan, since our competitors are already enjoying 
preferential access.
    I am one of those that, in my opinion, I still believe that 
the Trans-Pacific Partnership would have been a better strategy 
to deal with China's unfair trade practices, which we have been 
known for decades, back to the Clinton Administration and the 
Bush Administration. Every Administration has had a different 
strategy to deal with these unfair trade practices. As a matter 
of fact, most of what was in TPP was a part of now what is in 
USMCA, with some improvements. And I wonder whether or not at 
some point in time maybe we might want to consider rejoining 
the efforts with TPP, and I have suggested that to Ambassador 
Lighthizer.
    The Administration has acknowledged the damage these 
policies have caused for farmers. They have done so, in effect, 
by issuing now with this new round $28 billion in two taxpayer-
funded bailouts for those affected. And for the Committee 
assignment members, I have this chart here that is before you. 
It shows how they attempted to try to provide support across 
the country in that first round of $9 billion of mitigation. 
And you can see how much it benefitted various commodity groups 
on percents per pound, and I know the USDA is in the process of 
formulating how they will provide benefits in the second round. 
And that is important; but, farmers in California I can tell 
you--and around the country--they are not looking for a 
handout. They are not looking for subsidies. And this, in the 
bigger scheme of things, doesn't come close to mitigating the 
impacts that these--on prices have had. Three cents a pound on 
almonds, for example, we think the impacts have resulted in a 
30 per pound decrease in--at the marketplace. And you can go 
down the list.
    I am concerned about the policy signals that are taking 
place, notwithstanding the attempt to soften the blow for 
farmers that is being used.
    Gentlemen, as I said on the outset, I have respect for both 
of you. You are knowledgeable, and you have been around for a 
while. As we say, it is not your first rodeo. I know Secretary 
Perdue and Ambassador Lighthizer are also doing everything 
possible to resolve these issues. And I know we all share in 
this Committee on a bipartisan basis the goal of seeing 
American agriculture succeed. We all represent American 
farmers, ranchers, dairymen and -women. You both have lived 
through the agriculture going back to the 1980s. You have seen 
firsthand the foreclosure crisis, followed by a grain embargo. 
You know how destructive trade wars are on the farm, especially 
when we compound additional market stresses. And whether we are 
talking about on the farm, or on the board room, we all know 
that there needs to be a plan in place.
    And so, that is what we are going to be asking you here 
this morning: Where is the plan in place? Farmers don't operate 
without one, and it is reasonable to expect the same from this 
Administration.
    Let me tell you a story about a conversation I had last 
year over dinner with the European Union Commissioner for 
Agriculture and Rural Development, Phil Hogan. Phil Hogan and I 
have gotten to be friends. And he said Jim, he says, let me 
tell you something. He says we just finished our agreement with 
Canada. He says we are finishing our agreement with Mexico. We 
are working with the MERCOSUR countries, we are negotiating 
with Japan. And this is what the EU Agriculture Commissioner 
told me. He says when you figure out what your trade policy is, 
let us know, and we will dust off TPP and we will get to work. 
And so, what we are trying to figure out is what our trade 
policy is. I want to hear the plan for getting our agriculture 
trade policy back on track today. I am not looking to point 
fingers or buck passing or blaming the last Administration. 
That doesn't get the job done. The time for all that has 
passed. We are here in a trade war now for over a year. I don't 
think anyone wins a trade war; because, everybody has leverage. 
I mean, we haven't even seen the Chinese talk about the $1 
trillion in American debt that they have or their ability to go 
to security markets every month.
    And so, this tariff poker war is one in which no one wins.
    The President promised 3\1/2\ million American farmers and 
ranchers that he would get them more of what they have had 
before, and not more subsidies. We know that for China, the 
easiest thing for them to do is to buy more ag products. They 
have the market, and they have the need. And clearly, there are 
other issues at hand here that I know the trade ambassador is 
trying to negotiate, and that is important. Gentlemen, what I 
want to know is where are we today, and where are we going?
    [The prepared statement of Mr. Costa follows:]

Prepared Statement of Hon. Jim Costa, a Representative in Congress from 
                               California
    Thank you and welcome. We're here to get some answers about what is 
really our U.S. agricultural trade policy and its impacts on the lives 
and livelihoods of farmers, ranchers, and the countless others who rely 
on American agriculture. Trade is especially crucial for my home State 
of California where we export over 40 percent of our total agricultural 
product, which equaled over $20 billion in 2017.
    With us is Ambassador Gregg Doud of the Office of the U.S. Trade 
Representative, and USDA's Under Secretary for Trade and Foreign 
Agricultural Affairs Ted McKinney. These two are the two most directly 
involved in the Administration's discussions on agricultural trade 
policy, and I am glad to have them join us. Given the ups and downs of 
the trade discussion in recent months, we're all interested in where we 
are and where we're going.
    Farm bankruptcies are at their highest in a decade. After record 
highs in 2013, farm income is forecast to fall below $70 billion for 
the third straight year. Crop prices have cratered from their record 
highs within the last decade to generational lows. Dairy and livestock 
farmers are struggling. California wine exports to Europe are down 15 
percent, and down 25 percent to China, and the targeting of California-
grown fruits and nuts is projected to cost our growers $2.64 billion a 
year.
    According to the USDA's Economic Research Service, imports of 
agricultural goods increased by six percent between 2017 and 2018 while 
exports only grew one percent. As you can see on the screen, these 
factors have led the U.S. to the smallest agricultural trade surplus in 
over a decade.
    And then there's the weather: flooding continues to ravage prime 
corn and soybean regions in the Midwest; hurricanes battered cotton, 
rice and specialty crop producers in the South; drought has had a 
particular impact on the livestock and row-crop guys in the southern 
Great Plains and throughout eastern California; and wildfires took a 
disproportionate toll on both timber and winegrape growers across 
California.
    This Administration's trade policies have made tough times for 
American farmers and ranchers worse. I am glad that the President has 
abandoned his ill-conceived plan to put a new tariff on Mexico. I, 
however, remain concerned that this whole exercise has slowed down the 
positive momentum that existed after the Administration finally agreed 
to lift the section 232 tariffs on Mexico and Canada only a few weeks 
ago. I hope there won't be any more surprise policy changes from the 
Administration if we want to continue productive conversations on the 
U.S.-Canada-Mexico-Agreement. In my opinion, USMCA, under the current 
environment, that the President is largely responsible for, will be 
difficult to pass this year at best.
    I am also extremely concerned by the lack of resolution to the 
situation with China and am eager to see our farmers and ranchers on 
level playing field with Japan since our competitors are already 
enjoying preferential access. In my opinion, I still believe the Trans-
Pacific Partnership was a better strategy to deal with China's unfair 
trade practices which we have known about for years.
    The Administration has acknowledged the damage its policies are 
causing for farmers, issuing up to $28 billion in two taxpayer-funded 
bailouts to some of those affected. As we can see from last round of 
payments and purchases, these subsidies aren't going to make up the 
difference for what people have lost. However, the Administration has 
yet to show any signs of changing course.
    I am very worried that this policy signals that the Administration 
is more focused on softening the blow for farmers and is using 
agriculture to achieve undefined wins in other areas.
    I have a lot of respect for both of you. You're knowledgeable and 
you've been around for a while. I know Secretary Perdue and Ambassador 
Lighthizer are also doing everything possible to resolve these issues. 
I know we share the goal of seeing American agriculture succeed. You 
both lived through agriculture in the 1980s. You've seen firsthand a 
foreclosure crisis followed by a grain embargo. You know how 
destructive a trade war is on the farm, especially when compounded by 
additional market stresses. Whether on the farm or in the boardroom, 
there needs to be a plan in place. Farmers don't operate without one, 
and it's reasonable to expect the same from the White House.
    So, I want to hear the plan for getting U.S. agricultural trade 
back on track today. I don't want shrugs or buck-passing to other 
countries or the last Administration. The time for that has passed. We 
are over a year into this trade war. The fallout on agriculture of 
these trade policies are this Administration's to own.
    The President promised 3\1/2\ million American farmers and ranchers 
markets that get them more than what they had before, not more 
subsidies from the Federal Government.
    How are you accomplishing that, gentlemen? I look forward to 
hearing that answer today.
U.S. Agricultural Trade, 2000-2018
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

          Source: USDA, Economic Research Service using data from U.S. 
        Department of Commerce, U.S. Census Bureau, Foreign Trade 
        Database.
          https://www.ers.usda.gov/data-products/chart-gallery/gallery/
        chart-detail/?chartId=58310.
          U.S. agricultural exports were valued at $140 billion in 
        2018, a one percent increase relative to 2017. Export growth 
        was hampered by reduced exports to Asia, particularly for 
        soybean exports. Imports grew by six percent in 2018 to $129 
        billion. Imports have grown at a faster rate than exports since 
        2016, driven in part by strong domestic economic growth. These 
        shifts in U.S. agricultural trade produced a trade surplus in 
        2018 of $10.9 billion, the smallest surplus since 2006.
          Last updated: Monday, April 22, 2019

    The Chairman. And with that, we will look forward to the 
hearing. I would like to defer to the Ranking Member of the 
Subcommittee for any opening statement he might like to make.

  OPENING STATEMENT OF HON. DAVID ROUZER, A REPRESENTATIVE IN 
                  CONGRESS FROM NORTH CAROLINA

    Mr. Rouzer. Well thank you, Mr. Chairman. Good morning to 
everybody, and I particularly want to thank our two 
distinguished witnesses for being here today.
    There is no question that trade is of incredible 
consequence to American agriculture, from the hog farmer in 
North Carolina to the almond grower in California, or amond, as 
I understand they say in some places.
    The Chairman. That is when they are on the ground.
    Mr. Rouzer. From the wheat farmer in North Dakota to the 
cattle rancher in Texas, and for every farmer and rancher in 
between, agriculture trade and access to international markets 
obviously is absolutely critical. It is the difference between 
staying in business and not staying in business.
    While this Committee has long extolled the virtues of 
trade, we have also watched our producers struggle with 
challenges in the U.S. farm economy. Net farm income has fallen 
to half the level it was just 6 years ago. These struggles have 
been intensified by the illegal trade practices of some of our 
top trading partners, and we know who they are. Agriculture can 
ill-afford the market distortions that come when our 
competitors cheat, and that is, quite honestly, what the 
President was trying to battle.
    For example, China drives down prices here in the U.S. by 
building huge stockpiles of commodities, and it props up its 
wheat, corn, and rice farmers with more than $100 billion in 
annual support. That is three commodities, $100 billion in 
annual support. Not 5 years, annually. American farmers can 
compete with anyone, but only if they have a level playing 
field on which to do so. And that is what the President is 
trying to do.
    Beyond reaching a conclusion to the negotiations with 
China, there are steps that can be taken today to increase 
opportunities for U.S. agriculture exports right here before 
us.
    In the 2018 Farm Bill, we were able to provide a solid 
foundation for the promotion of U.S. farm products in the 
Market Access Program, the Foreign Market Development Program, 
the Emerging Markets Program, and Technical Assistance for 
Specialty Crops. I look forward to hearing an update from Under 
Secretary McKinney on the work this Administration is doing to 
implement these provisions and to aggressively promote U.S. 
agriculture products overseas.
    We also have before us another significant opportunity to 
expand U.S. trade by swiftly approving USMCA, which the 
Chairman alluded to a few minutes ago. Analysis by the U.S. 
International Trade Commission indicates that American 
agriculture exports will increase by at least $2.2 billion 
under the renegotiated deal. Additional gains are likely to be 
seen from science-based improvements to export procedures and 
cooperation on agriculture biotechnology.
    With the most recent agriculture trade surplus having 
fallen to just $10.9 billion, an increase in exports provided 
by USMCA is significant to our producers and to the rural 
communities in which they live. It is vital--absolutely vital--
that we approve USMCA quickly so that the fine folks at USDA 
and USTR can open up even more market access for U.S. food and 
fiber in other places as well, such as Japan, China, and other 
great countries around the world.
    Now, Mr. Chairman, I have a letter that I understand was 
delivered this morning--or at least I received a copy of it 
this morning----
    The Chairman. We all received a copy of it, and it is 
appropriate and fitting, and you are going to request that we 
submit it for the record.
    Mr. Rouzer. Yes.
    The Chairman. Over 900 agricultural organizations 
throughout the country supporting the United States-Mexico-
Canada Agreement on trade, and without objection, we will 
submit it for the record.
    [The letter referred to is located on p. 48.]
    The Chairman. I agree. Thank you.
    Mr. Rouzer. Thank you, Mr. Chairman.
    I want to thank our witnesses for being here. I look 
forward to your testimony. I yield back.
    The Chairman. Okay, the gentleman yields back, and under 
the protocol and propriety of our Subcommittee, the 
Subcommittee Chair will now defer to the Chairman of the House 
Agriculture Committee, if he wants to provide a statement. If 
he does not, he so passes and so we will recognize the Ranking 
Member of the House Agriculture Committee, former Chairman, the 
gentleman from Texas.

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

    Mr. Conaway. Thank you, Mr. Chairman. Thank you for having 
this really important hearing today. I want to thank both of 
our witnesses for all of the hard work they have done on behalf 
of producers and farmers and ranchers across this country over 
your tenure. Thank you for that. Ambassador Doud, it is never 
easy to stand up to a bully, and I appreciate your efforts to 
stand up to China, Xi Jinping, and the cheating that they have 
done in various activities. I, for one, don't believe that Xi 
Jinping and China will suddenly have some sort of a come to 
Jesus moment where they will abandon stealing our intellectual 
property, where they abandon all the nefarious activities they 
have been doing simply because we out-nice them, going forward. 
Standing up to bullies is hard, and difficult. The President 
recognizes that, and that is why these Market Facilitation 
Program payments and other efforts are going on to try to help 
somewhat offset the impact it has had on China's illegal 
retaliation pointed at our farmers and ranchers, because China 
believes that they are a good part of President Trump's base.
    And so, thank you for the trade deals you are doing. The 
USMCA is a good agreement. The ag part of that is certainly 
good, expanding those markets.
    Secretary McKinney, thank you for burning up the airwaves 
and running all over the world trying to put to good use the 
money that we put into 2018 Farm Bill, as well as the 
additional money that has come forward in these market 
facilitation payments. I know that you are shepherding those 
dollars well and trying to open new markets and sell American 
products across this country.
    But speaking of the USMCA, the people I talked to back home 
were worried that partisan politics will scuttle the effort to 
get this done. I am begging my colleagues on the other side of 
the aisle if, in fact, you do support USMCA, that you work with 
your leadership to get this process moving, get Speaker Pelosi 
to move forward with what she needs to get done, make her 
decisions to go forward. Trade deals are never easy, but if it 
stays on high center because the Speaker doesn't bring it 
forward, doesn't make the necessary agreements with the White 
House, then we will, in fact, scuttle it, and you can lay blame 
to partisan politics, and shame on us if that is how we wind up 
not letting USMCA be ratified. The sooner we get that done, the 
better. That is exactly what our folks back home tell me, that 
they are standing behind the President, but it is also painful 
and they want to get this process of all these trade 
negotiations done and done quickly.
    Again, thank you, Mr. Chairman, for having this hearing, 
and I thank both of you gentlemen for your work and your staff 
behind you, the unsung heroes of making sure you guys look real 
good, and they do a good job of it.
    Thank you for that, and I yield back.
    The Chairman. Well, the gentleman yields back, and I thank 
him for his comments. Many of us have had a history of working 
on a bipartisan basis on trade agreements, as well as farm 
bills and a host of other efforts, and I know that Ambassador 
Lighthizer, as well as Secretary Perdue, has been working with 
the leadership on the House side to try to work out the 
differences on this, and it takes everybody to sit down at the 
table. And as I said earlier, not to point fingers and engage 
in partisan politics. I agree that that requires discipline on 
both sides.
    Recognizing that, the chair would like to request that 
Members submit their opening statements for the record so the 
witnesses may begin their testimony and ensure that we have 
ample time for questions. We have a list here that was based 
upon when I hit the gavel down, and the order that the staff 
has among Republicans and Democrats. We will alternate, 
obviously, as we do traditionally.
    With that said, I would like to welcome the United States 
Department of Agriculture's Under Secretary for Trade and 
Foreign Agricultural Affairs, Ted McKinney. We created this 
post in the previous farm bill, and he is the first appointee. 
In this role, he leads the development and implementation of 
the Department's trade policy and oversees and facilitates 
foreign market access. He has been around, and as I said, he 
has a lot of experience and we welcome him here today for the 
opportunities to promote U.S. agriculture through various trade 
programs and high-level government negotiations.
    Our second witness is Ambassador Gregg Doud, who I will 
introduce in a moment.
    But I would now like to begin with the hearing of the 
testimony. Each of you have 5 minutes. You know how the drill 
works. The light is green for 4 minutes, and then it turns 
yellow for a minute, and then start wrapping up.
    Under Secretary McKinney, would you please begin when you 
are ready?

 STATEMENT OF HON. TED McKINNEY, UNDER SECRETARY FOR TRADE AND 
 FOREIGN AGRICULTURAL AFFAIRS, U.S. DEPARTMENT OF AGRICULTURE, 
                        WASHINGTON, D.C.

    Mr. McKinney. Yes, thank you, Chairman Costa, Ranking 
Member Rouzer, and Members of the Subcommittee. I am pleased to 
appear with my longtime friend and colleague, Ambassador Gregg 
Doud of USTR, and happy to talk about USDA and our overall 
efforts to address issues concerning U.S. ag exports.
    I must thank Secretary Perdue and President Trump for the 
appointment to this position. I am honored to be the first. 
That doesn't mean trade hasn't been a focus, but I am honored 
to be the first. And I thank you, because many of you played a 
big role in the 2014 Farm Bill that created the opportunity for 
this position. I hope we are honoring your vision.
    As Under Secretary, I fully support the Administration's 
strong commitment to our farmers, ranchers, and downstream from 
there providing everyone opportunities for exports across the 
globe importantly as we seek under free, fair, and reciprocal 
terms of trade.
    As we work to level that trade playing field, we are using 
programs that you helped create, widely, I might add. As we 
work through the 2018 Farm Bill, and other programs, I might 
add, to work with trade associations, cooperatives, state 
regional trade groups, and small businesses, and they touch all 
of your states.
    Through these programs, we share costs. We help focus the 
marketing and promotional activities. We help orient them, and 
we build commercial export opportunities. And I might add that 
the minimal return on the dollar of a taxpayer's investment is 
$28 to $1. It is most often better than that.
    A word about USMCA: First, it is the top legislative 
priority for the Administration, as it is for much of 
agriculture. Ranking Member Rouzer, you mentioned the letter 
from nearly 1,000 companies of all sorts, associations, et 
cetera. It states that, and I think that is very important. 
This provides unprecedented access for many reasons. Dairy 
farmers here for access to Canada, eliminates discriminatory 
grading of wheat, improves poultry access. A modernized chapter 
on sanitary and phytosanitary may be the crown jewel, because 
it is language that we can use in many other free trade 
agreements, or whatever form they might take. And the same goes 
for the biosciences.
    Biotechnology is very widely accepted around the world, but 
not everywhere, and we are at a crossroads with new 
technologies like gene editing. That chapter is also a terrific 
addition.
    Mexico is committed not to restrict market access for U.S. 
cheeses, and Canada has committed to eliminating the 
discriminatory treatment of retail sales of U.S. wine and 
spirits.
    I will just echo, we hope all of you will take that up and 
pass it. It is time. We need that.
    One sentence or two on China. President Trump has taken a 
tough, but necessary, stand to confront China's unfair trade 
practices. There are undoubtedly challenges. We are in the 
middle of that now. But I am confident, and I hear, as most of 
you do, that most U.S. farmers and ranchers want to see this 
through so that they, if not their children, nephews, nieces, 
and others that might take over the farms, can benefit.
    A bit about support of farmers. The Administration is 
committed to support farmers through this uncertainty, and that 
is why President Trump directed Secretary Perdue and he 
mentioned to many of us to craft a relief strategy to support 
American producers while the Administration continues to work 
on free, fair, and reciprocal trade deals. This is now the 
second mitigation program.
    Let me be clear: Secretary Perdue, I, and most farmers 
would much rather--I would say always rather have trade than 
aid, but given the circumstances, we hear that they are 
grateful, and we are working very closely with them.
    A big piece of that--well, a piece of that is the 
Agricultural Trade Promotion Program. It is the additional $100 
million in mitigation 2, on top of the $200 million in 
mitigation 1 that goes to opening new markets, and we are 
already seeing great results.
    My challenge, the challenge given to me, I embrace 
Secretary Perdue's charge to be U.S. agriculture's unapologetic 
advocate around the world. My most important role is building 
personal and trusted relationships. In my confirmation hearing, 
I shared that I wanted to be the happy warrior, and I hope that 
I am. Warrior in the sense that the cause is just. It is 
difficult. Happy in that we have to build trust, understanding, 
and progress.
    In fact, I just returned from a trade mission last week to 
Colombia. By the way, the Colombia free trade agreement with 
the U.S. is working marvelously. That doesn't mean there are 
not always issues, and if we can deliver on that, an all-time 
high record number of attendees on an ag trade mission in the 
history of the Foreign Agricultural Service, we have 
opportunities for the future.
    A request for you: We always need your help to speak to 
your State Departments of Agriculture, your small, medium, 
large businesses, and encourage them to join us on these ATMS, 
because they are successful. In 2016 prior, there were always 
about three or four per year. Last year, there were six. We 
doubled them. This year, there will be seven. We are going for 
eight or nine, because they are successful.
    And thank you. It was mentioned earlier, MAP, FMD, EMP, 
TASC, are all incredibly valued. We are grateful for the 
additional funds.
    Mr. Chairman, that concludes my statement. Thank you all. I 
look forward to your questions after my colleague's statement.
    [The prepared statement of Mr. McKinney follows:]

Prepared Statement of Hon. Ted McKinney, Under Secretary for Trade and 
     Foreign Agricultural Affairs, U.S. Department of Agriculture, 
                            Washington, D.C.
Perspectives on U.S. Agricultural Trade
    Chairman Costa, Ranking Member Rouzer, Members of the Subcommittee, 
I am pleased to appear before you with my colleague, Chief Agricultural 
Negotiator, Ambassador Gregg Doud from the Office of the United States 
Trade Representative (USTR). I welcome the opportunity to discuss the 
efforts of the U.S. Department of Agriculture (USDA) on behalf of U.S. 
agricultural exporters. I want to thank President Trump and USDA 
Secretary Perdue for their faith in me to serve as the first ever USDA 
Under Secretary for Trade and Foreign Agricultural Affairs (TFAA) and 
to thank this Committee for recognizing the critical need of this 
position, formally establishing it in statute in the 2014 Farm Bill.
    As Under Secretary, I fully support the Administration's strong 
commitment to our farmers and ranchers in providing them the 
opportunity to export across the globe under fair and reciprocal terms 
of trade. President Trump is making sure other countries are held 
accountable and no longer take advantage of the United States. 
President Trump is confronting China's unfair trade practices and has 
kept his word in negotiating the new United States-Mexico-Canada 
Agreement (USMCA). While there are challenges, we are confident that 
U.S. farmers and ranchers will reap the benefits of these efforts.
    I embrace the charge of Secretary Perdue to be American 
agriculture's unapologetic advocate around the world. It is important 
that foreign buyers and government officials develop direct personal 
relationships not only with us at USDA but also directly with American 
farmers and ranchers. I just returned from an agricultural trade 
mission to Colombia with an energetic group of exporters representing a 
cross-section of U.S. agriculture. Our farmers and ranchers are eager 
for the opportunity to forge relationships with potential customers 
and, most importantly, to generate sales.
United States-Mexico-Canada Agreement (USMCA)
    The USMCA is a top legislative priority of the Administration just 
as it is a top priority of much of U.S. agriculture. It is important 
for Congress to pass the USMCA so American farmers can begin to benefit 
from the agreement. The agreement will expand export opportunities in 
the vital markets of Canada and Mexico and improve the highly 
productive integrated agricultural relationship we have with both 
countries.
    Among its many provisions to help our agricultural community, this 
deal eliminates Canada's unfair pricing scheme for ``Class [VI]'' and 
``Class [VII]'' milk, opens additional access for U.S. dairy into 
Canada, and imposes new disciplines on Canada's milk pricing system. 
For the first time in a U.S. trade agreement, trading rules 
specifically address agricultural biotechnology to support innovation. 
The Agreement includes commitments to avoid trade-distorting policies. 
Poultry producers have new access to Canada for chicken and eggs, and 
expanded access for turkey. More generally, we maintain existing zero 
tariffs into Canada and Mexico, our number one and two markets last 
year. For example, corn growers maintain duty-free access to Mexico, 
which is the top market for U.S. corn. USMCA updates rules of origin 
for processed fruits to ensure preferences benefit U.S. producers. The 
agreement also addresses Canada's wheat grading process, so it does not 
discriminate against U.S. wheat growers. Similarly Canada has agreed to 
ensure British Columbia eliminates discrimination against U.S. wine 
sold in grocery stores. By ensuring better market access and 
solidifying commitments to fair and science-based trade rules with our 
top trading partners, USMCA is a big win.
Farmer Support Program
    President Trump directed Secretary Perdue to craft a relief 
strategy to support American agricultural producers while the 
Administration continues to work on free, fair, and reciprocal trade 
deals. Specifically, last month, the President authorized USDA to 
provide up to $16 billion in programs, which is in line with the 
estimated impacts of unjustified retaliatory tariffs on U.S. 
agricultural goods and other trade disruptions. USDA will use its 
Commodity Credit Corporation authority for $100 million to be issued 
through the Agricultural Trade Promotion Program (ATP) administered by 
the Foreign Agricultur[al] Service (FAS) to assist in developing new 
export markets on behalf of producers. Other USDA agencies are also 
contributing to this CCC funded effort, with up to $14.5 billion in 
direct payments to farmers from the Farm Service Agency (FSA) through 
the Market Facilitation Program and $1.4 billion to purchase surplus 
commodities affected by trade retaliation under Food Purchase and 
Distribution Program (FPDP) administered by the Agricultural Marketing 
Service (AMS) and the Food and Nutrition Service (FNS).
Traveling the Globe for U.S. Agriculture
    Since my confirmation, I've done my best to be the ``million-mile 
flyer'' that Secretary Perdue expects. As Under Secretary, I work hard 
every day to open markets and champion American agricultural products 
around the world.
    In March, I traveled to our current number one and two export 
markets, our North American neighbors Canada and Mexico. I used the 
opportunity to build relationships with my counterparts but also remind 
them trade is a two-way street on which we can all benefit. My trade 
missions to Southern China, Southern Africa, and Indonesia targeted 
regions with rapidly growing economies and increasing middle class 
populations--factors favorable to U.S. export expansion. Recognizing 
the importance of relations with Japanese counterparts and the 
importance of their market, I made two trips to Tokyo last year leading 
a trade mission, attending FOODEX, Asia's largest food show, and 
conducting bilateral meetings to advance agricultural export interests.
    Just last week, I led a trade mission to Colombia with more than 50 
U.S. companies representing a broad spectrum of U.S. agriculture. 
Participants engaged with potential customers from Colombia, Panama, 
and around the region. There is growth opportunity for agricultural 
exports to these countries, and U.S. exports of corn, soybeans, and 
consumer-oriented goods have been surging. U.S. farm and food exports 
to Colombia reached a record $2.9 billion in 2018. Most notably, 
increased feed demand for the country's expanding pork and poultry 
industries has led to rapid growth of U.S. exports.
    Agricultural trade missions and trade shows are activities that 
offer phenomenal opportunities for U.S. exporters to explore new 
markets and forge relationships with potential customers. USDA's 
Foreign Agricultural Service marketing and trade experts skillfully 
select markets that offer the best prospects for sales of U.S. farm and 
food products.
    I ask each of you to encourage the State Departments of 
Agriculture, producers, and producer groups in your respective states 
to reach out to USDA and consider participating in these market 
building efforts that showcase the depth and quality of U.S. 
agriculture. We have trade missions planned this year to Canada in 
September; Vietnam in October, including buyers from Burma and 
Thailand; and Kenya, including buyers from Burundi, Djibouti, Ethiopia, 
Rwanda, Sudan, Tanzania, and Uganda, also in October. In November, we 
are off to Mexico and are planning a mission to the UK in the near 
future.
Agricultural Trade Accomplishments
    USDA efforts to break down barriers and pursue export opportunities 
resulted in new or expanded market access for numerous U.S. farm 
products.
    Last September, President Trump and Prime Minister Abe announced 
that the United States and Japan would begin negotiations for a U.S.-
Japan Trade Agreement. I am pleased that trade talks have begun, and 
that Secretary Perdue announced in May an agreement on new terms and 
conditions that eliminates Japan's longstanding restrictions on U.S. 
beef exports. While at the recent G20 Agriculture Ministerial Meeting, 
Secretary Perdue met with Japanese Government officials and affirmed 
the importance of science-based trade rules. He even grilled some 
delicious U.S. beef and pork for his Japanese hosts. The new terms 
allow U.S. products from all cattle to enter Japan for the first time 
since 2003 and pave the way for expanded sales to our top global beef 
market. USDA estimates that this expanded access could increase U.S. 
beef and beef product exports to Japan by up to $200 million annually. 
An agreement with Japan offers a unique opportunity to expand U.S. 
exports of agricultural products to Japan, which totaled $13 billion in 
2018. The leading U.S. agricultural exports include corn ($2.8 
billion), beef ($2.1 billion), pork ($1.6 billion), soybeans ($947 
million), and wheat ($698 million).
    We have also expanded market access for beef and pork to Argentina, 
poultry to India and Namibia, beef and poultry to Morocco, eggs to 
South Africa, dairy to Turkey, and lamb to El Salvador. In April, 
Secretary Perdue and Ambassador Lighthizer announced that the 
government of Tunisia and the United States finalized export 
certificates to allow imports of U.S. beef, poultry, and egg products 
into Tunisia.
    Foreign Agricultural Service staff around the globe assisted U.S. 
exporters in releasing hundreds of shipments that were detained at 
foreign ports. Just last year, our efforts ensured that more than $77 
million of perishable U.S. products arrived safely at their final 
destinations. Among them were beef to Bulgaria, cherries to Taiwan, 
cranberries to China, and lobsters to the United Arab Emirates.
Implementing the 2018 Farm Bill
    Thank you for providing USDA a farm bill that provides a strong 
safety net for farmers and ranchers and supports important trade 
programs to bolster U.S. agricultural exports. The trade title provides 
authority and funding for export market development and promotion 
programs. In my mission area, we are hitting every implementation 
target and all our programs are fully operational. In February we 
announced 2019 allocations for more than $202 million in Market Access 
Program (MAP) and Foreign Market and Development Program (FMD) funds to 
assist U.S. agricultural exporters. Emerging Markets Program (EMP) 
awards include funds for projects to help eliminate cheese tariffs for 
U.S. exporters to Thailand and to evaluate consumer preferences for 
U.S. fish exports to China. Technical Assistance for Specialty Crops 
(TASC) early funds have been awarded, including to Florida Citrus 
Packers to develop treatments to reduce stem-end rot that restricts our 
grapefruit exports to Japan; to the Organic Trade Association to 
develop streamlined equivalency applications to speed that process; and 
to the U.S. Highbush Blueberry Council to research pest mitigation 
methods to support U.S. exports to Australia.
    We are also committed to smooth implementation of our programs to 
help developing countries improve their agricultural systems, build 
their trade capacity, and support food security. In March, Fiscal Year 
2019 funding opportunities for the McGovern-Dole School Feeding Program 
and the Food for Progress program were announced.
Conclusion
    This Committee knows well that agricultural exports contribute 
vitally to prosperity in and beyond rural America. It is my privilege 
to serve as USDA's agricultural advocate to the world and help grow 
these exports.
    Mr. Chairman, that concludes my statement. I would be pleased to 
answer any questions from the Committee.

    The Chairman. Thank you very much, Mr. Under Secretary, for 
your comments. I think that gives a good basis for discussion 
following your testimony. I am one of those that supports the 
effort on the Trade Promotion Authority, and obviously believe 
the Colombia agreement was important, which is why I voted for 
it.
    We now have our second witness, Ambassador Gregg Doud, who 
serves as the Chief Agricultural Negotiator in the Office of 
Trade Representative Ambassador Lighthizer, who has numerous 
conversations, and I must give him high marks for his efforts 
on the Hill over the last 3 months in working with Members on a 
bipartisan basis to try to answer questions and deal with 
issues that we all have with regards to not only the U.S.-
Mexico-Canada Trade Agreement, but also these vexing challenges 
we have with China and other countries.
    So, with that said, Ambassador Doud, we welcome you here 
today, and we look forward to your testimony.

     STATEMENT OF HON. GREGORY DOUD, AMBASSADOR AND CHIEF 
       AGRICULTURAL NEGOTIATOR, OFFICE OF THE U.S. TRADE 
                REPRESENTATIVE, WASHINGTON, D.C.

    Mr. Doud. Thank you, Chairman Costa, Ranking Member Rouzer, 
and other distinguished Committee Members. I want to thank you 
for the opportunity to testify today on President Trump's 
agricultural trade policy agenda. Ambassador Lighthizer and my 
colleagues at USTR and USDA have been working around the clock 
to address ag trade issues with our trading partners and 
increase export opportunities for farmers, ranchers, workers, 
and agribusinesses. I look forward to highlighting our efforts 
in multiple areas.
    The U.S. is the world's largest exporter and importer of 
food and ag products. U.S. agriculture has posted an annual 
trade surplus for well over 50 years. Overall, U.S. farmers and 
ranchers export more than 20 percent of what they produce, and 
in 2018, ag exports reached nearly $145 billion, an increase of 
1.4 percent over 2017.
    Every day this Administration, and the men and women at 
USTR and USDA, work to expand export markets for American 
agriculture. Whether it is poultry and beef to North Africa, 
pork to South America, grains and horticulture to Asia, dairy 
to Chile, and the list goes on and on.
    Let me focus my remarks today, however, on major trade 
initiatives of this Administration.
    First, passage of the U.S.-Mexico-Canada Agreement is an 
absolute necessity for U.S. agriculture. Since the 
implementation of the NAFTA in 1994, our ag exports to Canada 
have increased 289 percent and our ag exports to Mexico by 311 
percent, creating our first and second largest export markets 
in 2018 worth a combined $41 billion out of $145 billion in ag 
exports last year. In accordance with our TPA requirements, 
USMCA creates new market access for dairy, poultry, and eggs 
into Canada above and beyond existing access under NAFTA and 
what was negotiated in TPP. USMCA maintains duty free access to 
Mexico, allowing U.S. producers to build upon the $19 billion 
in ag exports last year.
    In addition to the current exports of dairy products to 
Canada from the U.S., Canada will provide new dairy TRQs 
exclusively for the United States. Additionally, Canada will 
eliminate its Class VI and VII milk class pricing policies. 
This is critical as we work to prevent Canada from 
externalizing the cost of its quota-based dairy program by 
undercutting U.S. skim milk powder prices in third country 
markets.
    USMCA also guarantees market access for poultry and eggs 
under new TRQs exclusively for U.S. producers. The need for 
this market access has never been more urgent, as more 
countries fill Canada's WTO chicken TRQ, resulting in a 
decrease in U.S. market share in Canada from 75 percent in 2014 
to 66 percent last year.
    For the first time in a U.S. trade agreement, USMCA 
specifically addresses ag biotech to support 21st century 
innovations in agriculture. The text covers all 
biotechnologies, including new technologies such as gene 
editing. In contrast, the TPP text covered only traditional 
recombinant DNA technology.
    For decades, U.S. wheat growers have raised concerns that 
U.S. wheat shipped to Canada must be graded as feed wheat, even 
though it may be high quality. Canada agreed to grade imports 
of U.S. wheat in a manner no less favorable than it accords to 
Canadian wheat.
    There are many additional improvements of USMCA over NAFTA, 
including procedural safeguards for recognition of new 
geographic indications, and Canada's commitment to ensure that 
British Columbia eliminates its discriminatory treatment of 
U.S. wine in grocery stores.
    The urgency to pass USMCA cannot be overstated for U.S. 
agriculture due to the size of the Canadian and Mexican markets 
for U.S. ag products.
    In addition to USMCA, a tremendous amount of work has gone 
into negotiations with China since President Trump and 
President Xi met in Buenos Aires back in November. The 
Administration has negotiated in good faith since then, twice 
delaying the scheduled increase in tariff rates due to progress 
in the trade talks. However, because China backtracked on 
significant commitments that it has made during the course of 
these negotiations, including on ag issues, President Trump 
directed USTR Lighthizer to increase the rate of duty on $200 
billion of Chinese imports from 10 to 25 percent on May the 
10th.
    The U.S.-China economic relationship is very important, and 
the Trump Administration is committed to reaching meaningful, 
fully enforceable commitments to resolve structural issues and 
improve trade between our countries.
    In 2018, the U.S. exported $13 billion in ag goods to 
Japan. The President, Ambassador Lighthizer, and I all 
understand the urgency to advocate these negotiations as soon 
as possible. We have also published our negotiating objectives 
for trade agreements with the EU and the UK.
    Continued adoption of technology by U.S. ag producers is a 
vital element to maintain U.S. global competitiveness. A 
cornerstone of U.S. trade policy is to promote the adoption by 
our trading partners of a transparent, predictable, and risk 
appropriate regulatory methods that are based on science. We 
are working in the WTO Codex and with several like-minded 
countries to advance this objective.
    Thank you. I look forward to working with the Committee to 
implement the President's trade policy agenda. I am happy to 
answer any questions.
    [The prepared statement of Mr. Doud follows:]

     Prepared Statement of Hon. Gregory Doud, Ambassador and Chief 
   Agricultural Negotiator, Office of the U.S. Trade Representative, 
                            Washington, D.C.
    Chairman Costa, Ranking Member Rouzer and other distinguished 
Committee Members:

    I want to thank you for the opportunity to testify today on 
President Trump's agriculture trade policy agenda. Ambassador 
Lighthizer and my colleagues in the Office of the U.S. Trade 
Representative (USTR) and U.S. Department of Agriculture (USDA) have 
been working around the clock to address agricultural trade issues with 
our trading partners and increase export opportunities for farmers, 
ranchers, workers and agribusinesses. I look forward to highlighting 
our efforts in multiple areas.
    The United States is the world's largest exporter and importer of 
food and agricultural products. U.S. agriculture has posted an annual 
trade surplus for well over 50 years. Agricultural exports support more 
than one million American jobs, with roughly 70 percent of these jobs 
in the non-farm sector, such as in processing and agricultural 
manufacturing. Overall, U.S. farmers and ranchers export more than 20 
percent of what they produce. In 2018, agricultural domestic exports 
reached nearly $145 billion, an increase of 1.4 percent over 2017.
    Every day this Administration, and the men and women at USTR and 
USDA, works to expand export markets for American agriculture. Whether 
it's poultry and beef to North Africa, pork to South America, grains 
and horticulture to Asia, dairy to Chile, and the list goes on, the 
Administration is focused on opening markets for America's farmers and 
ranchers.
    Let me focus my remarks, however, on major trade initiatives of 
this Administration.
    First, passage of the United States-Mexico-Canada Agreement (USMCA) 
is an absolute necessity for U.S. agriculture. Since the implementation 
of the North American Free Trade Agreement (NAFTA) in 1994, our 
agricultural exports to Canada have increased 289% and our agricultural 
exports to Mexico have increased by 311%--creating our first and second 
largest export markets in 2018 worth a combined $41 billion out of $145 
billion in total agricultural exports last year. In accordance with our 
TPA requirements, USMCA creates new market access for U.S. dairy, 
poultry, and eggs into Canada above and beyond existing access under 
NAFTA and what was negotiated in the Trans-Pacific Partnership (TPP). 
USMCA maintains duty free access to Mexico, allowing U.S. producers to 
build upon the $19 billion in agricultural exports to Mexico in 2018.
    In addition to the current exports of dairy products from the 
United States, Canada will provide new tariff rate quotas (TRQs) 
exclusively for the United States. This agreement provides new TRQ 
access for over ninety-nine thousand additional metric tons, after 6 
years, of dairy products, including: fluid milk, cream, butter, skim 
milk powder, cheese, and many others. And that number will grow for 
another 13 years after that. Additionally, Canada will eliminate its 
Class [VI] and [VII] milk class pricing policies. This is critical as 
we work to prevent Canada from externalizing the cost of its quota-
based dairy program by undercutting U.S. skim milk powder prices in 
third country markets.
    USMCA also guarantees market access for poultry and eggs under new 
TRQs exclusively for U.S. producers. The need for this market access 
has never been more urgent as more countries fill Canada's WTO chicken 
TRQ, resulting in a decrease of U.S. market share in Canada from 75 
percent in 2014 to 66 percent market share in 2018 of Canadian chicken 
imports. USMCA includes a TRQ for chicken of 57,000 metric tons and for 
eggs of ten million dozen in year 6 of the Agreement--both just for 
U.S. producers. Similar to dairy, these U.S.-only quotas will increase 
for an additional 10 years. The United States will also maintain the 
ability to export chicken to Canada under its WTO TRQ of nearly 40,000 
metric tons.
    For the first time in a U.S. trade agreement, USMCA specifically 
addresses agricultural biotechnology to support 21st century 
innovations in agriculture. The text covers all biotechnologies, 
including new technologies such as gene editing. In contrast, the TPP 
text covered only traditional rDNA technology. Specifically, we 
included provisions to enhance information exchange and cooperation on 
agricultural biotechnology trade-related matters.
    In the Sanitary and Phytosanitary (SPS) Measures chapter, we have 
agreed to strengthen disciplines for science-based SPS measures, while 
ensuring Parties maintain their sovereign right to protect human, 
animal, and plant life or health. Provisions include increasing 
transparency in the development and implementation of SPS measures; 
advancing science-based decision making; improving regulatory processes 
for certification, regionalization and equivalency determinations; 
conducting systems-based audits; improving transparency for import 
checks; and working together to enhance compatibility of measures. The 
USMCA also establishes a new mechanism for technical consultations to 
resolve issues between the Parties.
    For decades, U.S. wheat growers have raised concerns that U.S. 
wheat shipped to Canada must be graded as feed wheat, even though it 
may be high quality. Canada agreed to grade imports of U.S. wheat in a 
manner no less favorable than it accords to Canadian wheat, and to not 
require a country of origin statement on its quality grade certificate.
    There are many additional improvements of USMCA over NAFTA, 
including procedural safeguards for recognition of new geographical 
indications and Canada's commitment to ensure that British Columbia 
eliminates its discriminatory treatment of U.S. wine in grocery stores. 
The urgency to pass USMCA cannot be overstated for U.S. agriculture, 
due to the size of the Canadian and Mexican markets for U.S. 
agricultural exports.
    The President has a robust trade agenda that includes many 
potential economic opportunities for farmers, ranchers, workers, and 
agribusinesses, including negotiations for trade agreements with Japan, 
the European Union, and the United Kingdom upon its exit from the 
European Union. To advance the rest of the trade agenda, however, 
passage of USMCA is critical.
    Regarding the rest of the President's trade policy agenda, we have 
been very active in addressing trade policy concerns and creating new 
export opportunities for U.S. agriculture. In addition to USMCA, a 
tremendous amount of work has gone into negotiations with China since 
President Trump and President Xi met in Buenos Aires on November 30, 
2018. The Administration has negotiated in good faith since then, twice 
delaying the scheduled increase in tariff rates due to progress in the 
trade talks.
    However, because China backtracked on significant commitments it 
had made during the course of negotiations, including on agricultural 
issues, President Trump directed USTR Lighthizer to increase the rate 
of duty on $200 billion of Chinese imports from 10 percent to 25 
percent on May 10, 2019. USTR is currently establishing a process by 
which interested persons may request that specific covered products be 
excluded from the duties. Additionally, President Trump directed 
Ambassador Lighthizer to begin the process of raising tariffs on 
essentially all remaining imports from China, which are valued at 
approximately $300 billion.
    The U.S.-China economic relationship is very important, and the 
Trump Administration is committed to reaching meaningful, fully-
enforceable commitments to resolve structural issues and improving 
trade between our countries. I can say an important element of our 
negotiations has been to resolve a large number of unwarranted and 
longstanding trade barriers to U.S. agricultural exports. I hope that 
China will make real structural changes across the range of unfair 
policies and practices that yield actual, verifiable, and enforceable 
results. If we are able to have an acceptable agreement, President 
Trump expects substantial and immediate purchases of U.S. agricultural 
products, as well as the removal of technical and regulatory barriers 
that impede such purchases.
    With respect to Japan, in 2018, the United States exported over $13 
billion in agricultural goods to Japan. The President, Ambassador 
Lighthizer, and I all understand the urgency to advance these 
negotiations as soon as possible for U.S. agriculture.
    We have also published our negotiating objectives for trade 
agreements with the European Union (EU) and the United Kingdom (UK) 
upon its exit from the EU. Both of these sets of objectives include 
comprehensive market access for agricultural goods into the EU and UK. 
We will continue to consult closely with Congress regarding 
negotiations with the EU and UK.
    The World Trade Organization (WTO) provides multiple tools for the 
United States to build coalitions or act alone to aggressively 
counteract trade concerns that negatively impact U.S. production and 
jobs. That said, the WTO that we intended to create, and the WTO we 
seek, is in key respects not the WTO we have today. This is not a new 
or sudden development. For years, the United States and many other 
Members have voiced concerns with the WTO system and the direction in 
which it has been headed.
    For example, the WTO's negotiating arm has been unable to reach 
agreements that are of critical importance in the modern economy. 
Previous negotiations were undermined by some Members' repeated 
unwillingness to make contributions proportionate to their role in the 
global economy, and by these Members' success in leveraging the WTO's 
flawed approach to developing-Member status.
    In addition, certain Members' persistent lack of transparency, 
including their unwillingness to meet their notification obligations, 
have undermined Members' work in WTO committees to monitor compliance 
with WTO obligations. Their lack of transparency has also damaged 
Members' ability to identify opportunities to negotiate new rules aimed 
at raising market efficiency, generating reciprocal benefits, and 
increasing wealth.
    The United States is at the forefront of the reform effort in 
Geneva. In February, we submitted a proposal to the General Council to 
promote differentiation of development status in the WTO to reflect 
today's realities. We are also working with a diverse group of Members 
to advance a proposal aimed at improving Members' transparency and 
compliance with their notification obligations.
    In the case of agriculture domestic support, we have major concerns 
that countries are failing to properly notify their domestic support. 
We therefore have started submitting our own counter-notifications of 
other countries' excessive domestic support, and we are holding 
countries accountable for their excessive trade-distorting farm 
subsidies. We litigated a major dispute to a WTO panel on China's 
excessive farm support for grains, and we won. But we recognize that, 
in many respects, the WTO dispute settlement system has strayed far 
from the system agreed to by the United States. In particular, the 
Appellate Body has appropriated to itself powers that WTO Members never 
intended to give it and does not follow the rules set by WTO Members. 
Previous Administrations have worked to address this issue, and this is 
something that the Trump Administration continues to address head-on.
    Finally, U.S. agricultural productivity and efficiency, as measured 
by agricultural total factor productivity, is among the highest in the 
world. This productivity is, in large part, determined by how well 
producers manage current technology. Continued adoption of 
technological progress by U.S. agricultural producers is, therefore, a 
vital element to maintain U.S. global competitiveness. Accordingly, a 
cornerstone of U.S. trade policy is to promote the adoption by our 
trading partners of transparent, predictable and risk appropriate 
regulatory methods that are based on science. We are working in the 
WTO, Codex, and with several like-minded countries to advance this 
objective.
    Thank you. I look forward to working with the Committee to 
implement the President's trade policy agenda. I am happy to answer any 
questions.

    The Chairman. Thank you very much, Ambassador, for your 
focused and succinct testimony, and as you noted in your 
comments, there are a number of significant accomplishments 
that have been achieved in USMCA, and it is one of the reasons 
it is an improved NAFTA 2.
    Let me begin with my questioning. China's retaliatory 
tariffs, as I indicated in my opening statement, have had 
impacts across the board. It has been one of the growing 
markets for U.S. agriculture, and dairy producers, as an 
example, have found more than ten percent growth each year over 
the last decade. But this year, with their retaliatory tariffs, 
it has reversed some of those gains. First quarter exports in 
2019 were down 40 percent over last year, even though China's 
overall imports are up 13 percent. Obviously, if this 
continues, dairy producers think they will lose as much as $5 
billion by the end of 2020.
    Under Secretary, what are we doing to achieve progress that 
we will remove these tariffs and address the pain it has caused 
our dairy industry sector in the interim?
    Mr. McKinney. And your question is specific to China?
    The Chairman. Yes.
    Mr. McKinney. Well, clearly, we are in a discussion with 
China. I would say that Ambassador Doud and I and our teams, we 
are having great progress as we talk with China, including many 
of the commodity and the products that you referenced.
    But when that point in time came that there was 
backsliding, and it was very distinct, it was obvious, the 
decision was made that we could not see that happen. And I 
might add that we were not seeking things that were so out of 
line that they weren't being treated with same accord to other 
countries. China was providing access to other countries. We 
were seeking same, similar. Yes, we were pushing the boundaries 
on a couple of things.
    The decision was made to step back and revisit this, and so 
we are in this--I will call it a cooling off period. I hope 
that the Presidents will meet on the margins of the G20 and get 
this going again.
    What we are doing to address that are some mitigation 
programs, sir, and I think that is your question.
    The Chairman. Well, yes, and because of my time, I 
obviously understand what you are attempting to do in 
mitigation. But, the reality is, as I said, it is easy for 
China to buy more agricultural products. They have a market and 
they have the need.
    Mr. McKinney. Right.
    The Chairman. But citrus growers are grappling with this 
similar loss in exports to China, as well as a dramatic 
increase of imports of cheap, offshore fruit. These factors, 
coupled together with creating an oversupply in the domestic 
market and U.S. foreign fruit have seen prices decline 37 
percent. Obviously, the mitigation is not going to make up the 
difference.
    Our growers, whether we are talking about National Milk, 
IDFA, CDI, our citrus producers, Sunkist, et cetera, they are 
wondering what do they do in the interim, because in essence, 
we are being held hostage.
    Mr. McKinney. Yes.
    The Chairman. For the reasons that the gentleman from Texas 
indicated earlier.
    I talked to a lot of constituents of specialty crops and 
dairy farmers in the last round, and they are worried.
    Mr. McKinney. We are worried, and we would like to get this 
resolved. But, the question is what does it take to address 
this in the long-term?
    We can go through commodity after commodity, crop after 
crop, product after product, and talk about constraints that 
they were seeing in comparison to other countries, and so, this 
reset is a desire to level that playing field----
    The Chairman. On another point, the dairy farmers and pork 
producers, among others, suffered losses on the Canadian and 
Mexican tariffs while they were still in effect for nearly 5 
months of this year. Are those losses going to be included in 
the damage estimation for this second round of aid, do you 
know?
    Mr. McKinney. The formula is under review by OMB, but we 
have changed how that is calculated, so it is not just a 1 year 
look back, but it is looking back over several years. I hope 
so, but we will have to see what comes out of the OMB where it 
is currently under review.
    The Chairman. Mr. Ambassador and Mr. Under Secretary, we 
have all been around for a while and in every Administration 
that I have served with, there are always differences within 
the Administration on policies. That is to be expected, whether 
it is the departments or the agencies or what is happening in 
the West Wing. Do you feel that our agricultural interests are 
being well-represented as these negotiations are taking place 
in the West Wing, Under Secretary, and let me refer to the 
Ambassador first, since your portfolio is ag?
    Mr. Doud. Absolutely. There is absolutely no question about 
it. You see the President referencing agriculture on a repeated 
basis with regard to this, and I can tell you in the building, 
we are constantly talking about the need to remove these 
barriers----
    The Chairman. Notwithstanding the differences on approach?
    Mr. Doud. If we want to talk about China, the point is, we 
don't have access for a large majority of what we sell to 
China----
    The Chairman. No, I agree. No one is disputing that point.
    Mr. Under Secretary, my time has almost expired. Would you 
care to comment?
    Mr. McKinney. Mr. Chairman, there is no doubt in my mind 
the White House has our and the ag community's back, and we can 
see this with many Tweets. We can see this in his statements, 
with his actions.
    Now, how we are going about it clearly is an issue, because 
we are in choppy waters. But if you are asking the question 
does the White House have our back, the answer is yes.
    The Chairman. All right. I will defer under protocol to our 
Ranking Member for questions----
    Mr. Conaway. Well, thank you.
    The Chairman.----because, we try to follow protocol here. 
Mr. Peterson obviously would have taken the lead if he were 
here, but I will defer to you.
    Mr. Conaway. All right. Thank you.
    The Chairman. The gentleman from Texas.
    Mr. Conaway. I appreciate it, Mr. Chairman. Thank you very 
much.
    The Chairman and I and others just came from celebrating 
and memorializing the D Day efforts in France, and while there, 
Mr. McKinney, we met your ag rep, one Kate Snipes, and she 
couldn't have been more energetic on peddling U.S. wine and 
other products to the French. And so, she is representing you 
fellows really, really well.
    Could you both talk to us about the consequences of not 
getting USMCA done?
    Mr. McKinney. Well, we just must get it done. I don't even 
want to think of the alternative, and it is not just because of 
its reach and its importance, USMCA we are speaking of, across 
three nations, that goes well beyond agriculture. I mean, our 
interest here is, of course, agriculture where it is just 
crucial. The message to the world and to those other many, 
many, many countries that we want to do some sort of an 
agreement with, would be disastrous.
    That is why we are here in support of USMCA, that is why we 
are happy to answer and provide any information that would be 
of assistance to any or all of you. But Congressman, we have to 
get it passed. It is the template by which we are going to 
model so many of the things, and not passage is just simply not 
an option in our point of view, sir.
    Mr. Conaway. Gregg, anything to add to that?
    Mr. Doud. I would just simply add that we have plans to 
move forward in a lot of different places in the world, and if 
we don't get USMCA done, it halts the entire trade agenda of 
the entire Administration.
    Mr. Conaway. All right. Gregg, talk to us a little bit, 
recently we had two separate WTO dispute settlement panels that 
found that China's tariff rate quotas for wheat, rice, and corn 
in their domestic supports for grain producers were 
inconsistent with their WTO commitments. Can you highlight the 
impact that China's ag policies have had on our producers, as 
well as what could be our next steps in trying to hold China's 
feet to the fire on their agreement?
    Mr. Doud. Yes, sir. I actually think those are two of the 
most significant WTO cases in history, and two of the biggest 
wins we have ever had at the WTO. China's subsidies in wheat 
and rice were extraordinary. I don't know what the number is, 
somewhere around $80 billion.
    Mr. Conaway. Well, we have been told $100 billion a year, 
which dwarfs----
    Mr. Doud. And when you throw corn into that, and this case 
didn't even include corn, and that was a time when their 
support price for corn was over $9 a bushel. Fortunately, we 
have won both of those cases, and in fact, we now have recently 
learned that China and the U.S. have notified the chair of the 
dispute settlement understanding that we have jointly agreed to 
a reasonable period of time with China to come in compliance 
with the AMS panel report by March 31, 2020.
    Mr. Conaway. Right. I am sure we will have it until them 
for them to reset their processes. Do you think there is enough 
transparency in how China operates that we will know whether or 
not they actually keep their commitment?
    Mr. Doud. Well, this transparency issue is actually the 
biggest thing that we are pushing at the WTO right now in 
agricultural discussions. China hadn't reported what their 
subsidies were to the WTO until recently back to 2012, and we 
have enormous concerns with what is going on in India. We have 
issued the first ever in agriculture counter-notifications at 
the WTO with regard to what India's subsidies are, and that has 
sent a really strong message that the United States is showing 
leadership and is really pressing people to abide to their 
obligations.
    Mr. Conaway. Gregg, for the record, can you visit with us 
real quickly about what the impact that China cheating on their 
commitments has had on world markets and U.S. producers?
    Mr. Doud. Well, it is not just for U.S. producers.
    Mr. Conaway. Well, world markets.
    Mr. Doud. It depresses the price of these for rice and corn 
and wheat for farmers all over the world.
    Mr. Conaway. All right.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. All right, the gentleman yields back, and I 
will recognize the gentleman from California, Mr. Cox, for 5 
minutes.
    Mr. Cox. Thank you, Mr. Chairman. I have a letter here from 
the Almond Alliance of California, requesting they receive 
their full $63.3 million damage allocation assigned by the USDA 
for the Market Facilitation Program, and on behalf of myself, 
and yourself, Mr. Chairman, I ask unanimous consent for it to 
be submitted to the record.
    The Chairman. All right, without objection, the letter will 
be submitted for those on behalf the California Almond Board. 
Thank you.
    [The letter referred to is located on p. 47.]
    Mr. Cox. Thanks so much.
    Mr. Doud, my district is actually the top producer of both 
almonds and dairy in the United States, and farmers from both 
of these commodities have naturally been hard hit by the trade 
war. And so, what new market opportunities for almonds and 
dairy can we expect to become available soon?
    Mr. McKinney. Who did you direct that to, sir?
    Mr. Cox. Ambassador Doud, please.
    Mr. McKinney. Okay.
    Mr. Doud. Congressman, the big thing that we can talk about 
here is USMCA on the dairy side. We have worked very, very hard 
to make progress with Canada. The ITC report says that U.S. 
exports of dairy products to Canada will increase by $228 
million. I think that is a sizable quantity, and another $51 
million to Mexico. That is a significant piece of progress on 
the dairy side right there.
    Mr. Cox. Well great, thanks.
    And Under Secretary McKinney, during the rollout of the 
previous trade mitigation programs, some of the allocated 
Market Facilitation Program funds were left on the table, and 
the Agricultural Trade Promotion Program was vastly 
oversubscribed. And should the same events occur this time 
around, will unused MFP funds be reallocated to trade promotion 
programs?
    Mr. McKinney. Well, the commitment was up to $12 billion, 
and we are still in the process of buying products that go into 
food banks and school nutrition programs. That will cascade up 
just a bit. I don't know if it will reach $12 billion or not.
    Your question about reallocation, I don't know. We were 
satisfied and pleased with the $200 million that my mission 
area received for ag trade promotion. This is the 3 year, or up 
to 3 year, Foreign Market Development Program funds that are 
being rolled out now, I would add, successfully. We were 
delighted that here under mitigation round 2 will receive 
another $100 million.
    Now, let me put this in perspective. French wines in Europe 
have more than $200 million in support. Our total MAP program 
monies each year is at $200 million. Not a complaint. We are 
grateful for what we have, but it gives an illustration of the 
opportunity we have with this surge capacity, this ag trade 
promotion. And we are putting that to good use.
    Now, to your earlier question, I want you to know that I 
suspect--I would have to go back and check--but I suspect we 
have more visits with the almond folks and the dairy folks than 
any other group of commodities across the board, and we are 
happy to do it. They are always insightful and we are 
continuing to work with them on ATP and so many other things.
    I will add one other thing, because it is worth noting. I 
have not missed a single conversation with a single government 
official in all my trips without talking about these nefarious 
geographic indicator issues coming out of Europe. I don't know 
if we have made progress, I think so, and I think that is part 
of what USMCA helps to address with respect to Mexico.
    So, just three different examples, sir.
    Mr. Cox. Well, thanks so much.
    When Secretary Perdue was here last time, he said that the 
USDA was, ``taking the lead in getting back the markets that ag 
producers here have lost due to the trade wars.'' Can you give 
us just a bit of a status update as to what you are doing to 
actually accomplish that task?
    Mr. McKinney. Yes, yes. Let me say, it is always with our 
colleagues with USTR and proud to do that, but yes, two or 
three illustrations: 2016 and prior, the norm of USDA was to 
have about three large ag trade mission visits per year in some 
part of the world. Last year, we doubled that to six. This 
year, despite the shutdown where we had to postpone two, we 
will deliver on seven, and next year, we are looking to do 
eight or more. That doesn't include the bilaterals where I or 
Gregg and I, as we have done a couple times, go in and out on a 
more quick basis where we speak to government officials.
    I will add to you, and I mentioned in my opening comments, 
MAP, FMD, EMP, TASC Programs, all being utilized, in a couple 
places, under-utilized, the Quality Samples Program, the 
Emerging Markets Program. We want to encourage, and we are, 
people to dive into those a bit more, because some funds are 
being left--not a lot, but some--and we want to be fully 
utilizing them.
    The last thing I will say is that the creation of this 
position allows us to be more nimble. I have a bigger team. We 
have people at post in the embassies in 93 areas. They are 
terrific people, and so to go in and out as we have been, I 
have been about 17 countries, 350,000 to 400,000 miles into my 
million-mile quest. And all of those do result because there is 
nothing better than simply showing up. It is true. You build 
trust. You build relationships. You resolve problems. And so, 
these are just a few of the things we are doing, sir. But I 
would say specific to this group, it is the use of all your 
terrific programs.
    The Chairman. The gentleman's time has expired----
    Mr. Cox. Thanks so much.
    The Chairman.----and the chair will now recognize the 
Ranking Member of the Subcommittee, Congressman Rouzer from 
North Carolina.
    Mr. Rouzer. Thank you, Mr. Chairman. Again, I greatly 
appreciate our two witnesses being here today.
    I want to focus in on the EU here for a minute. The 
Administration--and I was pleased to see this included 
comprehensive market access for agriculture in its negotiating 
objectives for a trade agreement with the EU. And of course, as 
you know, the EU has also recently announced its list of 
products for retaliation in the WTO's civil aircraft dispute. 
And that list includes many ag products, among them, one of our 
big products in North Carolina, sweet potatoes. What have been 
some of the difficulties for the U.S. when dealing with 
European agriculture that you intend to address during these 
market access negotiations, and to add to that, can you commit 
to continuing to work on ways to address these retaliatory 
tariffs, and particularly our sweet potato issue? Either one of 
you.
    Mr. Doud. I appreciate that question, and overall with 
regard to agriculture, we struggle with the EU across the board 
in terms of their acceptance of our use predominantly of 
technology to grow food. That manifests itself in the fact that 
we have a $15 billion trade deficit with the EU, just in 
agriculture alone, which is extraordinary. Across the board, 
the EU always comes up with a reason not to take our 
agricultural products, and sweet potatoes is just a great 
example where they have changed the MRL on fungicide, and for 
all intents and purposes, locked us out of the market.
    I just want to give a shout-out here to Under Secretary 
McKinney in terms of the work that he has done at the Codex to 
work on MRLs, and everybody at USDA and USTR.
    The EU is actively undermining our efforts at the Codex, 
and Under Secretary McKinney is taking them head-on in that 
regard.
    Mr. Rouzer. Mr. Under Secretary, do you want to add to 
that?
    Mr. McKinney. We have met with your sweet potato growers, 
love them. My wife and I are fans, so count us in.
    Ambassador Doud said it like it is. The EU has been very, 
very difficult. The precautionary principle has a stranglehold 
on the area, and we are seeing it manifested in crop after 
crop, livestock and poultry, all of it.
    My only hope is that the case will get resolved amicably. 
They will realize that the WTO has made the determination, not 
the U.S., and that we will not get to the point that there is 
retaliation. And we are a ways off on that, so we are hopeful 
that that will get resolved. But, it points to larger issues 
that we are facing with our friends across the water.
    Mr. Rouzer. These non-tariff trade barriers, it has been my 
observation in life that if you don't want something, one 
excuse is just as good as another. And therein is that case in 
point with what we are dealing with, with the EU, but also with 
Asia too. It seems to me we need to have some type of 
comprehensive strategy to deal with these non-tariff trade 
barriers. I am not smart enough to tell you what it is. Perhaps 
no one else is either, but have you given any long-term thought 
to this and how to deal with it?
    Mr. McKinney. Just a couple, and really, it comes through 
each and every trade negotiation, each and every interface. We 
talk SPS issues on every single one of my visits. And 
sometimes, we are successful. Sometimes it is a bit more 
difficult, but it is a full court press. It is a leave no stone 
unturned kind of strategy.
    But I will say, we are making some progress. It may not 
seem like that now because we have so many larger countries 
where we are having some issues, and we will have to work 
through those.
    But I will tell you what, back to showing up, we can work 
that. I will not name the country, because I don't want to 
embarrass them, but I was at a country, notified Ambassador 
Doud immediately. We tag-teamed the next week, and we are 
seeing great resolve. Ironically, that involved fruit from 
partly your state and partly our friends in California. This 
country was just flat denying fruit access and it was beyond 
the pale.
    So, these are the things that we are trying to do.
    I would also say, very importantly, the language in USMCA 
is a great template to then have those discussions. It may not 
quite be as easy as a cut and paste; but, it is a great start, 
and it is new and it is different, and we don't have it 
anywhere else.
    Mr. Rouzer. Real quickly, Japan and beef, pork. Where are 
we?
    Mr. Doud. Conversations are going on as we speak.
    Mr. Rouzer. Good or bad?
    Mr. Doud. It is always good when we are talking.
    Mr. Rouzer. Fair enough. I yield back.
    The Chairman. The gentleman yields back, and I want to 
underline the efforts with Japan and beef have had a storied 
history that I have been engaged with for the entire time I 
have been here, and you are doing the Lord's work there. The 
beef that we grow here and the excuses that the Japanese have 
raised in the past, are not justifiable, and stay with it.
    Mr. Doud. Mr. Chairman, I would just like to say that I 
cannot emphasize enough the importance of the efforts of 
Ambassador Lighthizer and President Trump in this regard to get 
to the table with Japan and get these issues resolved, and get 
ourselves on a level playing field with some of our competitors 
in that market.
    The Chairman. Thank you. The next Member to be recognized 
is the gentlewoman from Minnesota, Congresswoman Craig.
    Mrs. Craig. Thank you, Mr. Chairman, and thanks to both of 
you for being here today. I have a lot of questions for this 
panel, so I am going to hop right to it.
    Over the weekend, the President tweeted that Mexico would 
begin purchases of U.S. agriculture products. There have been 
conflicting reports of the details of that agreement. Can you 
tell us today what products will be included, and at what 
volumes? Can you clarify the details of the agreement that the 
President is referring to? Mr. Doud?
    Mr. Doud. I don't have any details to that regard.
    Mrs. Craig. Mr. McKinney?
    Mr. McKinney. I don't have anything to add, except we have 
things in line if they are serious about wanting to make some 
immediate purchases. We are always ready to deal, but we have 
to get clarification first.
    Mrs. Craig. Is the President promising additional purchases 
without that being true, or does the Department of Agriculture 
and the Trade Representative here today just not been told yet 
what the President is promising?
    Mr. Doud. Well, we are going to be looking at good 
purchases as a result of the tariffs not going on and the 
section 232 tariffs coming off. If you are speaking of a net 
plus up, we will have to get clarification on that. But we do 
anticipate exactly what the President said in terms of 
restored, new, reinvigorated sales to Mexico. But if you are 
asking for a specific crop or livestock or poultry product, I 
don't have that at this point, ma'am.
    Mrs. Craig. Okay. Well, that seems odd that the President 
has made this announcement and has yet to tell the Department 
of Agriculture and the Trade Representative to the United 
States of America. I hope we all see that as just a little odd.
    In terms of China, I did a lot of work with China in the 
private-sector in my prior life, but every day that passes 
without a deal, we are losing our competitive advantage to 
Brazil, Australia, and others who want to take over that market 
share we are losing.
    Looking down the road, what can our producers realistically 
expect in terms of reopening market access? Do you think we can 
make up enough access in other markets, or do you see those 
markets opening back up to us any time soon?
    Mr. Doud. I want to describe our situation with China a 
little bit, because it is very important. Yes, we do sell a lot 
of soybeans to China, but in the case of poultry, we haven't 
had any access and haven't sold China a pound of poultry since 
2015, due to High-Path Avian Influenza. We now sell China a 
thimbleful of beef after being blocked out of the market due to 
BSE for 15 years. We have Codex, MRL issues with pork and 
ractopamine and we can't sell them pet food. Rice, dairy, 
animal feed, seafood, potatoes, nectarines, blueberries, 
barley, alfalfa, almond meal, timothy hay, we don't have 
access. And in fact, my biggest frustration--and we have spent 
hours with China talking about this--is in terms of biotech 
approvals. China is the only country in the world that requires 
that you send them the seed and they have to cultivate that 
seed in China before they approve the biotech trade. We know 
what happens once that happens. This is a frustration, and we 
have had, Ted and I and an enormous team at USDA and USTR have 
spent hours and hours and hours with China, trying to resolve 
these structural non-tariff trade barriers.
    Mrs. Craig. Ambassador Doud, in your written testimony you 
also note that USTR is currently establishing a process to 
exclude certain importers from Chinese tariffs. At a briefing 
last week, USTR told my staff that action could require at 
least 50 additional employees to sort through the thousands of 
likely exclusion applications, and that they hoped they would 
be able to receive detailees from the USDA to fill some of 
those positions.
    Under Secretary McKinney also testified at length about the 
work going into the second round of Market Facilitation Program 
payments.
    You are both talking about taking resources away from the 
core function of your agencies, implementing the farm bill at 
USDA and negotiating and enforcing trade agreements at USTR, in 
order to offset the damage done by the President's trade 
policies, all while farmers and ranchers are waiting for real 
help.
    I would be grateful if you would follow up with a written 
response on the work hours spent to provide exclusions from 
tariffs and creating Market Facilitation Program payments, and 
how many hours of productivity dedicated to your regular 
mission you may have lost.
    And I appreciate both of you being here today, and Mr. 
Chairman, I yield back the remainder of my time.
    The Chairman. The gentlewoman yields back the remainder of 
her time. We thank her, and the chair will now recognize the 
gentlewoman from Missouri, Madam Hartzler.
    Mrs. Hartzler. Thank you very much, Mr. Chairman, and thank 
you, gentlemen, for your timeless efforts to try to open up 
more trade for our ag products. We really appreciate your 
efforts.
    I wanted to follow up a little bit on some of the comments 
of my colleague, and this is something I hear in my district 
too, regarding our negotiations with China. There is a concern 
that trying to hold China accountable will result in the loss 
of markets that we will never get back. And so, do you agree 
with that, and what are we doing to avoid that scenario?
    Mr. McKinney. Hope springs eternal. I continue to hope that 
the two Presidents will meet on the margins of the G20. There 
is no doubt that the U.S. is very important to China, and there 
is no doubt that China is very important to us.
    I am not ready to go there yet, notably because we have had 
over 21 different sessions; very positive discussions. Didn't 
get exactly where we wanted to go. We are in a cooling off 
period here. We hope we get back to that table, because each 
country needs the other, and the world needs for this to 
happen. I am not going to go there yet on suggesting this is 
lost. I think we can get back to business.
    Mrs. Hartzler. Anything you want to add, Ambassador Doud, 
as far as other markets coming in?
    Mr. Doud. Well, I would simply point out that China is 
importing apparatuses as a state trading enterprise. And the 
fact that they have a unique ability to turn that switch on and 
off as they see fit, and part of this discussion, we have 
worked hard to try to maintain our ability to sell to the 
private-sector in China as well.
    Mrs. Hartzler. Great.
    I just met with several of my farmers last week, viewing 
some of the flood damage and the flooding that is going on, and 
as you know, many farmers are not able to even get in any crops 
in the Midwest because of the flooding. I had some questions. I 
know this isn't your exact area, but on the Market Facilitation 
Program, I wondered if you could help out. We just have some 
practical questions.
    Of this first tranche: I see we have $14.5 billion that is 
going to be made in direct payments. How much of that is going 
to be in the first tranche?
    Mr. McKinney. They said they are dividing that up, because 
we hope for changes in policy. Let me start there.
    Mrs. Hartzler. Sure.
    Mr. McKinney. I don't know that they have an exact amount, 
but the first tranche will be heavier because of the immediate 
need.
    Mrs. Hartzler. Okay.
    Mr. McKinney. Beyond that, it is at the OMB--I am 
disallowed by law from getting the specifics. I am sorry, but 
as those come out, we will let you know that.
    But, I want you to know that we are very sensitive to the 
whole additional complication of the flooding and the 
consistent rains.
    Mrs. Hartzler. Great, and you will probably answer the same 
way on these others. But when will we know the county rates for 
the MFP?
    Mr. McKinney. I don't know. In OMB.
    Mrs. Hartzler. Okay. Farmers last week were trying to make 
a decision between taking prevented planting and wondering 
about if they should try to hope that the water lets off and 
they will be able to plant something so that they get the 
Market Facilitation Program payment, because that is only going 
to be on planted acres and the date was Monday to take prevent 
plant from the FSA, and the date is Friday for RMA. And I know 
there was going to be some discussion about aligning those 
dates. Are you aware if those dates have been done yet?
    Mr. McKinney. I can't answer the specific question. I can 
say that last night, 6:30 or 7:00, the Secretary issued a 
statement that tries to clarify at least a little bit, without 
disobeying the law. Basically, what that was is to try to 
encourage farmers again to make the decision based on their own 
right best farm, soils, conditions, et cetera, and it was 
basically a statement that says the $3 billion that you all 
passed on disaster payments, and the $16 billion--$14.5 billion 
would be Market Facilitation Program. We are going to maximize 
as best as we can as the law allows to address these kinds of 
things. That is coming as quickly as we can, and we have the 
farmer at heart. We understand that these are different 
dynamics all sort of piling on each other, and we want to try 
to make it as flexible, but also, as easy as possible.
    We have good feedback from mitigation 1 that it was a 
fairly simple program. Not perfect, but a fairly simple 
program. We want to try to keep it in that vein. Thank you.
    Mrs. Hartzler. Okay. Well, I will follow up on that, but I 
appreciate your efforts traveling around the world like you 
are. I wanted to focus on what you have been doing with the 
$200 million last year and the $100 million. You have already 
talked about that a little bit. You have talked about how you 
are seeing great results. I took some notes from your earlier 
questions talking about the number of trips, three last year--
or you took six last year compared to normally three. Hope to 
have seven this year, eight next year. You talked about 
Emerging Markets Program funds. They are not all being used, 
and you called on us to maybe reach out to people back home and 
let them know those funds are available. You have had a trip to 
Colombia. Can you just expound some more now on some of your 
successes that you are seeing with your programs, not just 
trips, but actual results and new markets opening up?
    Mr. McKinney. Yes, I will try to do that and I will use 
different examples.
    Last year, we took a trip to Guatemala, Honduras, and El 
Salvador, which we know are sending a lot of people up to our 
southern border, and so, I went in thinking okay, no stone 
unturned. I have been saying it. We are going to go down here 
and see what we can do. The sales from that now validated more 
than 12 months later set the all-time high record of an ag 
trade mission in the history of the Foreign Agricultural 
Service. I am still in disbelief.
    Now, that is no disrespect to those people, but it makes a 
statement that though that is not a China, Canada, Mexico, 
Japan market, probably never will be, it does say that there is 
business out there if we go knock on the door, develop 
friendships and respect. This is the kind of thing we try to 
repeat.
    Now to be sure, we are never going to get to the point in 
one visit like we have over time. But I hearken back. I am a 
history buff. I am a World War II history buff. Look where the 
southeast Asia region, notably Japan, was at the point in time 
of the end of World War II. Look where Germany and much of 
Europe was. They are now terrific trading partners. We are 
working through some issues to be sure, but terrific trading 
partners. And that is what we are seeking to do. More than \1/
2\ of the ag trade missions every year will be to these not 
developing markets in the sense of third world, but markets we 
know but we just haven't had the funding, the energy, and the 
resources to go work on. And that is what we are doing.
    All of these trade missions and the bilaterals also get 
into government to government. There are there benefits there. 
Again, I am not going to cite the country because I don't want 
to embarrass them because we are making progress, but 
Ambassador Doud and I teamed up on one. It was a great USDA-
USTR teamwork where we are now seeing access that we had not 
seen for years. I mean, they were thumbing their nose to our 
face. It was amazing the rejections, multiply this times many, 
many areas, and you get something.
    I will also say something about leverage. When we were in 
Colombia, it is pretty clear that the President's strong stand 
on these kinds of things, I think, is a reason why they didn't 
want to pursue some other retaliatory kinds of things. We will 
validate that in the next week or 2, but that is certainly the 
sense I got.
    Showing up, working this, and standing tall and standing 
tough has, I think, seen results. We are not staying in choppy 
waters; we are getting through.
    The Chairman. With all due respect, Mr. Under Secretary, 
the gentlewoman's time has expired.
    Mr. McKinney. I am sorry.
    The Chairman. But, I appreciate your enthusiasm.
    Mr. McKinney. Thank you.
    The Chairman. All right. The chair will now recognize the 
gentleman from California, Mr. Carbajal, for 5 minutes.
    Mr. Carbajal. Thank you, Mr. Chairman, and thank you both 
for being here.
    Mr. McKinney, agriculture remains a top industry and core 
part of life on the Central Coast that I represent in 
California, and our wine, vegetable, and berry production 
consistently rank among the most profitable in the nation. 
Retaliatory tariffs are projected to cost California fruit and 
nut growers over $2 billion a year. That figure doesn't even 
include the losses that California livestock producers are 
facing, or the impact imports of foreign products have had on 
our markets.
    What is the plan to offset these losses, specifically for 
California specialty crop growers? Two, should I be expecting 
or should I expect USDA's next mitigation package to direct 
funding to California specialty crop growers? And what is the 
long-term plan?
    Mr. McKinney. Well, the long-term plan, to answer your last 
question first, is to try to right size trade so that we have 
ongoing free, fair, and reciprocal access. And that is what we 
are trying to seek. You heard me just say that not one, but two 
countries, China and this other one I mentioned, have rejected 
a lot of the products that you just mentioned. And so, we are 
trying to get free, fair, and reciprocal trade. And, you are 
well aware of what we are trying to do there.
    I would say what we are trying to do in the meantime is the 
mitigation program. It is not the total be all, end all, and we 
know that. But, we are getting feedback that says they 
appreciate the attempt. In mitigation 2, we have added tree nut 
crops into the Market Facilitation Program. It is also in the 
purchases program, and in my program of the Agricultural Trade 
Promotion, the fruit, vegetable, nut crops got a great 
percentage of the funds so that we can go work on new markets.
    Those are some of the things that we are trying to do. 
Longer-term, it is clearly open new markets, and that is where 
we are seeing some success.
    In Colombia, I brought along one of your colleagues from 
the Central Valley, and he pulled me aside at the reception and 
he said, ``Thank you, thank you, thank you for bringing me 
here.'' They had enormously successful visits. I have learned 
later that they did consummate some sales, and so, it does not 
replace the size of some of these markets immediately, but we 
do hope that in time it will, and that is some of the feedback 
we get. It is a multi-pronged approach, sir.
    Mr. Carbajal. When we consider mitigating funds for a lot 
of these losses throughout the country, I do hope that 
California continues to be at the forefront to get its fair 
share, which oftentimes doesn't seem to be the case.
    Mr. McKinney. I understand, and let me just say something. 
We have heard some say that there should be more fruits into 
the Market Facilitation Program. And yet, we also hear from 
many in the industry that they would rather just get it off the 
market through the purchases program. We try very hard and we 
do reach out, and they are not afraid to come in and share with 
us their views. We are trying to find the right best thing for 
each commodity group, and we have improved on that in 
mitigation 2. Or at least, you will see that when it all comes 
out, sir.
    Mr. Carbajal. Thank you.
    Mr. McKinney. But if I may add one more thing, the last 
time we were in front of this Committee, several of you raised 
the question about cherries into India. I want you to know we 
were successful in getting cherries from California to India in 
mid-May. We are hoping that sustains, particularly not just 
now, but into June as the Pacific Northwest does that. That is 
a follow-up from the last meeting.
    Mr. Carbajal. Thank you, Mr. McKinney.
    Ambassador Doud, the draft USMCA agreement includes 
provisions to remove barriers to U.S. wine sales in British 
Columbia. Since this is a provincial issue for the Canadians, 
how would this provision be enforced by the U.S.?
    Mr. Doud. The answer to that is we have a side letter that 
goes into effect in November 1 on the BC wine issue, and that 
is already an obligation that has been made, and we expect BC 
to adhere to it.
    Mr. Carbajal. Thank you. I know there are other barriers to 
wine sales with Canada. What other efforts are USDA or USTR 
undertaking to better open this market, which is essential to 
the Central Coast vineyards that I represent?
    Mr. Doud. Yes, there is one other wine issue that we are 
still working on, and in fact, we are raising that 
multilaterally at the WTO. We still have some work to do on 
that, I believe, in Ontario.
    Mr. Carbajal. Can you touch what that issue is?
    Mr. Doud. I can't think of all the details of it right now, 
but it is an issue where we don't have access. It is pretty 
complicated with regard to how they allow the marketing of our 
wine up there in Ontario.
    Mr. Carbajal. Great. I would appreciate it if you could 
keep my office apprised of those efforts.
    Mr. Doud. We definitely will.
    Mr. Carbajal. Thank you so much.
    Mr. Doud. Happy to do so.
    Mr. Carbajal. Mr. Chairman, I yield back.
    The Chairman. Yes, if the gentleman would yield for a 
moment. Mr. Ambassador, you have talked about a lot of 
interaction with the WTO in your testimony and answers to 
questions. How would you describe your efforts with the WTO?
    Mr. Doud. It might surprise you to know that we are having 
a lot of conversations right now about the best way to move 
forward at the WTO. What we are doing with regard to India and 
counter-notifications is important. The two WTO cases that we 
won with China are important. Those are the two countries that 
we are focusing on here to help people understand that we have 
a lot of work to do in terms of transparency, in terms of 
helping countries understand that the expectation of the United 
States is to fulfill their commitments.
    The Chairman. Do you think it has been successful?
    Mr. Doud. We have seen definite progress in helping people 
understand that the U.S. isn't the bad guy all the time.
    The Chairman. Is it true that we have won over 80 percent 
of the cases before the WTO?
    Mr. Doud. What is that?
    The Chairman. Is it true that we have been successful in 
over 80 percent of the cases with the WTO?
    Mr. Doud. I think that is accurate, and we are actively 
looking at where we can pursue additional cases.
    The Chairman. Well, that is good.
    The chair will now recognize our next Member, and that is 
Mr. Hagedorn from Minnesota.
    Mr. Hagedorn. Thank you, Mr. Chairman. I appreciate you 
holding this hearing.
    The Chairman. The great State of Minnesota.
    Mr. Hagedorn. Thank you. Yes, it is. We invite you up any 
time.
    Ambassador, Under Secretary, nice to see you again. We have 
had conversations in the past about these issues, and my 
message to you and to anyone in the Administration, including 
the President, Secretary--I have spoken to them personally--is 
that we appreciate the work that you are trying to do here to 
expand our markets, to drive down barriers. It is critically 
important to our farmers. They really would like to see 
progress across the board. We understand that China is a tough 
customer. Sometimes, we have to deal with what is at hand, and 
what is at hand right now, as we have heard 900 ag groups 
across the country say we need this United States-Mexico-Canada 
Agreement. It is critically important. I hear that in 
Minnesota, not just in our southern Minnesota district, but all 
across. All the ag groups say the same thing. We need to get 
this done. The President of our Farm Bureau, Kevin Paap, is 
here today. He has delivered that message personally. Heck, he 
is here today to deliver it again.
    I will tell you, we put together a letter--I did, with 
Congressman Emmer and Congressman Stauber recently, and we sent 
it to the President and to the Speaker. We said we support the 
agreement. It is going to be great for Minnesota, not just for 
agriculture, but mining, manufacturing, medical, on it goes. 
And we need an expeditious vote. If we can't get this agreement 
through and build momentum, then how do we expect to accomplish 
anything with China, Japan, the EU, and others? We appreciate 
what you are doing. Our message is keep working hard. Let's get 
those agreements and knock down the barriers that make that 
happen.
    Now, you have been doing some work recently in Colombia. 
That is great. We are trying to expand turkey into places like 
Colombia and Thailand. We are working very hard. You are doing 
a good job, but Japan--I know beef has actually been trying to 
do more with pork. We appreciate that, but one country that 
kind of stands out to me is Taiwan. We do a lot for them. I am 
a big supporter of Taiwan and relations that we have with them. 
The United States is very generous when it comes to helping 
them defend their country, but they won't purchase our pork 
products. I happen to represent a district that is the second 
largest pork producer in the country, maybe after Mr. Rouzer's 
number one over there.
    What can we do to expand our markets to that country?
    Mr. Doud. That is a topic that we talk about quite often in 
our office, and how do we engage with Taiwan in a proactive and 
productive manner? I believe there is a conversation going on 
here this week on that topic, and we continue to have those 
conversations all the time. We really need to work with Taiwan 
on the ractopamine issue, and it is a longstanding issue that 
we will continue to engage on.
    Mr. Hagedorn. A lot of our farmers, though, are in 
compliance with what they are looking for, and yet, we still 
don't have access to their markets. Again, whatever you can do 
to keep pushing that, and our office would be a resource to 
you, whatever we can do to help out.
    Now, I am for free trade, open trade, reciprocal trade, 
whatever you want to call it, but when the other side cheats or 
does things to undercut U.S. interests in our companies and 
agribusinesses, that is not right.
    Recently I testified on behalf of a company from our 
district, Cambria, they make fine quartz products. And the 
Chinese have been dumping into America trying to put them out 
of business. At that point, we have to step up and make sure 
that the Chinese are penalized for that.
    Similarly, the company that just purchased Schwann's, CJ 
America, they have a product, a feed additive, that they are 
having troubles with because China is now dumping into the 
United States. Are you aware of that, and what types of work 
are you doing to try to minimize that or to even the playing 
field?
    Mr. Doud. Under Secretary McKinney and myself and our 
staffs, we have really worked on the offensive side of the ball 
with regard to China. I would appreciate working with you on 
this issue of imports coming in from China to learn more about 
it and work with you to see what we can do to help.
    Mr. Hagedorn. We will make this letter available to you, 
and Mr. Chairman, may I submit my letter that we sent to the 
President for the record?
    The Chairman. Without objection, we will submit the letter 
for the record with unanimous consent.
    [The letter referred to is located on p. 55.]
    Mr. McKinney. If I could just add one thing? Without 
getting into any great depth, feed additives was one topic that 
included a lot of time in our discussions with China, and that 
was really their approval of our feed additives. I, too, would 
like to see the specific letter. It may be we know about it, we 
may not. But I want you to know that was one that got a lot of 
attention in the discussions.
    Mr. Hagedorn. Thank you.
    With that, I yield back, Mr. Chairman. Thank you.
    The Chairman. All right. The gentleman yields back the 
balance of his time. The chair will now recognize the gentleman 
from California, Mr. Harder, for 5 minutes.
    Mr. Harder. Thank you, Mr. Chairman, and thank you, Under 
Secretary McKinney and Ambassador Doud, for your testimony. I 
appreciate your knowledge on the state of trade for all the 
agricultural products and markets in the U.S. and across the 
globe.
    As you both mentioned in your oral statements, trade with 
Japan is a high priority for this Administration, and it is 
vitally important for our farmers. Developing a trade agreement 
that generates new market opportunities is critical, but I also 
want to make sure we don't lose sights of our current sales and 
what we are actually doing to increase those.
    Many of my constituents see other countries who have made 
agreements with TPP countries gaining advantage of multilateral 
trade economies, and I want to make sure the U.S. is not facing 
economic disadvantages in such a trade deal.
    I have been notified on numerous occasions about the 
difficulties of some of my tree nut growers and processors are 
having in their trade with Japan. As you might recall in the 
roundtable that we sat on just a couple months ago when I saw 
you, Mr. McKinney, I brought up the topic of tree nut trade 
with Japan and I am still awaiting a response on this matter. 
Could you or Mr. Doud please address the concerns highlighted 
by the tree nut industry when it comes to sampling and 
rejections at the Japanese ports of entry?
    Mr. McKinney. We are familiar with the issues we are facing 
in the EU, but it might be the same. Let me address that 
because a very capable nut industry and others are working on 
this.
    Right now, it deals with very low, sometimes 
infinitesimally low levels of aflatoxin, and some countries 
choose to go with a lower level than Codex, and that is their 
right, which is why we continue to try to promote the use of 
the Codex MRL, which is already a very, very safe and low 
standard. I will have to look into the specifics again, and I 
am sorry if we didn't get back to you in a response. We are 
usually very good at doing that within a 30 day period. If we 
missed that, I will take that on myself and get back to you. 
But just know that the whole business of residue limits, 
whether it is from natural causes like aflatoxins or more 
fictitious issues like we are seeing out of Europe where 
extremely low or no residues at all from pesticide use or 
fungicides or additives, is a growing problem, but not so much 
around the world because Codex is hanging tough and hanging 
true, and we have to keep it that way. That is what I can have 
to say is just we have to keep using science-based standards, 
not let folks have the affinity to go down to lower levels, and 
use them inappropriately, sir.
    Mr. Harder. Thank you, Mr. Under Secretary.
    When Japan rejects a load of tree nuts, there is enormous 
expense at shipping it back to the U.S. What are the avenues 
that you think we can explore in order to address this? Like 
what do you think we are actually going to be able to get done 
so we don't have to keep shipping tree nuts back if they are 
rejected?
    Mr. McKinney. It is an enormous cost to find another home 
for it. I understand that. The best thing is what I said, which 
is get it so that it goes in first. Sometimes there are pre-
certification, pre-export programs that have worked. I know 
with Australia on some other products we are working to keep 
that program alive so that the moment it leaves the ports, Long 
Beach or wherever it is going out of, we know it is going to be 
accepted at the port of entry in said country. That is another 
thing that we will look at, and we have seen success. There is 
always a cost to that and you have to calculate that in, but it 
is better than finding a rerouting cost that gets it from 
another country.
    Mostly, though, we want to get science-based standards that 
are uniform as much as possible around the world, and that is 
why we are working so hard on Codex.
    Mr. Harder. Yes, Mr. Secretary, I feel like this should be 
a no-brainer for everybody involved, Japan and us. There is no 
reason that we should have farmers sending loads over that we 
think satisfy our criteria, but obviously don't satisfy the 
criteria in place in Japan, and then we end up having this 
happen. And I have heard a lot about growing rejections over 
the last year to where it has become a significant cost of 
doing business with Japan. If we can push for pre-inspections 
at Oakland or Long Beach, that would be a huge win for us. I 
would really appreciate it if you would keep our office 
appraised of any movements on this issue and let us know if we 
can be of help, because we have to make sure that even as we 
are working with a longer-term trade agreement, we are pushing 
for stuff to get done even in the near-term, because it is not 
just my district that is having loads of tree nuts that are 
sent back.
    Mr. McKinney. We will be back to you both very quickly on 
what we learn.
    Mr. Harder. Thank you.
    Mr. Chairman, I yield back my time.
    The Chairman. The gentleman yields back, and I want to note 
that he supported the submission of the California Almond Board 
letter that we adopted earlier in the hearing.
    [The letter referred to is located on p. 47.]
    The Chairman. And Mr. Under Secretary, for you and the 
Ambassador, and this is something that I always try to deal 
with staff. We get into Washington speak here, and as we are 
having this hearing, that is going across the country, it is 
important when we talk about Codex that it is the U.N. Food and 
Agricultural International Food Standards, and it is a Latin 
name and we get talking in Washington speak sometimes, and 
people wonder what the heck it means. For purposes of everyone 
out there to understand, Codex is this international food 
standards effort that has been adopted by the U.N. and it seems 
to be something that is a useful tool that we have standards 
that we can all subscribe by that protect the health of 
everyone who consumes these food products around the world.
    Having noted that, I would like to recognize our next 
witness, and that is Mr. Marshall from Kansas--excuse me, our 
next Member. Thank you, Mr. Marshall.
    Mr. Marshall. Thank you----
    The Chairman. Great State of Kansas.
    Mr. Marshall. Thank you, Mr. Chairman. I would like to 
start by submitting for the record written testimony for this 
hearing on behalf of Ben Scholz, President of the National 
Association of Wheat Growers.
    The Chairman. Well, we like our wheat growers, and without 
any objection, we will adopt that statement with unanimous 
consent.
    [The statement referred to is located on p. 53.]
    Mr. Marshall. Thank you, Mr. Chairman.
    The Chairman. I mean, with no objection.
    Mr. Marshall. Thank you so much.
    My first question, I will go to Under Secretary McKinney. 
USMCA has some huge victories for Kansas and for all of 
agriculture. Certainly, my top legislative priority is making 
sure we get USMCA across the finish line here. It is something 
that we can control in Congress, whereas there are other things 
we are not able to control. Certainly, we need to do our job.
    There are great victories in here for dairy, wheat, and 
poultry, and my folks back home have concerns about 
implementing those. We kind of started answering the question, 
what can we do as we go forward to make sure that Canada is 
playing ball and following through on the spirit of this?
    Mr. McKinney. Well, I would first say that the agreements 
that Ambassador Lighthizer and USTR team developed are 
enforceable and we just have to follow up. More specifically, 
we have an A team on the ground in terms of Foreign 
Agricultural Service in the embassy, and we hear from them. 
They hear from their constituents in the U.S. It is just a 
matter of watching the markets to see and make sure that they 
comply.
    But every sense I got--and we have had many discussions, 
both of us, with our friends in Canada, is that they fully 
intend to do that. I hope we don't have to look back and say 
oops, they didn't comply. We have a sense that they will do 
that.
    Mr. Marshall. Okay. I will move on to Ambassador Doud. 
Let's talk about China beef and non-tariff related trade 
barriers that we have going on there. You have kind of alluded 
the ban on Hormone Growth Promotants, and beta agonists (beta 
adrenergic agonists) in this, but just overall, there are just 
47 percent total in tariffs now on American beef going in 
there. A large chunk are non-tariff. What are we doing to work 
on the non-tariff barriers right now?
    Mr. Doud. Well, that has been an enormous topic of 
conversation, as I indicated, across all. A huge number of 
commodities, but on the meat side of the equation, it is 
interesting to note that in the month of April, the latest 
trade data, China imported an all-time record $1.17 billion in 
a month of beef, pork, and poultry. The U.S. share of that was 
$36 million, and that is not because of retaliatory tariffs. It 
is because of non-tariff trade barriers where we just simply 
don't have access.
    The Chairman. Excuse me, would the gentleman yield on that 
point?
    Mr. Marshall. Yes, sir.
    The Chairman. Question. When you say that $36 million 
having been to China, and a little familiar with their efforts, 
does that include the gray market?
    Mr. Doud. That is--I am just citing an official trade 
statistic, Mr. Chairman.
    The Chairman. Okay. It probably doesn't include the gray 
market then.
    Mr. Doud. That is a complicated answer to that question you 
just asked.
    The Chairman. All right. I will make sure the gentleman 
gets the remainder of his time.
    Mr. Marshall. Thank you.
    The Chairman. Thank you for yielding.
    Mr. Marshall. All right. I guess I will move back to follow 
up with Ambassador Doud again on India, and a lot of issues 
with wheat and subsidies going on, and the WTO just seems very, 
very cumbersome when we are dealing. It tends to take years as 
we go through this. What other steps are we doing to monitor 
and address India's agriculture policies that impact our 
ability to sell into India and other third country markets?
    Mr. Doud. I appreciate that question very much. In terms of 
what we are doing or what we have done with the counter-
notifications to India has been very, very important 
development. China--excuse me, India indicated to the WTO--they 
reported what their subsidies were. FAS and USTR went back and 
looked at India's own websites. In the case of rice, we found 
that their subsidies to be somewhere around the neighborhood of 
eight times what they were allowed, and in the case of wheat, 
somewhere around six or seven times what they were allowed. It 
is curious to note in that regard with regard to rice, India is 
the biggest rice exporting nation on the planet because of 
those subsidies. We have significant concerns that India may 
return as a wheat exporter here coming up, and this is 
absolutely something that we have our eye on at USTR.
    Mr. Marshall. Okay. I will go back to Secretary McKinney on 
this one.
    Obviously, some preliminary discussions with the EU on a 
trade deal, and we are going back and forth on whether 
agriculture is going to be included in that or not. I recently 
got back on that CODEL, as well, to France and got to visit 
with your counterparts there in France, and I am just curious, 
how high of a priority is making sure that agriculture is 
included in that bilateral trade agreement? Is that to USTR as 
well as the Secretary of Agriculture?
    Mr. McKinney. Well, for us, it is very important, and we 
are very pleased with comments we have heard from some of you 
that says ag is either in the deal or we don't have a deal. We 
are very appreciative of that.
    It is frustrating because it takes two to tango, and when 
they just give you the old Heisman football forearm and say we 
are not going to deal with agriculture, it is not very 
rewarding. I, for one, continue to believe we must negotiate. 
Now, it will be arduous. It will be difficult, given the 
differences that have grown over the years, the precautionary 
principle has led to that. But we have so much more that binds 
us than separates us. I just don't understand why they are 
continuing to say that. I am advocating that we engage and get 
on with it.
    Mr. Marshall. Okay, last question, if I can have one more, 
is we have allocated some extra dollars for the Agriculture 
Trade Promotion Program. How will you use them? What are we 
going to do with it to get our markets back?
    Mr. McKinney. If you are speaking of mitigation 2, thank 
you for the extra $100 million. We didn't want to have all of 
our cooperators--all or nearly all who submitted an application 
in round 1, we don't want to have to have them redo that. What 
we are finding is ways for there to be flexibility for them to 
modify what they already submitted, and that is the process 
that is underway right now so they can modify that, leverage 
better, double down. Things have changed in some countries, and 
thus make it so that they are telling us what they see as best 
use of those funds, and then they match that at some level and 
off we go.
    We are trying very hard to be flexible, sir.
    Mr. Marshall. Thank you so much, and I yield back.
    The Chairman. The gentleman yields back. To the gentleman's 
question, are you suggesting that possibility in the second 
round that there will be an augmentation to the market access 
programs?
    Mr. McKinney. I don't know if an augmentation. We know 
there was the $200 million in round 1, the $100 million in the 
second one.
    The Chairman. If there is additional funds under specialty 
crops, consider that.
    Mr. McKinney. Well, if you wanted to do that, we of course 
would, our return on the investment shows that we are good 
stewards, but that would be your decision.
    The Chairman. I think it is.
    Mr. McKinney. We are happy with $300 million.
    The Chairman. And let me just say there are many of us who 
have--and keep doing the Lord's work because European Union 
needs to adopt agriculture as part of the discussions on any 
trade negotiations, and you have strong support here in the 
Congress for that purpose.
    As the Chair of the Transatlantic Legislators Dialogue, we 
are looking at maybe doing some interesting things once they 
get organized here this fall. It may be holding some actual 
Committee hearings with the European counterpart and ours, both 
here and in Europe, and have witnesses and really get them 
engaged in a way that gets beyond the politics that they have 
to deal with, as well as ours.
    All right. The chair will now recognize the gentlewoman 
from Connecticut, Mrs. Hayes, for 5 minutes.
    Mrs. Hayes. Thank you, Mr. Chairman, for holding this 
critical hearing, and thank you to Mr. McKinney and Mr. Doud 
for being here today.
    It is fitting that we are having this hearing during 
National Dairy Month. The importance of the dairy industry 
cannot be understated, and the dairy industry is one that is 
extremely important to me.
    In my home State of Connecticut, the dairy industry 
provides nearly 3,000 jobs and has an economic impact of over 
$900 million. And my district, Connecticut 5, doesn't seem like 
it would be a dairy district, but it is home to many small 
family-owned businesses. These farms are small but mighty, 
representing a large portion of the state's farmland and 
providing pastoral landscape, scenic vistas, and a wealth of 
rural characters to our local communities. They are staples in 
the community, producing everything from ice cream to the milk 
that makes Cabot cheese.
    However, this is a difficult business to be in, as I have 
heard from many of the farmers in my district. From perpetually 
low dairy prices to national and global economic changes, there 
is a lot of pressure on my local farmers. And to make matters 
worse, Connecticut dairy farmers were caught in the middle of 
this trade war. Then they were let down again by the Federal 
Trade Mitigation Program payments that they were promised, and 
some farm owners received as little as $50 in aid.
    Of the $4.7 billion allocated for the first round of trade 
mitigation payments, only $127 million was set aside for dairy 
farmers. Of that $127 million, payments to all Connecticut 
farmers totaled a mere $121,798. One dairy farmer in my 
district who owns about 300 cows on her farm received $3,918 in 
mitigation payments. That is less than 12 per hundredweight of 
milk.
    Even though the Canadian and Mexican tariffs are off, dairy 
farmers are still feeling the burden of the first 12 months of 
the year, and it does not seem like those damages are taken 
into account when mitigation payments are made. And while 
second and third rounds of these payments are either in 
progress or upcoming, they have not been timely and continue to 
treat dairy farmers as a low priority. This lack of aid is 
especially alarming in a state like Connecticut where the cost 
of production is extremely high and could even exceed the price 
they are getting in return for their products.
    Given the importance of dairy both in Connecticut and 
across the country, and the difficult situation we are in, I 
would like to ask some questions on what the USDA and USTR are 
doing to help. And I am glad my colleagues spoke of mitigation, 
so my first question I guess is to Mr. McKinney. Businesses 
made strategic investments to serve specific markets with 
specific products. Dairy exports and businesses are not 
positioned to redirect products someplace else overnight. Did 
your mitigation estimates consider value lost by those 
companies that kept exporting but paid the tariffs themselves?
    Mr. McKinney. I don't know, but I will look into that.
    The question you are raising, though, and I hope you can 
send me the data. I caught some of that, because I want to look 
into that.
    The first round of mitigation was to be a band-aid, to tide 
over, if I could use that word, and the calculations were based 
on economic modeling. If there were some that didn't quite get 
that, it was largely based on the counter-tariffs by China.
    The mitigation 2 is under a different formula, and so, we 
hope that that will help address at least in part some of the 
concerns that you are raising on behalf of your dairy 
producers.
    I would also add that we are getting very good feedback on 
the Dairy Margin Protection Program that was passed in the farm 
bill that is on its way toward implementation. At least, that 
is what I am hearing. And so, I want to make sure that you add 
to that and we would love your thoughts on that as well.
    Mrs. Hayes. Well, I appreciate your honesty on the answer. 
I will make sure you get that information so that you can have 
an answer to bring back to my constituents.
    Mr. McKinney. I would like to look into that.
    I think Ambassador Doud has a comment.
    Mr. Doud. The way I would answer your question is the best 
thing we can do is pass USMCA. We have $228 million in new 
market access into Canada for dairy, and your Connecticut 
producers will benefit significantly from that. And that 
includes, I think you mentioned, ice cream. We have new U.S. 
specific tariff rate quotas for all kinds of dairy products, 
including ice cream into that. The best thing we can do for 
these producers is provide new marketing opportunities, and 
that is precisely what we have done in really an unprecedented 
fashion with USMCA and dairy into Canada.
    Mrs. Hayes. Thank you. I will make sure you get this 
information, because that kind of opened the door for what 
would have been my next question if I hadn't run out of time. 
It is the availability of markets and open markets, and that is 
what I hear a lot of from these farmers. It doesn't matter what 
you are producing if you don't have a place to sell it.
    I look forward to hearing back from you, and I will get 
that information to you.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentlewoman yields back, and certainly is 
able to submit any other further questions you have to our 
witnesses, and we always expect a timely response from them on 
the questions that are submitted by Members of the Committee.
    We thank you for your participation, and I will recognize 
the gentleman from Pennsylvania, Congressman Thompson.
    Mr. Thompson. Mr. Chairman, thank you very much. Gentlemen, 
thank you for being here. Thanks for your leadership and your 
service.
    Dairy is an industry that has been hurting, but as you look 
at the financials on that, we need to work on the trade and I 
appreciate what you are doing on that. That will be what my 
questions really focus in on, but just a statement of the fact 
that you are looking at the financial demise of the dairy 
industry that started in 2010 when not this Committee, but the 
Education and Labor Committee, demonized milk fat and we took 
flavor and nutrition out of our schools. Kids didn't drink it, 
so consumption went down ten percent in the first year, and it 
tracks with the demise of the dairy industry financials.
    That said, though, we need a robust--and we are working to 
fix that. Whole Milk for Healthy Kids, it is a good bill, great 
bill, and would restore those options.
    But we also need to look at trade. I do think that one of 
the most important things we can do for our farmers is approval 
of the United States-Mexico-Canada Trade Agreement. Our two 
biggest trading partners are Canada and Mexico, and I 
appreciate what you are doing with the other countries. We need 
to look at all possible markets, but this legislative body has 
a responsibility to get that approved and in a timely manner.
    I really appreciate the fact that the President and you 
folks held out to the end on that with one of the key remaining 
issues being dairy, that you got a commitment to eliminate the 
Class VI, Class VII. My first question really has to do with 
the implications of that, not just for sales into being able to 
export into Canada, but my understanding is there are some 
other third world countries that Canada was sort of dominating 
that we now will open market--once we get this, we do our part 
as Congress. We approve this trade agreement. It will open up 
for our dairy farmers as well.
    Mr. Doud. I appreciate your question. That was the 
discussion with Canada is if you are going to have a supply 
management system, that means you have to manage your supply. 
That means that you cannot externalize the cost of your supply 
management system by disposing of skim milk powder and other 
types of nonfat solids in third country markets. And we spent a 
lot of time trying to figure out, and the discussion was back 
and forth and with the experts at USDA, tremendous help from 
USDA and everybody in our government, ITC, et cetera, trying to 
figure out how to do this in a way that made sure that Canada 
kept its supply management system in Canada. Through all the 
different things that we have in this agreement, I think we did 
a very, very good job of making sure that we will be able to do 
that in the future.
    Mr. Thompson. Yes, you did, and I appreciate that fact.
    I know my colleagues will join me in calling on Speaker 
Pelosi to just give us an opportunity to vote on the agreement. 
I think it would pass, and heavy lifting has been done, and we 
need the opportunity to get it ratified.
    My second question really is a little bit different. 
Different commodities. Obviously, I read a lot every day--I 
actually listen to kind of market analysis every day, read that 
on the implications of the African swine fever virus in China, 
and any thoughts of opportunities or threats to U.S. hogs and 
soybeans given that? I know we have to work some trade issues 
out, but kind of looking at your perspective on the impact on 
our American soybean growers and our American hog farmers.
    Mr. McKinney. Sure, I will take that.
    First, our hearts go out to our friends over there. We 
wouldn't wish African swine fever on anyone, notwithstanding 
the issues we have with China. That is just not something we 
would do.
    We are working both sides. My colleague in the marketing 
and regulatory programs, Under Secretary Ibach, who has APHIS 
under his tutelage is looking at all the defensive measures. We 
have added 70+ dog sniffing teams in airports, mostly at points 
of entry from China and Asia Pacific, so that is underway. 
Canada has added 30+ or is in the process. There are 
discussions with all of the protein intake companies, the large 
ones and small ones alike, to make sure that whatever might be 
coming in from China is determined as safe, or may be 
disallowed. And so, those are ongoing. And I have to say that a 
wonderful conference on African swine fever took place in 
Ottawa. That was agreed to by Secretary Perdue. Then Minister 
MacAulay of Ag in Canada and the Mexicans, and they brought 
people from all over the world. It was a lot of work on the 
defense side.
    On the other side, though, we are happy to provide pork and 
pork is flowing to China. And we are glad for that. We hope 
that we can supply as much as they need. We will have to see. 
But, China is diversifying their supplies, and so, they are 
looking for sources from all over, partly because they have to. 
And I will remind you that we believe--there is a guess that it 
is about \1/3\ of their pork population is gone because of 
swine fever. It may be higher.
    Mr. Thompson. Right.
    Mr. McKinney. One-third of their pork population is our 
entire herd in the U.S., so it indicates the size of that 
market and pork is a basic tenet of their diet. We are trying 
to be good stewards, provide them with what they want, work 
with them as we can on tariffs given this period that we are 
in, but so far, it is going well and we want to be as helpful 
as we can so that we don't see that spread, because it is 
spreading.
    Mr. Thompson. I guess we need to anticipate where those 
hogs will be raised to fill that void. I have heard it could be 
up to 60 percent perhaps by the end of the year that would die, 
and hopefully developing those markets for our soybeans growers 
as well.
    Mr. McKinney. Correct. We work very closely with USEC, the 
U.S. Soybean Export Council, among other protein suppliers, and 
we are looking. They have been going, as we have, to other new 
markets because there will be a bit less--not quite as much as 
many are saying--but there would be a bit less protein intake, 
just because the people aren't there to purchase.
    The Chairman. Yes, Mr. Secretary, the Chairman has been 
very generous with everybody's time, including your time.
    Mr. Thompson. You are always generous. What can I say?
    The Chairman. I try to be, but the time has expired for the 
gentleman from Pennsylvania, and I am sure there are more 
places for that pork production to take place in Pennsylvania, 
and elsewhere.
    But the chair will now recognize the gentleman from the 
great State of California and the beautiful Central Coast that 
he represents, Congressman Panetta.
    Mr. Panetta. Thank you, Mr. Chairman. I appreciate this 
opportunity to have this hearing.
    Gentlemen, welcome. Thank you for your time. Thank you for 
your preparation for being here, and of course, all your 
service to this country. I appreciate what you guys are doing.
    As many people here in this room know, and you may not 
know, I come from the site you heard, Central Coast of 
California, also known as the Salad Bowl of the world, dealing 
with a lot of fresh fruits and vegetables. That is pretty much 
all we got. Therefore, when we deal with trade, one of the 
biggest issues is the sanitary phytosanitary measures that can 
be imposed by some countries, sometimes indiscriminately. And I 
was wondering, Ambassador Doud, what you can do to make sure 
that trade decisions around these types of products, those 
types of decisions are based on sound science? And I know that 
USMCA kind of hits on that as well and focuses on that. Go into 
a little bit about that, if you could?
    Mr. Doud. Well, in terms of USMCA where we have really 
focused on that is in terms of biotechnology, and that we know 
if we are going to expand our ability to grow food to feed nine 
billion people by 2050, our ability to do that hinges on our 
ability to use technology.
    Mr. Panetta. Yes.
    Mr. Doud. And we have these conversations all around the 
world all the time, very much appreciate having Under Secretary 
McKinney now at USDA working on, again, we have talked about 
Codex issues, and having the use of maximum residue levels for 
products all around the world that are internationally 
accepted. This is a critical component, and we have to work 
with all of our trading partners to get countries to adhere to 
what those international guidelines are.
    Mr. Panetta. Fair enough, fair enough. Thank you.
    In regards to the tariffs that we have heard about, 
especially the $200 billion worth of goods known as List 3 from 
China, is there going to be some sort of exclusion process for 
List 3? Can you explain that?
    Mr. Doud. Well, I believe on the first tranche there, the 
comment period just ended on that, and I believe discussions 
are ongoing here and comments are currently being accepted with 
regard to the potential for a next tranche.
    Mr. Panetta. Understood, okay.
    Moving on to Japan, talk to me quickly, how are 
negotiations progressing there?
    Mr. Doud. They are ongoing as we speak, sir.
    Mr. Panetta. Okay. All right, and thumbs up, how are they 
progressing? Can you----
    Mr. Doud. I am not going----
    Mr. Panetta. Are you just going to leave it at that?
    Mr. Doud. I am not going to characterize that in public, 
but it is really important that we work very hard on that 
topic.
    Mr. Panetta. Fair enough.
    In regards to the tariff process, or at least the threats 
or the imposition of certain process, would you say that the 
process has been sufficient in regards to bringing other 
agencies in to that decision-making process, such as the USDA? 
Have they been consulted on these types of decisions from the 
Administration?
    Mr. Doud. There have been a lot of people involved in those 
conversations.
    Mr. Panetta. And has the USDA been consulted in those 
conversations?
    Mr. McKinney. We talk frequently, every week, as our people 
do, yes. We are interlocked like you would hope we would be.
    Mr. Panetta. Okay, fair enough. Fair enough.
    Let me just tell you, I am also on the Ways and Means 
Committee, and we are working on USMCA and I can tell you that 
Ambassador Lighthizer has been a presence up here, actually a 
very pleasant presence, to be frank. He has worked his tail off 
in order to make sure that bill moves forward and that trade 
agreement moves forward.
    Obviously, you understand the issues better than most 
people in this room when it comes down to labor and when it 
comes down to enforcement, when it comes down to the 
environment, when it comes down to biologics and the 
exclusivity out of Canada. These are issues we are trying to 
work on, and we hope to work on, because there are people on 
both sides of the aisle that do want to get to a yes; please 
understand that.
    Obviously, we have a ways to go, but what doesn't help is 
when there are certain threats out of the Administration, such 
as basically blowing up NAFTA. And so, I got to pose this to 
you. If we don't pass the USMCA, would you agree to basically 
get rid of NAFTA as the President has stated?
    Mr. Doud. Sir, I want to answer the question this way. When 
we entered into these negotiations, the clear mandate from the 
965 entities that just signed the letter in favor of USMCA from 
this body and others was--and in terms of agriculture, do no 
harm.
    Mr. Panetta. Yes, understood.
    Mr. Doud. And we have done that. And, in fact, if you look 
at agriculture and USMCA or across the board, the deal is as 
good as it was in NAFTA, the same as NAFTA, or better in every 
single aspect of our economy.
    Mr. Panetta. Therefore, you would not want to blow up 
NAFTA, correct?
    Mr. Doud. I want to pass USMCA, sir. That is why it is 
critical that we get that job done.
    Mr. Panetta. Understood.
    My time has expired again. Gentlemen, thank you.
    The Chairman. The gentleman's time has expired, and we 
appreciate his presence always.
    Mr. Panetta. Thanks, Mr. Chairman.
    The Chairman. And the chair will now defer to the Ranking 
Member for his closing comments.
    Mr. Rouzer. Well thank you, Mr. Chairman. I want to thank 
our two distinguished witnesses for being here this morning. It 
has been a very constructive hearing.
    I want to stress the importance--and it has been talked 
about a number of different times here--the importance of 
getting USMCA ratified. We have to get that done. I 
particularly want to thank both of you, particularly you, 
Gregg, for your great work in negotiating on this deal, 
particularly the inclusion of dairy. I remember a meeting at 
the White House several months back where this topic was 
raised, and you guys came though. I really, really appreciate 
your help and support in that regard.
    And of course, both of you know the specific issues of my 
state, and I won't belabor that. I appreciate your efforts 
there.
    And then one final thing, Mr. Chairman, I want to mention, 
that is just as important as trade, and just my editorial 
comment. We have to get something done for our farmers so that 
they can get workers. One of the big issues that we deal with 
day in and day out, every employer tells me they can't find a 
quality workforce that they need, really having a hard time 
getting labor. And it is especially acute--and it always has 
been; but, more so now than ever before. It is especially acute 
for agriculture. We have folks coming across the border through 
a variety of means, but yet, through the legal H-2A channel, 
they are stuck over there for 7 weeks, 8 weeks, 9 weeks 
delayed, and our farmers can't get their crops out of the 
fields.
    Anyhow, that is just my editorial comment, and it is just 
imperative we focus a lot of attention on that as well as in 
addition to all the other great responsibilities that you have. 
I know that is not specifically under your purview, but to the 
degree you can stress with everybody and anybody that you know, 
we have get this labor issue fixed. Congress has not done its 
job either, but it is a really critical issue.
    I yield back. Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back, and the chair 
always appreciates the Ranking Member's constructive efforts as 
it relates to our Subcommittee's efforts.
    The chair also wants to thank our two witnesses today, the 
Under Secretary and the Ambassador. You have ably made your 
case and have answered the questions as best you can. The fact 
of the matter is, is that I think we all want to see success in 
achieving the goals of good trade agreements on behalf of 
American agriculture. Clearly, there is no difference on that 
point or separation. We know the challenges that we have and 
the efforts that have gone in negotiating with both Mexico and 
Canada, and we know what outstanding issues are still out 
there, and hopefully we will be able to resolve them to bring 
up the measures so that we can do what is in the best interest 
of our entire country. And that is to have a fair, level 
playing field as it relates to our ability to trade American 
agricultural products with our neighbors to the south and to 
the north.
    China, of course, continues to be a vexing issue, and we 
know that there are other issues that are more challenging than 
the agricultural elements that we discussed here today, that 
are part of a larger overall agreement, because China has been 
a bad actor and their lack of compliance with the WTO is well-
known. I was pleased to hear the Ambassador indicate that the 
WTO has been a successful entity in negotiating a host of 
disputes that we have had over the years. I believe it is, and 
we need to make our negotiations to continue the WTO's efforts.
    Let me just close by saying that our goals are the same. We 
have differences as it relates to how we get there in terms of 
our strategies, but our goals, I believe, are the same and 
maintaining predictability and civility in this effort, as the 
two of you have demonstrated this morning, is the key. We can 
agree to disagree on various factors, but as long as we are 
predictable and civil in our case and the enthusiasm that the 
Under Secretary always exudes, it takes us a long way in terms 
of achieving those goals.
    This Subcommittee will continue to perform its oversight 
and work with all of the parties on a bipartisan effort to try 
to ensure that, in fact, we can be successful on behalf of 
American agriculture.
    With that, the Subcommittee is now adjourned. Under the 
Rules of the Committee, the record of today's hearing will 
remain open for 10 calendar days to receive any additional 
material and supplementary written responses from witnesses to 
any questions posed by the Members, and if I don't say those 
magic words, the staff really gets upset with me. I have now 
covered my base and the Subcommittee is now adjourned.
    [Whereupon, at 12:03 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
  Joint Submitted Letter by Hon. TJ Cox, a Representative in Congress 
 from California; Hon. Josh Harder, a Representative in Congress from 
                               California
June 10, 201[9]

  Hon. TJ Cox,
  Member of Congress,
  Washington, D.C.

    Dear Congressman Cox,

    We request your support in helping the California almond industry 
receive its full $63.3 million damage allocation assigned by USDA for 
the Market Facilitation Program.
    As you know, California almond exports to the world were valued at 
$4.5 billion in 2017, contributing substantially to the agricultural 
trade surplus that U.S. farmers and ranchers deliver to the U.S. 
economy each year. Almonds are one of California's top three valued 
commodities and the leading agriculture export. Unfortunately, since 
the imposition of retaliatory tariffs in spring 2018, almonds have been 
targeted by several key trading partners, and continue to face 
additional retaliatory duties in both China and Turkey. We can only 
anticipate what the outcome will be in India, which is also considering 
retaliatory tariffs resulting from withdrawal of their GSP status. The 
damage California almond growers have endured and continue to face is 
considerable and very troubling. This uncertainty does not take into 
consideration the further non-tariff implications which are more 
difficult to quantify.
    The prolonged disruption in trade has hurt our industry. Since 
April 2018, tariffs in China on almond kernels/inshell have increased 
from 10% to 50%. With China's latest announcement, tariffs on 
processed/roasted almonds have increased to 15% and 30%. California 
almond exports to China/Hong Kong for FY 18/19 YTD (Aug. 2018-April 
2019) are down by 33 percent from the same time last year--a direct 
result of these tariffs. If we look specifically at direct China 
shipments for the first quarter of 2019 (Jan.-March), we are at about 
60% of what we shipped in the first quarter of 2018. Importantly, the 
value is down $0.20 per pound.
    Meanwhile, Australia has taken full advantage of the 0% tariff 
under their FTA with China, increasing their 11 month almond exports 
into China by almost 2,000 percent. These retaliatory tariffs have 
impacted California's market share of almonds in China directly and the 
new market potential. Our industry takes a long-term view to market 
development; as such, we have invested about $74 million in China over 
the last 10 years to create demand for almonds--an investment that 
Australia is now leveraging.
    In July of 2018, the California almond industry was awarded $63.3 
million in retaliatory tariff mitigation program through the Market 
Facilitation Program (MFP). In response, we mobilized to take full 
advantage of this program and successfully facilitated five workshops 
statewide in conjunction with Farm Service Agency (FSA) to roll out 
this program, solicit applications and close enrollment all within a 6 
month period. This was extremely challenging, since most almond growers 
have not received direct payments in the past, necessitating they 
establish farm records with FSA which was also a time-consuming 
process. This was also at the time of the government shutdown, which 
further delayed submissions and review as FSA offices dug out of their 
respective backlogs.
    The majority of almond growers were eliminated by the USDA's 
average gross income (AGI) limitations; only some of the smaller 
growers felt they would receive some benefits, and pursued enrollment 
in a new program to the California almond industry. Based on the last 
numbers from the California Farm Service Agency Director, there are 
approximately 2,500 loaded applications, with estimated payments at 
$14.5 million. I understand there are still applications that need to 
be loaded.
    The payment limit of $0.03 per pound was a significant barrier 
which prevented our industry from accessing the entire $63.3 million 
designated for the California almond industry in trade damages. In 
November of last year, the Almond Alliance submitted a letter 
requesting $0.20 [] per pound direct payment to fully distribute the 
mitigation damages. While this request was denied, we believe that 
amount should be closer to $0.35 per pound given the prolonged trade 
disruption, increasing retaliatory tariffs and the loss of market 
potential in key markets. As noted above, we know that the per pound 
value of direct shipments to China are already lower than $0.20. 
Handlers have indicated that growers will experience even further 
reductions in their payments as the global market uncertainty persists.
    It is important to note that 70% of the 6,800 growers of almonds 
are farming 100 acres or less. These small family farms are being 
penalized for growing a high value, higher cost crop, and have 
therefore been unable to access the full $63.3 million of damages as a 
result of the AGI limitation which is geared to lower valued 
commodities. We are requesting that the balance of approximately $48.8 
million be rolled into the next direct payment program so the industry 
can access the entire amount of designated damages for the 2018 crop in 
2019. These funds should be in addition to the 2019 trade mitigation 
damages.
    As you know, the Almond Alliance is a trade association which 
advocates on behalf of the almond industry. We want to reiterate that 
approximately 91% of almond growers are family farms which are striving 
to stay competitive in an increasingly difficult trade environment. The 
California almond industry generates about 104,000 jobs statewide, over 
97,000 in the Central Valley, especially in areas that suffer from 
chronic unemployment. The industry also generates more than $21 billion 
in economic revenue and directly creates more than $11 billion to the 
size of the state's total economy.
    The focus of the California almond industry is on trade and market 
growth. as an industry we have worked hard over the last 30 years to 
develop strong international commercial partnerships and new markets. 
The current trade environment is putting these investments at risk, and 
have negatively impacted our industry. While direct payments are not 
the ideal solution, they will assist those that have been negatively 
impacted by the price-reduction effects resulting from the retaliatory 
tariffs and allow them to continue to operate in these uncertain times.
    Please let me know if you have any questions or would like 
additional information. I can be reached on my cell phone at 
[Redacted]. Thank you.
            Respectfully submitted,
            [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
            
Elaine Trevino,
President/CEO.
                                 ______
                                 
  Submitted Letter by Hon. David Rouzer, a Representative in Congress 
                          from North Carolina
A Letter from U.S. Food and Agriculture Associations and Companies
June 11, 2019

 
 
 
Hon. Nancy Pelosi,                   Hon. Kevin McCarthy,
Speaker,                             Minority Leader,
U.S. House of Representatives,       U.S. House of Representatives,
Washington, D.C.;                    Washington, D.C.;
 
Hon. Mitch McConnell,                Hon. Charles D. Schumer,
Majority Leader,                     Minority Leader,
U.S. Senate,                         U.S. Senate,
Washington, D.C.;                    Washington, D.C.
 

    Dear Speaker Pelosi, Minority Leader McCarthy, Majority Leader 
McConnell, and Minority Leader Schumer,

    We, the undersigned organizations representing all segments of the 
U.S. food and agriculture value chain at the national, state and local 
levels, write to urge your strong support for swift ratification of the 
U.S.-Mexico-Canada Agreement (USMCA). USMCA will benefit the U.S. 
agriculture and food industry while providing consumers a more abundant 
supply of high-quality, safe food at affordable prices.
    Over the last 25 years, U.S. food and agricultural exports to 
Canada and Mexico have more than quadrupled under NAFTA--growing from 
$9 billion in 1993 to nearly $40 billion in 2018. NAFTA has 
significantly helped create a reliable, high-quality supply of food 
products for U.S. consumers, while supporting more than 900,000 
American jobs in food and agriculture and related sectors of the 
economy. USMCA builds on the success of the NAFTA agreement, and will 
ultimately lead to freer markets and fairer trade. This modernized 
trade agreement makes improvements to further enhance U.S. food and 
agricultural exports to our neighbors and would deliver an additional 
$2.2 billion in U.S. economic activity.
    The International Trade Commission's new report, the United States-
Mexico-Canada Agreement: Likely Impact on the U.S. Economy and Specific 
Industry Sectors, confirms that the USMCA will improve market access 
for U.S. farmers, ranchers and food producers. The report states that 
USMCA would have ``a positive impact on the U.S. agriculture sector.'' 
Furthermore, it ``would likely have a positive impact on all broad 
industry sectors within the U.S. economy'', raising U.S. GDP by $68.2 
billion. USMCA further strengthens U.S. food and agricultural trade by 
enhancing standards for biotechnology; reducing the use of trade 
distorting policies; establishing modern, science-based sanitary and 
phytosanitary standards; reinforcing disciplines for science-based SPS 
measures; improving grading standards and services; facilitating the 
marketing of food and agricultural products; and strengthening 
safeguards for commonly used food names. These advances help provide 
certainty in the North American market, which is essential to the 
success of American agriculture and retailers.
    Given the significance of USMCA for the U.S. agriculture and food 
industry, we strongly urge that it be considered quickly, and we 
respectfully ask you to vote to ratify the agreement.
            Sincerely,

 
 
 
21st Century Co-op                   Legacy Grain Cooperative
Abbott                               Lenawee County Farm Bureau,
                                      Michigan
Adams County Farm Bureau, Illinois   Leprino Foods Company
Advance Trading Inc.                 Limaco, Inc.
Advanced Process Technology          Linn & Associates
Ag Partners--MN                      Livingston County Farm Bureau,
                                      Michigan
Ag Partners, LLC--IA                 Livingston County Farm Bureau, New
                                      York
Ag Power Inc.                        Logan County Farm Bureau, Kansas
Ag Processing, Inc                   London Agricultural Commodities
                                      Inc.
Ag Service Incorporated              Lortscher Agri Service Inc.
Ag Supply Co.                        Louisiana Cotton and Grain
                                      Association
Ag Valley Cooperative                Louisiana Farm Bureau Federation
Ag View FS, Inc.                     Louisiana Independent Warehouse
                                      Association
AgCredit, ACA                        Louisiana Pork Producers
                                      Association
Ag-Land FS, Inc.                     Lousiana Southern Railroad
AgMark, LLC                          Lowe's Pellets & Grain, Inc.
AgMotion                             Lubbock and Western Railroad
Agniel Commodities LLC               Ludlow Co-op Elevator
Agrex, Inc.                          Lydia Soybeans Inc.
Agri Beef Company                    Lyon County Farm Bureau, Kansas
Agri Networks Management LLC         M and M Service Company
Agribank, FCB                        Mac-Luce Schoolcraft County Farm
                                      Bureau, Michigan
Agribusiness Association of Iowa     Macomb County Farm Bureau, Michigan
Agribusiness Council of Indiana      Macon County Farm Bureau, Illinois
Agricenter International             Madison County Farm Bureau,
                                      Illinois
Agricor, Inc.                        Madison County Farm Bureau, New
                                      York
Agricultural Council of Arkansas     Malsam Company
Agricultural Council of California   Maplehurst Farms, Inc.
Agricultural Retailers Association   Maricopa County Farm Bureau,
                                      Arizona
Agri-Mark/Cabot Cheese               Marion County Farm Bureau, Illinois
AGRI-SEARCH                          Mars, Incorporated
AGrowStar                            Marshall County Farm Bureau, Kansas
Agtegra Cooperative                  Maryland & Virginia Milk Producers
                                      Cooperative Association, Inc.
AgVantage FS                         Mason County Farm Bureau, Illinois
Alabama Cotton Commission            Mason County Farm Bureau, Michigan
Alabama Farmers Cooperative, Inc.    Masterleo & Associates
Alabama Farmers Federation           Masters Gallery Foods, Inc.
Alabama Southern Railroad            Max Ag
Alabama Warrior Railroad             MaxYield Cooperative
Alaska Farm Bureau                   McCullough Grain
Albany County Farm Bureau, New York  McDonald Pelz
Al-CORN Clean Fuel                   McDonough County Farm Bureau,
                                      Illinois
All American Co-op                   McHenry County Farm Bureau,
                                      Illinois
All Star Purchasing                  McNabb Grain Company
Allegan County Farm Bureau,          McPherson County Farm Bureau,
 Michigan                             Kansas
Alliance Ag and Grain                MCT Dairies, Inc.
Alliance Grain Co.                   Meat Import Council of America
Alpena Coop Service                  Mecosta County Farm Bureau,
                                      Michigan
Alter Logistics Company              Menard County Farm Bureau, Illinois
Alter River Terminals                Menominee County Farm Bureau,
                                      Michigan
Amcot                                Mercer County Farm Bureau, Illinois
American AgCredit                    Mercer Landmark
American Bakers Association          Merck Animal Health
American Beverage Association        MFA Incorporated
American Cotton Producers of the     Miceli Dairy
 National Cotton Council
American Cotton Shippers             Michigan Agri-Business Association
 Association
American Dairy Products Institute    Michigan Agricultural Commodities
American Farm Bureau Federation      Michigan Apple Association
American Feed Industry Association   Michigan Bean Shippers
American Frozen Food Institute       Michigan Corn Growers Association
American Milling                     Michigan Farm Bureau
American Seed Trade Association      Michigan Milk Producers Association
American Soybean Association         Michigan Pork Producers Association
American Sugar Alliance              Michigan Soybean Association
Ampco                                Micropure Filtration Inc.
Anderson County Farm Bureau, Kansas  Mid America Pet Food
Animal Health Institute              Mid-Atlantic Farm Credit
Ann Arbor Railroad                   Midland County Farm Bureau,
                                      Michigan
Antrim County Farm Bureau, Michigan  Midsouth Grain Association
APT                                  Midsouth Grain Inspection Service
Archer Daniels Midland Company       Midwest AgEnergy
Arenac County Farm Bureau, Michigan  Midwest Farmers Cooperative
Arizona Cotton Ginners Association   Midwest Food Products Association
Arizona Cotton Growers Association   Midwest Grain LLC
Arizona Farm Bureau                  Milkco, Inc.
Arizona Grain, Inc.                  Milo Ag
Arizona Pork Council                 Minneapolis Grain Exchange, Inc.
Arkansas Farm Bureau                 Minnesota AgriGrowth Council
Arkansas Southern Railroad           Minnesota Corn Growers Association
Arkansas Valley Farmers Association  Minnesota Farm Bureau
Assaria Ag Inc.                      Minnesota Grain & Feed Association
Associated Milk Producers, Inc       Minnesota Milk
Atchison County Farm Bureau, Kansas  Minnesota Pork Producers
                                      Association
Attebury Grain, LLC                  Minn-Kota Ag Products Inc.
Aurora Cooperative                   Missaukee County Farm Bureau,
                                      Michigan
Aurora Organic Dairy                 Mission Mountain Railroad
Austin Western Railroad              Mission Produce Inc.
Autauga Northern Railroad            Mississippi Farm Bureau
Autauga Quality Cotton Association   Mississippi Pork Producers
                                      Association
Baker Cheese Factory, Inc.           Mississippi Southern Railroad
Barber County Farm Bureau, Kansas    Missouri Agribusiness Association
Barrett, Easterday, Cunninghamp, &   Missouri Corn Growers Association
 Eselgroth, LLP
Barry County Farm Bureau, Michigan   Missouri Farm Bureau
Bartlett Grain                       Missouri Pork Association
Barton County Farm Bureau, Kansas    Missouri Soybean Association
Baton Rouge Southern Railroad        MKC
Bay County Farm Bureau, Michigan     Mondelez International
Bayer                                Monroe County Farm Bureau, Illinois
Beachner Grain, Inc                  Monroe County Farm Bureau, Michigan
Belgioioso Cheese Inc.               Montana Farm Bureau
Benchmarks Inc.                      Montana Grain Elevator Association
Benzie-Manistee County Farm Bureau,  Montana Pork Producers Council
 Michigan
Berrien County Farm Bureau,          Montcalm County Farm Bureau,
 Michigan                             Michigan
Berryman and Associates              Montgomery County Farm Bureau,
                                      Kansas
Bimbo Bakeries                       Moore Farmers Oil Co.
Birmingham Southern Railroad         Morrow County Grain Growers, Inc.
Blackland Cotton and Grain           Moultrie County Farm Bureau,
 Producers, Inc.                      Illinois
Blue Bell Creameries                 Muenster Milling Company
Blue Diamond Almonds                 Muskegon County Farm Bureau,
                                      Michigan
Blue Ridge Southern Railroad         Nagel Farm Service
Bluegrass Dairy and Food             Nathan Segal & Company
BNSF                                 National All-Jersey Inc.
Boehringer Ingelheim Animal Health   National Association of Egg Farmers
Bogalusa Bayou Railroad              National Association of State
                                      Departments of Agriculture
Boswell Chase Grain, Inc.            National Association of Wheat
                                      Growers
Bourdeau Bros Inc.                   National Beef Packing Company, LLC
Boyce Valley Southern Railroad       National Cattlemen's Beef
                                      Association
Branch County Farm Bureau, Michigan  National Chicken Council
Brewster Cheese Company              National Confectioners Association
Brown County Farm Bureau, Kansas     National Corn Growers Association
Buchheit Agriculture                 National Cotton Council
Bunge                                National Cotton Ginners Association
Butler County Farm Bureau, Kansas    National Cottonseed Products
                                      Association
Byrum Hardwares                      National Council of Farmer
                                      Cooperatives
Calcot Ltd.                          National Grain and Feed Association
Caledonia Farmers Elevator           National Grape Cooperative
                                      Association/Welch's
Calhoun County Farm Bureau,          National Grocers Association
 Michigan
California Apple Commission          National Milk Producers Federation
California Association of Winegrape  National Oilseed Processors
 Growers                              Association
California Bean Shippers             National Onion Association
 Association
California Blueberry Commission      National Pork Producers Council
California Canning Peach             National Potato Council
 Association
California Cherry Export             National Renderers Association
 Association
California Cherry Export Council     National Sorghum Producers
California Cotton Ginners and        National Turkey Federation
 Growers Association
California Dairies, Inc              Nebraska Cooperative Council
California Date Commission           Nebraska Corn Growers Association
California Dried Plum Board          Nebraska Farm Bureau
California Farm Bureau Federation    Nebraska Grain and Feed Association
California Fig Advisory Board        Nebraska Pork Producers
                                      Association, Inc.
California Grain and Feed            Nebraska Soybean Association
 Association
California Pear Growers Association  Nebraska State Dairy Association
California Pork Producers            Nemaha County Farm Bureau, Kansas
 Association
California Rice Commission           NEOGEN
California Seed Association          Neosho Valley Feeders LLC
California Strawberry Commission     New Balance Commodities
California Walnut Commission         New Century FS
California Warehouse Association     New Mexico Cotton Ginners
                                      Association
California Wheat Association         New York Apple Association
Camp Douglas Farmers Co-op           New York Corn and Soybean Growers
                                      Association
Cargill Incorporated                 New York Farm Bureau
Carolinas Cotton Growers             New York Pork Producers Co-Op
 Cooperative
Carroll County Farm Bureau,          Newago County Farm Bureau, Michigan
 Illinois
Carroll Service Company              Niagara County Farm Bureau, New
                                      York
Cass County Farm Bureau, Michigan    North American Blueberry Council
Cass-Morgan Farm Bureau, Illinois    North American Export Grain
                                      Association
Cayuga Milk Ingredients              North American Meat Institute
Centennial Grain LLC                 North American Millers Association
Center for Dairy Excellence          North Carolina Cotton Producers
                                      Association
Centerra Co-op                       North Carolina Farm Bureau
Central Commodities Ltd.             North Carolina Pork Council
Central Farm Service Cooperative     North Carolina Soybean Producers
                                      Association
Central Life Sciences                North Dakota Corn Gower's
                                      Association
Central Missouri AGRIService LLC     North Dakota Grain Dealers
                                      Association
Central Prairie Co-op                North Dakota Grain Growers
                                      Association
Central Valley Ag                    North Dakota Pork Council
Central Valley Meat Company          North Iowa Cooperative
Ceres Solutions Cooperative, Inc.    North Side Grain
CereServ Inc.                        Northeast Agribusiness and Feed
                                      Alliance
CGB                                  Northeast Dairy Foods Assoc., Inc.
Chandler Co-op                       Northern Partners Cooperative
Charlevoix County Farm Bureau,       Northwest Agricultural Cooperative
 Michigan                             Council
Chautauqua County Farm Bureau, New   Northwest Dairy Association/
 York                                 Darigold
Cheboygan County Farm Bureau,        Northwest Farm Credit Services
 Michigan
Chenango County Farm Bureau, New     Northwest Grain Growers
 York
Cherokee County Farm Bureau, Kansas  Northwest Horticultural Council
Chippewa County Farm Bureau,         NuWest Milling, LLC
 Michigan
Chr. Hansen, Inc.                    NW Michigan County Farm Bureau,
                                      Michigan
CHS-OK-Okarche, OK                   Oahe Grain Corp
CHS, Inc                             Oakland County Farm Bureau,
                                      Michigan
Cicero Central Railroad              O-AT-KA Milk Products Cooperative
Clare County Farm Bureau, Michigan   Obion Grain Co., Inc.
Clark County Farm Bureau, Illinois   Oceana County Farm Bureau, Michigan
Clay County Co-op                    Oeth Farm Services, Inc.
Clay County Farm Bureau, Kansas      Ogemaw County Farm Bureau, Michigan
Clinton County Farm Bureau,          Ogle County Farm Bureau
 Illinois
Clinton County Farm Bureau,          Ohio AgriBusiness Association
 Michigan
Clin-Wash Ag Services                Ohio Corn and Wheat Growers
                                      Association
Cloud County Farm Bureau, Kansas     Ohio Dairy Producers Association
Co-Alliance                          Ohio Farm Bureau Federation
CoBank                               Ohio Pork Council
Coles County Farm Bureau, Illinois   Oklahoma Agricultural Cooperative
                                      Council
Collateral Certification Services    Oklahoma Cotton Council
 LLC
Colorado Corn Growers Association    Oklahoma Farm Bureau
Colorado Dairy Farmers               Oklahoma Grain and Feed Association
Colorado Farm Bureau                 Oklahoma Pork Council
Colorado Livestock Association       Olive Growers Council of California
Colorado Pork Producers Council      Oneida County Farm Bureau, New York
Columbia County Farm Bureau, New     Ontario County Farm Bureau, New
 York                                 York
Columbia Grain Intl. LLC             Osage County Farm Bureau, Kansas
Comanche County Farm Bureau, Kansas  Osceola County Farm Bureau,
                                      Michigan
CoMark Equity Alliance               OSH Solutions
CoMark Equity Alliance--Enid, OK &   Otsego County Farm Bureau, Michigan
 Cheney, KS
Commodity Solutions Inc.             Otsego County Farm Bureau, New York
Compeer Financial                    Ottawa Cooperative Association
Conagra Brands, Inc.                 Ottawa County Farm Bureau, Kansas
Conestoga Energy Partners            Ottawa County Farm Bureau, Michigan
Consumers Oil Company                Pacific Egg and Poultry Association
Cook County Farm Bureau, Illinois    Pacific Northwest Grain & Feed
                                      Association
Coop Services, Inc.--Lawton, OK      Pacific Sun Railroad
Cooperative Elevator Co.             Palouse River & Coulee City
                                      Railroad
Cooperative Farmers Elevator         Parrish & Heimbecker, Limited
Cooperative Milk Producers           Patton & Associates, LLC
 Association
Cooperative Network                  Pearl City Elevator, Inc./Alliance
                                      Commodities
Cooperative Oil Association          Pecos Valley Southern Railroad
Cooperative Producers Inc.           Pellet Technology
Copper Country County Farm Bureau,   Pennsylvania Farm Bureau
 Michigan
Corn Refiners Association            Pennsylvania Southwestern Railroad
Cort Consulting Group, Inc.          Peoria County Farm Bureau, Illinois
Corteva Agriscience                  Perdue AgriBusiness LLC
Cotton Growers Cooperative           Perry County Farm Bureau, Illinois
Cotton Growers Warehouse             Perry's Ice Cream
 Association
Cotton Producers of Missouri         Pet Food Institute
Cottonseed and Feed Association      Philbro Animal Health Corporation
Country Partners Cooperative         PIATT FS
Country Visions Cooperative          Piedmont Milk Sales, LLC
Countryside Cooperative              Pierre's Ice Cream Company
Countryside Feed, LLC                Pike-Scott Farm Bureau, Illinois
Cowley County Farm Bureau, Kansas    Pinal County Farm Bureau, Arizona
CropTrak                             Pipeline Foods
Crossroads Cooperative               Plains Cotton Cooperative
                                      Association
Crown Appraisals, Inc.               Plains Cotton Growers, Inc.
Crystal Creamery                     Plains Dairy
CSC Gold                             Planters Cooperative Association--
                                      Lone Wolf, OK
D&F Grain Co.                        POET Nutrition
D.E. Bondurant Grain Co.             Pope-Hardin County Farm Bureau,
                                      Illinois
Dairy Farmers of America             Prairie Central Cooperative
Dairy Foods Magazine                 Prairie Creek Grain Company
Dairy Products Institute of Texas    Prairie Farms Dairy
Dakota Midland Grain                 Prairieland FS, Inc.
DariFill                             Pratt County Farm Bureau, Kansas
Darigold                             Premier Companies
Dean Foods Company                   Premier Cooperative
Decatur and Eastern Railroad         Premier Grain, LLC
Definox Inc.                         Preque Isle County Farm Bureau,
                                      Michigan
Degesch America, Inc.                Pride Ag Resources
DeKalb County Farm Bureau, Illinois  PRO Co-op
Delaware Farm Bureau                 Pro-Ag Farmers Cooperative
Delphos Cooperative Assn.            Produce Coalition for USMCA
Delta Council                        Produce Marketing Association
Demeter Lp                           Producers Cooperative Association
Denali Ingredients                   Producers Cooperative Oil Mill
DeWitt County Farm Bureau, Illinois  ProPoint Cooperative
Dickinson County Farm Bureau,        Pulaski-Alexander Farm Bureau,
 Kansas                               Illinois
Dippin' Dots, LLC                    Quad Commodities Market Service
                                      Inc.
Doniphan County Farm Bureau, Kansas  Randolph Cooperative Grain Company
Douglas County Farm Bureau,          Ray-Carroll County Grain Growers
 Illinois
Douglas County Farm Bureau, Kansas   RCM Co-op
Driscoll's                           Real McCoy Enterprises
DuPage County Farm Bureau, Illinois  Reiff Grain & Feed, Inc.
Earlville Farmers' Cooperative       Reiter Affiliated Companies
 Elevator Company
Eastern Idaho Railroad               Reno County Farm Bureau, Kansas
Eaton County Farm Bureau, Michigan   Republic County Farm Bureau, Kansas
Edge Dairy Cooperative               Rice County Farm Bureau, Kansas
Edward E. Smith Company              Riceland Foods
Edwards County Farm Bureau,          Rich Ice Cream
 Illinois
Elanco Animal Health                 Richardson International Limited
Emmet County Farm Bureau, Michigan   Richland County Farm Bureau,
                                      Illinois
English River Pellets Inc.           Riley County Farm Bureau, Kansas
Equity Cooperative Livestock Sales   River Valley Cooperative
 Association
Estelline Coop Grain                 Roanoke Farmers Association
Everbest Organics, Inc.              Rock Island County Farm Bureau,
                                      Illinois
Evergreen FS, Inc.                   Rock River Lumber & Grain
Excel Engineering, Inc.              Rocky Mountain Agribusiness
                                      Association
Express Grain Terminals LLC          Rocky Mountain Supply, Inc.
F.M. Brown's Sons, Inc.              Rolling Plains Cotton Growers
                                      Association
Farm Credit Bank of Texas            Roquette
Farm Credit Council                  Rt. 16 Grain Cooperative
Farm Credit East                     Ruff Brothers Grain Company
Farm Credit Illinois                 Rumbold & Kuhn, Inc.
Farm Credit of Northwestern Florida  Saale Farm and Grain Co.
Farm Credit of the Virginias         Saginaw County Farm Bureau,
                                      Michigan
Farm Credit Services of America      Saline County Farm Bureau, Kansas
Farm Credit West                     San Antonio Central Railroad
Farmers' Association                 Sangamon County Farm Bureau
Farmer's Co-op Oil Company of Echo   Sanilac County Farm Bureau,
                                      Michigan
Farmers Cooperative                  Santori Company
Farmers Cooperative Association--    Saputo Cheese USA Inc.
 Tonkawa, OK
Farmers Cooperative Elevator Co.--   Saratoga County Farm Bureau, New
 Hanley Falls MN                      York
Farmers Cooperative Elevator         Sargento Foods Inc.
 Company
Farmers Cooperative--Dorchester NE   Sartori Company
Farmers Exchange--Helena, OK         Schneider's Dairy, Inc.
Farmers for Free Trade               Schoeps Ice Cream
Farmers Grain Company                Schreiber Foods, Inc.
Farmers Grain Company--Pond Creek,   Schuman Cheese
 OK
Farmers Grain Company of Central     Schuyler County Farm Bureau, New
 Illinois                             York
Farmers Grain Company of Dorans      Scott Bros. Dairy, Inc.
Farmers Grain Terminal, Inc.         Scoular
Farmers Mill Inc.                    Seaboard Foods
Farmward Cooperative                 Sedgwick County Farm Bureau, Kansas
Federation Cooperative               Seedway, LLC
Feed Commodities Inc.                Selig Group
Field Farms Marketing Ltd.           Separators Inc.
Fieldale Farms Corporation           SGS
Finney County Farm Bureau, Kansas    Shafer & Company, LLC
First District Association           Shamrock Farms Dairy
Fonterra                             Shawnee County Farm Bureau, Kansas
Food Marketing Institute             Shiawassee County Farm Bureau,
                                      Michigan
Ford-Iroquois Farm Bureau, Illinois  Shur-Gro Farm Services Ltd.
Foremost Farms USA                   SilverEdge Cooperative
Form A Feed                          Skyland Grain, LLC
Frank Bailey Grain Co., Inc.         Smithfield Foods
Frenchman Valley Coop                SmithFoods Inc.
Frontier Farm Credit                 SNAC International
Fruitcrown Products Corp.            Sooner Cooperative, Inc.--Okeene,
                                      OK
FS GRAIN                             South Central FS, Inc.
Galloway Company                     South Dakota Association of
                                      Cooperatives
GAPS FS                              South Dakota Corn Grower's
                                      Association
Garber Cooperative Association--     South Dakota Dairy Producers
 Garber, OK
Gateway FS                           South Dakota Farm Bureau
Gavilon                              South Dakota Pork Producers Council
Geary County Farm Bureau, Kansas     South East Dairy Farmers
                                      Association
Geaux Geaux Railroad                 South Kansas and Oklahoma Railroad
General Mills                        South Texas Cotton and Grain
                                      Association
Genessee County Farm Bureau,         Southeastern Ginners Association
 Michigan
Georgia Cotton Commission            Southeastern Grain & Feed
                                      Association
GFG Ag Services, LLC                 Southern Cotton Ginners Association
Gifford's Ice Cream                  Southern Cotton Growers Association
Glacial Plains Cooperative           Southern Rolling Plains Cotton
                                      Growers Association
Gladwin County Farm Bureau,          Southern States Cooperative
 Michigan
Glanbia Nutritionals                 Southern States Lexington
                                      Cooperative
Global Cold Chain Alliance           St. Clair County Farm Bureau,
                                      Illinois
Global Foods International           St. Clair County Farm Bureau,
                                      Michigan
G-M-I, Inc.                          St. Clair Service Company
Gold Star FS                         St. Joseph County Farm Bureau,
                                      Michigan
Gold-Eagle Cooperative               St. Lawrence Cotton Growers
                                      Association
Goodwine Cooperative Grain Company   St. Lawrence County Farm Bureau,
                                      New York
Grain and Feed Association of        Stafford County Farm Bureau, Kansas
 Illinois
Grain Craft                          Stanford Grain Company
Grain Journal                        Staplcotn
Grain Millers, Inc.                  Star Energy FS
GRAINCO FS, Inc.                     Star of the West Milling Company
GRAINLAND Cooperative                State Line Grain Co.
Grand Elk Railroad                   StateLine Cooperative
Grassland Dairy Products             Stephenson County Farm Bureau,
                                      Illinois
Gratiot County Farm Bureau,          Stephenson FS
 Michigan
Great Bend Coop                      Stevens County Farm Bureau, Kansas
Great Lakes Agra Corporation         Stewart Grain Co., Inc.
Great Lakes Cheese                   Stillwater Central Railroad
Great Northwest Railroad             Stratford Grain Company
Great Plains Cooperative             Sukup Manufacturing Co.
Great Plains Cooperative--Lahoma,    Sumner County Farm Bureau, Kansas
 OK
Greeley County Farm Bureau, Kansas   Sun-Maid Growers of California
Green Plains Inc.                    Sunrise Cooperative
Greenlee County Farm Bureau,         SUNRISE FS
 Arizona
Greenwood County Farm Bureau,        Sunsweet Growers, Inc
 Kansas
Grocery Manufacturers Association    Superior Farms
GROWMARK                             Swan Ranch Railroad
GROWMARK FS II, LLC                  Sweetener Users Association
GROWMARK FS, LLC                     Synergy Seeds Inc.
Growth Energy                        Syngenta
GSI                                  T&T Chemical, Inc.
Hamilton County Farm Bureau,         T.C. Jacoby & Company, Inc.
 Illinois
Hancock County Farm Bureau,          Tate & Lyle
 Illinois
Hannebaum Grain Co., Inc.            TAWI USA
Hardwood Federation                  Taylor Farms
Harper County Farm Bureau, Kansas    Tazewell County Farm Bureau,
                                      Illinois
Harris Ranch Beef Company            Team Marketing Alliance
Harris-Crane, Inc.                   Tennessee Farm Bureau
Harry Davis & Company                Tennessee Farmers Cooperative
Harvest Land                         Tennessee Pork Producers
                                      Association
Harvey County Farm Bureau, Kansas    Tennessee Soybean Association
Hawaii Pork Industry Association     Texas Agricultural Cooperative
                                      Council
Hawkeye Gold                         Texas and New Mexico Railroad
Henry County Farm Bureau, Illinois   Texas Corn Producers Association
Heritage Beef LLC                    Texas Cotton Ginners Association
Heritage FS                          Texas Farm Bureau
Heritage Grain Cooperative           Texas Grain and Feed Association
Hershey Creamery Co.                 Texas Pork Producers Association
Hiawathaland County Farm Bureau,     Texas Soybean Association
 Michigan
Highline Grain Growers, Inc          Texhoma Wheat Growers
Hi-Grade Farm Supply                 The Andersons
Hiland Dairy Company                 The Clorox Company
Hillsdale County Farm Bureau,        The DeLong Co., Inc.
 Michigan
Hilmar Cheese Company, Inc.          The Equity Cooperative
Hoffmann, Inc.                       The Fertilizer Institute
Hormel Foods                         The Grange
Hull Cooperative Assn.               The HANOR Company
Huron County Farm Bureau, Michigan   The Ice Cream Club, Inc.
Huron Shores County Farm Bureau,     The J.M. Smucker Company
 Michigan
Idaho Dairymen's Association         The Kraft Heinz Company
Idaho Farm Bureau Federation         The Mill of Black Horse
Idaho Pork Producers Association     The Russell Marine Group
IL Manufacturers Ass'n               Three Rivers FS
Illinois Corn Growers Association    Timber Rock Railroad
Illinois Farm Bureau                 TN Feed & Grain Assn
Illinois Fertilizer and Chemical     Tom Farms
 Association
Illinois Milk Producers Association  Tom Soya Grain Company
Illinois Pork Producers Association  Top Ag Cooperative
Illinois Soybean Growers             Topflight Grain Coop Inc.
 Association
IMA Dairy & Food USA                 Trans Pecos Cotton Association
Independent Bakers Association       Tri-Cities Grain, LLC
Indiana Corn Growers Association     TriCounty FS
Indiana Dairy Producers              Tri-Parish Co-op
Indiana Farm Bureau                  Trugman Nash LLC
Indiana Pork Producers Association   Tuscola County Farm Bureau,
                                      Michigan
Indiana Soybean Alliance             Two Rivers Coop--Ark City, KS
Ingham County Farm Bureau, Michigan  Tyson Foods, Inc.
Ingredion                            U.S. Apple Association
Innovative Ag Services               U.S. Dairy Export Council
International Agribusiness Group,    U.S. Hide, Skin and Leather
 LLC                                  Association
International Dairy Foods            U.S. Rice Producers Association
 Association
INTL FCStone                         U.S. Tobacco Cooperative
Ionia County Farm Bureau, Michigan   Union County Farm Bureau, Illinois
Iosco County Farm Bureau, Michigan   United Animal Health
Iowa Corn Growers Association        United Dairymen of Arizona
Iowa Farm Bureau Federation          United Dairymen of California
Iowa Institute for Cooperatives      United Egg Association
Iowa Pork Producers Association      United Egg Producers
Iowa Soybean Association             United Fresh Produce Association
Iowa State Dairy Association         United Grain Corporation
Iron Range County Farm Bureau,       United Potato Growers of America
 Michigan
Isabella County Farm Bureau,         United Producers, Inc.
 Michigan
Ithaca Central Railroad              Upstate Niagara Cooperative
J.D. Heiskell & Co.                  Ursa Farmers Cooperative
Jackson County Farm Bureau, Kansas   USA Poultry & Egg Export Council
Jackson County Farm Bureau,          USA Rice
 Michigan
Jackson Port Terminal Railroad       Utah Farm Bureau
Jasper County Farm Bureau, Illinois  Valley Fig Growers
JC Marketing Services, LLC           Valley Queen Cheese
Jefferson County Farm Bureau,        Van Buren County Farm Bureau,
 Illinois                             Michigan
Jefferson County Farm Bureau, New    Vicksburg Southern Railroad
 York
Johnson County Farm Bureau,          Virginia Cotton Growers Association
 Illinois
JV Smith Companies                   Virginia Farm Bureau
JW Safety Management                 Virginia Soybean Association
Kalamazoo County Farm Bureau,        Virginia State Dairymen's
 Michigan                             Association
Kanawha River Railroad               Vita Plus
Kankakee County Farm Bureau,         Viterra
 Illinois
Kansas & Oklahoma Railroad           Wabash Valley Service Company
Kansas Agribusiness Retailers        Wabaunsee County Farm Bureau,
 Association                          Kansas
Kansas Cooperative Council           Waldron Grain
Kansas Corn Growers                  Warren-Henderson Farm Bureau,
                                      Illinois
Kansas Cotton Association            Washington County Farm Bureau,
                                      Illinois
Kansas Farm Bureau                   Washington County Farm Bureau,
                                      Kansas
Kansas Grain and Feed Association    Washington County Farm Bureau, New
                                      York
Kansas Pork Association              Washington State Potato Commission
Kansas Soybean Association           Washtenaw County Farm Bureau,
                                      Michigan
Kanza Cooperative Association        Wayne County Farm Bureau, Illinois
Kaskaskia Regional Port Districts    Wayne County Farm Bureau, Michigan
Kaskaskia Watershed Association      Weidenhammer New Packaging
Kaw River Railroad                   Wells Enterprises, Inc.
Keller Grain & Feed Inc.             WEM Automation, LLC
Kelley Supply                        West Central FS, Inc.
Kellogg Company                      Western Grain Marketing, LLC
Kent County Farm Bureau, Michigan    Western Grain Marketing, WGM
Kentucky Corn Growers Association    Western Growers
Kentucky Farm Bureau                 Western United Dairies
Kentucky Pork Producers Association  Westway Feed Products
Kentucky Soybean Association         Wexford County Farm Bureau,
                                      Michigan
Kingman County Farm Bureau, Kansas   Wheeler Brothers Grain Company, LLC
Kiowa County Farm Bureau, Kansas     Whiteside County Farm Bureau,
                                      Illinois
Knox County Farm Bureau, Illinois    Will County Farm Bureau, Illinois
Kokomo Grain Co., Inc                William James and Associates, LLC
Kreamer Feed, Inc.                   Williamson County Farm Bureau,
                                      Illinois
Labette County Farm Bureau, Kansas   Williamson Farmers Co-op
LaBudde Group                        Winona Foods Inc.
Lactalis                             Wisconsin Agri-Business Association
Lake County Farm Bureau, Illinois    Wisconsin and Southern Railroad
Land O'Lakes, Inc.                   Wisconsin Cheese Makers Association
Land Run Farmers Cooperative--       Wisconsin Corn Growers Association
 Waukomis, OK
Landmark Services Cooperative        Wisconsin Pork Association
Landus Cooperative                   Wisconsin Soybean Association
Langeland Farms, Inc                 Woodall Grain Company
Lapeer County Farm Bureau, Michigan  Woodson County Farm Bureau, Kansas
LaSalle County Farm Bureau,          World Perspectives, Inc.
 Illinois
Laughery Valley Ag                   Wyandotte County Farm Bureau,
                                      Kansas
Laughlin Cartrell Inc.               Wyoming Farm Bureau
Lauridsen Group, Inc.                Yankee Farm Credit ACA
LCDM                                 Zeeland Farm Services, Inc.
Lee County Farm Bureau, Illinois     Zen-Noh Grain Corp
Legacy FS                            Zoetis
 

                                 ______
                                 
  Submitted Statement by Hon. Roger W. Marshall, a Representative in 
  Congress from Kansas; on Behalf of Ben Scholz, President, National 
                      Association of Wheat Growers
    Chairman Costa, Ranking Member Rouzer, and Committee Members, I am 
Ben Scholz, a wheat farmer from Lavon, Texas and President of the 
National Association of Wheat Growers (NAWG). NAWG represents wheat 
growers across the nation and works with a team of 21 state wheat 
grower organizations to advocate for the wheat industry. Thank you for 
the opportunity to submit testimony regarding the current state of U.S. 
agricultural products in international markets.
    Our nation's farmers are facing tough economic challenges and there 
seems to be no end in sight. Continued years of low commodity prices at 
a time when cost of production hasn't declined much has left much of 
farm country strapped for cash. The expectation of continued low prices 
has contributed to some of the lowest wheat acreage in U.S. history, 
with only 39.61 million acres of harvest wheat expected in the 2018/
2019 marketing year, a drop from 47.32 million acres just 4 years prior 
during the 2015/2016 marketing year.\1\ The market year average price 
for wheat continues to trend downward, having fallen to a low price of 
just $3.89 per bushel in 2016 and to this day, the average price over a 
10 year period is trending down. Net farm cash income is the cash 
available to farmers to draw down debt, pay taxes, cover family living 
expenses, and to invest. According to USDA Economic Research Service 
(ERS) data, net farm cash income has been down nearly 70% since 2013 
for wheat farmers. Working capital in the U.S. Farm Sector has also 
been on the decline, falling more than $100 billion in just 5 years. As 
farmers income has dropped, liquid cash capital reserves have been 
depleted. During times like these, it's critical that we look to expand 
markets and sell our U.S. wheat around the world.
---------------------------------------------------------------------------
    \1\ Source: USDA, National Agricultural Statistics Service, Crop 
Production, Agricultural Prices, and unpublished data; and USDA, World 
Agricultural Outlook Board, World Agricultural Supply and Demand 
Estimates.
---------------------------------------------------------------------------
    Unfortunately, the challenging economic conditions have only been 
exacerbated by a multitude of challenges to our international markets. 
U.S. wheat farmers are particularly vulnerable to trade disruptions 
with over 50 percent of wheat being exported. Uncertainty over trade 
agreements has already had an impact on U.S. wheat farmers. In an 
October 23, 2017 USDA Foreign Agricultural Service Report, it was noted 
that Mexico would make its first purchase 30,000 metric tons wheat from 
Argentina and that the shipment was tied to ``Mexico's well-publicized 
trade diversification efforts in the face of continued uncertainty over 
the future of the North American Free Trade Agreement (NAFTA).'' \2\ In 
fact, while Mexico had record wheat imports in the 2017/2018 market 
year (MY), imports of U.S. wheat fell by 569,000 metric tons compared 
to the previous year, an estimated loss of $178 million. This loss was 
caused by Mexico's decision to source wheat imports from alternative 
markets amid uncertainty of the NAFTA trade agreement and unknown 
repercussions from Section 232 tariffs. While we appreciate the 
Administration's efforts to improve the agreement and strongly support 
Congress approving the United States-Mexico-Canada Agreement (USMCA), 
this hasn't been done without economic harm to wheat farmers.
---------------------------------------------------------------------------
    \2\ Source: https://gain.fas.usda.gov/Recent%20GAIN%20Publications/
Mexico%20to%20Begin
%20Importing%20Argentine%20Wheat_Mexico_Mexico_10-23-2017.pdf.
---------------------------------------------------------------------------
    More so, U.S. farmers aren't competing on a level playing field. 
Major wheat producing countries like China violating WTO trade 
commitments in how they support their farmers and not fulfilling their 
tariff-rate quota (TRQ) commitments. We recently secured two big 
victories at the WTO on these issues, and continued engagement will be 
necessary as China may appeal the TRQ decisions or not comply with the 
decisions. However, since March of 2018, the initial threat of tariffs 
against China, there has been only a small private purchase of wheat. 
It's estimated that we have lost almost 1.6 million metric tons in 
annual sales or well over $325 million. In addition to lost sales, with 
China's tariff rate quota, they should be importing almost 10 million 
metric tons with much of that coming from the United States. If we 
captured just a third of that market, we would have sales of about $650 
million to China, the largest wheat consuming nation and making them 
our largest market.
    Similarly, we look forward to Brazil fulfilling their duty-free TRQ 
for wheat. A longstanding obligation under Brazil's WTO commitments in 
1995, in March, the Brazilian government agreed to comply. This creates 
an opportunity for increased U.S. wheat purchases to the number one 
wheat importer in Latin America. However, the U.S. needs to continue to 
engage with Brazil to ensure that they do follow through on their 
commitment.
    It is important to recognize that trade does not happen in a vacuum 
and that while we appreciate the [Administration] working towards a 
deal with Japan, only so many resources can be dedicated to that given 
the ongoing dealings with China and USMCA. Japan is the top export 
market for U.S. wheat and it is critical that a deal is struck with 
Japan quickly. With the Comprehensive and Progressive Agreement for 
Trans-Pacific Partnership (CPTPP) moving forward, top competitors like 
Australia and Canada have a growing price advantage in the Japanese 
market, while the U.S. is just beginning bilateral negotiations with 
Japan. If the U.S. loses market share because of a price disadvantage 
in Japan, or elsewhere, it will likely take years to regain full access 
and by then market share may not recover.
    As it has been outlined above, U.S. wheat farmers have been 
negatively impacted by trade disruptions. Wheat farmers do appreciate 
the Administration's recognition of this through the announcement of 
the second trade mitigation package. Given the challenging economic 
environment and trade disruptions we are hopeful that this second round 
of Market Facilitation Program (MFP) payments will provide some needed 
relief to wheat farmers. There are still many questions to be answered 
about how the MFP program will work and wheat growers have sent a 
letter to Secretary Perdue outlining these questions and providing 
input on how best to maximize the effectiveness of these payments. At 
the end of the day though, these payments won't make wheat farmers 
whole. The long-term solution to provide relief must be to secure deals 
with other countries quickly.
    There is no question that wheat farmers are facing an incredibly 
challenging economic environment and that trade disruptions have 
negatively impacted farmers. China is employing trade distorting 
policies but we have had significant victories through the WTO and see 
real opportunity to grow our market there. It is critical that Congress 
pass USMCA to provide long-term certainty with a top market, Mexico. 
Securing a deal with Japan is the only way for U.S. wheat farmers to 
compete with a growing price disadvantage compared to when Canada and 
Australia sell to Japan. Farmers have invested their own money in 
developing and building market share in countries around the world. We 
can't risk losing those markets that we've worked for several decades 
to build.
    NAWG thanks the Committee for holding this important hearing today. 
We look forward to continuing to work with Congress and the 
Administration towards the ultimate solution of creating long-term 
trade deals with critical markets to U.S. wheat.
            Sincerely,
            [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
            
Ben Scholz,
President,
NAWG.
                                 ______
                                 
  Submitted Letter by Hon. Jim Hagedorn, a Representative in Congress 
                             from Minnesota
June 5, 2019

  Hon. Donald J. Trump,
  President of the United States,
  The White House,
  Washington, D.C.;

  Hon. Nancy Pelosi,
  Speaker of the U.S. House of Representatives,
  The Capitol,
  Washington, D.C.

    Dear President Donald Trump and Speaker Nancy Pelosi,

    As Members of Minnesota's U.S. House delegation, we write to 
express our strong support for the United States-Mexico-Canada 
Agreement (USMCA). Passage of USMCA will increase economic growth, 
expand trade opportunities, and create high-wage jobs.
    Enhancing trade with Canada and Mexico is especially critical to 
the State of Minnesota. More than 250,000 Minnesota jobs and $7.2 
billion in exports underscore the value of North American trade. Fifty-
one percent of Minnesota's total agriculture and agri-food exports flow 
to Canada and Mexico. In addition to agriculture, the machinery, 
manufacturing, medical, and mining industries account for the vast 
majority of Minnesota's North American exports.
    We are confident that passage and implementation of USMCA will 
deliver opportunity and certainty to Minnesota's farmers, 
manufacturers, labor force, and consumers.
    Mr. President, we encourage your Administration to formally submit 
USMCA to Congress as soon as possible. Speaker Pelosi, we seek 
expeditious consideration and a vote on the House floor for this 
important agreement.
    Thank you for your consideration.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    

 
 
 
Hon. Jim Hagedorn,       Hon. Tom Emmer,          Hon. Pete Stauber,
Member of Congress;      Member of Congress;      Member of Congress.
 

                                 ______
                                 
                          Submitted Questions
Response from Hon. Ted McKinney, Under Secretary for Trade and Foreign 
        Agricultural Affairs, U.S. Department of Agriculture
Question Submitted by Hon. Jahana Hayes, a Representative in Congress 
        from Connecticut
    Question. Dairy & Trade:
    Thank you, Mr. Chairman, for holding this critical hearing. And 
thank you Mr. McKinney and Mr. Doud for being here.
    It is fitting that we have this hearing as National Dairy Month is 
underway. The importance of the dairy industry cannot be understated, 
and the dairy industry is one that is extremely important to me. In my 
home state of Connecticut, the dairy industry provides nearly 3,000 
jobs, and has an economic impact of over $900 million. My district, 
Connecticut's 5th Congressional, is home to many small, family-owned 
dairies. These farms are small, but mighty, representing a large 
portion of the state's farmland and providing pastoral landscapes, 
scenic vistas, and a wealth of rural character to local communities. 
They are staples in the community, producing everything from delicious 
ice cream to the milk that makes Cabot cheese.
    However, this is a difficult business to be in, and an even more 
difficult time. From perpetually low dairy prices to national and 
global economic changes, there is a lot of pressure on my local 
farmers. And to make matters worse, Connecticut dairy farmers were 
caught in the middle of our trade war. Then, they were let down again 
by the Federal trade mitigation payments that they were promised, with 
some farm owners receiving as little as $50 in aid. Of the $4.7 billion 
allocated for the first round of trade mitigation payments, only $127 
million was set aside for dairy farmers. Of that $127 million, payments 
to all Connecticut farmers totaled a mere $121,798. One dairy farmer in 
my district, who milks 300 cows at her farm, received $3,918 in 
mitigation payments. That is less than the 12 per hundredweight of 
milk!
    Even though the Canadian and Mexican tariffs are off, dairy farmers 
are still feeling the burden of the first 5 months of the year, and it 
does not seem like those damages are taken into account when mitigation 
payments are made.
    And while, second and third rounds of these payments are either in 
progress or upcoming, they have not been timely and continue to treat 
dairy as a low priority. This lack of aid is especially alarming in a 
state like Connecticut where the cost of production is extremely high 
and could even exceed the price they are getting in return for their 
products.
    So, given the importance of dairy both in Connecticut and across 
the country, and the difficult situation they are in, I would like to 
ask you some questions on what USDA and USTR are doing to help.
    On the topic of mitigation: Mr. McKinney, businesses made strategic 
investments to serve specific markets with specific products. Dairy 
exports and businesses are not positioned to redirect product someplace 
else overnight. Did your mitigation estimates consider value lost by 
those companies that kept exporting but have paid the tariffs 
themselves? A one-size-fits-all approach is not going to work here, and 
we must examine the way we help those in need on a more tailored basis.
    Thank you again, Mr. McKinney. I appreciate you answering my 
questions.
    Answer. USDA's trade mitigation payments were based on estimated 
gross trade damages. This damage estimate reflects the full total 
amount of exports expected to be loss due to the tariff. Furthermore, 
the 2019 MFP payments have been revised to account for loss trade based 
upon the maximum amount of U.S. exports over the past 10 years.
Question Submitted by Hon. TJ Cox, a Representative in Congress from 
        California
    Question. Under Secretary McKinney, during the rollout of the 
previous Trade Mitigation Programs, some of the allocated Market 
Facilitation Program funds were left on the table, and the Agricultural 
Trade Promotion Program was vastly oversubscribed. And should the same 
events occur this time around, will unused MFP funds be reallocated to 
Trade Promotion Programs?
    Answer. USDA has publicly shared estimated funding associated with 
the three trade mitigation-related programs. Those estimates are seen 
as targets but not definite or guaranteed. Where the Department may 
have overestimated funding for certain programs, there is no intention 
of reallocating those under-utilized funds for other programs within 
the suite of trade mitigation assistance.
Question Submitted by Hon. Angie Craig, a Representative in Congress 
        from Minnesota
    Question. Ambassador Doud, in your written testimony you also note 
that USTR is currently establishing a process to exclude certain 
importers from Chinese tariffs. At a briefing, USTR told my staff that 
action could require at least 50 additional employees to sort through 
the thousands of likely exclusion applications, and that they hoped 
they would be able to receive detailees from the USDA to fill some of 
those positions.
    Under Secretary McKinney also testified at length about the work 
going into the second round of market facilitation payments.
    So, you are both talking about taking resources away from the core 
function of your agencies, implementing the farm bill at USDA and 
negotiating and enforcing trade agreements at USTR, in order to offset 
the damage done by the President's trade policies, all while farmers 
and ranchers are waiting for real help.
    I would be grateful if you would follow up with a written response 
on the work hours spent to provide exclusions from tariffs and creating 
market facilitation payments, and how many hours of productivity 
dedicated to your regular mission you may have lost.
    Answer. USDA's mission includes supporting Administration 
interagency committees. USDA's Foreign Agricultural Service (FAS) 
personnel participate in activities of the USTR-led 301 Committee, a 
subordinate body of the interagency Trade Policy Staff Committee. In 
recent months, as part of their regular duties, a limited number of FAS 
experts have attended Subcommittee meetings, hearings, and evaluated 
several agricultural-related exclusions requested under the Section 301 
petition process. USDA's participation ensures that U.S. agricultural 
interests are carefully considered.
Response from Hon. Gregory Doud, Ambassador and Chief Agricultural 
        Negotiator, Office of the U.S. Trade Representative
Question Submitted by Hon. Jahana Hayes, a Representative in Congress 
        from Connecticut
    Question. Dairy & Trade:
    Thank you, Mr. Chairman, for holding this critical hearing. And 
thank you Mr. McKinney and Mr. Doud for being here.
    Mr. Doud, the European Union continues to limit U.S. market 
opportunities by making deals with other countries to restrict the use 
of geographic indicators. What are you doing to help keep these markets 
open to American dairy? While our relationships with Mexico and Canada 
are vitally important, we cannot undersell the importance of a strong 
presence in the European market.
    Thank you again, Mr. Doud. I appreciate you answering my questions.
    Answer. The United States and the EU have long-standing differences 
over the scope and level of intellectual property rights protection for 
geographical indications (GIs). This is an important concern, and USTR 
is pressing the EU both bilaterally and in multilateral fora to expand 
market access for U.S. producers into the EU. The EU's actions are also 
concerning where there are existing international Codex Alimentarius 
standards, such as for certain cheeses. USTR is also working to 
safeguard third country markets, including removing barriers such as 
over-broad GI protection for EU products that serve to block U.S. 
producers and traders using common food names or who have prior 
trademark rights.
Question Submitted by Hon. Angie Craig, a Representative in Congress 
        from Minnesota
    Question. Ambassador Doud, in your written testimony you also note 
that USTR is currently establishing a process to exclude certain 
importers from Chinese tariffs. At a briefing, USTR told my staff that 
action could require at least 50 additional employees to sort through 
the thousands of likely exclusion applications, and that they hoped 
they would be able to receive detailees from the USDA to fill some of 
those positions.
    Under Secretary McKinney also testified at length about the work 
going into the second round of market facilitation payments.
    So, you are both talking about taking resources away from the core 
function of your agencies, implementing the farm bill at USDA and 
negotiating and enforcing trade agreements at USTR, in order to offset 
the damage done by the President's trade policies, all while farmers 
and ranchers are waiting for real help.
    I would be grateful if you would follow up with a written response 
on the work hours spent to provide exclusions from tariffs and creating 
market facilitation payments, and how many hours of productivity 
dedicated to your regular mission you may have lost.
    Answer. USTR has assembled a specialized and dedicated team of 
paralegals, trade analysts, and contractors that work on the exclusion 
process. This team currently consists of approximately 40 people. The 
vast majority of these personnel were hired for and work on the 
exclusion process full-time. This allows the rest of USTR's personnel 
to focus on other agency priorities, including negotiating and 
enforcing trade agreements and fighting to open markets for U.S. 
farmers and ranchers. For example, on August 2, the United States 
signed a new agreement with EU to increase duty-free exports of 
American beef to the EU to $420 million over the next 7 years.
    USDA's trade mitigation program is an interim solution that runs in 
tandem with the Administration's work on free, fair, and reciprocal 
trade deals that will open more markets in the long run for American 
products. This will benefit agriculture and all sectors of the American 
economy. USTR is not involved in the process for making market 
facilitation payments. USDA will be best positioned to provide 
information on that program.

                                  [all]