[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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36-926 PDF WASHINGTON : 2019
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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
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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.
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\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]