[Congressional Record Volume 144, Number 51 (Thursday, April 30, 1998)]
[Senate]
[Pages S3944-S3946]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SENATE RESOLUTION 220--EXPRESSING THE SENSE OF THE SENATE THAT THE
EUROPEAN UNION SHOULD CANCEL THE SALE OF HEAVILY SUBSIDIZED BARLEY TO
THE UNITED STATES
Mr. DORGAN (for himself, Mr. Kempthorne, Mr. Wyden, Mrs. Murray, Mr.
Johnson, Mr. Baucus, Mr. Craig, Mr. Burns, Mr. Smith of Oregon, Mr.
Conrad, Mr. Gorton, Mr. Daschle, and Mr. Enzi) submitted the following
resolution; which was referred to the Committee on Finance:
S. Res. 220
Whereas, in an unprecedented sale, the European Union has
entered into a contract with the United States to sell
heavily subsidized European barley to the United States;
Whereas the sale of almost 1,400,000 bushels (30,000 metric
tons) of feed barley would be shipped from Finland to
Stockton, California;
Whereas news of the sale has already depressed feed barley
prices by at least 24 cents per bushel in the California feed
barley market;
Whereas, since this market sets national pricing patterns
for both feed and malting barley, the sale would mean
enormous market losses for barley producers throughout the
United States, at a time when United States barley producers
are already suffering from low prices;
Whereas the European restitution subsidies for this barley
amounts to $1.11 per bushel ($51 per metric ton);
Whereas the price-depressing effects of this 1 sale would
adversely affect market prices for at least a 9-month period
as this grain moves through the United States marketing
system;
Whereas this shipment would be part of about 9,000,000
bushels (200,000 metric tons) of European feed barley that
has been approved for restitution subsidies by the European
Union;
Whereas the availability of the additional subsidized
European barley in the international market would not only
continue to artificially depress market prices, but also
would threaten to open a new channel of imports into the
United States;
Whereas, as the world's largest feed grain producer and the
world's largest exporter of feed grains, the United States
does not require imported feed grains;
Whereas, at the same time that subsidized European barley
is being imported into the United States, some United States
feed grains are prevented from entering European markets
under European Union food regulations;
Whereas United States barley growers are now feeling the
negative impacts of the sale, regardless of whether the
subsidized European barley was originally targeted for sale
[[Page S3945]]
into the United States and whether the subsidies comply with
the letter of current World Trade Organization export subsidy
rules; and
Whereas the sale not only undermines the intent and the
spirit of free trade agreements and negotiations, but also
moves away from the goals of level playing fields and
fairness in trade relationships: Now, therefore, be it
Resolved,
SECTION 1. SENSE OF SENATE ON EXPORT OF EUROPEAN BARLEY TO
THE UNITED STATES.
It is sense of the Senate that--
(1) the European Union should--
(A) take immediate steps to cancel the sale of European
feed barley to the United States; and
(B) establish procedures to ensure that restitution and
other subsidies are not used for sales of agricultural
commodities to the United States or other countries of North
America;
(2) the President of the United States, the United States
Trade Representative, and the Secretary of Agriculture should
immediately investigate the sale of European feed barley to
the United States and prevent any future sale of European
agricultural commodities to the United States or other
countries of North America that is based on restitution or
other subsidies; and
(3) not later than 60 days after approval of this
resolution, the United States Trade Representative and the
Secretary of Agriculture should report to Congress on--
(A) the terms and conditions of the sale of European feed
barley to the United States;
(B) the steps that have been taken to cancel the sale and
prevent any recurrence of similar types of sales; and
(C) any additional authorities that are necessary to carry
out subparagraph (B).
Mr. DORGAN. Mr. President, periodically, there are events that help
focus and define the problems that this nation faces in its trade
relationships with the rest of the world. Today, we are facing another
glaring example of how this nation becomes the dumping ground for
subsidized exports that violates any reasonable understanding of fair
trade and level-playing fields.
Earlier this month, a sale was made for the shipment of 1.4 million
bushels of feed barley from Finland to Stockton, California. The irony
and tragedy of this sale is that the United States is the world's
largest producer of feed grains, as well as the world's largest
exporter of feed grains. There is absolutely no reason for this nation
to import a single grain of feed barley.
The only reason that this sale was feasible was that this shipment is
heavily subsidized to the tune of at least $1.11 per bushel through the
European Union's restitution system of subsidies.
At a time when farmers across this country are facing some very
serious economic challenges, including low prices, escalating
production costs, and adverse weather conditions, it is a serious
economic blow for them to be undercut by the import of subsidized feed
grains. At a time when many farmers are having difficulty getting
credit to put in their spring crops because current farm prices do not
cover production costs, we do not need unnecessary imports to put
further downward pressure on our grain markets.
News of this sale of European barley has already depressed feed
barley prices by at least 24 cents a bushel in the California feed
barley market. Since this market sets pricing trends for both feed and
malting barley, this sale of 1.4 million bushels is producing enormous
market losses for barley producers throughout the country. Market
experts indicate that this sale will adversely affect U.S. barley
prices for at least a nine-month period as this barley moves through
the U.S. marketing system. It particularly hits home in North Dakota,
which is the nation's largest producer of barley and normally produces
one-third of this nation's barley crop.
Compounding the pricing impact of this particular sale is the fact
that there is something in the neighborhood of another 9 million
bushels of feed barley that have been authorized for restitution
subsidies by the European Union and which have not yet found a home.
This morning at a meeting in the office of Senator Baucus, I and
other Senators from barley-producing states met with the Ambassador of
the Organization of European Communities, Mr. Hugo Paeman. We asked him
to convey to the European Union that this sale should be terminated and
that the European Union should take immediate steps to prevent any
future occurrence of such subsidized sales into the U.S. market. While
Mr. Paeman sought to assure us that this sale was a very unusual
circumstance and was not a precedent for additional sales of subsidized
barley into the United States, we continue to be greatly concerned
about the impact it has already had upon markets and the danger of this
sale opening a new channel of unfair trade into the United States.
While I sincerely hope that the European Union will take our concerns
seriously and take the appropriate actions to terminate this sale and
prevent future sales, I also recognize that this nation also has a
responsibility to fight for fair trade for our farmers. It's bad enough
that the European Union would permit such an event to occur. It would
be even worse if the United States took no action to stop it.
The real tragedy of this situation is that it is very likely that
this shipment of highly-subsidized feed barley is permissible under
current rules of the World Trade Organization. The possibility that
this sale is WTO legal doesn't make it any more acceptable to the
farmers who have already been hurt by the price reduction that this
sale has caused.
This morning we were told that the European Union had not targeted
the United States for this particular shipment of barley, and that it,
in fact, had been intended for sale to Saudi Arabia. Yet, the reality
is that this sale is currently scheduled to be shipped to Stockton.
California. Again, it makes little difference to U.S. barley growers
whether this shipment was originally destined for the United States.
The effect on their prices is the same. The damage to our markets is
the same.
While this sale of heavily-subsidized European barley is
unprecedented, once a channel of commerce is opened it is often
extremely difficult to put the genie back in the bottle. That is why
that I and my colleagues from other barley producing states are so
deeply concerned about this particular event. We have seen a trickle of
Canadian grain moving across our borders change into a perpetual
avalanche. We have seen assurances and good intentions become the
grease by which unfair trade policies have become structural.
This particular sale of European barley is another example of many of
the ongoing problems that our nation has in achieving fair trade with
level playing fields and reciprocal market access. While I hope that
this sale can be terminated and resolved quickly and effectively, I
also believe this sale should become a rallying point for not only
American farmers, but the entire nation in demanding fairness and
justice in our trade policies and relationship.
I am pleased that I have been joined by twelve of my colleagues in
submitting a sense of the Senate resolution which calls upon both the
European Union and our own nation to take the appropriate steps to not
only terminate this sale, but also to ensure that such a sale will
never occur again.
Mr. KEMPTHORNE. Mr. President, I rise today to declare my concern
over the dumping of barley into the American market by a European
producer.
I share the Idaho barley producers' outrage about the current
unprecedented movement of heavily subsidized European Union feed barley
into the California feed markets. Last week, a 30,000 metric ton cargo
of European feed barley was sold into the Stockton, California feed
market. As expected, this sale has caused a tremendous ripple in
American barley prices. In fact, this action has caused the price of
barley to drop 34 cents a bushel after the subsidized European Union
feed barley sale was announced. This sale undermines both the intent
and spirit of trade agreements with Europe and contradicts the goals of
trade fairness.
Any time there is a drastic drop in the price of any commodity,
America's agriculture community and leaders must take notice. Whether
the dumping was intentional or not, we must not allow it to go
unchallenged and the practice cannot be allowed to continue. American
barley producers can compete with any in the world, but there must be a
level playing field. The European Union must now take steps to level
that field.
I, along with my some of my colleagues, have met with European Union
Ambassador Hugo Paeman about the problem. Ambassador Paeman has assured
us that the European Union countries will not repeat the recent sale of
subsidized barley into the
[[Page S3946]]
United States. That would be a disaster for Idaho and American
producers. The ambassador also assured us that this is in no way a
precedent, and in fact is a unique and isolated event. However, if this
sale is still allowed to go through, it could create a real concern
that this deal will set a precedent.
Barley is very important to the economy of my home state. Idaho
produces 60 million bushels of barley a year, worth $155.3 million
annually. We are the second largest barley producer in the U.S. and
barley is the state's fifth largest crop.
Mr. Chairman, I call for termination of this sale of European Union
barley and also for assurances from the European Union that U.S. grain
markets will not be disrupted by unfair trade practices. That is why I
am submitting a resolution calling on the European Union to halt this
shipment and for the administration to investigate this unfair
practice.
Mr. WYDEN. Mr. President, I join with my colleagues in submitting
this resolution condemning the subsidized sale of European barley into
the California barley market.
Today several of us met with the European Union Ambassador, Mr. Hugo
Paemon, to express our extreme concern about this shipment and about
the future it bodes for the trade relationship between the United
States and the European Union. Quite frankly, Mr. President, I think
that we were heard but I am not sure, in the American vernacular, that
Mr. Paemon quite ``gets it.''
Mr. President, I want to suggest that whether this is just a
skirmish, or whether it is the first battle in what many believe could
become a rapidly escalating conflict over trade in agricultural goods,
for barley producers in Oregon and across America, there has been no
more serious matter in the past decade.
My language is strong, Mr. President, because it is very important
that Senators understand that if this shipment proceeds it sets an
extremely dangerous precedent for our agricultural trade practices.
There is a very real concern in Oregon that if we allow this shipment
of grain, the shipment of which would simply not be possible without an
extraordinary level of European Union subsidy, then we will have opened
the door to further shipments that could have devastating effects on
our domestic commodity prices.
For my colleagues who have not yet heard about this issue, a shipment
of European Union barley, at a restitution subsidy rate of $51 per
metric ton, that was originally targeted into the Saudi Arabian market
was not sold. In search of a buyer, this shipment was subsequently sold
into the California feed barley market at a price well below the then-
current market price.
Mr. President, the United States is the world's largest producer of
feed grains and the world's largest exporter of feed grains. Were this
European barley not subsidized at half of its value, we would not be
having this discussion because there is no way it could have been
priced competitively with domestic feed barley.
I met this weekend with barley producers in Klamath Falls, Oregon.
These folks are already seeing very tough barley prices this season,
down about $5 a metric ton from what they have normally received over
the decade. They are taking some hits as a consequence of our national
policy through the Farm bill of phasing out income maintenance
programs. And now the European Union is sending us a heavily subsidized
shipment that is causing collapse of the market. Enough is enough.
This European Union shipment, because it has the capacity to flood
the California market for the next 9 months, has caused prices to drop
$10 per ton in one week. One individual who operates a grain elevator
in the Klamath described telling a local producer that he had lost some
$20,000 in 48 hours as a result of this dumping of this subsidized
barley into California.
These farmers ask, correctly, that if ever there was a time for the
federal government to come to the defense of American agriculture, now
is that time. We face collapse of our American barley market because of
this relatively unique occurrence; now is the time to go to the mat in
defense of our producers against wholly subsidized foreign dumping.
Mr. President, we should also recognize, and thank, the larger
wholesalers of barley in California who passed up this sale, which to
them represented I'm sure a very lucrative marketing opportunity. These
companies understood the damage that the sale would do to their
customers and most reliable suppliers, the U.S. barley producers. But
surely if this sale is allowed to go forward, and other fire sales are
allowed to follow, those firms will no longer be able to afford that
posture.
Mr. President, as a supporter of free trade, and of providing fast
track authority, if we are to retain our credibility with American
farmers then we must show the ability to act forcefully when faced with
these sorts of irritants to free trade. There is no precedent for this
sale, and if we allow it to go forward then those of us who believe in
the promise of freer trade will have some difficulty explaining to our
farmers that greater trade freedom is in their best interest.
Mr. President, It is very important to all Oregon producers that the
U.S. Senate act quickly to respond to this unprecedented attack on one
segment of our agriculture industry. I urge the swift adoption of this
resolution.
____________________