[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.

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