[Congressional Record (Bound Edition), Volume 151 (2005), Part 20]
[Senate]
[Pages 27272-27274]
[From the U.S. Government Publishing Office, www.gpo.gov]




      WHAT'S AT STAKE FOR U.S. AGRICULTURE IN THE NEXT TWO MONTHS?

  Mr. SANTORUM. Mr. President, our top U.S. trade negotiators traveled 
this week and last in Europe, Africa, and Asia. They are making a 
concerted effort to encourage certain influential countries among our 
148 trading partners in the World Trade Organization to put meaningful 
agricultural offers on the table in Geneva. We are coming down to the 
wire in the most recent round of multilateral trade negotiations, 
referred to as the Doha Development Round. The offers that our trading 
partners put on the table in the next month or two are the starting 
point for agricultural negotiators. That deal in agriculture will be 
combined with the results of similar negotiations in the manufacturing 
and services sectors of the economy. Together, they constitute the 
outcome of the round that has been going on for the last 4 years. 
Without a deal in agriculture, however, the Doha Development Round will 
falter.
  While bilateral trade agreements are beneficial to U.S. exporters, it 
is through multilateral negotiations that across-the-board tariff 
reductions can be achieved. That is why the Doha Development Round is 
so crucial.
  The agricultural negotiations are significant to all of us 
representing states with agricultural constituencies. In the case of 
Pennsylvania, production agriculture generated $4 billion in cash 
receipts in 2003, according to USDA statistics. That's $4 billion for 
the producers of livestock and commodities in my State. Pennsylvania 
generates only 2 percent of agricultural cash receipts received by 
producers nationwide, so you can imagine how important agriculture is 
to the 31 States with larger agricultural economies. Then there is the 
added value to the Pennsylvania economy of further processing and 
manufacture of food products and their export. Virtually every State 
has a stake in these negotiations.
  The producers of U.S. food and fiber no longer are producing for the 
U.S. market alone. Those days are gone forever. Our farmers are part of 
the global economy. In fact, because they are so efficient, they 
produce in excess of what the U.S. can consume and must gain access to 
global markets to expand sales opportunities.

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  Yet many markets overseas remain closed to U.S. producers because of 
high tariffs applied against U.S. exports. Particularly egregious are 
the tariffs imposed by the European Union and Japan among developed 
economies and by certain developing countries such as India and Brazil, 
where they continue to claim developing status despite making major 
advances in certain sectors of their economies.
  These issues have been discussed at the WTO during the past 4 years 
of the current Doha Development Round, with little movement in 
agriculture. In an effort to move the round forward, the U.S. last 
month put forth in Geneva an aggressive proposal to jumpstart the 
stalled negotiations. Since U.S. tariffs already are low compared to 
our trading partners, there was little the U.S. could offer in market 
access to encourage comparable reductions. So the U.S. proposed to pull 
back its own domestic subsidies in exchange for significant cuts by our 
trading partners in the tariffs protecting their market access.
  The rationale behind the offer is that U.S. producers are so 
efficient that they require minimal domestic subsidies, as long as they 
have unfettered access to expanding markets. Those markets increasingly 
are found overseas where the increased prosperity of growing middle 
classes demands the kind of dietary diversity and convenience we have 
long enjoyed. U.S. producers and food manufacturers can supply both 
that diversity and convenience and supply it year in and year out.
  But not all agriculture is as efficient as that in the U.S. Rather 
than improve efficiency, some countries protect producers excessively 
with high tariff barriers to market access. And they are not 
forthcoming with offers of significance to begin the process of 
reducing those barriers. Frankly, there isn't much time left. The round 
ends at the end of 2006, and the initial offers for negotiation should 
be on the table this December at the Hong Kong ministerial meeting so 
negotiators are able to assemble the final package of tariff reductions 
and subsidy cuts in the next year. They will need every minute to do 
so.
  After last week in Europe, the Secretary of Agriculture and the U.S. 
Trade Representative were far from optimistic that the Hong Kong 
ministerial meeting would grapple with the type of formulas to be used 
in cutting tariffs or with the number of ``sensitive'' products that 
countries could declare protected behind a high tariff.
  And what happens if there is no agreement or a face saving agreement 
with minimal substance? That's what worries me and should worry 
American farmers. U.S. production agriculture has been a partner in the 
international effort of our trade negotiators to gain market access. 
But how long can the partnership last if the round fails? Where do 
farmers and ranchers put their efforts if the latest round of 
negotiations fails to live up to its promise?
  The European Union, for example, insists that dairy is sensitive and 
deserves special protection. How can the dairy farmers of the U.S. be 
convinced that overseas market access is the key to increased 
profitability if the European market remains unavailable behind high 
tariff walls? I am concerned that agriculture will lose patience with 
the trade negotiation process and return to familiar domestic farm 
programs to augment its income because the world market could not. What 
do responsible Members of Congress do then, facing the kind of fiscal 
constraints we do in 2006, just as existing farm programs expire?
  There is real potential under those circumstances for backlash. 
Testimony by commodity groups earlier this month in the House has 
telegraphed that already. Wheat, corn, and soy producers all expressed 
reservations at the degree of ambition and commitment to trade 
liberalization shown by U.S. trading partners, particularly the 
European Union and the G-20 group of developing nations, as evidenced 
by their counter proposals to the U.S. proposal in the WTO. U.S. 
producers are savvy. They see the inadequacy of those offers by our 
trading partners and have no intention of venturing too far in the 
direction of liberalized trade alone without a very strong safety net. 
The weaker the commitment to reform among our trading partners, as 
evidenced by the degree of success in the Doha Development Round, the 
more expensive will be the net required by our producers. That's bad 
news for those in Congress wishing to lead their agricultural producers 
toward a more productive and profitable model based on increased 
markets overseas, where 95 percent of the world's consumers live.
  A recent study by Australia, a leading member of the Cairns Group of 
trade-liberalizing nations within the WTO, underscores the potential 
loss if the more robust proposal of the U.S. in the WTO is not 
realized. Australia's agricultural economics bureau, ABARE, estimates 
the U.S. proposal would deliver an extra $17.5 billion in gross income 
per year to U.S. farmers from increased exports. Much of that increase 
would flow to producers of meat and fruit and vegetables, who would 
benefit from increased market access. In fact, the U.S. proposal would 
benefit all efficient producers in the world, according to ABARE.
  This is not the time to accept less than the U.S. proposal in the 
negotiations. ABARE estimates the European Union proposal would yield 
only about $3 billion, barely enough to account for assumption 
variables in the study, and it would continue to protect a number of 
its product lines where the U.S. stands to gain the most from market 
access. The proposal of the G-20 group would yield an extra $7.5 
billion per year, a bare minimum.
  Moreover, the benefit to U.S. production agriculture from increased 
earnings under the U.S. proposal would provide latitude for writers of 
the next farm bill to adjust domestic programs to accommodate two 
important realities. Some of our domestic programs have been ruled 
trade-distorting under the WTO. Ultimately we will have to reform these 
programs. Either we change our farm programs now by negotiation in the 
WTO where we can get something in return for them, or we will be forced 
to change them by litigation by which we don't get anything for them. 
Here is the perfect opportunity, where we can gain market access and 
income to offset changes made domestically.
  The second reality is the cost of farm programs. That cost may not 
seem like much in years of little budget competition. But today we are 
in a budgetary climate where any policy that depends on government 
financing is subject for review. There is strong competition for public 
outlays, and an effort to reduce the deficit places new scrutiny on all 
programs.
  We all have just experienced the budget reconciliation process in 
Congress. In agriculture, we were obligated to find $3 billion worth of 
savings to accommodate budget targets. That is just the beginning, and 
we are well advised to know the alternatives available to us to make 
adjustments in important programs in advance of the need. This WTO 
negotiation provides the U.S. with the opportunity to convert its 
aggressive proposal for reform into real income for farmers and 
agribusiness. For instance, if the U.S. program crops like wheat, corn, 
rice, and soybeans continue to be under pressure in the WTO for the 
portions of their domestic subsidy programs that ``distort'' trade, the 
advent of the next farm bill provides us a chance to convert supports 
for those crops into a format that conforms to WTO guidelines. In 
return, we gain the market access from our trading partners to sell 
them U.S. fruit and vegetables, meat and dairy products, and other 
specialty crops not previously allowed into their markets in sufficient 
quantity.
  If we don't succeed in opening those opportunities for U.S. 
agriculture, we will have nothing with which to persuade our producers 
to give up the expensive domestic subsidies to which they have become 
accustomed. Another expensive, non-innovative, and divisive farm bill 
might unfortunately be the result. Mr. President, a great deal is 
riding on the success of the Doha Round.

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