STATEMENT OF THE
AMERICAN FARM BUREAU FEDERATION
TO THE
SENATE COMMITTEE ON AGRICULTURE,
NUTRITION & FORESTRY
REGARDING THE
AGENDA FOR THE WORLD TRADE ORGANIZATION
MINISTERIAL CONFERENCE
Presented By
Andrew Whisenhunt
President, Arkansas Farm Bureau Federation
September 30, 1999
Mr. Chairman, members of the Committee, I am Andrew Whisenhunt, Chairman of the American Farm Bureau's Trade Advisory Committee, President of the Arkansas Farm Bureau, and a cotton, rice, soybean, wheat, and feedgrain farmer from Bradley, Arkansas. I appreciate the opportunity to testify before you today on the important issue of the upcoming negotiations on agriculture in the World Trade Organization (WTO).
Several members of the Farm Bureau Trade Advisory Committee traveled to Geneva earlier this month to meet with other WTO member countries and the Director General of the WTO to share our negotiating objectives with them and hear their views on what should be negotiated in this next round. Several WTO member countries concurred with the Farm Bureau's objectives for the next round, which I will share with you in a moment. However, it became obvious during our meetings in Geneva that some countries, including the European Union, Japan and Korea, have a very strong desire to continue trade distorting domestic support payments to their agricultural sectors. Given the need to further open foreign markets for U.S. agriculture, and the intent of some countries to resist such market openings, it will be very tough indeed to continue the agricultural trade reform started in the Uruguay Round in this next round of trade talks. Every ounce of leverage and negotiating muscle will be needed to make the agricultural results from these negotiations commercially meaningful for U.S. farmers and ranchers.
Moreover, we heard repeatedly from other WTO member countries that they were surprised by the lack of leadership exhibited by the U.S. government in setting the agenda for the upcoming negotiations. While it is important that our negotiators collect the views of all interested stakeholders before they advocate the U.S. position, it is clear that the inability of our administration to lead in this round is coming at the expense of those
sectors that are scheduled for renegotiation, such as agriculture. We are very concerned that reacting to proposals submitted by other countries, which is what the United States is now engaged in doing, rather than setting the agenda outright, will lead to a lesser result. The launching of the negotiations is now only nine weeks away. The United States must
assume a strong leadership role and communicate an aggressive market opening agenda in order for this round to bring the results we need.
You are all no doubt keenly aware that the U.S. agricultural sector is perhaps the most open market in the world. According to the U.S. Department of Agriculture, the average tariff for imports of agricultural goods into the United States is 8 percent or less, while our exports face an average tariff of nearly 50 percent. We must address this imbalance in the upcoming negotiations.
In short, Farm Bureau has adopted an aggressive stance for the next round of trade talks, one that we urge the administration to endorse.
Objectives for the Next Round
Structure and Framework
The American Farm Bureau Federation supports expediting action on the next round for agriculture in the WTO. Our market is the most open in the world. We cannot sit idly by while our competitors trade openly in our market, but deny us access to their markets on equal terms. We must begin the negotiations and conclude them as early as possible to put U.S. agricultural producers on a level playing field with the rest of the world. To this end, we have set a goal to complete the agricultural negotiations by the end of 2002 to ensure that our producers gain increased market access in a timely manner.
First and foremost, the next round of negotiations should encompass all sectors as a comprehensive, single undertaking. By this we mean that all aspects of the negotiation should be concluded simultaneously in order to get the best results for all sectors. The United States will make the greatest gain in the next round of trade talks if negotiations are concluded as a single undertaking without the possibility of an "early harvest" or provisional implementation of early agreements. As you are aware, this issue has attracted significant attention in recent months given the administration's intent to achieve early tariff reductions for the eight Asia Pacific Economic Cooperation (APEC) sectors. We are opposed to concluding early results, provisionally or otherwise, for any sector. Early harvest will require substantial resources to accomplish and will likely sidetrack the important structural issues that need to be addressed.
Export Subsidies and Export Credits
We must call for the elimination of export subsidies by all WTO member countries. Our producers cannot compete against the mountain of spending by our primary competitors, like the European Union (EU). The EU spends in excess of eight times the level of domestic and export subsidies spent by the United States. Data from the U.S. Department of Agriculture and the European Commission show that total EU domestic and export subsidy expenditures for 1997 exceeded $46 billion compared with $5.3 billion spent by the United States. This level of spending distorts world trade and undermines U.S. producers' competitiveness in vital export markets.
Regarding export credits, we believe that the negotiations in the Organization for Economic Cooperation and Development (OECD) hold the best potential to impose disciplines on export credits.
Market Access
U.S. negotiators must comprehensively address high tariffs, trade-distorting subsidies, and other restrictive trade practices in the new round of negotiations on agriculture.
The next round should result in tariff equalization and increased market access by requiring U.S. trading partners to eliminate tariff barriers within specified time frames. Our producers compete openly in their own domestic market with their foreign competitors, but are shut out of export markets due to prohibitively high tariffs. We must correct this imbalance for our farmers and ranchers. All WTO member countries should reduce tariffs, both bound and applied, in a manner that provides commercially meaningful access on an accelerated basis.
We must end the use of all non-tariff barriers to trade. There are several practices that have been employed by our trading partners to shut out competition in their domestic markets. These practices include, but are not limited to, domestic absorption requirements, discriminatory licensing procedures, price bands, and the administration of tariff rate quotas that prevent true competition. Provisions to address these and other nontariff barriers should be written into the new agreement on agriculture.
We support a trade round that enacts no product or policy exceptions. Adopting a formula approach on tariffs is the best method for ensuring that all sectors are included in the negotiations. As with the Uruguay Round framework, we recognize the need to address import sensitive products. It is imperative that the Seattle Round address tariff disparities, peak tariffs and tariff escalation in a commercially meaningful manner.
Domestic Support
We support transitioning countries to provide an increasing portion of total domestic support for agriculture in a decoupled form, as the United States has already done under the FAIR Act of 1996.
In addition, we support elimination of trade distorting domestic support programs now classified under the "blue box" criteria in the WTO. Blue box payments are based on fixed area, yields and number of livestock and are not subject to reduction. The United States does not currently have any domestic support programs that qualify as blue box spending. The European Union, on the other hand, has over $22 billion in blue box spending and such spending is projected to increase as a result of the recent CAP reform under Agenda 2000. We must put an end to blue box spending.
SPS and Biotechnology
We believe that the new negotiations must include a recommitment to binding agreements to resolve sanitary and phytosanitary issues based on scientific principles in accordance with the WTO Agreement on Sanitary and Phytosanitary Measures (SPS Agreement). The provisions of the Uruguay Round SPS Agreement are sound and do not need to be reopened. The United States has successfully litigated several SPS cases that underscore the strength of this agreement. Cases have now been tried that set precedents in each of the three areas of the SPS Agreement. For example, the successful U.S. litigation of the EU beef ban strengthens the provisions regarding human health, the Japan varietal testing case underscores aspects regarding plant health, and the Australia salmon case bolsters the animal health text of the SPS Agreement. Any change to the SPS Agreement would expose the sound scientific principles now embedded in its provisions--changes that the EU would relish making to restrict, rather than facilitate, trade.
We must ensure market access for biotechnology products produced from genetically modified organisms (GMOs). Significant delays and a lack of transparency in the regulatory approval process for GMOs in the EU have heightened the need for science based, transparent provisions governing bioengineered products. We cannot continue to be held hostage to the EU's nontransparent, discriminatory procedures that deny market access for our GMO products. All WTO member countries should reaffirm the principles of the WTO SPS Agreement, provisions which we believe cover trade in GMOs. Most importantly, the United States should not agree to a working group on bioengineered products in the WTO. The formation of such a group will derail the resolution of trade issues concerning bioengineered products and will not likely result in a consensus approach.
Multifunctionality
We oppose attempts to disguise protectionist policies as an endorsement of the multifunctional characteristics of agriculture. While we agree that agricultural production holds multifaceted benefits, we disagree that trade distorting subsidies should be allowed to continue to sustain multifunctional endeavors. Government spending for such pursuits should be non-trade distorting.
State Trading Enterprises
We must impose disciplines on state trading enterprises (STEs) that distort the flow of trade in world markets. Every effort should be made to craft an agreement that sheds light on the pricing practices of STEs and ends their discriminatory practices. Our producers have lost too many sales in third country markets due to the noncompetitive, nontransparent operations of STEs.
Dispute Settlement Process
Our negotiators must make changes to trading practices that would facilitate and shorten dispute resolution procedures and processes. The process for a WTO dispute settlement case typically runs three years, if the WTO ruling is implemented. We have seen in both the EU banana and EU beef cases that compliance is not always assured. Our trading partners cannot be allowed to unilaterally weaken the very principles that we negotiated in the Uruguay Round Agreement. The expedited dispute settlement process for perishable agricultural products outlined in the WTO Dispute Settlement Understanding should be modified to allow the procedure to be used if the aggrieved party requests it. Currently, the WTO requires that both parties in a case agree to use this procedure. As a result, it has never been used. This simple change should be enacted promptly. Doing so would address the fundamental problem of a dispute settlement procedure that requires too much time and prevents market access for several marketing seasons before a resolution is reached.
Environment and Labor
Concerning environment and labor issues in the upcoming trade negotiations, we believe that such matters should only be addressed in a manner that facilitates rather than restricts trade. We cannot allow the economic prosperity of our nation, and that of our agricultural producers, to be used as a weapon in the pursuit of our nation's social values.
In summary, America's farmers and ranchers are counting on the next round of trade negotiations to result in true reform of international agricultural policies. We are the most efficient producers in the world. Access to foreign markets should be based on efficiency, not on protectionist policies. Given the dire economic conditions now being experienced by our producers, opening markets and leveling the playing field is now more important than ever. We call upon the administration to set an aggressive agenda for the upcoming negotiations on agriculture in the WTO. We cannot afford to remain on the sidelines while other countries set the agenda for these talks, which will greatly influence global agricultural trade in the next century.
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