Advisory of May 4, 2001, announcing the hearing

American Medical Systems, Douglas Kohrs

American Soybean Association, and Minnesota Soybean Growers Association, Gary Joachim

Cargill, Incorporated, Scott Portnoy

Gutknecht, Hon. Gil, a Representative in Congress from the State of Minnesota

Kennedy, Hon. Mark R., a Representative in Congress from the State of Minnesota

Medtronic, Inc., Art Collins

Minnesota Corn Growers Association, Gerald Tumbleson

Minnesota Farm Bureau Association, Al Christopherson

Minnesota, State of, Hon. Jesse Ventura, Governor

Minnesota, Saint Paul, Hon. Norm Coleman, Mayor

National Association of Wheat Growers, Wheat Export Trade Education Committee, U.S. Wheat Associates, and Minnesota Wheat Research and Promotion Council, Bruce Hamnes

North Dakota Wheat Commission, Neal Fisher

BENEFITS OF TRADE TO THE MEDICAL TECHNOLOGY
AND AGRICULTURE SECTORS

House of Representatives,
Committee on Ways and Means,
Subcommittee on Trade,
Bloomington, Minnessota.

The Subcommittee met, pursuant to notice, at 1:00 p.m., in the Grand Ballroom at the Radisson South Hotel, Bloomington, Minnesota, Hon. Philip M. Crane (Chairman of the Subcommittee) presiding.

[The advisory announcing the hearing follows:]

Chairman CRANE. Good afternoon and welcome to this special field hearing of the Ways and Means Trade Subcommittee. As Chairman, it is my great pleasure to be here in Minnesota today, although I must confess, Jim, it would be nicer to be out on the golf course.

Before we start, I'd like to remind everyone that this is a Congressional hearing subject to the rules of the U.S. House of Representatives. Testimony will be heard from listed witnesses only. This hearing is part of a broader plan to make the legislative process more accessible to the public, and we will be holding hearings like this one across the country.

The Committee believes it is important to hear directly from local communities about their concerns on policy issues that we deal with such as trade. I also hope we can work together to educate the public on the importance of international trade to our economy and to get support for the President's ambitious trade agenda which he released last Thursday.

Today's hearing will highlight Minnesota's global export leadership and growth in medical technology and agriculture. Based on Minnesota's compelling example, I hope to launch a broader national discussion regarding the benefits of free trade and granting trade promotion authority to President Bush.

I welcome Governor Ventura and Mayor Coleman and our colleagues Mark Kennedy and Gil Gutknecht and look forward to their reports on Minnesota's great strides in the global marketplace and their comments on the dynamic economic growth Minnesotans have achieved through free trade, and I would also like to recognize a distinguished guest at our hearing, Senator David Durenberger. Is David here yet? Greetings. Congressman Tim Penny is also here. Nice to see you both. Thank you for being here.

Governor Ventura has been one of the best advocates for free and open markets, and he appeared before our Ways and Means Committee last year, and his testimony was a huge hit with our members. His common sense approach to trade has helped to illustrate that free commerce helps everyone from the corporate CEO to the family farmer and the stay-at-home parent.

Minnesota has thrived under Governor Ventura's leadership, and Minnesota is a winner in international business. Your State exported $17.5 billion in goods and services in the year 2000, which represents over $15,500 for the average family of four in Minnesota. Thanks in part to Minnesota's medical device industry, last year the United States ran a trade surplus in medical technology of over $7 billion.

We're going to hear testimony from several farmers later this afternoon. I know you've had a wet spring which has delayed your planting, and I appreciate your taking the time to be with us today.

Agriculture is a considerable component of Minnesota's success in exporting. Minnesota was the seventh-largest exporting State in the country in 1999. In that year, Minnesota's farmers exported nearly $689 million worth of feed grains, $681 million worth of soybeans, $64 million of wheat, and $184 million worth of live animals and meat.

These sales to foreign markets help Minnesota's farmers not only to put food on the table and turn on the lights, but to prosper. In 2000, Minnesota farms exported over $3.5 billion worth of agriculture and livestock products.

Minnesota's success story is what President Bush and I plan to showcase here and around the country. Our country needs to understand that when Minnesota, and indeed all of the United States, jumps into the game to compete against the world, we can and do win.

Now I'd like to acknowledge the man whose idea prompted us to be here today, my fellow Subcommittee Member, Congressman Jim Ramstad. Congressman Ramstad is clearly a strong advocate for his district and for Minnesota's medical device industry.

He Co-Chairs the medical technology caucus and sits on both the House Ways and Means Trade and Health Subcommittees. He has had a tremendous impact on Committee work in these areas, and I am delighted that he invited the Trade Subcommittee to his district today to hold this hearing on the benefits of international trade to the medical technology and agriculture industries.

Now I'd like to yield to Mr. Ramstad for any comments he'd like to make and to introduce our first witness.

[The opening statement of Chairman Crane follows:]

Mr. RAMSTAD. Thank you, Mr. Chairman, and thank you for traveling to Minnesota at my request for this hearing to get Minnesota's perspective on international trade and specifically the importance of the medical technology and agricultural sectors of our economy.

I also want to welcome our Trade Subcommittee staff, Angela, Stephanie, and Kim. Thank you for your work in getting this hearing ready.

I also want to thank each of the witnesses. Governor Ventura, good to see you as always, and Mayor Coleman, our two colleagues, friends from industry, from the medical technology sector, Art Collins, Doug Kohrs, Scott Portnoy, as well as our friends from the agricultural part of our economy, Al Christopherson is here, and others who will testify as well.

The timing, Mr. Chairman, of this hearing cannot be better. This last Thursday President Bush released his much anticipated 2001 agenda for international trade. Certainly the President recognizes that our economy is increasingly international in focus and that expanding trade is absolutely critical to continued economic growth and prosperity for America.

Over 25 percent of the growth in our nation's economy over the last decade is tied directly to international trade. Some 12 million Americans owe their jobs to exports.

Here in Minnesota expanding trade is critical. Last year alone, as you mentioned, we exported over 17 and a half billion dollars in goods and services, and that's an increase, by the way, of over $6 billion in the last decade, 60-percent increase in the last decade.

You mentioned that Minnesota is the seventh-largest exporting State. Our Twin Cities metropolitan area is the ninth-biggest exporter among metropolitan areas nationally. So we are a manufacturing State. We are an exporting State. We are an agricultural State. In fact, exporting manufacturers in Minnesota represent 270,000 jobs. So this is absolutely important, absolutely critical to our continued growth and prosperity here in Minnesota, to both the medical technology sector and the agricultural sector of our economy.

The President understands this. In fact, he's made trade promotion authority a cornerstone of his trade agenda, absolutely critical to expanding our economy. I think it's regrettable that the United States is falling behind in certain areas. We all know about the problem with our great deficit.

Currently, the United States is party to just 2 of the 130 free trade agreements in force around the world. Why? Because the President doesn't have fast track or, as now the vernacular goes, trade promotion authority.

Europe, which is still our main international competitor, continues to negotiate free trade agreements with the rest of the world. Meanwhile, our country is being shut out. We're outside the process, and our interests are not taken into account. So our direct competitors are at the negotiating table while we sit and watch.

In focusing, Mr. Chairman, on the medical technology and the agricultural sectors of our economy, it's important to note that the United States leads the world, leads the world in both these areas, and Minnesota farmers and Minnesota's medical alley are leaders in the United States. Our farmers and agribusiness people are the most efficient in the world, and our State, in fact, is the seventh largest agricultural exporting State in the nation.

We're going to learn today about opportunities for developing and expanding our international trade economy, and Congress has a full agenda to expand trade. Hopefully, hearings like this and similar hearings scheduled in California and other places in the United States will develop support for expanding our markets and growing our economy through expanding trade opportunities.

I just want to say in summary, Mr. Chairman, that I believe we stand at a crossroads. We can erect walls, barriers around our country and limit trade, limit the opportunities that trade represents, or we can grab the opportunity before us to grow our economy, create jobs, and continue to be the world's leader economically as well as in other ways.

International trade is a win-win for America and our trading partners. We can grow our economy, promote employment, and keep prices low here at home while promoting democracy, freedom, environmental improvements in other countries as well.

I think, Mr. Chairman, the choice is very clear, and which is a good segue into introducing our first witness today, who never is ambiguous in his policy statements, a leader who I'm proud to call my friend for over 20 years.

In fact, when our Governor testified at my request before the Ways and Means Committee in Washington, our former Chairman, Bill Archer, who's not one to handing out bouquets or accolades--believe me, anybody who knows Bill Archer knows that's true--when our Governor finished his statement, finished his testimony before the full Ways and Means Committee on the importance of permanent normal trade relations with China, Bill Archer looked at him and said, "Governor, you just hit a home run."

Well, here to hit another home run is somebody who needs no introduction to Minnesotans, who has truly been a leader in articulating the need to expand our markets for our farmers, our manufacturing sector and so forth, our Governor, my friend, Governor Ventura.

Good to have you here today, Governor.

[The opening statement of Mr. Ramstad follows:]

Mr. VENTURA. Thank you. Thank you, Mr. Chairman and Representative Ramstad. We do go back. It's hard to believe how time flies.

Let me first welcome you, Chairman Crane and other Members of the Trade Subcommittee, to the great State of Minnesota. If you get a chance, may I suggest you take an extra day, visit one of our beautiful lakes, or take a stroll through the Mall of America, or see the hottest team in baseball right now, the Minnesota Twins.

I think you'll find that Minnesota is truly one of the greatest States in the nation, if not in our humble opinion the greatest State.

But we are much more than a great place to visit. We are also home to leading agriculture and medical manufacturing companies that feed people and save lives throughout the world.

I'm glad to see that you've brought before you today some of these industry leaders. They are competing on the world stage while building a better Minnesota here at home. And they still have time to keep an eye on what you're up to in Washington, especially when it comes to trade.

A critical portion of my Big Plan for Minnesota is about keeping Minnesota a competitor on the world stage. I want Minnesotans to set higher goals and to expect more.

We cannot settle for being the best in the Midwest or the best in the country. We must strive to lead the world by increasing exports, creating better jobs, and building a stronger and more diverse Minnesota economy.

Last year we set a record. For the first time, Minnesota-manufactured exports surged to over $10 billion and our State's export rate grew by 11.2 percent. In case you didn't notice, we have arrived. But we're not stopping there.

I'd like to highlight some of the important trade issues facing these industries and the work left to be done, but first, let me share some of my newfound Eastern philosophy.

Last week I had the pleasure of meeting the Dalai Lama. I was impressed by his peaceful charisma and his statesmanship.

To my surprise, the Dalai Lama and I bonded. After all: We both share a hairline with Buddha. He's written 56 books; I'm getting there. And although he's not a golfer, I did interest him in renting the movie Caddyshack. After all, he does play a major role in the movie, and he's never seen it.

But above all, the Dalai Lama and I share a similar view on engaging the world in order to spread free markets and free ideals. The Dalai Lama preaches "common responsibility" when it comes to world relationships. He believes that we cannot close our doors to those around us, but we must embrace differences throughout the world and spread democracy and human kindness by forming those relationships.

He believes that we must, I repeat, we must develop relationships with the Chinese people and the Chinese government, so that our democratic ideals and free trade ideals will spread like wildfire. If we don't, we will not change minds, we will not open markets, and we will not move forward.

I took this encouragement very seriously, and I vow to spread this message when I go to China on a Minnesota-trade mission this coming fall. I'm going to China because I strongly believe that we have an opportunity, especially in Minnesota, to grow markets in China, especially in the areas of agriculture and medical technology.

The last time we met, I was asking for your support for trade with China. Thankfully, the tri-partisan effort to establish permanent normal trading relations with China was a success.

It goes to show you how good things can happen when partisanship is set aside and sound policy prevails. Thank you for your work on this issue. But don't stop there.

Minnesota's medical technology and agriculture industries need you to continue to push for a Free Trade Agreement of the Americas and for what you are now calling "trade promotion authority."

As you will learn today, Minnesota is home to a thriving international medical technology industry. We are a leader in medical manufacturing, with a total production of more than $1 billion.

Our innovative medical establishment, enterprising research institutions, educated labor force, and high-tech environment make Minnesota fertile ground for medical devices.

Overall, the industry in Minnesota employs over 20,000 people. Between 1988 and 1996, the industry added the largest number of new employees to the State, over 7,400 jobs. We like these high-wage, high-skilled jobs, and I think that free trade makes this industry stronger and more productive.

But to keep this industry and others thriving, we need Washington to implement more free trade agreements. The sad fact is that while other countries forge ahead with new trade agreements, the United States is falling far behind.

Congressman Ramstad mentioned that according to a recent study from the Business Roundtable, there are 130 free trade agreements in force throughout the world. The United States is currently part of only 2 free trade agreements, 2 out of 130. That means our farmers and our manufacturers face discrimination through higher tariffs in hundreds of markets throughout the world.

Last year our strong exports in the medical manufacturing sector were driven by exports to Japan, Germany, Ireland, Canada, and the Netherlands. Unfortunately, you don't see any Central or South American nations in the top five. It's time for a Free Trade Agreement of the Americas, so our manufacturers can improve access and increase exports to markets right here in our own hemisphere.

Agriculture producers remain the backbone of Minnesota's economy. Our dairy farms, live animal production, and commodity farmers export hundreds of millions of dollars worth of food every year, making us the seventh largest exporter of agricultural products in the United States. Minnesota's world-class agricultural producers are responsible for 10 percent of our nation's exports of soybeans and 10 percent of America's exports of feed grains.

Because of the innovative spirit of Minnesotans, because of our strong work ethic, and because of our skilled workforce, we have done a pretty darn good job with agriculture exports. But let's face it, we can do better.

Of course, if we want more free trade agreements, the President needs sufficient negotiating authority. Thank you, by the way, for changing the term from "fast track" to "trade promotion authority." No matter what you call it, we need it.

Education is the key. The three most dangerous opponents of free trade are misinformation, misunderstanding, and ignorance. In a recent New York Times column talking about the protesters in Quebec City, Minnesota native Thomas Friedman put it best when he said, "this anti-globalization movement is largely the well-intentioned but ill-informed being led around by the ill-intentioned and well-informed."

In order to pass trade promotion authority, we need to first take this case to the American people and spread the word about the benefits of free trade. Your presence here today is a very good step in that direction.

I applaud you for taking your Committee out of Washington. It's always good to get a fresh perspective. For far too long, discussions about trade have only taken place in the Committee rooms in Washington, the boardrooms of corporations, and the classrooms of economic professors. It's time to turn it up a notch and put the word on the streets.

Let's move the discussion out of the Committee rooms and boardrooms and bring it to the break rooms and the living rooms. Let's move the discussion beyond the hallowed halls of our universities and take it to the people who get up and go to work every day.

I have been around the world and back to promote Minnesota's products and workers and educate the citizens of my State about the jobs created through exports. I have been to Mexico and Japan and Canada, where I have seen firsthand that the products made in Minnesota save lives and feed people.

Mr. Chairman and Congressman Ramstad, please take a message back to Washington from the people of Minnesota. We need Congress to approve trade promotion authority for the President, and we need to participate in more trade agreements. We want more high-paying jobs. We need more pacemakers in Peru, Panama, Paraguay, Portugal, Poland, and Pongo Pongo. We need more soybeans in Senegal, Saudi Arabia, South Africa, and Singapore.

As the Dalai Lama told me, so I share it with you. "Go into the world and make friends and take your values with you."

I'm going to China, and I'm taking my values with me. And I'll also take Minnesota soybeans, Minnesota medical devices, and Minnesota's hope for prosperity in the world.

Let's engage. Let's move forward.

Thank you very much for this opportunity, Mr. Chairman and Congressman Ramstad.

[The prepared statement of Governor Ventura follows:]

Chairman CRANE. Thank you, Governor. We appreciate your testimony, just as we did so very much when you came to Washington and testified before our Committee.

One thing in your testimony that raised a question in my mind was you made a reference that the Minnesota Twins are the hottest team in baseball. Don't they play in that league that we used to? I think Chicago had a team called the White Sox who used to play in that league too, right?

Mr. VENTURA. Well, they're about 14 behind us right now, Mr. Chairman.

Chairman CRANE. I didn't know they were still playing. We have the Chicago Cubs now as our fallback.

But at any rate, I wanted to ask you a question based on your personal experience, and mine too. I worked for the Dredge and Dockworkers Union when I was going to college, and I understand that you're a member of two unions and that labor unions are a key constituency in Minnesota, and yet your position on trade is at the other end of the spectrum from where the union leadership is taking positions right now.

What do you think can be done to help change the opinion of the unions on trade liberalization?

Mr. VENTURA. Education and facts and going out and explaining to them that we can't isolate our country, we have to compete, and I think to promote them, inspire them, tell them, we have the best workers in the world and the most innovative, and why should we, the United States of America, be afraid of a challenge? That's not in our history. We've accepted every challenge from the time this great country was formed till today, and rather than hide or retreat, this country has always been known to advance forward and accept those challenges.

And I would just say this also, Mr. Chairman, as being a member of two unions, I found it interesting when I ran that I couldn't receive one union endorsement, and yet I had letters and phone calls from the rank and file of the union who said they supported me. In fact, I was there when a vote was taken to get an endorsement from a union.

I think there's a disconnect between union leadership and rank and file today, and I think that it's up to us to ensure that rank and file is well-educated and understands that this is not going to destroy the unions, it's going to help them in the long run.

Chairman CRANE. I couldn't agree with you more. Communicating that message is so vital.

I've mentioned to folks many times that in my district it may be the biggest export district in Illinois, but Illinois, like Minnesota, is a major export State, and yet when you bring up the question of trade, people start falling asleep at town meetings, and it's disturbing.

I had a hearing about five years ago in my district, and at that hearing what was revealing--and I have in my district the corporate headquarters of Motorola, Sears, Kemper, Baxter, right down the line, and so forth. What was revealing was better than 90 percent of our Illinois exports come from companies employing 500 or fewer, and in your medical technology industry here in the State of Minnesota, the vast majority, better than 80 percent, I understand, employ less than 50 people.

Mr. VENTURA. That's correct.

Chairman CRANE. I mean, they're small businesses. And it is really vital for those people who own those businesses to communicate to their employees that the business's survival is dependent upon guaranteeing that we expand those markets worldwide and that their jobs are dependent upon that expansion.

So, unfortunately, we're not getting the message out as well as we should, but you're doing an outstanding job, and you probably catch some heat for it, but I commend you for all you've done.

One final question. Your testimony on China before Congress last year was so very effective that it put the benefits of China's World Trade Organization (WTO) accession into real terms for real people. Unfortunately, it looks like we're going to have another debate on that in June. It's because we have not seen China accede into the World Trade Organization yet and get permanent normal trade relations. So we have to give them their annual renewal this summer, and that's always a heated debate.

Do you believe that continued economic engagement with China will eventually weaken the military anti-reform elements of the Chinese government?

Mr. VENTURA. I believe that this is the most important economic issue of this 21st century so far, and maybe I can add to it that for those that somehow think that you can avoid a global economy or globalization or whatever term they want to give to it, I think you need only look as far, Mr. Chairman, as the Internet. You will be able to go to a computer and communicate with someone in China in the near future, and that is going to make our world smaller and smaller and smaller, and there's no way around it.

I believe that by trading with China and our influence into China will be the most important move for democracy and good business in this century, and it will be China that will experience a change, even more so than the United States of America.

Chairman CRANE. To which I can only say amen. I have an uncle who's still alive, he's 98 years old. He was a missionary in China in the 1920s. And I salute him and give him and his colleagues credit for all of their efforts, but the fact of the matter is, trade has done more to advance civilized values worldwide than anything else in the span of recorded history, and it's a win-win proposition. We benefit and those with whom we trade benefit.

Mr. VENTURA. Let me add, Mr. Chair, if I may. Why will they listen to us if we don't have a relationship with them?

Chairman CRANE. Yes, exactly. Absolutely.

Mr. VENTURA. It ends right there.

Chairman CRANE. Absolutely. Mr. Ramstad.

Mr. RAMSTAD. Thank you, Mr. Chairman. Thank you, Governor, for your excellent testimony. Once again, you put your abilities to good use in communicating and putting into real terms how it affects real jobs, real people, people on the street. And you're right, we have to take this out of the Committee rooms, out of the boardrooms, and take it to the people and explain to them the facts, because there's so much demagoguery out there, as you know.

Let me just ask you this. It's a fair summary of your statement here today or your position that you share President Bush's top priority as far as trade is concerned and that is that we pass trade promotion authority this year?

Mr. VENTURA. Yes.

Mr. RAMSTAD. That's the overriding concern that you share with Congressman Crane?

Mr. VENTURA. Absolutely. As well, again, when we're only involved in 2 trade agreements out of 130, we need more.

Mr. RAMSTAD. And I hope, at some point we'll get to this, when it comes to the fore of the Committee that you will again be able to be involved and to come out and testify, because when you speak, Members listen, and I'd appreciate that once again.

Mr. VENTURA. Just call, and I'll be happy to. I enjoy trips to Washington.

Mr. RAMSTAD. Thank you, Governor.

Also, I want to ask you as a follow-up. You said the Dalai Lama shared with you the statement, "Go into the world and make friends and take your values with you."

Mr. VENTURA Yes.

Mr. RAMSTAD. Well, we have a problem with, first, of these trade issues, whether it's WTO bilateral trade negotiations, whether it's Free Trade of the Americas, whether it was North American Free Trade Agreement (NAFTA), General Agreement on Tariffs and Trade (GATT), whatever it might be, with some of our friends on the Committee and in Congress who insist on including labor protections and environmental protections as part of the agreements themselves.

It's difficult sometimes to explain to these people or to get them to understand at least that I believe we can be more of a force for changing human rights conditions, for changing their workers' protections, for changing their environmental standards if we're present there, if we're a force there, rather than seeing the treaty go down as we've seen in the ten years I've been in the Congress too many times. Do you agree with that?

Mr. VENTURA. I agree fully with that. Again, I'll repeat myself. Bear with me. They're not going to listen to us unless they have a relationship with us. We can sit across the big expansion of the sea and shake our finger all we want, but unless there's some type of relationship, they're not going to listen.

And to me it's simple. When our companies go into a country like China and when they employ Chinese workers, those workers are going to go back to their neighborhoods. They're people. They're the same as we are here.

They're going to go back and talk, and they're going to say, gee, look at what this company does, look at how the working conditions are here, this is what we need to have our companies do and the conditions.

And to me that's the only way you're going to change them, is by giving them concrete examples or hands-on experience to that change, not simply by just telling them.

Mr. RAMSTAD. So you'll help us once again with permanent normal trade relations, the problems with the Navy surveillance plane notwithstanding?

Mr. VENTURA. Notwithstanding.

Mr. RAMSTAD. Well, I know you have some work to do in St. Paul to finish up the legislative session. Again, I want to thank you, Governor, for being with us today, and thank your staff. I see John Woodley here and Steven Bosacker. Thank you, and let's continue to work together on these trade issues.

Mr. VENTURA. Thank you, Congressman Ramstad, and thank you, Chairman Crane. I appreciate it very much.

Chairman CRANE. Thank you, Governor. We're very grateful for your participation and look forward to working with you.

Mr. VENTURA. Thank you.

Chairman CRANE. And now I would like to ask the mayor if he will please come forward, since one of our Congressional colleagues is not yet here, and we're going to put the mayor in ahead of him.

Now I would like to welcome Mayor Coleman and express my appreciation to you for participating in this important trade hearing today, and with that, I would yield to you and tell you that your oral testimony will, of course, be part of the record, but any written testimony you have above and beyond what you present orally will be made a part of the permanent record too. And with that, you may proceed.

Mr. COLEMAN. Thank you, Mr. Chairman. It's a great pleasure to be before you.

My name is Norm Coleman, mayor of the capital city of St. Paul. It's a great pleasure to be before you and the Congressman from the Third District, my good friend, Jim Ramstad, who I have had the pleasure for many, many years of working together, for this opportunity to come before you today, and thank you for coming to Minnesota to hear about our concerns and thoughts on international trade and its importance for our State.

You come today to a State and a capital city that's seen tremendous growth over the last half of the last decade. In many ways this tremendous growth is the result of the resurgence of St. Paul and other American cities.

And I would note that I have modified my written testimony before you, and the official version will be forwarded in writing, later.

In order for the American entrepreneur, the American businessperson, the American farmer to compete, they need to deliver the best product at the least cost, and they must have the opportunity to market and sell that product. Government shapes the environment by regulation and taxes, rules and requirements that impacts the ability to compete.

In St. Paul we turned around a city that was dying economically by eliminating red tape, bureaucracy, and government regulation. We kept a lid on taxes. We attracted over $1 billion in new private investment. We didn't limit access to markets, and we sought to improve the growth of capital. We promoted job growth.  This year we proudly earned the first AAA bond rating in the history of the city.

It is particularly important that you are here today to talk about the importance of expanding trade to identify the specific benefits that free trade brings to the medical technology and agricultural sectors.

To be sure, it is important to know that Minnesota ranks 13th in the United States for exports to the world with a value of $14.4 billion. Today, agricultural exports still ranks at the top, with food products, livestock, timber, technology, printing and metals falling closely behind.

Mr. Chairman, we are not a closed society, nor an island unto ourselves. It is for that reason that I heartily support NAFTA and other efforts that will create a global trade zone unimpeded by unfair restrictions that undermine economic growth and freedom.

In St. Paul we are home to some of the strongest medical and technology providers in the country and in the world. HealthEast, Alliant, and Regions Hospital continue to provide not only state-of-the-art medical services and innovation, but are leading the industry in new techniques to prevent heart disease, improve critical care patient services and expanded trauma-based services.

In the area of technology, Lawson Software stands in the heart of our downtown, the largest independently owned software manufacturer in Minnesota, doing business across the nation and around the world.

What all of these companies need is open markets and the ability to compete internationally without unfair trade restrictions.

Some time ago I led a Sister City delegation to Neuss, Germany. There, with our friends from 3M and Northwest Airlines, we not only learned about our common bonds as people, but also our common bonds as trading partners. We all have the same goals in that respect. We want unfettered access to new markets for our products, we want to expand economic opportunity through economic freedom and trade, and above all, we want a global economy that lifts people up.

Those who have rallied against free trade often forget that we, as the United States, can do more to enhance human rights and protect and expand freedoms by exposing societies to the promise of democracy and capitalism.

I am unabashed in my support for free enterprise, Mr. Chairman. Cities need entrepreneurs, risk takers, and job creators. I support the vision of using our strength in technology and medical devices and agriculture as a way to open doors to new markets, but to also expand the horizons of freedom and democracy throughout the world.

Our strength as a country depends on our courage to introduce our goods, our ingenuity and innovation to other countries, and the strength of a global economy depends on free trade.

In St. Paul, 18,000 new jobs have been created since 1994. A large percentage have come from technology, insurance, and medical related fields. They are also a by-product of our expansion into the world economy. The future of cities will depend on our participation in a world economy.

And, finally, although I am an urban mayor, I have spent much time in rural Minnesota. I've heard the voices of many, many Minnesota farmers. Their message to me has been clear. They want one thing: Greater access to markets.

They want to sell their products wherever in the world a buyer exists who is willing to pay a fair price. American farmers can compete on a level playing field with anyone in the world. Give them that chance.

As you continue your deliberations today and through the weeks and months ahead, please take with you the very, very clear message that free trade not only works, it works wonders.

America's thriving economy has benefited from global markets. The 3Ms, the Honeywells, the Cargills, and the Lawsons and the Minnesota Wire and Cables, all of these companies, large and small, benefit when markets are open and free from restrictions.

I've often said that the best form of welfare reform for people is a job, and the best way to improve the lives of people is to bring them into the economic mainstream.

Today, I believe the best way to foster freedom and democracy throughout the world, the best way to open the doors of closed societies and to bring countries into the world of nations, is to expand trade and economic opportunity. The best tool in the fight for freedom and human rights is economic advancement through trade.

I wish you well in your discussions. I look forward to continuing to work with you and urge you to continue to seek ways to expand trade and economic opportunity at home for Minnesota and abroad.

Thank you, Mr. Chairman.

[The prepared statement of Mayor Coleman follows:]

Chairman CRANE. Thank you, Mayor Coleman.

According to statistics compiled by the U.S. Department of Commerce, exports from the Twin Cities metro area to Mexico increased by over 340 percent since 1993. Clearly, NAFTA has had a positive impact on your city.

How have current trade liberalization efforts, such as the Free Trade Area of the Americas which would create a free trade area spanning from Canada's northernmost province to the southern tip of South America, benefit your city?

Mr. COLEMAN. Very, very simple, Mr. Chairman. We've seen a city--American cities, not just my city. I think I can speak for so many cities in this regard because the phenomenon is so clear and it's so simple. If we expand job growth and opportunities, we expand the opportunities for all businesses to grow and compete, you will strengthen American cities.

We have seen that in St. Paul, and we have seen it, I believe, in speaking with mayors across America throughout this United States.

Chairman CRANE. Well, it has, and I commend you for your insights and your commitment on this subject. Something that a lot of folks don't realize is every billion dollar increase in U.S. exports translates into 20,000 new jobs here at home, and those jobs pay on average 17 percent more than jobs for simply the domestic economy.

Trade is a very beneficial thing to the working people of the United States and to our national economy as well and especially to your community here, and you're doing an outstanding job.

Mr. COLEMAN. The best housing program, Mr. Chairman, is a job. The best welfare program is a job. The best opportunity to provide dignity and self-worth to families is a job. And free trades means opportunities for jobs, particularly in core cities I believe throughout this country.

Chairman CRANE. Thank you. Mr. Ramstad.

Mr. RAMSTAD. Thank you, Mr. Chairman.

Thank you, Mr. Mayor, for being here today. We have worked together and been good friends for over 20 years, and I appreciate all of your good efforts and your testimony here today.

And this mayor, Mr. Chairman, has done an incredible job of turning around a city that everybody in this room knows was dying, and St. Paul has been revitalized under Mayor Coleman's leadership, and I think when he says the future of cities will depend on our participation in world economy, certainly St. Paul's growth has been in large part due to the leadership of the mayor and to the new jobs that he's attracted there, 18,000 new jobs since 1994.

My first question, Mr. Mayor, do you have any way of quantifying or can you quantify roughly, of the 18,000 new jobs since 1994, how many are tied directly or indirectly to trade would you say?

Mr. COLEMAN. Congressman Ramstad, without giving you the specific numbers, I can tell you that many of those jobs are tied to technology and are companies like Lawson Software. Lawson Software brought over a thousand jobs to the core downtown.

Lawson Software does business in Africa. Lawson Software does business in the Middle East. Clearly, if you speak, as I have, to Lawson Software, they will tell you that opening up free trade opportunities for them is important to their growth.

St. Paul, as you know, Congressman Ramstad, is the home of 3M, one of the great American companies, and they will tell you that their continued ability to compete grows and can be tied to opening up the global market.

We don't live in one little corner of the universe that we occupy ourselves. We live in this global environment, and we have to give our businesses the opportunity to compete, so that our folks, our moms and dads, have jobs. That's what this is about.

Mr. RAMSTAD. I'm going to ask you the same question. I'm going to ask everybody this today, because I think it's the most important question we could ask as it relates to trade.

You have heard the Governor testify to the point, you heard me make the point in my opening statement, 130 free trade agreements, and the United States is only a party to 2. I don't know what more empirical data we need to support the President's position, our position, on trade promotion authority.

And by the way, I supported what we then called "fast track" when the Democrats controlled the White House. All eight years I worked with President Clinton on the bipartisan whip team to try to get that done, as did our Chairman. And, unfortunately, we fell short; we fell a few votes short.

Let me ask you this. Do you agree with the President, with us, that gaining trade promotion authority is the most important trade issue by far?

Mr. COLEMAN. Mr. Chairman, Congressman Ramstad, absolutely, absolutely. And, again, I bring this from the perspective of a mayor of an American city that has seen itself prosper by expanding opportunities with competition, for job growth and job development.

If you can take a microcosm of a city, between Minneapolis and St. Paul, 15th largest metropolitan area in the country, you expand that nationwide, you'll understand that when you increase opportunities to compete, opportunities to expand business opportunity, what you do is you can make yourself strong.

So clearly, from the perspective I have being at the very local level, I have seen what happens when you increase those opportunities, that we need to move forward in that area, and I share your concern in that respect.

Mr. RAMSTAD. And that's another good and insightful commentary certainly on your part. We're the 15th largest population-wise, 15th largest metropolitan area in the country, but the 9th largest exporter as far as metropolitan areas go nationally.

So I think that speaks well to our leadership here in Minnesota in industry as well as the agricultural sector and not to mention the great political leadership that we have certainly in St. Paul.

My last question, Mr. Mayor. As long as I have known you, you've been a great advocate for human rights. Just share, if you will, briefly what your feelings are with respect to including labor protections, human rights protections, environmental protections as part of agreements, or should they be considered separately?

Mr. COLEMAN. Mr. Chairman, Congressman Ramstad, I came to Minnesota in 1976, worked for the Attorney's General Office and represented human rights. I've been involved with those issues for many, many decades.

If you want to strengthen human rights, you do what you can to make sure that mom and dad have some food in their belly. Start with that.

Uplift the standards of living, create an environment so they don't--what happens is we can move forward by creating trade economy, and as we're doing that, one of the things--and I share this with others in this respect. The world is becoming smaller. As we move economically, as we establish relations, as we establish the human ties, the wave of human rights is inescapable, is inescapable.

So I would argue that let us move forward, let us not hamper the ability to create opportunities, to lift up the standard of living, by creating barriers. And so the things that we can do, Mr. Chairman, Congressman Ramstad, to move forward, to strengthening the economic ties, put them on the front, make them happen, we will have a profound impact on the human rights situation.

You can't hide. You can't escape it. The world is becoming closer and closer. But if we cut off the opportunity to create the ties, we will hurt those with a passion about human rights.

Mr. RAMSTAD. Thank you very much, Mr. Mayor. Yield back, Mr. Chairman.

Chairman CRANE. Thank you very much, Mayor. We appreciate your testimony this morning and your willingness to be here and to present such outstanding commentary. And with that I will now let you depart, Mayor, and I will ask our Congressional panel to come forward.

I think Mark Kennedy is the only one that's still here. And, Mark, you can hold oral testimony to five minutes. All printed testimony will be made a part of the permanent record. And with that, you may proceed.

STATEMENT OF THE HON. MARK R. KENNEDY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. KENNEDY. Thank you, and thank you, Chairman Crane, for coming here to hear the concerns of Minnesota on this very important topic, and thank you, Congressman Ramstad, for inviting the Committee here and for your leadership on this issue.

I'm also very happy to see many Second District constituents here, and other Minnesotans whether that be Gerald Tumbleson, Al Christopherson, Mike Yost, or Duane Bakke, who will talk later. It's very appropriate that we have good Second District representation given how important trade is to our district.

We're facing tough times in agriculture today. Net cash income is at its lowest level since the Depression, and we're facing that largely because of unfair trade barriers.

We face about 62 percent in trade penalties, whereas America is only charging about 12 percent. Our tariffs are about 10-times higher in agriculture than what they are in industrial goods. In Europe, they're subsidizing their farmers at about 8 times the level that we do here in America.

So, clearly we need a new round of global trade talks focusing on agriculture. Prior rounds have focused on goods and services.

The protests in Seattle, in my view, set us back. We need to continue to push for another round of global trade talks to open up these trade barriers across the world because those barriers are really hurting our farmers.

We also need to make sure that we don't impose sanctions on a unilateral basis on other countries, because, again, that only hurts the common, everyday people of those other countries and our own farmers.

A lot has been spoken  already of how important trade is to agriculture, how we're the 7th State in the country in terms of our exports, and we're top 10 in just about every commodity. And if you look at the Second District and how important agriculture is to southwest Minnesota, our rankings are even higher.

We're the number one producer of soybeans, and one out of every two rows of soybeans is exported. We're very high in corn, and approximately one out of every three rows of corn is exported. So, with 30 percent of our cash receipts in the agricultural economy dependent on exports, it's absolutely critical that we tear down these trade barriers and create a level playing field.

Value-added is also something important. This isn't just about exporting the commodities. Since we're the farthest away of just about any of our main agricultural States, we need to focus on value-added, and we've done a good job of that.

Even though our commodity exports are down somewhat, we are up in terms of things like meat and where we have converted our corn and soybeans into a higher value-added product. We have a lot of that here across the Second District.

We need to give the President trade promotion authority. And, yes, there are areas of agriculture that need to have special transition, special consideration, whether that be sugar or dairy, but that can be taken care of only when we are in the game and talking about the agreements, and that's why we need the trade promotion authority.

This isn't the silver bullet to agriculture. We need to focus on other things, such as tax relief and better risk management tools, improving our conservation programs, and providing a better safety net to our farmers.

But given that we passed crop insurance improvements last session in Congress, given that tax relief is on the way and we're working very hard on the safety net, this is absolutely critical to the success of agriculture, and not just agriculture. If you go around southwestern Minnesota or all of Minnesota, you'll see that there are a lot of businesses that are heavily dependent on exports.

I'm very pleased to have three 3M plants in my district. I have Hutchinson Technology, ADC Telecommunications' largest plant, Seagate, and a lot of other smaller business that are very dependent on foreign exports.

As we look at what we need to do about this economy, yes, we need to provide tax relief; yes, we need to make sure that we have an energy policy, to make sure that that vital input into our economy is affordable; but we need to open up trade.

Trade is good for Minnesota. It's good for America. It's good for the world. When we do what we all do best, we benefit; everyone benefits.

Trade opens up not just markets, but minds. It expands the influence of democracy, it expands our values in regards to human rights, and it improves the condition of labor, not just in other countries but in our own country.

So I encourage you to continue to push for a new round of global trade talks and giving the President trade promotion authority, and thank you for being here today.

[The prepared statement of Mr. Kennedy follows:]

Chairman CRANE. Thank you.

One question that I have, you make a reference here to the impact on the corn and soybean industry, and I've got a farm in Indiana, and last year we took it on the shin, corn and soybeans. And, of course, I don't farm it myself. I've got a friend that was doing the farming. He packed it in this year because of last year's returns, and I've got someone doing it again.

But one of the things that is so important, and you touched upon it in your testimony, is the elimination of barriers around the world to our exports of agricultural products, and I think that a lot of people didn't fully understand that if China becomes a member of the World Trade Organization, and that's what we had that Permanent Normal Trade Relations (PNTR) vote about, that only applies to them after they become a member of the World Trade Organization, and they've been dragging their feet on it. It's on the agricultural issue. They're talking about subsidies for agriculture. They get about a 10-percent subsidiary, and they want to try and preserve that.

But the thing that is interesting is that the projections were if they join WTO with the elimination of their existing tariff barriers, that that would have translated in 1-year's time into literally billions, billions of dollars of increased U.S. ag exports just to China.

I mean, it is critically important, and hopefully, notwithstanding the slowness of their advancement toward joining WTO, that they will achieve membership status by this fall. I mean, they're hinting at that, but there's no guarantee.

In the interim, though, we have, as you know, coming up again the Jackson Vanek waiver in normal trade relations for China, and the President has to call for that. That's an annual thing. He has to call for that on June the 3rd, and we have to vote on it before July the 3rd, and that's always a sticky business.

And so I hope, Mark, that we can count on you to help us rally some of the troops, to get them to understand the significance of it, the importance of it, and to make sure that China is encouraged to continue down a civilized path and not play the kinds of games that were played over the downing of the airplane there in Hunan and rather concentrate on the progress in terms of economic developments and the advancement of free trade.

We're appreciative of your testimony today, and I'd like to yield now to your distinguished colleague from your home State here, Jim Ramstad.

Mr. RAMSTAD. Thanks, Mr. Chairman.

Mark, you've become a great partner in a very short time on these trade issues important to the Second District of Minnesota and indeed important to all Minnesotans, and I appreciate the good work you're doing on the AG Committee as well.

Let me just ask you the same question I've asked the previous two witnesses. In your judgment, is trade promotion authority the most important trade measure we can pass to benefit farmers?

Mr. KENNEDY. Well, I think, it's critical. You know, we have to get a new farm bill. I've spent a lot of time focusing on that. But I would say for your Committee, it is the most important.

Mr. RAMSTAD. As far as trade issues.

Mr. KENNEDY. Absolutely. And I come from a business background, and I know if you get too many cooks in the kitchen nothing gets done. And it's absolutely critical that every time we have the ability to have, a focus, say, on the energy objective, we need to have that to be able to put something before us in the House and in the Senate as it does make sense. Clearly, if it doesn't make sense for America, we'll vote against that.

But it's been spoken of repeatedly again the trade agreements that we have been outside of, and as we look around the world, we're not going to be eating a whole lot more here in America. But as the standard of living in places in Asia and others increase, their protein intake is going to significantly increase.

We need to be part of that gain. We need to be making sure that they're being fed with American corn, soybeans, livestock, and otherwise.

So, I can't think of really anything more critical than giving the President trade promotion authority so that we can be at the table and involved with all these agreements.

Mr. RAMSTAD. Thank you very much again, Mark, for being with us today and for the good job, great job you're doing in Washington. I yield back, Mr. Chairman.

Chairman CRANE. And now our belated witness, Gil Gutknecht has arrived, and perfect timing, Gil. And so if you will proceed with your testimony and try and limit your oral testimony to five minutes or less, and your written testimony will be made a part of the permanent record.

STATEMENT OF THE HON. GIL GUTKNECHT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. GUTKNECHT. Thank you, Mr. Chairman. I hate to waste time, and so we're not wasting any today, and I'm going to catch a plane to go back.

Principally I wanted to stop by to say thank you for having this hearing because, as you undoubtedly already heard and will continue to hear, we in Minnesota are intensely dependent upon trade for our economy, both in terms of the technology sector as well as agriculture, and I think many people are surprised in my Congressional district, in the First Congress District of Minnesota, how much in fact we ultimately export.

There is a glass company that manufactures large plate windows for skyscrapers principally down in Owatonna, Minnesota, called Viracon, and they export over 30 percent of what they produce in Owatonna, Minnesota, in large plate glass windows to markets around the world, principally to Asia.

The problem, of course, we have is what we have in the United States, and that is we produce much more efficiently than our own markets can absorb, and as a result, we need access to those markets.

In Rochester, for example, we have a very large IBM plant. Over a third of the computers that they manufacture in Rochester, Minnesota, the AS400s, are ultimately exported.

We cannot possibly use all that we can produce, and we can produce very efficiently. So we are very dependent on foreign markets, and trade is extremely important.

One of the points you need to know about Minnesota is because we are at the end of the river, if you will, in terms of exporting agricultural goods, some people are surprised at how much we ultimately export. As you may have already been told, and certainly may be told again, that over half of the soybeans that we grow in this part of the country ultimately wind up in export markets, and that comes as a surprise to an awful lot of people even here in Minnesota.

The truth of the matter is--if you look around the room, you will understand this--we simply cannot eat all that we can grow. If you look at the people behind me, you will note that we're all fully fed. Ultimately, we need access for our farmers to be able to put more of what we can produce efficiently here in the State of Minnesota in other parts of the world.

I talk a lot about some of the exports that we already have. If you came to Austin, Minnesota, for example, in my Congressional district, down in the southern part of my district, there's a little company called Hormel, and every day we turn 16,000 pigs into wonderful meat products, including the world's finest lunchmeat called Spam.

Now, I joke a lot about Spam, but it is a fabulous export product for a lot of reasons. First of all, it requires no refrigeration, and it's one way that we can convert our corn and our beans into pigs and ultimately those pigs into a very good value-added product which we can export all over the world.

And while people here in the United States sometimes joke about that product, ultimately it is a terrific export product, particularly in Asia. Asians like pork, they like salted pork, and they are particularly fond of that product.

So, we need access to those markets, and we understand probably more than almost any other State how dependent we are on trade. You're going to hear from a number of experts, who are much more adept at describing their particular circumstances, but I do want to add one more important point, and that is in the area of dairy.

There is one cheese plant in our district, right on the border of Mark's district and my self's, that every day they sell over 500,000 pounds of cheese. Now, if we had to eat all of the cheese that we produce here in southern Minnesota, well, we just simply couldn't do that. We need access to those markets.

And so not only do we need access to markets in places like South America, Central America, Asia, and around the rest of the world, but I also want to say, Mr. Chairman, with all due respect, we also need access to markets in places like Vermont.

So, as we look into opening up markets, one of the things we're going to be saying from the upper Midwest, and I hope you'll understand, is we want access to markets in Asia, and we also want access to markets in places like the Northeast where they have a dairy compact, which in a sense is a way of creating an internal cartel or an internal trade barrier, and that is one of the issues you're going to hear and learn more about, Mr. Chairman, as we go forward.

I want to thank you again for coming today. You have a great group of folks who are testifying today.

We hope that your visit to Minnesota is a pleasant one, and we look forward to working with you in terms of expanding trade and market opportunities, not only for our farmers but for our businesses here in Minnesota. So again, thank you, Mr. Chairman.

[The prepared statement of Mr. Gutknecht follows:]

Chairman CRANE. Thank you, Gil. Referring to your testimony, I didn't notice any overweight people in the audience. Not even you, Gil. I mean, you look fit to me.

Mr. GUTKNECHT. We're not underfed, Mr. Chairman. We're well fed here in Minnesota and throughout the country.

Chairman CRANE. Well, I want to express appreciation to you not just for your testimony but for your support on this critically important issue and getting the message out to constituents back home. It's something that requires communication and getting the folks at home to understand the importance of their component part, whether it's just working in the fields or whether it's participating in the factories or whatever.

They're an important part in the total equation to guaranteeing that the United States maintains supremacy as the world's biggest export nation on the face of this earth and that it translates into jobs, higher-paying jobs, and a better economy not just for us, but for those people with whom we engage in trade.

You're playing a key role, and we're going to bank on you heavily as we get into some of these upcoming battles before us this year.

And with that, I'd like to yield to Jim Ramstad.

Mr. RAMSTAD. Gil, I just want to thank you for being here as well and thank you for your work. It's a pleasure to work with you on these trade issues. You've always voted in the best interests of Minnesota farmers and Minnesota manufacturers and understand free trade, and I appreciate your testimony to that effect.

You've already answered my question I've asked the previous witnesses when you say it's simply imperative, not a desire or a wish, but it's simply imperative that we grant the President trade promotion authority. So thanks for your help on that issue as well. Yield back, Mr. Chairman.

Chairman CRANE. With that, I will yield to our panelists for right now, but it is my hope that both of you might be able to stay, so that after the testimony both of you and Jim and I can participate in a press availability right here in this room. I mean, if you've got a conflict, don't feel guilty about it.

Mr. GUTKNECHT. Mr. Chairman, I am going to catch a plane to go back to Washington this afternoon.

Mr. KENNEDY. I'll stay around. That will be great.

Chairman CRANE. All right. That will be great. Gil does everything by the numbers. That's why he got here right exactly on time. Thank you both.

And with that, I would now like to call our panel, our first panel: Art Collins, chief executive officer, Medtronic; Douglas Kohrs, president and chief executive officer, American Medical Systems; Al Christopherson, president, Minnesota Farm Bureau Federation; and Scott Portnoy, corporate vice president of Cargill.

If you gentlemen will please take seats and, in the order that I introduced you, if you will make your presentations, and again try and keep your oral testimony to five minutes or less, and any written testimony will be made a part of the permanent record.

And with that, we shall commence with Art Collins.

Mr. COLLINS. Chairman Crane, Members of the Committee, welcome to Minnesota, home of the Golden Gophers, the Mall of America, and Congressman Jim Ramstad. Congressman Ramstad is a tireless champion for patients throughout the United States and around the world who benefit from medical technology developed by thousands of constituents in his district.

Thank you for the opportunity to testify today on the importance of global trade to the medical technology industry.

As you indicated, my name is Art Collins. I'm president and chief executive officer of Medtronic, Incorporated, headquartered here in Minneapolis.

Medtronic is the world's leading medical technology company. With deep roots in the treatment of heart disease, Medtronic now provides a wide range of cardiovascular, neurological, and spinal therapies that help physicians solve the most challenging, life-threatening medical problems. We employ 25,000 people worldwide, some 6,000 here in Minnesota.

As Congressman Ramstad knows, Minnesota is proud of its reputation as a leader in health care. Certainly, the vast number of medical technology companies in the State, and the significant amount of money and time we spend on research and development, is part of the reason that we are so successful and healthy.

Another reason for our success involves the importance of international trade. Many Medtronic jobs, and much of all new job creation in our company, are directly related to new product development and product introductions outside the United States. Approximately one-third of our revenue comes from technology sold outside the United States, and two-thirds of our revenues come from new therapies introduced within the last two years.

Medtronic and other Minnesota-based medical technology companies have historically benefited from U.S. trade policy that has sought to ensure open markets around the world. Our trade agreements have helped to reduce or eliminate tariff and non-tariff trade barriers, contributed to greater transparency and predictability, helped protect our intellectual property, and most importantly, improved patient access to innovative, life-enhancing, and cost-saving medical technologies.

The dynamic pace of innovation in the U.S. medical technology industry, coupled with an effective U.S. trade policy, has created a $94 billion worldwide market and more than a $7 billion positive trade surplus.

Before I cover several specific opportunities for trade reform, let me speak more broadly. U.S. medical technology firms and patients worldwide can benefit enormously from the introduction and enforcement of new bilateral trade agreements with other countries and regions.

Medtronic, and the greater U.S. medical technology industry, supports extending trade promotion authority to the President in order to allow the Administration to aggressively pursue bilateral trade agreements in the medical technology sector.

The Global Harmonization Task Force and its regulatory harmonization process also holds potential benefit for our industry. This effort, which incorporates input from both government and industry, should be supported by the U.S. government.

Japan is a specific example of the importance of trade and U.S. trade policy. Japan is the single largest country market for medical technologies outside the United States, and it is also one of our most challenging countries in the industry.

The establishment and rigorous enforcement of medical device trade agreements has helped lead to a 500-percent increase in U.S. medical technology exports to Japan between 1987 and 2000. U.S. policy helped turn a 100 million dollar medical technology trade deficit in 1987 to a $1.1 billion trade surplus in 2000.

Continued oversight has been necessary along the way, and continued enforcement is badly needed today. Japan has failed to fulfill some important trade commitments to reform its rules for new technology reimbursement and regulation. Rather, the government of Japan has used inconsistent means to reduce technology prices and has slowed the introduction of new products as a means to contain overall expenditures.

In addition, there is an immediate, discriminatory threat in the Japanese government plan to introduce foreign reference pricing in the price-setting process. This is a particularly onerous and even dangerous attempt by the Ministry of Health, Labor, and Welfare to set prices in Japan based on prices in other markets. This would fail to capture the significant and unique costs of doing business in Japan.

Mr. Chairman, Japan's average hospital stay is 30 days compared to 6 in the United States. Japan's failure to adopt new therapies not only impacts U.S. manufacturers and our employees, it also does nothing to enhance quality of care for Japanese patients and bring about greater system-wide efficiency in the Japanese health care system. Fully utilizing new medical technology can actually improve the financial health and productivity of their system, especially given Japan's rapidly shrinking and aging population.

Let me move on to Europe. Likewise, U.S. trade policy can benefit from the industry's ability to compete in Europe, the second largest set of countries and the largest region for medical technologies. Today the industry exports some $8 billion to Europe and currently maintains a $3 billion trade surplus.

As the Member States of the European Union continue to reform their health care systems to accommodate the needs of an aging population, new health technology assessment processes, as well as new reimbursement and payment systems, must be transparent and capable of adopting new technologies in a timely manner.

If properly implemented, the U.S.-EU Mutual Recognition Agreement will help streamline regulatory inspection processes for certain technologies while protecting public health. U.S. oversight must help ensure it is fully implemented by December 2001, when the current 3-year transition period ends.

U.S. trade policy should also encourage the European Commission to continue its efforts to preserve the uniform regulatory regime for medical technologies throughout the European Union (EU). A patchwork of regulatory policies throughout Europe would not only frustrate the medical technology innovation process and extend the time it takes to bring innovative technologies to the market, but also undermine the single market concept espoused by the European Union.

In conclusion, the benefits of trade for the medical technology industry are many, and they are reflected in the thousands of jobs in Minnesota and the U.S. that we create, as well as the enormous contribution we make to the health and vitality of our State and country.

This concludes my testimony. Thank you for the opportunity to testify. I look forward to answering any questions you may have.

[The prepared statement of Mr. Collins follows:]

Chairman CRANE. Thank you, Mr. Collins. Mr. Kohrs.

Mr. KOHRS. Thank you, Chairman Crane and Congressman Ramstad, for the opportunity to testify today on the benefits of trade for the medical technology industry, the many workers in the medical technology fields, and the Minnesota economy.

My name is Doug Kohrs, and I'm the president and CEO of American Medical Systems. AMS is a publicly held, NASDAQ-traded medical device company headquartered in Minnetonka, Minnesota. We are recognized as an industry and technology leader in the area of urological and surgical solutions.

Our products treat patients suffering from male and female incontinence, prostate diseases, and erectile difficulties. Last year alone we successfully treated over 40,000-patients worldwide.

Now, we employ over 500 people around the world. But, Mr. Chairman, we are one of those small companies that you referred to earlier that need your help. Our employment base is 350 people here in Minnesota, and we manufacture virtually all of our products at our facility.

The focus of today's hearing is to discuss the benefits of trade in the medical technology sector, but I would first like to comment on the benefits of the medical technology sector itself. Just as American Medical Systems is recognized as a leader for medical devices to treat urological disorders, the U.S. medical device industry is the global leader in medical device innovation.

The U.S. is the largest producer and exporter of medical devices in the world. Our industry makes substantial contributions to the nation through high-paying employment and a consistent trade surplus. As you heard Governor Ventura mention earlier, we are a high-wage, high-skill, high-productivity industry in Minnesota.

Now, as you know, 96 percent of the world's population live outside the U.S., so obviously there are many people beyond our borders that can benefit from medical innovations.

The demographics of an aging population and how this impacts the growth of a company like AMS are critical. We estimate that there are 160 million men and women around the world who are symptomatic of the diseases for which we have a solution. But of these 40,000 patients we treated in 2000, only 8,000 or 20 percent of these medical technology beneficiaries were from outside the United States.

The U.S. medical device industry looks to international trade to expand market opportunities, cultivate our businesses, increase the number of jobs we can create here in the U.S., grow our economy, and ultimately help more patients around the world.

Given Minnesota's economic specialization in medical devices and the growth in foreign markets, it is not surprising that foreign exports play an increasingly larger role for our industry and our State. We've heard a lot about that already today. In Minnesota, foreign exports of medical technologies alone account for over 21 percent of the industry's value of shipments, but this could be even higher.

Using American Medical Systems as an example, our total revenues in 2000 were just north of $100 million, but only $18 million of our sales came from outside the U.S. An important aspect of our future growth is international expansion. The impact international growth would have on our employment base in Minnetonka cannot be overemphasized.

We have a state-of-the-art facility, with world class employees, plenty of capital, and the desire to rapidly expand our business. As our industry continues to refine and improve existing products and develop new, breakthrough technologies, our reliance upon an aggressive and effective U.S. trade policy will only continue to grow.

Now, Art Collins mentioned to you the problems that the medical device industry is having with Japan. Let me relate to you firsthand specific issues that my company, American Medical Systems, has experienced in Japan.

I mentioned earlier that in 2000 our products will be used to treat over 40,000 patients around the world. Yet in Japan we treat less than 300 patients per year. Japan has roughly 50 percent of the U.S. population, and yet our products are used to treat 1 percent as many patients.

Now, we've developed, manufactured, and distributed "Gold Standard" products, as an example now, that we use to treat urinary incontinence. We estimate that in Japan more men suffer from this problem than in the U.S. Yet in Japan we treated only ten men who suffer from this disease.

The reimbursement hurdles in Japan with this product have been significant. Since the early 1990s, this life-changing product has been in the reimbursement approval process within Japan.

Now, we have been providing paperwork upon paperwork over the last ten years, including completing a Japanese clinical study, to no avail, and amazingly we've had full Food and Drug Administration (FDA) and approval and reimbursement in the U.S. since 1983. There is no other product like this device on the market in Japan today. So therefore, until our device is approved in Japan, there are thousands of men who are needlessly suffering from this disease.

U.S. technology firms would benefit enormously from the introduction and enforcement of new bilateral and multilateral trade agreements with other countries and regions. The U.S. government should utilize such agreements to help make regulatory regimes conform to internationally established principles and practices and to adopt reimbursement processes that are more streamlined, transparent, and predictable.

To aid in this effort, and Mr. Ramstad or Congressman Ramstad, you've asked us many times today, our industry encourages Congress to grant the President trade promotion authority, which is critical to pursuing bilateral trade agreements in the medical technology sector with our major trading partners.

The medical technology industry is a vital contributor to the Minnesota and national economy. It has benefited from, and will continue to rely upon, international markets for its continued growth and vitality. We face significant challenges in assessing these foreign markets and look to partner with the U.S. Congress and the Administration to ensure our industry remains the world leader in innovation and exports.

I greatly appreciate this opportunity that I have been given to speak before the Committee, and I look forward to any questions you may have.

[The prepared statement of Mr. Kohrs follows:]

Chairman CRANE. Thank you, Mr. Kohrs. Mr. Christopherson.

Mr. CHRISTOPHERSON. Thank you, Mr. Chairman and Congressman Ramstad. I am Al Christopherson, president of the Minnesota Farm Bureau, and a corn, soybean, and hog producer from Pennock, Minnesota. I might add the Minnesota Farm Bureau represents more than 32,000 member families throughout the State of Minnesota.

As you've already heard, Minnesota agriculture is highly dependent upon access to world markets with over one-third of our commodities destined for other countries. Minnesota farmers compete head to head with their competitors in their own market, but are not given equal opportunities to compete in foreign markets.

We need to secure trade promotion authority for the President in order to improve our access to world markets and correct the trade inequities now facing our sector. However, trade promotion authority should not include labor and environment provisions that use trade as a weapon.

The negotiations in agriculture in the World Trade Organization represents another important opportunity to increase America's access to international export markets. Farm Bureau-supported objectives for these trade talks include, among others, the elimination of export subsides, substantial reduction of tariffs worldwide, increased transparency of State trading enterprises, access based on scientific principles for bioengineered products, expiration of the peace clause, and elimination of the blue box category of government allowed subsides.

WTO member countries should adopt a broad-based approach for a new round to ensure that all sectors of the global economy benefit from increased trade liberalization, including a single undertaking approach.

Another important trade issue affecting agriculture is the completion of China's accession to the WTO. We are concerned that China has not fully implemented its bilateral agreement with the United States to import our wheat and meat products. The United States should not give final authorization for China to join the WTO until it indeed lives up to its commitments.

Concerning regional agreements, the Free Trade Area of the Americas (FTAA) will create an open market to 34 countries. It is imperative that U.S. producers begin to enjoy access to the Free Trade Area of Americas' markets on equal terms.

In retrospect, NAFTA has significantly benefited the U.S. agricultural sector. When you take a closer look at specific commodities, however, there have been some winners and some losers. While we cannot expect significant gains for all commodities and all trade agreements, we can and we must ensure that the rules that are adopted as part of the FTAA result in fair trading opportunities.

Setting aside the issue of trade negotiations for a moment, there are also a number of trade disputes that need to be resolved. We support a negotiated solution to the Mexico sugar and high fructose corn syrup issue that is equitable for our producers and helps maintain their economic viability.

We call upon the Canadian government to implement the WTO ruling on dairy in a manner that is consistent with WTO rules. We believe that the European Union should lift the ban on U.S. exports of hormone treated beef consistent with the WTO ruling.

The U.S.-Canada Softwood Lumber Agreement expired at the end of March, and we support the pursuit of a countervailing duty case by U.S. producers, but continue to believe that a negotiated solution is preferable to litigation.

Regarding the trade title of the next farm bill, the market-oriented approach adopted in the 1996 farm bill places increased importance on an aggressive trade policy to further develop export markets. Farm Bureau supports additional funding for all export programs.

Some examples of some successful market export programs that require additional funding include the market access program, the foreign market development program, the dairy export incentives program, and the export enhancement program.

We feel Congress should support our producers in every way possible to make sure that access to foreign markets is unrestricted and the terms of trade are fair.

Mr. Chairman and Congressman Ramstad, the United States is facing an important juncture for agricultural trade. Bilateral and multilateral negotiations are underway to design the future that will govern the global movement of our commodities, and international conventions are writing new rules and standards for tomorrow.

The United States must assume a strong leadership role to ensure that these new rules and standards create a favorable trading environment for our producers. We are already the world's leader in production efficiency and product quality. We now need our government to take the necessary steps to make us a leader at the negotiating table and to once and for all open new markets for U.S. agriculture.

I thank you for this opportunity to share the Farm Bureau's views on trade issues affecting agriculture and the trade title of the farm bill.

[The prepared statement of Mr. Christopherson follows:]

Chairman CRANE. Thank you, Mr. Christopherson. Mr. Portnoy.

Mr. PORTNOY. Mr. Chairman and Congressman Ramstad, thank you for the opportunity to present this testimony. I am Scott Portnoy, a corporate vice president at Cargill, Incorporated.

Cargill is a 136-year-old firm based here in Minnesota's Third Congressional District. The company is an international marketer, processor, and distributor of agricultural food, financial and industrial products and services, with 85,000 employees in 60-different countries.

I have had the opportunity to live in Latin America and oversee Cargill's businesses in several of those nations. I have seen firsthand how international trade links farmers with consumers around the world. Trade moves commodities from regions of surplus to regions of deficit, enlarging markets for efficient farmers and expanding choices for consumers.

I have a prepared statement that I'll submit for the record, but let me summarize that statement by making a few simple points.

U.S. agriculture's future depends on getting better access to those foreign consumers who have rising incomes to spend on upgrading diets. Getting that access requires three steps.

The first is to open up foreign markets by removing barriers to imports. That is primarily a governmental task. We call it building a global open food system.

The U.S. government needs to do the following as its part in this effort: Grant the President fast track or trade promotion authority, help launch a new multilateral trade round that is sufficiently broad to provide room to negotiate down agricultural trade barriers and that sufficiently focus to accomplish that task in years rather than decades, establish that the United States can be counted upon as a reliable supplier of basic foodstuffs by making clear that it will not impose food sanctions for economic or foreign policy reasons, and bring existing agricultural trade disputes and future agricultural negotiations to successful market-opening conclusions.

We know it won't be easy. Agricultural tariffs are on average of 15 times higher than nonagricultural tariffs. But it is important. It is the single most important economic action for raising global living standards and for creating markets for American farmers.

The other two steps that are critical to a dynamic, profitable U.S. agriculture primarily depend on the private sector. We need to get to know the needs of foreign customers better. Then we need to serve those needs better than other suppliers. Both of these steps have become more important with collapse of Communist economic systems, the growing privatization of national economies, and the spread of democratic institutions.

As we enter the 21st century, we have a unique opportunity to show that private markets and democratic institutions can serve the needs and aspirations of all people. America's free enterprise system and open political institutions give us the advantage of serving these goals, but it is not an insurmountable advantage. As a country and as an economic system, we need to provide the leadership called for or else others will seize it from us.

Thank you, and I will be happy to answer questions.

[The prepared statement of Mr. Portnoy follows:]

Chairman CRANE. Thank you, Mr. Portnoy.

Let me first comment that I appreciate all of your testimony today, and President Bush has now portrayed on the top of his radar screen, and he attempted at the Summit of Americas in Quebec last month and released last week his recent trade agenda.

In his and our campaign to educate the public on the benefits of trade, there's a vital role for industry leaders such as yourselves because we've got an education problem on our hands, and it's getting the message out of the direct benefits to American businesses, and that translates into jobs, and that is a message that is not being told as well as it can be.

This question I would like to put to all of you, and we'll start with Mr. Collins. How long ago did you decide to venture into foreign markets and what has been the impact upon the size and the operations of your organization today and what percentage of jobs would you attribute to your overseas sales?

Mr. COLLINS. Medtronic actually started a little over 50 years ago, and our first forays into international markets really were in the last 35 years. Today approximately one-third of the revenues that are generated in each year for Medtronic come from sales outside the United States.

We currently employ approximately 25,000 employees worldwide. About 6,400 of those are outside the United States. But I would hasten to add that many of those U.S. jobs are dependent on our ability to sell products outside the United States.

Chairman CRANE. Thank you. Mr. Kohrs.

Mr. KOHRS. Yes. Similar to what Art had to say, is that the international business for American Medical Systems represents approximately 20 percent of everything that we sell. The company has been in business for approximately 28 years. We have been in international markets for that whole time period. We want to see that 20 percent grow to an even higher number.

The number of people employed in Minnesota that contribute to that 20 percent is probably about 150 people that are involved in the manufacturing, involved with the devices that we send overseas.

Chairman CRANE. Thank you. Mr. Christopherson.

Mr. CHRISTOPHERSON. Well, certainly trade has been around a long time in terms of agricultural commodities. For us in this part of the world, in this part of the United States, trade is extremely important by virtue of the fact that we are so far from many of the other parts of the U.S. in terms of transportation, so on a relative basis we have a greater advantage for world trade than we do sometimes for trade even within our own country.

Having said that, I think in terms of what it has meant to this area, obviously we've heard the figure that a third of what we produce has to find a home someplace other than our own soil.

To put it in context possibly, for those of you who have any kind of experience with agriculture or listen to markets, etcetera, especially in July or August, if on a crop report the report comes out that there's going to be a 10-percent reduction in yields or even in acres at some point in time earlier, that can add a dollar to the price of a bushel of soybeans.

And so there's all kinds of ways to look at this, but it has a very dramatic effect on agriculture, the whole area of trade and what it means for our industry.

Chairman CRANE. Mr. Portnoy.

Mr. PORTNOY. Cargill has been around for 136 years, and I believe we began trading in foreign markets in the late '20s and early '30s. Today approximately 40 percent of our business is overseas, with 60 percent still being within the borders of the United States.

However, as Mr. Collins pointed out, for us many of the opportunities that are created in foreign markets come from our activities here in the United States. So we are very, very interested in seeing the promotion of an open food system because of the fact that we believe that markets internationally will respond to demand that comes from opening up markets and not from supply restrictions.

Chairman CRANE. Something that came to mind, Mr. Kohrs, have you seen today's USA Today business section? It deals with trade with Japan and Japan's economy and the internal elections that have people guardedly optimistic about improvements.

Let me raise a question here with our first two panelists. You've referenced how U.S. trade policy has benefited the medical technology industry and allowed it to be able to operate around the world.

Knowing the problems that you've raised with respect to Japan, how can U.S. trade policies or initiatives serve to reduce the problems and improve nations' access to your innovations overseas?

Mr. COLLINS. Let me give you three specific examples. First of all, I think it's very important that we continue not only to establish these trade agreements but also to monitor them.

First, there is a 2-plus year delay in access to current therapies that exists, and we believe that we should have a process that establishes guidelines, time frames, as well as appropriate follow-up. The time is even longer for new technologies.

We would also recommend that we have strict adherence to government industry consultations as established in the 1986 MOSS trade agreements, and we would propose that any major changes in either reimbursement or the regulatory process have open and frank discussion with the industry.

Chairman CRANE. Mr. Kohrs.

Mr. KOHRS. Yes. Specifically with respect to Japan, one of the things you have to understand about their regulatory process is that they are basically a system in place mimicking the same regulatory process that is in place with the United States with the Food and Drug Administration.

The reason there is this 2-year lag that he's talked about is that companies like Medtronic and ours go through all the trouble of complying with the Food and Drug Administration, go to Japan, and then have to comply with all the same parameters all over again.

There's an excellent opportunity for the Japanese government to save money by recognizing what's done with the Food and Drug Administration in the United States, and that would streamline the whole process, and with regard to the article that you referred to this morning, it would save them a lot of money.

Chairman CRANE. Mr. Ramstad.

Mr. RAMSTAD. Thank you, Mr. Chairman. And thank you, gentlemen, all four of you, for being here today. I know each of you well and appreciate the collaboration you've provided through the years on the support of trade issues.

I want to congratulate you, Art. Since we last saw each other, your ascension has been complete to the positions of president and CEO of Medtronic. I've been to Medtronic; and, Doug, recently the second visit to AMS. I appreciate that.

Certainly, as you know, Scott, I've been to Cargill many times. It's located in my backyard.

I guess the only place that I haven't been represented by these gentlemen here today, Mr. Chairman, is your farm, Al. I'm waiting for an invitation. You certainly have been very helpful, all four of you, and I appreciate your testimony here today.

I think it's a fair statement to say that all Minnesotans and millions of people worldwide know the Medtronic story, 25,000 employees worldwide, 6,000 here in Minnesota, certainly a leader in your field worldwide.

Let me ask you the first question, Art, that I have. When you say that--and I certainly know, obviously, that Medtronic supports trade promotion authority and realizes as well as anybody in the world the significance. You stated in your testimony to create promotion authority is essential to ensuring further work on regional and global trade negotiations.

You heard the testimony and you know that of the 130 bilateral free trade agreements in force today the United States is only a party to 2. Can you just in any way quantify or explain how that fact, the fact that we're only party to 2 of 130 bilateral free trade agreements, how that impacts Medtronic?

Mr. COLLINS. Well, I think it puts the industry and Medtronic at a disadvantage. Even though we have a $9 billion positive trade balance, compared to a number of industries, we don't necessarily get on their radar screen.

The WTO is not particularly effective in our case, and to allow the President to have the ability to negotiate these trade agreements we would see would put us on a much more equal footing with many of our competitors that are in other countries, particularly in Europe and Japan.

Mr. RAMSTAD. Thank you also, Art, for your kind words and your testimony.

I want to ask you, Doug Kohrs, representing AMS, and certainly AMS is recognized as a leader for medical devices that treat urological disorders. In fact, I said to my staff as I left AMS the last time just recently that I hope I never need your devices, but like other males throughout the world, I probably will.

Your story is a real success story. You now have 500 employees and started with a couple people. Could you just briefly, just briefly talk about, just for my benefit, the impact of trade on AMS and your rapid growth?

Mr. KOHRS. Thank you. To again expand a little bit upon what Art said, we have been able to grow our international business to the 20-percent level, as I mentioned earlier. We have the products and unique products to where that can be as much as 40 percent of the company's overall business.

What's keeping us from doing that is that the trade barriers that are in effect are in essence making it difficult for us to reach that goal and keep jobs in Minnesota. To really reach that goal and play around the edges of the rules in places like Argentina, in places like China, etcetera, you almost have to move to offshore manufacturing, and that's not something that we're going to do.

By lowering those trade restrictions, we can keep the jobs in Minnesota, grow business here, and I think really bring a lot of great surgical solutions to people around the world.

Mr. RAMSTAD. Let me ask finally, either you, Scott, can answer this, or Al. I note from your testimony, Scott, you state that frankly the Free Trade Area of the Americas negotiations are not the highest priority for U.S. agriculture.

Could you just expand briefly, either one of you? Why don't you, Scott, since those are your words, and then, Al, you can add to it.

Mr. PORTNOY. I think that if you look at interregional trade and agricultural products between the United States and South America and to some degree Central America, you will find that in the scheme of things trade promotion authority is more important than the FTAA, and that's simply because of the nature of the trade that takes place between the entities, the United States and many of the South American nations.

So presumably there will be requests from Brazil and Argentina to open up U.S. markets that might to a large degree have an offsetting benefit for U.S. production in agriculture in areas that are hard to resolve. So from the perspective of ourselves, we think that if you break down the barriers around subsidies and you work at overall trade equalization outside of the Americas, you probably will do more to create that demand that I mentioned in my remarks than you might within the hemisphere itself from an agricultural standpoint.

Mr. RAMSTAD. Did you want to comment, Al?

Mr. CHRISTOPHERSON. Yes, two things. First of all, recognizing that in the Free Trade of Americas geographic area there will be quite a potential for increase in the standard of living for a number of people, that's the plus, and I think trade is going to help address that.

The other part of that, getting to what was just said here a moment ago, certainly if we have areas in which agriculture is hesitant on trade, it's the border areas, and we see it as it relates to part of Minnesota and Canada, because we have some feelings there that we recognize, and those are hard to overcome. You see the same thing in Florida and to some extent Arizona and California as it relates to citrus products and those types of things.

Those are tough issues, we recognize that, and as I said in my testimony, there are going to be winners and losers. Overall, trade is positive, but recognizing that there will be winners and losers, and if you happen to be one of those who falls through that crack, it can be a very painful experience.

Mr. RAMSTAD. Mr. Chairman, before I yield back, let me just make one more statement. Art, this is directed at you. In addition to congratulating you on your new position, I must congratulate you on your newest hire. It's certainly my loss and your gain, and we're happy for Dave Fisher, who's joining Medtronic.

Dave has done a great job, more than anybody on my staff, my trade council on Ways and Means, in setting up this hearing today, and he's going to do a great job for you as well. Thank you all for your testimony.

Mr. COLLINS. You keep sending them our way.

Mr. RAMSTAD. We'll keep training them. Thank you very much. I yield back, Mr. Chairman.

Chairman CRANE. Thank you all. We appreciate your participation and look forward to working with you.

Now I would like to invite our final panel, Gary Joachim, soybean farmer and with the American Soybean Association; Neal Fisher, wheat and cattle farmer and administrator of the North Dakota Wheat Commission; Bruce Hamnes, wheat farmer, on behalf of the Wheat Export Trade Education Committee, U.S. Wheat Associates; and Gerald Tumbleson, farmer and director of Minnesota Corn Growers Association.

If you gentlemen would please take your seats and proceed in the order that I introduced you and try to keep your oral testimony to five minutes or less, and your written testimony will be made a part of the permanent record.

And with that, Mr. Joachim, you may proceed.

Mr. JOACHIM. Thank you, Mr. Chairman, and thank you, Representative Ramstad, for holding this hearing here in Minnesota. I'm Gary Joachim, and I am a soybean and hog farmer from Claremont, Minnesota. Claremont is about 75 miles south of St. Paul, Minnesota, and in the Minnesota First District.

I've been on the board of the Minnesota Soybean Growers Association since 1990 and on the board of the American Soybean Association since 1999. Currently I am a member of the ASA Trade Policy and International Affairs Committee, and I am chairing currently the Latin America Subcommittee.

Once again, thank you for this opportunity to testify on the importance of trade to soybean farmers and soybean-related businesses in the United States and Minnesota.

Just a little background. In the year 2000 the U.S. grew 2.77 billion bushels of soybeans. In the Supply-Demand Report that came out last week on May 10th, it estimates that for the 2000-2001 marketing year, when all is said and done, the U.S. will export 990 million bushels of whole soybeans, 1.4 billion pounds of soybean oil, 6.9 million short tons of soybean meal. In whole soybean equivalents, that amounts to 1.243 billion bushels of soybeans, and that's 45 percent of the crop we grew last year.

If you consider that the U.S. is also a net exporter of meat and other products that consume soybeans, it's no exaggeration to say, as we've heard in this room before, that every other row of soybeans is grown for export.

Just looking a little bit at the world situation on the production side, since 1990 U.S. production is up 800 million bushels, 43 percent. Brazil, which we hear so much about, is up 500 million bushels or 65 percent, and Argentina has the biggest percentage increase of 100 percent or 425 million bushels. Overall in the last ten years, world soybean production has increased 2.2 billion bushels.

Economic growth and trade liberalization have been the keys to increasing demand for soybeans fast enough to use up this increase in world production. For instance, the North American Free Trade Agreement has allowed U.S. farmers access to the growing Mexican demand for soybean protein, and Mexico is now the equal of Japan as a market for U.S. soybeans.

The other thing we've done to grow the market has been promotion efforts paid for by U.S. soybean producers through their national check-off and in cooperation with the United States Department of Agriculture's foreign market development and market access programs.

These programs have been instrumental in seeing China go from basically zero in 1990 to become our largest buyer of soybeans in this marketing year, with purchases to date of over 215 million bushels of soybeans.

The Foreign Market Development (FMD) and the Market Access Program (MAP) programs seek to build on U.S. advantages in quality, service, and technical support, to build new markets and to maintain existing markets. The American Soybean Association believes that FMD and MAP should be funded at a level fully sufficient to maintain their effectiveness.

In this time of low market prices, increases in soybean price due to increased exports save the United States Department of Agriculture and the U.S. government exactly the same amount in reduced farm program costs with load deficiency payments.

We all know that the world of trade and trade agreements is not static. The U.S. is in danger of being shut out of markets as other countries form bilateral and regional trade agreements. For instance, Columbia and Venezuela are a part of the Mercosur trade group. They can import soybeans from Bolivia, a fellow member of the pact, duty-free.

The situation for importation of U.S. origination soybeans is complex, but basically it's a combination of tariffs and value-added tax imposed on U.S. soybeans that amount to an effective tariff of over 50 percent, and that has shut the U.S. out of all soybean shipments to those two countries.

It is vital that the President of the United States be granted trade promotion authority in order to effectively and expeditiously secure the benefits of open markets for the United States.

President Bush recently made a big push for the Free Trade Area of the Americas, and we support that, but we think that the U.S. is suffering from a little bit of bipolar trade disorder when on the one hand we're promoting the Free Trade Area of the Americas and on the other hand we have what amounts to an embargo in place yet in Cuba.

Technically, we can sell food there, but as a matter of fact, the rules are such that we basically are still shut out of the market, which not only means the loss of the Cuban market which would naturally be ours, but this illogical flow from other countries to Cuba which we should service probably 90 percent or more means that other countries in the Caribbean basin, while the ship is underway to Cuba, they can drop off part of a load someplace else. So we think that sanctions reform is another area that really can be used to promote exports of United States soybeans and all other commodities.

Back to my prepared testimony. The American Soybean Association supports the safe and responsible use of biotechnology. The only widely planted biotech soybean has been shown to be the equivalent of soybeans produced from traditional breeding techniques. It has official acceptance by all of our major trading partners.

However, we are opposed and believe that the United States should oppose using the precautionary principle or labeling rules in the Codex Alimentarius as a means of discriminating against soybeans and soybean products that come from the U.S. On the other hand, if the customer is willing to pay for the extra costs for identity preserved shipments, the United States farmer is able to produce for this or any other specialty market segment.

Mr. Chairman, I would like to stress the importance of the completion of Chinese accession to the WTO in a timely manner. Also, I'd like to stress the importance of and the need for the start of meaningful negotiations on the next round of trade liberalization when the WTO meets this November.

Finally, I'd like to comment on the effect that the strong U.S. dollar has had on our ability to compete with our competition. In terms of Brazilian currency, the producer of Brazil is getting more for his soybeans than he was three years ago when the price in U.S. dollars was higher.

This is perhaps a simplistic way of viewing the situation, but in the short-term the effect of the strong U.S. dollar on ag exports has been real. The strength of the dollar is also working at cross-purposes with the market-oriented philosophy of the Freedom to Farm Act.

Thank you, and I'll answer any questions when the time comes.

[The prepared statement of Mr. Joachim follows:]

Chairman CRANE. Thank you. Mr. Fisher.

Mr. FISHER. Mr. Chairman, thank you for the opportunity to appear before you today. I'm Neal Fisher, administrator of the North Dakota Wheat Commission.

The Commission, just for reference, is a market development and promotion organization which represents 28,000 North Dakota wheat producers. We're funded by a 1-cent check-off on every bushel of wheat and durham sold in North Dakota.

At her confirmation hearing earlier this year, Secretary of Agriculture Ann Veneman correctly stated that with 96 percent of the world's population living outside the country, we need to expand trade and eliminate barriers to access for our products in what is an ever-expanding global economy. We agree with the Secretary completely in this case.

U.S. wheat producers are especially export dependent. We've heard about the soybean situation and others today. Each year we export approximately 50 percent of what we produce annually. North Dakota producers are no exception, exporting 50 percent of the high quality hard red spring wheat and durum we produce each year also. U.S. wheat producers have a lot at stake therefore in expanding trade opportunities and securing those opportunities in fairly negotiated and fairly implemented trade agreements.

I'm also proud to acknowledge that the North Dakota Wheat Commission's producer board of directors has been at the forefront of the debate over every major trade issue facing U.S. agriculture since the negotiation of the Canada-U.S. Free Trade Agreement or CUSTA. Our experience dictates that farmers must remain deeply involved in the development of U.S. trade policy. Trade and trade negotiations are dynamic and essential elements of U.S. farm policy.

That said, it is imperative that we revisit and correct inequities when they occur, such as in CUSTA and NAFTA. This is important as negotiations for the Free Trade Agreement of the Americas move forward.

As many of you are probably aware, the North Dakota Wheat Commission is currently involved in a section 301 investigation into the Canadian Wheat Board. It centers primarily on their government-sponsored, monopolistic trade practices.

Many of the problems with the Canadian Wheat Board date back to the negotiations regarding CUSTA. Those negotiations did not adequately address the practices of a State-supported monopoly and its impact on U.S. producers.

North Dakota and Minnesota producers have been particularly vulnerable to these practices, not only because we live on the border, but because we produce the same classes of wheat that they do, especially unique wheats that compete in the same markets that Canada does.

As the world's largest wheat exporter, the Canadian Wheat Board's (CWB) government-mandated monopoly actions distort world grain trade and deflate world wheat prices, including those of the United States. Canada's unfair trade practices have reduced returns to U.S. producers and raised U.S. taxpayer outlays in the form of larger loan deficiency payments and emergency government assistance payments, as we have witnessed this last year.

It is obvious that the Wheat Board's actions distort trade, depress prices, and create an environment which is directly counter to what is currently being sought in the larger scope of global world trade negotiations.

To allow the Wheat Board to market wheat in the free trade zone created by the CUSTA and expanded in the NAFTA, under its current structure, is unacceptable to our producers. The world trading system also can no longer tolerate the unfair trade practices of State-trading enterprises, referred to as STEs, like the Canadian Wheat Board.

Government involvement in wheat purchasing and sales has declined rapidly worldwide. Brazil, Egypt, even Yemen and Algeria now allow some private buying. Argentina and South Africa have also dismantled their grain boards.

I find it extremely ironic that when China enters the WTO, this highly centrally planned country will have agreed to more disciplines on its STEs than Canada has ever even allowed to be discussed.

No previous case, investigation, or temporary settlement has addressed the fundamental problem of the Canadian Wheat Board; that is, the existence and operation of a full-fledged monopoly marketing board in a free-trade zone. Contrary to the vigorous claims of the Wheat Board, past investigations have not vindicated the Board's activities, but rather raised a difficult question, and that is, can U.S. and Canadian wheat farmers continue to exist in an environment where one country's farmers must compete in a totally free market, while the others hide behind the veil of a government-sanctioned and financed monopoly marketing board?

The ongoing Section 301 trade action specifically targets the operations of the Wheat Board in the United States but maybe more importantly in third country markets. This case and its outcome may provide our last best opportunity to negotiate a comprehensive and lasting settlement with Canada with respect to exports of Canadian wheat to the United States and third country markets. We have documented case studies of several traditional markets, such as the Philippines, Venezuela, Guatemala, and others where these violations are very glaring.

The International Trade Commission will hold a hearing, a public hearing, in connection with the investigation on June 6, 2001, at the ITC Building in Washington, D.C. ITC is assisting with the wheat investigation at the request of the Office of the U.S. Trade Representative. The ITC will submit a confidential report to the United States Trade Representative (USTR) by September 24, 2001.

In that effort we have recommended the following negotiating objectives: Eliminating the Wheat Board's export monopoly, eliminating the Wheat Board's supply monopoly, instituting full market access for U.S. wheat in Canada, and establish full transparency of the Wheat Board's operations.

We've also asked the Office of the U.S. Trade Representative to establish tariff rate quotas for two crop years. These tariff rate quotes are temporary measures that can be adjusted or eliminated in subsequent years as the fundamental reforms that we're discussing are implemented.

In conclusion, our producers have been unfairly disadvantaged by the continuation of monopoly marketing boards in a free trade area. The inequities contained in the CUSTA were perpetuated in the NAFTA. The Uruguay Round Agreement failed to address and discipline the unfair practices of STEs. That may be addressed in WTO this time around.

Over the last decade, the national wheat organizations have supported numerous trade and sanction agreements, including NAFTA, most-favored-nation (MFN) for China, Uruguay Round, PNTR for China, fast track, I'll refer to it as trade promotion authority, and continued negotiations for agricultural trade reform in the WTO. However, with the CWB trade dispute unresolved, it becomes increasingly difficult for our rank and file producers to envision how they can directly benefit from these expanded trade opportunities, and opportunities they really are. We respectfully request the full support of this Committee and the entire Congress in our Section 301 investigation and its successful outcome.

We know that our future lies in the expansion of export market opportunities and fair competition for those opportunities. We now have an opportunity before us to make fundamental changes and improvements to the trade environment which is so critical to the success of our industry. To miss this opportunity would be a grave and critical mistake.

Thank you very much for this opportunity.

[The prepared statement of Mr. Fisher follows:]

Chairman CRANE. Thank you, Mr. Fisher.

Mr. HAMNES. Good afternoon, Chairman Crane. I too want to welcome you to Minnesota.

My name is Bruce Hamnes, and I produce wheat and soybeans on my 2,000-acre farm in Stephen, Minnesota, in northwest Minnesota. Thank you for allowing me the opportunity to highlight the many challenges faced by U.S. wheat producers as we compete in the world market. This hearing is an excellent opportunity for wheat producers in Minnesota and throughout the country to impress upon this Subcommittee how vital trade is to our livelihood.

My written statement contains information that time does not permit me to cover here, but I would like to highlight two points that we need to take into account.

As Neal has just told you, 96 percent of the world's consumers live beyond our borders; and, secondly, we export nearly half of our total production. As you can imagine, our success and failure hinges on the ability of U.S. wheat to be exported around the world.

With the challenges facing U.S. wheat producers, reform is necessary in negotiations of the World Trade Organization and the Free Trade Area of the Americas. Trade promotion and market development are vital components of success in world wheat trade.

U.S. wheat is exported to over 130 countries around the world. In each of these markets the trend towards privatizing the milling and baking industries has dramatically increased the time and resources it takes to ensure our buyers' needs are being met. As an officer of U.S. Wheat Associates, I've had the opportunity to visit many of these overseas markets and see firsthand how important it is to have a presence in those markets.

Trade negotiations such as the multilateral efforts in the WTO and the FTAA and bilaterals with Chile and Jordan are critical means of addressing trade challenges. These negotiations have potential to build alliances, remove barriers, and allow greater access to markets and discipline unfair trade practices.

The U.S. wheat industry has been a firm supporter of trade agreements. However, there are several issues we feel need to be addressed as we proceed through the negotiating process.

First, the export State trading enterprises, such as the Canadian Wheat Board which operates as a State-mandated monopoly, must be addressed, as you have just heard from Mr. Fisher.

Secondly, we urge the United States to place its highest priority on complete elimination of trade export subsidies. European export subsidies represent the international trading system's single greatest market distortion.

Third, Europe continues to lavish its producers with trade distorting support, while clinging to the rationale of multi-functionality. Europe applies this term in an effort to justify exporting the cost of supporting European farmers. The U.S. should refrain from negotiating on domestic supports within the context of the FTAA. We must not unilaterally disarm within the hemisphere, leaving the EU to continue subsidizing their producers.

Fourth, the average U.S. tariff on agricultural imports is about 5 percent, while in the rest of the world it exceeds 50 percent. Until such time as significant reductions are made by others, U.S. agricultural tariffs should not be further reduced. In the WTO and the FTAA, negotiations reducing these high tariffs must be a priority.

Fifth, events over the past year have made it clear that food safety issues will continue to create challenges to international trade. Science must be the foundation for addressing these issues, not murky concepts such as the precautionary principle.

The wheat industry strongly believes that Congress should grant trade promotion authority to the President that is unencumbered by environmental or labor provisions. The importance of the environmental and labor protection is without question; however, we believe these concerns are more appropriately addressed in other forums and by other methods.

Granting this authority would send a strong signal that the U.S. is committed to maintaining its leadership role and promoting free and fair trade.

We recognize that significant work was done last year to reform U.S. sanctions policy. However, the industry supports continued efforts to ease access to formally sanctioned markets by eliminating licensing requirements, allowing access to export credit programs, and rescinding travel restrictions and the prohibition on U.S. commercial financing for Cuba trade.

Last year's historic granting of China permanent normal trade relations was a positive first step toward realizing the massive potential of this market for U.S. wheat producers. Our nation's agreement with China promises U.S. wheat producers unprecedented access to the largest market in the world. Upon China's accession to the WTO, the U.S. will have greater recourse than ever in dealing with Chinese trade problems.

Biotechnology also represents significant challenges to trade. We in the wheat industry have taken a long, hard look at what happens to our markets when wheat produced using biotechnology is commercialized. This may be as early as 2003. We believe that biotechnology holds tremendous potential for American agriculture and the wheat industry.

The needs of our customers are of utmost importance to us. However, we must not be barred from fair competition by nonscience-based approval and clearance systems like those proposed in the European Union and by activists' misinformation campaigns.

With over 50 percent of our sales overseas, we must protect the viability of U.S. markets by maintaining and requiring that all regulatory systems be based on internationally recognized scientific principles.

We thank you for your attention to our concerns and recommendations and want you to know that the entire wheat industry stands ready to work with the Congress to address these issues. I'll be happy to respond to your questions at the appropriate time.

[The prepared statement of Mr. Hamnes follows:]

Chairman CRANE. Thank you, Mr. Hamnes. Mr. Tumbleson.

Mr. TUMBLESON. Welcome, Mr. Chairman and Mr. Ramstad, and if you ask Mr. Ramstad, you'll realize that this is not one of our better weather days. Minnesota is much better than this. So come back another time.

My name is Gerald Tumbleson, and I'm a farmer from southwestern Minnesota, and I serve as a director of the Minnesota Corn Growers Association Board. I farm with my wife, two sons, and a brother.

Your roles as policy leaders and our roles as ag leaders require us to be visionary, peering into the future to see what lies ahead for those we serve. The long view of agriculture finds a world with a growing population and a growing demand for energy of all types. Agriculture will be a player in this growth.

Middle America can be a prosperous place if we can capture the full value of the raw commodities we produce. Corn, for example, is a complex package of valuable chemical building blocks, with potential to help in meeting our energy, fiber, plastic, and nutritional needs.

Depleting hydrocarbon sources, coupled with growth in demand for fuels and chemical foodstocks, indicate that to continue our strong economic growth we must begin to incorporate renewables. We refer to this as the carbohydrate economy. When we capture the sun's energy through the 400 million acre solar panel of cropland across the country, then convert it efficiently into more valuable meats, fuels, feed products, anything with a higher value, it benefits many sectors of the U.S. economy.

These renewable resources will not directly compete with petrochemical resources, but will complement them and help meet the incremental growth in demand. This carbohydrate economy is sustainable, environmentally friendly, and helps reduce our reliance on imported oil and the resulting trade imbalances.

As we process these products through our carbohydrate economy, if you take the corn kernel, for example, and break it up into starch, protein, fiber, and oil, and then export those commodities, we not only have increased the value, but we have put many job opportunities here in Minnesota, and they're high-paying jobs, and therefore our economy advances along with our exports.

As many of you know if you live in southwestern Minnesota, Mankato is a city, and it's probably the largest soybean processing city in the United States. These processing plants become very important to us in the trade negotiations and how we go about that.

So the lack of a nimble trade negotiating authority limits our ability to access foreign markets, increase exports and investment overseas, and sustain the dynamic performance of our economy. Trade promotion authority allows quick response to often fleeting opportunities, yet it gives Congress the authority to vote the negotiated agreement up or down. This is important to agriculture because negotiations that drag on lead to missed opportunities. Trade promotion authority will reinforce our commitment to the pursuit of free trade.

Agriculture makes a positive contribution to our balance of trade, and that positive value will grow in the future. The improvements in genetics and cultural practices will bring continued increases in crop yields while also protecting the environment.

This growing supply of raw commodities will enable growth in value-added processing and the sales of both processed goods and raw grains to both domestic and foreign customers. While domestic food and energy consumption provides the base demand American agriculture is built around, Minnesota farmers depend on the continued growth of trade opportunities throughout the world for future prosperity.

As we move ahead in processing these products in Minnesota, and fortunately you're in Minnesota because it's one State that processes a lot of these products, you will understand how exports can become very valuable in the future because we're going to be exporting a much higher valued product.

Thank you for coming to Minnesota.

[The prepared statement of Mr. Tumbleson follows:]

Chairman CRANE. Thank you, Mr. Tumbleson.

I read a statistic that estimates that the world's population in 2050 is expected to hit 9 billion, and that's a lot of people, and without continued advancements in land use and crop production, there may not be enough food to feed everyone.

Biotechnology attempts to solve this problem, yet it's been met with serious opposition. What is your industry doing to counter the critics of biotechnology? I don't know if you have comments.

Mr. JOACHIM. Mr. Chairman, the American Soybean Association has been very active since 1995 when we first sought the approval to plant, in our instance, Roundup 30 soybeans and educating foreign buyers, and also we've been active since then in making sure that the companies have basically used due diligence and not released any soybean for general planting that hasn't been approved.

We have full faith in the products that are being sold. Obviously, farmer acceptance of the biotech soybeans is well over half the crop, I guess somewhere around 60 percent.

We have been blessed or cursed by our competition in Argentina that run a level that's much higher than the U.S. even, 90 percent, and which basically meant that back in 1996 that the people, when soybeans were tight worldwide, basically with the circumstances they really had no choice but to take on Brazilian soybeans, and the world didn't come to an end, but that doesn't mean that there couldn't be this problem run through a variety.

And I think it's unfortunate, but looking back I really don't know how it could have happened any different that the first rights out really had economic trades that benefited the farmer and not specific output trades that benefited the consumer, but when I look at--like I say, in hindsight we might have wished that would have happened differently, but practically I don't see how it could have happened.

I think it's just a matter of education. I think Mr. Ventura used that term in his testimony earlier this afternoon.

Chairman CRANE. Any thoughts, Mr. Fisher?

Mr. FISHER. Yes, I do, and I think Mr. Hamnes as chairman of U.S. Wheat will have some additional comments on the topic.

I think our position is somewhat drafted following the soybean, corn examples, if you will, because we have yet to have a Roundup ready for biotech wheat out in the fields at this point. It's said that it will be between 2003 and 2005 before that occurs.

The wheat industry has chosen to embrace the technology, but also in developing the biotechnology committee some years ago and developing their position statement, clearly acknowledged the fact that--

Chairman CRANE. I thought we were in California.

UNIDENTIFIED SPEAKER. Ladies and gentlemen, the power went out in the whole hotel. Just hang loose. It might be coming back on here shortly.

Chairman CRANE. Well, with the lights that we have, I think we can continue.

Mr. FISHER. Mr. Chairman, the biotech committee chose to be sure to include in its position statement a rather go-slow approach, for lack of a better way to say it, because the concerns were heightened with the Starling episode and the rash of customer concerns that seemed to follow that. So the wheat industry has adopted a rather go-slow approach, in other words, to embrace the technology but to make sure that we have adequate reassurances for our customers and education, as the Governor said, to make sure that we get this done right.

We have a little time, since our first biotech wheats are not yet out there. However, they will be spring wheat, so it will affect North Dakota and Minnesota and Montana and States like that as soon as they are available. That seems to be the target.

So we have a little time yet, and I think it has great promise, and I also think that the customer benefits, the secondary benefits also hold more promise in helping that education or meeting the issue I think with the customer at this point, although it tends to benefit, as in the Roundup technology, for example, tends to benefit the producer, and so there's a little less linkage there to the ultimate consumer.

Chairman CRANE. Very good. Mr. Hamnes, any thoughts?

Mr. HAMNES. Mr. Fisher has summed it up quite well, but we do have this Committee, and in fact we just had a team that came back from Japan, which is our second-largest wheat customer, and visited very extensively with them about what we were doing here and to assure them that our customers are first and that we would take their considerations very seriously.

We are also working with industry to attempt to put together a system so that we can assure our customers that when the technology does become commercial that they can be assured that they will get the product they want, and if they don't want a genetically modified organism (GMO) wheat, they will not get that.

Also, we're trying to work in the international arena with discussions on tolerances, because there is no such thing as a zero tolerance. So we're moving on a number of different fronts to give confidence to our customers that their concerns are first, but also as we move forward on this technology which we think is going to be part of our life in the future, that we'll be ready to put it into operation and that will be acceptable by all our customers.

Chairman CRANE. Mr. Tumbleson.

Mr. TUMBLESON. Yes. Coming here from corn, it's an interesting discussion, isn't it, because you've all heard of Starling. That was not approved, and the corn growers did try to keep that controlled. As you know, corn is a pollen that fertilizes, so it's a different crop than soybeans and wheat like that.

But let it not be misunderstood, technology benefits the consumer more than the producer, and when the United States has such inexpensive food, the world can be supplied the same way. You have to understand that technology is out there. The GMO is not going to make the farmer rich, but it's going to make the consumer much happier.

When the education process is done, that will not be a problem. The problem is still going to exist in trade, and as we increase our production, which we will double probably in 20 years through technology, maybe taking hopefully not less, but maybe, the consumer will benefit from this. So how we do it, how we get the scientific information out there, is very critical.

Chairman CRANE. One final quickie question. Which markets are of a higher priority to you folks, Latin America or Europe, the EU? Mr. Joachim.

Mr. JOACHIM. Well, we have an allocation model for where we spend our money. It's interesting, seven years ago Latin America was number one, followed by then I think Asia and Europe. The way we've got the world split up for soybeans, we're about tied. Now Asia is about 50 percent of where we're spending our market money, and Europe is roughly 28 or 29, and Latin America is the rest.

Part of that is because of the sheer number of people in Asia and the fact that our biggest competitors for soybeans are in South and Latin America, South America, and in Europe we're looking at a more mature market, so there it's more of a maintenance situation where those guys--and you can't tell a farmer in Denmark a whole lot about feeding a pig that he doesn't already know.

So you can't spend the same kind of money on that kind of program in Europe that you can, for instance, in Indonesia or Vietnam or Thailand or someplace like that. But we foresee the biggest growth is going to be in Asia.

Chairman CRANE. Mr. Fisher.

Mr. FISHER. Well, in spring wheat in particular, and that catches most of the production in North Dakota and Minnesota, there is a vast and mature market in Europe that has now begun to grow again a bit with more specialty products and more attention to quality there again. But we've always felt that Latin America held a lot of promise, and we've worked hard to open phytosanitary discussions with the Brazilians, and, of course, that goes on. Almost weekly there's a new one, it seems.

But for the very fact that there's a huge market there, we've always looked at Latin America as being a very important market as well, Mr. Chairman. I think at this time we have about a million tons of spring wheat sold to Europe and just shy of that to the Latin America markets at this point in the marketing year.

Chairman CRANE. Mr. Hamnes.

Mr. HAMNES. I think Latin America is much more important in the long-term for us. We've got a growing market in Mexico, now close to our third largest importer or user of U.S. wheat.

Brazil is also the largest buyer of wheat in the world, even though they buy most of their wheat from Argentina, but we're locked out of that wheat, not only by phytosanitary concerns that they have put up, but also by the MERCOSUR Agreement where they're able to import the wheat from Argentina with very little tariff, and so it's a growing market.

I've had occasion to spend some time in South America, and it has great potential for us, and it's also so close to us, so we have a definite freight advantage to other areas.

Chairman CRANE. Mr. Tumbleson.

Mr. TUMBLESON. It's an interesting question, because you'd think it would be Latin America looking at it, and I think Latin America is important, but I spent two trips to Europe in the last year and a half. There is a concern over there whether they have the ability to farm. As you know in England now with the foot and mouth, they are thinking of making a tourist country, and other countries over there are thinking of the same thing.

So it's an interesting thing when you look at it. You can't narrow it down to that concept, because, as I was saying before, as we break the kernel apart, the products we sell are going to be entirely different 20 years from now than they are today. So we have to look into the future and how we're going to sell them and where we're going to distribute them.

We can't compete with Brazil, Argentina, and the Ukraine in raw grain. Their land costs are less. Their living costs are down. We can't do that. We will compete, though, in processing. Now we have to look where we sell those products.

Chairman CRANE. Thank you. Mr. Ramstad.

Mr. RAMSTAD. Thank you again, Mr. Chairman. Thank you, gentlemen. All four of you represent the agricultural sector very well.

I appreciate the Chairman agreeing to our friend Earl Pomeroy's request. He regretted he couldn't be here today, Mr. Fisher, but glad that you were added to the panel. Earl was the newest member on the other side of the aisle of our Ways and Means Committee and a valuable addition, represents agriculture well, and so we're glad to see you here today.

Let me just ask any or all of you whether you think a new round of the WTO is the best way to proceed with respect to Minnesota's position or North Dakota's in the agricultural sector. Do you think a new round of the WTO is the best way to go? Mr. Hamnes.

Mr. HAMNES. Yes, I definitely think we do need a new round, and we've got to have rules to trade by, and that's what this is all about. And so if we get some rules, we'll do well in the trade.

Mr. RAMSTAD. Anybody else?

Mr. JOACHIM. Mr. Ramstad, we definitely think we need to proceed with the WTO because, for one thing, the circumstances change, the world changes, and we all have the goal of further liberalization for one thing, and there are certain inefficiencies and things that pop up over the life of the agreement.

I guess the only concern of soybeans that we really have--I mean, we have plenty of concerns, but one concern we have is that agriculture doesn't get traded out for other issues, industrial issues or information issues or media kind of issues.

Mr. RAMSTAD. Anybody else?

Mr. FISHER. Mr. Ramstad, I would share the optimism, I guess, that Mr. Hamnes has shared with you already. U.S. Wheat Associates, which is our national organization, has spent considerable time in preparing for the WTO negotiations, actually selected what we call a WTO ambassador to carry our message there, and I think it would be tragic if we were not involved in the process.

But we also share the concerns that the gentleman from the soybeans has just raised, and I think in the testimony that I presented earlier on the part of U.S. spring wheat producers in particular in the CUSTA, we felt that maybe we were traded off a bit for some of the other industries that may have had a little higher profile at the time.

So that is a concern certainly in any of these negotiations, that we make sure that we're on solid footing and that we have a good negotiating position and then that maybe even we have a chance to correct some of the inequities that were allowed to pass in some of these earlier agreements as well. I think that's also an opportunity in the FTAA.

Mr. TUMBLESON. Yes, I think for the corn it's the same. We need the WTO. We need some form of something like that.

As you know, in the last campaign for our presidential election, the statement was made that we can import our food cheaper than we can raise it. Now, think about that.

As they move into a WTO, if you leave agriculture out of this, the only thing you have to remember: We're a renewable resource. We're a very efficient resource. We're the carbohydrate economy that's going to take over the hydrocarbon economy in time.

So how you make these WTOs today is the 20- to 50-year thing that we have to be looking at. You and I might not be living then, but that's not what we're really here for anyway.

Mr. RAMSTAD. Thank you again, gentlemen, for being here, for your excellent testimony, and I can assure you, we will share it with the rest of our Subcommittee and Committee. Thank you.

Chairman CRANE. Absolutely. Thank you all. We look forward to working with you on a continuous basis too. And with that, the hearing stands adjourned.

[Whereupon, at 3:30 p.m., the hearing was adjourned.]
[Submissions for the record follow:]