Statement of Al Christopherson, Corn, Soybean, and Hog Producer, Pennock, Minnesota,
and President, Minnesota Farm Bureau Federation, Saint Paul, Minnesota

Testimony Before the Subcommittee on Trade
of the House Committee on Ways and Means

Field Hearing in Bloomington, Minnesota, on the
Benefits of Trade to the Medical Technology and Agriculture Sectors

May 14, 2001

Mr. Chairman, members of the Committee, I am Al Christopherson, President of the Minnesota Farm Bureau Federation and a corn, soybean and hog producer from Pennock, Minnesota. MFBF represents more than 32,000 member families throughout the state of Minnesota. Our members produce a variety of farm commodities and depend on access to foreign markets for our economic viability.

I appreciate the opportunity to speak with you today about trade issues affecting Minnesota agriculture and the trade title of the next farm bill. As you know, Minnesota agriculture is highly dependent on access to world markets with over one-third of our commodities destined for foreign shores. Our sector has long enjoyed a trade surplus, but that surplus has steadily decreased in recent years due to declining export values and barriers to trade that are erected by our trading partners.

At the same time, U.S. agricultural imports continue to rise. This is evidence that our market is among the most open in the world. Minnesota farmers compete head-to-head with their competitors in their own market, but are not given equal opportunities to compete in foreign markets.

In addition, our competitors are outspending us in their use of export subsidies and market promotion programs. We can't expect our producers to compete on the world stage when they are outgunned by foreign government spending. Congress must equip U.S. producers with adequate funding to promote their exports.

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. Granting this authority will signal to the world that the United States is ready to negotiate.

However, Trade Promotion Authority should not include labor and environment provisions that use trade as a weapon. Putting labor and environment standards in trade agreements, and more troubling, imposing sanctions on countries that fail to enforce their labor and environment standards, is a recipe for ensuring that no future commercially meaningful trade deal will be struck.

Moreover, sanctioning U.S. exports historically has proven to be an ineffective policy tool that merely cuts off U.S. producers' access to vital export markets without achieving the desired policy result. Meanwhile, our competitors are all too happy to take over these sanctioned markets at our expense.

It is for this reason that Farm Bureau continues to oppose unilateral export sanctions in any form on U.S. agricultural exports. The sanctions reform legislation that passed last year as part of the agricultural appropriations bill was a good first step on the road to achieving meaningful sanctions reform.

However, the restrictions placed on the use of federal export promotion assistance, financing of sales and travel to Cuba, and licensing requirements are provisions that need to be repealed in order to allow U.S. farmers and ranchers true access to these previously sanctioned markets. We support S. 171, which will accomplish this objective.

Congress should repeal these onerous restrictions as part of its proven desire to lift unilateral economic sanctions on U.S. agricultural exports. Full sanctions reform will enable America's producers to compete in a market valued in excess of $6 billion.

The negotiations on 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 the elimination of export subsidies, substantial reduction of tariffs worldwide, increased transparency of state trading enterprises, access based on scientific principles for bioengineered products, expiration of the peace clause, elimination of the blue box category of government allowed subsidies, adoption of an equitable approach to domestic support spending between nations and the conclusion of negotiations on export credits in the Organization for Economic Cooperation and Development (OECD).

However, true progress in the WTO agricultural negotiations cannot be achieved unless a global trade round is launched. WTO member countries should adopt a broad-based approach for a new round to ensure that all sectors in the global economy benefit from increased trade liberalization. To accomplish this, the United States must insist that a single undertaking approach for the negotiations is adopted wherein all elements of the agreement are concluded and implemented simultaneously.

Another important trade issue affecting agriculture is the completion of China's accession to the WTO. Minnesota farmers are eagerly awaiting the opportunity to compete in the Chinese market. However, it is vitally important that all outstanding issues for China's accession package be resolved before the United States gives its final approval for China to join 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. China must fully comply with the letter of that agreement. Importation of these products into China will serve as evidence that China intends to fulfill its international obligations. The United States should not give final authorization for China to join the WTO unless it lives up to its commitments, including the bilateral promise to remove sanitary and phytosanitary (SPS) barriers on U.S. wheat and meat exports.

Additional regional and bilateral free trade agreements are now being negotiated that could significantly impact U.S. agriculture. These negotiations present an important opportunity to address specific bilateral and regional trade issues affecting our sector.

On the bilateral front, Chile, as part of the free trade area negotiations now underway, must agree to resolve all outstanding SPS measures that restrict U.S. exports to that market, including meat, poultry and dairy, and must agree to eliminate its price band system, which places imports into that market at a price disadvantage.

 Recent reports indicate that the administration may be considering pursuing a free trade area with Australia. Australia is an important ally of the United States in the WTO negotiations on agriculture. However, there have been numerous bilateral SPS barriers to trade that Australia has erected to keep our exports out of its market. All outstanding SPS issues must be resolved in a scientific manner before a commitment is made to commence free trade negotiations with Australia.

Regarding the Jordan Free Trade Area, Farm Bureau opposes including labor and environment provisions in the agreement and strongly objects to the use of sanctions to enforce labor and environment provisions.

We also oppose Executive Order #13141 that mandates environmental reviews of trade agreements and believe this administration should rescind it. U.S. negotiating proposals for trade agreements should not be subjected to the faulty, non-science based process that this executive order will impose.

Concerning regional agreements, the Free Trade Area of the Americas will create an open market of 34 countries. Several of these nations produce many of the same commodities that we grow in America. Producers from these countries already enjoy significant access to our market and also compete with us in the international marketplace. It is imperative that U.S. producers begin to enjoy access to the FTAA markets on equal terms.

We also view the FTAA as an opportunity to apply the trade lessons we learned from the North American Free Trade Agreement. On average, 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 losers. While we cannot expect significant gains for all commodities in all trade agreements, we can, and must, ensure that the rules that are adopted as part of the FTAA result in fair trading opportunities. To this end, we have requested that special safeguards be implemented in the FTAA for perishable commodities that account for seasonality and regionality.

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 maintains their economic viability. We are also concerned that Mexico's requirements placed on the importation of dry beans are not consistent with its NAFTA obligations and should be corrected.

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. Because the EU has not complied, the list of European products subject to retaliation should be immediately rotated and continue to carousel in accordance with U.S. law until a solution to this longstanding dispute is imminent.

The U.S.-Canada Softwood Lumber Agreement expired at the end of March. U.S. timber producers will now be subjected to unfairly subsidized imports of Canadian lumber, which promise to further exacerbate the low price conditions they already face. 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.

The Andean Trade Preferences Act is set to expire at the end of this year. Renewal of this trade act should only be granted if a competitive trigger similar to that of the Generalized System of Preferences (GSP) is implemented that eliminates the tariff preference once a country becomes internationally competitive in a specific commodity and the safeguard mechanism for perishable products is improved.

Finally, the issue of biotechnology continues to be a top trade concern for U.S. agriculture. The European Union has maintained a de facto moratorium since 1998 on additional approvals for new varieties of genetically enhanced commodities. However, the European parliament recently approved a revised 90/220 directive outlining the process for GMO approvals.

Although all member states are required to conform to this revised directive, several have indicated that they will not implement it. In short, the de facto moratorium is legally over but not in practice. We believe the Europe Union should reinitiate its approval process based on science and should implement it without exception or delay.

In addition, international provisions and standards governing biotechnology are being discussed and adopted in a number of forums, yet the United States lacks a coordinated policy approach on trade in these products. We support the establishment of an interagency committee to address biotechnology matters in a coordinated fashion. The United States should also forge stronger alliances with its international allies on this issue, thereby depolarizing the U.S.-EU biotechnology debate.

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 supported provisions for the trade title of the next farm bill include:

Approval for additional funding (up to the WTO allowed limits) for all export programs. We have participated with other agricultural groups to try to ascertain the necessary amounts for each of the export-related programs and are still working on those figures.

Farm Bureau supports a greater percentage of increase in funding for expansion of agricultural exports than any other recommendation in our farm program testimony -- $400 million in additional funding annually. With over one-third of our production moving into the export market, expanding those markets rather than allowing them to continue to shrink is key to the recovery of the current farm economy crisis. Opening markets and leveling the playing field is more important than ever. We cannot afford to remain on the sidelines while other countries use similar export programs to capture our markets.

The GSM program is an export credit guarantee for commercial financing of U.S. agricultural exports. The programs encourage exports to buyers in countries where credit is necessary to maintain or increase U.S. sales, but where financing may not be available without such credit guarantees.

Title I of the PL 480 program is used to provide overseas food aid, also known as Food for Peace, which includes concessional sales. Food aid is vitally important to many developing countries around the world. The ability to provide this assistance should not be altered in the ongoing negotiations on agriculture in the WTO. Farm Bureau supports a 10 percent increase in food aid programs.

The Market Access Program (MAP) uses funds to aid in the creation, expansion, and maintenance of foreign markets for U.S. agricultural products by forming a partnership between non-profit U.S. associations, cooperatives, small businesses, and the USDA to share the costs of overseas marketing and promotional activities such as consumer promotions, market research, trade shows, and trade servicing.

MAP, after being adjusted for inflation and exchange rate movements has declined $45 million since 1986. Using the same assumptions, the MAP program would need to be funded at a minimum of $155 million rather than the current $90 million. In order to arm U.S. agriculture with the same amount of market development funding it had in 1986, the Foreign Market Development (FMD) program would need to be authorized at a minimum of $43 million rather than the current level of $33.5 million.

We are very interested in USDA numbers for the FMD program which examine the global inflation and exchange rate changes that have reduced the "real" or "effective" levels of market development funding since 1986 (the year following the 1985 farm bill which was really the first push for expanded export programs). The numbers show that "real" FMD allocations, after being adjusted for inflation and exchange rate movements have gone down by almost $12 million since 1986.

In short, the FMD program authorization and appropriation should be increased to $43 million and the MAP program to $155 million.

The DEIP helps exporters of U.S. dairy products meet prevailing world prices for targeted dairy products and destinations. The major objective of the program is to develop export markets for dairy products where U.S. products are not competitive because of the presence of subsidized products from other countries.

The Export Enhancement Program (EEP) helps products produced by U.S. farmers meet competition from subsidizing countries, especially those of the European Union. The major objective of the program is to challenge unfair trade practices. The EEP authorization level has been at least $478 million over the past four fiscal years; however, the past administration never utilized any more than $5 million in any of those fiscal years.

The EEP and DEIP programs should be reauthorized at the maximum levels consistent with export subsidy reduction commitments made in the WTO agreement.

The total cost to increase food aid and export promotion programs by 10 percent per year and to raise EEP and DEIP to their maximum allowable WTO limits is about $120 million per year.

U.S. farmers and ranchers are the most efficient producers in the world. They produce a high quality product that can out-compete the competition if they are allowed to meet it head on without being disadvantaged by excessive export subsidies and insurmountable barriers to trade.

Congress should support our producers in every way possible to ensure that access to foreign markets is unrestricted and the terms of trade are fair. Increasing spending on MAP, FMD, EEP, DEIP and food aid and securing trade promotion authority and full sanctions reform represents the best means in the short term for enabling U.S. producers to increase their export potential.

Mr. Chairman, 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.

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