The American Farm Bureau Federation is the nation’s largest agricultural organization with over five million member families. Our members produce every crop raised in America and depend on exports for over one-third of their total production.

Negotiations now underway in the Free Trade Area of the Americas are important to our members from both an import and export perspective. This agreement will create an open market of 34 countries. Several of these nations produce many of the same commodities that we grow in America. According to a recent U.S. Department of Agriculture report, the commodities that are expected to benefit from an FTAA include wheat, soybeans, cotton and corn. Conversely, increased competition in the U.S. market could substantially affect U.S. sugar, peanut and orange juice producers. 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.

Recognizing the importance of achieving such an agreement, the Farm Bureau believes every effort must be made to develop a negotiating consensus in the Western Hemisphere that underscores the objectives the United States seeks to achieve in the WTO negotiations. Although important gains can be made in the FTAA including eliminating export subsidies, disciplining state trading enterprises and ensuring market access for bioengineered commodities, the real gains from trade are more likely to be achieved in the WTO negotiations on agriculture.

Most importantly, any agreement reached in the FTAA must recognize the existing rights and obligations of the General Agreement on Tariffs and Trade (GATT) 1994 as provided in the Marrakesh Declaration, which established the WTO. Agreements reached as a result of the FTAA negotiations should in no way subordinate or prejudice member parties’ WTO commitments.

The Farm Bureau supports adoption of the following general objectives for the FTAA negotiations:

• Require compliance with existing WTO commitments of all WTO-member trading partners in the FTAA.
• Stipulate that no signatory should be permitted to protect or exclude any sector, or commodity within that sector, from meeting the terms of the agreement.
• Provide for the continued and regular use of private commodity and trade policy advisory group input into the FTAA negotiation process.

General Market Access:

• Develop equivalent customs procedures to facilitate the flow of traded products and minimize market disrupting commercial disputes.

• Establish standardized rules of origin.

Agricultural Market Access:

• Allow for adoption of zero-for-zero sectoral initiatives where commodity specific support for such an approach exists.
• Improve the administration of tariff-rate quotas to increase the transparency and predictability of market access opportunities.
• Eliminate nontariff barriers to trade in agricultural products, including, but not limited to: domestic absorption requirements (barring market access until the domestic supply of a commodity is exhausted); price pooling of domestically supplied and exported products; discriminatory licensing procedures, reference price calculations that overstate the value of imports, product certification and labeling procedures that discriminate against approved exports and sanitary and phytosanitary measures that are not science-based.

Export Subsidies:

• FTAA member countries should eliminate export subsidies as called for in the San Jose Ministerial Declaration by FTAA Ministers.
• FTAA signatories should call for the elimination of export subsidies in the WTO negotiations on agriculture.

Domestic Support:

• Domestic support negotiations should take place in the WTO and not in the FTAA.

Additional Agricultural Objectives:

• Develop principles for the immediate, unrestricted, science-based trade of agricultural products produced with genetically modified organisms.
• Obligate signatory countries to adhere to science-based sanitary and phytosanitary measures in accordance with the WTO Agreement on Sanitary and Phytosanitary Measures and require all FTAA countries to come into full compliance with its provisions.
• Eliminate state trading enterprises or adopt disciplines that require full transparency of STEs that operate in the region.
• Institute special safeguard provisions that remedy price depressing import surges of perishable commodities in a quick and efficient manner and establish disciplines that address seasonal and regional import surges for agricultural products.
• FTAA countries should support the harmonization of labeling requirements and product certification procedures (including harmonization of pesticide registration requirements) in regional and international standard setting bodies.
• Promote the development of science-based international standards in recognized regional and international standard setting bodies.

Dispute Resolution:

• Develop expedited dispute resolution procedures and processes for perishable commodities.
• FTAA dispute settlement procedures should provide strong provisions for compliance with dispute settlement rulings and should facilitate trade.

Environment and Labor:

• Environment and labor issues that restrict trade should not be included in the agreement.

The United States, in negotiating the FTAA, should insist on strict implementation of international trading rules to prevent unfair practices by countries in the hemisphere and to ensure unrestricted access to these important markets. This agreement, as with all others, should be continually evaluated with emphasis on fair trade as well as free trade.

Farm Bureau will not support renewal of the ATPA unless certain import sensitive products such as asparagus are excluded. The act should only be renewed if this exclusion is granted and 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.

While the objectives of the ATPA are laudable, U.S. producers should not be put out of business as a result of the Act. Considerable injury to U.S. producers resulted from the duty-free importation of cut flowers under the ATPA and the same scenario is beginning to unfold for our asparagus producers.

Providing duty-free treatment for imports from Andean countries -- Bolivia, Colombia, Ecuador and Peru—has measurably affected trade in certain horticultural products and has had a significant impact on domestic production of these commodities. For example, the duty-free treatment provided to asparagus growers in Peru has further enhanced an already competitive industry that existed in Peru prior to enactment of the ATPA. Once a small industry in the early 1980’s, Peru has become the world’s largest producer and exporter of asparagus. Asparagus is Peru’s second largest agricultural export item with about $130 million in annual export earnings.

Asparagus imports from Peru have grown more than ten-fold since 1990. Imports of Peruvian asparagus, predominantly for the fresh market, have more than doubled in the last three years. Steady increases in Peruvian asparagus imports are expected for the next several years. The U.S. market absorbs up to 80 percent of the Peruvian fresh asparagus crop. In addition, a sizeable asparagus processing industry exists in Peru. Although most of the processed product is white asparagus destined for European markets, significant quantities of green asparagus are now being diverted to frozen utilization.

U.S. industry sources indicate that five to 10 million pounds of Peruvian frozen asparagus have been made available to the U.S. market in the past year. Imports of this magnitude are significant because the total U.S. market for frozen asparagus is only 10 million pounds annually. Duty free access for Peruvian frozen asparagus has exacerbated the situation. Peruvian imports are displacing U.S. frozen asparagus production at an alarming rate.

Peru produces asparagus for two distinct markets: green asparagus (primarily fresh, with an increasing portion dedicated to frozen/processed product) for the U.S. market and processed white asparagus for the European market. Peruvian cultivation of asparagus occurs year round with very high yields per acre experienced by its growers.

The extent to which the ATPA has advanced narcotics eradication in Peru is highly questionable largely because cultivation of asparagus in Peru occurs in the desert region along Peru’s coastline, not in the foothills and mountains where Peruvian drug cultivation is known to exist.

Farm Bureau believes that duty-free treatment should not be accorded under the ATPA for specific commodities wherein a country is deemed economically competitive. The determination of economic competitiveness should follow the criteria now used in the Generalized System of Preferences program requirements.

The GSP competitive need limitation revokes duty-free treatment for certain goods once that article/commodity accounts for 50 percent or more of the total value of imports of that commodity or exceeds a pre-established dollar value (in 1996 the value was set at $75 million). Once GSP treatment is revoked for a commodity, the tariff for that product reverts to the MFN level.

Instituting this change would support the objective of the ATPA of providing economic alternatives to narcotics production, but would not allow foreign imports to put U.S. producers out of business in the process.

Second, a safeguard mechanism should be instituted to address import surges of perishable agricultural commodities. Import surges can be extremely disruptive to U.S. agricultural markets, especially considering seasonality concerns and the price variability of perishable agricultural products. Criteria now exist in the NAFTA and the WTO agreement on agriculture that enable safeguard actions to be taken under specified conditions. Certain trade remedies, such as the U.S. 201 law, allow the administration to take action to mitigate import surges when they are determined to be causing or threatening injury to U.S. producers. However, imports from ATPA and other countries are exempt from consideration in the investigation of 201 cases.

In order to address the often irreparable damage caused to U.S. producers of perishable products due to import surges, we request that any extension or renewal of the ATPA include an automatic, transparent, and temporary safeguard mechanism. The safeguard mechanism would provide much needed import relief to U.S. producers being injured by an import surge and would still provide market access for ATPA beneficiary countries during the remedy phase.

Farm Bureau appreciates this opportunity to comment on the Free Trade Area of the Americas and the Andean Trade Preferences Act.