Mr. Chairman, members of the Committee, I am Dean Kleckner, president of the American Farm Bureau Federation and a hog, corn and soybean farmer from Iowa. I appreciate the opportunity to testify before you today regarding negotiating objectives for agriculture in the next round of trade talks in the World Trade Organization.

The American Farm Bureau is the nation's largest organization of agricultural producers. Farm Bureau represents over 4.8 million member families in the United States and Puerto Rico. Our members produce every commodity grown in America and depend on access to customers around the world for the sale of over one-third of our production. Agriculture is one of the few U.S. industries that consistently runs a trade surplus, posting a positive balance of trade every year since 1960. The United States along with agriculture, must be at the negotiating table in the next WTO round in a meaningful way, with trade negotiating authority, to ensure that this trade surplus continues.

The ability of U.S. agriculture to gain and maintain a share of global markets depends on many factors, including obtaining strong trade agreements that are properly enforced, enhancing the administration's ability to negotiate increased market access for U.S. agriculture and building in the necessary changes to the WTO dispute settlement process to ensure timely resolution of disputes.

When Congress passed the 1996 Freedom to Farm Act, it phased out farm price supports, making U.S. agriculture more dependent on the world market. American farmers and ranchers produce an abundant supply of commodities far in excess of domestic needs and their productivity continues to increase. Exports are agriculture's source of future growth in sales and income.

As you are well aware, U.S. agriculture is reeling from low commodity prices. Given an abundant domestic supply and a stable U.S. population rate, the job of expanding existing market access and opening new export markets for agriculture is more important than ever. Agriculture's longstanding history of a balance of trade surplus will not continue if we are relegated to the sidelines as new negotiations in agriculture commence.

Moreover, global food demand is expanding rapidly and more than 95 percent of the world's consumers live outside U.S. borders. Despite significant progress in opening U.S. markets, agriculture remains one of the most protected and subsidized sectors of the world economy. In addition, U.S. agricultural producers are placed at a competitive disadvantage due to the growing number of regional trade agreements among our competitors.

U.S. leadership of the global trade liberalization agenda has paid off for American agriculture. If the United States now leaves it to others to form new trade pacts and write future rules for trade, U.S. producers, processors, and exporters will be severely disadvantaged in the competitive marketplace of the 21st century. We are counting on this administration and Congress to ensure that U.S. farmers and ranchers have a significant place at the negotiating table, armed with the tools they need, including trade negotiating authority.

WTO Ministerial

As you know, the Seattle Ministerial Conference will serve as the kickoff for the new negotiations on agriculture and other sectors in the WTO. As the host country for this ministerial, the United States and its trade policies will be in the spotlight. Given the economic turmoil and technical barriers being experienced in many of our important export markets, the launching of new negotiations to further open markets has never been more important.

The United States has an unprecedented opportunity to lead these negotiations to a successful outcome and should play a central role in influencing the debate early regarding the structure of the negotiations. Specifically, the administration should take a stand now on a number of different issues, including what sectors will be negotiated in this next round and what approach will be used for the negotiations (formula approach versus request-offer, or some combination thereof). These negotiations are too important to agriculture, and other sectors, to let other WTO member countries dictate the negotiating agenda.

Objectives for the Next Round

Higher living standards throughout the world depend upon mutually beneficial trade among nations. We urge that trade policies be developed that promote the growth in world trade.

To this end, U.S. negotiators must comprehensively address high tariffs, trade-distorting subsidies, and other restrictive trade practices in the new round of negotiations on agriculture.

The American Farm Bureau Federation supports expediting action on the next round for agriculture in the WTO. Our market is the most open in the world. We cannot sit idly by while our competitors trade openly in our market, but deny us access to their markets on equal terms. We must begin the negotiations and conclude them as early as possible to put U.S. agricultural producers on a level playing field with the rest of the world. To this end, we have set a goal to complete the agricultural negotiations by the end of 2002 to ensure that our producers gain increased market access in a timely manner.

First and foremost, the next round of negotiations should encompass all sectors as a comprehensive, single undertaking. By this we mean that all aspects of the negotiation should be concluded simultaneously in order to get the best results for all sectors. The United States will make the greatest gain in the next round of trade talks if negotiations are concluded as a single undertaking without the possibility of an "early harvest" or provisional implementation of early agreements. As you are aware, this issue has attracted significant attention in recent weeks given the administration's desire to achieve early tariff reductions for the eight Asia Economic Pacific Cooperation (APEC) sectors. We are very concerned about concluding early results for any sector recognizing that doing so will require a substantial devotion of resources to accomplish and will likely sidetrack the important structural issues that need to be addressed in order for this round to be completed in three years.

Second, we must call for the elimination of export subsidies by all WTO member countries. Our producers cannot compete against the mountain of spending by our primary competitors, like the European Union (EU). The EU spends in excess of eight times the level of domestic and export subsidies as the United States. Data from the U.S. Department of Agriculture and the European Commission show that total EU domestic and export subsidy expenditures for 1997 exceeded $46 billion compared to $5.3 billion spent by the United States. This level of spending distorts world trade and undermines U.S. producers' competitiveness in vital export markets.

Third, we believe that the new negotiations must include a recommitment to binding agreements to resolve sanitary and phytosanitary issues based on scientific principles in accordance with the WTO Agreement on Sanitary and Phytosanitary Measures (SPS Agreement). The provisions of the Uruguay Round SPS Agreement are sound and do not need to be reopened. The United States has successfully litigated several SPS cases that underscore the strength of this agreement. Cases have now been tried that set precedence in each of the three areas of the SPS Agreement. For example, the successful U.S. litigation of the EU beef ban strengthens the provisions regarding human health, the Japan varietal testing case underscores aspects regarding plant health, and the Australia salmon case bolsters the animal health text of the SPS Agreement. Any change to the SPS Agreement would expose the sound scientific principles now embedded in its provisions--changes that the EU would relish making to restrict rather than facilitate trade.

Fourth, the next round should result in tariff equalization and increased market access by requiring U.S. trading partners to eliminate tariff barriers within specified time frames. Our producers compete openly in their own domestic market with their foreign competitors, but are shut out of export markets due to prohibitively high tariffs. We need to correct this imbalance for our farmers and ranchers. All WTO member countries should reduce tariffs, both bound and applied, in a manner that provides commercially meaningful access on an accelerated basis.

Fifth, we must impose disciplines on state trading enterprises (STEs) that distort the flow of trade in world markets. Every effort should be made to craft an agreement that sheds light on the pricing practices of STEs and ends their discriminatory practices. Our producers have lost too many sales in third country markets due to the noncompetitive, nontransparent operations of STEs.

Sixth, we must ensure market access for biotechnology products produced from genetically modified organisms (GMOs). Significant delays and a lack of transparency in the regulatory approval process for GMOs in the EU have heightened the need for science based, transparent provisions governing bioengineered products. We cannot continue to be held hostage to the EU's nontransparent, discriminatory procedures that deny market access for our GMO products. All WTO member countries should reaffirm the principles of the WTO SPS Agreement, provisions which we believe cover trade in GMOs. Most importantly, the United States should not agree to a working group on bioengineered products in the WTO. The formation of such a group will derail the resolution of trade issues concerning bioengineered products and will not likely result in a consensus approach.

Next, we must end the use of all nontariff barriers to trade. There are several practices that have been employed by our trading partners to shut out competition in their domestic markets. These practices include, but are not limited to, domestic absorption requirements, discriminatory licensing procedures, price bands, and the administration of tariff rate quotas that prevent true competition. Provisions to address these and other nontariff barriers should be written into the new agreement on agriculture.

Finally, our negotiators must make changes to trading practices that would facilitate and shorten dispute resolution procedures and processes. The process for a WTO dispute settlement case typically runs three years, if the WTO ruling is implemented. We have seen in both the EU banana and EU beef cases that compliance is not always assured. Our trading partners cannot be allowed to unilaterally weaken the very principles that we negotiated in the Uruguay Round Agreement. The expedited dispute settlement process for perishable agricultural products outlined in the WTO Dispute Settlement Understanding should be modified to allow the procedure to be used if the aggrieved party requests it. Currently, the WTO requires that both parties in a case agree to use this procedure. As a result, it has never been used. This simple change should be enacted promptly. Doing so would address the fundamental problem of a dispute settlement procedure that requires too much time and prevents market access for several marketing seasons before a resolution is reached.

Concerning environment and labor issues in the upcoming trade negotiations, we believe that such matters should only be addressed in a manner that facilitates rather than restricts trade. We cannot allow the economic prosperity of our nation, and that of our agricultural producers, to be used as a weapon for nations that disagree with our values.

In summary, we support liberalization in global agricultural markets that will result in true reform of the current trading regime and bring about fair trade for our producers. The United States has a tremendous opportunity before it to shape the agenda for the next round and should seize this chance to demonstrate to the world that we are committed to opening new markets for U.S. agriculture. This is our opportunity to address the trade imbalances that hamper our domestic producers, from both an import and export perspective. Given the economic turmoil being experienced in many of our important export markets, the launching of new negotiations to further open markets has never been more important.

SEATTLE ROUND AGRICULTURAL COMMITTEE (SRAC)
1999 WTO POLICY STATEMENT

The U.S. agricultural and food sector supports the launching of a comprehensive round of multilateral trade negotiations that includes all goods and services, continues to reform agricultural and food trade policy, promotes global food security through open trade, and increases trade liberalization in agriculture and food. Policy and process objectives should include:

* Conclusion with a single undertaking that encompasses all sectors (i.e., no early harvest).

* Adoption of the Uruguay Round framework for the 1999 agricultural negotiations to ensure that there are no product or policy exceptions.

* Establishment of a three-year goal for the conclusion of the negotiations (by December 2002).

* Elimination of export subsidies and tightening of rules for circumvention of export subsidies.

* Elimination of nontariff barriers to trade.

* Transitioning countries to provide an increasing portion of total domestic support for agriculture in a decoupled form, as the United States has already done under the FAIR Act.

* Commercially meaningful reduction or elimination of tariffs (bound and applied) and mutual elimination of restrictive tariff barriers on an accelerated basis. In addition, the administration of tariff-rate quotas (TRQs) must be improved.

* Elimination of State Trading Enterprises (STEs) or the adoption of disciplines that ensure operational transparency, the end of discriminatory pricing practices, and competition for STEs.

* Maintaining sound science and risk assessment as the foundation of sanitary and phytosanitary measures.

* Ensuring market access for products of biotechnology, with the regulation of these products based solely on sound science.

* Accelerating resolution of trade disputes and prompt enforcement of panel decisions.

* Providing food security for importing nations by avoiding sanctions on food exports combined with a WTO commitment not to restrict or prohibit the export of agricultural products.

* Addressing labor and environment issues in a manner that facilitates rather than restricts trade.

* Establishing WTO rules for developing countries to graduate to full WTO obligations using objective economic criteria.

Ag Processing Inc.
Agricultural Retailers Association
American Cotton Shippers Association
American Crop Protection Association
American Farm Bureau Federation
American Feed Industry Association
American Potato Trade Alliance
American Soybean Association
American Sugar Alliance
American Vintners Association
Animal Health Institute
Archer Daniels Midland Company
Biotechnology Industry Organization
Bryant Christie Inc.
Bunge Corporation
CF Industries, Inc.
California Table Grape Commission
Cargill, Incorporated
Chicago Board of Trade
Chocolate Manufacturers Association
Coalition for a Competitive Food and Agricultural System
ConAgra, Inc.
Continental Grain Company
Corn Refiners Association
Distilled Spirits Council of the United States
Farmland Industries, Inc.
Florida Phosphate Council
Food Distributors International Association
Gold Kist, Inc.
Grocery Manufacturers of America
Independent Community Bankers of America
International Dairy Foods Association
Kraft Foods
Louis Dreyfus Corporation
Monsanto Company
National Association of Animal Breeders
National Association of State Departments of Agriculture
National Association of Wheat Growers
National Barley Growers Association
National Cattlemen's Beef Association
National Chicken Council
National Confectioners Association of the United States
National Corn Growers Association
National Council of Farmer Cooperatives
National Cotton Council of America
National Food Processors Association
National Grain and Feed Association
National Grain Sorghum Producers Association
National Grain Trade Council
National Grange
National Milk Producers Federation
National Oilseed Processors Association
National Pork Producers Council
National Renderers Association
National Sunflower Association
National Turkey Federation
North American Export Grain Association
North American Millers' Association
Northwest Horticultural Council
Pacific Northwest Grain and Feed
Pet Food Institute
Pioneer Hi-Bred International, Inc.
Ralston Purina Company
Snack Food Association
Sunkist Growers
Sweetener Users Association
The Fertilizer Institute
The IAMS Company
Transportation, Elevator, & Grain Merchants Association
USA Poultry & Egg Export Council
USA Rice Federation
U.S. Apple Association
U.S. Canola Association
U.S. Grains Council
U.S. Dairy Export Council
U.S. Meat Export Federation
U.S. Poultry & Egg Association
U.S. Rice Producers Association
U.S. Wheat Associates, Inc.
United Egg Association
United Egg Producers
Washington State Potato Commission
World Perspectives Inc.

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