Remarks by Deputy Secretary Richard Rominger Agricultural Conference -- Sponsored by the Irish Farmers' Journal Dublin Castle, Dublin, Ireland -- March 26, 1998 Thank you, John Duggan, for that kind introduction. My thanks to MattDempsey, Editor of the Irish Farmers' Journal, for hosting this forum and giving me the opportunity to participate. President McAleese, Commissioner Fischler, Minister Walsh, Chairman Osorio, distinguished representatives from agricultural industries across Ireland and Europe, it's a pleasure to be here. President McAleese, just over a week ago more than 40 million Irish-Americans -- and millions more who claim to be Irish -- celebrated St. Patrick's Day in their customary heartfelt reaffirmation of the historic ties that bind our nations. From neighborhood restaurants and pubs across America, to New York's 5th Avenue, to Boston's South Side, all of America was Irish for a day. I'm proud to say Americans used the day well, not only to revel, but to reflect on the Irish-American bond. And President Clinton was no exception. Morning and evening, the White House received Taoiseach Bertie Ahern, who presented the President with the unifying symbol of shamrock. The Prime Minister and the President spoke eloquently about the Irish stamp on the American character, the vast contributions that have enriched U.S. culture, profited our economy, and co-authored the heritage and development of our nation. Certainly we've come a great distance since hundreds of thousands of Irish men and women found a new home in the United States in the 19th century. But we haven't come so far since 1847 -- the worst year of the Great Famine, an anniversary you observed last year -- that we can afford to forget that our deepest tie, the single link that most profoundly connected our people to a shared future, was agriculture. We haven't come so far that our crops aren't still attacked by disease like late potato blight fungus, which is back with a vengeance. And we haven't come so far that our farmers don't need their governments to help them prepare for the complex trade agenda of the 21st century. Scientists and geneticists of the U.S. and the EU are working innovatively and reciprocally to fight potato blight, an old problem with a virulent new twist. It's the position of the United States that our farmers need farm policy that's equally aggressive and contemporary in its approach to the risks and opportunities that will mark world agricultural markets. As we stand on the bridge between the centuries, decisions made by the U.S. and EU countries -- as great agricultural and trading nations -- will direct the evolution of world trade. Reform is a weighty responsibility, not for the cautious. It's our hope that the U.S. experience of the past two years will provide some guidance and insight as Europe considers its own Common Agricultural Policy. UPDATE ON THE FARM BILL With the historic Farm Bill of 1996, the United States' goal -- to paraphrase our great Irish-American President John Fitzgerald Kennedy -- was "to influence history instead of merely observing it." We laid out several major purposes, but they all tie back into one major theme: for American agriculture to thrive and prosper in the next century -- not just survive -- we need to expand export opportunities and provide our producers the means to tap into them. In terms of the mechanics, we recalibrated America's farm programs so they're in sync with a freer-market scenario. Government phased out costly programs that micro-manage supply and demand. Our actions always remind me of the story about Ezra Taft Benson, who was Agriculture Secretary back in the 50s. Benson wanted farmers to get rid of dairy cows that were poor milk producers, because he was cutting government support prices for milk." From now on," he said, "the only thing a farmer is going to get from those cows is companionship." Instead of income supports tied to production, we're now paying gradually declining market transition payments to ease farmers into a freer agricultural marketplace by the year 2002. U.S. producers like the planting flexibility provisions. They understand them and the profit opportunities they offer. More than that, they're taking advantage of them. But there's something deeper going on here than the benefit of higher initial payments. By all indications, U.S. farmers are "on" to the Farm Bill, and that's extremely gratifying to us. I want to tell you about an incident that happened recently. The Department's Chief Economist came to me, enthused about developments at a farm conference. The speaker before him had asked the audience, "How many here planted more soybean acreage in 1997 than in 1996?" Hands shot up. "How many will plant still more in 1998?" Even more hands shot up. Our Chief Economist was "astounded," in his own words. Under our old program, soybean acreage was shrinking. Now that producers are making their own decisions, they planted the third highest soybean acreage on record in 1997. Some say this year will be the highest ever. Their decisions are grounded on market prices and crop rotation needs -- good for the pocketbook, good for the soil, and good for market-savvy entrepreneurs. In addition to phasing down price supports, we used the 1996 Farm Bill to conduct the greatest revamping of our conservation programs in history. Through our Conservation Reserve Program, we're moving our sights beyond just an acreage set-aside program, beyond simply production agriculture to a truly sustainable agriculture. We're putting our most productive farmland to use while protecting our most highly erodible land. This approach goes to the heart of sustainable development, the idea that our farmers can do what's best for the environment and still realize a profit. We're convinced that none of us -- anywhere on the globe -- will know true food security without this kind of serious commitment to worldwide sustainable development. So we structured this farm bill with the idea that it would be comprehensive and lay a strong foundation for the future. At this time, we're seeing that when markets are strong, the farm bill works and works well. It's certainly been bolstered by President Clinton's economic plan which has given us a strong economy with low interest rates and high employment. All of this helps farmers. But President Clinton was prescient back in 1996, when he signed the legislation. While he praised the opportunity and flexibility it would hand farmers, he expressed concern about the lack of a safety net. Now, with shaky Asian markets taking the edge off our recent record highs, a rampaging El Nino doing damage from coast to coast, and lower commodity prices, global agriculture markets may not be quite so strong this year. We're closely watching the impact on our farmers. Grain prices that were record-high in 1996 were down in '97. Now they're down even more. Starting next week, Secretary Glickman and I will tour the country. We'll hold forums across the United States, taking the pulse of our farmers. Now that we're two years into this new farm policy, we want their help in redefining just what constitutes an appropriate, effective safety net for the next century. We want to know how their Department of Agriculture can better serve them. We expect to hear a lot from producers about cushioning risk and crop insurance, which happens to be agriculture's top legislative proposal right now on Capitol Hill. Removing government interventionist tools means exposing farmers to greater risk. Our producers are fully aware of this. But they're also aware that the United States' model doesn't leave them to shoulder risk alone -- whether it's El Nino or weak markets. Our government and private sector now offer revenue insurance. Not only can our farmers protect themselves against catastrophic weather, they can now buy insurance against catastrophic prices as well -- and increasingly, they're taking advantage of this strong, new risk management tool. FASHIONING THE GLOBAL ORDER: AGENDA 2000 Crop insurance is just one tool we're taking great care to provide in agriculture's newly-constructed safety net. Another -- critically important to U.S. competitiveness and profits -- is the range of our actions that are focused on protecting, promoting and expanding America's export opportunities. The key to strong future farm incomes -- in America and around the world -- will be the extent to which we link our producers with a fair and strong global economy. If I have license to take this discussion one step further, I would say to Europeans -- now in the process of reforming the Common Agricultural Policy: our transition to market orientation is a success. But it wasn't undertaken in a vacuum. Clearly the same budget impetus that led us to abandon many government inefficiencies was a prod for farm program reform. And our considerations were philosophical as well. The United States recognized that our commitment in the World Trade Organization to more free and fair global agricultural trade meant that we could no longer justify government programs that were tantamount to massive interventions in the marketplace. We hope the European Union will come to this same philosophical frame of mind. We urge them to move boldly toward greater market orientation and a more open world market. Last week, Commissioner Franz Fischler and the EU's executive body guided Agenda 2000 in that direction. We note their leadership and salute their actions. By moving to reduce subsidies for certain commodities, the EU expanded Agenda 2000's focus on economic efficiency and global competitiveness. Every move to incorporate greater flexibility in the internal farm programs of the EU is another step toward market orientation. And the more market orientation Agenda 2000 brings to Europe, the better it will serve Europe and the global trading environment. True market orientation requires us to boldly move toward eliminating agricultural price supports, production and export subsidies and all farm income supports linked to production. Governments need to get out of the way but help farmers respond, with freedom and flexibility, to world food demand. Having said that, I want to acknowledge the reservations of the smaller EU nations about the implications of CAP reform -- and possible eastward expansion -- on their agricultural economies. Ireland, like Spain, has a tremendous stake in these developments. I want to commend the Irish Ministry of Agriculture, Minister Joe Walsh, and those in the private sector, for working with the Food and Agricultural Policy Research Institute at the University of Missouri. By building your analytical capability, you'll put yourselves in a strong position for the upcoming round of trade talks. WTO 1999: THE U.S. PERSPECTIVE Minister Walsh, like Commissioner Fischler and U.S. Secretary Glickman, is recently back from the OECD meeting in Paris where leaders set the tone for further reform as we head toward the 1999 round of trade negotiations. The U.S. perspective remains focused, first and foremost, on the biggest possible picture ... the fundamental purpose of the World Trade Organization: to put behind us politicized trade battles that disrupt economc growth and international relations; to put behind us mutual and spiraling trade spats that are irrelevant to the quality and safety of our products; and to put in front of us a community of nations producing and trading in ways that economically benefit our producers and foster world food security and economic growth. Despite the outstanding results from the Uruguay Round Agreement and NAFTA -- landmark achievements on the path to new opportunities and world trade -- our position is that now is the time to roll up our sleeves. The hard work is just beginning. The United States will continue to pursue an active, aggressive, ambitious trade reform agenda. We appreciate the fact that the ministers at the OECD session pledged further substantial and progressive reductions in farm subsidies and import protections. But we also recognize that achieving that commitment is a long-term process, and difficult negotiations lie ahead. In the United States, we're laying the groundwork for those negotiations, with special emphasis on issues involving technical and regulatory trade restrictions. From the U.S. perspective, tariffs need to come down substantially. Agricultural tariffs worldwide still average about 56 percent. U.S. tariffs, in contrast, average about 5 percent -- a startling and disturbing inequity. High tariffs not only raise the price for U.S. commodities, but can effectively shut them out of markets. We also feel that exporting countries should eliminate or make additional cuts in export subsidies. The EU's subsidy program, for example, is extensive -- budgeted at more than $6 billion last year. This high level of EU subsidies makes a very strong case for further negotiations. Our own wheat producers ask us to use our Export Enhancement Program, especially in a year like this when they're afraid that a short U.S. wheat crop could jeopardize U.S. competitiveness. We feel for now that a 50 percent increase in wheat stocks should help us maintain, even expand, U.S. wheat exports next year. As for the long-term, we will use the EEP as Congress directed us -- for trade policy, as a response to others' subsidies, and as a tool for market development. We'll use the Program when we believe it's the right tool to meet the right goal under the right circumstances. In the upcoming trade round, the U.S. will pursue barriers that constitute subtle and elusive obstacles to free, fair and open trade. One of our former secretaries of state, John Foster Dulles, was fond of saying that he felt he was making progress if today's problems were different from yesterday's. By that standard, we're making enormous strides. Some of the greatest tensions in the United States-European Union relationship now center on issues of food safety and the rightful place of science in international trade. If these issues and tensions are permitted to escalate, we risk jeopardizing our shared long-term trade agenda. The United States will continue to press for science-based sanitary and phyto-sanitary trade regulations. As Secretary Glickman has said repeatedly, we'll hold all countries to their commitments under the World Trade Organization. Internal politics and other unjustified trade disruptions are unacceptable. The landmark WTO ruling in the EU hormones case backs up overwhelming scientific evidence that these hormones present no risk to human or animal health. The EU's own scientific reviews have confirmed this. The dispute settlement process has had its full run, and the U.S. will not tolerate any action short of full compliance with WTO obligations. This matter is critical to our beef industry, which loses about $200 million a year in trade and has waited for ten years for access to the European market. And it's critical to the future and integrity of the Sanitary and Phytosanitary Agreement. If the EU -- or any major player -- can simply walk away from the SPS disciplines, then the integrity of the entire process is put at risk. Clearly, in the U.S. view, the hormone ban -- along with specified risk materials and EU approvals for new biotech products -- point up the need in the upcoming trade round for clearly defined rules on technical barriers. Biotechnology is one of the more positive points in the EU-U.S. relationship. Just last week, the EU approved three U.S. varieties of genetically-modified corn for commercial use in the EU. We're pleased, though we're still urging the EU to work out a more efficient approval process. And we're encouraged that we're making progress on achieving a science-based resolution of our differences. Although we're concerned that proposed EU labeling requirements could affect our trade, we're pleased that the EU doesn't seem to be on a path that would require segregation of biotech products . But we're watching carefully to make sure that the final outcome of the labeling policy isn't tantamount to segregation. Matters related to biotechnology will be among the most serious decisions we make for our world as we head into the new century. The United States regards biotechnology as our greatest hope. It offers the potential for dramatically increased crop yields, fewer pesticides and greater nutritional value. In the process, there's less stress on fragile lands and forests -- all factors that put us on the road to realizing world food security. I have personally assured U.S. industry that its government is working hard to gain foreign market acceptance of U.S. grain from transgenic seed. But I've also cautioned them that our task will be impossible if foreign approval processes are ignored, or seed is marketed without necessary consideration to the requirements of other countries. The integrity and comprehensiveness of the U.S. approval system for GMOs should provide a good basis to assure that products we approve will be approved elsewhere. While we lay the groundwork for negotiating these technical matters, it's critical to keep in mind one single overriding point. The process of global trade reform is exactly that -- a process. It's a continuum that must not be allowed to stop. There can not, must not be a pause. Technically, an interruption is possible if negotiations on new tariff and subsidy reductions aren't completed by the year 2001. The Uruguay Round was a beginning, a first step, which will be fully implemented by the end of the year 2000. Any gap in the process risks the momentum and completion of full agricultural trade reform. We have too far to go and the issues are too serious to permit this process to become intermittent. Our WTO trading partners have agreed to continue the reform process. This will ensure that liberalization moves forward and is re-charged with new issues that make up the next trade agenda -- from State Trading Enterprises to phony science. This is the next generation of concerns that the U.S. is focusing on. Our motivation is the knowledge that the choices we make will affect the future of our farmers ... our economies ... our ability to feed growing world populations while protecting the environment. Agriculture remains among our deepest ties and connects our nations -- in ways more complex and profound than ever -- to a shared future. From a fragment of a potato gene that may hold the promise of world food security, to trade negotiations that offer the potential for international harmonization, we're linked by the needs and concerns of contemporary agriculture. As we work them out, on principle and in good faith, we'll make the promise of the new global economy a reality for our farmers and our nations. Thank you. #