"The U.S.Approach to Agriculture in a New Round"XIX Meeting of the Cairns Group Release No. 0350.99 Remarks As Prepared for Delivery by Secretary of Agriculture Dan Glickman "The U.S. Approach to Agriculture in a New Round" XIX Meeting of the Cairns Group Buenos Aires, Argentina -- August 28, 1999 "I want to commend you for your continued leadership in confronting the challenges that face our countries. Opening markets for agricultural and non- agricultural products can create wealth for all our nations. Political freedom also relates to economic opportunity. Your efforts have been critical in moving forward a strong agenda on behalf of farmers and ranchers around the world. The Cairns group is an important U.S. partner in international trade for agricultural products and our efforts will be particularly significant given the highlighted role agriculture is expected to play in the next trade round. "With me today from USDA are Tim Galvin, Administrator of the Foreign Agricultural Service, Dr. Isi Siddiqui, my Special Assistant on Foreign Agriculture, Ken Roberts our Agriculture Minister in Geneva, and Philip Shull, our Agriculture Counselor here in Buenos Aires. They do a terrific job working with our trading partners all over the world to maintain a steady flow of goods. "As we all know too well, these are very difficult times for our farmers. Nearly four straight years of record production worldwide; the Asian financial crisis; problems in Russia and elsewhere, have all dragged commodity prices, in some cases, to a 30-year lows. The anguish and doubt among farmers in the United States is as great as I have ever seen it during my time as Secretary or previously, as a Member of the U.S. Congress for 18 years. And I know that each of you is facing similar problems with your own farmers and ranchers. "As we embark on the next round of WTO talks I think it's important to keep in mind the importance of trade in the larger picture of relations among nations. Free, fair, and open trade contributes to free and open communication which leads to peace, prosperity, stability and democracy. The nations represented in this room have a lot to be proud of as we close out this century. This is a record we need to build on. -more- -2- " In my four years as Agriculture Secretary I have seen what trade means to agriculture's bottom line. Early in my tenure, we saw record agricultural exports in the United States reach $60 billion in a single year. But in the last year and a half, we saw the bottom drop out -- and that has been true for farmers worldwide. As record production has met with collapsing demand, agricultural prosperity evaporated. "As we all know, the key lesson, from both the good and bad periods of the last four years, is how significant trade is to agriculture's bottom line in all of our countries. If our economies are to continue to grow and prosper, then we must look for new markets -- and that means we need an open trading system. Look at the facts: Since 1960, tariffs worldwide have fallen by 90% while global trade grew 1500%. World economic production has quadrupled while per capita income more than doubled. "We in the United States have a more immediate example to cite. In 1998, as U.S. farm exports worldwide declined by 6 percent, our exports to our partners in the North American Free Trade Area Canada and Mexico grew by 11 percent, to record levels, as did their exports to the United States. "In his annual State of the Union address, President Clinton called on the nations of the world to tear down barriers, open markets and expand trade. He also added that, "we must ensure that ordinary citizens in all countries actually benefit from trade." "Nowhere is this more important than in agriculture. Farmers do some of the hardest, riskiest, most important work. And, around the world today, their difficulties should remind all of us how important a robust agricultural sector is to our quality of life. Because of the volatility and unpredictability of agriculture, because we want to assure a reliable food supply, we want to do what we can to make sure that farmers have the opportunity to survive, and hopefully to prosper. "I recently traveled through several states crippled by severe drought, in some cases the driest it's been in over 100 years. Difficult times, such as those we are facing with depressed farm prices and drought in the U.S., obligate the U.S. Government to address the needs of our farmers. That is exactly what we are doing with our emergency relief efforts in the United States. We cannot ignore the human side of food production, and we must do what we can to give farmers and ranchers the tools they need to cope with the increasing volatility in world agricultural markets. "I am particularly concerned about the ability of smaller, less well- capitalized producers to stay in business during rough times and we should do everything we can to help these farmers and ranchers. To the extent we can, we will ensure that the aid has minimal impact on trade. "To their credit, the countries in Asia didn't close markets during the Asian financial crisis when 40% of the world's economies stumbled badly. Rather than a wave of protectionism, reason ruled the day and allowed for special trade and financial measures to help different sectors and countries. And that's why, in the United States, we will honor our commitment to the world trading system and remain well within our subsidy ceiling. In fact, we are doing everything possible to find the least trade-distorting mechanisms to help support farm income during this time of need. -more- -3- "The Uruguay Round of the WTO was a giant step forward for trade setting the stage for a broader and deeper WTO that will include more countries and a stronger move away from isolationism and protectionism. It's time to build on that success. "So we look at these upcoming negotiations, not as an adversarial process, but as a joint venture -- where, despite our different perspectives, we can work together toward the common, mutually beneficial goal of an equitable world trading system. "To do this, countries will have to change the way they're used to doing business and accept that some of their traditional practices and internal systems will have to adapt. "For example, the United States and others are in a great struggle with other nations over acceptance of agricultural products of biotechnology. It is my belief that this situation will be resolved when consumers come to understand the benefits biotechnology has to offer and when they understand that the high food safety standards applied in the U.S. to other aspects of food production are applied to products of biotechnology as well. "At the same time, it is critical for the future of biotechnology that the food safety regulatory regimes contain the highest standards possible. These systems must be arms length from the industry that is developing these technologies so as to give consumers around the world the confidence they need to accept the resulting products. If consumers have no confidence in the new technologies, or the regulatory process, they will not use the products no matter how good they may seem. "I find it interesting that when it comes to pharmaceuticals, Europeans for example, have no problem with biotechnology that's because the benefits are clear and tangible to consumers, as are the risks of inaction. Our mission then is not only to ensure that new technologies such as biotechnology adhere to the strictest scientific principles, but that we demonstrate to consumers the safety and efficacy as well as the advantages of the products of these new technologies -- products that will have tangible benefits for consumers, lower use of pesticides, less water, more sustainable agriculture that will benefit the environment, and crops with higher nutrient values. "Despite the progress made in the Uruguay Round, there is much to do. Our goals for the next round, while easily stated, will not easily be achieved. "First, we need to eliminate export subsidies. Export subsidies depress world commodity prices, are costly, and discourage production by farmers who, in the absence of subsidies, would otherwise be able to compete on a level playing field. The EU, for example, carries out an extensive export subsidy program accounting for over 80% of global export subsidy expenditures. These high subsidies are particularly onerous for developing nations who often cannot compete with subsidized prices. "Another key objective of the United States will be to rein in the trade distorting practices of agricultural state trading enterprises. We will seek more discipline and greater transparency in the monopoly activities that these government-run entities engage in. It is my feeling that we need to look at all activities that WTO members feel distort markets or otherwise circumvent the fairness that the WTO process is trying to achieve. In an effort to achieve true balance, we are asking all countries, including our own, to look at the way they are doing business and to consider change. Change is hard. We know that. But it is essential. -more- -4- "Another major goal is to improve access to markets. It is disturbing that agricultural tariffs worldwide still average over 50 percent while in the U.S. ag tariffs are around 8%. "Another area where we can make further advances is by ensuring that tariff rate quotas are used in a manner that increases market access rather than restricting it. In the Uruguay Round TRQs were used to begin to open markets to products previously subject to very restrictive quotas. But TRQs can also have the effect of curtailing imports and impeding trade, depending on how they are administered. Now we have the chance to ensure that TRQs are actually trade-enhancing. "By and large U.S. producers recognize that progress was made under the Uruguay Round. But for U.S. farmers and ranchers, the true test of success in the next round will be whether the playing field is in fact leveled. For them success will be measured against the additional market access that U.S. products gain in foreign markets, and the level of producer support that continues to prevail elsewhere, but especially in the European Union. That's the test. As the world's largest agricultural exporter and 2nd largest importer - behind the 15 nation EU - the United States has a responsibility to show leadership but also an obligation to ensure our producers will not be asked to go it alone. That's an obligation that I take very seriously. "Let me just say as an aside that in June the United States trade deficit hit another record reaching $24.6 billion annualized that's over a $300 billion trade deficit. Our demand for imports has been a source of tremendous growth for countries around the world, especially in Asian countries that serve as key markets for many of the countries represented here today. "Looking separately at our agricultural trade with Cairns-member countries the United States actually imported $6 billion more in agriculture than our farmers and ranchers exported in 1998. "I also think we need to forcefully address the questions surrounding emerging issues such as biotechnology which I mentioned earlier. We want to ensure that the rules governing trade will maintain legitimate health protection, but all of us must do so without unnecessarily and arbitrarily blocking free and fair trade. And all nations must guard against using sanitary and phytosanitary measures as a disguise for trade barriers. I have found that there has been a tendency in some quarters to not recognize that non-scientific use of sanitary and phystosanitary procedures can be just as significant a trade barrier as high tariffs and direct subsidies. "Finally, we must ensure that all countries fully participate and benefit from the global trading system. Our experience tells us that countries whether developed or developing that are open to trade and investment with the world as a whole have generally been able to create growth, competition, and prosperity. Open trade in agriculture can relieve farmers in developing countries of the burdens imposed by protectionism and export subsidies. It can reduce the number of food insecure people by offering consumers reliable supplies of food at good prices. "These are ambitious objectives that will take some time to achieve. And while other countries express trepidation over the consequences of further action on trade reform, I think all of us here know that we should be far more concerned with the consequences of inaction rising world hunger, economic stagnation and global instability. The next trade round will not be a piece of cake. It will be tough and difficult. Agricultural issues will be the toughest, but I want to make clear that agriculture is key to getting an agreement signed. -more- -5- No country is pure when it comes to agriculture. "That being said, we look forward to having all countries at the table, ready to discuss serious negotiating proposals encompassing far-reaching reforms in agricultural trade that will enable us to build together a more stable, prosperous and food secure world in the 21st century. "Thank you." #