Thank you very much. I appreciate the opportunity to offer a few thoughts today. And I look forward to the opportunity to take some questions.

Let me also, if I might just acknowledge how honored I was this morning to meet with Secretary Cárdenas and Secretary Sojo and other members of the President's leadership team. I want you all to know that we had a good morning of discussions. We covered a wide range of topics, and it's also appropriate for me to express my appreciation for the great hospitality that we've enjoyed during our visit to Mexico.

Let me also say that this is an honor for me to speak at this luncheon. I hope you enjoyed the presentation of Joe Glauber. He is really one of our best economists at USDA.

Because Mexico is such an important partner for the United States, I felt it was important to comment, to meet here with new leaders and exchange views on key issues that we presently face. It's equally important to engage all of you who work every day to build a stronger agricultural sector here in Mexico.

Now I do want you to know that I come here with the knowledge that we've had a very good working relationship with Mexico for some time. One of my main messages today is to stress our desire to maintain and build upon that relationship; sustained and constructive engagement between our countries has never been more important than it is today.

One important way we have found to enhance our bilateral trade relationship is through the U.S./Mexico Consultative Committee on Agriculture (CCA). This morning we signed an agreement to renew the CCA.

Since it was formed in 2002, our agricultural exports to each other have been growing close to $1 billion per year. This arrangement has helped us prioritize and manage the differences that inevitably arise.

I have said a number of times today that during any given year, billions of dollars of trade occur between our two countries. On any given day millions of dollars of trade occur, and from time to time there are going to be issues, issues that we believe can be addressed and solved.

We're very confident that the renewed CCA will help facilitate our bilateral trade relationship and deal with these issues.

Now if I might offer a few thoughts on NAFTA. As we discussed this morning, I believe we are in agreement that the North American Free Trade Agreement has been a very positive force for our respective agricultural sectors. Since its implementation, we've witnessed a dramatic growth in our two-way trade in agricultural products.

Mention was made of the fact that we have enjoyed record numbers in terms of our exports. Let me point out to you that our trading partners have enjoyed record numbers in terms of their imports to the United States, and let me also share with you that you would need only drive across our border to be in the country that has the largest trade deficit in the history of mankind. It is enormous.

Our people are very willing to buy products from other parts of the world, as evidenced by the numbers. While the United States remains Mexico's top export market, for the United States, Mexico is now our number two market, and is only second to our other NAFTA partner which is Canada.

In 2006 we saw yet another record in our two-way trade of agricultural products with the value of that trade for the first time topping $20 billion. This is really very remarkable when you consider that the value of that trade was just over $6 billion in the year preceding the implementation of NAFTA in 1994. And although there is some difference, quite honestly, the equality between our two countries in terms of trade in agricultural products simply can't be ignored.

I believe without question that the expansion in trade and market integration has been a positive force for the farm sectors. This is a trend that I believe has started and can continue in the future.

I believe there are two key reasons why NAFTA has been so valuable to our countries. The first is a comprehensive agreement with respect to agriculture. This has provided farmers and ranchers and processors with the greatest possible potential to identify and take advantage of new export opportunities. In tandem with that, the agreement also provides a basis for adjusting the competitive pressures that do occur in some sectors.

Secondly, and something I consider of critical importance, NAFTA has provided a clear and certain path to liberalized trade. This very predictable framework has been essential in attracting new investment, technology and talent that is necessary for sustained economic growth in what we all recognize to be a very global marketplace.

Can anybody doubt for a moment that that investment simply would not have been there if there were uncertainty at any point in this trading relationship? Businesses will not invest on a platform of uncertainty. Today we have U.S. corn feeding Mexican hogs that are being shipped to Japan. Contemplate that for a second. We have a tomato industry that depends on the seasons of each of the NAFTA partners to just meet the market demand. We have consumers eating products that they hadn't even heard of before NAFTA and enjoying an abundance of produce throughout the year as we take advantage of the varying climatic conditions in our three countries.

During this time, Mexico has become a global leader in agricultural trade. Mexican producers and ranchers now export their products to a growing number of countries including a demanding Asian market. And Mexico leads the world in the export of mangos and avocados, products that distinguish your nation as a high-quality supplier.

But trade, ladies and gentlemen, is just one aspect of NAFTA. NAFTA has opened up opportunities for other relationships, to share technologies, to work cooperatively to eliminate threats to agriculture in all of our countries. Together, we've eliminated Screwworm from North America; we have greatly diminished the threat of Mediterranean fruit fly. The committees and forums we've established in NAFTA have helped us to develop the confidence in each others' institutions that have led to a common approach in handling bovine spongiform encephalopathy, BSE.

We have such confidence in each others systems, that when your food safety officials say a meat processing plant meets the standards that our laws demand; do you know what we do? We accept that judgment and register that plant as an authorized export facility.

And you extend that same confidence to our officials. Can anybody imagine that that would have been possible without NAFTA?

We're jointly monitoring wild birds and have developed a joint plan to ensure rapid response in the event of an outbreak of avian influenza, so we can avoid the devastation to our poultry industries that we've seen in so many parts of the world.

Together, we're tackling the difficult issues of invasive species that threaten our native habitats. And just two weeks ago we dispatched our experts to work with you to control a pest that threatens the cactus industry.

For years, USDA's Forest Service has cooperated in training programs and fire control. And various USDA agencies are working cooperatively in conservation programs to improve soil and water use.

These are the things that government can do to help the ag sector; yet little of this existed before NAFTA was signed. And for a moment can we believe that it ever would have happened without NAFTA?

The transition to free trade in agriculture under the NAFTA agreement is now nearly complete. And as I emphasized to you, Secretary Cárdenas this morning, the United States remains fully committed to the implementation of NAFTA and its associated provisions. Those who see the benefits that NAFTA has brought need to bring a louder voice to the debate, demonstrating the benefits we've reaped by entering into this really historic agreement.

The positive results achieved over the past years clearly illustrate that our task is to build upon these achievements, not undermine them. We have to move forward, not backward.

There is no question that NAFTA has meant some adjustments in products and industries and in some localities. Industries that have moved to Mexico have caused temporary hardships in our cities. There's a lot of criticism for that. But the challenge is to find ways to ease those occasions or to evaluate and retool those sectors rather than try to protect an industry that maybe isn't competitive.

The North American Competitiveness Council established under the Security and Prosperity Partnership has outlined some areas where our countries can work together. We need to build on that work in all segments of agriculture to benefit our countries.

Let me if I might now turn my focus just briefly to trade capacity building. The United States has met with Mexico on many occasions to discuss technical matters relating to the implementation of NAFTA and to explore cooperative efforts to ensure the benefits of trade liberalization. As noted earlier, we have in fact carried out a broad range of activities and initiatives aimed at smoothing the transition to free and open trade under the agreement.

Since '05, the United States has invested about $20 million in these programs that address problems facing Mexican agricultural producers and processors. Throughout Mexico a number of U.S. government agencies and universities and private sector groups are working to increase ag production, improve market information systems, increase the efficiency of commodity storage and transportation, expand food, and feed processing capacity and manage natural resources, and to enhance ag education and research.

Now, if I might just mention the Farm Bill. I know that all of us are concerned with providing a safety net for our farmers and ranchers. On the U.S. front, we're involved in a major discussion on the next Farm Bill. Like Mexico, U.S. agriculture is an export-sensitive industry and its future will be determined by forces of global supply and demand and the competitiveness of our products.

It's vital for our experts to have a bold, comprehensive farm policy that will help ensure our place in the global food and ag markets. Just after I became U.S. Secretary two years ago, we went directly to farmers and ranchers and held listening sessions. Many of the ideas have been incorporated into our proposals. We've been mindful of the WTO challenges to our programs, and propose using more of our resources in green box programs, non-trade-distorting.

The proposed framework provides a safety net while allowing producers to respond to market conditions. These proposals arose from the needs and concerns of our farmers. But I believe these concerns and problems are shared by other producers around the world. That's why I share them with you today.

First and foremost, we believe the United States must move forward with a farm program that's market-oriented. Here are some key components.

We want a revenue-based commodity payment program that responds to actual conditions. We would protect our natural resources by increasing acreage for protected wetlands and funding environmental programs. In our quest to reduce dependence on petroleum, we'd provide funding for research into biofuels and renewable fuels.

In the past, most of our farm programs were devoted to five traditional crops. We want to broaden that, not with trade-distorting subsidies, but in research, development, market promotion. We're going to enhance the U.S. presence with international standard-setting bodies.

We also want to continue to assist our producer associations in marketing and promotional activities. All of this is incorporated in our proposals.

With this framework, we believe we can support our producers, conserve our natural resources, support renewable energy with minimal trade-distorting impact.

Now the final shape of the legislation will be determined later in the year by the U.S. Congress, but we are actively engaged in the process.

I would be remiss if I didn't wrap up my comments today by mentioning Doha. I believe very, very strongly in this process. We are absolutely committed in the United States to do everything we can to bring an agreement to the Doha Round of trade negotiations. If you study any economic study that has ever been done on Doha, you will see that the conclusion is that the benefits will come from increased market access, not just for the developed countries, but for developing countries and least-developed countries.

In fact, studies indicate that millions of people can be lifted out of poverty. That's what we want to achieve in getting a successful Doha Round. We are committed to that process.

Again, thanks for your patience and your hospitality. It's been an honor to be here with you today.

[Applause.]