SEC. MIKE JOHANNS: "Well, thank you very much. It's great to be here. If I might just use a little speakers privilege and acknowledge that my wife Stephanie and the very best part of this team is also with me today. So it's always good to have Steph.

[Applause.]

"I tell a story about Steph. I had just given a state of state address in Lincoln a couple of years ago, and I thought I had done really well. You know I was all pumped up. And so making my way down the alley-way of the chamber, unicameral chamber, I'm shaking hands with senators, and I come upon this one senator, Senator Ed Shrock, and Stephanie-- when I was traveling Stephanie would oftentimes hang out, go to a movie with Ed and another senator. And so he mentioned to me-- he said, 'you know Steph and I, we're going out to a movie when you're gone next week.' I said, 'great.' I said to Ed, 'she's the funnest part of this team.' Ed looked at me and he said, 'I know.'

[Laughter.]

"But it's good to be here. Thank you for the introduction. Thank you, Bill, for hosting this event. We've been coming to the Rockies for years and years and years, and I don't know if I've ever seen it look so good. The moisture has been outstanding, and so it's been fun for us to be here for a couple of days."

BILL: "I thought you meant me looking good."

SEC. JOHANNS: "Well, you know, you look good too. So I do feel a bit nostalgic about being here because I had so many friendships in Western Governors. I really think this is the most effective governors organization in the land. They just do great work.

"When I was governor of Nebraska I was convinced that this was an effective group. My attitude about that hasn't changed a bit since I became Secretary. The perspective might be different, but the respect for this organization is very much there.

"I spent several months in the federal office that I hold. I would go so far as to suggest that in my judgment this group has had its influence with any group I deal with.

"Well, it's good to see you. In my job you have to be fleet of foot, and today is no exception. I thought maybe the best way for me to talk today would be to deal with the issue that we talked a lot about over the last months but maybe especially in the last couple of days, and that's BSE.

"I didn't come out here planning to talk on this, but after the events of late last week I thought well I better change the speech a little bit because all of the folks at the table here come from cattle country and you're going to go home and folks are going to say, what did the Secretary tell you about BSE? So I thought I'd better address that, and then I'm going to talk about trade issues.

"Well, where do I start? Today I would like to just simply take the subject head-on because I know it's critically important, and I want to make sure that you have the facts.

"I know that many of you do represent very strong cattle producing and processing states, and your constituents turn to you for accurate information. And I know we have Premiers here from Canada who of course are very interested in this issue also.

"I will be more than willing to take questions after I'm done, really on any topic. But this is a perfect opportunity for me to get started and offer some answers. So I'm going to walk through step by step what's occurred, what's next, and the very important role that each of you play in this issue.

"So let me start with a brief history, bring us all up to date. Since the USDA began an enhanced surveillance program for BSE in June of 2004 we've tested about 375,000 animals. And I might mention that these animals come from what we regard as high-risk population of cattle.

"Three of these animals in all that testing tested 'inconclusive' using something that we refer to as a 'rapid test.' So once we had that inconclusive on the three animals, USDA followed protocols and followed up by conducting a test known as IHC, which is internationally recognized as a method of confirming BSE. And in many countries, actually it's the preferred test for BSE, and in this country it is the test that is used overwhelmingly. I don't know the exact percentage, but this is the test that we use in this country. Again it's internationally accepted.

"All three inconclusive samples when subjected to IHC testing showed up negative. So let me fast-forward now to this year.

"USDA's Office of Inspector General, and that would be like an auditor in your organizations, has been reviewing BSE-related activities throughout the process and reached the conclusion that further testing was warranted. The Inspector General recommended that all three of these samples be subjected to a second internationally recognized test, and that second test was called the Western blot test.

"Last Friday evening we received the results of those tests. Again all three of those were tested; of the three samples two were negative. And one came back reactive. I'll talk a bit more about what that means.

"It is critically important to note that all three of these animals though were kept away from the food and feed supplies as the protocols dictated. The carcasses from the animals in question were incinerated, again just as the protocols dictate. So in other words, the safeguards worked. We were able to protect both human and animal health. They never found their way into the food or feed chain.

"So what we have really is a scientific pursuit. We know that there's no public health risk related to this case. And we know that the protocols were kept throughout. So the additional examination represents an effort to better understand the disease.

"Because of the conflicting results between the IHC and Western blot test, the USDA will send a sample from this animal to a laboratory in Weybridge, England. This lab is internationally recognized for BSE testing.

"We expect the results on that within about two weeks. That could give or take two days on either side. Regardless of the outcome, one thing is very clear, and again I emphasize our firewalls did work. We put in place a system of interlocking safeguards, not just one safeguard but many, to protect human and animal health from BSE. And the system performed as it should, as we hoped it would.

"The safeguards are extensive. The ban on specified risk materials, we call them SRMs, from the human food supply. This animal went to a facility that handles only animals that are not suitable for human consumption, and the remains were incinerated as I mentioned.

"Our feed ban is another safeguard that has been in place since 1997 and ensures that a disease does not get passed from animal to animal. We have learned that's how the disease is transmitted, ruminant-to-ruminant feeding, which is banned in our country and I might add in Canada at the same time.

"We have verified that the animal was born before the feed ban was instituted. This is a very important point that I need to point out to you. As you know, BSE is transmitted through contaminated feed. Our feed ban prohibited feeding practices that could pose a risk. The fact that this animal was born before the ban tells us that we can remain confident in the feed ban.

"I'd like to offer a thought about the possibility that the additional tests will come back positive. USDA has said since the very start of the enhanced surveillance program that we expected additional cases of BSE. You would find that statement on many records. We've said that from the very beginning.

"The key is whether we protected the food supply and the feed supply from the disease. And the answer very clearly is that we have. We have done that. The American consumer has the utmost faith in the safety of beef, and their confidence is well placed, and I'm committed to making sure that that continues.

"So you might be asking yourselves why the Secretary of Agriculture called a news conference to announce the results of a test when we specifically said that we haven't identified another case of BSE. All we have is the test that at best can be described as a weak positive, but even we acknowledge that we want to get the lab in England to take a look.

"Let me answer, I believe it is apparent-- I believe transparency is essential. Not only is it essential to government as a whole but it's essential when we talk about consumer confidence. You know all about this. You're elected leaders. I don't need to tell you about the devastating impact of false rumors and misinformation. And when it comes to BSE I think the history of this, there's been plenty of that. So my goal is to make sure that the American people and for that matter our friends across the globe know exactly what is happening, what the significance is, and what happens next.

"That incidentally is the reason why I led the roundtable discussion in Minnesota last week. We presented the facts and brought together representatives with very differing views, and we are articulated our position. So our goal is to do everything we can to get the information out. That was the reason for the Friday news conference.

"I will offer an observation. Seventy-two hours later thereabouts the result is a relatively calm reporting of the situation. And I might add with commendable accuracy. For the most part media accounts that I've heard and read about have been very straightforward and very factual. I suspect the outcome might have been different had we waited for rumors to build over the weekend, and again that's why we talked Friday night.

"You might also be wondering what implications this has in the area of exports or imports. I would submit this should have no impact, absolutely no impact if our trading partners make decisions based upon science and based upon facts.

"The fact is, that the safeguards did work. The fact is, the animal in question ran into those safeguards and it never entered the feed or food supply, and there was no public threat.

"There is no legitimate reason why our willingness to go above and beyond internationally accepted standards for testing should impact the acceptance of our product in other countries especially when several of these countries have confirmed multiple cases of BSE within the their own borders. The key here is that our safeguards are in place, and they did make the difference.

"With that said, I don't see how testing is relevant to the ongoing discussion with Japan, Korea, South Korea or any other trading partner. Our beef is in fact safe. We will be diligent in ensuring that we have the right protocols in place, protocols that are solidly grounded on science and consistently followed.

"For your part, you have a role also. My hope is that you will take the information, which we're going to hand out to you. We have packets for everybody -- and reinforce the citizens of your state, your confidence in our beef and indicate that consumer confidence is well-placed.

"You're welcome to direct anyone and everybody to our USDA website, and that is http://www.usda.gov . All of the information that I'm sharing with you is available there today.

"Now if I might change topics here and just talk about an issue that I've been spending a lot of time on relative to the topic of trade, which of course is one of the issues that you're going to be paying a lot of attention to not only as governors but during this meeting.

"The issue that we're working on is the Central American Free Trade Agreement. The Senate Finance Committee begins the consideration of this agreement tomorrow as a matter of fact, so the discussion today is very timely. I believe very strongly that free trade is key to a successful future for the ag sector. The reality is that the world marketplace is becoming smaller and American agriculture must adapt to compete. There was a time when farmers and ranchers provided their products to the nearest village or town. Then came the train and products moved from state to state and across the nation-then ocean liners and airliners and overnight travel and Internet, instantaneous communication.

"Now a rancher in Utah or Wyoming has customers in Asia. That farmer in Colorado sells in Eastern Europe. In fact 27 percent of our ag receipts in this nation come from exports.

"A couple of other statistics: 96 percent, 95 percent of the world's population doesn't live here; it lives in another part of the world. Our farmers and ranchers are the most productive in the world, probably at any time in history of mankind. Their productivity increases 2 percent a year. Our ability to consume increases about 1 percent. Again, we realize the importance of foreign markets when we study those figures.

"The solution to keeping our farmers and ranchers competitive in an increasingly global economy is not to withdraw from it. It is to do what Americans have always done, adapt, innovate, and lead. That is why the President and I believe that trade liberalization can only benefit American agriculture, and indeed part of the future of agriculture in this country is dependent upon that marketplace.

"For me the argument for CAFTA is pretty straightforward. CAFTA nations have a total population of 44 million people, expanding economies, rising consumer incomes. Many, many years ago when we were talking about CAFTA countries we would not be talking about trade. We would be talking about international risk. These were countries that were not headed in the right direction. Then in 1982, 1983 timeframe Ronald Reagan came to Congress and said, we need to make concessions to these countries to try to improve their economies.

"And on two successive occasions, from Reagan to Clinton, Congress has extended or done something relative to those countries to enhance their economies by very, very unified votes, very bipartisan votes.

"Well, what's the net effect of that? Today--and I'm not talking about CAFTA passing-- today 99 percent of their products enter our country duty-free and compete with the products raised in our states, compete with our farmers and ranchers. We do not have the same access when it comes to our products.

"Everybody believes in the fair and level playing field for trade. That's what CAFTA is all about. It will eliminate duties on 80 percent of U.S. exports and consumer and industrial products to these countries. This is not an insignificant market in agriculture, $1.8 billion worth of business with CAFTA countries. A number of estimates have been made as to what will happen when CAFTA is passed. One estimate that I would cite from the Farm Bureau is they expect our exports will double because of the elimination of the duties.

"The CAFTA countries are a good market. It is a good marketplace for our products. Let me give you just some quick examples. On beef, duties on beef products run as high as 30 percent when we go to sell to the CAFTA countries. But the WTO would allow those duties to go to 79 percent.

"Under CAFTA, duties on prime and choice cuts are eliminated immediately and on other products eliminated over time. Poultry, current duties would go as high as 164 percent. WTO allows duties at 250 percent. But these are eliminated immediately or phased out over time. Wheat, WTO permits duties as high as 60 percent, sometimes higher. Under CAFTA the duties are eliminated immediately.

"I could go product after product where we have very high duties, but with the passage of CAFTA those duties come down. The fact is that this is a good agreement for agriculture. This is an agreement that levels the playing field.

"The last thing I will mention, many of the states represented here, in fact the state I came from, has sugar, and I acknowledge that. Let me just point out to you that I studied this agreement very carefully relative to sugar. There isn't enough sugar involved in this agreement. Sugar is a very, very protected industry in our country. The 100 percent duty on over-quota production is going to continue. That's how much protection, and we're talking about one day's worth of production and literally a teaspoon and a half of sugar per day per consumer. Sugar isn't going to be impacted in terms of how we manage this program when CAFTA is passed.

"With that, let me just wrap up and say again, it's a pleasure to be here. I'd be happy to take any questions that you might have. Thank you."

[Applause.]