Transcript of Acting Agriculture Secretary Chuck Conner's Remarks Regarding Pending U.S. Trade Agreements
Washington D.C. - September 27, 2007
SEC. CHUCK CONNER: Well, thank you very much, ladies and gentlemen, for being here today. You've just heard from a number of our industry folks from various agricultural industries about the importance of trade to their membership to the profitability of their producers, and why they support the pending free trade agreements in order to maintain that profitability.
If I could just give you a bigger picture look at this, we believe that for every billion dollars of ag export sales that we are talking about in the United States, we do generate $2.6 billion of economic activity, and that same economic activity supports more than 13,000 jobs. This year alone U.S. agricultural exports hit a record $79 billion, and we expect that number to reach $83 billion in 2008. This is a significant part of our entire agricultural economy. It's a significant part of our entire economy.
Creating and maintaining these foreign markets for our products is necessary. It is necessary for the future health of American agriculture. We have tremendous opportunity to open markets for our agricultural goods with these pending free trade agreements, with Panama, Peru, Colombia and Korea.
The agreement with Korea is of course the most commercially significant of the FTAs. It is the most commercially significant FTA that we have negotiated really in the last 20 years. A full $1.6 billion of farm exports will become duty free to Korea, effective immediately. Korea has a $1 trillion economy, and we would gain access to that fast-growing market and their nearly 50 million consumers that exist in that market.
Passage of Panama, Peru and the Colombia FTAs will provide duty free access to markets with nearly a combined population of 75 million consumers, and those countries have a GDP of well over $500 billion. More than half of our current farm exports to those countries would enjoy duty free access immediately. In just the last five years our ag exports to these three countries have grown 37 percent already, so the demand we believe is there for our products.
Some critics may ask why we should ratify the free trade agreements if we're already seeing a healthy growth in our exports. Let me give you three responses to that point.
First, U.S. agricultural exports currently face barriers to entering these markets. Although we allow more than 99 percent of the agricultural exports from Colombia, Panama and Peru to enter our market in the U.S. duty free, we have virtually no duty free access in their markets. So 99 percent coming in, virtually zero percent of our products going out have duty free access. These agreements open the door to a much freer flow of goods to this region.
Secondly, not signing these agreements does not mean that we can maintain the status quo going forward. As other nations put free trade agreements in place, we stand simply to lose market share. I'll give you an example, an example from Korea, which is our fourth largest market today for the export of lemons. In the past two years our lemon shipments to Korea have a value of over $4 million. The country of Chile recently signed a free trade agreement with Korea and began shipping lemons there in 2005. Since that free trade agreement with Chile, they have now captured 10 percent of the market share for lemons in that country.
Now ladies and gentlemen, please don't doubt for one minute that the Chileans are going to be content with 10 percent of the market share. We face stiff competition. I'd hate to see our American farmers and ranchers lose more of these markets simply because we failed to act and because the Congress failed to act.
These agreements give American producers the chance to compete fairly but in a very competitive marketplace.
The third and final reason that I will offer today for implementing these trade agreements, is simple. It's a simple message because free trade is simply a good thing. It does level the playing field, creates jobs, it allows for fair competition for U.S. producers, and it does capitalize on the strengths of the parties that are involved.
The Central American Dominican Republic Free Trade Agreement, CAFTA-DR for short, is a good example really of what can happen when we give free trade the opportunity to work. Even though we are still at the very early stages of this agreement, CAFTA-DR is already delivering on the promises of expanded opportunities and benefits for all partners involved. Since it went into effect last year, our agricultural exports to this region were up almost 19 percent from 2005. That's 50 percent higher than the 12 percent growth that we have seen in our exports to the rest of the world. It is estimated that CAFTA-DR could boost our agricultural exports by $1.5 billion when it is fully implemented. And the CAFTA-DR of course is also creating jobs and stimulating the local economies in Central America as well.
Benefits like that do stretch beyond economic security and, of course, get into the all-important national security. Free trade agreements with Panama, Colombia and Peru will reinforce economic and political stability in the Western Hemisphere, and this is good news for America and certainly good news for American farmers.
They demonstrate U.S. commitment to the growth and prosperity of our neighbors, and that in turn enhances our own national security interests. I was very pleased that the House Ways and Means Committee recognized the significance of these agreements and approved the Peru deal on Tuesday. We do hope and the administration will press with you, the full House to follow their lead and approve all four free trade agreements so that American farmers and ranchers can have a level playing field that currently does not exist. So I thank you all very much for this opportunity.
REPORTER: If the talks fail will these free trade agreements be the only route open to American farmers and ranchers?
SEC. CONNER: Well, Orion, I appreciate the question. Let me just say from the administration's standpoint obviously we remain fully committed to a comprehensive trade round through the Doha negotiations, and we believe this offers the most economic benefit to our U.S. producers going forward in terms of international agreements across the board for greater market access for our products. In the meantime though, we have indicated that we're not going to sit idly by during this process, and we have continued to pursue a strong free trade agreement agenda with bilateral agreements like the ones before you today. We're going to continue to press those on an individual basis because these are regions that are important to our future economic interest as well for our agricultural producers. And again in these countries, as we have identified, Orion, so much of their product, years ago, was given duty-free access to the U.S. market. Vast, vast majority, 99 percent or greater, of our exports do not have duty free access. So we believe that gain is important as well while continuing to pursue a comprehensive international trade round through the Doha situation.
REPORTER: Alan Bjerga from Bloomberg News. This is question is directed toward Acting Secretary Conner. Bob Stallman said the impact on this for farmers of the Peru agreement alone is $705 million. Is that the number that USDA I using as well? And what does the passage or failure of this free trade agreement say about the prospects for passage of the following three agreements?
SEC. CONNER: That's a good question, Alan. I would just say that the $705 million is a Farm Bureau economic analysis. I think our economists have looked at that and they have no beef with that analysis at all, and I don't want to speak for Dr. Collins and the others in terms of their own embracement of it, but I think it's a good analysis. And we have again no heartburn with those numbers at all.
In terms of the consequences, I will just tell you that the consequences are enormous for the failure of a free trade agreement like this. Again, from an agricultural standpoint this is an absolute win/win situation. More than two-thirds of our current exports to Peru will become duty free immediately under this agreement. And again as I have stressed, Peru in particular, this is a country where virtually none of our agricultural exports go to that country duty free. Their access to our agricultural markets are more or less unfettered, 99 percent duty free.
So this is a win/win for American agriculture, it needs to pass, American agriculture needs for it to pass, and it would send a troubling signal if something that is so positive and so beneficial for American agriculture could not get through the Congress. We remain very confident that it will. And I think the votes, the test votes as well as the real vote in the Ways and Means and Finance Committee, demonstrate that our message is getting out there and we just need to continue to plug away on this.
REPORTER: Missy Ryan from Reuters. The first question for Secretary Conner. Can you describe what you see as the biggest obstacle to getting the Peru agreement specifically, passed? And second question maybe for Mr. Stallman or any of the other groups present, I understand President Bush this week told President Lula that the United States would be willing to cut its overall trade distorting subsidies as low as $13 billion annually if it got the market access it's looking for. For the farm groups here today, would that be acceptable even if the new market access that you've been looking for was provided, that level of subsidy? Thank you.
SEC. CONNER: On the second question and then you'll probably have to restate your first question for me. But on the second question, let me just say that as I have already publicly indicated, our trade negotiators have indicated that they want to proceed forward in the Doha round and maintain some flexibility and willingness to discuss these issues. They have been very, very clear however that any flexibility on the part of the U.S. position is predicated and remains predicated on the level of market access that we will be given. This has been the fundamental point since the beginning. This is what the U.S. has said from the beginning is that we're willing to talk about our domestic supports but that talk is predicated on other countries' willingness to engage us on market access.
That position hasn't changed. I maintain it's not going to change going forward. So that remains where we are. We've had a trade team over there on technical issues for the last three weeks. Bob was actually over there as well during a good portion of that time. That team has just returned. They have indicated that on some of the technical issues they are making some headway on that. But the fundamental point of market access, the flexibility on that market access in exchange for us being willing to talk about our domestic support, that remains a key point out there. We've indicated again that we are willing to talk about domestic supports but totally predicated on market access.
And your first question again was?
REPORTER: What's the biggest obstacle?
SEC. CONNER: The obstacle? Well, obviously the historical obstacles to trade agreements remain in place, and those involve labor problems and others that we have needed to overcome in virtually every trade deal that we have presented to the Congress. Our job, and I think my job as the Acting Secretary of Agriculture, I know for each one of these guys, is just our responsibility is to get the agricultural message out there because, again, from agriculture's standpoint this is an absolute win/win situation. There is no downside whatsoever to these agreements. We need these agreements for our future prosperity. And as I have told several people just in the last few days, we are going through some mighty good times in American agriculture today. We are seeing income and prices like we haven't seen in a long, long time. And our challenge is, how do you sustain that over a longer period of time so that we don't have a boom and bust cycle? You sustain it through agreements like the four agreements that are pending before Congress.