Testimony of

Roger Johnson

Commissioner of Agriculture

State of North Dakota

United States Department of Agriculture

And

United States Trade Representative

Public Listening Session

On WTO Negotiations

Holiday Inn

St. Paul, Minnesota

June 7, 1999

Good morning. On behalf of North Dakota’s 30,000 farmers and ranchers, thank you for this opportunity to share my views on agricultural trade issues.

I commend US Secretary of Agriculture Dan Glickman, US Trade Representative Charlene Barshefsky, and their respective agencies for organizing these listening sessions to gather producer and industry input prior to the WTO Ministerial in Seattle this winter.

Thanks, also, to Commissioner Gene Hugoson and the Minnesota Department of Agriculture for their efforts in hosting this listening session.

I am hopeful that the preparatory efforts of our industry will be beneficial during the upcoming round of international trade negotiations.

As they say, hindsight is twenty-twenty. Looking back, I believe many of us in agriculture feel as though our industry has not been a top priority of our country’s trade negotiators in past rounds of regional and international negotiations.

As you know, our domestic agricultural economy is suffering tremendously due to prolonged periods of low market prices, coupled with a series of natural disasters throughout the country. We cannot afford to lose any more ground, certainly not at the hand of poorly managed trade negotiations.

Let me stress to you that agriculture – particularly, the interests of our family farmers and ranchers – MUST be the top priority of our country’s trade negotiators. This will be in stark contrast to the former administration’s approach, which was to throw the interests of agriculture on the table at the last minute and then trade them away.

In fact, earlier negotiators, while stumbling over themselves in their Pollyannaish fervor for "free trade", often focussed more on tearing down our family farmers’ protections in the hope that other countries would follow suit. In their zeal to remove our "barriers", they forgot to demand the same from other countries.

Hopefully, we’ve learned our lesson. Whatever is done with respect to trade policy has very direct implications on our domestic industry. Many of the problems we’re suffering from right now are the effects of previous trade negotiations and agreements – namely market displacement, low market prices, and weakened domestic policy. Enough is enough.

We have an obligation as a country to demand the development of responsible international trade policy. And responsible trade policy is fair trade policy. Our domestic industry – largely made up of family farmers and ranchers – will not survive with the policy of "trading at any cost." If we continue in that direction, the "cost" will be the loss of an industry that is the backbone of our country’s social structure.

At the heart of our trade negotiations must be the interests of our domestic industry – family farmers and ranchers. We must protect our ability to implement domestic farm policies that enhance our producers’ capabilities to compete fairly in the world market, while becoming the trusted provider of the highest quality food in the world. The farm law passed in 1996 decoupled government support from production and sent our industry in the direction of relying on inadequate risk management programs and put our farmers’ and ranchers’ fate in the hands of an increasingly unstable and continually changing global economy. The Asian economic crisis clearly demonstrates that we must do more than rely solely on foreign markets to sustain our domestic industry.

As a matter of national security, we need to have domestic farm policy that recognizes the inherent obligations of a government to provide its citizens with a safe, healthy, and adequate food supply. Our negotiators must make sure that in the future we have the ability to develop and maintain those policies (which may be very different from current policies). We need to maintain that sovereign right, and we must recognize the sovereign rights of other countries to have the same capabilities. After all, what is more important for any country than its obligation to assure its citizens of a safe, healthy, and adequate food supply?

We also have a need to provide food security on an international level. I believe that an international food reserve program should be developed to increase that security. During productive, profitable years, some of that production should be held for use in lean years. All WTO countries should be responsible for sharing in the cost of the program. It should be separated from the market – closed off in times of low prices and utilized in times of high prices.

Certainly, we can all recognize that a Farmer Owned Reserve program, if employed only by the United States or any other single country, would impose a large burden on that country. But if all major food-producing countries were to share in such a system, its humanitarian benefits would accrue to all. It is really no new idea to suggest that food ought to be stored during the years of plenty for the lean years that will follow.

Achieving fairness in trade will take more than trading fairly ourselves. We must insist that major food producing countries approach international trade with "good faith" and fairness in mind.

An example of where countries are not on equal footing is the use of direct export subsidies. The European Union continues to use direct export subsidies to dump their commodities onto the world market. They have created a David vs. Goliath scenario with the use of direct export subsidies, while many other countries (including the United States) continually fight a losing battle. Our negotiators must work to first equalize and then eliminate direct export subsidies.

When the World Trade Organization (WTO) was created in 1995, its objective was for the WTO to "help trade flow smoothly, freely, fairly and predictably." One of the areas where the WTO has fallen short time after time is in settling trade disputes. We have ongoing trade disputes that started years ago and are still unresolved. The dispute resolution process is slow and cumbersome. Our US negotiators must insist on improvements to this process.

We must demand timely and complete compliance with current trade agreements and international trade laws from all countries. The United States has complied with our trade obligations. Our industry has responded and is working to move forward and compete at the highest level within the framework that was created during the Uruguay Round and subsequent agreements. Other countries must do the same.

The "smooth flow" of trade has also been a significant issue for many of us. We need to insist that international standards are set at a level at least equivalent to the high standards already in place in this country. Consumers worldwide are increasingly demanding higher quality products. We produce that high level of quality, but we must never forget that it is the consumer who determines what he or she is willing to buy.

We can no longer tolerate the importation of commodities produced at much lower standards than what our farmers and ranchers must adhere to in this country. That is certainly not a fair trading environment. We should not allow the importation of products, which are produced with inputs that are illegal for Americans to use. Period. The North Dakota Legislature passed a bill (HB 1335) during the 1999 session clearly exemplifying the adherence to this principle. Unfortunately, that bill was vetoed. The bill would have disallowed the importation of commodities into our state if those commodities were produced using chemicals, which are illegal for our producers to use. The bill may not have been perfect, but the concept was absolutely sound. Why should our producers be forced to compete with foreign producers who have the ability to use chemicals, that are banned in our country? Perhaps even more importantly, why should our consumers tolerate it? Whether we’re dealing with environmental concerns, sanitary/phytosanitary issues, the use of pesticides, or labor concerns – we must negotiate toward the highest standards, not to the least common denominator.

We must also work to end the use of non-tariff barriers, which often hamper the flow of trade. Many of our trading partners continually use unfounded sanitary/phytosanitary issues to keep our products out of their markets. The next round of WTO talks must create more stringent rules and require the use of "sound science" in dealing with non-tariff issues.

"Sound science" must also be used in making determinations on the safety of using hormones and genetically modified organisms (GMO’s) in food production. Governmental scare tactics should not be tolerated. However, we must continually remind ourselves that consumers drive the market and we must meet their demands. We must educate consumers and provide them with the facts they need to make informed decisions. I believe we must increase our capabilities in the area of identity preservation and should consider the potential benefits of labeling organic, mainstream, and enhanced food production. In the end, consumers must be willing to accept our "sound science" or the products will not sell. It is far better to be certain of our "sound science" than it is to be trying to cram it down the throats of skeptical consumers. We will not achieve our goal of becoming the trusted provider of the highest quality food in the world by forcing "sound science" onto consumers.

Many textbooks and publications on trade indicate that the displacement of domestic industries is sometimes the price that has to be paid to attain free trade. I’m here to tell you that agriculture is not willing to be one of those industries. Agriculture must be the top priority in upcoming negotiations and the interests of our family farmers and ranchers must be protected!

Agriculture will continue to be a driving economic force in this country. With well-negotiated agreements and with the appropriate domestic policies, we will create the potential to enhance the profitability for our family farmers and ranchers.

Thank you again for this opportunity.