Togo RPCV Jackie Theriot comes to us from St. Francisville, Louisiana, representing the Louisiana Farm Bureau Federation of which he is the secretary treasurer.
Jack Theriot
Louisianna Farm Bureau Federation
MR. MANNING: Unless one of the panelists has a comment or remark, Jack Theriot if you would make your way to the podium, please, sir. Jackie Theriot comes to us from St. Francisville, Louisiana, representing the Louisiana Farm Bureau Federation of which he is the secretary treasurer.
MR. THERIOT: Thank you, Earl.
Mr. Secretary, Members of the Panel, as Earl said I'm Jackie Theriot a producer of sugar cane in Louisiana and also manage a cooperative for growers in Louisiana. Although, my comments reflect Louisiana's views on U.S. agriculture trade negotiations, many of our views reflect the sentiments of producers across the nation. In Louisiana we are cognizant of the role that trade plays in the production of agriculture commodities in our state and across the nation. As an industry agriculture in the U.S. represents one of the few industries that consistently runs a trade surplus in a highly competitive global marketplace.
In 1997 Louisiana's agriculture exports were estimated at 740 million dollars, a comfortable share of our nation's 50 billion dollars of agricultural exports. The top export crops in our state were cotton, rice, soybeans, wheat, corn and cotton seed. Based on Gross Farm Value export crops such as rice and cotton ranked as the third and fourth largest crops grown in the state. In fact, Louisiana ranked third in the nation in the production of rice and sixth in the production of cotton. Although this is impressive for a state our size, these crops are just two segments of our state's diverse agricultural economy which includes a five million dollar forestry industry, a 1.4 billion livestock industry and 885 million dollar agriculture industry, a 502 million dollar sugar cane industry, a 157 million dollar nursery industry and an 82 million dollar sweet potato industry just to name a few.
In 1998 the total volume of agriculture commodities produced in the state were estimated at $9.6 billion and agriculture is the economic engine of our state. This snapshot of Louisiana agriculture and dits diversity is not unique to our state, and if you look at a composite of other states agricultural industries, you will find a similar picture. The significance of these numbers are that when we consider our state in total, 704 million dollars in exports must be weighed against agricultural enterprises that supply domestic markets. It is important to note that these markets in aggregate exceed the value of export crops in our state. So while our organization strongly supports agreements that would provide greater market access for our state's agricultural producers of export commodities, we must also consider framing our trade objectives so that as we pursue securing greater market access for export commodities, we also recognize that not all agriculture commodities are export bound.
Our negotiators must strive to achieve a balance between maintaining current markets and securing new ones. Otherwise, the only trade we re accomplishing is trading away an established market for access to an export market. Our thoughts are whether a market is an export or domestic market. A market is a market and the largest cost to our country is the loss of an established market that has taken millions of dollars to develop.
The formation of the World Trade Organization (WTO) in 1995 following the General Agreement on Tariffs and Trade (GATT) has established an agreement that is the frame work for 134 member countries and 30 other prospective ones to establish fair trade parameters for member countries. Today we stand poised to begin the next round of WTO negotiations. However, the United States enters these negotiations with the lowest aggregate level of tariffs and trade protections of virtually any member country. Therefore, we must first target the noncompliance of member countries in the agreements negotiated in the last round of trade negotiations before forging ahead with additional agreements. If a county has not complied with the terms of an earlier agreement, compliance must be reached before U.S. negotiators move forward on additional agreements.
Second, our negotiators must avoid the temptation to offer any U.S. concessions to member countries in order to negotiate their compliance. In Louisiana a pointed example of WTO member country noncompliance is the Mexican government's attempt to revoke the terms of the sugar side-letter agreement in the North American Free Trade Agreement, (NAFTA) and the addition of tariffs onto U.S. High Fructose Corn Sweetner (HFCS). The side letter agreement on sugar which caps Mexico's access to the U.S. market was crucial in securing U.S. Congressional support for NAFTA.
Now we see our domestic sugar market in jeopardy as the Mexican government expects the U.S. to absorb Mexican sugar displaced by HFCS by ignoring the terms of the side-letter agreement. This trade agreement compliance problem is extremely significant to the economic health of our state. You see Louisiana ranks as the second largest sugar cane producing state in the nation and it is our state's largest agronomic crop. It accounts for over 32,000 jobs and the sugar cane industry is the largest employer in a large region of our state. Our biggest concern is that U.S. trade negotiators will concede additional U.S. market access for Mexican sugar to remove Mexican HFCS tariffs. In Louisiana, as well as in 15 other sugar producing states, our view is that any reduction in the terms of the sugar side-letter would amount to negotiating away our sugar market to secure a corn export market, a corn market for HFCS that according to the terms of the NAFTA agreement is illegally being subjected to a Mexican tariff.
Another trade issue that impacts our state is the terms of China's accession to the WTO. While China is the world's largest market and U.S. Export opportunities abound for small grains and other commodities, China is also one of the largest producers of cotton in the world. Cotton is important to Louisiana and it is our third largest crop. While our state's cotton producers need to export cotton, the terms of China's accession to the WTO must include adequate safeguards that prevent Chinese cotton textiles from cannibalizing our nation's cotton production and textile industry. Negotiators need to understand that this is especially important because it is our nation's cotton producers that have made the greatest investment to develop the domestic cotton market in this country through checkoff contributions to fund Cotton, Incorporated, promotional advertising.
Therefore, we feel that the WTO terms must address China's current cotton policy that currently provides a reference price for Chinese cotton production of 60 to 65 cents per pound. The accession terms must also provide that U.S. textile industry with an adequate transition period for the U.S. textile industry with a 0-year phase-out of textile import quotas. Another sticking point in upcoming U.S. trade negotiations is the dilemma concerning the application of sanitary and phytosanitary measures under the terms of the SPS agreement of the WTO.
The European Union, (EU) has applied the terms of the SPS agreement to prevent the entry of genetically-modified grain and hormone fed beef. However, I must state that despite the recent ruling by the WTO in favor of the U.S. and Canada against the EU's hormone beef ban, we must realize that the SPS agreement does allow members countries to have different phytosanitary and sanitary standards based on sound science. Therefore, if a sanitary or phytosanitary standard has scientific justification, then the WTO will not rule against these standards even if they create a nontariff barrier. While I agree that scientific justification versus GMO corn is vague at best, U.S. agriculture may be best served by becoming proactive in the SPS standards debate and consider implementing U.S. standards for imported products that are similar for those governing domestically produced products. As the country with some of the highest environmental, sanitary, phytosanitary and labor standards in the world, U.S. negotiators have an opportunity under the SPS agreement not to erect nontariff trade barriers, but to protect the safety of U.S. citizens by imposing sanitary and phytosanitary standards for foreign products that more closely duplicate the standards imposed on U.S. producers.
An excellent case in point that illustrates the disparity between the standards for domestic versus imported products is the Food Quality Protection Act (FQPA) implemented by Congress in 1996 to protect U.S. citizens from pesticide exposure risk based on sound science. The agricultural chemicals used by U.S. producers such as Malathion and Lorsban can only be used on crop applications. However, imported agricultural commodities are not subject to comply with the Food Quality Protection Act. Therefore, many chemicals such as DDT and Chlorodane, which have been illegal for use in the U.S. for years, are still used in foreign countries. Their commodities produced with these illegal U.S. chemicals and others enter our country with less than one percent of these commodities inspected at the border. Imported commodities must only have residue levels that are below U.S. threshold levels and these residues are not considered under the FQPA, which governs U.S. producers very use of the product. If there ever was an unfair trade practice, it is our own government holding U.S. producers to a standard that imported commodities are exempt from. The Act serves as a U.S. nontariff trade barrier against our own producers. Under the STO SPS Agreement, Article 3, (Harmonization) #3 and under Article 4 (Equivalence) #1, a scientifically based SPS standard based on some provisions of the Food Quality Protection Act would legally fit within the WTO SPS agreement. My point is that U.S. negotiators must realize that whether we like it or not, sanitary and phytosanitary standards are already a part of ongoing trade agreements and that U.S. negotiators must consider enhancing U.S WTO SPS standards or risk losing U.S. agricultural markets to unregulated foreign imports. As we enter the next round of WTO negotiations, our U.S. agricultural trade negotiators' focus must be targeted on leveling the playing field.
Since the Uruguay Round, U.S. agriculture has not only complied with but has exceeded our trade obligations for lowering tariffs and subsidies and granting U.S. market access to foreign countries. Now as we view world agricultural trade, the Uruguay Round was successful in lowering tariffs and subsidy support levels, but foreign countries continue to have much greater import protections to their markets and higher subsidy support mechanisms for their producers than those provided to U.S. agricultural producers. Therefore, we recommend that negotiators employ a flexible request off strategy in the upcoming round of trade negotiations to reduce huge disparity in supports between the U.S. and WTO member nations. The formula driven method of negotiation support reductions used in the Uruguay Round reduced supports proportionately, still leaving U.S. producers competing for markets with foreign producers with much higher subsidies. A perfect example is EU sugar subsidies which totally distorts the world sugar price by paying EU sugar producers over 30 cents per pound while marketing surplus EU sugar on the world market at less than 10 cents per pound. We further recommend that our U.S. negotiators target methods that have been used by foreign countries to circumvent their Uruguay Round commitments. The main method of circumventing trade agreements has been through the formation of State Trading Enterprises (STE's). State Trading Enterprises were not addressed in the Uruguay Round and have been successfully used by countries such as Australia to provide subsidies and reduced interest rates for producers outside of their government's negotiated trade commitments.
In conclusion, we feel that for agriculture, the upcoming round of WTO agricultural trade negotiations holds the greatest promise to expand market access for export commodities. At the same time we have an opportunity and an obligation to balance these efforts with hard-nosed negotiations to reduce the difference between U.S. and foreign agricultural support levels. Our leverage is that the stability of our U.S. currency has made U.S. market access a prize. Let's use this opportunity to move toward more fair agricultural trade for our U.S. producers. I would like to thank the panel for your attention and it has been a privilege to appear before you today.
I would like to sincerely thank the U.S. Department of Agriculture and the United States Trade Representative for conducting this listening session, and I would like to compliment the Tennessee Department of Agriculture for hosting this listening session. Thank you again. I will be happy to answer any questions. Also I might add in this presentation I did make some comments Chlorodane and DDT. That's not allegations. My work brings me from back in the '60's as a Peace Corps volunteer, Kennedy administration to 45 countries in the worlds. I do consulting in these countries on a very small basis back in Louisiana. But I have soon the use of Chlorodane and DDT. Chlorodane supposedly according to our trade negotiators when I asked the question to Peter Scher in Washington indicated, well, they're using it for -- DDT they're using from a (inaudible) control in Mexico. I've seen it with many own eyes. I go down to the level of (inaudible) in these countries. Just came back from Bolivia. A beautiful (inaudible) -- sugar cane herbicides. We cannot (inaudible) in this country, but, yet, they have a panel that dictates exactly how many ounces per (inaudible) you can use to control grass.
So, again, panel be very cognizant of what is happening. Always -- you know, going back to the SPS. You know, we have a threshold -- like I indicated to the people in (inaudible). The per capita made in (inaudible) is probably 60, 70 dollars a year. You have 30, 40 percent mortality there among children that are suffering from much more than from lack of nutrition. Now if the governor of (inaudible) decides we've got to try to do something about this. We've go to find a way to reduce the mortality rate and they find the perfect pesticide to be able to produce -- to be able to get rid of the locusts and produce more food for their people so they can reduce the mortality rate and maybe (inaudible) in that pesticide. What choice do they have? It's either death or use the pesticide. If they produce enough of this food what SPS is telling me is that according to their level of protection, they can export this commodity to the U.S. It just doesn't make sense. Thank you, Mr. Chairman.
MR. SCHUMACHER: I would like to thank Jack. He made a couple of very interesting comments.
