For Immediate Release
July 30, 2004

Secretary Veneman Speaks at Ag Forum

USDA Press Office July 30, 2004

Remarks by Agriculture Secretary Ann M. Veneman at the American Agricultural Competitiveness Forum Hosted by the Indiana, Ohio and Illinois Farm Bureaus Indianapolis, Indiana

Secretary Veneman: "Thank you very much, Don, for that kind introduction, and it is wonderful to see you and the other state presidents from the Farm Bureaus here today. Don and I, as we said, have known each other for quite some time, and we served together in an organization called the Farm Foundation. So we used to see each other at least twice a year when I was living in California.

"I'm also really pleased to see my friend Bob Stallman. He moved the offices of the Farm Bureau to Washington just last year, and I think that's been a great move. It's very important to have the central offices in DC, although I know they were in Illinois so I don't want to hurt anyone's feelings by saying that.

"And Bob Thompson, congratulations on your new job. Both of these folks have been members of the Farm Foundation and we've worked together for many years, and Bob and I also served in something called the International Policy Council where we looked at global trade issues together with people who have been involved in trade issues from around the world. So I commend you on the speakers that you have for this conference today, and I commend you on the conference and the timeliness of it, and to each of the Farm Bureaus that are participating for your foresight in holding this today.

"Our success in agriculture trade is a story that needs to be told as Don said, and it's one that is vital to the continued economic health of American farmers.

"For many years agriculture did not really enjoy the benefits of trade liberalization. But that began to change most significantly in the Uruguay Round of trade negotiations under what was then known as the General Agreement on Tariffs and Trade, or the GATT. The conclusion of that round formed what we now call the World Trade Organization.

"I was privileged in September of 1986, only about two and half months after I started work at USDA in the Foreign Agricultural Service, to be part of the launch of the Uruguay Round negotiations. Now they went on much longer than any of us would have anticipated, but indeed they truly did create a result that liberalized trade and that gave us the structure from which we can now negotiate further trade liberalization today.

"The other thing that those trade negotiations did is they gave us the agreement on sanitary and phytosanitary issues. Those issues have been some of the biggest issues we've had to deal with in trade over the past several years. And I will talk a little bit later about some of the issues around market maintenance.

"Today trade is indispensable to American agriculture, and it contributes importantly to rural communities. In this Administration we are absolutely committed to building upon our successes in trade and looking for additional market opening opportunities that benefit producers.

"In fact, we have embarked on the most aggressive trade agenda in our country's history, and the President is personally committed to the importance of trade and the importance of trade to agriculture.

"Many of you who have heard me speak before know that when I talk about trade and the President I tell you the story that he rarely ever will mention trade without mentioning agriculture. And he will rarely talk about agriculture without talking about trade. I remember as we were all in this building going through the transition when we were getting ready for our confirmation hearing they decided to announce Bob Zoellick as the nominee for the U.S. Trade Representative. And I was privileged to be in the room when that announcement was made. And the President focused, in that announcement of Bob Zoellick, about the importance of trade to agriculture. And when Bob Zoellick got up to talk he again focused on agriculture and trade.

"And I can tell you that he has been a wonderful partner in this trade liberalization quest that we have been undergoing over the last three and a half years. And he continues to be such a strong advocate for American agriculture as he negotiates trade agreements around the world.

"As you know better than anybody, our country exports about one out of every three farm acres. And we are now forecasting that agricultural exports this year for fiscal year 2004 will reach a record level at $61.5 billion. Now this is a 21 percent increase over where we were in the year 2000. The previous record was set in 1996 at $59.9 billion.

"One of the things that gives us concern and I hope -- Don talked about it a little bit -- is that we continually hear today a lot of talk of protectionism, of turning inward. But stop to think for a moment about what the state of American agriculture would be if one-third of our land sat idle and in the alternative all those products sat unsold or unshipped.

"And for some of our commodities the reliance on foreign markets is even greater. For example, we export over 60 percent of our sunflower oil and our almonds and nearly half of our wheat and our rice. The fact is American agriculture relies more and more on the export markets.

"Our farmers can produce more than our domestic consumption needs, and that's why we're working hard to find new customers while keeping the pipeline flowing to our existing markets.

"Now if we look back at history, I think it shows that trade liberalization does indeed work. I want to talk about a couple of examples.

"First, is the North American Free Trade Agreement. We just passed the ten-year anniversary of the implementation of that agreement. Before NAFTA U.S. agricultural exports to Canada and Mexico together were just about equal to our sales to Japan, which was then our number one export market. Ten years later our sales to Japan have remained relatively constant, still a very important market that's $8.6 billion. But our exports to our NAFTA partners are now more than double our sales to Japan at an unprecedented $18.5 billion.

"Second, let me briefly discuss China. In November 2001 we were in Doha, Qatar to launch the Doha Development Agenda. At that meeting, China was admitted to the WTO. This brought them into the rules-based trading community. Since that time agriculture sales to China have exploded, and it has quickly moved up to become our fifth largest overseas market.

"This year we are forecasting that our agricultural exports to China will be $5.9 billion. Now this is more than triple the $1.8 billion that we exported in 2002. In two years we've tripled our exports to China.

"And China is now our number one market for soybeans, purchasing nearly $3 billion last year which is triple the level prior to them joining the WTO. China is our number one market for cotton, importing $737 million worth last year, up 1,500 percent since 2001.

"China is also our top market for hides and skins, our sixth largest market for wheat, with purchases representing a ten-fold increase for wheat from just two years ago.

"Higher export levels mean not only markets for our products but they also mean more jobs, from the farm to the processing facility, on our transportation systems or at our ports. Today agricultural exports account for about 900,000 American jobs of which 40 percent are in rural areas.

"Every additional $1 billion dollars in exports adds another estimated 15,000 jobs.

"But American agriculture and rural Americans are not the only beneficiaries of trade liberalization. Eliminating all global tariffs including those on agricultural products is estimated to have the same effect as a tax cut of $1,600 a year for the average American family of four. According to some estimates, a tariff-free world will result in global income gains of some $832 billion.

"An editorial this week that ran in the Washington Post stated that global free trade could reduce the number of people around the world earning less than $2 a day by about 500 million in the next 15 years.

"In launching the Doha Development Agenda, the role of trade in alleviating global hunger and poverty is clearly recognized. As part of our international development efforts, USDA last year hosted a Ministerial Conference on Agriculture, Science and Technology in Sacramento, California. Our objective was to focus on accelerating the pace of agricultural productivity through the use of science and technology, particularly in those parts of the world where hunger and malnutrition is most acute.

"We supported several follow-on activities including regional conferences in Central America which was in Costa Rica in May. And just last month in June there was a follow-on conference in West Africa in Burkina Faso.

"The West African meeting was particularly important. We had four heads of state attend that meeting and many ministers from the countries of West Africa. But one of the things that happened at that meeting was these heads of state were endorsing the promise of biotechnology-- that is, with the appropriate regulatory safeguards. Many participants at that conference expressed the same sentiments that for them the debate was no longer whether biotechnology, but rather now, they now understand it is how they utilize it to help better feed and provide higher incomes to their people.

"Earlier this week on Monday I met with the ministers of Trade and Agriculture from Benin, Burkina Faso, Chad, and Mali at the conclusion of a tour that they had of U.S. cotton production processing and other facilities here in the U.S. This was part of an exchange that enhanced their understanding of our U.S. cotton industry.

"Now I referenced the Washington Post editorial that ran earlier this week about trade. That editorial also warned against those who support the new barriers to trade, and I quote, "The Democratic platform gives scant recognition to the benefits of open global markets concentrating far more on trade as a threat to American workers. It does not bode well for where a Democratic administration will lead or fail to lead in this field."

"As you know, 96 percent of the world's population lives outside the United States. We must, we must continue to capitalize on fast-growing emerging markets in order to remain successful. It is projected that over the next several years food consumption in markets such as Asia, Latin America, Africa, and the Middle East will surge, benefiting from a growing middle class and rapidly rising disposable incomes.

"Gaining share in these fast-growing markets without sacrificing hard-won gains in existing markets will continue to bring more benefits to America's farmers and ranchers. To achieve this, the Bush Administration has concluded eight bilateral and regional agreements. These are with Chili, Singapore, Jordan, Bahrain, Australia, which was just passed by the Congress last month, and is about to be signed by the President next week, Morocco also just passed by the Congress last month.

"And then there's the CAFTA agreement with countries of Costa Rica, Honduras, El Salvador, Guatemala and Nicaragua along with the Dominican Republic. These bilateral and regional agreements will give our agricultural producers increased assets to the 120 million consumers with a combined annual GDP of $830 billion.

"Our current agricultural trade with these countries now stands at $2.7 billion. We expect that amount to expand by well over 50 percent when these agreements become fully implemented.

"While we continue to aggressively pursue regional and bilateral agreements, our main objective of course has been the successful conclusion of the Doha Development Agenda in WTO negotiations. These talks as you know have been going on since 2001, and this is a critical week.

"In fact today has been a critical day in those negotiations. We've been following the development in Geneva very closely. Ambassador Zoellick is there, and from USDA he's accompanied by our Under Secretary, J.B. Penn, who's been involved with Ambassador Zoellick in all of these negotiations.

"I can just say, thank goodness for Blackberrys because I'm able to keep up with what's going on virtually on an hour-by-hour basis. Early this morning Agriculture Chairman Tim Grosser provided WTO members a revised draft framework for agriculture. As you know, agriculture has proved to be key in these negotiations-- of course as it was in the Uruguay Round negotiations. However, there is more to the process and negotiations that is going on with nonagricultural issues as well in terms of services, market access and other areas.

"Since the Cancun meeting, the United States and a few other countries have played a key role in trying to at least start the talks. And I give Ambassador Zoellick a tremendous amount of credit for his leadership in this area.

"There are five countries representing the major trading nations and developing world and met earlier this week and formally reached a historic agreement on many of the contentious issues. They provided substantial input into the paper that was released this morning; thus, giving the talks a big boost.

"We are still evaluating the paper. But it appears to be consistent with the U.S. objectives.

"Let me just share some of the most important elements. First, on market access, there is what we a call banded approach. This would ensure that the highest tariffs are cut the most and bring down tariffs all across the board. This will be better access for our agriculture products in all countries.

"Now let me remind you that tariffs around the world on food and agriculture average about 62 percent. And in this country they average about 12 percent. So we in the U.S., our farmers and ranchers, stand to benefit tremendously from reducing tariffs on food and agriculture around the world so that we can have greater market access.

"On domestic support, substantial reductions will be required for all subsidizing countries. There will be greater harmonization ensuring that the discrepancy that exists between what Europe and Japan are allowed and what we're allowed will be reduced.

"And in export competition we finally achieved the long-sought goal of elimination of export subsidies by a date certain. And we've been careful to maintain our own ability to provide export credit guarantees and food aid.

"The next step now is for member countries to begin what's known as the green rule process in which each country has the opportunity to discuss the paper, raise concerns or offer alternative language. You can imagine that this will be an unbelievably long session with officials from 147 countries in the same room.

"As Bob Stallman knows, many of these sessions go all night long, and in fact I think this morning they went until about 3:00 or 4:00 in the morning.

"There are still many problems to be overcome. The African cotton issue, Argentina making threats over differential export taxes; these and more could emerge to wreck the talks. But we still are hopeful that everything can be concluded this weekend, and we're generally optimistic about the outcome.

"There's numerous groups that have come forward as these negotiations have progressed-- the G20 to G10, the G90, the five interested parties, the US, EU, Brazil, and Australia and India, all with various positions. Despite these differences, I understand that the move this week has overall been quite positive and participants have been constructively engaged.

"This seems to generally reflect a broad recognition that if these negotiations are not concluded now and a framework is established so that the broader negotiations can go forward, there may not be another opportunity for these multilateral negotiations for a long time.

"We remain optimistic that countries will negotiate in good faith and not miss this historic opportunity to reform global trade in agriculture.

"In addition to reaching new trade agreements, we continue to focus on keeping our existing markets open, or what we call market maintenance. The issues that we've dealt with in the three and a half years that we've been in office have been numerous-- everything from dealing with poultry in Russia to a whole range of issues. We have had a lot of work to do in maintaining our existing markets.

"Despite those difficulties that we encounter, we continue to realize the benefits of trade and again are projecting record exports this year.

"Keeping trade flowing is a major job these days. But as you get more trade, you're likely to get more trade problems. And that's why it's so important that we stay focused on these issues.

One of our primary goals today, as you know, is to reopen the beef markets to U.S. producers in the wake of the single case of BSE that was found in this country in December of last year. We're also intensifying our work with the World Organization for Animal Health to ensure a consistent international response to potential future cases of BSE with regulations and policies based on sound science.

"Clearly the benefits of trade and the increasing prosperity of incomes in our country and around the world are plain to see. But even at the dawn of the 21st century there continue to be those voices that are arguing to return to a new era of protectionism. This view is swimming against the tide of history.

"Our world as Don indicated is becoming increasingly global, with changes occurring at a faster and faster pace. New technologies and modes of communication, transportation improvements and interconnected markets all make it vital that we work even harder to compete rather than walling ourselves off and going it alone.

The future of American agriculture and trade go hand and hand. It is a future that we must embrace on behalf of our farmers and ranchers, our world communities, and people all around the world.

"Thank you very much."

[Applause.]

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