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trade package is also predicated on the understanding that our negotiators and other trade leaders will continue to press for improvements through legislative history and followup negotiation with our trading partners which will deal with these key needs.
No. 1, provision for prompt and effective enforcement of the subsidy countervailing duty code which will fully assure U.S. dairy and other U.S. agricultural interests of prompt relief against unfair subsidy competition. No. 2, continuing efforts to minimize any detrimental effect of additional cheese imports on U.S. dairy farmers. No. 3, a consideration which has been uppermost in U.S. farm interests in this round and in our trade needs for many years, namely, improved access abroad for U.S. agricultural exports which face discriminatory tariffs or other unfair trade barriers.
And No. 4, avoidance of any future international grain agreements not in conformance with the recommendations of the Grain Agricultural Technical Advisory Committee, GATAC.
And with that brief comment I want to pay my thanks and my congratulations and that of my organization to the fine work of the negotiating team led by Ambassador Strauss and to the fine, classic example as he put it, of the kind of coordinated and cooperative effort between the administration and trade leaders and congressional leaders that has resulted in what we think is a very noteworthy accomplishment.
Senator RIBICOFF. Thank you very much.
Are there any questions from any of the members of the committee?
Thank you, sir.
[The prepared statement of Mr. Hampton follows:]
PREPARED STATEMENT OF THE NATIONAL COUNCIL OF FARMER COOPERATIVES
Mr. Chairman and members of the International Trade Subcommittee, I am Robert N. Hampton, Vice President, Marketing and International Trade of The National Council of Farmer Cooperatives. Representing the off-farm business interests owned and controlled by more than two million American farmers. The National Council of farmer Cooperatives must reconcile the views of the many farm commodity groups affected in different ways by various details of the MIN agreements to be implemented by S. 1376.
In addition, we have consistently reflected the prevailing overall view of U.S. agriculture for many decades; namely, that fairer international trading rules along with worldwide reduction of trade-distorting measures such as subsidies and discriminatory standards would benefit our farmers, our nation, and the world.
We strongly support S. 1376 as an important step toward more open and fairer world trade and expanded U.S. agricultural exports. We believe that in the long run, the balance of trade benefits favorable to U.S. farmers can be substantial to the extent that provisions of the subsidy and other trading codes are aggressively and effectively implemented. In addition, shorter term net annual gains for U.S. agriculture have been estimated at about $356 million, in the recently issued report of professor James Houck which is part of the Tokyo-Geneva Round studies made for this subcommittee.
We would like to call special attention to another of these June 1979 MIN studies for the Subcommittee on International Trade, that of Professor John Jackson of the University of Michigan, formerly General Counsel of the Office of The Special Trade Representative. Professor Jackson cautions that the new trading codes, while representing an important step forward, are so complex that they represent only a beginning and we must redouble our efforts to improve GATT (General Agreement on Tariffs and Trade) rules, especially on dispute settlement procedures. He concludes "It would be dangerous indeed to view the MIN process as a job finished, to see the dispersal of experienced talent, and to hope that the new complex, intricate, and ambiguous tangle of international rules which has come out of the MIN could now be put on the shelf, like a wound up clock, to operate by itself. It will take
great skill and resources, both within the U.S. Government and at the international level, to keep these MIN results from becoming merely another addition to the useless debris left strewn on the international landscape, such as the unfortunate 1948 ITO charter, the stillborn 1955 Organization for Trade Cooperation, the Kennedy Round Grains agreement, and the Kennedy Round American Selling Price agreement."
The following policy statement of the National Council reflects our position as approved by the NCFC delegate body in January 1979:
Expansion of foreign trade in farm products.-The National Council of Farmer Cooperatives encorses the ogjectives of expanded world trade and encouragement of market opportunities abroad for American agricultural products. We recognize the special importance of expanded farm markets for our balance of payments and consequent benefit to the national economy.
We encourage multilateral and balanced trade negotiations to reduce world trade barriers. However, we recognize that the lowering of barriers which now limit world trade may create serious economic dislocations and that adjustments to trade patterns must normally come about through careful and gradual reduction of trade barriers.
Under GATT (General Agreement on Tariffs and Trade) or other international trade negotiations, expanded trade to benefit all countries is possible only if offers on trade and other issues by all trading partners represent comparable concessions. Maximum trade benefits should be based on encouragement of production and trading patterns which are consistent with the principle of comparative advantages of all countries. This principle of equal treatment must continue to be the keystone of the U.S. trade agreement policy.
We also strongly encourage the U.S. and all major trading nations to agree on the principle that nations shall not export the costs of their internal policies, as an important prerequisite to meaningful negotiations toward trade expansion. National farm policies to protect and improve farm income should be designed in such ways as to further promote international trade.
The National Council recommends continuation of Presidential authority to enter into further trade agreements based on reciprocity. Many forms of non-tariff barriers, such as quotas, embargoes, unrealistic inspection procedures, and lack of uniformity of grade regulations and tolerances, hamper efforts to achieve such reciprocity and severely limit U.S. export opportunities. Negotiations toward trade agreements should be focused on reduction of such nontariff barriers, particularly the variable levy system widely used by the European Community (EEC) and various quotas and other trade barriers such as those of Japan.
We are opposed to the minimum import price and unfair export subsidies of the EEC and request that U.S. negotiators press vigorously for the removal of their trade-restrictive effects. Such undue protectionism on the part of the EEC reduces opportunities for worldwide relaxing of trade barriers, and limits growth of world markets with the accompanying economic benefits of specialized production.
The National Council is concerned over increasing use of international marketing subsidies which are disruptive of long-established United States markets. Such practices lead to chaotic marketing patterns which tend to allocate resources on a political rather than on economic basis. We recommend that United States agencies or negotiators imvolved in such matters view such practices wherever they exist as a serious disruption of attempts to increase world on a fair and equitable competitive basis.
We also deplore those unilateral increases in tariffs of introduction of other trade barriers which have been made since the termination of the Kennedy Round negotiations. We urge that prompt and positive action be taken by the U.S. to offset trade loses and damaging effects to our balance of trade through such unfair practices.
We recognize the need for sharper difinition of our national goals for food and fiber requirements. We encourage the development of plans to insure a fair and appropriate balance of agricultural products for domestic and export use. Such plans should include a strong monitoring system for worldwide products and, as a last resort, export licensing arrangements could be used in times of threatened world shortages. These arrangements should not involve abrogation of contracts which are the vital links holding our world trading system together. We oppose export controls for political purposes that are disruptive to agricultural markets. Trade agreement bargaining which is limited to farm products alone would be ineffective. All commodities, farm or otherwise, must be considered an integral part of the broad spectrum of international trade and related issues. If we are to grant import concessions on industrial goods, or make concessions on other monetary, economic or political issues, farm products must be part and parcel of the total package for which we, in turn, must secure concessions.
Following the completion of the Kennedy Round of trade negotiations, we worked aggressively with congressional and administration leaders and with many agricultural and other groups to gain passage of the Trade Act of 1974 which made possible these broad, precedent-setting world trade negotiations. Our primary goal has been to gain more open and fairer access to markets abroad, and we believe that orderly and expanding trade in world markets would be seriously jeopardized by a failure of the Tokyo Round.
While the short-term gains for U.S. agriculture in the Geneva agreements have been quite limited, there are important potential long-term benefits in the more significant "non-tariff barrier" negotiations. Our negotiators led by Ambassador Strauss have worked hard and conscientiously to bring these talks to a successful conclusion in the face of extremely difficult economic and political circumstances. Like any negotiation, the Tokyo Round involves costs along with benefit, and all U.S. sectors would like less costs and far more benefits. In the world of hard reality, however, the Tokyo Round should not be judged in terms of “wishes” or sometimes inflated expectations. Instead, we should ask how good the results from Geneva are in these terms: (1) "How near have we come to the maximum possible net benefits from this round?"; and (2) "What would be the alternative, or the consequences to U.S. and world trade and to our long-term national welfare, if no broad agreements are reached at this time?"
In our view, our trade negotiators have done a remarkable job in concluding these talks with substantial potential benefits to the United States, especially so in view of reluctant attitudes and difficult political pressures on the part of some of our most important world trading partners. Ambassador Strauss and his team deserve high marks for accomplishing a step which we believe can be viewed in the future as a historic breakthrough in progress toward a more open world trading system, and a landmark in developing the worldwide cooperative framework which is so vital to dealing with the tremendous economic and political problems facing us today.
We appreciate and applaud, too, the important consultative and advisory role which members of the subcommittee and other key congressional leaders have played throughout the talks. The keen and continuous interest and the congressional recognition of the urgent national importance of the Tokyo Round have been a source of strong reassurance to those of us in the private sector who are constantly aware of the threats as well as the potential benefits of these talks. Congressional interest has encouraged the open and responsive attitude which the trade negotiator's office has shown to the various and sometimes conflicting sector concerns. We are pleased to see that Congress attaches great significance to the importance of this round, as evidenced by these hearings and the vast amount of effort which this committee and other groups are now devoting to trade issues and the Geneva agreements.
Our strong support for the Geneva trade agreement package, based on the assumption that effective implementation and continuing improvements of the trading codes will continue to strengthen its essential thrust, is not primarily because of the very modest net agricultural benefits from tariff cuts and other short-term gains. These so-called "bottom-line" short-term benefits are not the most important aspect of the Tokyo Round, though they are often misperceived as such.
The major results of the MTN will be in the potential for improvement of GATT trading codes, including improved institutional arrangements and procedures for consultations and dispute settlement. Furthermore, there are alarming risks of trade deterioration or world economic disruption in the event of failure in the Tokyo Round. Such failure could lead, directly and indirectly, to serious damage to our farm and agricultural sector, and to the U.S. and the world economy.
Our support for the Geneva package is also predicated on our understanding that U.S. trade negotiators and other trade leaders will continue to press for improvements, through legislative history and follow-up negotiations with our trading partners, which would deal with these key needs: (1) Provision for prompt and effective enforcement of the subsidy/countervailing duty code which would fully assure U.S. dairy and other U.S. agricultural interests of prompt countervailing duty relief against unfair subsidy competition; (2) continuing efforts to minimize any detrimental effects of additional cheese imports on U.S. dairy farmers; (3) improved access abroad for U.S. agricultural exports which face discriminatory tariffs or other trade barriers; and (4) avoidance of any future international grain agreements not in conformance with the recommendations of the Grain Agricultural Technical Advisory Committee (ATAC).
In summary, The National Council of Farmer Cooperatives is strongly favorable to continuing world trade negotiations toward more open markets with fairer access abroad for U.S. farm and other products. We view the MTN Geneva Agreements
package as a strong and useful step in that direction. However, a modest but very commendable success in the Tokyo Round will be only a major building block, not the capstone, of an improved international trading system. Further bilateral and multilateral negotiations must be sought to further improve access for American products abroad and to deal with inequities and abuses which will continue to persist, such as the use of unfair subsidies and other such trade-distorting measures. The codes of the Tokyo round offer us an important means of continuing to work for this fairer and more open world trading system.
We should emphasize, however, that the benefits of the various codes can be no greater than the major trading countries' intent to adhere to the spirit as well as the specifics of the codes. Furthermore, it is important that the United States continue to exercise leadership and initiative in protecting our interests under these codes, through consulting and dispute-settling procedures. We urge this committee and other congressional trade leaders to emphasize in these deliberations and throughout the development of the legislative history for the "Trade Agreements Act of 1979" the need for strong administration of these provisions which promote our agricultural and our national interests.
We appreciate the opportunity to present our views on this urgent matter, and request that you include the attached copy of our News Release of 22 June 1979 in the hearing record on S. 1376.
NATIONAL COUNCIL OF FARMER COOPERATIVES STRONGLY BACKS TRADE PACT LEGISLATION
WASHINGTON, June 22.—The National Council of Farmer Cooperatives today announced its strong support for a landmark trade bill, The Trade Agreements Act of 1979, introduced in Congress this week.
The bill would implement U.S. rights and obligations under agreements reached by nations representing over 90 percent of world commerce during recent multilateral trade negotiations in Geneva, Switzerland.
In a letter to members of Congress, NCFC President Kenneth D. Naden praised prompt endorsement of the bill by the House Ways & Means Committee, and called for its early passage. The bill has, in effect, been under consideration by the Senate Finance and House Ways & Means Committees since the agreements were signed by GATT (General Agreement on Tariffs and Trade) nations in Geneva on April 12.
Naden said that while U.S. farmers would realize only modest immediate benefits from the agreements, they offer potential for substantial long-range expanded trade. He added that maximum benefits could be achieved only through effective implementation of subsidy, standards, and other international codes for fairer trading practices.
"Furthermore," said Naden, "if we don't successfully conclude this round of negotiations, we face serious dangers of continued rising protectionism. That, in turn, could lead to trade disruptions which would be very damaging to U.S. agriculture, our nation, and the world economy.'
The NCFC chief executive praised the outstanding work of the U.S. trade team led by Ambassador Robert S. Strauss. Naden said that successful conclusion of the agreements were due in large measure to Strauss' exceptional leadership, diligence, and effective negotiations.
"Ambassador Strauss' achievements, made possible by President Carter's strong initiatives and support, are a tribute to his great ability to work closely with congressional leaders, public advisors, his negotiating counterparts, and heads of state," Naden said.
The cooperative leader noted that conclusion of this trade agreement doesn't represent a full solution to world trade problems. But, he said, it's an important step toward a fairer and more efficient trading system which will serve us well.
Naden stressed the need for strong enforcement programs, and improved coordination of U.S. trade policy and negotiations. He also called for greater monitoring and coordinating authority for the Office of Special Trade Representative, which "has served agricultural and national interests so well."
The NCFC spokesman cautioned that the U.S. must seek to further improve subsidy and other codes to deal with unfair trade problems still faced by agriculture and other industries. He cited the need for fairer access of some U.S. commodities to Japanese and European markets, unfair import competition faced by U.S. dairy producers, and export subsidy problems which the U.S. often faces in competition for markets abroad.
Senator RIBICOFF. Mr. Robert Lewis.
STATEMENT OF ROBERT G. LEWIS, NATIONAL SECRETARY AND CHIEF ECONOMIST, NATIONAL FARMERS UNION
Mr. LEWIS. Thank you, Mr. Chairman.
I would appreciate it if you could put my full statement in the record.
Senator RIBICOFF. Without objection.
Mr. LEWIS. I will summarize as briefly as I can.
The farmers union supports passage of the Trade Agreements Act of 1979. We feel that Congress has no realistic choice but to approve the multilateral trade agreements. In doing so, it should be recognized that it represents a vote for continuation of our international trading system rather than a vote of satisfaction for the results of this particular phase in the development of that system.
It must be recognized that these agreements fall far short of satisfying the legitimate needs and the equitable rights of farmers. Two outstanding needs we feel must urgently be met.
First, the need of American dairy farmers for compensation for the burden placed upon them by the denial of effective enforcement of the countervailing duty statute and the large increase in the cheese import quota.
The trade agreements mean that our competitors will be able to subsidize their product into our market and place their farmers, who are receiving more for their milk than American farmers receive, in a position where they can take part of our market away.
We feel that the reality for the dairy farmers has been overlooked by the negotiators. It is milk that farmers sell. It is not cheese. And when Mr. Starkey says that he is satisfied that American farmers will enjoy a large share of the growth of the market for cheese, he is ignoring the fact that it is milk that farmers sell, and that dairy farmers have looked to the expansion of consumption of cheese as a way to provide a market for that milk which has lost its outlet through the diminishing demand for butter and to a substantial extent for nonfat dry milk.
Total milk production, and the total market for domestic milk in this country today are less than 10 years ago. We are losing our market for milk and we need to have the right to shift to cheese as an outlet in order to satisfy the need for income for farmers.
It should be borne in mind also that dairy farmers receive no compensation in the way of trade adjustment assistance for their loss of income due to imports. It must be kept in mind that it is not price that is important. The price at which imports of cheese come in is not the important aspect. It is the volume that comes in that takes away part of the market for the farmer's milk, shifts it into the price support program, creates a Government expenditure that becomes an excuse for reducing the level of price support to the dairy farmers, and thereby creates an injury to them.
We think the compensation that is due to dairy farmers is an increase in the minimum level of price support on milk and its products.
Second, there is a need for immediate administrative action to raise the prices of grain. Grain exports from the United States account for almost half of our huge $30 billion a year of agricultural export earnings. Our grain faces import barriers, the equivalent