Any questions from our negotiating panel of our panel?

Deputy Secretary.

USDA DEPUTY SECRETARY ROMINGER: I appreciate all of the comments on organic production from this panel. It's certainly something that we're going to be working on at USDA. Lon Hatamiya when he was -- before he was administrator of the Foreign Agricultural Service, he was the administrator of the Agricultural Marketing Service. And he got us started on implementing federal legislation.

We're getting closer, but we're still a little ways away. But we will have some federal organic standards here. Hopefully, that rule will be out by the end of the year. So with your help, maybe we'll get it right this time.

I wanted to ask -- certainly, we agree that Codex can be of some help in the interim here, since we don't have international standards. From what we've been hearing, I think they were waiting to see what we would come up with in the U.S. before they move too far down the road with the Codex standards. So we hope that we can all work together and make some headway in that area.

Jim, did you want to comment on that ISO 65 or what's happening there or anything?

I think we're pretty close there. I thought we were going to make it by June 30th but maybe not.

MS. FRANKLIN: Can I make one comment about what you just said. The rate of speed at which we achieve these things is of concern to me, because of the study the USDA itself put out, which is that 94 percent of American farms net less than $23,000 a year.

Two days later my next door neighbor, who farms over 100 acres of organic cherries, which he can't ship to Japan, came in and said, "Kay, I only made $22,500 last year," when he finished his taxes. And these are people who've already converted to organic. But the point is is that many of these farms are converting to organic, because they're looking for that premium, for that help, for the ability to stay farming. And that's why I feel there's a real urgency.

USDA DEPUTY SECRETARY ROMINGER: Okay. Well, we hear you, but we're trying to get it right this time.

MS. FRANKLIN: Yeah, we hope so. We hope you do too.

CO-MODERATOR JONES: Anymore questions from our negotiators?

Yes, Dr. Murphy.

ASSISTANT U.S. TRADE REPRESENTATIVE MURPHY: One question related to the issue of being disqualified in Japan, because you -- I guess there are certain requirements that you fumigate certain fruits, vegetables which then deny issuability to be designated as organic. Are there ways to accomplish this same objective, that is looking at the Japanese point of view, owning a pest-free import?

Are there ways that could be used? Has there been an attempt to talk to the Japanese authorities to say well, here's an alternative way that does it just as well, and is there evidence to put on the table to make that case?

MS. BOWEN: Well, it's difficult for us, as a relatively small nonprofit organization, to hold those negotiations with Japan. However, there are some promising technologies that would qualify for acceptance under organic handling practices. One of the promising technologies is ozonation. And I know that a number of our producers and exporters are looking at this.

I think that there is a role for the, you know, USDA, the agricultural research service and possibly, you know, at the WTO that, you know, for there to be dialogue on these kinds of technologies and sharing of information on technologies that are up and coming and maybe more environmentally benign and acceptable in organic standards. So that's maybe just a message for USDA too, we really would appreciate priority placed on some of the organic handling issues within the research service.

USDA DEPUTY SECRETARY ROMINGER: Well, that's a good point and we certainly are putting a lot more effort than we did before into looking for alternatives for treatments such as methyl bromide. And Japan is a member of the Montreal Protocol, so they know what's coming down the line as far as that use for treatment. So we are looking for non-chemical treatment methods that would solve the problems.

MS. BOWEN: But we are -- the organic industry is just as dedicated to a safe food system obviously as other agricultural sectors. You know, certainly no farmer or processor wants to have his product either making people sick or, you know, possibly introducing pests into other countries, that may wreak havoc on their agriculture. So we're dedicated to, you know, fulfilling the requirements, but we would ask that there be, you know, broad examination of methods by which we may fulfill them.

CO-MODERATOR JONES: Mr. Ambassador -- oh, sorry, Deputy Secretary.

USDA DEPUTY SECRETARY ROMINGER: I wanted to ask Dr. Kramer a question on biotechnology. Given what we're seeing in the European Union about the resistance to the technology, it seems to me that perhaps one of the reasons that we see that resistance is because those consumers don't see enough benefit to them as a consumer. Because certainly they have accepted biotech pharmaceuticals, because they see the direct benefit.

So I'm wondering how long you think it will be before we see biotechnology food products coming along where the consumer will see a direct benefit, whether it's a food that reduces cholesterol or reduces blood pressure, prevents diabetes, how long do you think it will be before we see those kind of products?

DR. KRAMER: Well, we are working on various research projects, because I myself realize, coming from Europe and working only temporarily in the United States, I'm very much aware of the issues that are important in Europe. And in my opinion, a breakthrough can hardly be expected in the acceptance of biotechnology until the science has developed so far that a significant consumer benefit can be contributed through various delivering systems using genetic modification techniques.

Now, the question you are asking, how long is this going to take? I mean that's a difficult question, because really most of the traits that are available at the moment are more agronomic traits, which to the consumer do not bring additional benefits at this moment. Maybe, to a certain degree, elimination of pesticides, but that would be an indirect benefit.

My current thinking is that it might take as much as maybe five years before we see some real breakthrough in coming, available certain traits that really have consumer benefits. Then taking the regulatory requirements which take easily up to two years, we might be easily seven, eight years down the road from today.

USDA DEPUTY SECRETARY ROMINGER: Thank you.

CO-MODERATOR JONES: Mr. Ambassador.

AMBASSADOR BAAS: Yeah, I sort of hesitate to raise this. I just wanted to make a comment on Mr. Letourneau's statement. And there's a lot of passion and a lot of misinformation perhaps or not fully formed information that goes around on biotechnology. And I think two of the examples you give in your statement, may, in fact, turn out to be true, but I think the evidence is not in yet.

One is the Monarch butterfly example, which was, as I understand it, done via a letter to Nature Magazine not done after tests in the field. Of course, Bt toxin kills butterflies. It's developed to kill that kind of, I don't know the scientific name. And there is some evidence from people who know more about these things, that they feed on milkweed, which isn't very close to corn and pollen falls and so on.

Now, my only point here is, I think we need some more tests in the field to find out, in fact, what the effect is on butterflies. And, also, I would point out that the tests in Scotland on potatoes was subsequently disavowed by the organization that employed the man or the scientist who did it.

Now, again, I don't want to enter into a debate with you, both tests may eventually prove to be the truth. My only point, is that I think where we are now, they are not yet shown to be the truth. And I think we have serious issues that need to be considered and studied further. And I just wanted to get that on the record, Mr. Chairman.

MR. LETOURNEAU: If I could comment for a minute on that. It is true the Monarch butterfly was a laboratory test. It is also true that milkweed grows in disturbed soils as seasonal agricultural soils that have been disturbed. So the likelihood of them appearing near corn fields is actually quite substantial.

The scientist who did the research in Scotland was discredited by the Institute. However, there was testimony from 20 additional scientists afterwards that said that his -- that said that his research was, indeed, valid. And so there are some questions as to the motivation behind the attempts to discredit his study.

So, again, but the real point here is why are these coming out now, why shouldn't these studies have been done before these were released? In effect, the environment and the population, the human population of that area eating these genetically manipulated organisms, are the guinea pigs. The only thing that I'm suggesting -- I'm not saying that this is all bad. What I'm saying is that these -- it was premature market release that led to this. And the consequences are unknown at this point.

And I think that the fact that we did not have long-term studies done on this is partly, I lay at, the regulatory agencies and the responsibility of that and also the intense competition that is happening within the biotech. And both the lack of regulatory oversight and this competitive atmosphere has not taken the human population and the environment into consideration. That is my main point here.

CO-MODERATOR JONES: Any other questions from the negotiators?

CO-MODERATOR LYONS: I've just got a couple quick comments. One is when it comes to the organics, CDFA is, I think, beginning to establish a good relationship. I know that some time in the future, I'm going to be over on the coast to look at some organic farms and agriculture.

One of the other things I want to bring up, and this is maybe a heads up for some of the negotiating team, when Jim brought up the issue about milk out of New Zealand, it all of a sudden reminded me of an issue that Secretary Sue Combs is probably going to bring up when you're in Texas and that's on a similar vein. When it comes to the importation of lamb where she brought up the fact that, and I hope these numbers are close, they're not exact, let's say close, that New Zealand had imported into the United States, I think, over $200 million worth of Mutton and that we had exported $5,000 of Mutton back to New Zealand. So I think that, in a sense, even though it's not milk, Jim, it's the same type of issue that we have to deal with.

That was just kind of a heads up. Sometimes I have problems remembering things, and so I thought I'd bring that up. I know I'll be much softer when those Texans are up here.

USDA DEPUTY SECRETARY ROMINGER: Or the Montana sheep growers.

AMBASSADOR BAAS: Just a comment then, if I might. We ought to have fair trade, but if we are going to expect that we're going to always send as much milk to New Zealand as they send to us or as much, you know, Mutton to them as they send to us or at least Europe sends as much beef to us as we send to them, I mean it's crazy. So we've got to be a little careful how far we go.

CO-MODERATOR LYONS: We'd have to send more people.

AMBASSADOR BAAS: I mean New Zealand has got three million people and 60 million sheep and we don't have anything like that.

(Laughter.)

MR. TILLISON: If I could just comment on that?

CO-MODERATOR LYONS: Let me just finish with Mark for just a second. And I understand that, I just know that those three million people will eat more than $5,000 worth of U.S. Mutton.

MR. TILLISON: Well, if I could just comment on it specifically regarding milk. Obviously, we don't expect to export the same amount of dairy products to New Zealand. My point was is that New Zealand and Australia both come to the United States and lobby our Department of Agriculture and our Congress very heavily, saying Asia is our market, that's our traditional market. We'll, I'm sorry, this is our traditional market. And fair trade doesn't mean exact trading even with the country as much as equal access to areas, that's what I was talking about.

AMBASSADOR BAAS: I don't disagree at all.

MR. TILLISON: Thank you.