MS. STEPHENS: Good morning. My name is Meredith Stephens. I'm president of the California Association of Wheat Growers. My husband and I are fifth generation farmers in northern California where we grow wheat and grow crops.

We as growers have used all means available to grow high quality wheat to serve a growing world demand. Unfortunately, while our major competitors in Australia and Canada and the European Union have sold their 1998 wheat crops, we in the U.S. are holding a very full bag of unsold wheat.

Is our wheat inferior? Are we not doing enough to promote sales? No. The basic fact is that our trade policy lacks the teeth to maintain a competitive position in the world market. It's time for the U.S. to get tough on trade policy. We must end our strategy of unilateral disarmament in trade negotiations.

The California wheat industry's top priorities for trade talks are State trading enterprises, export subsidies, phytosanitary measures and biotechnology. I will talk about the first two and my colleague Craig will talk about the second two.

State trading enterprises. The last trade round failed to discipline state trading exporters. Grossly unfair competition in wheat has resulted. The Canadian Wheat Board has monopoly power to handle about 20 percent of the world's supply of grain and barley. Yet it operates without commercial risk.

Why is it that the U.S. government will challenge Microsoft's market power, but can't keep the Canadian Wheat Board from running our wheat growers out of business. The bottom line on state trading exporters is that they must be subject to the same disciplines as other traders. This will require better price transparency and complete reporting to the WTO.

Export subsidies. We urge all direct export subsidies be eliminated immediately. Our government has not used export subsidies on wheat since 1995, while the European and monopoly wheat boards have freely done so. To establish leverage, the U.S. Administration must fully fund and use all of our export tools. This includes the export enhancement program, GSM 102 and 103 credit guarantees and most importantly food donations.

U.S. negotiators will face strong pressure from foreign nations to classify U.S. export credit programs as subsidies. They should adamantly resist pressure to eliminate or reduce these programs. Our export credit programs are not unique and are commonly used in other forms of our trade rivals.

Finally, as you negotiate our trade future, we ask that you know exactly what our competitors have, how they use it and where our leverage lies.

Thank you very much for listening.