And our next presenter is Jessica Wasserman, Trade Counsel, in the Foreign Agricultural Service, Office of the Administrator. Ms. Wasserman will give us an overview of the WTO process and the important role of Agriculture.

(Thereupon an overhead presentation was presented as follows.)

WASSERMAN: I'm going to take you briefly, I hope, through the following areas to give an overview of ag trade policy as we go into the next round: The critical role that exports already play for agriculture; the role that trade agreements have played in obtaining the current level of agricultural exports; and our goals for the upcoming WTO round of negotiations.

I hope that you all have the handout that actually shows those slides and I believe the speech as well, so it will be very easy for you to follow along as I go through these few slides.

I'd like to start with showing you, as others have mentioned, the level already of dependency on exports in the agriculture sector. U.S. Ag exports reached 53.6 billion in 1998. Exports support nearly 750,000 jobs. Products of nearly one in three harvested acres are destined for overseas. Even in the current downturn, around 25 percent of ag sales are exports sales, compared with ten percent on average for the rest of the economy. The vast majority, about 96 percent, of potential customers for U.S. products, including agricultural products, live outside the United States. We clearly have to increase our opportunities to sell in global markets.

Access to customers in foreign markets is a key factor to the health of the U.S. Agriculture. Compared to the general economy, U.S. Agriculture's reliance on export markets is higher and projected to grow faster. Agriculture is already more reliant on exports than the economy as a whole.

The top line shows ag exports at 26.4 percent. Whereas, the overall economy is at around 11 percent.

This slide shows the long-term trend in ag exports. The overall trend has been one of increasing exports for American agriculture. U.S. agricultural exports climbed to nearly $60 billion in 1996 up from $40 billion at the beginning of the nineteen nineties. Exports were down last year and likely will be down for 1999 as well, due to worldwide crop production, the Asian financial crisis and the strong dollar. Agricultural exports in 1998 were $53.6 billion, and we project exports of $49 billion in 1999.

However, when the global economy rebounds, the trend of increasing exports is predicted to continue, and exports will account for a larger percentage of farm income. So the shaded area is our prediction, which you can see is a triple one.

The 1996 Farm Bill increased the market orientation of agriculture and so to be prosperous in an increasingly competitive market, we must increase our exports in those areas where we have the comparative advantage. Certain agricultural sectors, such as almonds, grown in California, are already exporting more than 60 percent of production.

The red shaded are California products and this shows products where 25 percent more of total sales are already exported. And you can see when we're in other states there are often three or so bars that are highlighted, but California is a big State and Arizona as well in the agricultural sector.

And this slide makes a similar point showing products where we already export over a $billion worth of products. U.S. agricultural productivity is increasing, while domestic demand for agricultural products is growing slowly. Therefore we must develop new overseas markets for our products.

It's also interesting to graph farm equity versus exports. And you can see how closely they've tracked over a period of 40 years or so. Expanding export markets, while certainly not the only tool, is a very important tool for leading us out of the slump in agriculture. We must be realistic, exports are projected to decline in 1999 to $49 billion. It's estimated that 45 percent of the world's economy outside the United States is now suffering recession or depression. Until the global economy turns around, we will not immediately increase our global customer base. But as a long-term strategy, expanding our export markets is critical.

A key to expanding our export markets are trade agreements. And it's clear that the trade agreements that we have already worked so hard to negotiate have benefited agricultural exports. We would not be at the level of exports we are at today if we had not negotiated trade agreements, such as the WTO or the North American Free Trade Agreement.

And this slide just shows over time, here at the bottom, are the trade agreements, and what happened to exports and imports at those points. Clearly, the value of the dollar has an impact on all of this. But all economists agree that the trade agreements are key to expanding export markets.

And this slide is very persuasive with regard to showing the estimated benefits that have come just for agriculture from trade agreements. For the Uruguay Round by 2005 it's predicted that we will have $5.17 billion more exports than we would have without the Uruguay Round Agreement.

And already in 1994, with the Japan beef, citrus agreement, we benefited to the tune of $1.29 billion more of exports to that market as a result of the trade agreement.

We know that NAFTA can sometimes be controversial. We feel that it is fulfilling its promise for agriculture. This slide shows where NAFTA has exceeded the EU as an export market for us. And also it shows, the green line as the Asian Pacific Rim, that as exports have fallen off there, our exports for NAFTA countries have helped to offset those sales declines tremendously.

We estimate that in the first three years, NAFTA can take credit for three percent additional exports to Mexico and seven percent additional exports to Canada.

Now, I'm going to move into our goals for the WTO round focusing more on that.

A major part of our strategy to level the playing field for agriculture is to be successful in the upcoming WTO round of negotiations. To understand where we're going in the WTO, it's important to understand where we have been.

The General Agreement on Tariff and Trade, the GATT, was established in 1948 and set the basic rules for international trade. A number of multilateral GATT negotiations or rounds took place between 1948 and the present, with the most recent round being the Uruguay Round, concluding in 1994, six years ago.

The Uruguay Round established the World Trade Organization or WTO, which is basically a continuation of the GATT system.

And this slide shows some of the results from the Uruguay Round. The Uruguay Round Agreements opened a new chapter in agricultural trade policy, committing countries around the world to new rules and specific commitments to reduce levels of protection and support that were barriers to trade. Agriculture finally became a full partner in the multilateral trading system.

For the first time, countries had to make across-the-board cuts in agricultural tariffs. For the first time, export subsidies had to be reduced and internal support polices that distort trade were capped and reduced. New rules set a scientific standard for measures that restrict imports on the basis of human, animal or plant health and safety. And a new dispute settlement process was adopted, one that we have successfully used in a number of cases.

For example, we recently won dispute-settlement panels against the European ban on beef from cattle treated with growth hormones, against the EU's banana import licensing regime, against Japan's restrictive quarantine requirements for fresh fruit, and Canada's dairy policy on subsidies. We must now maintain a firm line to ensure that the banana and hormones decisions are carried out so that U.S. exports have the access determined to be their legal right.

The Uruguay Round agreement was a good start. It has already contributed to increased U.S. agricultural exports and higher farm incomes as American producers have taken advantage of newly opened markets and new opportunities. But the Uruguay Round was just a start, the first important step in global agricultural trade reform.

And as other speakers have mentioned, the new round is being kicked off in Seattle in November and December. And we expect the agreement -- the negotiations to begin in 2000 and last three years or so.

In setting the agenda for the next WTO round of agricultural negotiations, we will build on the Uruguay Round accomplishments. Tariffs were reduced in the Uruguay Round, but they are still too high.

And this slide shows that for the U.S. our average tariffs are eight percent or so, for the EU 20 percent and for all WTO members averaged together it's about 50 percent. So it's certainly in our interests to get into negotiations and be sure that some more harmonization occurs in this area.

We also want to expand market access under tariff-rate quotas by increasing the quota amount and decreasing the tariff outside the quota.

On export subsidies. Again, we call this our pacman slide. The red is all Europe. And you can see the United States is just in yellow there. Global exports subsidies are about $8.5 billion, with the EU accounting for 83.5 percent of those. Again, this is something that we are going into the round and calling for the elimination of export subsidies, which would clearly benefit our producers.

Another problem in agricultural markets are state trading enterprises or STEs, government entities that act as monopolies. When an STE has government authority and monopoly power, they may be able to price their products artificially low and unfairly increase market share. It is important that we develop stricter WTO rules to ensure that STEs operate in a fair and transparent manner.

On domestic support, again, a similar story, in that the EU outspends the United States by a very large margin. And every time I look at this, I'm amazed, but that really does add up to about $90 billion in global internal supports.

A comparison of the levels of such support shows that globally, including the United States, but particularly in Europe and Japan, domestic support remains high. Our goal for the next round is to make sure that the assistance other governments give to agriculture is provided in ways that do not interfere with markets. But generous subsidy programs that encourage farmers to produce as much as possible without regard to efficiency or environmental costs can only be sustained by keeping out the competition and dumping surplus production on world markets.

These are our main goals going into the round. There are a few others that are important to mention. With regard to the SPS agreement, we are determined to ensure that the existing strong agreement requiring that barriers related to health and safety continue to be based on sound science.

With regard to biotechnology, we are committed to finding better ways to facilitate trade in products resulting from scientific innovation including biotechnology.

Trade reform through the WTO provides the biggest bang for the buck. In one agreement for example, we can get 134 countries to cut tariff barriers on exports. But getting all these countries to agree on major reforms will take up a lot of time and effort. It won't be easy.

The United States has already completed much preparatory work in Geneva, where the WTO is located. We are using the WTO committee on agriculture to identify places where current rules and commitments don't go far enough to open up markets for our exports. At the same time, we are using a less formal process to build a consensus and prepare the ground for the tough negotiations to come.

This includes our Internet address for your continued participation. Input from those who will be most affected by the results of the WTO negotiation, that is you here today, is critical both at this early stage and as the USDA and USTR work together in the negotiating process. We need your support and suggestions, including any specific proposals you may have for our negotiations.

You can make your voice heard on these issues by making your views known to your local farm groups and State government representatives in the Legislature or the Executive Branch. Many of you are represented on our federal Agricultural Trade Advisory Committees. We encourage you to bring your eyes for the WTO to the upcoming meetings.

In all our activities, we want to send a clear message to the rest of the world that agriculture is a top priority for the United States and that we remain fully committed to open markets and fair trade. But we need your support and advice to make sure that trade agreements continue to work for American farmers and for U.S. agribusiness. Please do not hesitate to send us your views via the Internet or a letter to the USDA or to the USTR.

In conclusion, U.S. agriculture is already a globalized industry. It is inevitable that globalization in agriculture will continue. To establish the best international rules for U.S. agriculture, we must stay engaged in the negotiation of trade agreements. Our next major opportunity is the upcoming WTO round.

Thank you for your interest today, and we hope, throughout these important negotiations.