Our first panel -- and I would invite the four of them to please join us here at the front -- is made up of Kevin Vinchattle, who is the Executive Director of the Iowa Egg Council and Iowa Poultry Association; Joel Van Gilst, board member of the Iowa Pork Production Association; Representative Sharon Schwartz from Kansas, who will speak on behalf of the U.S. Meat Export Federation; and Dr. Dennis Gorley, Elite Genetics from Waukon, Iowa. Kevin, why don't we begin with you. And your 5 minutes starts the second you're up here. Dan didn't notice this, but there is a little light up here that tells you when the floor disappears.

MR. VINCHATTLE: Thank you.

Mr. Secretary, Senator Grassley, Congressman Boswell, Mr. Ambassador, Secretary of Agriculture, and our distinguished members. On behalf of the membership of the Iowa Poultry Association, I want to thank you for the opportunity to provide comment today. And a brief personal aside, I want to thank you for the opportunity to shake hands with Dennis Gorley again. His sister and I were classmates in Webster City High School which has probably been 20 plus years since I've seen him, so it's a renewed acquaintance. But back to the matter at hand. We have seen a dramatic resurgence of meat production during the last decade in Iowa. We believe we are now likely the number two egg-producing state in the nation. It is quite conceivable we will be at the top of egg-producing states in a very short time. This is quite amazing when you consider that a little over a decade ago Iowa had 8 million layers.

The Iowa Egg Industry clearly recognizes the importance of the world marketplace. We have fewer than 3 million people in Iowa. We are well aware the primary markets for our production are found outside our state borders. We also recognize more than 95 percent of our potential customers are found outside the borders of the United States. However, at this time, the U.S. Egg Industry is perhaps less dependant on exports than some of the other sectors of agriculture. About 3 to 4 percent of U.S. egg production is exported in shell or processed form. However, the recent expansion makes us well aware of the need to build export markets. Reliance on domestic markets alone will not support the industry at present levels. While egg producers have historically sought a minimal role of government intervention in egg production and processing enterprises, we do believe government has an important role to play in making sure our access to world markets is free and open.

Current situations around the world are a great concern for men and woman who produce or process the incredible edible egg. I'd like to share a few specific examples. European Union officials have recently suggested they will not allow animal welfare regulations to make European egg production noncompetitive, but will act to keep imports from other sources out of the country.

In addition, the EU has taken recent actions which appear to violate the zero-duty binding on inedible egg products negotiated during the Kennedy Round of the multilateral trade negotiations in 1967. Canada continues to maintain restrictive tariff-rate quotas on import eggs while operating an export system for egg products that was identified as a trade barrier in the U.S. Government's recent National Trade Estimates. These U.S. Government findings stated the domestic Canadian price for shell eggs is maintained at a level substantially above the world price. At the same time, producers are assessed a levy on all eggs sold, and a portion of the levy is used to subsidize the export of eggs. This practice artificially increases Canadian exports of egg products.

More specifically, the Canadian system provides some of the levy funds that are utilized in an industrial products pool. The Canadian Egg Marketing Industry then uses the pool to reduce the price of eggs. This special subsidy is only available for eggs destined to be processed for export. The United Egg Association estimates removal of this subsidy would increase U.S. egg products exports by some $60 million per year.

Mexico is another country considering the enforcement of regulations not based in science which could greatly impact eggs and egg products. They may require that refrigerated eggs sold to Mexico shall not remain outside a refrigerator for more than an hour and require the designation of imported refrigerated retail eggs for industrial use only if stores keep them at unrefrigerated temperatures. However, their own regulations recommend a 15-day expiration date for unrefrigerated eggs. They are trying to imply that sweating eggs, that is those exhibiting normal condensation if removed from a cooler environment to a warmer environment, are a health risk, and this is not supported by the findings in literature. In fact, WTO Article 5.2 says, "In assessment of risks, members shall take into account available scientific evidence, relevant processes, and production methods; relevant inspection; sampling and testing methods." Mexico has failed to do this in this instance. Instead, U.S. egg producers are faced with a transparent attempt to block egg exports to Mexico.

The egg industry in Iowa and the U.S. is extremely efficient and competitive.

We support the abolishment of export subsidies. We support the cutting of tariffs and the phase-out of tariff-rate quotas. Sanitary, phytosanitary, and environmental rules should not be used as barriers to free and open trade. All products and all policies from all countries should be on the table at the upcoming round.

We encourage the U.S. Government to utilize its powers to provide free and open access to markets throughout the world. With more than 95 percent of our potential customers living outside our borders, we are confident egg production and processing industries can deliver the quality and quantity the world desires. Thank you.