MR. THIBAUT: Good morning. Panels from the office of the USDA, the State Department, the United States Trade Representative, my name is Charles Thibaut. I serve as the chairman of the National Legislative Committee of the American Sugar Cane League, and am chairman of the USDA Agricultural Technical Advisory Committee on Sweetness. I'm also a grower and processor of sugar cane in Louisiana. The league represents more than 700 growers and all 18 processors of sugar cane in the state.

I appear before you to today present testimony on behalf of our organization. Although my comments reflect Louisiana's views on U.S. agricultural trade negotiations, our views are shared by all of the producers in this country.

Before I begin, let me first express my appreciation for being provided the opportunity to testify before the panel. I would like to compliment the USDA and USTR for holding this hearing. The purpose of my presentation today is to provide some direction to our trade representatives on the next round of agricultural trade negotiations. You see, in Louisiana, we are very cognizant of the role that trade plays in the production and marketing of agricultural commodities in our state and across the nation. We also realize that as an industry, U.S. agriculture continues to be one of the few industries that consistently runs.a trade surplus and has been successful in exporting agricultural commodities in the highly competitive global marketplace. In 1997, Louisiana's agricultural exports were estimated at 704 million dollars, with cotton, rice, soybeans, wheat, corn, and cotton seed ranking as the state's top export crops. Rice and cotton ranked as the third and fourth largest agronomic crops grown in our state and nationally; we ranked as the third largest rice producing state and sixth largest in the production of cotton. In sugar cane, we are second only to Florida.

The ability to secure export market access for these commodities has a direct effect on the productivity and profitability of our state's producers. However, crops such as rice, cotton, corn, wheat, and soybeans represent only about 20 percent of our state's agricultural economy. We also have a five billion dollar forestry industry, a 1.4 billion dollar livestock and animal production industry, an 885 million dollar aqua culture industry, a 500 to 600 million dollar sugar cane industry, a 157 million dollar nursery industry, and an 82 million dollar sweet potato industry, just to name a few. In 1998, the total value of all agricultural commodities produced in the state were estimated at 9.6 billion dollars, which illustrates the agricultural diversity of our state, which is very similar to the diversity found in many other states.

The significance of these numbers are that when we consider our state's 704 million dollars in agricultural exports, we realize that much of our state's agricultural production is not

produced for export but for domestic markets, and these crops exceed the value of our export crops. The same is true in many other states. So while we strongly support agreements that would provide greater export market access for commodities such as rice, cotton, corn, wheat, and soybeans, we must also consider framing our trade objectives to adhere -- to achieve a balance between maintaining domestic markets and increasing export access. Otherwise, the only trade we are accomplishing is trading away one commodity's established domestic market for another commodity's access to an export market.

Our concerns are not whether a market is an export or a domestic market. A market is a market, and the largest cost to our country is the loss of an established market that has taken hundreds of millions of dollars and many years to develop.

The formation of the World Trade Organization in 1995 established an agreement that is the framework for 134 countries and 30 other prospective ones to establish fair trade parameters for its members. However, as we stand poised to enter the next round of the WTO negotiations, the United States enters with the lower aggregate level of tariffs and trade protections of virtually any member country. In reviewing the list of Section 301 cases initiated, it is apparent that many trade-distorting practices still exist within the member countries. Therefore we must first target the noncompliance of member countries in agreements negotiated in the last round of trade agreements -- trade negotiations before forging ahead with additional agreements. No new agreements should be negotiated with member countries that have not complied with earlier agreements.

Second, our negotiations – negotiators must avoid the temptation to offer any U.S. concession to member countries in order to negotiate their compliance. In Louisiana, a pointed example of WTO member country noncompliance is the Mexican government's attempt to revoke the terms of the sugar side-letter in the North American Free Trade Agreement and the addition of tariffs onto U.S. High Fructose Corn Sweetener. The side-letter agreement on sugar, which caps Mexico's access to the U.S. market, was crucial in securing U.S. Congressional support for NAFTA. Now we see our domestic sugar market in jeopardy as the Mexican government pushes to ignore the terms of the side-letter agreement in an attempt to force the U.S. to grant market access for Mexican sugar displaced by High Fructose Corn Syrup from the U.S.

This trade agreement compliance problem is extremely significant to the economic health of our state, since we are the second sugar-producing state in the nation and sugar cane is our largest agronomic crop. The sugar cane industry is also the largest employer for a large region of our state, providing more than 32,000 jobs in 24 of 64 parishes, one-third of the state.

I must state that our biggest concern is that U.S. trade negotiators will concede additional U.S. market access for Mexican sugar as the concession for Mexican High Fructose Corn Syrup tariff removal. In 15 sugar-producing states like Louisiana, our view is that any reduction in the terms of the sugar side-letter agreement would amount to negotiating away our market for domestically produced sugar to secure a corn export market. No reduction in terms should be provided by U.S. negotiators since the High Fructose Corn Syrup tariffs violate the terms of the NAFTA agreement.

Another trade concern that impacts our state is the terms of China's accession to the WTO. Since China is the world's largest market, U.S. export opportunities abound for small grains and other commodities. China is also the largest producer and consumer of cotton in the world. In the U.S., we export about one-third of our cotton production and we hope to have opportunities to export cotton to China. However, China has increased their presence as an exporter, and the terms of China's accession to the WTO must include adequate safeguards that prevent Chinese textiles from cannibalizing our nation's cotton production and textile industry.

Negotiators need to understand that this is especially important, because it is our nation's cotton producers that have made the greatest investment to develop the domestic cotton market in this country through their check-off contributions for promotional advertising. The WTO terms must address China's current cotton policy that currently provides a reference price for Chinese cotton production of 60 to 65 cents per pound. The accession terms must also provide the U.S. textile industry with an adequate transition period to prepare for Chinese competition, with a 10-year phase out of textile import quotas.

Another sticking point in upcoming trade negotiations, and one of my main topics, is the dilemma concerning the application of sanitary and phytosanitary standards under the terms of the SPS agreement of the WTO. We have all witnessed how the European Union has used the SPS agreements to create an EU-SPS standard that prevents the entry of genetically-modified commodities and hormone-fed beef. I full well understand how the SPS standard can be used by a country to create a non-tariff trade barrier which is difficult to challenge because of its technical complexity. However, the terms of the SPS agreement provide the governments of member countries with the sovereign right to establish an SPS standard in order to provide the level of health protection it deems appropriate, as long as the standard imposed is limited to the extent necessary to protect human, animal, or plant health based on sound scientific information and assessment.

While we have been successful in winning Section 301 cases, we will continue to see SPS standards implemented by member countries that will limit market access for U.S. exports.

Furthermore, it is these standards -- if these standards are proven to be permissible under a scientifically-based transparent formula, the WTO will be powerless under the technical barriers to trade agreement to rule against the standard, despite its effect on U.S. market access.

My point is this: The U.S. has some of the highest environmental sanitary, phytosanitary, and labor standards in the world for our domestically produced commodities implemented to protect the health of U.S. citizens. However, we are currently -- we currently do not provide the same level of attention to sanitary and phytosanitary standards of foreign agricultural commodities imported into this country.

This must be a consideration as we approach the next round of trade negotiations.

There is far too great a disparity between the regulations governing U.S. agricultural producers and the commodities versus the regulations imposed on foreign agricultural products entering the U.S. We must take into account the food safety standards that Americans expect, and develop SPS standards for imported agricultural products that establish standards comparable to those regulating domestically produced agricultural commodities and products.

An excellent case in point that illustrates the disparity between the standards for domestic versus imported commodities is the Food Quality Protection Act implemented by Congress in 1996 to protect U.S. citizens from pesticide exposure risk and based on sound science. The agricultural chemicals used by U.S. producers, such as Malathion and Lorsban, can only be used on crop applications that fit into an acceptable measure of human exposure for risk for U.S. citizens.

However, imported agricultural commodities are not subject to comply with the Food Quality Protection Act; therefore many chemicals such as DDT and Chlordane, which have been illegal for use in the United States for 20 years, are stillused in foreign countries. Their commodities produced with chemicals illegal for use in the U.S. enter our country, with less than one percent of these commodities inspected at the border. Imported commodities must only comply with the U.S. threshold residue levels. The FQPA does not regulate the products and chemicals used on imported commodities whatsoever. If there ever was an unfair trade practice, it is our government holding U.S. producers to a much higher standard than that of imported commodities.

A scientifically based SPS standard based on some of the provisions of the Food Quality Protection Act would definitely meet scientific criteria for validity and transparency under the WTO-SPS agreement. As our trade representatives prepare for agricultural negotiations, we must realize that whether we like it or not, sanitary and phytosanitary standards are already a part of ongoing trade agreements. We must negotiate trade terms that provide equality or U.S. producers. I urge implementation of any enhanced US-SPS standard, or risk losing U.S. agricultural domestic markets to unregulated foreign imports.

The implementation of the comparable SPS standards for foreign commodities entering the U.S. would help equalize trade within the WTO for U.S. producers of import- sensitive commodities that compete with the least developed member nations. They are allowed to subsidize their producers under the terms of the WTO agreement and are protected from WTO countervailing measures. The low level or absence of sanitary and phytosanitary standards provide a trade advantage for these foreign agricultural commodities in that they are not required to adhere to U.S. standards established to protect the health of U.S. citizens.

As we enter the next round of WTO negotiations, our U.S. agricultural trade negotiators' focus must be targeted on leveling the playing field. Since the Uruguay Round, U.S. agriculture has not only complied with our obligations but has exceeded our obligations for lowering tariffs, subsidies, and granting U.S. market access to foreign countries. Now as we view our world agricultural trade, the Uruguay Round was successful in lowering tariffs and subsidy support levels, but foreign countries continue to have much greater import protection to their markets and higher subsidy support mechanisms for their producers than those provided to U.S. producers.

Therefore, we recommend that negotiators employ a flexible request-offer negotiating strategy in the upcoming trade negotiations to reduce the huge disparity in supports between U.S. and WTO member nations. The formula-driven method of negotiating support reductions used in the Uruguay Round was ineffective and left producers competing for markets with foreign producers with much higher subsidies. A perfect example is the EU sugar subsidy that totally distorts the world sugar price by paying EU sugar producers over 30 cents per pound, while marketing surplus EU sugar on the world market at less than 10 cents a pound.

We further recommend that our U.S. negotiators target State Trading Enterprises, the main method used by foreign countries to circumvent the Uruguay Round commitments. State Trading Enterprises were not addressed in the Uruguay Round and they are being used successfully by countries such as Australia to provide subsidies and reduce interest rates for producers outside of their governments' negotiated trade commitments.

As we approach the upcoming round of WTO trade negotiations, I would like to encourage the United States Trade Representative to utilize all of our resources to negotiate the best agreement for agriculture. In recent years our top USTR trade negotiators have become very valuable and many have moved to the private sector. At the same time, many comment on the length of tenure of foreign trade negotiators and their industry advisors. As an offset, I would like to encourage the office of the United States Trade Representative to utilize Agricultural Policy Advisory Committees on Trade and the Agricultural Technical Advisory Committees and other industry specialists as consulting advisors and direct counsels to the negotiators during the next round of WTO trade agricultural negotiations. I feel that access to greater technical information during the negotiations would benefit our country's negotiating position and allow us to troubleshoot problems before the negotiations conclude.

In conclusion, we feel that for agriculture, the upcoming round of WTO agricultural trade negotiations hold the greatest promise to expand our market access for export commodities. At the same time, we have an opportunity and an obligation to balance these efforts with hard- nosed negotiations to reduce the difference between U.S. and foreign agricultural trade -- and foreign agricultural support levels. Our leverage is that the stability of our U.S. currency has been -- has made access to the U.S. market a prize. Let's use this opportunity to move toward a more fair agricultural trade policy for our U.S. producers.

I would like to thank the panel for your attention. It has been a privilege to appear before you today. I would like to sincerely thank the office of the United States Department of Agriculture and USTR for conducting these hearings. Thank you.

MR. GALVIN: Thank you very much. Sharon?

MS. BOMER-LAURITSON: Yeah. I have, I guess, a comment or two. I want to just say that I can assure you that we will be working very closely with APAC, ATAC, and a number of other advisors, including state ag commissioners, governors, legislators throughout the negotiations.

And we would hope that, you know, private sector farmers and ranchers will be by our side providing us --

MR. THIBAUT: We'll be there.

MS. BOMER-LAURITSON: -- that we need. I would like to clarify one issue that you raised when you're talking about imported

foods and the level of standards in the case of pesticides and what are allowed to be used in other countries, and to clarify that imported food does have to meet the same pesticide tolerance levels as established by U.S. producers. I think we recognize that the Food and Drug Administration, which is responsible for enforcement of those, does inspect a very small percentage of imports, as they inspect a very small percentage of domestic products as well, but that the Administration is actively working right now with members of the Senate on some legislation that was recently introduced which would broaden FDA's authority to ensure that the imported foods are produced and processed under the same level of standards and protection as domestically.

MR. THIBAUT: Good.

MS. BOMER-LAURITSON: And this is a high priority for the Administration, and I'm sure, you know, for the industry. If you need more information, you can contact your senators or myself or the Food and Drug Administration.

MR. THIBAUT: Good. I'm glad to hear that.

MR. GALVIN: Thank you very much.

MR. THIBAUT: Thank you.