*EPF106 03/26/01
Text: State Dept.'s Larson on Agriculture Trade Policy Reform
(He assails EU, Japan on positions at WTO) (2400)

The European Union (EU) and Japan have shown little evidence that they are ready to reform agricultural trade, Alan Larson, under secretary of state for economic, business and agricultural affairs says.

Larson told an American Soybean Association meeting in Washington March 21 that without the reforms proposed by the United States, "farm trade will become more distorted, developing country farmers will face greater obstacles and more people in poor countries will suffer from hunger."

He made the speech ahead of the March 26-28 World Trade Organization (WTO) meeting in Geneva to take stock of ongoing agriculture negotiations.

"The EU proposal in Geneva is a hodge-podge of excuses for continued government interference in trade..." Larson said. "Japan's proposals advocate protection of inefficient farmers in rich countries and even seek to roll back the modest reforms of the Uruguay round."

He said most WTO members support "an ambitious reform agenda. The U.S. proposal includes "the elimination of all export subsidies, significant tariff reductions, substantial increases in most tariff-rate quotas, effective disciplines on state trading enterprises, special provisions for developing countries and -- importantly -- open and transparent treatment of products produced through agricultural biotechnology."

Larson also criticized pending EU proposals concerning biotechnology. Proposals on traceability, liability and labeling "would appear to be costly, unworkable and unjustified by any scientific principle of risk assessment or risk management," he said. "If Europe sets up an unworkable system to protect against an unidentifiable risk, the effort will fail and the credibility of its own food safety system will be the ultimate casualty."

He said the United States should do more "to make the benefits of biotechnology accessible to farmers and consumers throughout the world. We need to help developing countries develop the capacity to use biotechnology safety to help address their food needs."

Following is the text of Larson's speech:

(Note: In the text "billion" equals 1,000 million.)

(begin text)

Restoring Trust in Agricultural Trade

Thank you for inviting me to discuss the opportunities and challenges that the American soybean industry faces in the global economy.

I must acknowledge at the outset that I am both an Iowan and an economist. Some of you may have heard about the woman whose doctor told her that she had only six months to live. "My advice," the doctor told the patient, "is that you marry an economist and move to Iowa." The patient asked, "If I do, will I be cured?" The doctor responded, "No, but it will sure make the six months seem longer." My remarks will be brief ... and I hope they don't seem longer than they really are.

More than most Americans, this group realizes that we are part of a global marketplace. Nearly 40 percent of American soybean production is destined for foreign markets. American soybean exports not only bolster farm incomes at home, but they also raise dietary standards abroad.

We need to improve conditions for agricultural trade, including for soybean products. Freer agricultural trade will give us a better chance of feeding the world's people at the lowest possible cost. As income levels rise in foreign countries, the demand for protein will increase; soybeans can help meet that need both directly and as a safe and reliable feed for animals.

Freer agricultural trade will enhance food security. Today trade restrictions discourage the world's most efficient and reliable farmers, and they increase the economic and environmental cost of food production. Freer and more reliable international trade in agriculture will make it more possible to reduce, and hopefully one day eliminate, the number of people -- now estimated at nearly one billion -- who go to bed hungry each night.

Freer trade must be built on greater trust. If American farmers are going to gear up to produce even greater harvests destined for foreign markets, they need to know that our exports will be treated fairly. If our customers are going to become even more reliant on American soybeans, they need to know they can count on us to be a reliable supplier of a high quality and safe product.

Strengthening Agricultural Trade Disciplines

To build greater trust, we need stronger WTO disciplines on agricultural trade. The average WTO tariff binding for agricultural products is around 60 percent, with many tariffs over 100 percent. Current WTO rules permit the European Union to provide up to $65 billion in trade-distorting domestic support. Japan is permitted similarly large levels of such support. Moreover, the European Union expends over $7 billion annually on export subsidies, over 90 percent of the total direct export subsidies in the entire world.

These massive obstacles to agricultural trade have far-reaching consequences. They are, to begin with, a serious burden on U.S. commerce. In addition, as the World Bank has documented, European agricultural protectionism is profoundly harmful to developing countries.

The United States advocates comprehensive reform of agricultural trade. Our proposal calls for the elimination of all export subsidies, significant tariff reductions, substantial increases in most tariff-rate quotas, effective disciplines on state trading enterprises, special provisions for developing countries and -- importantly -- open and transparent treatment of products produced through agricultural biotechnology.

The European Union and Japan have shown little evidence that they are ready to reform agricultural trade. The EU proposal in Geneva is a hodge-podge of excuses for continued government interference in trade, including the so-called "multi-functionality" of agriculture and proposals on "animal rights." Japan's proposals advocate protection of inefficient farmers in rich countries and even seek to roll back the modest reforms of the Uruguay round. If the world accepts this elitist, rich country agenda, farm trade will become more distorted, developing country farmers will face greater obstacles and more people in poor countries will suffer from hunger.

During the next week there will be an opportunity to review the state of play on agricultural trade reform. In a special WTO session in Geneva from March 22-28, our trading partners and we will discuss how to intensify agricultural negotiations under the built-in agenda. I am pleased that, with only a handful of exceptions, WTO members are supporting an ambitious reform agenda.

Global disciplines on agricultural trade are enhanced not only by strengthening the rules but also by having more countries subscribe to them. That's why we are continuing to work with China to ensure that its entry into the WTO occurs as quickly as possible and on terms that contribute to an effective and predictable international trade system.

The Administration also is pursuing agricultural trade liberalization regionally and bilaterally. Next month President Bush will attend the Summit of Americas in Quebec, where we aim to inject new life into the negotiations for a Free Trade Agreement of the Americas. We also are pursuing a bilateral Free Trade Agreement with Chile. These negotiations can help ensure that the Western Hemisphere is a model of how open agricultural markets can make us richer and better fed.

To put farm trade on a freer and more predictable basis, all major trading partners must have the authority to make tough decisions. The positions taken thus far by Europe and Japan do not give me confidence that their negotiators have been given the political authority to negotiate the necessary reforms. I would urge our friends in Europe and Japan to secure such a mandate.

At the same time, it also is imperative that the United States come to the table with clear negotiating authority. That means action on Trade Promotion Authority [also called fast track authority]. President Bush stated in his address to a joint session of Congress, "free trade brings greater political and personal freedom. I ask you to give me the strong hand of presidential trade promotion authority, and to do so quickly."

The world is moving on trade, with or without us. Europe and Japan are busily negotiating trade agreements around the world while we continue to indulge in arcane debates on the phraseology of Trade Promotion Authority. We can't go on like this.

Imagine what you would think if your alma mater were invited to participate in the NCAA basketball tournament but as game time approached your team did not take the floor because of a disagreement over strategy between the coach, university president and the board of regents. Well, ladies and gentlemen, when it comes to trade, the horn is blowing and it's time for our team to take the floor.

Ensuring Reliability of Supply

Soybean farmers understand better than most the importance of being a reliable supplier. You paid the price for the misguided decision in the 1970s to restrict soybean exports to dampen price pressures. Ever since, successive Congresses and Administrations have agreed on the importance of keeping trade channels open even when supplies are tight.

We are committed to ensuring the reliability of U.S. agriculture supply. USDA Secretary [Anne] Veneman most recently reiterated this commitment in her February 22 address to industry at the Agriculture Outlook Forum.

You also want to make sure that your customers do not have unwarranted concerns that foreign policy sanctions may cause interruptions in supplies of food from the United States. That is why there was strong bipartisan support for the last Administration's decision two years ago to open up food exports to most destinations, including terrorist supporting states such as Iran, Libya and Sudan. Since that change in American policy, we have sold 900,000 tons of corn to Iran, 165,000 tons of wheat and 25,000 tons of corn to Libya and 91,000 tons of wheat to Sudan.

We need to make further progress towards sensible sanctions reform. To make progress, we need to have an open dialogue with all sides of this debate. It is important to respect the principle of Presidential discretion and flexibility and we must ensure that the benefits of food trade go to the people, not to oppressive governments.

Restoring Confidence and Stability to Trade in Biotech Agriculture

Soybean farmers have a vital stake in a science-based, rules-based approach to trade in biotech soybeans. Acreage devoted to biotech soybeans has increased remarkably during the last four years. I understand that biotech varieties accounted for about 50 percent of the 2000 soybean crop.

To be sure, the starting point must be an unshakable commitment to keeping the food safety system in the United States the world's best. We have -- and we must always have -- a system in which protection of consumers is pursued without qualification or compromise. Science-based, rules-based precaution is an integral part of our food safety system.

The situation in Europe is different. The European food safety system is broken, as successive crises over BSE and dioxins have made clear. The major flaw in the European system has been too much politics and too little science. It is understandable that consumer confidence has been shaken.

What is neither understandable nor acceptable is that some in Europe have sought cynically to divert these consumer concerns about food safety to an attack on biotechnology.

We want to work with Europe to restore consumer confidence and access for EU-approved biotech corn and restart the EU biotech approval process. We welcome efforts by the Commission of the European Union to bring order to trade in biotechnology crops and processed products. This process must, however, be informed by sound science and common sense. The traceability, liability and labeling proposals now under consideration would appear to be costly, unworkable and unjustified by any scientific principle of risk assessment or risk management. If Europe sets up an unworkable system to protect against an unidentifiable risk, the effort will fail and the credibility of its own food safety system will be the ultimate casualty.

We also take issue with Europe's effort to export its flawed system to others. Recently there has been an aggressive European campaign to politicize the scientific international bodies that set standards for food safety. I am speaking of the World Health Organization, the Food and Agriculture Organization and the Codex Alimentarius Commission. This is a destructive initiative, one we will resist strenuously with the help of like-minded countries.

The so-called "precautionary principle" has been the rallying cry of those who have sought to substitute emotion for science and arbitrary decision-making for a rules-based process for effective consumer protection. Unless we want to see a dysfunctional European food safety regime spread to the rest of the world, we should strongly resist the European effort to enshrine "the precautionary principle" in international organizations. Let me be clear. When governments ban products they know to be safe, their actions hardly can be called principled. When they turn cartwheels over risks no one can identify but fail to take adequate measures to deal with real risks like BSE, they can hardly present themselves as paragons of precaution.

Here at home, we must continue to improve the systems by which biotech products are reviewed and ensure that our grain inspection arrangements are state-of-the-art. Our failure to keep Starlink segregated for animal or other non-human use has taught us a lesson. Our grain logistics system cannot completely separate grain intended for different end-uses and our approval procedures must take that fact fully into account.

We also need to accept that, rightly or wrongly, many European consumers have general questions about biotech food. That is why we support well-designed public conferences in which scientists and other experts can respond to such concerns in a thoughtful way. We should have no problems with public debates about precaution, because we have nothing to hide. Our scientific and rules-based approach more effectively protects the public than Europe's reactive, unscientific and politicized approach.

We should also do more to make the benefits of biotechnology accessible to farmers and consumers throughout the world. We need to help developing countries develop the capacity to use biotechnology safety to help address their food needs.

Conclusion: The Need for partnership

Your industry faces great challenges and opportunities in the international marketplace. Our most basic task is to increase trust in international agricultural trade. Let's see what, working together, we are able to do.

(end text)

(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)
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