[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

MARKET CLOSED: FOREIGN TRADE BARRIERS FACING SMALL AGRICULTURE
EXPORTERS

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HEARING

before the

COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

HEARING HELD
JULY 26, 2012

__________

[GRAPHIC] [TIFF OMITTED] TONGRESS.#13

Small Business Committee Document Number 112-082
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C O N T E N T S

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OPENING STATEMENTS

Page
Hon. Scott Tipton................................................ 1
Hon. Mark Critz.................................................. 2

WITNESSES

James Boyer, Owner, Jim Boyer Hogs, Ringstead, IA................ 8
Jason Hafemeister, Vice President, Allen F. Johnson and
Associates, Washington, DC..................................... 5
Roger Mix, Owner-Operator, Mix Farms, Center, CO................. 3
Carl T. Shaffer, President, Pennsylvania Farm Bureau,
Mifflinville, PA............................................... 7

APPENDIX

Prepared Statements:
James Boyer, Owner, Jim Boyer Hogs, Ringstead, IA............ 17
Jason Hafemeister, Vice President, Allen F. Johnson and
Associates, Washington, DC................................. 32
Roger Mix, Owner-Operator, Mix Farms, Center, CO............. 37
Carl T. Shaffer, President, Pennsylvania Farm Bureau,
Mifflinville, PA........................................... 40
Additional Materials for the Record:
Letter to Ambassador Kirk.................................... 45
HOUSE COMMITTEE ON SMALL BUSINESS

SAM GRAVES, Missouri, Chairman
ROSCOE BARTLETT, Maryland
STEVE CHABOT, Ohio
STEVE KING, Colorado
MIKE COFFMAN, Colorado
MIKE MULVANEY, South Carolina
SCOTT TIPTON, Colorado
JEFF LANDRY, Louisiana
JAIME HERRERA BRUTLER, Washington
ALLEN WEST, Florida
RENEE ELLMERS, North Carolina
JOE WALSH, Illinois
LOU BARLETTA, Pennsylvania
RICHARD HANNA, New York
ROBERT T. SCHILLING, Illinois
NYDIA VELAZQUEZ, New York, Ranking Member
KURT SCHRADER, Oregon
MARK CRITZ, Pennsylvania
YVETTE CLARKE, New York
JUDY CHU, California
DAVID CICILLINE, Rhode Island
CEDRIC RICHMOND, Louisiana
JANICE HAHN, California
GARY PETERS, Michigan
BILL OWENS, New York
BILL KEATING, Massachusetts

Lori Salley, Staff Director
Paul Sass, Deputy Staff Director
Barry Pineles, Chief Counsel
Michael Day, Minority Staff Director

MARKET CLOSED: FOREIGN TRADE BARRIERS FACING SMALL AGRICULTURE
EXPORTERS

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THURSDAY, JULY 26, 2012

House of Representatives,
Committee on Small Business,
Subcommittee on Agriculture,
Energy and Trade,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
room 2360, Rayburn House Office Building. Hon. Scott Tipton
(chairman of the subcommittee) presiding.
Present: Representatives Tipton, King, Critz, and Keating.
Chairman Tipton. Good morning. I would like to thank all of
you for joining us today. The hearing will now come to order.
I would like to begin by extending a special thanks to each
of our agricultural industry witnesses for taking time out of
your business schedules to be able to travel to Washington,
D.C. and to be able to appear before this Committee. I would
like to especially recognize Mr. Roger Mix, a constituent of
mine from Colorado's Third Congressional District out of
Center, Colorado, and we look forward to everyone's testimony.
Today's issue is very important to small agricultural
producers and their key role within the American economy. The
challenges posed by foreign non-tariff barriers to agricultural
trade. Approximately 91 percent of farming and ranching
operations in the United States is classified as small by the
United States Department of Agriculture. In comparison to most
other industries, agricultural operations depend more heavily
on overseas trade for a significant portion of their income. It
has often been said that one of every four acres planted in the
United States is planted for the export markets. Overall,
exports account for up to 30 percent of farm income.
Agricultural trade is also an important job creator in the
United States and our economy needs job creators right now.
According to the Department of Agriculture, farm exports
support more than one million jobs on and off the farm. Along
with many of my colleagues, I believe that more can be done to
take advantage of our nation's apparent comparative advantage
and agricultural production by further expanding our access to
foreign markets. A common tool employed by foreign nationals to
block U.S. agricultural products is the use of non-tariff trade
barriers, predominantly sanitary and phytosanitary measures.
Because nations have the sovereign right to be able to block
products that pose a threat to human or animal health that
could contaminate their food systems, they have used these
measures in some instances as a means to be able to block
competition.
The agricultural community and Congress have taken notice.
I have heard from a number of potato and other commodity
growers in my district regarding the harm caused to them by
unfair trade. These barriers have to be able to be dealt with
and I personally met with USDA Secretary Edward Avalos to be
able to discuss this problem. I would also like to include,
without objection, for the record, a letter that we sent to
Ambassador Ron Kirk in regards to our export of potatoes into
the Mexican market as well.
The purpose of today's hearing is to examine these issues
further and to learn how sanitary and phytosanitary measures
have been used as trade weapons against American agricultural
producers and the resulting economic impact on all small
businesses.
I would now like to yield to Ranking Member Critz for his
opening statement.
Mr. Critz. Thank you, Mr. Chairman. I was going very
quickly through my statement here as we have votes that could
be coming within the next half hour, 45 minutes. So I will try
to go very quickly so that we can get to your testimony.
Right now, job creation is priority one for this Committee
and that means looking to new markets, whether they are
domestic or abroad. One such opportunity lies in agriculture
exports which have exceeded imports since the early '70s. In
fact, last year, U.S. agricultural exports reached nearly $140
billion outpacing the previous record set in 2008 by 23 billion
and suppressing 2010's totals by 29 billion. This growth shows
that America's farmers are essential to leading our economy
forward, spurring development and employment gains throughout
the country.
Within this sector, small farms play a key role, accounting
for 91 percent of all farms and 23 percent of overall
agricultural production. Not surprisingly, these smaller farms
are actively engaged in international trade, which now drives
20 percent of their employment. This is especially true for my
home state. During an April field hearing in Pittsburgh, we
heard the significant role that international trade plays in
western Pennsylvania's economy. In fact, agricultural exports
support more than 20,000 jobs in our state. Further inroads in
foreign markets are necessary to generate even more jobs in our
local communities. In order to do so, key challenges must be
overcome.
The breadth of restraints is staggering and they reach into
nearly every product grown or raised on America's farm. For our
country's poultry producers, this means that such important
markets like China, India, and Japan are off limits. Pork
producers cannot export to the European Union, Singapore, or
even Peru. The impact of this reaches into communities like
mine in western Pennsylvania, where local dairy farmers are
left with fewer customers even though foreign goods are
plentiful in local stores. The truth is that for many the
promises of free trade have never materialized, and America's
farms face the prospect of having to compete with foreign
imports without having access to those very markets.
Reversing unfair practices has been extremely difficult.
The U.S. trade representatives have taken the lead in
mitigating the impact of these standards. They have worked to
undue restrictions in Japan and Korea in cherries and citrus,
as well as barriers in South Africa and Sri Lanka for apples
and seed potatoes. They were also able to get Kuwait and Taiwan
to lift unwarranted restrictions on U.S. exports of poultry and
poultry products, while it also negotiated full market access
for U.S. beef to the United Arab Emirates. Clearly, this is
progress, but more needs to be done if we are going to achieve
the president's goal of doubling U.S. exports by the end of
2014.
Aside from the bilateral efforts of the USTR, there is a
lot riding on the Trans-Pacific Partnership. This multiregional
trade pact will ideally set common certification requirements
for agricultural products which will ultimately be adopted by
all signees of the partnership.
In the essence of time, I would ask unanimous consent if I
could enter my full statement into the record. And I want to
thank all the witnesses in advance, and I look forward to their
testimony.
Chairman Tipton. Thank you, Ranking Member Critz. We would
like to be able to go ahead and start with introducing a
constituent of mine for our first portion of testimony this
morning, Mr. Roger Mix. He is from Center, Colorado. I was
there just a couple of weeks ago. Roger is a fourth generation
farmer and has been active in a number of agricultural producer
organizations. Most recently, he served as president of the
National Potato Council from 2010 to 2011. Roger is testifying
today on behalf of both the Colorado Potato Committee and the
National Potato Council. Mr. Mix, thank you for appearing today
and you now may deliver your testimony.

STATEMENTS OF JAMES BOYER, OWNER, JIM BOYER HOGS, TESTIFYING ON
BEHALF OF THE NATIONAL PORK PRODUCERS COUNCIL; JASON
HAFEMEISTER, VICE PRESIDENT, ALLEN F. JOHNSON AND ASSOCIATES;
ROGER MIX , OWNER-OPERATOR, MIX FARMS, TESTIFYING ON BEHALF OF
THE COLORADO POTATO ADMINISTRATIVE COMMITTEE AND THE NATIONAL
POTATO COUNCIL; CARL T. SHAFFER, PRESIDENT, PENNSYLVANIA FARM
BUREAU

STATEMENT OF ROGER MIX

Mr. Mix. Thank you. Good morning, Chairman Tipton, Ranking
Member, and other members of the Committee. Thank you for
inviting me to testify before you today. It is an honor and a
privilege to be here.
I am here today representing over 170 potato growers in the
San Luis Valley of south central Colorado. Colorado produced 21
million hundredweight of potatoes in 2011 with an approximate
market value of $200 million. We produce over 100 varieties of
potatoes with 95 percent marketed as fresh potatoes, which
ranks Colorado as the second largest producer of fresh potatoes
in the nation.
Colorado is the largest United States shipper of fresh
potatoes to Mexico, but access has been limited to a 26
kilometer deep area along the northern border of Mexico. The
opportunity to expand this market represents a significant
economic opportunity for Colorado and other U.S. potato
growers. Currently, about one in every five rows of potatoes
grown in the United States is exported, but in Colorado it is
only one in every 20.
I want to thank you for calling this hearing to examine the
effects of the application of non-scientifically based sanitary
and phytosanitary standard on agriculture products grown in the
United States and exported to our value-trading partners. All
too often, the application of these standards has resulted in
reduced market access for the agricultures grown by America's
family farmers, who operate small businesses across the
country. As we all understand, these small businesses are the
heart and the soul of our economy.
In March 2003, the United States and Mexico signed a market
access agreement that allowed for the shipment of U.S. fresh
potatoes from all 50 states into a 26-kilometer deep area along
the border of Mexico. This signed agreement called for
increased access to the five northern Mexican states in 2004
and for the consideration of full access by 2005.
Presently, the shipping of U.S. fresh potatoes to Mexico is
limited to 26 kilometers. In 2011, U.S. potato growers exported
$39 million worth of fresh potatoes to Mexico, making it our
second largest export market behind Canada. If our products had
full access to all of Mexico, we estimate that would become the
largest market for U.S. fresh potatoes with a value in excess
of $150 million.
Many of the obstacles raised by Mexico to justify their
failure to honor commitments in the 2000 agreement have been
phytosanitary in nature, but were not based in sound science
and did not justify trade restrictions. For example, Mexican
potatoes produced in areas of the country with identical pass
profiles as those in U.S. production areas have been allowed to
move throughout Mexico if they were washed or brushed and
labeled for consumption only. Yet, U.S. fresh potatoes exports
to Mexico are not allowed to move in a similar manner.
The application of the different standard for domestic
production than that for imports clearly violates the globally
accepted principle of national treatment. Mexico also argues
that the pest finds on U.S. potatoes entering Mexico have been
excessive. U.S. growers and shippers apply rigorous production
and testing protocols to ensure that shipments to Mexico are
free from pests. According to USDA's Animal and Plant Health
Inspections Service, legitimate pest finds on U.S. potatoes
entering Mexico are at or below the levels of pest detections
for any Mexican agriculture products entering the U.S. The lack
of timely and accurate reporting of test finds is used by
Mexico to artificially inflate the number of pest finds.
Recently, U.S. and Mexico negotiators were able to reach an
agreement on a path forward to develop a market access
agreement for the U.S. for potatoes to Mexico. As Mexico,
Canada, and other key trading partners seek to become
participants in the Trans-Pacific Partnership, we need to be
vigilant in using that process to increase the commitments to
signed space resolutions on sanitary issues. The trade
agreement negotiation process provides an opportunity to gauge
our trading partners' commitment to the scientific evaluation
of sanitary risk, as well as our internationally accepted trade
rules and standards.
We are encouraged that the progress toward expanding potato
trade with Mexico and as of TPP negotiations continue,
America's family potato farmers believe there is a need for
continued and visible progress on the final work plan that
would give potato growers and shippers in Colorado and the rest
of the U.S. the opportunity to export potatoes to Mexico. A
lack of progress on the potato issue would call into question
Mexico's commitment to be a responsible partner in the TPP
agreement.
Thank you again for the opportunity to testify.
Chairman Tipton. Thank you, Mr. Mix.
I neglected to mention, and you hit it right on the button,
we do have five minutes to be able to testify. When you do see
the green light on you are doing great. When the yellow light
comes on you have a minute left. And when the red light comes
on, if you would wrap up your testimony. And you did perfect.
Thanks a lot.
Mr. Mix. Thank you.
Chairman Tipton. Our next witness is Jason Hafemeister. He
is vice president of Allen F. Johnson and Associates, a trade
consulting firm headquartered in Washington, D.C. In this
capacity, he works with businesses and associations in
identifying trade opportunities and barriers for American
agricultural producers. Prior to joining Allen F. Johnson and
Associates, he served as deputy assistant and U.S. trade
representative for agriculture, where he led agricultural
negotiator at a number of treaty discussions including the WTO
to a round of trade negations. The Central America-Dominican
Republic Free Trade Agreement and negotiations over China's
success to the WTO.
Mr. Hafemeister, you may deliver your testimony. Thank you
for being here.

STATEMENT OF JASON HAFEMEISTER

Mr. Hafemeister. Great. Good morning. Thank you, Mr.
Chairman, Ranking Member Mr. Critz, and Mr. King. It is good to
be here.
What I would like to focus my time on here is to summarize
three of the key points that we face in agriculture when
looking at unjustified trade restrictions on our exports.
First, right now, U.S. agriculture exports are doing great, but
even today we are performing below our potential because of
unjustified health and safety measures applied by other
countries. And in the future we run the risk of even more
disruption of our exports as countries revert to unwarranted
technical barriers to restrict trade, either to protect
domestic industries from competition or for misguided efforts
to protect health and safety. The kind of problems our products
face, which I think are well explained in the case of Mexico
and potatoes, range from shipments held up in ports because of
concerns about a particular government test that an inspector
finds, or production or labeling requirements that other
countries employ that force changes in how we have to produce
goods if we are going to access the market, or limits on
chemicals or other residues that may show up in our products
that are more stringent than required by the U.S. laws or
international standards. Or even just outright bans on our
products because of purported concerns about the safety of U.S.
products. So these are the reasons, some sincere and some not
so, that are used to stop our products. And in the future, we
expect it is going to be an even bigger problem as tariffs come
down and we conclude other trade agreements.
So I do not think there is any dispute about the importance
of this. What I think the issue is is making them a top
priority in U.S. trade policy and implementing effective action
plans to improve our export opportunities. Reducing tariffs in
other countries or running promotion programs to boost exports
will deliver no benefits if our exports can be shut down by
unjustified import restrictions. That means the United States
need to prioritize staffing, operations, and policies that give
our trade negotiators the tools needed to convince other
countries to establish science-based health and safety
standards and work to facilitate trade rather than trying to
block it. In particular, technical agencies, such as agencies
within USDA, FDA, and EPA need to prioritize discouraging other
countries from erecting unjustified barriers and challenging
unjustified barriers when they are established.
Finally, third point, we have a strong set of principles
already to guide us in world trade in the WTO. They require
countries to establish science-based measures and encourage
them to facilitate trade when there may be different approaches
across countries' health and safety systems. But this set of
principles needs to be strengthened by prioritizing efforts to
foster trade through international standard organizations and
through trade negotiations, such as the Trans-Pacific
Partnership which was mentioned earlier.
I will give you two examples. One is the United States
needs to work in the Codex Alimentarius to set more common
standards that recognize scientific consensus on the safe use
of technologies so that countries across the world, when they
recognize a product as safe, will allow it to be imported. This
is particularly true in veterinary drugs. Similar work is
needed in the World Animal Health Organization on animal
diseases and in the International Plant Protection Convention
on plant pests.
Similarly, the United States needs to negotiate agreements
with other countries that facilitate trade by delivering
enforceable agreements that recognize the U.S. system as
delivering high levels of food safety and protection against
pests and diseases. Important ideas that should be included in
these negotiations include developing common export
certificates to reduce the complexity of meeting paperwork
requirements; recognition by other countries that the U.S.
system, while it may be different in some technical details
from theirs, delivers world-class food safety protection
against pests and diseases, protection that is equal or higher
than exists in the importing country; and providing procedural
safeguards that allow exporters time to comment on and adapt
new measures before they are finalized.
America's farm and ranch families include some of the most
successful exporters in this country. They, along with the
network of food processors, brokers, and trade servicing
professionals depend on keeping U.S. export markets open.
Health and safety barriers are the biggest threat to reducing
our current exports and can place a cap on their future growth.
Moving aggressively to stop these barriers from being put on
place or removing those that exist will provide a tremendous
benefit to our farmers.
Thank you for your time, and I am happy to answer any
questions.
Chairman Tipton. Thank you. Our next witness, I will now
yield to Ranking Member Critz to be able to introduce.
Mr. Critz. Thank you, Mr. Chairman.
I would like to introduce Mr. Carl Shaffer, president of
the Pennsylvania Farm Bureau. Pennsylvania Farm Bureau is the
state's largest farm organization with a volunteer membership
of more than 50,000 farm and rural families representing farms
of every size and commodity across Pennsylvania. Mr. Shaffer
also serves on the American Farm Bureau Federal Board of
Directors where he serves on the Trade Advisory Committee. Mr.
Shaffer continues to be an active farmer himself, growing
vegetables and grains on 1,800 acres of farm land in Columbia
County, Pennsylvania. Among the much recognition for leadership
and achievement in agriculture, Mr. Shaffer was named as a
Master Farmer in 1996, one of the highest honors awarded to
farmers in the Commonwealth.
Mr. Shaffer, if we could have your testimony.

STATEMENT OF CARL T. SHAFFER

Mr. Shaffer. Thank you, Mr. Tipton. Thank you very much for
the opportunity to be here, and Ranking Member Critz, and the
rest of the Committee.
Trade matters to Pennsylvania and America's farmers. As you
well know, more than 95 percent of the global population lives
beyond our borders. As such, agriculture is mindful of global
markets, the opportunities they present and the trade barriers
that exist. Previously, barriers to U.S. agricultural trade
were mostly confined to tariffs. As tariffs on many
agricultural products have been reduced, other forms of
barriers have been increased, though they essentially serve the
same function--restricting market access.
You may have seen a report published by the Office of the
U.S. Trade Representative, which gives an account of the
sanitary barriers maintained by nations against the United
States agricultural exports. Within this report, the primary
concerns of Pennsylvania agriculture include restrictions on
biotechnology; export health certificates for poultry, pork,
dairy, and dairy products, specifically regarding Russia and
India; and the increased use of geographic indicators. Formal
negotiations between nations can act to reduce tariff and non-
tariff trade barriers. However, in negotiating these
agreements, we must strive to make sure we benefit the entire
agricultural economy, not just parts of it. For example NATFA
did nothing to address the Canadian tariff on U.S. dairy
products. Canada imposes out-of-quota tariffs on dairy products
that exceed 200 percent, with some as high as 292\1/2\ percent.
This is particularly harmful to Pennsylvania's dairy industry
in that we could be exporting cheese to our northern neighbors
if NATFA had eliminated or reduced this barrier.
U.S. negotiations should use the Trans-Pacific Partnership
negotiations to address these Canadian tariffs and expand
market opportunities for America's dairy producers close to
home. As you know, the dairy sector has taken several hits on
the chin lately. Any effort we can take to find long-term,
reliable markets for our dairy products will help decrease
price volatility for our dairy farmers. The conversation about
geographic indicators as a non-tariff barrier is an emerging
and difficult challenge. Pennsylvania's dairy industry is
concerned about the common names for dairy products, like
mozzarella or feta cheese, or even Greek yogurt being
restricted in use.
Affordable and reliable shipping of commodities and foreign
products is also essential in delivering U.S. agricultural
products to foreign consumers and to compete in world markets.
Our inland waterways are in need of continuing repair and
maintenance to locks to preserve a major domestic shipping
advantage that the U.S. has over many other nations in the
movement of agricultural goods. Our seaports need to be
improved to take advantage of and to be ready for the
competition that will come from nations after the expansion of
the Panama Canal moves freight into even larger ships that
require deeper harbors.
Even though Pennsylvania is not often considered to be an
agricultural exporter, poor infrastructure is a major concern
of farms. Lone Maple Farms of New Alexandria in Pennsylvania's
12th Congressional District sells all the soybeans they grow to
Agland Co-op in neighboring Ohio. Their beans are loaded on a
barge, floated down the Ohio and Mississippi Rivers, and loaded
onto ships headed into Asia. Unfortunately, Gulf Coast ports
are not able to accommodate the larger ships that will soon
navigate the Panama Canal. The inability to dock, load, and
unload the post-Panamax ships in the Gulf Coast could limit the
foreign markets currently enjoyed by Lone Maple Farms and
several other Pennsylvania farmers.
In closing, America's agriculture depends on export
markets. Policymakers must remain committed to reducing
sanitary and phytosanitary trade barriers. Moreover, an
efficient, reliable, export-oriented transportation system is
necessary to get agricultural goods to foreign markets.
Agriculture matters to the American economy, and trade matters
to agriculture.
I really look forward to your questions. Thank you.
Chairman Tipton. Thank you, Mr. Shaffer.
Our final witness today is Mr. Jim Boyer. Jim raises hogs
on his family's operation located in Ringstead, Iowa. He also
serves on the board of Iowa Farm Bureau and represents Iowa on
the American Farm Bureau Swine Advisory Committee. He is also a
member of the Iowa Pork Producers Association and will be
testifying today on behalf of the National Pork Producers
Council.
Mr. Boyer, thank you for being here, and we look forward to
your testimony.

STATEMENT OF JAMES BOYER

Mr. Boyer. Good morning, Chairman Tipton, Ranking Member
Critz, and members of the Subcommittee.
As Mr. Tipton said, I am Jim Boyer, pork producer from
Ringstead, Iowa. My wife, Lisa, and I, and our three kids,
operate a third-generation family farm where we produce corn,
soybeans, hogs, and cattle. I appreciate the opportunity to
present my views and those of the U.S. pork industry on the
application by foreign nations of non-science based sanitary
and phytosanitary measures that restrict market access of U.S.
pork and adversely affect small producers like myself. I also
appreciate the interest of this Committee in assuring that
future trade agreements include more robust and effective
dispute resolution mechanisms to address the misuse of sanitary
measures.
The future of the U.S. pork industry and of American family
hog farms like mine depend on free and fair trade and the
continued access of our exports. The U.S. is the lowest cost
producer of pork in the world and the number one global
exporter of pork. In 2011, the United States exported a record
$6.2 billion worth of pork, up from $4.8 billion in 2010. Those
exports represent nearly 27 percent of the pork produced in the
United States and added almost $55 to the price I receive for
each hog I sell.
Increasing pork exports is important to more than just pork
producers. The U.S. pork industry supports an estimated 550,000
domestic jobs, 110,000 which are a result of pork export. USDA
estimates that each $1 billion in meat exported generates about
12,000 new U.S. jobs, meaning that last year's increase in pork
exports created about 18,000 new jobs.
The growth in the U.S. pork export has been achieved
despite significant foreign barriers in the form of unjustified
health and sanitary measures. Those barriers are costing the
U.S. economy and the pork industry billions of dollars. The
U.S. pork industry supports the Trans-Pacific Partnership, but
for it to be a 21st century agreement there must be a market
access outcome similar to that achieved in the Korea and the
Columbia Free Trade Agreements. And sanitary barriers must be
eliminated. A strong SPS chapter with a meaningful dispute
settlement provision must be part of the TPP, and sanitary
restrictions on pork in all TPP countries must be eliminated.
Vietnam alone holds incredible potential but blocks pork with
non-science based restrictions.
The only way to gain the support of U.S. pork producers for
a final TPP deal will be though a robust outcome in Vietnam and
other TPP countries in which all barriers are eliminated.
Russia soon will be joining the World Trade Organization.
Although Russia established a zero duty tariff rate quota for
pork as part of its WTO essential commitments, it is highly
unlikely that the U.S. pork industry will be able to take
advantage of those quotas because of a long list of Russian
sanitary barriers. Russian food safety officials recently said
they intend to leave these unjustifiable and trade restrictive
measures in place after Russia joins the WTO and that they may
add new restrictions. We need Russia to eliminate its sanitary
barriers. The EU should be one of our largest export markets,
but because of numerous sanitary barriers it is currently one
of our smallest export markets. We actually export more pork to
Honduras than we do to the entire EU.
As in the TPP and other trade deals, agriculture and pork
must be included in any EU trade negotiations, and discussions
on eliminating sanitary barriers also must be included. It
makes no sense to have a standard for our TPP partners and
another for the European Union. Taiwan unfairly restricts
exports of U.S. pork from hogs that have been fed ractopamine,
a feed additive approved by the FDA, 25 other countries and
earlier this month the U.S. Codex. This restriction flies in
the face of science. If eliminated, ISU economist Dermot Hayes
estimates that we could see pork exports to Taiwan increase by
an additional $417 million. Taiwan has been campaigning for
entry in the TPP, but a country that ignores science likewise
should have its bid to join the TPP ignored.
In conclusion, Mr. Chairman, we are convinced if we sit by
passively while SPS measures are incorrect or erected and
maintained, we will see our exports rapidly erode. Pork
producers understand that the future of our industry depends on
adopting new and safe technologies and in expending our
exports. We must protect our current market access from unfair
barriers or such expansion will be impossible.
Thank you, and I will be happy to answer any questions you
may have.
Chairman Tipton. Thank you, Mr. Boyer. And thank all of you
for your testimony. We will now begin the questioning. I will
begin, and if you can give maybe a brief answer we would
appreciate it. And this is for all of the panelists here.
A number of associations representing agricultural
producers are pushing for inclusion of a WTO plus chapter in
future trade agreements. In your opinion, would enforceability
of SPS major requirements improve market access for small
producers? Mr. Mix.
Mr. Mix. I believe it would. Anything that would help as a
fresh potato grower get access to the various export markets
that would definitely help us and go in the right step.
Chairman Tipton. Mr. Hafemeister.
Mr. Hafemeister. Yes, it would. I think the key thing to
focus on is the difference between a best endeavors commitment
by some other country to something that is actually subject to
dispute that we can litigate. And that I think is the key
question in the negotiation. And without the ability to
litigate, it is not worth much.
Chairman Tipton. Mr. Shaffer.
Mr. Shaffer. I think without a doubt it would be
beneficial. With us depending on exporting 30 percent of what
we produce, that is how critical the continuation to expand
that market just becomes.
Mr. Boyer. Yes, I believe so also, like the other three
gentlemen said. It is imperative to small producers, like
myself, that we have access to these markets. Like I said in my
statement, 27 percent of the pork that we produce here in the
United States goes to export markets. If we can expand that, we
saw what the dollar value of the Taiwan market is. We look at
the value of the Russian market. We have already achieved or
seen what we can create by the Korea, the South Korea, and the
Columbia trade agreements. So yes, it is definitely going to
help small producers like myself.
Chairman Tipton. Mr. Boyer, you spoke a lot about
scientific-based testing to be able to make sure that the
products are safe. We all want that. And how many agencies do
testing on pork--U.S. agencies?
Mr. Boyer. That I do not know off the top of my head but I
can get you that number. Just assuming it is USDA, FDA, they
regulate all the pharmaceuticals that we use and that is what
is standing as a barrier, especially with Russia, the European
Union, as some of the pharmaceuticals that we use, their
standards for traceable amounts within the meat, anything that
we produce. As a family farmer, I also feed my children what I
produce on my farm. So as a producer and as a farmer, I am not
going to--and as a father, I am not going to produce something
that is going to be detrimental to the health of my kids.
Chairman Tipton. Certainly.
You know, we have groups representing--Mr. Hafemeister,
maybe you would like to be able to speak to this--groups
representing small agricultural producers wrote to USTR
regarding their concerns that certain regions, such as the EU
that Mr. Boyer had mentioned as well, are overrepresented in
international standard setting bodies and that these regions
use these positions to be able to legitimize non-science based
standards. Is this a worthy concern?
Mr. Hafemeister. I think it is certainly worth attention.
The key issue here is that in World Health Organization
proceedings, all countries are allowed to attend and they can
all vote on whether or not a certain product is safe or not,
say a veterinary drug. One of the concerns we have had is that
some of the small countries who may otherwise not attend a
meeting or pay attention, may find their airfare paid by the
European Union and encouraged to vote against a standard that
may protect European producers and damage U.S. producers.
We just had a big vote in Rome that the U.S. won, but just
barely, on ractopamine, which benefits pork in particular. So
the U.S. government did a great job of convincing all these
folks, but we are running up against some undue influence we
thought from other countries. So it is definitely working to
make sure these decisions are science-based and not influenced
by anything else. But of course, we want to make sure all
countries have bought into this process. That requires
international organizations' cooperation, consensus, so it is a
difficult issue.
Chairman Tipton. Well, thank you for that. You know, we
have worked long out of our district to be able to try to work
with the Mexican government. We thought about a year ago we got
there, to be able to get the potatoes out of the San Luis
Valley down into the Mexican market. And when you are talking
about being limited to 26 kilometers into Mexico, Mr. Mix, I
understand that some of the potato exports going into Mexico,
they have been denied access by the Mexican officials because
they claim that they test positive for certain pathogens.
However, those are the same potatoes that are tested in U.S.
laboratories and they came up clean. Is this a common practice
that you see?
Mr. Mix. I believe it is getting better. Working with
Secretary Vilsack and Under Secretary Avalos, they have brought
this to the attention of the Mexican government. As of February
of this year, we have only had one legitimate fine. So the
fines have dropped due to the talks with the NAPO panel. They
have dismissed a bunch of the fines. A lot of them were like
PV-wide viruses that they were finding, but they have the same
viruses in Mexico that we do in the United States. So they
decided to dismiss the viruses. So it is getting better, but
the thing that, you know, halters the shipments into the 26
kilometers is if they find a pest, it is the timeliness that
they get back to the growers. And then it just distorts
everything. So you have to wait a certain period of time before
you can export from that shed again. So if they find a pest,
they hold up the proceedings and take their time before they
let the grower know what they did find and if there was a
second test in the United States' lab, it just takes time to do
it. So that is the bad part about it.
Chairman Tipton. Thank you. I would now like to yield to
Ranking Member Critz for his questions.
Mr. Critz. Thank you, Mr. Chairman. And before I ask my
first question I did want to recognize a special guest that
came down with Mr. Shaffer and the Farm Bureau, Jenna Moser,
who is in the audience. She is a candidate for the FFA national
officer team and came along to learn about public policy
process and agriculture in general. So Jenna, welcome to the
hearing. I hope this is helpful in your future. And thanks for
being a young person who is interested in the future of
agriculture in this country.
With that said, Mr. Shaffer, you had mentioned about inland
infrastructure, water infrastructure, the inland waterways, and
you and I discussed very briefly when the Panama Canal gets
finished, and you mentioned that as well in your testimony. And
if you would, just elaborate. And if anyone else wants to jump
in on this as well, elaborate on what you see as what is going
to be happening as these larger barges come online, what the
impact is going to be on agriculture. And sort of, if you have
a crystal ball, what the timing is. You know, what you think,
you know, when do you think the impact is really going to hit
us?
Mr. Shaffer. Okay. As I indicated in my testimony, with the
opening up of the new Panama Canal, the post-Panamax ships are
so much larger. They are going to be able to accommodate them
through the canal. Unfortunately, according to USDA, there are
only six ports in the United States that will be able to accept
these larger vessels. Now, if we expect them to go to the
Bahamas and be offloaded on another smaller ship to accommodate
a U.S. port, our economic competitiveness is just going to drop
to nothing. We are going to be uncompetitive. Now, if we do not
wake up and address the infrastructure in our ports and harbors
in this country to accept these larger vessels as other
countries have done who have invested billions of dollars in
infrastructure upgrades, we are going to be left behind. And as
you know, for instance, it is my understanding New Orleans
cannot accept these larger vessels, and that is where a lot of
the majority of our agricultural products are funneled down the
Mississippi loaded on these ships for export. So I think in the
future it is going to be very critical to address this
situation, and it is going to come sooner than later.
Mr. Critz. Anyone else like to----
Mr. Boyer. I concur with what Mr. Shaffer said, too. And
this is outside my realm of pork, but as a producer from the
Midwest, a lot of our agricultural raw products, be it soybean
or corn, move down the Mississippi River. As we see the impacts
of the drought this summer, a lot of that traffic has been
curtained or they are moving it at a much larger expense
because of the draft or the barges and such.
As we look at our competition, especially in the soybean
area, we look at the expenditures or the investment that other
countries are making in their infrastructure. One of our
biggest competitors for soybean is Brazil, and we look at the
share of the soybean production that China is now buying from
Brazil because they can move that product a lot more efficient
than we can.
Mr. Critz. Thank you. And this question is for Mr. Shaffer
and for Mr. Mix about what the TPP means for farmers in
Pennsylvania or farmers in general. Now, in Pennsylvania, my
question was centered around dairymen and the problems
exporting to Canada, but one of the questions I wanted to ask,
too, is do we send potatoes as well to Mexico? Is that part of
our market or is that too far from Pennsylvania? We do not
export to Mexico. But what would the TPP mean to dairy and
potatoes in both of your instances?
Mr. Shaffer. We ship very little potatoes to Mexico, but I
will tell you this. When I look at trade, whatever leaves any
part of the country is making room for the rest of the product
in the country.
Mr. Critz. Okay.
Mr. Shaffer. So whether it leaves from Colorado, that opens
up more markets for our potatoes on the East Coast or anything
else.
Mr. Critz. I see.
Mr. Shaffer. So that really has that effect. And dairy, as
I said, our dairy farmers really have been taking a beating on
price the last couple of years. And in this country, we are
about at maximum consumption of dairy products for all
practical purposes. So the only opportunity is exports, and
that is why it is so vital to the dairy industry.
Mr. Mix. I would agree with the statement of Mr. Shaffer on
exports. You know, if Colorado does get the Mexican to all the
nation, that market, it allows the potato movement in the
United States to open up and there are less potatoes. So it is
the supply and demand curve that everybody knows in the
economics.
We, as a potato industry, right now we are watching the
negotiations of the TPP to see how that goes and to see what
the reaction of the Mexican government is to that to go forward
with it. I think that would be a definite help to us as an
industry in Colorado being with our locality to Mexico, the
freight advantage that we do have. So that is where we are at
with the TPP, is just watching the negotiations and where it is
going to go here in the next 80-90 days.
Mr. Critz. Okay. Well, thank you. And because I know we are
going to have votes here shortly, I have about a dozen
questions but I will yield back so that we can get to our other
members. Thank you.
Chairman Tipton. Thank you, Mr. Critz. And we actually have
had votes called now and that series will run until about 1:00.
And I want to recognize and give Mr. King and Mr. Keating an
opportunity to maybe ask a question before we do move on to
vote.
Mr. King. Thank you, Mr. Chairman. I would first inquire
how much time is left on the clock at the vote. Pardon?
Chairman Tipton. Nine minutes.
Mr. King. Nine minutes. So normally here we would be able
to head over that way with a couple minutes left but I
appreciate being recognized and I appreciate the witnesses. I
regret I had to step out of the room and miss the opportunity
to introduce Mr. Boyer, who comes from--I will call it my
neighborhood in Iowa. And some things call us away and we have
simultaneous committee meetings and hearings going on in this
town on a regular basis.
I wanted to start with Mr. Mix and ask you do you know if
there is, aside from these issues that you testified, do you
know if there is a foreign entity out there that has regulated
your means of production that said you have to raise potatoes
in a certain way?
Mr. Mix. I am not aware of a foreign entity. There are
protocols that we have to meet to ship to Mexico. The brushing
of dirt off and we have to apply a storage product so they do
not sprout, but as far as a foreign entity, I am not aware of
one.
Mr. King. Are there any regulations that you know of that
would regulate how you raise potatoes that could not be
identified at the border? For example, application of a
treatment to the potato where cleaning those potatoes, they can
look at that potato and examine it and tell whether you have
done what they have asked. Correct?
Mr. Mix. Yes.
Mr. King. So there is no regulation that you know from a
foreign entity that regulates the means of production, just the
product itself at the border?
Mr. Mix. Right. They do not--there is no means of
regulating how we grow the actual potato.
Mr. King. Okay. I like that kind of world.
Mr. Shaffer, I would ask you, do you know of any
regulations of any means of production that you have to comply
with that cannot be identified by examining the product?
Mr. Shaffer. No, I would only referred to limited exports
because of biotechnology issues some countries put on us that
that might--I consider that a production tool that I use, so
that might be one of the means you are referring to.
Mr. King. That would be GMO?
Mr. Shaffer. Correct. Correct.
Mr. King. And do we not know also that that can be examined
in the lab to determine the GMO identity?
Mr. Shaffer. Correct.
Mr. King. Like ground up ready beans, for example?
Mr. Shaffer. Yes.
Mr. King. And so we know that technical fee has been
applied to soybeans coming in from Argentina and Brazil over
the years and charged back again. So I understand your answer
and I appreciate it.
I would like to turn to Mr. Boyer and say do you know of
any regulations of the means of production that come from an
outside entity outside Iowa or the country that cannot be
identified by observing the product and examining it but only
can be a regulation on your means or method of production?
Mr. Boyer. At this time I am not aware of some but I think
if we are not cognizant about it, it will come to fruition. We
see what is going on within our own country between states--
California requiring some kind of identifying of a product, if
it was raised in a cage or not in a cage. I know for a fact you
cannot tell from a pound of bacon if that pig was castrated
using anesthetics or if that sow was housed in a gestation
crate or an open pen.
But at the same time we are seeing through the European
Union some are processing practices. One of the problems that
the European Union had was the color of the walls in the
processing plants and also the style of molding using the
processing plants. Those have been addressed by some of the
packers, but it is still one of those issues that they are
using, what they are saying are sanitary or phytosanitary
measures but they are accurately not being portrayed that way.
Mr. King. Aesthetics for hogs or aesthetics for the people
that are processing them?
Mr. Boyer. I could not answer that. I am not from France.
Mr. King. You would not take that I think.
Mr. Boyer. Yes.
Mr. King. But in any case, what you have identified, Mr.
Boyer, is the trade protectionism by regulating the means or
method of production. When that happens from a foreign country,
we see that as trade protectionism. When that happens within
the United States, state-to-state, it is still trade
protectionism. The Constitution of the United States reserves
the regulation of interstate commerce to the Congress and
prohibits it to the states for that very reason, because they
did not want to set up trade wars between the states. Now we
are seeing this emerge in the ag community with regulations of
gestation crates, stalls for veal calves, how you feed ducks
and geese for liver, the ag piece, and it will be broilers
next. And so I am just suggesting that the language that we
have written into the Farm Bill now that prohibits the states
from regulating the means of production of ag products as an
important piece of language and legislation that must go into
law or we will see in the United States trade wars by
regulating the means of production that are worse than the
trade competition that you have testified to here today.
So I thank all of the witnesses, and I thank the Chairman
for calling this hearing. And I yield back the balance of my
time, even realizing it is a minus 14 seconds.
Chairman Tipton. Thank you, Mr. King.
Mr. Keating, I would like to be able to yield to you, and
we can see how much time we have left.
Mr. Keating. Not much, but thank you, Mr. Chairman.
Thank you for your comments on infrastructure improvements,
particularly seaport infrastructure improvements. I think the
same thing could be said for rail, as well. That would be
helpful in our country, not just for agriculture but for
manufacturing.
Now, I come from a huge cranberry growing area, and I was
going to ask you--I am also on Foreign Affairs--have you been
helped at all by any of the U.S. missions or any diplomacy? I
notice in cranberries, in Turkey there is a market but they do
not even have a word for cranberries. And in Italy just
recently they just were still calling it red fruit. So have you
had any help from the U.S. missions in terms of trying to take
some of the informal barriers, not the strict ones, but the
ones that are just very real but maybe sometimes unintended?
Mr. Mix. With potatoes, in Mexico, where we have been
helped down there mostly is the retailers and the wholesalers
trying to get their point across to their government that there
is a market for the United States' potatoes going in there. So
we are working through that avenue to get them on board with us
to relay their point of view in their own country that there is
a market for United States' fresh potatoes in Mexico. So we are
not using missions but other avenues.
Mr. Keating. Okay, quickly, the Import-Export Bank, are all
of you utilizing that? How effective is that? We just
reauthorized that. Is it helpful?
Mr. Mix. I am not aware of any help on that.
Mr. Keating. Mr. Boyer.
Mr. Boyer. I think any influence that we can see from our
federal government to help us open these other countries to our
exports which, you know, in fact, increases our bottom-line and
helps us is appreciated.
Mr. Keating. Great. Thank you. With the seconds ticking I
will yield back the rest of my time. And I thank all of you for
coming.
Chairman Tipton. Thank you, Mr. Keating. And I would like
to thank all of our witnesses again for taking the time to be
able to appear before us today. We do apologize for having to
move a little quicker than we would like in regards to the
votes that we have coming up. You have all provided insight to
this Committee, and we pledge to be able to work with you to
ensure that American exports, agricultural products and
otherwise, receive fair treatment in international markets.
I would like to be able to ask for unanimous consent that
members have five legislative days to be able to submit
statements and supporting materials for the record. Without
objection, so ordered. The hearing is now adjourned.
[Whereupon, at 10:53 a.m., the Subcommittee was adjourned.]

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