Following is the U.S. Department of Agriculture transcript of Veneman's remarks:

United States Department of Agriculture
Release No. 0319.02

By Agriculture Secretary Ann M. Veneman
Before the American Chamber of Commerce
Beijing, China
July 29, 2002

Well thank you very much Chris Murck for that kind introduction. It is truly an honor to be here today to address this group. I also want to thank Ambassador Randt for his tremendous support and hospitality and everyone at the Embassy. They have just been tremendous as we've done this whirlwind trip through Beijing doing as much as we can in a short period of time.

I also want to introduce some key members of my staff from Washington who came with us on this trip. We have two of our Under Secretaries of Agriculture Dr. J.B. Penn, who is the Under Secretary for Farm and Foreign Agricultural Services, overseeing not only our farm programs but overseeing our international programs as well; and Dr. Joe Jen who is our Under Secretary for Research, Education & Economics; David Hegwood who is our Special Counsel for agricultural trade and focuses both on the global trade negotiations as well as biotechnology issues; and Ellen Terpstra who is our Administrator of the Foreign Agricultural Service. And they're traveling with us from Washington. So we are very pleased to have them as part of our team. And I think, as we have traveled around and talked with various of the Chinese officials, it has been significantly noted the level of the delegation that we have brought with us on this trip.

I thought what I would do today, just for a moment, is talk a little bit about the trip I've had but also a little bit about the U.S. Department of Agriculture. And I got this idea yesterday, or the day before yesterday, when I was coming in with the Ambassador and he was surprised at some of the things USDA does and so I thought maybe I'd tell the rest of you what we do as well.

Our agency is one with about a $76 billion ($76,000 million) budget. If it were a corporation in the U.S., it would rank about 6th in terms of U.S. corporations, a little bigger than IBM and a little smaller than General Electric. So that gives you some idea of the scope and size of what we're dealing with. It is also one of the most diverse departments in the entire government. And I know that surprises you, but I'll explain that in just a moment. We have figured out that, here in China, there would be about 13 different Ministries that would have overlapping jurisdiction with the jurisdiction we have in USDA. Yes we have all of the farm programs, we run rural development programs, but we also have a major role in the fight against hunger. We run the food stamp program, the school lunch program, the school breakfast program, the women, infants and children (WIC) program which, of course, helps mothers and small children. Do you know that 47% of the children born in America are born into WIC families. We also have international food assistance programs so that part is international as well. A lot of people are surprised. My niece used to like to tell people that I was Smokey the Bear's boss. But we also have the US Forest Service in the Department of Agriculture. dealing with one of the biggest fires seasons ever. We're at about double our ten-year average in terms of acreage burned so far this year. So that presents a whole other set of challenges for our Department. And we've had an opportunity on this trip to talk to some of the ministries about the importance of cooperation on forestry issues and re-forestation. And, of course, this year this has been fairly significant because we have been ....

We have a major role in food safety and protecting the food supply running the Food Safety Inspection Service with jurisdiction over all of the meat and poultry inspection for the country, as well as the Animal Plant Health Inspection Service which regulates the animal and plant health issues. And all of these food safety and animal plant health issues are extremely important when it comes to trade and relate to a number of the trade irritants that we are experiencing with several countries, and China is no exception. And I will touch on that a little more later.

Finally, we have a major international trade portfolio and, as I mentioned before in the Foreign Agricultural Service, we have people in Embassies all over the world. And, as many of you know when we talk about international trade and international trade agreements, one of those issues that always comes out is one of the most contentious is that of agriculture and the food system. But international trade is critical to U.S. agriculture to our farmers and ranchers. We export about a 1/4 of what we produce. It is one of the few areas in the economy where we run a positive balance of trade. We produce much more than we can possibly eat in the United States and some people say that we have already eaten too much. And so the international marketplace is absolutely critical. And the President feels very strongly about the importance of trade and agriculture. Both Bob Zoellick and I say, the President doesn't talk about agriculture without mentioning the importance of trade and he never talks about trade without talking about agriculture. So it is a critical issue for him and it is a critical issue our farmers and ranchers.

So, before I get into China, I want to touch a moment on this trip we're on because it's gotten a fair amount of media attention. I saw it in the paper again today in the China Daily. We started out this trip in Japan. And I chose to go to Japan because we were attending the Quint Agricultural Ministers meeting. I arrived in Tokyo Wednesday night and Thursday spent some time doing actual agricultural promotion events for agriculture, particularly meat exports. That is a very important market for us. Japan is our number one food and agriculture export market in the world. So, while we continue to have a number of trade disputes with them in the food and agricultural area, we appreciate what a good customer they are. But because of the BSE find earlier this year in Japan there has been a significant drop in some of our meat exports. So, we did a promotion event with children talking about the safety and so forth of U.S. beef. So, we met with some consumer groups. And then we did another promotion event for rice because they've been pretty restrictive on their rice market. But I'm from California as you know and we in California grow the kind of rice that the Japanese like but it comes under these restrictive tariff rate quotas which are better than we had before because we negotiated all of those in the Uruguay Round. But there is now a plant that's been built in Fairfield, California in northern California by the rice producers where they're producing Bento Boxes with California rice and meat and fish and so forth for the Japanese market. And so we're now able to get California rice into the market outside of the quota. So we did a little promotion event for that as well.

We then traveled on to Nara, Japan where we attended the meeting of Quint Agricultural Ministers. This is a forum that Clayton Yeutter started in 1989 after he had been US Trade Representative and he subsequently became the Secretary of Agriculture. And there is a process in USTR where they've done something called the QUAD where they've met with the trade ministers of major trading countries to work out the different trade issues. And so he decided to replicate that with agriculture ministers because ag trade issues are so important. So this was the fifth one since 1989. The first one to be held in Japan. It really is an opportunity for the Ministers from the EU, Japan, Canada, Australia and the U.S. to get together and talk about issues related to agricultural trade and particularly the WTO negotiations. And we're also able to address a number of issues that are confronting all of our countries today with the changes going on in the food and agriculture system. What ended up being very significant about this meeting is that it also turned out to coincide with the release of the U.S. negotiating proposal on agriculture that we put forward last Thursday in Washington. I was in Japan so was able then to begin to talk with my counterparts about it and release it at that meeting at the same time. And it is being released in Geneva today at the WTO meetings.

It is a very important proposal because it is an aggressive and bold proposal on the part of the United States and it really creates a two-phased approach to move forward with these trade negotiations. It would phase out completely export subsidies over a period of five years. We put that on the table a few weeks back in Geneva. The two parts of the proposal that are new, that we released last week, are phasing down of market access barriers and of the most trade distorting domestic supports that we call the Amber Box subsidies, equalizing those over a five-year period and then from there moving toward elimination.

So, again, it's a very significant proposal. It would bring all countries down to a percentage level of their overall production on their trade distorting domestic supports to a level of 5 percent which is significant because right now Europe is about 25 percent, Japan's about 40 percent and we're about 10 percent so that would bring us all down to the same level vis-a-vis our ag production and we would eliminate from there. On the tariff side, the market access side, global food and agricultural tariffs around the world average about 62 percent -- in the United States they average about 12 percent. This proposal would say that countries should reduce down to an equalized level of about 15 percent with a maximum tariff on any product at 25 percent and then work toward elimination. So, again, this is a very significant proposal. It is one that we think will show that the U.S. is going to continue to assume a leadership position in these negotiations and we're hopeful that we will find significant support from this. We did get considerable support from some of the countries already, countries of the so-called Cairns group, the ag-exporting nations led by Australia and they were very supportive of the meeting in Nara. So that gives you a little background of my trip so far until I got to China on Saturday night.

I am very pleased to be back in China. This is my first trip as Secretary of Agriculture, but my fourth overall trip to China. I have not been to Beijing since 1993 so you can only imagine the changes I see as I come back here. It is just tremendous and, as JB Penn likes to say, it's amazing what a little market economics will do.

One of the things that is interesting as we come here -- as of course it's the first visit since China has become a member of the WTO -- I've been struck by how that comes up in so many of the meetings and how significant that is to so many of the government leaders that they are now part of the WTO and they realize that means some differences. I was telling the Minister of AQSIQ yesterday how exciting it was to be in the room in Doha when they actually voted on China's membership into the WTO and he really appreciated that fact. The WTO membership is obviously something the Chinese have been very engaged in and we from the standpoint of market access are very engaged in as well. And so as we approach this visit, we are looking at some of the difficulties also that we've had since the WTO accession, some of the difficulties in implementation and trying to work through how we can make sure that the WTO commitments that were negotiated are implemented in a way that is consistent with obligations that were entered into and consistent with the trade that was promised.

As was mentioned, the administration of the tariff rate quotas has been a problem and that's on our agenda for this trip. They're adding additional requirements that weren't part of the original negotiation. We've had difficulties with export subsidies of corn. That was to be eliminated. No export subsidies according to the accession agreement. So, that's an issue that's subject of our discussions. As well as import licenses on some of the products that are being required and issued in a matter that is seemingly slowing the trade. So these are all issues that are of concern to us. They are issues that we are raising with government officials and they are issues that we are hoping to make progress on during our visit here. The other issue of course is sanitary and phytosanitary issues and the whole regulatory scheme that comes around any agriculture and food system. And we've been emphasizing to the Chinese that the regulations must be based on good, sound science.

Part of the Uruguay Round in the negotiating of agriculture was the negotiation of a sanitary and phytosanitary agreement in agriculture. This was a significant achievement in the Uruguay Round an agreement on agriculture. One which sets forth a rules-based approach to regulatory issues to agriculture and one which requires that those regulations be based on science. And so that's a point that we try to emphasize very strongly as we've had meetings with the Chinese and try to emphasize that we need to work together in developing the good science so that trade regulations don't become impediments to trade. Which brings me to another very important topic and that is the issue of biotechnology and genetically modified organisms.

As you know, the most immediate issue is access for our soybeans. About 75 percent of which are today produced from biotech seeds in the United States. So, if we're going to export soybeans to any market in the world today, we can't have a restriction that won't allow biotech products into their marketplace. And this market for soybeans last year became a billion dollar market for us and because of proposed regulations on biotechnology that market has slowed considerably because the trade is reluctant to purchase and enter into contracts because they don't know what the regulatory scheme is going to look like. So this is a very important issue for us. It is one the President raised in his visit here, and one which he doesn't want to have to raise again in the upcoming visit to the United States. So, it is critical that we make progress on this.

We have determined that there are between six and seven ministries involved in the regulation or oversight in the issues related to biotechnology. I am sure all of you know this much better than we do, but we are starting to get a true picture that ministries in this country don't coordinate as well as we do in the United States. So, this is a challenge but it is one that we have been trying to address with our Chinese counterparts as we've moved around and visited with the various Chinese ministries. I believe we also need to look at this issue of biotechnology and new technologies in the food and agriculture issue in a little bit broader context and that is that China places a high degree of emphasis on new science and scientific discovery and actually is doing a lot of work in research related to biotechnology and biotechnology products.

We are, in fact, doing a joint project that Dr. Jen has negotiated with the Beijing Genomics Institute -- we are going to go out there later today -- on genomic issues, particularly in the livestock area. But all of these science issues begin to merge as you look at the ability to discover the genomic makeup of plants and animals and how that would then relate to the ability to develop biotech solutions. So, in talking about these biotechnology issues, we are also emphasizing to the regulatory agencies as well as the science-based agencies, the MOST for example, which we visited with this morning, but we need cooperation on research and science and that science needs to then translate into a science-based regulatory system. And, again, it's a question of getting the ministries to work together but we believe that it is very important to emphasize the science basis in all of these.

One of the other things we've also been emphasizing is the opportunity to work together with international standard setting organizations that are so important to regulations pertaining to agriculture and food products. I do believe it is in our interests to cooperate with China in these international standard setting organizations. So, our goal is to try to work with them to get consistent regulatory systems for both the short-term, resolve this soybean issue, as well as looking at the longer-term promise and opportunity with regard to these new technologies and we think that is extremely important. When we look at some of the opportunities in biotech, whether it's creating drought resistant varieties to serve the hungry people around the world or it's the environmental benefits we're seeing -- we're seeing such water quality benefits now in the United States from using Bt variety corn and cotton and the waterways -- the amount of chemical residue now is being drastically reduced -- so, we're seeing tremendous benefit and we will begin to see the health enhancing benefit of certain foods come out through biotechnology research and the consumer benefits we'll be seeing very soon from these products.

We think it's important to work together, but we also believe it's extremely important to emphasize how critical it is that the Chinese understand how to play by the rules and we need to help them do that. We need to help them develop the kind of regulatory system that will be based on good science and not be based on other issues and trade distorting issues. I also want to compliment the Chamber in putting together your new forum on agriculture and agriculture technology. I think this is going to be absolutely critical to make sure there is a broad understanding of these issues, both from a scientific and a regulatory perspective and from a private sector and government perspective because all of those issues need to come together. So, again, I appreciate very much the opportunity to be here today. I'd like to make this very informal and hear your thoughts, your ideas or your questions.