Release No. 0263.02

of

Secretary Ann M. Veneman and

U.S. Trade Representative, Ambassador Robert B. Zoellick

Upon allocation of Market Access Program funds

Wednesday, June 26, 2002

- - -

MS. HARRISON: “Before we get started, I wanted to just do a few housekeeping announcements.

“This morning we will have a few opening remarks by Secretary Veneman followed by Ambassador Zoellick. We'll also have a few brief remarks from Terry Stokes from the National Cattlemen's Beef Association, and Roger Watson with the California Strawberry Commission.

“Today we also have an open line for reporters to listen in as well as we are streaming this live via the Web. So when we go to questions and answers, if you would wait for the microphone so that we can capture your name and make sure that we get the question, and also go ahead and introduce yourself as well as the organization that you're with. So the event will begin here momentarily.

SECRETARY VENEMAN: “Well, good morning, everyone, and let me first welcome you all to USDA. It is a pleasure to have you all here today, and, as always, it's a great privilege for us to have Ambassador Zoellick here with us today. He is a great friend of American agriculture and is a delight for me to work with, and I think we are able to do better work on behalf of trade and agriculture because of our close working relationship.

“We just came from a meeting with representatives of key trade and commodity groups, many of whom you see here with us today, and we discussed various activities that we are engaged in to increase U.S. food and agricultural exports.

“Trade promotion authority, which is a critical element of our agenda, was one of the big topics of discussion, and I know that Ambassador Zoellick will speak more about that and its importance in a few moments.

“Expanding opportunities for U.S. agricultural exports is one of the most important contributions this administration can make to sustained economic prosperity for America's farmers and ranchers.

“One of the ways we do this is through public/private partnerships such as the Cooperator Program, and we have many of our cooperators here with us today. We export more than $1 billion of food and agriculture products from this country every week, generating about one-quarter of farm income.

“Today, I want to talk about our framework to boost exports. First, we will use all available tools to promote U.S. agricultural exports. One of these tools is called the Market Access Program, and I'm pleased to announce today that USDA's Foreign Agricultural Service has allocated $90 million in funding under the 2002 Market Access Program, with $10 million more by the end of the year.

“This funding will go to 67 trade organizations to market U.S. products and expand food and agricultural exports of everything from catfish and asparagus to popcorn and wine.

“The Farm Bill President Bush signed in May more than doubled the total funding of this very successful program to $200 million by the year 2006.

“While our competitors have increased their market development investment substantially, U.S. spending has remained relatively flat. So we believe this is a much-needed increase.

“The second step in our framework is to aggressively pursue trade negotiations. Last week, agriculture sector trade negotiations focusing on export competition issues commenced at the World Trade Organization in Geneva.

“The United States submitted a proposal calling for the eliminating of export subsidies. We will follow this up with similarly ambitious proposals concerning market access and domestic support in the coming months.

“We will also pursue trade liberalization through bilateral and regional free trade agreements. Negotiations for a free trade area of the Americas and for an FTA with Chile are ongoing.

“In addition, Ambassador Zoellick is exploring a number of other possible agreements. Expanding access to markets with freer trade opens the door to broader economic opportunities here at home.

“We also have to be prepared to defend U.S. farmers, ranchers, and our entire food industry against the unfair practices of other countries. This is the third point of our framework.

“We will aggressively attack unfair trade barriers and subsidies.

“Ambassador Zoellick and I have been fully engaged in fighting trade barriers to U.S. poultry in Russia and Japan and restrictions on soybean exports to China.

We are continuing the battle against Canada's unfair dairy export subsidies and we won our case before the WTO earlier this week.

“In addition, we will keep fighting the monopoly practices of the Canadian Wheat Board. Trade agreements, once reached, have to be enforced, and we are committed to ensuring that countries trying to skirt the rules do not undermine our exports.

“The final point of our framework is to increase demand for U.S. food and agriculture products through economic growth and sustainable development. A healthy outlook for U.S. ag exports depends on a healthy global economy and sustained economic growth in developing countries.

“Earlier this month, I led the U.S. delegation to the World Food Summit in Rome, where one of the critical achievements was recognition of the importance of agricultural trade liberalization for economic growth in developing countries.

“Starting with the Doha ministerial last November, and continuing through the Monterrey conference, the World Food Summit, the G-8 summit this week, and the world summit on sustainable development in August, this has been and will be a recurring theme in the administration's global agenda.

“Sustainable development, which brings global economic growth, will increase export opportunities for U.S. farmers and ranchers. With continued focus on these four points, we expect to see increased export opportunities for U.S. food and agricultural exports.

“Now it is my pleasure to introduce my friend and colleague, Ambassador Robert Zoellick.

AMBASSADOR ZOELLICK: “Well, thank you very much, Madam Secretary. It's always a pleasure to be here, not only with my friends at USDA, and first and foremost among them is my colleague, Ann Veneman, because we worked on the agricultural trade issues for a number of years, and it's always a delight to have such a knowledgeable and helpful colleague, but also her staff at USDA, and, frankly, all the people that are a part of the agricultural community, because they've given this administration some fantastic support on trade, and we very much appreciate it, because, frankly, when the President interviewed me for this job--and I know he talked about this with Ann--the first thing he emphasized was the importance of ag trade for America and how important it was for him that we put that on our priority list.

“As the Secretary said, today we've been talking about the Market Access Program and how we can connect it to what we're trying to do in the market opening area. So we not only open the doors for trade but we also help make sure that we provide some of the financial support to make sure we get the marketing to get the products in.

“As the Secretary mentioned, America's agriculture depends on markets abroad. Exports generate about 25 percent of gross cash farm receipts. One in three acres in America is planted for exports, and, indeed, relative to the general economy, American agriculture is two and a half times more dependent on international trade, and, frankly, as American productivity increases--and that's at the heart of what this business is about, is using biotechnology and other things to increase the productivity--we're going to need to have more and more markets because the United States will have population growth. But as we always talk about, there's only so much more Americans can eat, although we may challenge each other on this on July 4th weekend.

“But nevertheless, the growth is going to be abroad, and you can see that, and we talked about this at the meeting. Some of the people from the meat industry were talking about the tremendous growth in beef and pork exports over the past five, ten, fifteen, twenty years.

“The unfortunate reality is we still face a lot of barriers abroad, and that's why there's a lot of work to do.

“The average bound agricultural tariff around the world is 60 percent. The average U.S. tariff is about 12 percent and Europe is about 30 percent. Our friends in Canada, who often talk about agriculture, are about 23 percent.

“So there's a lot of work to do on the market access area. In the area of trade-distorting subsidies, as many of you know, under the WTO rules, there's a cap level in terms of the amount that various countries can spend of subsidies that distort trade. Our level is $19.1 billion, Japan's level is about $30 billion and the European Union's level is $60 billion, over three times our level. We've got to get those numbers down.

“In addition to the global negotiations where, frankly, a lot of people are unaware that agriculture is always kind of left out of the trading system until the Uruguay Round. The Uruguay Round is the first one that's created these rules and disciplines, and as a price of it, it left some of these asymmetries, which we've got to try to change here.

“In addition, there are other opportunities in our regional and our bilateral negotiations. There's some 150 free trade agreements around the world and the United States is only part to three of these, and in each of these agreements, it's not only a question of working on market access but it's a question often of the rules and the standards and how we can try to improve SPS, the sanitary and phytosanitary standards enforcement.

“Ann and I, under the President's direction, have been trying over the past year and a half to try to reinvigorate the agenda on trade, and we've had some good success. We got China and Taiwan finally into the WTO, so we activate the basis of that agreement negotiated by our predecessors.

“It took 15 years for China; nine years for Taiwan. Now there's going to be a lot of work pre- implementation done and we talked a little bit about that today. There's also opportunity to use some of these MAP funds to help some products get into the Chinese market.

“We talked about some examples of almonds and citrus. We also now have the challenging task of Russia. Russia is an important agricultural market, and one of the things that we are committed to doing is to make sure that the openness of that market remains open. And undoubtedly as you've seen in the case of poultry, there's cases where all of a sudden some of the strong Russian economic interests don't want to have the exports that we've had, and we're going to fight that, to make sure that if they come into the WTO, they come in on a rules based and open system.

“It's also true in the regional area where the President really gave a concrete push to the free trade area of the Americas last year in Quebec City.

“But then last year, we also finished the bilateral agreement with Jordan. We had another trade agreement, not a free trade agreement, with Vietnam. We're working on Chile and Singapore, and should be able to finish those this year. But there are other markets.

“The President's talked about Central America, Morocco. Frankly, we're in discussions with the Southern African Customs Union, this week, a topic that is on the agenda because of what's going on up in Canada, which would be a way of building on the African Growth and Opportunity Act, to lock in benefits through a free trade agreement.

“These are all important initiatives, but one of the reasons that I was absolutely delighted to be with these people from the agriculture community is, we can't deliver this unless we get our trade promotion authority.

“Trade promotion authority is the heart of what allows us to take an agreement and bring it back for an up or down vote.

“Many people ask, `Why do you need that? Why can't you just subject to an amendment?’ Here's the problem you face. When we're at a negotiating table, anybody's at a negotiating table, you're trying to push somebody to get to their bottom line, or a little bit beyond it, and it's a deal, it's a package, and the last thing that somebody's going to do is to take a risky position at home.

“If it's part of the deal, somebody in Congress can say, well, we'll take this piece but we won't take that piece. That's simply what it comes down to. Hank Paulson, the CEO of Goldman Sachs, wrote an article, an op-ed, saying how could you ever put together a financial deal if you couldn't bring it back to a board of directors as a package?

“Well, for some of those from the union sector, I asked them how many times do they bring back a union negotiation and say, well, now let's have an amendment on the wages and we'll have an amendment on the benefits. Uh-uh. It's an up or down package. That's the way it's got to try to work.

“All the Presidents since Gerald Ford have had trade promotion authority. It expired in 1994 and there's a long gap, and it's been tough to try to get the Congress to come back to close that gap.

“As you know, TPA passed the House. TPA passed the Senate. We're now in the process of trying to get the conferees appointed, and we've got to get it done this year.

“For the ag community that knows that its future is at stake abroad, all I can say is that over the recess the opponents of trade will be out working this issue.

“They'll be out trying to kill the ability to negotiate trade agreements and that's not going to help America's farmers and ranchers, and it's not going to help America's consumers, or anybody else that benefits from competition and trade.

“So it's very important that the agriculture community let their representatives know over the recess, the importance of trade.

“So I very much appreciate this. We worked together on a whole series of issues, big and small. It's a great group to work with, I'm proud to be with them, and I'm glad that we can try to talk about ways where we can link the market opening agenda with the market promotion agenda.

“So thanks to all of you.

SECRETARY VENEMAN: “Thank you very much. We're not quite there yet, Roger. We just wanted you to hear from a couple of our folks up here, and, first, we're going to have Terry Stokes who's the CEO of the National Cattlemen's Beef Association, followed by Roger Watson, who is the CEO of the California Strawberry Commission, formerly with the Almond Board of California.

MR. STOKES: “Thank you, Secretary Veneman. It's a pleasure to be here and we applaud the efforts that both Secretary Veneman and Ambassador Zoellick have outlined this morning.

“As you know, exports are a vital part of our industry. Almost 10 percent of our beef production is exported from our marketplace, and this would not have happened without the partnership of the beef industry with USDA and the Foreign Ag Service, and the funding that comes through the Market Access Program and we applaud the efforts and the increase in funding that has come forth to help us to further open markets.

“As we look at increasing the potential for profitability of beef producers, this is one hope and one way in which we can do that. A specific example of how this has worked for us has been recently in Japan, with the finding of BSE in the fall, and the loss of market share that we had in Japan, that MAP funding has allowed us to expedite and accelerate the rebuilding of our market in Japan and we've seen exciting growth over the last few months as a result of that.

“The second dimension of this, though, is the importance of trade promotion authority, and what that means to our industry.

“One of the issues that we face is a lack of profitability and the concern of beef producers is not only having more markets open but having fair trade, and that fair trade policy begins with the ability to negotiate that up-front in the treaties.

“It is the foundation of a strong policy and we applaud the efforts of the administration to move forward with this. We hope that Congress will expedite the approval of it. It's vital for us and it's one way in which we can provide to our constituents a, you know, a greater hope for profitability and an increased potential for them to pass their ranches on to the next generation. Thank you.

MR. WATSON: “It's a pleasure to be here today. Yesterday afternoon, I was in a strawberry field, literally, and when I heard a few days ago about this event taking place, I knew I was going to have to take the red eye, which I did last night, but I took the advantage of standing out in the field and talking to some farmers and telling them why I was coming back here, and to voice some support for both MAP which I've been a participant in as long as I've been able to, and with a couple of commodities, and also trade promotion authority.

“One thing I find when you talk to farmers, as many of you do as well, is they get hung up on some of the acronyms. When you talk about MAP, what's that? When you talk about TPA, what's that?

“And yet when you talk about really negotiating and opening markets and trying to develop new markets, everybody understands that language, because the one reality for American agriculture is that we can produce a whole lot more than what we can sell here, and in fact as Secretary Veneman pointed out, until just a month ago, I was the CEO of the Almond Board of California and I'd been there ten years, and those of you in this room can see the chart on the wall here of where almonds rank as far as exports.

“In fact what you may not know is that 70 percent of the production of almonds in the United States goes to exports. It's an industry that simply cannot survive unless you're developing and opening markets, and I just want to mention briefly one example of where the MAP funds have really helped, and that is in working in China.

“In China, we started using MAP funds about six years ago in developing the Chinese market, and at that time there were only a couple hundred thousand pounds that were going into that market, and now China has gone up to close to 30 million pounds that are going into China, with lots of handlers that are shipping into China, and it has become, of 110 countries that the almond industry is exporting to, it's become one of the top five in the world as a customer for California almonds.

“That's just one example. I think everybody up here on the stage could take turns and come up here and give you another example of where programs have really paid off. So it is, indeed, really, an honor to be here and talk about MAP and also the other side of it, and that is the trade promotion authority. Thank you.

MS. HARRISON : “We can open it up for questions now to folks here in the audience, and those who are on the phone with us. So why don't we begin.

QUESTION: “Mr. Zoellick, you said that opponents will be [inaudible]. Will you elaborate on that, and also what makes you think that, ultimately, Congress is going to approve [inaudible]?

AMBASSADOR ZOELLICK: “Well, the answer to the first question, as reported in Congress Daily, the AFL-CIO unions have announced that they're going to be running ads in a lot of the key districts. Given the voting pattern we saw when the House passed TPA in December, people pretty much know there's sort of twenty-five or thirty or some forty key players on this, and so the people that want to stop trade, that want to make it harder for American agriculture, they're going to be out there.

“Now what's often hard to understand is exactly how they see this in their interest. I'll give you an example, is that, you know, the aerospace workers from Boeing are against trade.

“Now I don't know how people think they're going to have jobs if we're not selling Boeing planes abroad, and I could go through one list after the other, and, you know, whether it's longshoremen--how do you have longshoremen jobs if you don't have trade?

“So a lot of this, frankly, I think is driven by an underlying anxiety. It's the fear of change, and people often don't know what to do, whether it's change due to technology, it's competition across the country, whether it's competition from abroad, and that's, frankly, one reason why the administration has supported the efforts to combine the trade promotion authority with a serious trade adjustment assistance program. And it came through the Senate, when they get to conference, that'll also be part of this, to help people adjust.

“But I think what everybody's seen over the past 10 or 20 years is that you don't deal with change by trying to hold in place. It just won't work, and you've got to help adjust, whether it's through better education, whether it's through trade adjustment.

“But, frankly, the other part of it is we need to play to some of our strengths, and the people standing up here represent America's strengths in terms of agriculture. We can't negotiate agreements to open markets and as I said, you know, people often talk about the closed markets in the United States. Yeah, we've got closed markets, but you compare some of those numbers I gave you, and you'll see there's a lot of closed markets abroad plus other ways that people are blocking things.

“Now to come to your--and we need to be able to break those down. Now to come to the question about why I think it'll happen.

“It passed the House, it passed the Senate, and, frankly, we think that the combination that's likely to come out of conference should be able to give us additional support in the House because, frankly, there were a number of people in the Democratic Party that said we understand you're right on trade but we'd like to have some more on trade adjustment assistance, and there'll be more on trade adjustment assistance.

“So the question, frankly, is that you've got a crowded Congressional calendar, people have to put this as a priority if it's going to get done.

“The President just this week, again, said how important this is, communicated to us as part of his economic program, and so, you know, it's a question of working through the machinery to get it done in the time that we have.

“The last part of it is, is that, you know, if we don't get it done, then these initiatives that we've taken, globally, regionally and bilaterally, well, it's going to be pretty hard to see how you can move those forward, and so at the end of the day, what moves Congress is self-interest and that's one of the reasons why these people have been so helpful, is that I can talk about the policy, they can go back to the districts and say it helps your pork producers, it helps your corn growers, helps your soybeans, helps vegetables, and others, and that's what moves people.

QUESTION: [inaudible] “the technical people--

MS. HARRISON: “remember to use the microphone.

QUESTION: “Sorry. If I may just follow up, briefly. There's some trouble with the textile folks here who supplied some of the votes in the House. How is that going to be resolved? Or how are you going to get your arms around that?

AMBASSADOR ZOELLICK: “Well, there are different textile issues, obviously. You know, one is Secretary Evans and I talked about trying to help a lot of the apparel industry. They have legitimate complaints, ranging from the fact that, you know, again, some of the countries that complain about our tariffs have got tariffs three or four or five times as high.

“We've put a very strong emphasis on that in the agenda. Also focused on some of the issues of circumvention, because, for example, we have rules and people have to abide by the rules, and we, working with the Customs Office, have made some big efforts on that.

“Another is trade adjustment. And there's been a particular issue related to something called dyeing and finishing, and on that basically Chairman Thomas was trying to carry forward the leadership's promise. You see the Speaker made that point, and, frankly, what we've also tried to do is to help a lot of those members who voted for us, we know they face difficulty, and try to help them in their districts, and, again, you know, part of the reason why the ag community is so vital on this, is that I've spoken to some of these members and I've asked them--some of them, for example, I've seen in South Carolina. South Carolina is an interesting state, often associated with apparel.

“It's got the second highest percentage of employment due to foreign direct investment in the country. Seven and a half percent of people employed in South Carolina have their jobs because of foreign investment, and those products come in and out.

“So, frankly, in a lot of these districts where people are worried about the apparel industry, what they're going to need to be worried about is the other industries that employ more people, whether it be from BMW, whether it be from Michelin, whether it be from other research industries.

“Now politics is a question of reality, we've got to help these people get the support, and show the people in those districts that their jobs depend on openness, and, again, that's one of the things that the agriculture community is organized to try to do. We've got to do it with high tech; we've got to do it with the retail industry.

“I'll give you another example. You know, I was talking with people from one of the major retailers, Wal-Mart, probably employs more people in America than anybody else. You go look at their shelves. Where do you think their products come from? And, you know, do their employees realize that their jobs frankly depend on open trade? That's part of the message we've got to get done at a micro level over the next weeks, but also over the longer term, and we discussed, actually, some things that Ann and I might be able to do in farm country, to go out and talk a little bit more about this.

MS. : “The next question we're going to take from Keith Marks from the Texas State Network in Arlington, Texas.

QUESTION: “Yes, thank you very much. Good morning. This is Keith Marks, Texas State Networks. This question for Secretary Veneman and Mr. Stokes may want to weigh in as well.

“Obviously promotion is an important part of trade, thus the name, trade promotion authority. I realize that some may consider this "apples and oranges." Then again, some won't.

“We've seen an important promotional program effectively handcuffed with a judge's ruling that the beef checkoff is unconstitutional, unenforceable. What effect will this have and will you appeal this decision?

SECRETARY VENEMAN: “Well, I put out a statement last week when that decision was reached, saying how disappointed we, in the Department of Agriculture were with that decision by the judge.

“We are working closely, as we speak, with the Department of Justice about an appeal. It is not our ultimate decision but those of our lawyers who are the Department of Justice, but we will work closely to determine on what grounds we can support an appeal, and certainly will aggressively pursue an appeal if our lawyers tell us it's within the realm of possibility.

“So we think these programs are an important part of promotion for so many agricultural commodities that we produce in America and so we will do whatever we can to maintain that program.

MR. STOKES: “We fully expect at the end of the day that the program will be proven to benefit producers and that it will be ruled constitutional. As we look at the topic for today, one benefit of the beef checkoff program has been how we partner the dollars that are available through those funds with MAP funding, to help open markets and increase sales of beef products, internationally, and that's been the way that our partnership has worked over the last 15 years, is our ability to leverage those two funding sources, to be able to optimize the potential that exists in the global marketplace.

QUESTION: “Ambassador Zoellick, Heather Scott with Market News International.

“President Bush is in Canada, now, for the G-8 summit. Prior to the summit, the shadow G-8 issued a report warning of the real risk of a trade war in the current atmosphere. They cited the steel, the pending FSC dispute, as well as the Farm Bill, saying that this is something that's really rolling back some free trade initiatives of the United States, and makes it hard for the United States to argue that other countries should lower their agricultural barriers. How do you respond to that and how do you respond to their proposal that there be a standstill on any sort of protectionist measures by all the G-8 countries?

AMBASSADOR ZOELLICK: “Well, I don't think there's going to be any trade war, and you mentioned a number of topics, and I don't want to dominate the time, but let me just give you a couple of them. My colleague, Commissioner Lamy of the EC was with me here, on Friday. He spoke himself about the Foreign Sales Corporation. As you know we're still waiting for the arbitrator to come down with the final amount. In the meantime, Chairman Thomas of the Ways and Means Committee has said that he wants to try to move forward with legislation to truly remedy it.

“Senator Baucus, the chairman of the Senate Finance Committee, has recognized--he said it's a problem we'll have to deal with. When the President met with the EC, he emphasized a need to remedy this.

“Now it's not going to be easy. Taxes are complicated issues. We don't have much time left in this Congress, and we've explained, this may take some time to do it. But I think as Commissioner Lamy emphasizes, publicly, he said his goal is not retaliation, his goal is to try to remedy the problem, and that's what we're trying to do.

“In terms of steel, actually, the message was somewhat of the same. I mean, as you know, despite the regular news reports about sort of imminent retaliation, actually, both the Japanese and the EU have said no, they're not planning to retaliate immediately. We've got issues that we're trying to work through with them. We believe they should be resolved through the WTO processes.

“Let me spend the most time on agriculture because it's the one where, frankly, I think there's been the most disinformation that's probably frustrating to all of us up here. My colleague, Ambassador Johnson, was just in Geneva over the past week, emphasizing U.S. commitment to the Doha agenda, which is not flagged one iota, and the point that he emphasized and the point that I've made publicly is we hear a lot of complaints in Europe about U.S. farming.

“Let's eliminate the export subsidy program. Last year, we spent $20 million. I've seen both $20- and $80 million dollars. Okay. So the European Union spent $2 billion. Want a deal? Eliminate it tomorrow. How about that? Our plan suggests we'll do it over five years. We'll do it tomorrow if that makes everybody happy.

“Okay. Market access. As I said, our average tariff is 12 percent. Japanese, 50 percent. European, 30 percent. Global, 60 percent. Cairns Group of agricultural exporters, 30 percent. Canada, 23 percent.

“So we're committed to the negotiation of market access. Now the last one is in terms of the internal support, and, again, here, where I think what's probably driven this, and I don't frankly blame the Commission on this, but I know a number of the member-states have felt a little defensive about their numbers.

“As I said with my opening comments, European spending on production distorting support is three times the amount the United States has. Now as part of the Uruguay Round, we agreed to that asymmetry to start the disciplines, but what actually the Congress did for the first time is to say we will ensure that we stay within our limit, because they gave the Secretary of Agriculture a circuit breaker that stays within that amount. Our limit of $19.1 billion.

“But part of the message to the rest of the world that we're conveying in Geneva, and elsewhere, is we're ready to negotiate, we're willing to negotiate, we want, we have the common interest in trying to negotiate. But in the meantime, are we going to use what authority we have under the WTO rules, fully, as others do? You bet we will. People want to remedy that problem? Sit at the negotiating table and reduce it with us.

“And that's the answer to the farm question, and, again, you know, it's easy to kind of throw stones. I mean, the Canadians have thrown some stones, but as Ann mentioned, you got, you know, we want to change the Canadian Wheat Board. I see no reason why they should have a monopoly of Canadian wheat production, absolutely no reason, and so that was one of the other issues that we're trying to focus on. Export subsidies. We just went to the WTO and won a case, again, because the Canadians haven't remedied the program.

“So, you know, we have our challenges, others have their challenges. We find it most useful to sit down and negotiate and get it done and that's one of the things we talked about as a group, is that to be able to be effective in this, and what we want, need the help of people from ag congressional districts, is to give us the authority to do that negotiation. We're all ready to do it.

“The Farm Bill gives us the basis to do it. Now we've got to get it done.

MS. : [inaudible].

QUESTION: “Pete Kasper [ph] from Inside U.S. Trade. The EU--this is a question for Ambassador Zoellick.

“The EU this week formally proposed that it unbind tariffs on grains and rice. I was just wondering, what does that mean for the U.S. Some of the producers--I don't know if they're here--for grains and rice. What does it do for the WTO talks and then what do you do specifically about it? Do you seek retaliation, or compensation, I guess would be the, something you would ask the EU for.

AMBASSADOR ZOELLICK: “This is a special market access program that the EU instituted after the Uruguay Round, called the MOP Program, and Al Johnson was actually, after he was in Geneva, had some discussions in Brussels about this with BG Ag people. I've gone over with Commissioner Lamy. This is a very important part of the market access commitments that the EU made and we've had some increase in our wheat sales, a significant increase over the past year.

“What’s driving this, frankly, is not U.S. ag sales. It's a concern in Europe. They've had some low protein sales come from the Ukraine region, and, frankly, we believe that, looking at the marketing year, that this would be resolved on its own in market terms over the next year. But what we've emphasized, in no uncertain terms to the Europeans, is that we expect to keep the market access that we've negotiated.

“Now what the Europeans have said is that under the WTO rules, they're willing to, if they change their program they're willing to consider different ways to change it, and try to work with us to make sure that we maintain the market access, and right now, we're at that point, having discussions with them.

“I've certainly got the sense from Commissioner Lamy that while this is primarily Franz Fischler's area, that the European Union doesn't want to undermine its obligations, and so it's a good example of actually how we work, which is that we identified this early on. We focus quickly. We've talked to the different grain producers in the United States and our goal is first to try to solve the problem before we start talking about retaliation because the name of the game is to keep and grow the market access, not just to get in the world of retaliation.

MS. : “Next we'll go to Sonja Hillgren with the Farm Journal in Pennsylvania.

QUESTION: “Oh, okay. Ambassador Zoellick and Secretary Veneman, following up on the questions about foreign complaints about our Farm Bill, I wanted to ask if you believe that these countries will follow through on their threats to take our Farm Bill to the WTO, and then what would be our defense, in addition to the things that you mentioned about, you know, our criticism of their program.

SECRETARY VENEMAN: “Well, I think, first of all, it's important to point out that we don't think that there is an actionable case to be taken under the WTO, and that's the most important point. While countries have threatened, as Ambassador Zoellick just pointed out in relation to the last question, there is a circuit breaker. The economic analysis has shown that we will stay within our WTO limits, but, in addition, there's the circuit breaker.

“We've heard a lot of arguments about how this Farm Bill is protectionist, but it doesn't raise one single tariff, it doesn't take one preferential program away like AGOA, and so many of these arguments that we've heard simply are not founded, and we don't believe that there would be a viable WTO case to be taken.

AMBASSADOR ZOELLICK: “Let me just add one little factual point because not only do you have the U.S. analyses, but the OECD, which is the Organization of Economic Cooperation and Development in Paris, recently did an analysis of our Farm Bill, and one of the things that they've identified for the world, so it's not the United States speaking, is that if you actually take the funds that were spent under Freedom To Farm, plus the annual supplementals, this Farm Bill will be about the same.

“It obviously depends a little bit on market prices. So as Ann said, you know, in the area of WTO you have to look at the specific category. Export subsidies. We're not doing it anyway, so how can there be a violation of that?

“Secondly, in terms of market access, we didn't change a thing, and, indeed, since there's a lot of talk about the African market, 91 percent of the agricultural exports from Africa now come in tariff and duty-free, and, frankly, the subsidies only affect another 2 percent.

“So 88 percent is totally unsubsidized product. That doesn't change at all and that of course is the unilateral offer on our part.

“So then the only question really comes back down to the domestic support, and as I've said, we don't think the domestic support numbers are going to change that much, and that really comes down to the $19.1 billion commitment that we have.

“So having been negotiating these things around the world, let me tell you what happens, in part, is that people want to strengthen their negotiating position. So they want to say, oh, you know, they want to try to weaken the United States' situation.

“And so look, I mean, in some ways it's amazing that people in the United States don't figure out what's going on--is that if this helps the EU avoid their responsibility, allows the Japanese to dodge their responsibility, allows somebody else to say to the United States you owe us something, those are good negotiating techniques.

“Unfortunately, we weren't born yesterday and so we're talking about the facts, and when we negotiate we're going to negotiate for America's interests.

MS. : “We have time for one more. Go ahead.

QUESTION: “Hi. Doug Palmer with Reuters News Service. I realize that you said you were fairly optimistic that they would eventually do TPA. There does seem to be this snag over the dyeing and finishing language in terms of whether it honors the leadership's commitment, or not. I just wondered, has USTR taken a look at that language, and do you guys have an opinion on whether this hybrid category would be exempted from the requirement or not? And do you have any advice to the Republicans on whether they should go ahead with the rule that they proposed last week, or just simply go ahead a motion to instruct, so that the conference can get underway?

AMBASSADOR ZOELLICK: “Well, let me take the second one first. The House Republican leadership has done a superb job for us and they've been extraordinary partners on this, and starting with the Speaker, but the whip team with Tom DeLay and Roy Blount and most of all, obviously, Chairman Thomas, have been a pleasure and an extraordinarily professional group.

“They know much more about this than we do. What our interest is is trying to make sure that we get the conference going and we get it going on terms that we can try to get a good result, and then we get that result, and that's what we've communicated, and I've been in touch with members of the leadership as well as Chairman Thomas in talking about that.

“On the first one, as you know, the dyeing and finishing commitment came out of a letter that Congressman DeMint and others provided to the Speaker, and so, because, frankly, our respect for the Speaker and the leadership, when he said he had to give that commitment, we said we'd back him, and, frankly, in this case, what we'll do in the same spirit is the Speaker, in my view, is the judge of this.

“The Speaker said that the language that Chairman Thomas is pushing forward met the commitment, and so we want to try to help the people in the apparel industry that are supporting trade.

“I've certainly done things for both Mr. DeMint, Mr. Hayes, and others, to try to do so, both in the apparel area, but also as I said, for a lot of them, there are a lot of other industries in their districts that are very dependent on trade.

“And we know these people are taking difficult stands, so I'm not suggesting that in any way it's easy. But we want to try to work with them because the long run of America is not going to be based on closing markets, I mean, and our view is, people standing up here believe is, give us a level playing field, Americans can compete with anybody.

“But part of our job is to negotiate that playing field and to make sure it stays open.

SECRETARY VENEMAN: “Thank you all.”

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