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U.S. Department of State

Department Seal Alan Larson, Under Secretary of State
for Economic, Business, and Agricultural Affairs

Remarks, Commodity Classic, Orlando, Florida, March 6, 2000
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Agriculture: Trade, Aid, and Foreign Policy

Introduction

Good morning. I'm pleased to meet with the representatives of one of the most important, innovative, and productive industries: American agriculture. To begin, I would like to convey a short message from my boss, Secretary of State Madeleine Albright:

"Although I have to be in Europe today working to restore peace and prosperity to the Balkans, I want to let participants in the Commodity Classic know how much I value everything that American farmers do to promote our prosperity and to feed a hungry world. American farmers need to export to prosper and survive. For that reason, I want the State Department to be your partner, both in removing barriers to your products in foreign markets and in developing new markets. In this regard, I will make an all-out push to persuade Congress and the American people to support Permanent Normal Trade Relations for China this year."

Today, I want to outline a few of the ways in which the State Department is carrying out the Secretary's directive to open and develop markets.

  • First, on biotechnology, where we're trying to maintain access in markets, especially in Europe.
  • Second, on China, where the WTO accession agreement will open up a large and growing market for corn and soybeans.
  • Third, in the promotion of global growth and financial stability.
  • Fourth, on food aid, where we can both help those suffering from humanitarian disasters overseas and support agricultural prices.
  • Fifth, on sanctions reform, where we have decided to exclude agricultural products from virtually all sanctions, and
  • Sixth, in the WTO, where we are working to resume negotiations on agriculture which will be the centerpiece of any agreement.
Biotechnology

On biotechnology, we have a big problem. Many European Union (EU) consumers simply do not have confidence in the EU food safety system. As if to overcompensate for its past failings, the EU is now moving forward with a number of hastily developed directives on biotechnology. In December, the EU Council approved revisions to Directive 90/220, the legislation that aims to regulate biotech products with a potential environmental impact, including bulk agricultural commodities. The EU Directive would add new layers of approval requirements, recommend measures be taken on the basis of the so-called "precautionary principle," and require tracking of each approved variety through the commercial stream. A recent European Commission White Paper on Food Safety proposes 80 new pieces of regulation by 2001, as well as the creation of an EU-wide Food Safety Authority. There is strong pressure in Europe to regulate biotechnology "from farm to fork." The Administration is taking this issue very seriously. We have two broad goals.

  • First, we want to ensure that Europe's policies do not stop the development of this vital technology.
  • Second, we want to ensure that when the U.S. farmer plants, he knows that his harvest will be marketable.
We are making the following specific suggestions for restoring stability.
  • First, the EU should not disrupt existing trade in corn gluten and soybeans. Our 1998 soy exports to the EU were valued at $1.5 billion, almost nine percent of the value of U.S. production.
  • Second, the EU should agree to accept exports of American non-biotech corn and already-approved biotech corn on an appropriate and reasonable basis. That means finding a mechanism to reduce liability to exporters.
  • Third, the EU should move ahead on the five biotech corn products that are pending in the EU. Only 4.6 percent of the U.S. 1999 planted corn acreage is unapproved in the EU. Two varieties, representing 2/3 of the unapproved acreage planted in 1999, have passed through the approval process but are being held up by the Commission's Directorate General for Environment.
  • Fourth, the EU should put in place a rational, predictable, and science-based EU regulatory regime for assessing the safety of new biotech products with a potential environmental impact.
  • Fifth and finally, the EU should ensure that any regulatory actions are science-based, non-discriminatory, and grounded in sound application of risk assessment and risk management. They should also allow for advance warning, in part to avoid negative policy and market surprises on both sides. Last year, for example, we received no advance warning from the EU on its June 1999 de facto moratorium on U.S. corn imports -- a moratorium imposed, in part, due to an unreviewed Nature Magazine article on the Monarch butterfly.
We are willing to work with the EU to allay its consumers' concerns about agricultural biotechnology. President Clinton and EU President Prodi have established a senior officials' dialogue to move these issues forward; the third and latest discussion will be held later this month. We have also agreed to work with the EU on the creation of a consultative forum of eminent persons, which we hope will lead to increased European consumer confidence that biotech food products are safe. There should be fuller consideration of the benefits of biotechnology as well. We are prepared to use various international organizations to help resolve these issues.

First, the Codex Alimentarius is working to reconcile conflicting approaches to biotech labeling in its the Labeling Working Group, and has created a task force to address food safety regulation.

Second, the OECD is reviewing the main food safety issues and compiling a compendium of international and national approaches to biotech food safety regulation. It will report to President Clinton and other world leaders by May so that the issue can be discussed at the G-8 Summit in July.

In addition, the State Department is using its embassies and our public information systems to convey to consumers all around the world our confidence that our regulatory systems work and our conviction that the biotech food now on the market is safe. I would like to invite you to give me your reactions, comments, and ideas on concrete ways in which we can resolve the EU market impasse. While we continue to work hard, I cannot honestly say that we should expect an early breakthrough.

China's Entry into the WTO

Now a few words on China. As Secretary Glickman stressed, our bilateral deal with China for the terms under which it will join the WTO is a great deal for America and American farmers. We give up nothing, and when China joins the WTO, our access to the world's most populous country will improve dramatically. The numbers are already impressive: over the past twenty years, China's economy has grown nearly 10% per year, and our exports have grown from almost nothing to $14 billion a year. When China joins the WTO and gets permanent normal trading rights, it is our markets that will remain the same while China's will become more accessible.

Trading with China is by no means an endorsement of all other Chinese policies, nor is it a retreat from our responsibilities. As you know, we are pressing China to live up to international standards on human rights and other issues. We will certainly continue to do so once China is in the WTO. We have just published a toughly worded Human Rights Report on China and will pursue a resolution on China at the UN Conference on Human Rights. We need PNTR from Congress to lock in the market access that we've negotiated, to strengthen the rule of law in China, and to give China the best opportunity to make the right choices on human rights and other responsibilities.

Global Financial Stability

All market-opening efforts will be of little benefit to you if foreign countries don't have enough money to buy our products. That helps to explain why the State Department puts so much effort into promoting financial stability and economic growth around the world. The recent Asian financial crisis resulted in a dramatic decline in demand in most of Asia, which in turn led to a 20-percent decline in 1998 U.S. agricultural exports to Asia. As the crisis spread to other countries such as Russia and Brazil, we faced the threat of a severe global recession. In response to this crisis, the U.S., working with other nations and with key international financial institutions like the IMF, sought to assist countries in Asia and elsewhere to regain their financial stability and a return to steady, sustainable growth. Thanks in part to these efforts, Asia as a whole began to show promising signs of recovery in 1999. Similarly, Brazil managed to avoid a severe downturn, and Russia, which was widely expected to suffer an economic meltdown, managed to avoid catastrophe.

We enter the year 2000 expecting solid growth in Asia, greater strength in Europe, and a rebound from recession in Latin America. All of this means greater demand for U.S. products, including agricultural exports.

Food Aid

Our food aid policy is another area where we've been working to provide important markets for U.S. agricultural products. Last year alone, the U.S. government provided over two billion dollars worth of food aid to communities devastated by natural disasters and armed conflicts. $84 million of that was corn, and $4 million was soybeans. That assistance comprised over 70% of the world's entire food aid. Our food aid programs help more than just the victims of famine and overseas wars. These programs help our farmers right here at home. More than 800 million people worldwide do not have enough to eat. And many countries are just too poor to purchase all the food they need. Therefore, to utilize some of our surplus production, and also to help support prices, we provide food aid. Last year alone, the U.S. government purchased over nine million tons of commodities from U.S. farmers. This year, the Vice President has announced a three million-ton program to purchase surplus wheat, corn, and soybeans to donate to food-deficient countries.

Sanctions Policy

Another area that affects your overseas markets, and an area where we've been active, is our sanctions policy. When used sensibly, sanctions can be a valuable tool for protecting our national interest and building a safer world. But they can also be blunt instruments with unintended consequences on innocent groups, such as women and children, and on the attainment of other important U.S. objectives. Last year, the President announced that the U.S. would exclude food and medicine from future sanctions and that he would extend that principle to current sanctions regimes where we have the discretion to do so. Since we changed the regulations affecting trade with Iran, Libya and Sudan, U.S. farmers have sold over 600,000 tons of corn worth about $73 million to Iran through commercial sales. The Administration will support sensible sanctions reform initiatives in the Congress, particularly proposals that provide for systematic consideration of sanctions before they are enacted and imposed. We want improved discipline in both the Congress and the Executive Branch and Presidential discretion to modify or lift sanctions that are not working and which hurt our interests.

WTO Negotiations

We continue to work towards launching a new WTO round with agriculture at its center. In the meantime, discussions on agriculture will continue in Geneva where we will promote the elimination of export subsidies, reduction of tariffs, and expansion of market access opportunities. Substantial progress was made at the Seattle ministerial on these issues, and we are encouraged that many WTO members share our goals for liberalized agricultural trade.

Conclusion

These are just some of the ways in which the State Department is working in partnership with agriculture. To be effective, we need the resources, both financial and human, to do the job. The Secretary of State is fighting hard both to advance the interests of U.S. agriculture and also to secure an international affairs budget that adequately reflects the stake you have in the world. Today, only one penny out of every federal dollar goes to the international affairs budget, yet this budget affects the bottom line of every farmer in this room. When we negotiate market-opening agreements, work to restore stability to troubled regions, contribute to United Nations peacekeeping efforts or make contributions to economic development abroad, we are not doing so just to help foreigners. We are also supporting American values, interests, and exports and we are building new partners and markets for the future.

Thank you.

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