WASHINGTON, Oct. 21, 2015 – Cotton, dairy, and sugar stakeholders went before the House Agriculture Committee Wednesday, arguing that they were being harmed by domestic policies in overseas trading rivals and calling for the U.S. to challenge those policies at the World Trade Organization.
The full committee hearing comes after negotiators from Pacific Rim countries announced an agreement in principle on the Trans-Pacific Partnership earlier this month. Witnesses said that agreement, and most other free trade agreements like it, stresses market access, largely ignoring issues with domestic support.
“(Free trade agreements) are not the vehicle to address subsidies in those countries,” Jack Roney, director of economics and policy analysis with the American Sugar Alliance, told the lawmakers. He said that might be “the biggest flaw in the bilateral and regional approach” because if two countries are negotiating an agreement that addresses price supports in one of those countries, other countries will want similar treatment in that market.
Roney and other witnesses called for the U.S. to take a more aggressive approach to excessive price supports at the World Trade Organization. As Collin Peterson, the committee’s ranking member, put it, some countries are unjustly claiming to have agricultural markets that are still in the developing stage, which allows for more favorable domestic price supports under international trade law.
“I don't think it's fair that developing countries, no matter how advanced, can designate themselves for special treatment,” the Minnesota Democrat said in his opening statement. “I also think it's time for the United States to start challenging those countries that fail to meet their WTO commitments.”
Committee Chairman Mike Conaway, R-Texas, said that the U.S. “must begin to take on those who are cheating on their trade commitments,” focusing specifically on Chinese cotton policy that sent global prices “into a total free fall.” China is currently sitting on about 50 million bales of cotton in government reserves, according to testimony from National Cotton Council President and CEO Gary Adams.
The hearing also touched on issues like Mexican sugar dumping and dairy policies in the EU and Canada. Peterson reiterated that he was upset that Canada was able to preserve its dairy supply management program throughout the TPP negotiations, and Jaime Castaneda with the National Milk Producers Federation said the U.S. dairy industry could potentially lose billions of dollars due to EU dairy subsidies and market protection policies.
On sugar, Roney said many countries are keeping domestic prices artificially high, allowing producers to stay in business. He said only about a quarter of the sugar produced around the world is sold at globally set market prices, while the rest is sold at higher levels due to domestic price supports.
While many of the price support issues addressed at Wednesday’s hearing are not addressed in TPP, all of the witnesses said it appeared to be a positive agreement for their industries. They reserved the right of final judgment until the text is ultimately released, but Castaneda in particular said congressional pressure appeared to help the dairy industry avoid “a really bad agreement.”
After the hearing, Conaway addressed a U.S. program currently viewed by other countries in a similar light as those addressed at the hearing: country-of-origin labeling (COOL). The WTO has ruled that the law is unfavorable to Canadian and Mexican livestock, and a decision on retaliatory tariff amounts is expected by Dec. 7. He remained consistent that the Senate should take up the bill he introduced to repeal COOL, which passed the House in June, and said he isn’t aware of any reason why President Obama wouldn’t sign the bill.
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