Opening Statements

Opening Statement: Chairman K. Michael Conaway Review of Agricultural Subsidies in Foreign Countries

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Washington, DC, June 3, 2015 | comments

Remarks as prepared for delivery:

This hearing on agricultural subsidies in foreign countries will come to order. I am pleased to have before us two expert witnesses on the topic of today’s hearing.

I will not steal the thunder from our witnesses but it is important for me to observe that there are several studies listing the high and rising subsidies, tariffs, and non-tariff trade barriers being thrown up by our trading partners.  Two of the authors of these studies are here today, and it is my understanding that some of the subsidies, tariffs, and non-tariff barriers they report are so blatant they are clear violations of the countries’ WTO commitments. 

I hope everyone takes a close look at these studies because they underscore two things.  First, the U.S. government needs to stand up to countries that fail to abide by their commitments.  And, second, we need strong U.S. farm policy as a modest response to foreign competitors that cheat. 

It is disturbing that as this Committee worked to produce a Farm Bill that significantly reformed U.S. farm policy, achieving an estimated $23 billion in savings, many of our biggest trading partners were apparently increasing to new heights their already high subsidies, tariffs, and other trade barriers.  I am troubled by this development for three basic reasons.

First, free markets are the most effective means of ordering our economy.  Trade agreements foster free markets by establishing rules for all countries to follow.  We all know and agree on these things.  But when our trading partners do not follow the rules that they agreed to and it goes unchallenged, two serious problems develop.  First, American farmers and ranchers lose the market opportunities they were promised.  This hurts our farmers and ranchers, it harms our economy, and it costs American jobs.  And, as a result of the first problem, the second problem arises:  America’s farmers and ranchers lose faith in trade agreements.  Given the current debate over Trade Promotion Authority (TPA), it is safe to say that free trade cannot afford to lose the support of American agriculture.  The United States government must enforce our trade agreements.

Second, American agriculture is incredibly dependent upon trade.  We all know and agree on this.  For example, 80 to 85 percent of American cotton is exported.  If our trade agenda freezes up because American agriculture loses confidence in trade, the biggest losers under that scenario are American farmers and ranchers.  We cannot afford to let this happen.  Rigorous enforcement of our rights under trade agreements is part of the solution, but addressing the double-standard that exists between developed and large, emerging economies is of vital importance.  The key to getting stalled multi-lateral efforts like the Doha Development Agenda back on track is recognizing the disproportionate impact trade-distorting subsidies from large emerging economies are having on world prices.

And, finally, my part of the country is particularly dependent upon trade.  Our biggest cash crop in Texas is cotton.  Unfortunately, trade in the world cotton market is neither free nor fair.  Communist China’s government controls most of the world market.  And what China does not control, countries like India and Turkey fill in the void to make the global cotton market absolutely haywire.  For instance, we saw world cotton prices reach a record-breaking level in 2011 as China pursued a policy of building up stocks to an historic level.  And, then, we saw prices nose-dive toward the end of last year when the Chinese government changed its mind.  Prices for cotton remain low today, and according to USDA, the Chinese government’s change in course could mean years of depressed world cotton prices.  The U.S. government must work to address these problems through the WTO, and it must also stand by America’s cotton farmers while the situation is made right.

On a related note, concerning our largest competitors, I recently read a report that Brazil is once again deliberating a challenge to U.S. farm policy, this time against corn and soybeans.  Let me just say this:  Brazil’s case against U.S. cotton policy was without merit from start to finish, but the WTO was determined to rule in Brazil’s favor no matter the rules or the facts.  The WTO must now work to right that wrong by being vigilant and wary in regard to Brazil’s latest saber rattling, and the U.S. must defend its farmers in a world where trade manipulation and distortions by foreign governments often come at the expense of America’s farmers.

With that I would recognize my good friend and Ranking Member for any remarks that he may have.

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