Transcripts For CSPAN3 Panel On Trade Policy And The Agriculture Industry 20180215

Beef association. From the school of Public Policy of georgetown university, this is an hour and 20 minutes. Good afternoon, ladies and gentlemen, and well coom come t panel. Dont let the suit fool you. I am a farm boy from south dakota, which is why im super excited about this panel and introducing our great speakers as well as our moderator. My name is joseph schwartz. We all know that agriculture has transformed over the last century. Not just how we grow our food but how we move our food and how we trade with other countries. And so leading us through this very important global conversation is adam ferris, a moderator. Hes an alumnist at the university of oklahoma and will graduate from the u. S. Army work college with a masters in strategic studies in july. So congratulations, adam. The light is at the end of the total. Some of the students here are graduating in may in the room. Dale moore is the director of Public Policy. He joined in 2011 as the executive director of Public Policy and manager of the agriculture and trade policy team. Lisa shroeder is a global director of trade. As part of the Global Affairs and Public Policy team lisa has director responsibilities for defining and managing the companys director trade agenda as well as developing a strategy on International Aspects of corporate issues. Based in washington, d. C. Her responsibilities include trade policy negotiations and investment that foster growth and businesses through identification of policies facilitating Market Access and reducing Global Distribution costs. Kent backus is the National Cattleman and beef associations director on trade issues. Including nafta, expanding access to japan and other markets. He works with the white house and other foreign governments to advance the u. S. Beef industrys. He joined in 2010 after serving on several political campaigns in texas and working for several years as the appropriations assistant to u. S. Senator Elizabeth Dole from north carolina. Please join me in welcoming our panel for a discussion on agriculture and free trade. [ applause ] thank you very much for the introductions. As was just mentioned my name is adam ferris, and i know we have three spectacular distinguished panel today that are eager to share their insights and thoughts with you guys on the importance of free trade and agriculture. I thought it might be a good idea if the panel knew a bit more about our audience. So can we get a show of hands how many georgetown students are in the audience today . Awesome, very good. Any congressional hill staff . Couple of rows. Any executive branch folks that might be in the audience . One, nice. Thanks for being here. Thats right. So if its okay, ill open us up for introductions and then well go off into a q a session. So kent, if youll start us off. Okay, were on. Thanks so much for having us here. This is great. Let me tell you about who the National Cattlemans association is and in the industry we represent were the oldest and largest trade association representing the cattle industry. Weve been around since the 1890s and have had a presence here in washington for quite some time. We cover every aspect of production from the cow calf side all the way to retail. And thats the important thing for us to make sure that we can speak on behalf of those men and women who are producing our food who cant have a daily presence here in washington. As far as trade goes, when you look at beef production in the United States, most of what we consume or what we produce is consumed her domestically. Only about 10 to 15 is actually exported. The United States is still one of the greatest markets in the world for beef consumption and beef sales. In the United States beef industry, we dominate here. So weve got a saturated market here. They a very developed Consumer Base. So in order to increase our sales we have to look beyond our borders. You hear the statistic commonly used that 96 of the worlds consumers live outside our borders. So its important for us to try to target those different markets. For beef in particular, north america has been a great place for us. Nafta created two 1 billion markets on either side of our border. Mexico consumes a lot of cuts that americans find less desirable. Well talk that more in a little bit, but our main focus has been asia. Thats where weve seen a tremendous growth. And really over the last five years weve seen a shift in our export focus from north america to asia. In 2017 we came very close to selling about 2 billion worth of beef products to japanese consumers. And thats with a 38. 5 tariff applied to that beef. Japans pbeen a great market for us as other asian markets. Cuts like tongues, rounds, chuck shoulders, Everything Else like that we were able to sell as a premium. And really we would not be able to sell those as a premium. Thats we we target those areas. Korean is another export target. Under the korean agreement weve seen our exports double. We have a lot of opportunities in asia. Thats going to be a big focus for us, and thats also where a lot of our trade barriers still lie. Thats why we have requested so much attention from congress and the administration on efforts to focus and open the asian markets. Thats where we see a lot of potential, and thats where our focus is going to be. Exports alone account for 300 million per head. Its important to develop some very sturdy markets to help offset that volatility. Again, happy to be here today. Look forward to the questions. I can tell already ive got ahold of the microphone and i talk with my hands. So if i kind of fade in and out thank you for the opportunity to be here. I work for the American Bureau federation. We are the nations largest federation. We have roughly 600 families across the country. We have a footprint, if you will, in every state and puerto ricos. We have affiliates in our family. We also are in the Crop Insurance business and other branches of the family that are, again, part of farm bureau. One of the things in trade being one of those, when we look at trade because we represent all commodities. We represent all the different sizes of farmers and ranchers across the country. We represent certainly everybody from the organic growers to those that are using the latest high tech, bio tech kinds of approaches to managing their farms. When we look at trade roughly a third of a percent is destined for export. If you look in the Pacific Northwest wheat growers in that area anywhere from 80 to 85 of that wheat is raised for export. It also takes into account all the different scopes. You have the growth crops, cotton, and fruits and dairy crops. Hawaii and puerto rico very active in the coffee markets. Theyve had very small kind of niche markets. When it comes to trade it is fundamentally and kind of exquisitely linked. Without trade were in deep economic strife. Were looking at now going into the fifth year of down turn in terms of the economic platform, if you will, that agriculture stands on. Weve lost roughly half of the net farm income over the last five years. Most of our producers is in the commodity business. Which means the prices they get for their commodities, their crops, their live stock are not things they get to set. Theyre price takers not price makers. So when you have a commodity that is particular relying on exports, we have a little ripple right now were wrestling with china who are upset about tariffs on washington machines and solar panels, so they are in effect dropping the grain. Theyre getting our attention. Not a lot in the agculture can do with solar panels, but were working on nafta and a lot of different fronts including the fact when we pulled out of the Transpacific Partnership, the tariff on beef, we had a really good deal with japan on that. Thats not in there now, and Bilateral Agreement with some of these countries theyre pretty straightforward in telling you were not trinterested in going back to that particular drawing board. You all are going to have to start over. You could find a good number of farmers and ranchers who would say i dont understand this time thing, i dont understand it. I sell to the local meat packer or the local farm stand, and now im dealing with an issue when id much rather have you focus on the farm bill or some other issue. So trade is one where we spend as much time encouraging congress, encouraging the executive branch to Pay Attention to agriculture trade. As we do spend time out in the countryside letting our members know why this is so important. So appreciate the opportunity to be here, look forward to answering questions, and as always warn folks been in town for 30 plus years, so if the question is easy, you will get a short answer. Thank you. Lisa shroeder with dow chemical. Its a historic American Company operating not only here but around the world. We also last year merged. One of the things i want to highlight out of that merger kind of gives osgreat opportunity in looking at the agricultural sector, ag is an entire value chain. Its not just the end product youre going to find in your super market. When we look at agriculture were looking at everything from seeds to Crop Protection technology, innovation and farm and heavy Machinery Equipment to data and packaging and the Logistics Network that actually gets that product into your super market or farm stand or wherever youre buying from. Its really important to think about that ag across that chain, because then youre getting a sense of the impact we have on economy. That is lot of jobs even from the guy thats helping to pack the truck thats on its way to our super market. And that is one of the reasons why the u. S. Has Real Advantages. We are an enormous Agricultural Producer because were also one of the most innovative territories. When you think about Crop Protection and seed technology, biotechnology has been mentioned. Thats a great example of where science is driving health, environment, yield innovation to help get the farmer more out of his crop that ends up getting more out into the food value chain. Great example is dow back in 2005 we created a new cunola oil called omega9 oils. Since thats been introduced into the market, its taken a billion pounds of fat out of the american diet. Theres a lot of innovation thats america is bringing to agriculture thats a benefit not only for our health and nutrition around the United States but around the world. We drive innovation, resource efficiency. As we look at all the Great Innovation and development of these products in america, we need to look at the export. As were growing all of this, eventually people are going to want to get paid for what theyre contributing. And that means accessing a lot of markets around the world. Tariffs have been mentioned quite a lot. And a im sure as anyone studying International Trade that tends to be the fist place most people go to. Tariff are very quantifiable, too. If you knock down the 14. 5 that japan charges, thats very much Market Access. There are real critical areas like regulatory. Regulatory barriers often become a deeper barrier to us. Innovative Crop Protection materials because you dont have import licenses to keep customer countries like china for those biotechnology products. And if you look at nafta, thats one of it reasons why were such big supporters of the agreement. There is actually a regulatory chapter specific to chemicals. And the reason thats in there and so sported by not only the u. S. Chemical industry but also mexico and canada is because its about raising the standard. Trade really gives us an opportunity to embed sound science, transparent, efficient approaches to regulatory that get to the heart of what regulations are supposed to do. Ensure high levels of health and safety while also promoting economic competitiveness. Of course to do that we fundamentally need an underlying nafta agreement. So were very hopeful progress that was made recently in montreal, we can continue to capture the good and eventually get to a modernized nafta that demonstrates the value of this integrated supply chain and market. Reasons why modernization is a good idea, data. Nafta was signed in 1994. There was not a lot of effort to think about ecommerce or digital signatures on documentation. Believe it or not there was a time when the internet was not so prevalent. We werent writing it into these agreements yet. So we need to do that. We need to think about cross data flows, customer facilitation. When you think about ag products, a computer might be able to wait at the port for a while. Most Agricultural Products cannot. So we need to make sure that custom are efficient and were able to get Great American innovation straight to our customers. I think thats one of the reasons why its such an interesting opportunity to have this conversation with all of you because there really have been a lot of changes in the way agriculture is produced in this country and the opportunities we see in the rest of the world. So ill stop there because im always much more interested in your questions and discussion than hearing myself prattle on. Thank you, lisa and kent. I definitely want to leave a lot of time for the audience to answer and questions as well. I think its important for the panel to hear from the audience than it is for the panel to hear from the audience today. If i could i think ill start with a general question about trade and agriculture that a lot of you had a in your opening remarks, but just wanted to leave an opportunity to mention anything else on this. Ag has been an important part of trading for years. Weve had a surplus in products for many years, and some of you economy majors will know what im talking about. Can each of you talk a bit about why ag has been such a success in trade compared to other industries . Im going to start out because that way i can give a general answer and ill let the smart folks answer after me. Fundamentally is because when you look around the goodies and services we have and the marketplace across the world, there are a number of good, solid markets for agricultural food, fiber, feed where their economy doesnt have them clamoring for the latest iphone or whatever it might be. And secondly a lot of us need to eat. I had an opportunity to participate with one of the industrial colleges. And one of things they look at is most of time when we have men and women in harms way is food available, period . And thats a Real Advantage. You get the opportunity to develop a market. We also cotton is a great example where for a variety of reasons our textile industry has really dropped off, but we export about 70 of our raw cotton and feed that Economic Development in those countries. So it is not really food, but it is Agricultural Production that helps feed the economy, not just the people around the world. I would just add to that, the point i was raising about innovation, i think in particular when you look at american agriculture, whether it is, you know, getting the food out that solves a lot of these food sustainability, Food Security issues or looking at the broader opportunity of integrating things like packaging so that we can get more product out to markets safely, when you look at cotton production the science and the opportunity to develop not only just selling cotton but cotton thats actually customized. Were creating solution products so that customers in other parts of the world have products that are really going to fit their marketplace, whether it is, you know, a cotton thats more specific to highend clothing versus lowend. Theres a great amount of American Science and technology that goes into these productions so that it makes our product more valuable. There is a desire to buy from america when you know you are getting the quality that you need and a solution thats going to help you be more successful. Thats a Real Advantage we have in the world, providing we can get access to those markets. Yeah. I think just biggie backing off what she is saying there, when you talk about quality, i think you can dive a little further into that and really look at safety. The products that we produce here are produced at some of the highest standards in the world. We have we have not only a very intelligent and educated producer group, most of our people have fouryear degrees and higher. These are scientists that are producing our food when you really look at it there. Not only that, but the strict standards that are applied to us in production, we dont have to worry about a lot of the same problems they do in other countries. We also have very strong Environmental Standards here, too. So when you look at the quality thats there, a lot of that comes from safety. You also have to look at where our growth is, and it is in asia. In asia you have a rising middle class that wants to incorporate more protein into their diet. For us specifically, we produce some of the safest, highestquality beef in the world, but not only just beef but pork, poultry. You go down the line on any agricultural good, were at the top. People pay for that. They pay for peace of mind, because in many cases theyve had incidents where people have gotten sick or died. There have been stories, we all read them, thats why were concerned about standards coming from some of these markets. But in nothose countries weve been able to develop a trust with the consumer, and with their Economic Growth and the demand for our goods that many of them, quite frankly, cant produce, thats been a real win slish w win win for us. Not only for us as producers but in the markets. Lisa, you mentioned something i want to hit on, the importance of innovation in trade. I know a lot of you in your organizations are also involved in talking about Regulatory Reform efforts. Is there a nexus between domestic regulation and exports and innovation . Lisa, i dont know if you would like the start off on that. Sure, i would be happy to. As i mention, well use that nafta example. One of the reasons why as industries we were promoting regulatory cooperation is that, you know, when you look at the Chemical Industry, the u. S. And canada have already and relatively recently upgraded their chemical regulatory systems. In the u. S. It is well, it is the update of tasca, now called the loudenberg chemical security act which Congress Passed thank you last year. Theres also a riskassessment based regulatory model. Mexico is in the process of upgrading theirs. Doing it in alignment means there will be greater efficiency between the three markets. Better understanding the transparency and efficiency of a system allows us to bring our products that much more quickly to market, which is a very good thing for u. S. Exports. Where you dont have that, where theyre less transparent, less efficient or models that arent particularly based on science or risk assessment, you can run into real challenges. Weve had issues with in china, for example, biotechnology approvals, you need an import license to bring in Biotech Products cultivated here in the u. S. As dow and dupont we have a number of Innovative Products farmers are looking for because they solve real challenges. Herbicides, pesticides that solve Environmental Issues that theyre having, or helping them ensure greater yield so theyre actually earning more for literally their blood, sweat and tears going into agriculture production. We would like to be able to provide those products to them so that they can grow more and then sell to their chinese customer, but without the Regulatory Approval we are blocked and that stops innovation from getting into the market. Now, chinas made Great Strides in improving that system and looking to move more approvals, but we would like the see, you know, a more transparent, efficient and regular system that will help all of us plan with more certainty. Always any business would, you want to know that the crop you are growing now you can sell once you have actually grown it. So as we look at regulatory barriers, they can be an impediment or they can be a great opportunity like were seeing in nafta. Well, i was going to add, but all i can say now is amen. I mean thats fundamentally, thats what were talking about, is having when you have certainty and you have a sciencebased system, you have an ability not only here but the countries, the other side is using the same standard. When i was with usda we had this process and often would ask a question when we would get upset and we would get calls from capitol hill saying, why are you letting in oranges from this particular country or even beef from a different country. It is like, well, part of what we were trying to do and part of what we need to do is set an example, too. So if were going to demand that china follows certain protocols and procedures and sciencebased approaches, setting that example gives us a little bit of leg up when we are trying to i say we, but the collective we is trying to get them to quit using nontariff trade barriers and pseudo science to hold things out. Is there a connection you know, you guys mention a lot of the foreignbased regulatory efforts. Is there also a link to what the u. S. Does . Are there bigger factors at play with trade policy other than traditional trade barriers, tariffs, et cetera . You touched on that lisa and kent as well, but what happens here at home domestically, the regulatory environment, is there an impact on trade . I absolutely think so. You can look at, you know unfortunately, sometimes there are a lot of regulations outside of our industry where ag gets forced in. Our government seems to no matter who is in office, tries to apply a onesizefitsall approach. With agriculture we are unique in a lot of ways. In our situation we handle live animals. Some of the transportation regulations put forward, while it is importanto on the road, they dont always apply to us. They could actually put those animals at risk. So we have some, you know, some livestock concerns there. One of the other big things is, you know, theres a lot of growth and theres a lot of growth overseas and a lot of demand on our industries. In order to meet that demand, we need access to credit. Not just through the farm Credit System but also through the private financial sector, in order to expand and be able to hire more people, to develop our operations, we need that access. Unfortunately, dodd frank while it was well intended, it was supposed to go after the bad actors. Unfortunately, it led to the closure of many rural banks that financed a lot of these operations. So now you have banks in more urban areas who dont understand the rural needs, and then those are pretty much the only people we have to go with. So while theres always good intentions through regulations and through policy, but unfortunately agriculture has been on weve been Collateral Damage in a lot of ways. Thats prevented us from really capitalizing on a lot of this demand for our products. And i think to add to that item, the point you are raising about all of the Regulatory Reform thats going on here, i think the more as kent is saying, the more we demonstrate it is a working model, if things like chemical regulatory approaches or others, it demonstrates that high level of safety, security while encouraging innovation and economic competitiveness. I mean other countries, and it affects other countries as they should need to develop their own regulations. Thats a National Sovereignty issue. Most countries, especially emerging countries, will look at what models are out there. The more we serve as that model, demonstrate science and riskassessment approaches work and meet the needs, the more we can actually work with these countries to ensure theres alignment based on fundamental principles no matter what type of system they put in place. Does europe come to mind when you are talking about some of this stuff at all . Always thats a longstanding debate we have with the europeans, absolutely. That was one of the examples of progress we were making in the ttip negotiations. I know the idea has been around for a long time, but it becomes part of the conversation. The more we can bring regulators together as a Chemical Industry we have an umbrella organization, we have created a Global Regulation task force designed to do that, really elevate the conversation at a local level but get regulators talking to one another. You dont see that enough in the world. Very often theyre working on the same things. When you do things like that in a silo without any kind of consultation you can end up with d die vergi diverging result. An opportunity to bring it together includes working with our european partners. I would add kent and i shouldnt comment on european because our cowboy words tend to come out so well stop there. Thank you. The growing demand for u. S. Agricultural goods abroad, so im curious if you all can talk about the balance between providing a stable food source here at home with our agriculture industry, with the demand abroad for our goods . Well, this is one and this is a longstanding talking point among i think aggies all over capitol hill and around town. If were producing for a robust export market, you know, to meet that demand, were producing more than enough to meet domestic demand. I think thats fundamentally where we look at it. It is when, you know, an export market starts drying up, you know, and the Economic Impact it has on the producers and all the way up, you know, from the beginning of the value chain all the way to the Grocery Stores. Then you start having issues, you know, domestically. We have seen it in other countries as well. So that is part of what drives, you know, innovation. It drives the investment in the research and development, you know, with the companies that provide the input, you know, to all of our members from the seed and Crop Protection and so forth. But at the same time if im going to put lot of time, energy and resource into a foreign market, typically im looking also, if im in a particular commodity sector, looking for a home for the excess we are producing in this country to keep the market price up. I think thats fundamentally where it comes from. Kent, anything from your end . Sure, absolutely. When we look at we look at the role imports play in our industry, you know, theres only so many parts of the animal you can actually eat. You know, a lot of other stuff goes into the rendered product, which is which is a big industry, but it is also the it is not the most valueadded part of the industry. We want to sell those hides. We want to sell the meat and Everything Else, but, you know, theres only so many cuts and so many Different Things americans want to buy. So we export quite a bit as well. But, you know, one of the probably one of the brightest things that we have in our industry is our ability to capitalize on imports. What we export is not the same as what we import. Everyone always tries the look at the differences there, you know, and try to think it is a oneforone thing. The high value export we get from, again, those cuts americans dont want is it is not offset through imports of the same product. Were importing primarily trimming or things that go into make ground beef. Most of our cattle are theyre fed here in the United States, which benefits not only our producers but the grain producers as well. Well, the marbling, that highvalue marble flavor helps add value to our product. It also means that our cows have a higher fat content. Well, in order to meet the demand for ground beef domestically we import lean trimmings from other countries. We also do that because the same cuts that we were using for ground beef, primarily the chuck, we have developed into other cuts, things like the flat iron steak. Some of you have probably heard of that. That used to go into making ground beef. Now we can sell that as a lean muscle cut that is much more affordable, and so we can hit an entire new demographic here domestically. When you look at when you look at that without those imports, we would not be able to make the ground beef necessary to meet demand here. But i would say more generally one of the value of imports we have seen is specifically through nafta. When you look at the fact that you can go to a Grocery Store any time of the year and get fresh fruits and vegetables and it is safe, it has to meet they have to meet the safe standards that we have here in the United States, i encourage you to find that in many other countries throughout the world. Were spoiled. We get a very affordable food supply and we get it year around. We can pretty much get whatever we want. Thats because of thats not only the highvalue products that we produce here, but also those valuable imports that come in. So for our consumers, thats a very good thing. Trade has developed a lot of those opportunities. Also, one other important thing to remember is while we dont raise cattle in the cities, we have a lot of consumers there. Obviously we have an issue with food deserts and things like that. Imports help lower the price of food and make it more affordable. And so thats why these trade agreements are so important. We want all of those imports to be safe. We want them to be of the same caliber product or at least safe like our products here, but we also want to make those available to consumers. So trade is a twoway street. We cant necessarily demand access to foreign markets if were not willing to give access as well. The important thing is that we need to tear down those export barriers because our market is already open, and thats evident in our Grocery Stores, our restaurants and Everything Else. The problem is that it is not a twoway street because we dont have that reciprocal access to many of these other markets. Well, i i was going to add to that, just from our perspective, and were all about helping the Farming Community do more, do more, do better. So when they have opportunities to grow, they can theres great opportunities to source domestically and for export when we meet all of the needs that kent is talking about. I was just going to say i am officially hungry after hearing you talk so much about beef and steak. So i just have one more question and then i would like to open up question period for the audience. This is a very simple question, but i just think it is kind of a fascinating concept here on the hill. But why is japan so important to trade, especially agriculture . It was, you know, perceived as the real benefit of the tpp, and, you know, i know that this administration has said theyre going to continue pressing for negotiations. Why is it so important . Ill start. For us in the beef industry, japan was the brass ring of tpp. It was the main reason why we really wanted that, and it is because it is our biggest export market. We sell in volume and in value, we sell more beef to japan than any other market in the world, more than mexico, more than canada. We sell to the japanese. They are willing to pay a premium for a lot of these a lot of these cuts. For us, japan means about 75 per head of cattle. Thats a lot of money. And so we, unfortunately, we still have a high tariff that we face there and our competitors dont. Our main competitors in the market are the australians, and right now they have about an 11 advantage over us. While our exports have significantly increased over the last couple of years, were afraid that those that those gains are going to be shortlived and that we could lose that advantage once the Australian Market starts to recover. So, you know, trailde agreement dont guarantee success. What they do is give us the opportunity to capitalize on Market Conditions and maximize our sales when theyre advantageous. Right now we are leaving a lot of money on the table with the 38. 5 tariff in place. We also see japan as not only important on the value side, but also just strategically. When japan considers a product safe, japan has very high standards, then other countries look to that as well as an example. Were still trying to make major inroads into china. We made major inroads into korea and i think a lot of that has to do with the fact that we have such a positive image in the japanese market. That really sends a strong message throughout the pacific rim. I think the other thing you have to, you know, keep in mind too with japan, that it is in terms of of its economic, i guess, value, i mean it is an after fluent country, it is a firstworld country. It has a Large Population and it has a minimal land mass. So feeding that population means that theyre looking for food, their own Food Security, and theres a demand for, you know, the higher value products that can come in and thats, frankly, a comparative advantage we have over, you know, most countries around the world. And to put that in context, it is 127 million consumer, highincome consumers looking for that diversity, looking for specialty products. Japan particularly is one of those economies that is fairly high tariffs, on average about 14 on a wide range of Agricultural Products. It is a real area of opportunity, taking that down so we are competitive, especially as they negotiate deals with other countries. That creates a real steady market for american agriculture. Kent already mentioned the high standard. You look at the rule of law, the commitment to science, intellectual property protection, these are all areas where theyre operating in a market where american ag can do really, really well, providing were competitive to access it. Thank you. Can we open this up for questions to the audience . Can i just say if you guys wouldnt mind saying your name and what office you work for or what organization youre with. So i would like to cheat a bit because conference organizers technically shouldnt ask questions but i couldnt help notice kent mentioned nafta and standards and sort of fruit. I would be curious what you would say about Something Like country of origin labelling which was a big issue in the Previous Administration, and it was like partly a regulatory thing but also an emotive thing. People wanted to know if they were buying u. S. Beef but canada and mexico felt it was an unfair regulation. Thats a good question on country of origin labelling. First and foremost, it is not a food safety mechanism. It is a Government Marketing mechanism is what it is. It competes with our private labels that already do that. So when you have the government picking winners and losers, that discourages innovation. It discourages competition. It discourages a lot of quality. So it wasnt just canada and mexico didnt want it, the u. S. Beef industry didnt want it. We didnt ask for it. It was one of the great ideas that came through from congress, and it is not necessarily something that we really wanted. So we had to, you know, do everything we could to try to work around that. Any beef thats going to come to the u. S. , it has to meet the equivalent standards of what we have here. So while the quality may not necessarily be the same, the safety has the safety has to meet that certain threshold. So, you know, at the end of the day it is also something that if Consumers Want want that marketing, theyre going to pay for it. The market will reflect that. So far the market hasnt indicated that at all. When consumers go to the meat case, they look at price first and foremost. They look at quality. They look at tenderness. They look at the appearance. When you slap a government label on it, theyre not going to see any of that. It also when you look at the sidebyside comparisons, theres still a lot of Grocery Stores that will do that. They will put, you know, product of the u. S. Or u. S. Beef, made in america, theyll put that sticker on there, but country of origin label is that small, little black lettering that was on the nutrition labels. Nobody really paid attention to it. Did nothing to develop a new Consumer Base for us or to drive sales. If anything, it cost the industry millions and millions of dollars in compliance and it led to the potential retaliation of almost one billion dollars from canada and mexico. So it wasnt really a win win situation for anybody and it didnt deliver on any of its promises. So with nafta, thats one of the first things that we asked the administration not to do, is go back down a path that had already been litigated, that was already shown that this was a failed policy, and let the private industry, let the market determine, you know, what you know, what goes on those kind of marketing labels. As far as food safety goes, this has nothing to do with that. I dont want to touch it. [ laughter ] good job. Good afternoon. My name is ann cubara, im at georgetown. Im a 30year navy veteran and i have been overseas a lot. So whenever i went to the stores i was comforted by american beef and other american products. Theres definitely thank you. A quality difference. So i have two questions. One, how much is a head of cattle and, two, when you are trying to break down trade barriers with our competitors, do you find that going to the wto is a lastditch resort or is it or effort . What are some of the things that youve worked on over the decades, especially to enter markets in asia . Well, first of all, thank you for your service. Yes. And thank you for your support for u. S. Agriculture. I think when you look at the value of cattle overall, it definitely fluctuates. I think the average fed steer this last year, i think that brought i think anywhere between like 1,400 and 1,800. So it depends a lot on quality. It also depends on because we have a wide range. You have what is called commercial beef production, which is primarily people who they have some innovation but not much. Then you have some very highend cattle that sell. So theres really a wide spectrum in the overall value. That average that i mentioned is really an average of the whole value. So, you know, thats an important part of that because exports build a significant part of the value. When you look at the wto, i will touch on this briefly, wto takes it takes a long time. It is youre hopeful that your government can settle a lot of these issues before they get into that wto process. Quite frankly, it ties up a lot of resources. We would much rather usdr focus on negotiating more Market Access than having to, you know, either take other countries to court for abusing us or defending u. S. Policies. But we live in a world where, you know, we have a lot of lawyers, and im sure some of you either are lawyers or will become them, and the wto has been a Good Business for them, because once a case gets brought in the wto it can take years. For us in particular, even when you have a wto ruling in your favor, sometimes it is very hard to enforce that. Then you go through the appeals process. That just makes it kind of gums up the works. Thats why these trade agreements are important. We need different provisions in there that kind of help us resolve those disputes much faster than what we have in the wto. And i think more exactly what kent said. When you are looking at any particular country, a lot of how effective you can be through using something kind of the big hammer with the wto, a, it is resource intensive and if the other country largely ignores through the process use the cotton case in brazil, sued the United States over our cotton program. It took well roughly a decade to get that all sorted out. So, you know, if youre spending if you are a farmer, you are a rancher and you have to wait a decade for something to get sorted out, it is going to have i mean you could be out of business by the time it is sorted. The wto as a hammer can sometimes help drive, you know, more effort to use the dispute settlement mechanisms in a lot of the trade agreements. It certainly gives, for example, like the department of agriculture working with the u. S. Trade representative, working with the department of commerce, certainly working with the state department, it brings a lot of different resources to bear on kind of the governmenttogovernment kind of action. Thats, you know, one of those things that resolving these things internationally can also find, you know, when you have another Pressure Point that i may be using a nontariff trade barrier to keep your products out of my country and then, you know, i have a hiccup on a sanitary issue and all of a sudden im willing to sit down, hey, lets talk about your product and please dont shut the gate on mine. So a lot of these are like any negotiation. Can i ask and, kent, you touched on this as well but theres really generally speaking three ways of settling a dispute. You have your unilateral action, you know, you do a grievance, you decide to implement a tariff and it is a oneway deal, typically retaliation is involved. Theres a bilateral action, which is you mentioned the dispute settlement courts that are available when we have free trade agreements with country. Then theres the multilateral going through the wto. It sounds to me like both of you are typically generally supportive of the bilateral action when it comes to settling disputes in the agricultural trade. Is that generally fair to say or is there are there times when it is help of to go the wto or unilaterally do something . I absolutely believe that it works so much better when you can get things sorted out bilaterally. I think this is again, we look at nafta being an example. We have had issues with canada, we had issues with mexico. You know, you lock the gates on the border and im saying this carefully, but it is a little like last night at midnight. When things shut down it is like, okay, now this is real, lets get it sorted out and come up with an agreement so before everybody wakes up we have it sorted out. When you have a multilateral like we have with nafta, it kind of gives everybody a chance to get in the room. It is like, well, we can go can around the hard way on this or we can work it out. We went through this on country of origin labelling where we werent able to sort it out in the u. S. In a way that canada and mexico liked, so they took us to wto. We ended up with, okay, we understand, we dont need the retaliation coming from either direction. Ill just mention one other really quick area too, because all of the dispute mechanisms that you are talking about, and to give credit to our usdr and usda colleagues, the wto and the sps committees at wto the tbt and the sps committees rather, those can be areas where theres conversations that can take place before the barriers in place. You know, the idea of notifying draft regulations and actually creating some conversations amongst the governments, in many ways it can be sort of u. S. Driven, but the more there are other countries raising concerns the more we can help. Again, back to the point we were raising before, look at different models to help that government do what they want to do but in a way that doesnt create a trade restriction. So the effort to modify and engage early, before we have to before we consider our dispute options can be a real opportunity, too. Next question . Hi. My name is abdul ahi, im from kenya studying economics last semester. I just want to go back to innovation policy, and i do have a comment and then one question that follows up. Many countries are actively pursuing ambition innovation policies to push their competitor, both private and public, theyre becoming transitional in the nature. So basically my question is how do you build innovation capability to effectively address Sustainable Development challenges, which includes environment, food securities and Public Health as you guys kind of talked about it . How would that be possible . That is a great question. You have reminded me that one of the favorite things at least that i get to do and folks on my team at farm bureau get to do, is we work a lot with the state department and usda and other sometimes private sector groups in things like farmertofarmer exchanges or agriculture food industry, both commercial and government officials that come from other countries. We will get contacted, say, a group from kenya is coming in, can you talk about it. Theres a lot of the innovation and we look at this. Theres a lot of innovation that is developed and in place in the United States that, it is like, well, lets just share that innovation but it doesnt really it is not really applicable either because of the cost or because of the technology and systems, the tractors, you know, that are needed for it, the harvesting systems or that theyre designed for large acreages. But then kind of gleaning through that, what is it we have that we can help share with other countries because, you know, it is not just about, you know, helping farmers, for example, get from subsistence farming to, you know, basically, you know, farming and growing food, fiber, feed, et cetera for, you know, customers. You know, building an economic base. So when we look at innovation, thats part of what sometimes we have to remind ourselves that weve got reams and reams or buildings full of innovation, not all of it may be, you know, the latest technology here in the United States but theres some very worth while technologies for, you know, small farmers, for very small farmers. You know, sometimes it is not about an actual commodity being raised but the services. Again, usda a lot of what we did in certain countries was effectively export our Extension Service ideas, to put the experts out there that can help and bring that sustainability because sustainability, most folks think about the environment first. You know, how do we have environmental sustainability . I always like to remind folks too that for farmers and ranchers, you know, it was touched on, you know, to be good farmer and rancher and be in business, being an economics major it is good if you make money so you can continue being in business. Thats kind of the number one sustainability issue for the men and women that i work for, and however we can help bring that, you know, around the world because as that Economic Sustainability grows in another country that provides, you know, the resources and also the desire to incorporate other technologies that may improve on Environmental Quality or other types of innovations. Ill be fast on this because want to get another question. I think it is also important that the United States continue to engage in International Standard setting bodies. Specifically, there is one thats called the cod codex alamentarius. We are fortunate in the u. S. We have the Scientific Community and we have the regulators who can work well together to give proper guidance on the use of technologies in food production. Well, not every country can afford that. Many countries cant. So as dale touched on with the extension, thats one part of it. The other part is making those standards that are in place, you know, are actually available for their producers. One of the major problems is that the codex alamentarius is supposed to be a board made primarily of scientists. Each country sends representatives, numerous representatives from african nations, from south american nations, from asia, from europe. The only problem is europe does not embrace technology. Europe prohibits the use of technology in their food production. Even though the Scientific Community internationally supports this and the science supports the use of these technologies, whether it is gmos or hormones or any other growth p promoters out there, these are Safe Products that have gone through rigorous testing, europe tries the restrict other countries from doing those. They do it by basically pull aside the codex alamentarius to do this. It is important that the United States stay engaged so other countries have sciencebased standards to use from the recommendations from codex. If we are not leading the europeans will show up with their 27 or 28 votes en bloc and restrict technology everywhere. As our technology grows, we need to use it for production. We have to be safe and efficient in doing that, and the policies the European Union espouses, they take punitive action on countries who will back the use of these technologies. Thats something that we have to step up as leaders in this world and to push back against. The last thing we need are more famines, we dont need more droughts, and we certainly dont need, you know, people facing hunger. We need to be able to use the Agricultural Production of each of these countries, use it efficiently and safely so theres less instability overall. Kent, if i could ask you about something you brought up, you mentioned the importance of for the United States to be able to set standards internationally through its trade policies. Part of the reason that the Previous Administration really pushed on the Transpacific Partnership was because of its ability potentially to enact standards broadly across, you know, the asiapacific region of u. S. Standards. The Current Administration has taken the approach that it wants to pursue bilateral trade deals as opposed to multilateral trade deals. Do you think that that same pursuit of setting standards globally can be achieved bilaterally . I think that well, first of all, i think were hopeful that President Trump is going to really entertain returning to the Transpacific Partnership. Weve heard it repeated by secretary purdue, and as early as yesterday from Vice President pence. We are hopeful the Administration Takes it seriously and takes the steps to did that because tpp would not only have basically applied u. S. Standards to a lot of these other countries, it would have given us tremendous leverage over a lot of other countries in the pacific rim, not just to lower tariffs but to apply better labor and Environmental Standards and also production standards. The sps chapter, the sanitary chapter within tpp is one of the strongest that we have ever seen. You know, we were hopeful that there are not going to be significant changes to that in the new modified version of it, but the tpp was really a good example of the u. S. Really expanding our presence in a fastgrowing market. So were hopeful that we can return there. The bilateral process just means we have to take them one at a time. The only problem with that is it takes two to tango. If the other country is not necessarily willing to sit down with us and agree to these terms, it is going to be tough. So with tpp you kind of got it all, you know, in one fell swoop. It is going to take more time now. Instead of having this already in play, now it is going to take a few more years to really see action there. Thats why it is so important that we continue to support the efforts of the tpp, because even if the United States doesnt return we still left our mark, and especially in the sps chapter, and we need to see it applied across the pacific rim. Bilaterals can work, multilaterals we need all different approaches, but you know this. It takes just as much work to get a bilateral to 218 votes and to 60 votes as it does to get a multilateral. So theres that political component here in town to get that done. And it is important to remember the rest of the world is not waiting. You know, we have already seen obviously the tpp11, now known as the ct tpp. Australia recently hosted partners, five countries out of latin america, to talk about building a new trade relationship. The eu is up greating thegradin agreement with mexico. The rest of the world is not waiting, and the longer it takes us to continue to drive the standards the more difficult it becomes. What other questions . In the back. If we move quickly i think we can get through two more questions. Okay. Hey. Thank you guys for being here. Im air ro im aaron from senator lane forwa senator langfords office. From us here in Congress Looking forward to trade agreements, what kind of messaging and what kind of lessons can we learn from the withdrawal looking forward . Thats a great question. I will tell you that what immediately popped to mind, you know, back to kents point when we looked at this, these are negotiations, which means were not dictating, were negotiating. We are very much aware of that. What it means fundamentally, when for example, when tpp started out, it was actually i think ten of us, and then canada and excuse me, canada and japan wanted to join the party. We, the United States, were very adamant that, well, if you are going to join the tpp, you join the game in progress. Were not going to go back to zero and start all of this over. So all of the things weve already agreed to, youve got to suck it up and get on board with those provisions because thats where were going. So we pull out and then we come back in and it is like, hey, guess what, we want to get back in, and it is like, okay, you joined the game in progress. Now, the points kent made, we dont know what all theyve changed. Im sure we will find out more details as they go along. Now were looking at the same list and what we used to force canada and japan into a certain sized box, but now theyre saying, you guys can join us but guess what youre going to put up with. Thats going to be the tough thing from my part. The fact that it is still alive, the high principles and standards will be implemented in the region, theres a real benefit. Maybe it is something we can bring back to washington, you know, as american multinationals many much us operate in the other countries as well. So the more that we can demonstrate the benefit and the standard and how it does align with american interests, potentially that helps get us to the point eventually where we can look to get back in. One quick point here. As she already mention, the rest of the world is moving on. The clock is ticking. While it is easy to point fingers obviously at the administration, i think we also need to be respectful of the fact that were asking the administration to do a lot with nobody in there to actually negotiate these things. We need im glad that the senate has finally decided to move forward and confirm the rest of the ustr nominees. It is not just ustr, but there are a lot of other unfilled positions. We really need to have those positions filled, because when it comes to these negotiations were going to accomplish a lot at the technical level, theres no question about that. We have some of the best trade lawyers who are there. But nose talks always get kicked up to the next level before they go all the way to ambassador lighthizer. At that next level we dont have people who are confirm, so how can we expect results, whether through a multilateral or bilateral if we dont have people in place to actually, you know, call the balls and strikes on all of the other negotiations and really be able to make those recommendations to the top . So thats probably one of the biggest concerns we have as an industry, is just the fact that it has taken such a long time. It took a long time to get people nominated in the first place, and then the confirmation process has taken a long time, too. I understand that. I mean i was a senate staff i understand how things can drag out, but if we dont if we dont move quickly to put these people in place, then it is going to be tough for us to see the real gains that were asking for. We have a nafta round coming up, you know, very soon. We still dont have a chief ag negotiator confirmed. It is important that we dont go seven rounds without having someone there as a chief ag negotiator representing the ag industry. It is very important. So just point welltaken, kent. We are working on it. He got the message. He wrote it down. Actually, let me do that quick as potentially a call to action to this crew too because theyre such an enthusiastic and positive you came to this discussion to learn more about this space and because you are clearly interested. I think weve talked a lot about the process and specific agreements and the challenges we see in the trade environment these days, but theres a broader issue here too. There are some real concerns about trade policy and the impact it has to people. So the more that you get educated in this space, the more we can actually bring out that rational conversation in the world. What does trade really mean . You know, it is not just the ability to buy strawberries in december, as great as that is. We really need to focus on some of the underlying concerns and how were addressing what people are worried about so were again positioning trade policy as the benefit it really can be for our economy, but most importantly for our workforces and the consumers in the United States. Some question in the back row . We have time for one more. Hi, my name is tom dunn, a consultant. It seems as though every 10 or 15 years theres a proposal to merge the ustr and commerce, and occasionally to include the Foreign Agricultural service. Can you speak to you know, some people say the fas is among the most successful trade agencies. Can you speak to the importance of keeping the agricultural negotiating separate from manufactured goods . Secondly, you alluded to the importance of gmos and not being accepted in europe, but how successful are the agriculturalbased research products, our products, who are they breaking into other markets . Im thinking specifically of monsanto, or soon to be bayer, but can you speak to those two points . Thank you. Im going the take the easy question. As far as merging ustr and commerce and afts it would be a great idea as long as they were reporting to secretary purdue at usda. When you are talking about agriculture, you know, you need folks who understand agriculture. Thats why we need an ag neglector at ustr. One of the things, and when you look at how the structure works, again, when i was at usda, ustr has a relatively small staff but they rely heavily in the ag sector. The folks in the Foreign Agricultural service as well as economists, the national ag statistics, folks from, you know, the food Safety Inspection service. You kind of go bing, bing, bing down the list. They bring time and energy to focus on the small details and feed that back into the ag trailed negotiator. Same thing at commerce or any other industry sector. You will not find too many folks experts on automobiles or intellectual property from a trade perspective working at department of agriculture anymore than a wheat or cotton expert at commerce. And just to add to that, i think one of the most exciting things we have seen is that, you kno know first of all, thank you to congress for authorizing the undersecretary for trade. You know, thats been a big victory for agriculture. We are glad secretary purdue implemented that. We think ted mckinney is going to do a fantastic job. He is already traveling around the world. Really, the problem was the way the system was designed, as dale mention, you pretty much had silos where people have different tasks but there was not a way to organize them. So it kind of depended on the issue that would pop up, who would take the lead and be responsible for that. With ted mckinney we now have someone who can organize that and who people are accountable to. You know, it is one of the good things, is we have someone to help troubleshoot a lot of the issues this not only we run into but other countries run into when trying to do business with the u. S. We can solve the issues before they become leverage in trade negotiations. And i think taking up the biotechnology issue broadly, when you look at the innovative agricultu agricultureal space theres a great deal of opportunity and demand, whether it is leveraging this type of innovation to solve Food Security challenges in fooddeprived parts of the world or dealing with environmental challenges farmers face here at home and in latin america. Biotechnology has become an opportunity for a lot of the reasons kent was talking about before, the wide range of science that backs this up and recognizes the value in helping to address as was asked before, things like Sustainable Development goals. The more we continue to use science and innovation to address those challenges, better planet. How are we doing on time . I think it is a good note to end it on. I dont want to well, i mean i dont want to force you guys to stay. If you are tolg do mowilling to questions, theres interest in doing so. I would. The gentleman in the back has raised his hand from the getgo. Let him ask the question and well decide whether or not we what to answer it. You have to ask a really good question. If not, theyre going to walk out. I think im the only one from gw here too, so perfect. My question kind of piggy back off that is when you consider the fact that from the crossborder data flows, perspective, innovation perspective, fundamental economics perspective, why is the Manufacturing Sector kind of winning this battle over agriculture and tech when it comes to tpp . When it comes to tpp or i guess more free free trade agreements right now in general. Let me put it in this context, and maybe first of all let me explain. I have a degree in animal science, so if i sound like i understand economics im just flat making that up. [ laughter ] but when you look at agriculture in general and this is one of the issues on nafta. It was the same, you know, relatively speaking, same in tpp. Agriculture generally is a winner in these trade negotiations. A lot of particularly with countries, whether theyre bilaterals like with south korea, with colombia and so forth, but where it comes together to your point, agriculture has consistently been a surplus in terms of, you know, net trade in micro sets. There are certainly some countries where we import more than we export, but in total we export more in value and in quantity than we bring in. So typically, you know, our experience with trade deals is that any country we have a trade agreement with, were generally doing about 60 , 65 better in trade with that country than we were before. When you kind of step back from that point and say, you know, for other sectors, honestly, you know, part is the Technology Change thats occurred, you know, intellectual property and things that dynamic has changed a lot. Agriculture, you know, despite the innovation, despite all of the Different Technology we use, you know, it is still fundamentally you know, it is a pound of beef, it is a bale of cotton, it is a bushel of wheat, it is a basket of apples. Folks are looking for food. If theyre safe and the quality is there, were going to be able to make a deal. I think thats also from kind of the politics of it frankly, virtually well, every senator has got, you know, farmers and ranchers in their stridistrict n their state. I grew up on the house side. On the house side it various. There are about 70 congressional districts in which, you know, you would consider rural districts. So when you kind of do that comparison and you bring it forward, agriculture typically is kind of the usually the period when you get a negotiation done and ag is usually about the last thing that gets sorted out, at least they tell us that. But agriculture is also critical to getting these trade deals to 218 votes and to 60 votes. That fundamentally is where it is. So when you gauge what weve talked about, when you gauge a trade agreement successor not based simply on whether or not we have a trade surplus or a trade deficit with the country, youre missing a whole bunch of the backandforth and the economic value that, you know, importing coffee, for example. Just think about the Economic Activity that drives, you know, like just out in the hall. Everybody had a coffee pot to dip into. How is that for dancing all the way around the barn and not really answering your question, huh . I will add on to that really quick, and i am also a gw grad and you dont want to see what my econ grades looked like. I think thats the evolution that were seeing in trailed, too. I think, again, why theres so much were what generates a lot of concerns can and challenges these days is it is not that easy to separate and say this is ag, that is manufacturing. Plastic packaging, Farm Equipment, you know, manufacturing wins, ag wins with it and vice versa. So it is really about getting the best and most comprehensive deals we can so everybody has that opportunity to compete. And i think that theres also just the misconception that agriculture stops at the farm. We are manufacturing. We are definitely part of manufacturing. Just on the beef side, when you look at again, i mentioned the rendering section. Like it or not, that goes into pharmaceuticals, it goes into cosmetics. There are a lot of valueadded products that come from one animal. We have been able to be innovative and maximize that. That has created a lot of opportunities in manufacturing services. That starts at the farm, but it doesnt end there. It is not just that. You look at equipment, for example. You look at all of the Farm Equipment that is produced, and thats one of the biggest exports thats out there. No one produces that as good as we do and in the quality and the quantity. So manufacturing doesnt it doesnt exclude agriculture. We are part of it. So we are part of that were part of that balance. We are also part of that discussion. But i also think you cant ignore the fact that, you know, while not everybody farms everybody either. As dale mention, that really resonates with a lot of folks can. So i dont think that were necessarily losing as much. I just think that the conversation has changed and people are looking theyre looking at factors that, quite frankly, havent been part of the discussion as much in the past. But, you know, it is not necessarily the direction we want things to go. I think thats probably another way to say it. We would much rather see our government focus not on renegotiating the entire trade agreements, but focus on areas that need to be improved. But lets get back at doing what we do best, and thats tearing down trade barriers and letting u. S. Agriculture really maximize on those opportunities. I think were out of time. So thank you guys for being a great audience and asking such great questions. Im just glad i was not the one having to answer those. Laugh las vegas. [ laughter ] thank you. We can give lisa, dale and kent a round of applause. Thank you, adam, lisa, dale and kent. I know i appreciate how candid and informational the last panel was. What a great note to end the conference on. From the entire 2018 mccourt policy conference team, thank you so much for joining us today. It was a really great panel to finish with. I think this panel and every panel we have seen today really exemplified the mission of our 2018 conference. When we met and chose the topic of free trade and american prosperity, we decided we wanted this conference to be something more than just an academic exercise. We wanted this conference to be seen through the eyes of the practitioner. We wanted the conference to be seen through the eyes of the american farmer, through the eyes of the auto manufacturer, the investment banker, even the european. I think we achieved that with the fantastic panels we had today and the one we had last night. We couldnt have had this amazing conference without the support of our very generous sponsors, ford motor company, the baker center for leadership and governance at georgetown, and as well as our barry gold, had we didnt get to see this morning at the Emergency Panel but we would like to have back at georgetown at a later time. On a personal note about the conference, last nights very brief Government Shutdown was a reminder in our democracy things dont always go according to plan or how we want, but shutdown notwithstanding we were still here today in the peoples house, one of the most influential buildings in the world hosting this very great conversation. So now it is up to us to continue the conversation beyond today. Thats our call to action. I will leave you with that. Thank you so much for coming. N eastern on cspans q a. Coming up tonight on cspan3, a confirmation hearing for nominees of the federal trade commission. Then, Governor Scott walker delivers the wisconsin state of the state address. After that, a look at the future of the army and military readiness. Later, a forum on u. S. Trade policy and agriculture industry. Next, a confirmation hearing for federal trade commission nominees. The senate customers,