conversation conversation [inaudible conversations] [inaudible conversations] >> good morning i call this meeting of the senate committee on agriculture, nutrition and forestry to order. the last couple of years have been very busy for members of the senate ag committee as we work hard to produce the 2018 farm bill that will provide certainty and predictabilities nor u.s. farmers ranchers and gores and everybody up and down the food chain. as i have traveled kansas and other areas around the country, having a farm bill in place certainly tops the list of concerns i hear about. the economy committee is doing or two, get a bill to at the finish line as soon as possible but along with that i also hear about trade. i hear from wheat growers about the need for market access t sell what they produce i hear from beef producers but barriers to trade preventing their product from entering an export market and i hear from producers across the agriculture industry and all across our value chain about how trade policies impact their prices, their decisions and they're livelihoods. these are not new concerns. the united states has long had to work to overcome barriers to trade around the world. sometimes those barriers are regulations not based on sound science. that might impact specific regions products. sometimes barriers are foreign governments that consistently choose not toed a their or abide by the same rules to which we all have agreed. we need to hold our trading partners accountable but i'm concerned that some of the trade actions we have seen in recent years are causing uncertainty and unpredictability for the agriculture industry. on top of already low prices the agriculture sector has even immediate negative impact as a result of retale ya torry trade actions. without resolution the concern of losing long-term market access grows. know that sect perdue and the department of agriculture recognize that the need for long-term certainty and have made efforts to provide temporary relief to our hard working productioners form are years the united states has worked to establish itself as a reliable supplier. around the world to domestic agriculture policies look the farm bill and through strong international trade policies. free trade grandmas including cafta have boostedded the agriculture economy and supported broader u.s. economic growth of course there's nafta. in the early 1900s as ranking move the house agriculture committee i traveled with my dear friend, chairman he garza of texas to build support for the brand new north american free trait grade -- trade agreementment or nafta. a that the value of experts was $43 billion. since 1994 when nafta went into fuse the value of u.s. agriculture experts to canada has increased by 271%. to mexico by 305%. and in 2017, the total value of u.s. agriculture exports was over $138 billion. let me repeat. over the time that nafta has been enforced the total value of u.s. agriculture exports increased from 43 billion to over $138 billion. i have been encouraged to hear that the effort to modernize and strengthen nafta has been progressive. the announcement that the u.s. and mexico reached an agreement that will reserve the trading relationship the agriculture industry already enjoys, was certainly very welcome news. the light at the end of the tunnel. i know that our team at the office of u.s. trade representatives is working hard, even as we speak, to bring our friend from canada into the agreement as well. hope we hear news on a strong nafta agreement very soon. the need for the tattoos aggressively continue pursuing new trade agreement us around the world. the entire food and agriculture value chane relies on that effort. this was particularly recognized in the last farm bill processed when congress, led by this committee, created the position of undersecretary of trade and agricultural affair ted department of agriculture. thank secretary perdue from implementing this position and are in secretary mckinney thank you for your willingness to lead these efforts and joining us today. am board dowd -- a&m ambassador dowd, walk back to the committee. and thank you no rob johnson -- johansen, chief economist at the department of agriculture for being willing to share your expertise this morning as well. look forward to hearing from al of youen your perspective on trade. i recognize senator stabenow for any rocks. >> thank you for holding this hear to discuss this hearing on one of the most pressing issues facing agriculture and i want to indicate my gratitude and thanks for your leadership as we continue to work hard to get a farm bill done. i appreciate very much our working relationship on behalf of the senate. i also would note that even though the senate completed it voting last night, members are here rather than on planes because of the importance of this sum. this is critically important to all of producer so is ambassador dowd and undersect mckenney and dr. johansen, welcome. it's good to see you again. we all know our farmers are no strangered to uncertainty. they experience it every day when they check the weather forecast, look at the markets, when their crops are challengely invasive pests and diseases and on top of all that, there are now more unknowns around agriculture exports and trade. mr. chairman we worked together on this not only here but a as senior members members of the fe committee and we bring agriculture's needs forward. ahead of this hearing i had a call with agricultural leaders from across michigan to hear directly from them and no surprise i heard loudly and clearly our farmers need markets in order to be successful and there are impacts that are occurring right now because of the incertainty. agriculture experts add over 8.4 billion to the u.s. economy each year while supporting more than one million american jobs on and off the farm. we recognize this and the senate farm bill by providing permanent, expanded investments for critical trade promotion initiatives that open new marks to american grown agricultural products. this kind of long-term market development has helped michigan grown crops like cherries and navy beans merrick it ton plates across the world. however, retaliatory tariffs are put these relationships and to manier in in germ. it's estimated that american dairy farmers will tick a $1.5 billion hit this year due to tariffs imposed by, and china. that's on top of the 40 million that michigan dairies lost in income last year due to canada's unfair class 7 pricing system. our farmers are feeling the impact incorrectly. when washington state can no longer ship apples to china, it makes it harderring for michigan apple gores to compete at home. to address the impact of the tariffs, the administration has proposed up to 12 billion in emergency aid for some farmers, some farmers. the reaction from many farmer i not surprising. they want trade, not aid. while i look forward to hearing more about the details and the methodology behind this package, we must acknowledge that stripe, go so far. we need to be mindful of the long-term impacts for agriculture. producers in my state are concerned that current and future administrative actions could result in agriculture permanently losing important trading partners. i agree we need strong, meaningful trade enforce. when countries like china break the rules, i've been out there strongly and vocally on that but also agree it makes sense to update -- i also agree it makes sense to update nafta. a lot has changed since its inception in 19994. there's room for improvement in a number of areas when it comes to data on -- however all negotiations must be done thoughtfully, looking at the long-term impact and we need to get them done. so there's certainty. mr. chairman, you and i have urged the administration to get it right. mental farmers cannot be collateral damage. there are many actions this administration can and should take now that will help our farmers with long-term disability, not just short term relive. from trade negotiations that affect exportser to stopping unfather. of competition from. pores expect to raise self he issues today as well as in writing. the bottom line is greening should not be an afterthought when it comes to trade which is why we're here and all of us care deeply about this. i look fared to hearing from our witnesses and we are anxious to know how we, work with you to ensure or farmers are not left behind. thank you, mr. chairman. welcome to our panel of witnesses before the committee as of this morning. our first witness is ambassador rick dods 0 who is our chief agriculture annual negotiator. greg was raise he on a familiar in mankato, kansas, america and graduated from can't state university. formerly the home of the everoptimistic fighting wildcatses. from hit ties walking to develop market force the wheat association and the cattlemen's beef association he has an understand offering the trade's impact on agriculture and finally worked on another important issue, something called a farm bill, as a staffer on the senate ag committee during my time as ranking member. with his noticeable experience with global going trade i'm confident he was and will continue to represent the voiceovers farmers and ranchers is in the current role tet usgr. ambassador dow, welcome back. i look forward to your sect. next undersecretary for trade and guacal affairs ted mckin in the who coordinates the trade across at the department of agriculture. undersect mckin in the was emearly direct eye for he indiana state department of agriculture and then governors mike pence and eric hole come and worked for 19 years with dal signses and with alanco as director of corporate global affairs. he is a graduate of purdue university. ted is no stranger to the committee. welcome back undersecretary mckinney, i look forward to your testify you are testimony. additionally, dr. robert johansen has agreed to join our witness panel as a resource for any question related to trade mitigation payments or activities at the department of agriculture. dr. johansen is the economy economist at the department. thank you for joining us today. greg, why don't you start off. >> chairman roberts, ranking member stabenow and all members of the committee, thank you for the opportunity to join my colleagues from the department of agriculture this morning and testifying on the administration's agricultural trade policy agenda on behalf of donald trump ambassador. it is impossible to testify without first mentioning the renegotiation of nafta and the benefits for u.s. agriculture. we're working diligently bring a successful closure nafta to that philadelphias the trade promotion authority requirements. we have reboundly reached an agreement with mexico to improves nafta. it maintains tariff free access to in the mexicoart' modernizes the agreement way that cuts red tape. the am abortion my colleagues at usgr are working to. flow agricultural situation with canada, particularly in the area of dairy, poultry, eggs, grain, wine, and other products. when i first testified to the senate finance committee during my confirmation process i discuss how in terms of u.s. agriculture we play offense. since the con fish make of my fellow deputies and myself, i am undergoing a thorough analysis of future fga parters. we're looking into the benefit of potential partners in southeast asia and africa and i look forward to working with congress through the tpa process as these considerations evolve. our dialogue withgap continues to be a -- with japan continues to be a priority. a high level delegation of japanese officials came to ustr last knock discuss ways to expand and improve our bilateral trade. the discussions are continuing when we fully recognize the important to u.s. agriculture of expanding market access into japan. we are determined to put our producers and agribusinesses on a level playing field with other business such as australia, canada and the european union. in july, president trump the european commissioner launched an initiative promote more free, fair and reciprocal trade. we understanding there many sensitivities surrounding agricultural trade but including agriculture in any know, with the eu rye mains a priority for this alleged, mr.. the united states runs an agricultural trade defendant sift of over $15 billion which indicate of tv to the scope of market -- in may i traveled to geneva to deliver the united states first ever counter-notification to the wtos mistee on agriculture concerning indiana's price price for rice and wheat. every country should be concerned but the raged effects of india's trade distorting spoke supports. at the wdo we are pushing forward the largest agricultural disputes in history against china for the market price support policy and unfar administration of at the trade fee quotas. question estimate china has exceeded its domestic support for rice, squeeze corn by some $100 billion weapon estimate that if china had administered the -- according to its wt commitments that would have import billions nor rice, meet and co-from all sources. we currently have seven offensive wt ooh disputes for u.s. agriculture and six more on retaliatoriy duty biz trading partners on agriculture and other products. under section 301 of the '74 trade act usd launched an investigation into the chinese unfair technology transfer regime. in response the usgr implemented trevors on 50 bilges of chinese imports and $200 billion is under active consideration. these trevors are intended to address long-standing and unfair discriminatory chinese afraid investment practices with respect to bell electric to all property and to ebb courage china to eliminate the harmful behavior and adopt policies that lead fair markets for all citizens. the correct response would be for china change the practices and until then the president is notices having the backs of farmers and ranchers to address the the -- i'm disappoint in that recent months our trading partners decided to retaliate ghosn 3 billion of our experts following necessary actions taken to defend our national security for respond town fair trade practices. we are taking action at the wto to counter this unjustified retaliation. often tell people the easy issues in agriculture were resolved a long time ago. for example, earlier this year usgr and usga announced access to u.s. pork in argentina and poultry to morocco. long standarding issues. undersect and i will continue to working to to expand upon our 143 billion in ag exports and thank the members of the committee for their time today and look forward to answering your questions. >> we thank you for your testimony, greg. undersecretary mckinney. >> thank you, mr. chairman. ranking member stabenow and members of the committee go to be back with you. i'm pleased to be before you and welcome the opportunity to discuss the efforts of usda on behavior of u.s. ag experters. first i must thank the president, mr. secretary, sonny perdue and their faith in me to take on this first ever role as undersecretary of trade and foreign ag affairs and thank this committee for creating the opportunity for this in the 2014 farm bill and the secretary perdue for milwaukee it happen. first but the missionary. promotes ag, experts works to reduce trade barriers and opens new parks for pardon me products in collaboration with our friended at ustr and other agency. the area includes the foreign ag service and now the u.s. code desk office. as undersecretary i embrace the charge from secretary perdue to be american agricultureys unapologetic advocate around the word and i've done my boastern that million miler club participant the secretary expected. i of my traveled began two weeks after the confirmation when we held a full ag trade mission group to india. i've been to mexico, central america, chroma, our, brazil, japan, dubai, china, vietnam, southeast asia and some of these twice. all to advance our trade issues and expand exports. last week as an example i provided the keynote address at ireland's ag science association, very good and interesting group and prior that was in brussels to meet with key members of the european commission. at all stops as with all others i make clear that we seek only free and fair two-way trade always based on science-based decisionmake are and they're all very important. looking ahead before the year is out i'll lead aing a mission to south africa and my colleagues witch fas will lead a similar group south africa and then the philippines and thailand. all told we'll have doubled the number of formal ag trade missions from years past and that doesn't include the bilateral singular sort of me only meetings on bilateral trips. a bit about ag trade accomplishments. ambassador towns on these. we are making some headway. last year these includes easing of regulations on u.s. citrus into the e.u., resumption of usddg's into into vamp re-entry of u.s. chipping potatoes in japan and lifting of south korea'san on the imposers of u.s. poultry. in july secretary purdue celebrated the reintroduction of pork into argentina after more than 25 years. did so by slicing a 10-pounds u.s. honey baked ham and in august ambassador and seconds perdue announced morocco agreed allow import of u.s. agricultural meat for the first timer and we continue to work with greg his colleagues on nafta. at any given time i have six to 27 people supporting never and other negotiations and glad to do it. that doesn't touch many, many more hope we can announce in the coming weeks and months. a moment on codsex, we have strangenned the group in numbers and will add outreg to regions of the world based on good science, but with great vigor. i'm trying to earn what i said to you bee a happy warrior am little bit about mitigation. in response to unjustified retaliation by china in particular and other countries, the president directed secretary perdue craft a short-term relief strategy to protect agriculture producer while the administration works on free, fair and reciprocal okayed deals and it's a three-part mitigation program. let me touch quickly them first leg of the stool this mark facilitation program, administered by my colleague, bill northy and his team the farm service agency itch provides payments to producers of certain crops and livestock nell if therely affected be the unfair counter-tariffs. the second leg involves a food purchase and distribution program that is managed by my colleague, greg, undersecretary nor ag marketing area it and affects and deal width affected commodities. the third leg of the school, the ag trade promotion program, will be administered by my team. this is the $200 million in costs share assistance -- it's cost share, which i the hallmark of the program do will be may available to eligible u.s. organization whose have suffered damage from these unjust retaliate trade activity. that program will focus on new markets and mitigation in select existing markets. but more the former than the latter. areas of work include advertising, pr, opinions of sale demonstration, trade fairs, exhibits, market research and other activities. our group does this very well through a similar program that you know well, the market access program and the foreign market development program. in conclusion, the ag exports contribute to prosperity in and well beyond rural america. it's a privilege to serve as a strong ag advocate worldwide. mr. chairman that clock mist statement. i'd be pleased to answer any questions. >> thank you. mr. johansen. >> thank you, chairman, and ranking member. i'm happy to answer any questions you may have regarding the marketing facilitation programs or on the food purchase and distribution program. thank you. >> only if we had more witnesses like yourself. ambassador dowd. i've been pleased to hear progress on finalizing a nafta agreement. i hope that preserves the strong trading relationship between the united states, mexico and canada. if we can bring them along. there has been a great deal of discussion surrounding the success of the existing nafta agreement. generally for ag the benefits of the grandma are without question there are samples such as restrictive policies, more specially with canada on grain, grading standards or dairy, where there is room for improvement. with do no harm the top priority. what opportunities you seer to farmers and ranchers and gores in a new and improved nafta. >> thank you, mr. chairman. you know, the first thing you have to do in these kind discussions is look towards the future and we -- it's been 25 years since nafta. we have to took but what things look like in another 25 years. i think the first piece of this is obviously we keep the tariffs at zero and the mantra of do no harm has been throughout this discussion. but in sanitary land the issues we deal with so very often between u.s. da and usga in agriculture, we have item proffer the discussion and dialogue in nafta and around the world and i think we have done that with additional ability to have conversations with regard to sps and also in particular with ag biotechnology. the goal with ag biotechnology is tot not talk about current technology but anticipate what we have to he terms of new gene editing technology and those are the areas we work very hard on with mexico in this agreement. >> ambassador mckinney, beyond strengthening current agreements we should be aggressively seeking new trade agreements with donees there like japan, vietnam and the unites kingdom. ... >> the visit to guatemala, honduras and el salvador set the all-time record high in sales of ag products from across the u.s. in the history of the foreign ag service. so much so that we had to set the top two aside to validate a in that they got the message to estimate conservatively what their sales might look like over the next 12 months. now, not all are this way, but we are seeing record attendance and record sales through these ag trade missions. so that's the first thing. the second thing as we look proactively as we go on offense, as ambassador doud said, as we cited and listed the candidate countries we want to go pursue for free trade agreements or bilaterals or whatever you might call it, the good news is, it was almost identical to the list that greg and his team cited. and certainly, the top five were in the same category. we took that as positive. many of the countries i listed are the ones that we're going to follow up later or ustr will fake the lead on. -- take the lead on. so we're cultivating them and developing them. and finally, you know, i think there is some evidence that we are seeing some growth in the countries that we've already opened. beef and pork, for example, in south korea after the chorus agreement has been at record levels. and this is the pattern we'd like to emulate across the board. so i hope that we're already, even two weeks after my confirmation, starting to pave the way with many of these countries that we need to go back to. for sure, some will be long and arduous. i cite india. great country, one we must invest in. but i think for a while they're going to be very difficult with a tendency to throw tariffs up, as are many others. but this is where i appreciate the strong hand of the president, secretary perdue, ambassador lighthizer. people know that we mean what we say, that we believe that gsp, for example, is a serious thing that cannot be abused. that when you introduce non-tariff trade barriers -- which is very, very common -- that there's a consequence for that. so i think we're rounding a corner, and i'm very optimistic for the future. >> do you have any comment on this, ambassador doud? >> [inaudible] >> i think undersecretary mckinney summed it up very well, senator. >> i want to get into trade mitigation here just a moment. [inaudible conversations] under the trade assessment package the department has immaterial -- implemented atp. i beg my colleagues' deference here in going over time. i know you'll forgive me. [laughter] that will assist exporters in the market excess around the world. what i want to know is, this program, does it complement existing export programs? you mentioned the market access program, the foreign market development program. how will you insure resources are not duplicative? real quick, ambassador. >> sure. i can be quick. >> pardon me, assistant secretary. >> that's okay. i have a twin brother, so i answer to "hey, you." [laughter] they are highly complementary. and let me remind you if you haven't already heard, the market access pgram and now the complementary program that we're introducing are beloved. they might just be one of the finest creations of u.s. government, they are that highly regarded. what people are looking at is, first and primarily, where can these monies be applied where we haven't had the funds to invest in the future. i hear that many people lobby you folks for additional funds to map an fmd, so consider this as an opportunity for folks to go finally dive into export markets where they haven't been, at least not at the present they'd like to. i think that's the first and primary focus. and for sure, some would like to dedicate some of these new funds, the surge, if i can use that word, into maybe mitigating some lost sales or some hurt feelings or whatever the case might be in existing markets. so as we speak now, there's a lot of discussion going with all the commodity organizations you might imagine, and they include the organizations and the products that come from all the farms and ranches in your states. and we're working with them. and we encourage creativity, new markets, some mitigation and products or programs that'll work full time. so certainly, this is very much like the market access or foreign market development program. but, bio, oh, boy -- boy, oh, boy, is it exciting for them to get into some territories they haven't experienced yet. at least not very much. >> senator bennet had to leave, in that he is getting on a plane to colorado, but he had this question for dr. johannson. undersecretary mckinney, you can weigh in you want -- which means i have another two minutes. the largest program in the administration's trade mitigation package is the market facilitation program. can you offer some background on how the department determined the methodology and the payment rates for the different commodities eligible for the program? and i say this, that when the secretary called me -- secretary perdue -- indicating that there would be a program like this, even though many groups had come to the house and said we don't want aid, we want trade, and that's sort of been the hallmark. but we do have this mitigation program. i think that's probably the best description. but how was the methodology and the payment rates for different mod cities eligible for the program? i told the secretary that once you announce a program like this, you're going to have a heck of a time stopping it for the next year and the next year and the nt year. and every possible farm organization and commodity group will complain that it isn't equal to their circumstance, which i have heard virtually from every commodity organization and farm organization i know of. i think probably everybody here has. could you elucidate us on the methodology and how you came to that. >> thank you, mr. chairman. of course, senator bennett for his question. i'm sure we've heard the similar question and ideas about how such a program could be designed from a variety of commodity groups, as you can imagine, as you mentioned. so putting such a program together, we were, we were faced with the objective of trying to be the equally fair across commodity groups, as fair as possible. we were also constrained a little wit by some of the existing tools that we have for developing such a program. so as you know, we utilized authorities under the ccc section 5, and that has certain prescriptions on how we should go about setting up such programs. but i think the main, the main point that i want to make today -- and i will point out that we are going to be publishing a white paper today and putting it on the usda office of the chief economist web site that explains this fully, and, you know? we've been trying to do that in person meetings, but we've written it down, and we're going to be putting it out shortly. this is a trade program, retaliatory tariffs that we're trying to address. we weren't trying to address the vast array of other trade issues that have come up already today. this was specifically targeted to the 232 and 301 retaliatory tariffs, and so we wanted to make sure that our program was able to reflect those tariffs and those tariff levels from the countries that are levying those tariffs on the specific commodities that are listed under those tariff regimes. and we wanted to do so in a, as i mentioned, in an equitable and consistent manner across the different commodity groups. so there are a lot of different models that can be developed from an economic or perspective to reflect trade damage. we wanted to focus on a trade damage approach which is similar to what we would normally use if we were to go and support ustr in actions at the w,to in geneva when we go there to argue that a country's actions are unwarranted, and we are claiming damage from those actions. in that sense, we used a trade model that reflects, essentially as secretary mennet pointed out, those commodities that were exported to the countries that are retaliating are going to show the highest trade damage effects from these tariffs. and that's why you see such a large component of the program being directed to producers of soybeans, since soybeans is our largest export to china. and, on the other hand, for producers of corn, for example, we don't sell as much corn for a lot of reasons understandably, but to the retaliating countries, the e.u. and china in this sense for corn. and that's why the payments to corn producers are so much smaller. so, essentially, again, we just wanted to be consistent. we did know that for the majority of this program we were going to have to do a rulemaking in that sense. we also needed to be, follow the prescriptions that we would normally have to go through in order to publish a rule in the federal register and incorporating interagency comments from omb as well as other white house offices, ustr included. and so i'll stop there and see if we have any follow-up questions from some of the other members here. >> obviously senator bennet's time is expired, but senator hoeven just left. he wanted five minutes and whispered to me the question that he wanted to be answered. senators were up there at the white house on the day that the president announced the decision along with the president of the european common market that no tariffs, that they had decided no tariffs would be the best policy, and we all applauded that. and then we went around the room, and congressman neuhaus from washington pointed out he was a cherry producer, lost his whole crop. and then i find there's nothing for cherries. now, i'm not here to advocate cherries in particular, but senator stabenow is on the floor, she gets that from everybody on her side of the aisle, i get it from my side of the aisle with regards to commodity versus commodity versus commodity. i'm very interested in your white paper. i know it's a difficult job, but you can understand our concern when people come and say, whoa, wait a minute. then, of course, you can get on the exclusion or addition list of which there must be at least a thousand or two already on that list. senator stabenow. >> well, thank you, mr. chairman. you do a good lead-in, because i actually do advocate for cherries as well as a wade variety of commodities that we grow in michigan. and, of course, we care about what's happening all over the country. i do want to say thank you -- my question was going to be about releasing the methodology and assumptions in calculating the amount of trade mitigation, and so i'll look forward as well. i know my growers do in terms of seeing the white paper. first for our ustr -- ag negotiator, greg doud -- thank you for all of your efforts, ambassador. and i want to thank you and ambassador lighthizer for considering the cherry industry's petition to revoke you are turkey's unfair duty-free access for imports of cherry juice. we have a huge issue going on right now for that industry, as you know. and i hope we can expect a timely and favorable decision on this critical issue. let me talk about and ask you a question about nafta. we've heard about the initial agreement with mexico which contains a zero tariff on u.s. agricultural exports to mexico. however, many of our u.s. agricultural products including dairy and apples and pork face substantial tariffs in mexico due to the steel and aluminum tariffs. what's the path forward and timeline to reach an agreement with mexico to resolve these tariffs in a key export market for our u.s. farmers? >> senator, i appreciate the question. the answer is, first of all, the section 232 tariffs are administered by the department of commerce -- >> sure. >> -- not by ustr. so that's not really something that's if in our job jar -- >> i hope you will weigh in though because of the, what's happening. >> i appreciate your comments. my understanding is that part of the discussion is on a separate tract and not a part of what we're working on right now. >> really? okay. because, unfortunately, all of this is coming together from a producer stand point, as you know. it hits -- doesn't matter which department, which agency, what effort. it lands on them. so they're deeply concerned. i want to talk a little bit more and ask dr. johannson about the market facilitation program. and i'm anxious to see the methodology and so on. i had sent the department and the secretary a list of the commodities in michigan and their concerns and the number of ways tariffs, nontariff barriers, the number of things that are happening that i had hoped would be considered. but they've pushed back on me about the fact that, about the fairness of what is happening already. and here's what i get asked. through the market facilitation program to assist producers harmed by trade disruptions, usda's planning to provide $277 million in payments to our cotton producers. this is despite strong cotton prices in 2018 and recent forecasts that cotton prices will continue to increase over the coming months. in march usda used the same ccc charter act authority to make $150 million in direct payments only to cotton farmers. and i, certainly, we, you know, this is not about picking on cotton farmers, but we have a lot of folks that have been hit. the same time commodities that we produce in michigan -- dairy, corn, dry beans, fruit and others -- continue to struggle with very low prices, receive less help through the administration's trade assistance plan. so can you explain how usda determined that a commodity with increasing prices that received significant assistance earlier in the year should receive more assistance than the other commodities who have seen their prices go down? >> thank you, ranking member, for the question. it is, obviously, as i mentioned, there's a lot of different ways that we could have used estimation techniques to develop the program. this particular program that we're talking about today, the trade facilitation mitigation programs that the department's put together as undersecretary mckinney mentioned, the three different programs, and some are intended to address pieces that the others may not. in the case of prices, for example, as you mentioned, one of the -- a lot of the commodity groups that have come in to talk to us have pointed at perhaps how much prices have changed since the late spring, early summer period when the countries that were retaliating announced their activities. and prices have fallen dramatically since that point. now, of course, we've seen a lot of other reasons why prices may have fallen whether that be through increased production or other activities or weather conditions in other countries, for example. so when we put this program together, you know, certainly one way we could have done it is by keying off of prices. we decided not to use the price-driven methodology, but to look at gross trade damages. trade damages are going to be simply higher for those commodities that have exported significant quantities to china or to the other countries that are retaliating. and, of course, we sell a lot of cotton to china, and that's the reason why we would expect these tariffs to significantly impact cotton exports to china. so because of the, you know, because we use the trade, the sort of the wto approach of looking at trade damages and not necessarily looking specifically to prices, we show damages from the tariffs to the 232 and 301 actions to be what they are for soybeans, cotton, sorghum and down the list including some of the specialty crops and fruit and nut commodities. that being said, going forward into the fall as we see harvests continue and we see market conditions change, as you'll note we announced for the market facilitation program in particular the first phase of the program and the second phase, if needed, will be develop over the coming months and announced in december, and that may include consideration of other factors such as prices, trade, other tariffs that may occur. or as some of the other senators are likely to ask later today, things you may see in other parts of the country. so, again, hopefully, that answers your question. >> well, sort of. [laughter] i appreciate the answer. i guess i would say i'm still confused by an area where we see prices continuing to go up maybe not as high as they would have gone, but are still going up, ask we have so many producers where it's actually going down in the real terms. so i have one more quick follow-up, dr. johannson, to you. not every commodity affected by retaliatory tariffs has faced the same impacts from trade disruptions. and, for example, many producers of perishable commodities such as dairy and specialty crops were impacted immediately while other producers may have utilized forward contracting or futures markets to sell their crop before prices fell. how were these factors considered in allocating assistance under the tariff mitigation plan? >> no, i think your questions are raising a lot of the real key considerations that makes developing this program and launching it in an equitable fashion as possible very difficult. there are a lot of considerations such as, you know, we wanted to put the program out there in time for producers to respond to in a fairy rapid a fashion. that that's -- fairly rapid fashion. that's why the secretary announced this program at the beginning of september. we could have waited over time to see how sales and harvest had men affected -- been affected, but we wanted to try and get these mitigation measures in place as quickly as possible. i would, i would say that we are trying to move forward on the perishable commodities in a similar fashion. we are working to address, for example, almonds and cherries. we're still working on those since they were a little bit more difficult to work into the two types of -- three types of programs that we had. and, of course, all of the commodities are eligible and encouraged to work with undersecretary mckinney and his team on developing new markets and maybe ask undersecretary mckinney if he wants to add anything to that effect. >> just that we've been meeting with, i think, every commodity group known to man and woman alike, and they are answering the challenge of being creative, looking at those new markets. and, again, it is open to the all the cooperators who have been negatively affected. so that certainly includes the -- well, many, i would say all of the crops that i'm familiar with in michigan. we'll have to see how they come out because we haven't finalized and haven't received their final proposals. those are due november 2. we'll then take til early, early january and then funds will be released. i didn't add that in my testimony. >> thank you very much. and i will add some additional questions in writing, but as you know, it's not just retaliatory tariffs that are affecting votes. all of the other things that are happening around that. and so i would urge you to look at all of those impacts. thank you. >> senator boozman. >> thank you, mr. chairman. and today's hearing is so important in regard to trade. it's all about trying to provide some certainty to our farm community that's struggling so, so very much. and then also the other thing that we've got going on is the farm bill. and i want to thank senator stabenow, senator roberts for providing the leadership that we need to get that done. again, that's all about certainty and trying to put the safety nets in place. so we do appreciate you. and even more importantly, your staffs for their hard work. we know who actually does the work around here. >> [inaudible] >> they're working hard. so i just got off my egg tour a couple -- my ag tour a couple weeks ago. we do that every year in arkansas. and, certainly, trade was right at the top regarding in the sense that always, it doesn't matter what the situation -- we've got a very difficult situation now -- the retaliatory actions are always against agriculture first. and that's the situation that we're in. and so i think, you know, the farmers in arkansas willing to work with the administration. they understand, you know, that we need not only free trade, but fair trade. on the other hand, they are anxious to wrap this up as quickly as possible. the other thing and our farmers are smart, they understand that we've got 95 -- we've got 5 customers in the united states, we've got 95 all over the world that we need to be selling to. people like japan, people like cuba, things like that. so can you tell us, ambassador doud and undersecretary mckinney, you talked about trade relationship with japan. can you expand on what the next steps should be in regard to getting a market like that in place? do you see an opportunity for the u.s./japan bilateral free trade agreement come to fruition? >> senator, this is probably -- other than nafta -- top of mind. and our concern is that i believe it is in april of next year that europe, their trade agreement with japan will enter into force. obviously, canada and australia have trade agreements with japan as part of the tpp apparatus. so we're right here, right now. but sometime next year, those three countries' tariffs are going to go down here, and we're going to still be up here. and u.s. industries are already coming in to see me saying we need to address this. and let me assure you, we at ustr completely agree. there isn't anyone in the building that doesn't want to do a trade agreement with japan. we understand this is a sensitive issue. we understand japan would like us to be a part of tpp. but we're committed to engaging with this, and i know ambassador lighthizer, this is a top priority issue for him and the administration, and we're going to continue to work on it. we've got to get there at some point, definitely. >> what other countries hold the greatest potential for getting an agreement worked out? >> when we refer to southeast asia, you know, the other country that is important to us is vietnam, obviously. and if you do vietnam and japan, that is -- we'd have agreements with, essentially, every other country that is tpp. another country that is quite interesting is the fill boons. philippines. you know, as the senate chairman knows, i'm an old wheat guy from kansas. even i was surprised to learn that the philippines is our number three market for u.s. wheat today. in my mind, senator, the philippines is a he create mate top -- legitimate top ten market for u.s. agriculture. in a lot of ways -- and, ted, you can talk about this -- it's probably about where mexico was 25 years ago. and, you know, we're having conversations with indonesia. we're -- but not in terms of a bilateral, but in terms of overall trade discussions. we're very interested in africa and getting something going there. and, obviously, down the road next year we'll see what evolves with the u.k. and brexit. i have to tell you what i appreciate more than anything else is my boss, ambassador lighthizer, was in europe this week. and he said here in the senate when he testified and the first thing he said to commissioner mall strom when he was over there this week was agriculture has to be a part of any trade discussion. that, to me, is just an incredibly important thing for u.s. agriculture as we all know here. dealing with the europeans and ago -- [laughter] has been a difficult issue for all the time that we can remember. and i can't tell you how gratifying it is for the e.u./u.s. trade representative to say that the first thing in these kinds of discussions. >> no, that's excellent. and i know the -- i think i can speak for the committee that we will help you any way we can in that regard. very quickly because my time is out, but the iraqi tenders regarding rice. we had a situation where in the past they have disregarded, we've had bids that were actually lower, better quality rice. the iraqis went with other countries for some reason. we've reached a little bit of an agreement there. i guess what i would like is just kind of a yes or no, will you help us hold their feet to the fire in the sense of keeping their agreements and making sure that we have the free and fair situation in that regard? not only with rice, but with whatever comes up. >> yes, always. >> thank you very much. >> i would just add -- >> absolutely, senator. >> you should know that we talk, gosh, at least once and usually it's two or three times a week so that we're aligned. and part of the reason for my going to some of these countries is we have a little more bandwidth particularly with what's going on with nafta and all the different other countries. so we intend to collaborate fully. still want to travel together to one or two locations. and, again, i think -- i wouldn't want to suggest that there's no business going on in some of these countries where we want a new free trade agreement or bilateral or whatever you want to call it. but we certainly can build on that. so not just the new ones, but i tell you, the guatemala experience that i told you about, there are countries where we already have a free trade agreement or something of that sort or that we can continue to build on. and i'll remind you that when we go in, i tell them that we believe in two-way trade. i think there's an intimidation factor out there that we have to address. we are most certainly looking at two-way trade. and when we get there, i think it's a very positive relationship. so we're, once again, looking forward to these. >> good, thank you. >> senator klobuchar. >> thank you vy muc thank you, all of you. i spoke with you earlier today. first of all, minnesota's fourth in the country for ag exports. it's very important to us and, certainly, being a state where we can see canada from our porch, canada trade is very important. and as i've told the ambassador before, we would like to see canada as part of any nafta agreement. so let me start with canada. the administration has signaled its intent to prioritize ending canada's class 7 program, ambassador, which is essentially close the market to u.s. dairy producers as part of the nafta negotiations. how have you engaged in these negotiations to insure that u.s. dairy producers can once again compete in the canadian market, and is this still a high priority? .. intent an enormous amount of time working on the issue and both countries trying to resolve the issue. the challenge is that how desperate these two systems are between canada and the u.s. they're closed supply management system versus ore open system. we're working really hard to try manage this and we're going to do our best. >> day, turkey, none for turkeys in minnesota. i like to say that. are you focused on that mark as well for turkeys and the other thing would be pork, making sure that mexico and canada are number two and three markets for pork. and what is happening with those? >> yes, senator. the vernacular is dairy, poultry and eggs and with regard to pork that's a very high priority item. >> i know japan came up earlier but in your item you mentioned looking into benefits of potential partners in southeast asia and increasing dialogue with japan, critical markets, and what is the latest on the administration's effort to engage japan in serious talks beaut free trade agreement? >> well, as i indicated in my testimony, we had conversations last month. this is an issue that is the vice president has directly engaged in, and i believe there will be continuing conversations coming up here and this is a very high priority issue for us. >> okay. the 25% duty placed on soybeans to china has caused significant disruptions given that 57% of all u.s. soybean win to china. the duties have hit my state hard because about 60% of our state soybeans are shipped to the rest coast by rail. dr. johansen, when preparing the methodology to determine payments under the market facilitation program was any consideration begin to recent until a shipping disparities within each commodity? >> so, great way. based on the facts are very obviously complicated to consider but certainly we have been asked to look at that issue. when we put the current methodology together, we did not do regional affects. there were a number of factors to consider there transportation certainly being one of them. availability of storage, storage capacity being another. and availability as you know of rail shipment capacity to the pacific north west relative to barge capacity to the gulf. those are factors we're actively examining and looking at, and will be continuing to provide the secretary with that type of information. >> will you take these unique regional impacts into account if you you determine a second round of assistance is necessary? >> we'll certainly continue to consider that. i can't speak for the secretary of the interagency process but we'll bring that information to bear in terms of putting together the -- if a sect phase is required, we'll be considering that information, yes. >> thank you. undersecretary mckinney i will spare questions but thank you for your good work work and your minute connections. >> senator. >> thank you for the witnesses for being here this, is a really important topic as you can tell by the attendance at this committee. trade is something that we are very, very engage inside here in the united states congress and we want to make sure we're doing the right things for our constituents. since the trade turned more into trade war grain prices have dropped from 15% to 25% and when we look at pork we have seen their prices drop about 25% as well, and i do want to thank president trump and secretary perdue for their commitment to america's farmers by providing some relief, but we have heard time and time again today, trade, not aid. and so while a lot of our farmers and rancher will be out there cashing the assistance checks we have to make sure our markets are being opened so i am encourage today hear we're looking at japan and the e.u. bit we leave to get -- we have to get it done. dr. johansson many farmed in iowa were shocked when they say the mere 1% -- 1 cent point four our corn for the ream bestment or -- reimbursement or the payment assistance and through the market facilitation program, despite the significant losses that we have seen since the trade tensions took hold, so, we have seen higher tariffs from china that resulted in a 70% tax on u.s. ethanol exports and prior to the tariff increases exports to china had been up 57% year over year. u.s. ethanol is now essentially shut out of a growing market. while china is transitioning to e-10. so, we are really missing out in that area. can you walk me through how the usda arrived at the payment rate for those corn farmers and did you -- did your model calculate for the rate -- for the lost ethanol exports? >> so, those are great questions. i'll just say quickly on the ethanol side, while we did see some increases in little nothing, china had taken some -- already taken action relative to our ethanol exports that had reduced or exports of ethanol to china prior to the 232 and 301 actions being taken. they're also listed as being affected by the tariffs as well. that being said, the amount of ethanol we do sell to china would have -- would not have been affected specifically looking at the 232 and 301 actions to significant degree, and the programs were intended primarily to address producers, farmers and ranchers and that were producing primary commodities and not processed -- not on the process side. >> but it does have a direct effect for those corn farmers, though. >> that's right. it -- certainly would. on the corn side, as i mentioned, earlier we look at a trade model that is keying off of 2017 exports to the affected commodities and i'll just provide a highlight here. on soybeans, for example, the value of soybean exportses that were being affected by the tariffs was roughly 13.9-$14 billion on and corn it was $3 million. so there's significant difference between the amount of soybeans and other types of commodities relative to corn just because corn had -- corporationship. s to the countries retaliating were relatively low compared to other ones and the methodology used were focused on being consistent across the notes and keying off the export values to the country. >> i appreciate that and we'd rather have trade, not aid and he hope we don't have to see a second round. mr. dowd, just very briefly issue met with some pork producers from iowa yesterday and they are encouraged by the administration's announcement regarding the modernized trade agreement with mexico and we are large exporter of pork to mexico, and so hog prices are at a 15-year low and what approach are we using to alleviate this pressure on the pork producers? >> well, senator issue think the biggest thing we can do is get nafta wrapped up and we're working on that as aggressively as we can, and obviously another critical market for our pork producer us is japan. the chinese -- we exported i 1.75 worth of pork to china-mile-per-hour understand they keep remarking the tariffs up there. some pork was still getting in over the tariff because most of that isla riot meat-is variety meats but we have seen some interesting thing owes curing recently in the lean hog futures contract related to african swine flu in china, and i think we all need to keep a very close eye on that. >> we do, and just in wrapping up, mr. chair, i was on the production floor of a meat processor, pork processer in iowa just a few weeks ago, and that's currently throwing away some very valuable organned that normally imported to china but because of the tariffs, all of that is going to rendering, so very unfortunate situation for those producers. thank you. >> senator bennett. re get to tell you -- >> i'm here to claim m time. >> i've already used five minutes of your time. but out of the goodness -- >> restore my going it in. >> out of the goodness of my heart and the neighborly process of colorado and kansas ask since you're no longer in big~12. >> i will not good over my time. appreciate that. i'm grateful for holding this hearing. as you can see there's a enormous bipartisan interest and i think that's relates to the uncertainty that's been created here and in fairness it's not just the senator anticalledded the trade war and also commodity prices are low and my part of the country, drought. creating really huge amounts of strain for our farmers and ranchers, and my agriculture commissioner the other day said that you only get to be 22 once, and a young farmer only gets the chance once to decide whether to stay in the business or not, and this kind of uncertainty doesn't help and adversaries understand that, which is why they're doing what they're doing to us. i raise this with ambassador once and he said your farmer have missimple sympathy. i said they don't need your sympathy. they need you act rationally. want to ask about the -- not in the uncertainty but the opportunity cost that's happening to us since the beginning of the trump administration, there have been 11 by my count free trade agreements have been signed without the united states. these are opportunities we have missed to open new export markets that cause real concern for my farmers and ranchers in colorado and i'm deeply worried and i wanted to ask you but this, ambassador dowd, the long-term consequences of other companies open us to fill the markets. pork exports to china and singapore are down by 14 at 40% rereand iftily and brazil soy exports to china is increasing and they're on track to cap our more market. giant china import more sow boundaries from brazil than the previous year dow to tpp and the u.s. beef annual expert losses by 2023 are estimated $550 million. here some of the headlines from around the world. bloomberg, china reaches into rich roz far east and hunt for crop supplies. reuters, trade spat with mexico speeds u.s. decline as global wheat supplier. reuters, brazil, china, trade to reach new levels and global trade spat. it goes on and on. while u.s. forgetes over tariffs europe and japan close a trade deal. reuters, brazil, farmers vie for soy contracts during u.s.-china trade war. mr. dowd, the president's approach to trade is change the global trade dynamics and agricultural production. in your experience are shifts of this magnitude in agricultural marts and supply chains only temporary and that everything will just go back to the way it was, the way it was before? in these kinds of shifts? can you tell us how this trade war ends without american agriculture taking a step backward. >> senator, there's a lot of things to discuss there let me talk about a couple. >> i will give you the rest of my time. >> thank you. your point but the world being divvied up why we have been watching is a point i've made many, many, many times am pound i made with ambassador light -- highser when i interviewed for the job and i would comment that it took me 49 years from the time he offered me the job until the time i got in the job. that's been valuable time it's cost us. in terms of getting aggressive. i was recently in argentina and my counterpart, young guy, his father actually works for jp morgan in new york city, works for the agentine government. hi asked me, how are things going between the u.s. and the uk in a free trait agreement said we have to see what happens with regard to brexit. i i says i hope you guys stumble and fall bus we'll swoop in and tell the uk we can offer you a better deal, don't have to do something with the u.s. you're satellite correct. the he world is watching and bit want to make one point here while i have an opportunity with regard to china. we all understand that we export $20 billion worth of agricultural products to china. our biggs marmont we also understand that china retaliated against u.s. agricultural products in my opinion because they viewed power of this committee, and the power of u.s. going politically to sway opinion on this. but i don't think u.s. farmers are swayed and here's why. we have one of the biggest were to cased in the world with regard to china' and their domestic subsidies and their tariff free quote ad meteorologist. don't buy the wheat they said they i would would buy. they don't buy the corn that, buy no rice from us. their tariff on distiller's great is 80%, tariff on ethanol is 7 postal service don't buy any poultry because of high -- we finally got a them billful of beef in there after 15 years of me personally working on that. the grain thing is difficult and we aren't selling them almost what we think would be a billion dollars worth of pet food. the point with china, they need to change their behavior. this is going on not just in agriculture but in other things and this is an administration, pre president said we need to do something about this. >> i could not agree with you more. i mean i don't need the lecture on that. that is my view. but it would seem to me that provoking a trade war with mexico, canada, and the e.u. when the issue fundamentally is with china, and when the growth for all of our farmers and ranchers in the west is going to come from the pacific rim, seems insane. thank you, mr. chairman. >> senator fisher,. >> thank you, mr. chairman. ambassador dowd, thank you for being the nebraska earlier this week and we had a great roundtable discussion with about 50 ag producers and ag business people within the state, and they agreed with you in your comments with china. what i hear across my state, what you heard on monday, it's about time. also, when you talked about the bilateral agreements that you're looking for, you heard from nebraska cattle feeder asking you, when are we going to see that happen with japan. you kind of touched on that in an earlier question. do you want to elaborate on how you would answer that cattle feeder on how we're going to get that japanese market back and be able to grow it? >> senator, first of all, let me say as you can tell when we have -- we begin to have these conversations i get pretty passionate. these are issues that i've been in town, this is now my 26th 26th year and the vast majority of my time has been working on these kind of things and these are very, very difficult issues to resolve. when i was in omaha this week, i gave anime passioned speech with our from japan the room and the importance of that isship between u.s. fathomers and japanese consumers. my first job out of graduate school was with u wheat in portland, oregon, and got to work on that discussion between and evolving the relationship between our two countries. to me that is a critically important relationship, and it is personal between farmer and consumer with the japanese people. we take at that time very, very seriously, and i hope we have an opportunity here to sit down and engage with japan and really, really solidify that relationship for decades to come. >> i had the opportunity on merchandise to also meet with the japanese ambassador to the united states, and we had a cordial but very frank conversation as well. i appreciated, again, you being there with a roundtable of nebraskans and alleviating a lot of their concerns about where we are on these agreements and carrying that message to the japanese ambassador that we are serious about these negotiations. but there is, as you know, that uncertainty out there. i would ask you, when we're looking at the united states and working on bilateral agreements with southeast asia, people understand that's going to be a great new market and you heard, we all hear about the importance of not just maintaining the markets we have but growing market opportunities for the great ag products we have. can you give us any information at this point on what the status is on negotiating with countries in southeast asia, what are you hearing about for issues and possibly concerns? i understand negotiations are delicate but if you can give any kind of information to this committee issue certainly would appreciate it. >> senator, i'd be happy to talk to you privately more about what specifically we're looking at but i can assure you that enormous moment of groundwork has been done on this, particularly with extraordinary countries in southeast asia and hopefully we can talk more but that. >> that was a no. >> well, we're not quite ready yet, senator. >> i understand. i understand. but i, again, would say to you, when these agreements can be reached in a quickly, that it is important for all of our producers and it's important to every citizen in the state of nebraska because of the impact that the agriculture has on our economy in the state. mr. undersecretary you were also in nebraska and i thank you for returning to our state. it's important that we hear from you, but it's also important usda has a seat at the table when we have these trade negotiations. that's why congress created your position in 2014 in the farm bill. we want to make sure that ag is there and is at the front of any agreement. can you tell us if you are working with ambassador doud and with ambassador lighthighser to advocate for market access opportunities as this administration works to improve and update and negotiate existing and also new free trade agreements. >> well, simply put, yes and yes. greg and i talk at least once a week, usually together and lately it's been two, three, four timed. we called each other internationally to give each a heads up on things that paid dividendses. so, yes, and like i said, because we have a larger group that does policy and all kinds of tradework at any given time we have six to a dozen, sometimes more, dairy, nafta, working with and n support of his team and so i hope we can be a model of how the two agencies should collaborate. would add further their secretary perdue and the ambassador talk frickly as needed. they're both busy but no hesitancy so pick up the phone or pass a message or some way collaborate. just say that, yes, we're -- our team is already hard at work. he talked about groundwork laid. you can pick any number of countries and we have already begun to lay some of the basic work. one of the facts, figure is, what would you like out of that. we look at their needs, trade is a two-way street or it's not a very productive relationship. so those kinds of work have been going on for some time and when our friend with usdr are ready to reveal the names i bet you'll find we're right there echoing the same countries. >> i thank you for that. i thank both of you for coming to nebraska. i thank both of you for standing up for ag producers in working hard to get us better deals because we hear a lot of examples of neglect for the needs of ag producers and i am a cattle rancher and fully understand the neglect over the years and i look forward to good deals in in the future. thank you. >> i'd like to add one thing i didn't touch on your -- on the role i played out the. we each gave a bit of a keynote talk, and i was with different groups because you and i had been together a few months ago and i appreciated that very much. we go out of our way to touch and keep in touch with all the japanese activities. mean from cherry blossom festival to food and ag receptions. i've been to japan twice. the ambassador, i've met his wife and daughter. whatever you can do across the board we're doing to sustain that relationship. i think it's a matter of probably settling on other negotiations and then we can get there but we're ready to go when the time comes. >> thank you both. >> senator donnelly, i know you're on a tying time schedule. >> i want to thank my colleague, senator smith. it's kind of you. thank you very much. ambassador doud i get pretty passionate about this as well as do my friend here on the committee. these are the lives and the farms of my fellow hoosiers who are at stake. as with the group again this weekend. we have friends who are going to lose their farms because of what is going on right now. they're going to lose their life, the dreams of their life, because of what we're dealing with, and secretary mckinney, as you well know these are very, very, very hard times for indiana farmers. we have known each other fairly well for a long time and both been deeply involved in advocating on behavior of hoosier agriculture. yesterday i had hoosier pork example they're getting crushed. the hardwood lumber candidate getting crushed. the cash price for a bushing of beans this morning, 775. the cash price for corn $3.13. you cost for production is 360. the math doesn't work. the question i have for you is what banker next spring, if these prices are still the same, is going to make a loan for seeds or make a loan for inputs if the cash price is 775. the cost of production is 920. what banker in our home state is going to make that loan? >> thank you, senator good to see you again. your point is valid. what we're facing her is we he been four or five years with very depressed farm prices and that's for a number of factors and would characterize a lot of them town fair practices. when i was in front of -- >> we were at about 1070 before this price war started. that was the cash price for beans at that time. >> right. >> i'm sorry. >> that's okay. thank you. yes, we are taking some short-term pain with the hopes of long-term gain. >> how do you explain that to the farmer who is going to lose everything. >> that's very difficult and there will be some losses but when we -- >> waist you're that person? >> excuse me, sir. >> you said we'll take some losses. what if it is the folks i was with recently in kokomo who took me applied and said, down the road, there's a fellow who is going to lose everything. what do you till hills kids, mr. mckinney. >> it's very difficult. the-and-give is we're trike to make some corrections that will affection many of the tried issues we have been suffering from for a long time. i can cite many of those mitchell twin brother was pulling weed out 0 soybeans because china has not approved ten biotech traits, the longest there the 83 months, the last one 53. we're trying to right size those make a better day. >> he was able to be in the field. pulling to the soybeans women have people who are going to lose everything unless something changes. we have seen in the last week, that the administration has said, and you may know when, that they're about to implement another $200 billion in tariffs, and then there's a third coming for 267 billion decide million farmers keep coming in and asking, and it's about as valid a question as you'd ever get, when does this end? mr. secretary? >> my hope is that the work going on by our friends with ustr on things like nafta and then japan and all the other bilaterals will bring this back. that's my intent and that's what we're doing to supports them. >> how do we bring this back when we are in the process of another $200 billion in tariffs in the next month or soso? they won't tell us the exact date when it's coming but that's 200 more. they've said another 267 is coming. it seems like the light tend of the tunnel is a train coming mate farmers and there are farmers because we both know them, care about them, love them. they're our friends. they need to know that there's an off ramp or an end to this because what young man or woman graduating from purdue right now is going to go into farming when they look and see this is the situation? >> it's tough and i've talked to several and all i can say is, we're right-sizing things that should have been right sized over the many years past. when i was in front of you i talked about the slippery slope of sanitary barriers. we're making headway in changing those, sir, and that is the only attention can provide is that we have a right size this so that bright light is not a train but the bright sunshine of a bright and sunnier day, and there are some regreets. it's like the 1980s i went through those just as you werement i hope we found we right-sized things and made it better for farmer. >> mer secretary with all due respect those nor regretsment those-under neighbors who are losing farms, lose thing life's dreams, whose kids are wondering why dad can't do this anymore or mom can't do this anymore. and this is completely self-inflicted. thank you, mr. chairman. >> thank you, mr. chairman. gentleman, thank you if believe we all share the common goal of insuring that u.s. companies and farmers and ranchers able to compete on a level global playing field without being subject to unfair trade practices from other countries as a resident of the administration has made to correct unfair trade, farmers and rancher who depend on sending what the produce across the borders living in an economic night mother because their products have been targeted. i'm deeply concerned but the impact that today's retallat torry tariffser having on u.s. agricultural products especially considering that farmers and ranchers were already struggling with a weak ag economy before the tariffs were imposed and commodity prices dropped mitch greatest concern is not only for the 2018 net farm income dropped but for the next year and succeeding years losses due to lost global market share of our agricultural product which is may take years or decade toy recapture. now there's been some discussion already about the potential for bilateral trade agreements. i ask you a kauai i've asked other member's the administration emsad if you want to send a message to china the best way is just start doing business with their competitors and i -- under tpp the tariff on beef, american beef going into japan was going to drop from 38% down to 9%. and i guess my question is, there is a possibility of rejoining the tpp? if not, when can we expect negotiations to begin on a bilateral agreement with japan which is a substantial market for u.s. beef among other things, as are many of the countries in that region that were a part of the trans-pacific partnership. >> mr. doud. >> senator, i i think the answer to that -- i don't know what the answer is on tpp other than i think the president is indicated clearly, when i was in the room at one point he said, i'd rather do it bilateral i get it better degree and i think he is exactly right. so your question is how to get that down the road with japan, and the question is, we're having the conversations and we'll continue. the vice president is working on that. certainly my boss is working on that and hopefully we can get there as quickly as possible but your point is extremely valid. other countries have beat us to the punch and we have got to get busy. >> yeah. i appreciate that. i've heard that now for the last couple of years since we decided to pull out of tpp, that we're working on a bilateral trade agreement. but i don't see any evidence we are. maybe there are discussions going on in a back channel way that are not visible to the rest of us but it strikes me at least that these are huge missed opportunities for an economic standpoint, from a trade standpoint, not to mention the role that the u.s. plays in that region of the world, which has national security implications among other things. so, i'm just really frustrated and obviously with the state of play in agriculture today, where june 1st, soybeans were $10 a bushel, i was in innovator in south dakota and they were 67.05 on the board -- 7 pot 5 on the board. the transportation costs continue to go up and most of the farmers tell me to break even you're looking -- you need $8 a bushel and if you didn't forward contract and some did but a lot of 0 them didn't -- they're hairing now look at the prospect of storing a lot of their soybeans because this market is just shot for the moment. there nor bids coming in from the pnw which is where 65 asker% of the soy bone inside south dakota go. so the concern and anxiety level is continuing to rise in farm country and my impression is that it seems to fall on deaf ears around here. in with one -- i know that the attempt -- the program is designed to try to provide some temporary relief and perhaps it will, again it's not -- just nothing more than a band-aid. we need to open up markets. but even the implementation of that, which i expressed concerns about how that's being rolled out and how the formulas being used, they're using if the year's production to pay -- to make the payments to soybean producer per bushel when in fact there are areas in south dakota and other areas where you had drought you had floods, don't have bushels this year, and we came up with several other ways we think make more sense in terms of determining how those payments might be distributed and suggested those to the department of agriculture but those, too, were rejected. so just understand that this is -- these impacts are real. the economy in farm country continues to deteriorate. there will be more and more producers who are not going to be able to get operating loans next year and are going to be at risk of losing their operations, and i just -- doesn't seem to me that message as hard as we tried seems to be getting across to the administration, but we need bilateral trade agreements or let's get back -- let's re-open discussions with tpp. i'm still at a loss why that isn't something that is an option on the table. thank you, mr. chairman. >> senator smith. >> temperature, chairman roberts. i'd like to start out by thinking you for this and you and senator stabenow as well. i want to note the discussion we're having here but the intense pressures and farm country across the country and certainly in minnesota, i'm remind about how grateful i am of how hard you and debbie are working to getting the farm bill done. it is desperately needed and i don't use that word desperate lightly. i feel that the members of this committee, i've had a chance to hear comments and answers to questions from all of my colleagues ago 0 both sides of the aisle and i detect a strong bipartisan agreement that there is desperation in farm country, and i'm just going to be direct. my sense is that the three of you gentlemen understand that very well. just honest to god wish the person who sits in the oval office understood it as well. i think -- johansson you understand this aid package we have been talking about is at best a small band-aid on a very big wound. you're doing the best you can with what you're dealing with, but i heard that time and time again from minnesota farmer whos say i need a hand. but this is barely covering a penny on what i need and i know you know that. and the two of you, i -- both of you are very respected in farm country in minnesota. and i appreciate the conversations that we have had. i also appreciate that this isn't the time and the place to try to negotiate in plain view what you're trying to accomplish with our trading partners around the world. but i'm wanting to convey to you the sense of urgency that i hear from the farm bureau members from minnesota that are sitting behind you today and what i am going good hear from the farmer union members i'm going to be also late to talk to because i'm here. so, let me just go to something that you said, ambassador doud, that concerned me a little bit. senator stabenow was asking about the interplay between the 232 tarfs that commerce is working on and the work you are doing on the ag side to address these reel talia torry tariffs. what can you tell us about holiday the administration is work together and what plan there is to try to bring this complex situation together with some coherence. >> i'll be honest a lot of that is above discussions i have been part of. >> probably part of the problem. >> i well tell you, i very much want to convey our sense of urgency at ustr on dealing with this agricultural trade issues no question. and my sincere hope is that we can get things wrapped up with nafta and we can begin no move on two other issues to address these issues. we are behind the curve. there's no question. and i cannot tell you enough how much i agree with your comments on the sense of urgency. >> with regard to nafta and canada, my colleague, senator klobuchar raised this. at you're working on this right now, you are working -- i want to make sure i understand if can go back to minnesota and say you folks are working on canada's class 7 pricing scheme and you are working on expanding market access and you understand that we need a situation where we have got mexico and canada and the united states together. >> absolutely, senator. >> okay. thank you. let me just touch on one other thing. senator bennett raced a concern about the -- i think -- talking about hoe that meteorologist is considering places trevors on foreign autos and suvs and auto parts and the impact that would have on eyeing. i'm thinking right now of minnesota's pork producers, particularly. can you address quickly what is the plan to stop future retaliatoriy tariffs on u.s. eyeing from companies like japan and south korea as we are pursuing potential retaliatoriy tariffs. >> i don't know, again, 232 is the department of commerce, it's not something i've been involved with. from my part in terms of agriculture, we're trying to get to an opportunity where we can increase our access into countries like japan, canada, et cetera. we're trying to do that as quickly as possible. >> i urge you to appreciate is a know you do that what happens with the one hand over here in commerce has a deep impact on what you're trying to do on the other hand. thank you. >> senator hoeven. >> thank you, mr. chairman. i appreciate all of you being here tied. ambassador doud, what their major issues left to resolve in terms of getting canada into an agreement on nafta? what their major issues and how are we doing on getting that done? >> the major issues, there are priority for us, obviously dairy, the grain grading issue and some wine issues that we're working on as well. >> on the grain grading, when we take our grain up there and goes 0 inspection they immediately classify it as freed grain. that's ridiculous. right? you're going to get that addressed. >> that is a top priority issue for us, senator. >> good to hear. what is your sense that we're going to get resolution of this in the near term? for example, in time to get canada in the agreement with mexico so that we can vote on it before the end of the year? >> senator, you're asking a lot of legal questions and tpa question is don't know the answer to. i think our goal is my understanding of it is that congress has been notified of the intent to bring both mexico and canada into this agreement. and for my part in this, we're working day and night and as hard as we can to bring canada into this discussion and finalize it. >> there's another issue with table powe tate toes, red and yellow, where the canadians have restrictions under their canadian ministerial exemption and it's part of the canada ag product act where they restrict shipment of table potatoes between provinces and of course our exports to their country, at the same time they're increasingly bringing fresh potatoes down and putting enemy our market. are you addressing that in your boxers. >> we have recently become ware of the situation and your staff joined the industry in my offers to discuss that and we are -- that is definitely a priority. we're looking at -- to figure out a resolve and i will -- be happy to discuss that with you privately on the things -- ideas we have. >> let's do that. this is a clear trade barrier and there may be subsidies going on as well, which would not meet the wto requirements, and as they continue to push on dairy and on pork and on poultry, they're doing exactly what we're trying to overcome whichs their trade barriers him that have to put all this product in our market and they're putting up restricts and barriers on our product size hope you're addressing those and i believe you are. you're telling us you will address those issues. >> we're have something conversations and look into that. >> we have no greater ally and they're our friends and neighborhood about we want reciprocity in our trade with canada. but again, the sense i'm getting from you is that canada wants to get a deal in time to be part of a nafta vote before the end of the year. it's your sense her to working towards that. >> senator, i can tell you that in the conversation is-been part of, both sides worker very harding to. >> okay. in terms of -- secretary, anything you want to add as far as those questions? just that we're dedicating resources to help to the folks with all the heavy lifting. >> as we pushed it to try to get nafta squared away, make progress with the e.u., not only does that help in terms of our farmer but i think it puts pressure on china. but shifting to china for a minute, our state alone, north dakota alone, sends $1.5 billion worth of soybeans to china every year. just our state. and we put in an incredible amount of work into the shipping both the rail and the shipping companies, built up customers, containerized shipping, identity, and when our producers can't ship to china that creates bases because now we have to try to go down the -- to golf or east coast and we're behind the stays to the east of us. as you work on this assistance for the negotiations, you need to take that into account. so i don't now if thissing some for dr. johansson but they're two questions. if it's going to take longer than china where do we move the soybean inside the meantime, one, and, two, as you put out the second half of this assistance how are you going accommodate some of that basis which producers have built up over many years and is a significant part of the disruption you need to take into account? those two questions. the markets and then the basis on the assistance. >> i thank you for the question. certainly we have been -- as to the basis issue and of course we know that the da diets in the past have had -- dakotas bad had basis problem with regard to the p -- ican to directly to the sect e secretary and he came back with a positive answer but the basis was overcome by all the work ask that is disrupted by the tariffs so not just a locationality issue. it's a function of the tariff disruption which is why it needs to be part of the calculation. >> that's right. so we have been looking at this particular issue to look at -- to try to take into account regional differences by basis relative to previous years basis so we're looking at not only -- as you can knowledge with this many commodities, it's fairly complicate issue but we're looking at regional basis as well as differences of the bases across time in order to identify whether they -- to what extent they're being affected most by the tariffs right now. we'll continue to do that and we're can go those factors as we look to the lakes for a potential second round of payments later this fall. >> mr. secretary, again, how do we help move some product here in the meantime, right? because the elevators -- it's hard for them to take crop. >> i would just understand that i've made two or three notes about basis, regionalization and taking that into account but you raise the point this is a temporary thing. the mitigation plan is not meant to be repeated so i think the best thing to say -- it's moor intermediate to long-term play is to get the markets reopened. if china is a problem we have to look at other marks and we are spending so much time in southeast asia that feeds from and feeds to the pack pacific northwest markets. my traveled have been to myanmar, vietnam, the philippines, indonesia, japan, of course, so i would say we're focusing on that area but it's an enter meetat to long-term play. i think you understand that. >> thank you. >> first of all, let me thank you -- conversation. >> senator grassley, just -- i just wrapped up my 56th county tour, senator grassily -- he's representing a 99 county tour and had a dq blizzard mitchell last 48 hours, mr. chairman, have been -- 48 hours ago i was in jordan, mt. -- i do a 56-county tour. it's not 99 counties that the chairman had here, mr. grassley, but 56 counties in mt.. i can tell you i hear a lot about the anxiety and concern what is going on right now in prices in our commodities, crops, white, barley, three cows per person in montana. ag this number one industry in our state. that was on tuesday. today meeting with farm bureau, just this morning, meeting with our grain growers. in fact i cut short my farm bureau meeting to get down here for the committee. in fact the farm bureau folks have lot of things to talk about. long list. good issues and they said, senator, get down to that ag committee hearing because you're talking about trade and that's our single biggs concern, -- biggest concern, that and the farm bill getting passed. i witch 95% of the world's pop laying outside of the united states our farmers and ranchers clearly see the incredible opportunity we have before us to get the fair, free markets to res reciprocity. that's the future of ag, getting access to nose markets. in the short term there is a lot of concern, a lot of anxiety -- you have heard that today from several senators who it's an existential threat to certain operations as we speak right now they may lose everything, with prices. i think it's critical that we work in concert with allies, so that u.s. businesses are farmers or ranchers are able to compete on a level playing field. spent a lot of of time working international markets, sent six years on the ground in china. two kids born in hong kong in the 1990s. working on balancing of u.s. businesses to expand into those markets. and i believe that we should continue to reengage on tpp. if we think but our strategy related to china. and i do see some merit in a lot of bilateral agreementes. the problem is we see right now in these negotiations they take a lot of time. they're complicated. and in agriculture as in business, time is money. and so as we step back and look at the big picture, i would highly encourage we rethink reengaging on tpp that will serve as a counterweight to china's growing influence, not only in the region but around the world. in fact recent hearing secretary perdue agreed with me concerning the strong benefits of tpp. mr. mckinney could you summarize the tariff reductions and their benefit to tpp would provide to pacific american ag commodities. >> i'll try to than pick to any tariff reductions. tpp has been here and i think is in the wings or in -- going to be reblazed bilateral. my sense is what is going on here is we have been facing unfair trade barriers for a long time, and if you're wondering whether some of these action are helping us right-size trade the answer is unequivocally, yes. it is true, i've been a part of that. that's one of those calls that greg and i shared. comes slower than we would like but for misbehavior that's again out there, there's been no leverage for a country that's been misbehaving particularly on the season tear -- and even inside of rules we have had countries we won wto suits and still got rejected in terms of trying to right-size that. it's very true, two or three. so what we are seeing is changed. we are seeing change where forks are realizing the u.s. is finally very serious about this, so the hope is, i think -- i'll have to turn to others doing the negotiating but my hope is that by bringing these tariffs and other pressures to bear, we'll see changes behavior and those her to trevors come down. that's my hope but i'm not in the middle of the negotiating room. that's our hope at usda, some pressures we're placing will realize in their tariffs and of course our tariffs coming down. that's our hope. >> so, one of the area wiz actually made some great progress on fairly recently was removerring the ban on u.s. beaver imports that china had placed, been there for six years, and i was over in china a year ago, we actually brought some montana steaks to the premier, and had a very good discussion and later that ban was removed. the second largest beaver import market in the world. i remain concerned with made loot of progress here but we may have a significant setback here and-under seeing that with china and i completely understand and appreciate and respect the fact we needed to confront what is going on with he fairway practices in china, intellectual property, unfair trading practices. not withstanding the broader trade dispute with china, do you have any updates regarding the existing opportunities and challenges that u.s. ranchers would face in china's market and the prospect for long-term growth you spend a lot of time in southeast asia recently. >> senator, on the beef side of the equation, you are absolutely correct it took us 15-16 years to get in there and still have some significant issues with regard to their requirements regarding hormones. but definite lay step forward -- definite lay step forward but there's a tremendous amount of two, be down here with china. believe the size of the chinese beef market is now somewhere in the neighborhood of $4 billion a year in terms of. ports and our exports so far have been in the tens of millions. so obviously we have got an enormous amount of work to do there. it's encourage that there's going to be another discussion with china here yet this month. this is the issue of our time in agriculture, is to work no build and get that relationship with china where it needs to be, because is a indicate earlier there are so many problems with china that beef is just one, but the benefit if we make progress, and get issues resolved, is enormous. >> it is. i'm out of time but just -- my grain growers were starting to make gains into wheat sale in china. know how much wheat is going china this year? zero. i. >> if i could just add, ag and energy are the woman to that have seriously totally engaged and that in june, greg took a whole team to negotiate, and i think progress was made. not enough, not enough, but progress was made. when the secretary of treasury i vote folks back well-participated and ag was part of. that even though ag was not the focus, and yesterday greg and i cohosted vice minister, the lead ag negotiator for china so there's larger issues to solve but i would like to say that it think once we can renegotiate, whatever time that is, i think ag can pick up where it left off, and pick up and go, and that's what we're looking to do whenever that time is right because there's many issues across all the sectors. as far as ag we have dink everything we can do and then some to sustain and be ready when that time is that we get the green light. >> thank you. >> thank you. >> thank you for comments, and i do think we should take into consideration a blend o bilateral and multilateral trait agreements as a good strategy going forward here because knocking thespians over one at a time in a series -- these pins over one at a time is going to take a lot of time and we're returning out of time right now in fathom and ranch country. thank you. >> thank you, senator. secretary mckinney, thank you for coming. ambassador dods, thank you for coming dr. johansson, thank you for coming. dope forget the white paper. get it up to us as soon as you can. you have heard from several senators, their concern about that. ted, i know you're going to work as hard as you took get this thing turned around if we can, and i know that to be the case with greg. what concerns me most is what -- well, most -- that doesn't get it -- but i guess equally with regards to restoring our markets, is the opportunity that we did have and i hope we don't stumble on it and that's to somehow get back engaged with tpp. the reason i say that is you just read the news, watch the news if you can stand to watch the news, but in the news here you have the russians extending their blue water navy 200 miles. you got the philippines upset. you have -- well you have everybody in the south china see upset. they're holding exercises now with russia. that falls under the national security banner. ... >> as opposed to china. the next thing he said was, do you still have our back. and that's absolutely key. and i think the farther we drift away there that opportunity -- i'm not saying that you're not trying to get it done -- i think we add to our national security woes in that part of the world. i think it's that important. that will conclude our hearing today. thank you to each of our witnesses for taking time to share your perspectives on agriculture trade. and my fellow members, we would ask that any additional questions be submitted to the committee clerk five business days from today or by 5 p.m. next thursday, september 20th. the committee is now adjourned. thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations] >> coming up this weekend on booktv, saturday at 8 p.m. eastern fox news host jeanine pirro discusses her thoughts on the trump presidency and his detractors with her book, "liars, leakers and liberals." >> when i went to a dairy and i came out, and one of my press people said to me in the car there's already an article on what happened at the dairy farm. and i'm like, really? what'd it say? and it said nothing that i said. but they alleged that i said x, y and z and i remember sitting in the car, i didn't realize that it was fake news. but i said, how can i possibly run against someone where the fix is in, it's already rigged? they're saying i said things that i never said, that i did things that i never did five minutes ago! >> on sunday starting at 10 a.m. eastern, coverage of the 2018 brooklyn book festival with authors april ryan and her book, "under fire: reporting from the front lines of the trump white house." ely s -- eli saslow and linda greenhouse with her book, "just a journalist." then on "after words" at 9 p.m. eastern, political writer derek hunter discusses his book, "outraged ink: how the liberal mob ruined science, journalist and hollywood." he's interviewed by brent bozell, founder and president to have the media research center. >> host: does anybody get a real point across on television in a minute and a half? >> guest: no, no, they don't. i'm guilty of it too. you look for a way that something can go viral. producers are looking for something that can go viral. the network is looking for something they can clip into a 39-second clip, put in a tweet, on facebook that will go viral. it's good for business because you get a lot of eyes on it, but it's bad for conveying information. >> watch this weekend on c-span2's booktv. >> on capitol hill, the senate returns for business monday at 2 p.m. eastern. lawmakers will debate a bill to combat opioid abuse and another on drug pricing transparency. final votes on both measures at 5:30. the house continues a district work period until they return on september 25th. at that time members will continue work on 2019 federal spending including ebbs tending government funding through the midterm elections until december 733th. current funding expired -- 7th. current funding expires at the end of the month. you can watch the house live on c-span and the senate live on c-span2. >> leading up to the 100th anniversary of the end of world war i, on november 11th every weekend on american history tv we're featuring special programs about the war. >> in late july 1918, general pershing created the first united states army under his command, and immediate steps were taken to concentrate american forces at one point on the line. that point was -- >> sunday on american artifacts we're in northeastern france visiting villages, monuments and the american cemetery related to the battle of saint mihiel. >> the weather was horrible, it was rainy, it was chilly. the americans launched the attack heading north in this direction of where we are standing. unbeknownst to them, the germans -- who had occupied this whole area -- had begun a withdrawal, and they were starting to move their troops, but they didn't move them quick enough. and by the end of the day of the 12th, the or americans reached not only the main objectives for that day, but many of the objectives for the following day. and so by mid-morning of september 13th, it had been liberated. >> watch american artifacts sunday at 6 p.m. eastern on american history tv on c-span3. >> washington post reporter bob woodward is our "washington journal" guest monday at 7 a.m. eastern talking about his new book, "fear: trump in the white house." and then on tuesday at 8:30 a.m. eastern, former independent counsel ken starr joins us to discuss his book, "contempt: a memoir of the clinton investigation." watch next week on c-span's "washington journal." >> next, a look at the security and standards of u.s. election infrastructure. the national academies of science, engineering and medicine released a report recommending steps officials take to improve election security. >> good morning, and welcome to everyone here with us todaynd

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