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Congressional Testimony
March 01, 2000
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 2840 words
HEADLINE:
TESTIMONY March 01, 2000 TIM BURRACK SENATE AGRICULTURE,
NUTRITION AND FORESTRY US CHINA FARM TRADE
BODY:
Statement of Tim Burrack on behalf of the National Corn Growers Association
and American Soybean Association March 1, 2000 Mr. Chairman and members of the
committee, my name is Tim Burrack. I raise corn and soybeans on my farm near
Arlington, Iowa. I serve on the board of the National Corn Growers Association
and am a member of the American Soybean Association. I am happy to be here today
on behalf of both organizations to discuss the tremendous potential of the
emerging Chinese market. The Peoples Republic of China, with a population
estimated at over 1.25 billion, is considered the most important growth market
for U.S. agriculture in the 21st century. Although it has more than 20 percent
of the world's population, China has only seven percent of the arable land. Over
the next ten years, per capita gross domestic product is expected to grow at an
impressive 6.7 percent annually. This economic expansion will contribute to
increased consumption of food and fiber. It will also create export
opportunities for U.S. farmers, if, when China completes negotiations to join
the World Trade Organization, the U.S. Congress has eliminated the sanctions
that treat China differently than other trading partners. Last November, China
and the United States completed bilateral negotiations for China's admission to
the World Trade Organization. China agreed to one- way trade concessions - new
market opportunities for corn and soybean exports. In return, the United States
agreed to exempt China from restrictions that limit our trade relations with
communist countries. As a farmer from the Midwest, it is hard for me to see how
Congress can say no to a deal like this. Under current law, goods from China can
only receive normal trade status by presidential waiver. The law provides for an
annual extension unless a joint resolution denying the waiver is enacted into
law within 60 days after expiration of the previous waiver authority. Since
1980, China and the United States have treated imports from the other country to
the same tariffs and border measures which apply to goods from the rest of the
world. Because China limits market access for most products, this trade
relationship has greatly benefited China, which has consistently exported more
goods to the United States than it has imported from us. The agreement with
China will significantly reduce the border restrictions that have kept U.S.
farmers from fully benefiting from our comparative advantage in agricultural
production. China agreed to cut tariffs by more than half on priority
agricultural products and to end its system of discriminatory licensing and
import bans for bulk commodities. The commitment to rely on imports for a small
portion of the country's food security signals real reform in the Chinese grain
sector. As a corn and soybean farmer, I expect to benefit from the entire trade
agreement - increased exports of meat, poultry, and dairy products will
translate into increased domestic demand for grains and oilseeds. Since other
witnesses can better describe the opportunities for their sectors, I will focus
on the implications for corn and soybeans. Corn For China, corn is a sensitive
commodity with trade and marketing controlled by the state- run COFCO. China
allows corn imports when supplies are short, but at other times China blocks
corn imports. Consequently, China is a very sporadic customer. U.S corn exports
to China spiked during the 1994 marketing year at 130 million bushels. During
the 1996 marketing year China did not import any U.S. corn. Over the last five
years, China has imported an average of less than 50 million bushels of U.S.
corn. Under the WTO accession agreement, China has committed to establish a
tariff rate quota (TRQ) for corn. Imports within the quota will be subject to a
minimal one percent duty. In the first year, the TRQ will apply to 4.5 million
metric tons (1 77 million bushels) of corn. By the fourth year, China has agreed
to allow imports of 7.2 million metric tons (g83 million bushels) of corn at the
nominal tariff. If U.S. farmers capture a significant share of the corn TRQ, we
can easily exceed the export levels of 1994. To assure that the quota is used, a
portion will be available to the private sector. In the first year of the
agreement, the private sector share will equal 25 percent of the corn TRQ. This
share will increase to 40 percent by the fourth year of the agreement.
Additionally, any quota not used by the end of October, will be released for use
by the private sector. The introduction of private trade will ensure increased
opportunities for U.S. corn exports. China has agreed to lift the ban on imports
of wheat from the Pacific Northwest and to allow grain shipments from all U.S.
locations, provided the presence of TCK spores are below agreed levels. This
provision will enable corn exports to move through the Pacific Northwest when
that is the most competitive export location. Perhaps the most important and
exciting provision for U.S. corn farmers is China's commitment to eliminate
export subsidies. China is the second largest producer of corn in the world,
producing over 5 billion bushels last year. Over the past several years China
has exported surplus corn at the expense of U.S. corn farmers. In late 1994,
China instituted a grain policy designed to boost grain production to assure
food self-sufficiency. The policy generated surpluses of corn, wheat and rice,
as well as unexpected government expenses. In an attempt to reduce storage
costs, China has aggressively exported surplus corn. In February, the USDA World
Agricultural Outlook Board increased its projection for corn exports by China to
315 million bushels from the earlier estimate of 197 million bushels. When China
eliminates export subsidies, U.S. corn will be very competitive in markets that
have been buying subsidized Chinese corn. Soybeans For the U.S. soybean
industry, China represents the largest potential market for the 21 s' century.
When the Uruguay Round Agreement was concluded, the American Soybean Association
conditioned its support on a commitment by the Administration to make oilseeds
and oilseed products a key priority in negotiations on China's accession to the
WTO. ASA and the National Oilseed Processors Association have met regularly with
USTR, USDA and other Administration officials over the past five years to
emphasize the importance of obtaining a significant increase in access for
soybeans, soybean meal, and soybean oil to the Chinese market. The China WTO
accession agreement negotiated last November is particularly beneficial to U.S.
soybean producers and the soybean industry. It will lock in currently applied
tariffs on soybeans and soybean meal at 3% and 5%, respectively. For soybean
oil, it will reduce and bind the current tariff from 13% to 9%, and increase the
amount of soyoil imports at this duty from 1.7 to 3.2 million tons over the
six-year implementation period. The tariff on over quota soyoil will be reduced
to 9% in 2006, after which the TRQ will be eliminated. U.S. soybean producers
strongly support the China WTO accession agreement, and urge Congress to approve
Permanent Normal Trade Relations for China as quickly as
possible. We already have too many restrictions on U.S. farm exports in the form
of unilateral economic sanctions. To turn access to the Chinese market over to
our competitors after negotiating this agreement would deal a terrible blow to
efforts to restore profitability to the U.S. farm economy. Conclusion Quite
simply this is a one-way deal for U.S. agriculture. We gain access to the
largest market in the world, and we give up nothing in return. We may not know
the magnitude of this market-opening opportunity for several years, but what is
abundantly clear is that U.S. farmers will only benefit from this trade
agreement, if Congress approves Permanent Normal Trade
Relations for China. I appreciate the opportunity to present the views
of the National Corn Growers Association and the American Soybean Association.
LOAD-DATE: March 6, 2000 
