Senate Banking, Housing and Urban Affairs Committee

Subcommittee on International Trade and Finance

Hearing on the Effects of International Institutions
on U.S. Agricultural Exports

10:00 a.m., Tuesday, May 4, 1999

Prepared Testimony of Mr. Kieth Kinzer
Idaho Grain Producers Association

10:00 a.m., Tuesday, May 4, 1999

Thank you for the opportunity to appear today before the subcommittee. I am Kieth Kinzer, I farm in Genesee Idaho where I produce wheat, barley, peas, and lentils. I serve this year as president of the Idaho Grain Producers Association. My association represents Idaho's wheat and barley producers.

My message today from Idaho is to outline to you the importance of the up coming WTO negotiations and IMF funding holds for the Idaho grain industry. At the same time, I will caution that you be watchful to protect U.S. interests.

Export markets are very important to Idaho producers. We export 65-70% of our wheat production. In northern Idaho where I live, we export over 90% of the wheat that my neighbors and I produce. That is why the impacts of WTO agreements effect the growers of Idaho immensely. We support the goal of the WTO to create a level playing field and promote open trade. However, we feel agriculture trade was inadequately addressed in the Uruguay Round Agreement. Export subsidies by the European Union have effected our barley export markets to the point that EU barley was delivered to California while barley prices in Idaho remained below the cost of production. State Trading Enterprises (STE's)like the Canadian and Australian Wheat Boards were not properly addressed in the Uruguay Round. We feel they still have the ability to distort trade by unfair trading practices because of the lack of transparency. A good example of STE's effects on our market is America used to be the major supplier of wheat to South Korea. We now supply less than twenty percent of their imports while Australia enjoys over a 60% market share.

In order to expand our trade, the U.S. must be at the table during WTO trade talks. Our negotiators must have the tools to effectively negotiate a position for the U.S. That mean Congress must have fast track authority. Idaho agrees with that need, however, we also want Congress to be very specific in what needs to be included in any agreement brought back to you for approval. Before we support fast track, Idaho's grain producers want the following issues addressed:

The elimination of State Trading Enterprises (STE's). Failure to eliminate the STE's will continue to provide distortion in the world grain market.

The U.S. should establish a high priority to eliminate all export subsidies with a strategy for phasing them out over three years following the conclusion of the rounds.

Sanitary-Phytosanitary trade barriers must be eliminated unless they can be justified by agreed to scientific evaluations.

Idaho grain producers support the continuation of the current "green box" conditions on direct payment to farmers.

We feel the upcoming WTO Ministerial Meeting in Seattle needs to be more open, so our national commodity associations can have input during the negotiations.

The other area that I would like to comment on today is the impact of the International Monetary Fund (IMF) on Idaho's exports. In many cases, we have seen the lending function of the IMF support a countries ability to buy our wheat and barley. Mexico, Egypt, and Pakistan are all good examples of IMF lending enable countries to continue trading with the United States. Another important function of the IMF that we support is the facilitation of exchanging the world's currencies. We believe it is important to have an effective IMF to assist in an efficient world export/import system. I personally have a few worries about how the IMF has been changing over the past few years. With 182 member countries and a staff off over 2,600 people, it looks like an overly stratified organization. In recent years there has been a major increase in lending. They now control 193 billion dollars worth of "quota subscriptions." This year they increased their "line of credit" for special circumstances to $40-$45 billion dollars. Along with an increasing concentration of lending capacity, they have stepped up what they call "Surveillance" and "Consultations." In publications on their web site, they openly admit to "exerting moral pressure" to achieve "good quality government spending." While they deny having the ability to effect governmental decisions, they control 4.5% interest loans, and openly make statements on social issues. The rumor mill at the local coffee shops in Idaho talk about IMF funding of large agricultural projects that will produce wheat and barley at prices below America's cost of production. With these concerns in mind, congressional monitoring of the IMF must continue. Idaho's grain industry however, continues to support funding for the IMF. A strong IMF remains essential to our export markets.

In closing Senators, I simply remind you of my concerns. While we support fast track for WTO negotiations, we ask for access to the dialogue and negotiators during the process. U.S. Wheat Associates, U.S. Grains Council, National Association of Wheat Growers, and the National Barley Growers Association need to have their specific concerns addressed during the upcoming WTO Seattle talks. The IMF needs to retain lending ability, however, I ask this subcommittee to be watchful for projects by the IMF that distort traditional trading relations.

Thank you for the opportunity to testify, I look forward to answering your questions.

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