Agricultural Trade in the 106th Congress: A Review of Issues

CRS Report for Congress
Agricultural Trade in the 106th Congress:
A Review of Issues
December 29, 2000
Geoffrey S. Becker, Charles E. Hanrahan, and Remy Jurenas
Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

Agricultural Trade in the 106th Congress:
A Review of Issues
The 106th Congress considered a number of trade policy developments against
a backdrop of weak foreign demand and large world supplies of agricultural products.
The U.S. Department of Agriculture reports that the value of U.S. agricultural exports
fell between FY1996 (a record year) and FY1999 by almost $11 billion, to $49.2
billion. Agricultural exports did climb back to $50.9 billion in FY2000, and are
projected at $53 billion in FY2001. However, the pace of recovery has been of
concern to many agricultural groups and their supporters in Congress.
Although they recognize that many world economic and other factors influence
exports, many of these groups believe the sector’s future prosperity also depends on
such U.S. trade policies as 1) encouraging China’s entry into the WTO, with its
binding rules and responsibilities; 2) exempting agricultural exports from U.S.
unilateral economic sanctions; 3) fully using export and food aid programs; and 4)
challenging foreign-imposed barriers to the movement of U.S. farm products.
A few U.S. farm groups are wary of such approaches. They point out that, by
maintaining barriers to U.S. imports and their own high export subsidies and internal
farm supports, not all countries have fully honored existing trade agreements. In fact,
some of these U.S. groups pressed for more restrictions on foreign farm and food
imports. Agricultural trade issues of interest in the 106th Congress included:
China permanent normal trade relations (NTR) status, which the United States
had been renewing on an annual basis. A 1999 bilateral trade agreement between the
United States and China (tied to WTO accession) provides for tariff reductions and
increased access to the Chinese market for many U.S. agricultural products. To help
ensure that the United States can take advantage of these potential benefits, the
Clinton Administration gained passage of legislation in 2000 granting China
permanent NTR status, effective upon its accession to the WTO.
A new round of WTO multilateral trade negotiations. Although trade ministers,
meeting in Seattle November 30 to December 3, 1999, did not agree on an agenda to
launch a comprehensive new round, sectoral talks on agriculture did begin in March

2000. These talks are proceeding slowly.

Funding for USDA export and food aid programs. A program level of about $5.8
billion is assumed in the FY2001 agricultural appropriation (P.L. 106-387).
An exemption for agricultural exports from U.S. unilateral economic sanctions
against 5 countries. Such a provision, with restrictions regarding Cuba, was included
in P.L. 106-387.
Trade disputes with the European Union (EU) over its banana import regime, its
continued ban on imports of meat treated with growth hormones despite a WTO
panel ruling that it be lifted, and U.S.-EU differences over environmental effects of
genetically modified organisms (GMOs) and the safety of GM foods.

Overview ........................................................1
Agricultural Trade Trends...........................................1
Exports .....................................................1
Imports ......................................................4
U.S. Agriculture and China’s Accession to the WTO......................5
Agriculture in World Trade Negotiations...............................6
Multilateral (WTO) Negotiations.................................6
African Growth and Opportunity Act..............................7
Economic Sanctions and Agricultural Exports...........................7
U.S.-EU Issues ...................................................8
Biotechnology Issues...........................................8
Banana Dispute..............................................10
Meat Hormone Dispute........................................11
Agricultural Export and Food Aid Programs............................11
Country-of-Origin Labeling.........................................12

Agricultural Trade in the 106th Congress:
A Review of Issues
The 106th Congress considered a number of trade policy developments against
a backdrop of weak foreign demand and large world supplies of agricultural
commodities. The U.S. Department of Agriculture reports that the value of U.S.
agricultural exports fell between FY1996 (a record year) and FY1999 by almost $11
billion, to $49.2 billion. Agricultural exports did climb back to $50.9 billion in
FY2000, and are now projected at $53 billion in FY2001. However, the pace of
recovery concerned many agricultural groups and their supporters in Congress.
Although they recognize that many world economic, farm production, political,
and weather factors influence exports, many of these groups believe that the
agricultural sector’s future prosperity also depends upon such U.S. trade policies as
1) encouraging China’s entry into the World Trade Organization (WTO), with its
binding rules and responsibilities; 2) exempting agricultural exports from U.S.
unilateral economic sanctions; 3) fully using export and food aid programs; and 4)
aggressively battling foreign-imposed barriers to the movement of U.S. farm
A few U.S. farm groups are wary of such approaches. They point out that, by
maintaining barriers to U.S. imports and their own high export subsidies and internal
farm supports, not all countries have fully honored existing trade agreements. In fact,
some of these U.S. groups have pressed for more restrictions on foreign farm and
food imports.
Agricultural Trade Trends
Export markets are extremely important to U.S. producers, the world’s leading
agricultural exporters. Although agriculture is one of the few U.S. sectors that
records a surplus trade balance, it declined to $11.6 billion in FY1999 and was $12
billion in FY2000, well below FY1998’s $16.6 billion surplus and the lowest since

1987 (see chart on page 2).

Leading Markets: The leading U.S. farm export markets (value, FY1997-99)
were: Japan, the European Union (EU), Canada, Mexico, Taiwan, and South Korea.
Asia in general, and China in particular, are viewed as critical long-term growth
markets (see chart on page 3).
High Value Products: Worldwide, U.S. exports of bulk commodities (e.g.,
oilseeds and grains) remained significant, but high-value exports such as meats,
fruits, vegetables, and processed foods have increased — now representing more than

60% of the value of total U.S. farm exports.

Dependence on Exports: Some products depend more heavily on exports for
total sales than others. For example, exports of almonds, hides/skins, wheat, walnuts,
and rice have accounted for 50% or more of their total sales. Other products where
exports constituted 25% or more of sales included cotton, prunes, grapefruit, raisins,
soybeans, salmon, pulses, tobacco, animal fats, lemons, grapes, broccoli, pears,
oranges, coarse grains, and canned corn.
State Export Rankings: Nearly every state exports agricultural products, led
by California, with agricultural exports valued by USDA (in 1999) at $6.9 billion —
more than twice the level of number two Iowa with $3.2 billion. Other states in the
top ten (by rank, 1999) were Nebraska, Kansas, Illinois, Texas, Minnesota,
Washington, Indiana, and Wisconsin.

World Market Share (1999): The United States was the major world exporter
!Corn, with export market share of 66%. Major competitors: China
(13%), and Argentina (12%).
!Soybeans, with export market share of 57%. Major competitors:
Brazil (23%), Argentina (8%), and Paraguay (6%).
!Wheat, with export market share of 28%. Major competitors:
Canada (18%), Australia (17%), the EU (15%), and Argentina
!Cotton, with export market share of 25%. Major competitors:
Uzbekistan (16%), Franc-Zone Africa (group of former French
colonies that share a common currency, 15%), and Australia (13%).
!Poultry, with export market share of 42%. Major competitors: EU
(14%), Hong Kong (13%), Brazil (13%), and China (7%).
The United States also had major shares of world markets for beef/veal, pork,
and rice — but trailed Australia, the EU, and Southeast Asia, respectively, for each
of those products.

U.S. agricultural imports were $33 billion in FY1997, $37 billion in FY1998,
$37.5 billion in FY1999, and a record $38.9 billion in FY2000. USDA projects such
imports will rise further to $40 billion in FY2001.
Types of Products: Most U.S. agricultural imports are high value. The largest
component is horticultural products, which amounted to $7.3 billion or 19% of total
agricultural imports in 1999. Leading imports by value ($1 billion or more annually)
were: fruits and preparations, vegetables and preparations, wine and beer, red meats,
coffee, feeds and products, oilseeds and products, live animals, dairy products, sugar
and products, cocoa, nursery and cut flowers, and bananas.
Major Suppliers: Canada, the EU, and Mexico are the leading exporters to the
United States. Oceania (mainly Australia and New Zealand), Indonesia, Colombia,
Brazil, Chile, and other Latin American countries are also major import suppliers.
(For more data see CRS Report 98-253, U.S. Agricultural Trade: Trends,
Composition, Direction, and Policy.)

U.S. Agriculture and China’s Accession to the WTO
The prospect of future growth in demand for agricultural products made China’s
accession to the WTO (likely in 2001) an important issue for U.S. agriculture. Most
U.S. agricultural interest groups looked to China’s eventual membership in the WTO
as a way to enhance U.S. agricultural exports and increase farm incomes. U.S.
agricultural exports to China were valued at nearly $1.5 billion in FY2000, making
it the eighth largest market for U.S. farm products. Another $1.3 billion of U.S. farm
products were shipped to Hong Kong in FY2000. In the long run, if economic
growth is strong, as many economists expect, China’s 1.2 billion population, and its
growing middle class, suggest its significant potential as a market for U.S.
agricultural products.
The U.S.-China negotiations on terms for the latter’s accession to the WTO
were concluded in November 1999. The agricultural components of this agreement
appear identical to those of an earlier agreement negotiated in April 1999 but not
finalized due to U.S. problems with it and, subsequently, to diplomatic fallout from
the accidental U.S. bombing of China’s embassy in Yugoslavia on May 8, 1999.
Negotiations resumed in September 1999. The November 15, 1999 agreement
provides that China, if it becomes a member of the WTO, will make substantial
reductions in agricultural tariffs and establish market access quotas that should
expand trade for several important U.S. agricultural products, including soybean
products, wheat, corn, rice, and cotton. Virtually all other WTO members have
concluded bilateral agreements with China; ultimately, China’s application for
membership must be agreed to by other members of the WTO.
U.S.-China WTO negotiations in April 1999 were accompanied by bilateral
agreements to end China’s sanitary and phytosanitary (SPS) barriers to U.S. wheat,
meat, and citrus exports. When accession negotiations were suspended, however,
China’s implementation of the bilateral agreements came to a standstill. Since the
November 1999 agreement, China has begun to implement the bilateral agreements,
with reported purchases of wheat, citrus, and meats, including beef and pork,
occurring in 2000.
The WTO requires that members extend most-favored-nation (MFN) treatment,
also known as normal trading relations (NTR), to all other members. Such status
means that products enter the United States at the same low tariff rates that apply to
virtually all other nations. To help ensure that the United States can take better
advantage of the full range of concessions, Congress was asked to grant China
permanent NTR status.
The Clinton Administration submitted permanent NTR legislation to Congress
on March 8, 2000. On May 17, the Senate Finance Committee and the House Ways
and Means Committee each approved bills (S. 2277; H.R. 4444) to accord permanent
NTR. The full House approved its bill on May 24 by a vote of 237-197. The full
Senate approved the House bill on September 19 by a vote of 83-15, and the
President signed it (P.L. 106-286) on October 10, 2000.

Previously the United States could extend NTR treatment to China on an annual
basis only if China complied with freedom of emigration conditions in the Jackson-
Vanik amendment to the Trade Act of 1974 (P.L. 93-618, Section 401). Providing
NTR for China depended on the extension of an annual waiver of Jackson-Vanik by
the President, subject to a resolution of disapproval by either congressional chamber.
Because permanent NTR authority would not take effect until China accedes to the
WTO, the President in June 2000 recommended this waiver for an additional year.
A resolution of disapproval (H.J.Res. 103) was introduced, but defeated (147 to 281)
by the House on July 18, 2000, thereby upholding the President’s waiver. (For more
information, see CRS Report RS20169, Agriculture and China’s Accession to the
World Trade Organization; and China and U.S. Agriculture, in the CRS electronic
briefing book on trade.)
Agriculture in World Trade Negotiations
Multilateral (WTO) Negotiations
A new round of multilateral trade negotiations (including but not limited to
agriculture) was to be launched formally when trade ministers of WTO countries met
November 30-December 2, 1999, in Seattle. While the Uruguay Round (UR)
provided new and strengthened rules for the conduct of agricultural trade, a new
round is intended to expand markets for agricultural products and further ease trade
barriers, export subsidies, and trade-distorting domestic support. The operations of
state trading enterprises (STEs), like the Canadian Wheat Board, and trade in
genetically engineered food products, also are at issue.
Trade ministers at the Seattle meeting were unable to agree on an agenda for a
comprehensive new round, which would have included not only agriculture, but
services, intellectual property, industrial tariffs, and perhaps broader issues of
competition, investment, and the relationship of trade agreements to labor and
environmental considerations. However, Article 20 of the UR Agreement on
Agriculture mandates negotiations in agriculture to begin in early 2000. These
negotiations were launched March 23-24, 2000, at a special session of the WTO’s
Committee on Agriculture. Various countries have since submitted more detailed
negotiating proposals during this process.
On June 29, 2000, the Administration announced its negotiating proposal to the
WTO. It includes elimination of agricultural export subsidies by a fixed date;
substantial reductions in current tariffs and increases in tariff-rate quotas on
agricultural imports; discipline of state trading enterprises; and new reductions in
domestic farm supports based on the same fixed percentage of each country’s total
agricultural production value — with the objective of eventually making all
countries’ domestic support levels comparable. The negotiations have been
proceeding slowly.
Many agricultural interests support U.S. participation in a comprehensive round
(rather than a sectoral negotiation) because they believe the trade-offs possible in a
larger negotiation would result in improved market prospects for U.S. agricultural

exports. Some agricultural groups, who feel that they have been disadvantaged by
previous trade agreements, oppose U.S. participation in a new round. In Congress,
the Senate Agriculture Committee held hearings on WTO issues on June 24 and
September 30, 1999; the House Agriculture Committee held its own hearing on June
23, 1999. In early 2000, several other committees held hearings on the WTO Seattle
meeting and its implications for future talks, including those on agricultural trade.
Relatedly, the African Growth and Opportunity Act (P.L. 106-200; see below)
contains U.S. negotiating objectives for agriculture in these talks.
A joint resolution (H.J.Res. 90) requiring the United States to withdraw from
the WTO was introduced on March 2, 2000, but the House, on June 21, defeated the
measure by a vote of 56-353. (See The WTO Seattle Ministerial in the CRS
electronic briefing book on trade; CRS Report 98-254, Agricultural Negotiations in
the World Trade Organization; and CRS Report RS20422, United States’
Withdrawal from the World Trade Organization: Legislative Procedure.)
African Growth and Opportunity Act
The President, on May 18, 2000, signed into law the African Growth and
Opportunity Act (P.L. 106-200; H.R. 434), which includes a number of amendments
of direct interest to agriculture. The primary purpose of the measure is to increase
trade opportunities with Africa and the Caribbean Basin. Among the agricultural
provisions added by the Senate in November 1999 and retained by conferees is the
so-called “carousel retaliation” provision that requires the Administration
periodically to rotate, or change, the types of products targeted for trade retaliation
against a foreign country. Its immediate objective was to seek to intensify pressure
on the EU to permit imports of beef produced with hormones, and to resolve a long-
running dispute over banana imports (see below) by penalizing a wider range of
foreign industries and regions. As the 106th Congress adjourned, the Administration
had not yet released revised lists of imports subject to retaliation.
Other agriculture-related provisions in this measure include the creation of a
chief agricultural negotiator in the office of the U.S. Trade Representative, and the
detailing of explicit U.S. objectives for agriculture in WTO negotiations. The latter
include calls for an end to export subsidies and a reduction of foreign trade barriers.
A Senate provision permitting farmers to apply for Trade Adjustment Assistance
benefits was dropped from the final conference version (H.Rept. 106-606).
Economic Sanctions and Agricultural Exports
Falling agricultural exports and declining commodity prices led farm groups and
agribusiness firms to urge the 106th Congress to pass legislation exempting the export
of food and agricultural commodities from U.S. unilateral economic sanctions policy
against certain countries. In the course of debate on P.L. 106-387, the FY2001
appropriations bill for the U.S. Department of Agriculture (USDA), Congress
adopted a provision to lift sanctions on commercial sales of food, agricultural
commodities, and medical products to Iran, Libya, North Korea, and Sudan, and to
allow such sales to Cuba, subject to financing and other restrictions.

With the exception of the Cuba-specific provisions, Title IX of P.L. 106-387
largely codifies rules that the Clinton Administration formalized in July 1999
allowing licensed commercial sales of food and medical products to three countries
currently subject to U.S. unilateral economic sanctions — Iran, Libya, and Sudan.
Title IX also codifies a June 2000 Administration decision to allow unlicensed
agricultural sales to North Korea. Agricultural sales to Cuba under a separate policy
announced in May 1999 have been restricted only to private and non-governmental
The inclusion of Cuba in the proposal generated considerable controversy and
delayed enactment of the USDA spending bill until late in the session. Supporters
of the proposed changes argued that sanctions were rarely effective, and that
maintaining them against Cuba, which many see as a sizable potential market for
U.S. agricultural sales, harms the U.S. agricultural sector. They argued that opening
up trade with Cuba, which has been subject to a comprehensive U.S. embargo since
1962, would be a way to pursue a “constructive engagement” policy with that
country. Opponents countered that an exemption would undercut a U.S. policy
designed to keep maximum pressure on the Castro government until political and
economic reforms were attained. Strong differences of opinion on this issue twice
delayed House movement of its measure, until both sides reached a compromise in
late September. The House compromise differed from Senate language (passed
without change on July 20) in specifically prohibiting private financing of U.S.
agricultural sales to Cuba, placing more restrictions on sales on that country
compared to the other sanctioned countries, and codifying rules on travel to Cuba.
In conference action, Members adopted the House position after some debate.
The Clinton Administration in principle has favored exempting food and
medicine for humanitarian reasons from broad sanctions measures. It did express
concern, though, that the final language unduly limits the President’s flexibility in
conducting future foreign policy, reduces the prospect of food sales to Cuba, and
constrains people-to-people travel to Cuba. (For more information, see CRS Issue
Brief IB10061, Exempting Food and Agriculture Products from U.S. Economic
Sanctions: Current Issues and Proposals, and Economic Sanctions and Agricultural
Exports in the CRS electronic briefing book on trade.)
U.S.-EU Issues
Biotechnology Issues
Disputes over genetically engineered crops and foods which contain them
threaten to disrupt U.S.-European agricultural trade. Generally referred to as
genetically modified organisms, or GMOs, in trade discussions, such crops and
products are a focus of disputes over differences in approval procedures and on
whether there is a need to label GMO products. Underlying the disputes are
pronounced U.S.-EU disagreements over the environmental effects of GMOs and the
safety of GM foods.

Crops produced from GMOs are rapidly being introduced into U.S. agriculture,
especially crops for export such as corn, soybeans, and cotton. Acceptance of GMOs
in the EU and other markets for U.S. agricultural products is thus critical for U.S.
producers and exporters. U.S. consumers generally have not questioned the health
or safety of GM foods, although some U.S. consumer groups have called for labeling.
The U.S. National Academy of Sciences, environmentalists and others have called
for paying more attention to the environmental effects of GM crops. Conversely, in
the EU, a broad coalition of environmentalists, consumer groups, and some scientists
argue that the long-term effects of GMOs on health and the environment are
unknown and not scientifically established. These interest groups argue that caution
should be exercised in approving and regulating GM crops and foods until their
effects are known with certainty.
The U.S. approval process for GMOs has facilitated their introduction into the
U.S. food system. The U.S. position has been that GM foods are no different from
non-GM foods. Thus existing regulations for approving them are appropriate and
adequate. The EU, however, maintains a separate (and longer) regulatory system for
approving GMOs, and also requires mandatory labels for products containing GMOs.
Labeling is not required in the United States, except when there is a significant
difference between the conventional and the GM product or if the GM product poses
a health risk. In May 2000, the President announced that FDA would be developing
guidelines for voluntary labeling of GM products.
The EU Council of Ministers instituted, on June 24-25, 1999, a de facto
moratorium on any new approvals of GMO crops while a new approval and
regulatory framework is established. This new process will become effective in
2001. In 2000, the EU Commission proposed to accelerate the implementation of
new approval procedures, but met resistance from some EU member countries. The
prospect of an effective approval process is attractive to many proponents of GMO
crops because under the present system, no new GMO crops are being approved.
However, some harbor doubts about the ability of the EU to overcome apparent
strong consumer and environmental resistance to GMOs even with a more effective
and scientifically based system. Such doubts may have contributed to recent
decisions by major U.S. agribusiness firms to ask suppliers to begin separating GMO
and non-GMO corn and soybean products.
The 106th Congress played a major role in the domestic debate on regulation and
labeling of GM foods as constituencies for competing viewpoints sought legislative
support. S. 2080 and H.R. 3377 were introduced to require that food that contains
a genetically engineered material, or that is produced with a genetically engineered
material, be labeled accordingly. Also introduced were H.R. 3883 and S. 2315 to
levy user fees on firms seeking approval for GM foods to pay for Food and drug
Administration (FDA) safety reviews and ban GM foods likely to cause allergic
reactions. H.R. 4627 and S. 2838 each would have required the development of a
program to tell consumers about the scientific basis of the safety of foods produced
with biotechnology and fund research to address economic and environmental
impacts of biotechnology on the food supply. Another bill, H.R. 5095, would have
required USDA, acting through the National Academy of Sciences, to study and
report what type of tests are needed to assess human health risks, what type of
monitoring system is needed to assess the long term effects of consumption of GM

foods, and what federal structure is needed to ensure that these foods are safe. S.
3184 was proposed to require developers of GM foods to consult with FDA, increase
FDA’s authority to review these foods, and monitor more closely imported foods.
It also calls for a registry of GM foods that have been approved and for information
about restrictions, if any, applied to their use.
Several bills introduced in the 106th Congress reflected the views of opponents
of stricter regulation and labeling and of those concerned that regulations in other
countries may become trade barriers. H.R. 817, S. 19, S. 101, and S. 566 would
have required U.S. trade negotiators to address any “unjustified restrictions or
commercial requirements affecting new technologies, including biotechnologies” in
the next round of trade negotiations. (For more information, see CRS Report 98-861,
U.S.-European Agricultural Trade: Food Safety and Biotechnology Issues, and
Biotechnology and Agricultural Trade in the CRS electronic briefing book on trade.)
Banana Dispute
A WTO dispute arbitration panel has ruled that the EU’s preferential regime for
importing bananas violates WTO rules and that the United States has the right to
retaliate against the EU by imposing prohibitive duties on almost $200 million in EU
imports. The EU indicated its acceptance of the WTO ruling, but the United States
and other complainant countries have rejected EU proposals for altering the banana
import regime.
The United States criticized EU proposals for continuing to discriminate against
Latin American bananas regarding license allocations and tariff preferences, but has
not re-instituted WTO dispute settlement proceedings. Attention in both the United
States and the EU has focused on finding a solution to this long-running dispute, and
the effects of the ruling on banana exporters in developing countries is a factor.
Complicating matters has been internal disagreement among EU members
themselves on how to resolve the issue.
While many in the 106th Congress supported the U.S. approach to the banana
issue in the WTO because of its implications for dispute settlement, some Members
indicated that the banana decision would harm developing countries that depend on
bananas for export earnings. Legislation reflecting this point of view (H.R. 1361)
was introduced but not passed in the 106th Congress. It would have barred the United
States from retaliating against the EU because of its failure to comply with the
WTO’s decision. On the other hand, the African Growth and Opportunity Act (P.L.
106-200; see above) requires the Administration to increase pressure on the EU to
comply with the WTO decisions on bananas and beef (see below) by rotating the lists
of products subject to retaliatory tariffs. The Administration had not yet announced
the new lists when the 106th Congress adjourned. (For more information, see CRS
Report RS20130, The U.S.-European Banana Dispute, and U.S.-EU Banana Dispute
in the CRS electronic briefing book on trade.)

Meat Hormone Dispute
WTO dispute settlement panels have ruled that an EU ban, in place since 1989,
on imports of meat derived from animals treated with growth hormones, is
inconsistent with the Uruguay Round Agreement on the Application of Sanitary and
Phytosanitary measures (the SPS Agreement). The WTO panels agreed with the U.S.
argument that the ban lacks a scientific justification; left open the option for the EU
to conduct a risk assessment of hormone-treated meat; and gave the EU until May 13,
1999, to bring its hormone measure into compliance with SPS rules. The EU did not
meet this deadline. Citing studies that, it contends, raise human health questions
about the use of such hormones, the EU said it would maintain the ban while
continuing a risk assessment. In response, the United States in May 1999 stated that
it would seek to impose economic sanctions on EU products valued at $202 million.
A WTO panel agreed that sanctions were warranted, but in July 1999 set the value
subject to sanctions at $116.8 million. The United States then announced the list of
agricultural goods on which the 100% tariffs would be imposed, effective July 29,


The Commission of the European Union has proposed continuing the EU ban
on imports of beef produced with hormones. The Commission made its proposal
following a recommendation by an EU scientific committee that concluded that one
of the growth hormones in use (17 beta-oestrodiaol) is carcinogenic and should be
banned completely, while five others were determined to have possible but unproven
health risks and should be provisionally banned. Some expect that the EU will use
these scientific conclusions to reintroduce the issue in WTO dispute settlement. U.S.
officials claim, however, that much of the evidence in the EU study has already been
considered and rejected by the WTO.
The EU did lift a threat to ban the import of all U.S. meats as a result of
inadequate residue testing and standards for ensuring that meat is hormone free. The
EU has indicated that this decision, which clears the way for hormone-free meat
exports, would facilitate negotiations to reduce the $117 million retaliation list
imposed for the EU’s refusal to accept imports of hormone-treated meat. The EU
would presumably offer increased market access for hormone-free meat as
compensation for not importing hormone-treated meat. Some in the U.S. meat
industry have been cool to the idea, arguing that imports of hormone-free meat would
not be adequate to compensate for losses incurred due to the EU’s ban on hormone-
treated meat. As 2000 was coming to a close, discussions were on-going between the
United States and the EU over possible resolutions to this dispute. (See CRS Report
RS20142, The European Union’s Ban on Hormone-Treated Meat, and U.S.-EU Meat
Hormone Dispute in the CRS electronic briefing book on trade.)
Agricultural Export and Food Aid Programs
The 1996 Federal Agricultural Improvement and Reform (FAIR) Act (P.L.104-

127) authorized several USDA programs that 1) subsidize agricultural exports; 2)

develop foreign markets for U.S. farm products; 3) guarantee commercial financing

of exports; and 4) finance concessional sales or donate commodities to low-income
developing countries.
Export subsidies are the Export Enhancement Program (EEP), used mainly to
subsidize wheat, oilseeds, and other bulk commodities, and the Dairy Export
Incentive Program (DEIP). USDA export promotion programs are the Market
Access Program (MAP) and the Foreign Market Development (FMDP) “Cooperator”
Program. MAP, which can fund brand name product promotion, is often a target of
budget cutters who consider it corporate welfare.
Export credit guarantees are authorized at $5.5 billion (the value of exports
financed under the program, not the outlays incurred). Credit guarantees have been
used extensively to finance U.S. agricultural exports to Asian countries that
experienced financial and economic difficulties. Food aid programs include P.L. 480
(concessional credit and donations), Food for Progress (mainly donations), and
Section 416 (donations). Food aid programs have also been used to finance or donate
U.S. agricultural exports to Russia, some financially stressed Asian countries such
as Indonesia, and several food-short countries such as North Korea.
Many lawmakers support these programs, especially when demand for U.S.
agricultural exports is weak as in the current international economic environment.
They view the programs as helping maintain agricultural exports in markets which
are experiencing slow economic growth. Others contend that some programs are
“corporate welfare” that should be eliminated. Unsuccessful legislation reflecting
this latter point of view (H.R. 1470) would have repealed both EEP and MAP. Some
U.S. trading partners have criticized recent large U.S. food aid shipments, alleging
that they are used to reduce surpluses and increase domestic U.S. prices rather than
meet international food needs. U.S. food aid shipments have not yet, however, been
challenged as trade distorting in multilateral trade dispute settlement proceedings.
The programs and their operation have been reviewed at congressional hearings,
including those held by the House and Senate Agriculture Committees on June 21
and July 18, 2000, respectively.
Although funding for most export and food aid programs is determined by their
authorizing statutes, annual spending is provided through appropriations. The
President’s FY2001 budget plan, released February 7, 2000, proposed a program
level of $5.8 billion for these activities. USDA’s FY2001 appropriation (P.L. 106-

387; H.R. 4461), signed October 28, 2000, generally supports this program level.

(Also see CRS Report RL30501, Appropriations for FY2001: U.S. Department of
Agriculture and Related Agencies and CRS Issue Brief IB98006, Agricultural Export
and Food Aid Programs.)
Country-of-Origin Labeling
Federal law requires most imports, including many food items, to bear labels
informing the “ultimate purchaser” of their country of origin. Various bills were
introduced into the 106th Congress to impose expanded country-of-origin labeling

requirements on meats and on several other agricultural products. However, none
were passed.
Such proposals have attracted attention for a number of reasons. One is that
they are viewed (by some advocates) as a way to help U.S. producers dealing with
low farm prices. Also, some perceive that food products from certain countries
might pose greater risks than those from the United States. Proponents of the bills
contended that additional country labeling requirements would enable consumers to
know the source of retail food offerings and employ that knowledge in selecting their
purchases. Opponents countered that country-of-origin labeling bears no relation to
food safety and would not raise U.S. commodity prices. They argued that it would
impose excessive and costly regulatory burdens on retailers and others in the
marketing system and on consumers, be difficult to enforce, and — by imposing new
non-tariff trade barriers — undermine ongoing U.S. efforts to reduce other countries’
trade barriers and expand international markets for U.S. products. (For more
information see CRS Report 97-508 ENR, Country-of-Origin Labeling for Foods:
Current Law and Proposed Changes, updated December 1, 2000.)