Thank you, Mr. Chairman. I think I'll make a few comments on the negotiations and then go into questions.
From time to time, I send a number of you commentaries on the state of play of the negotiations. I'd like to assure Ms. Guergis that I do believe the WTO is important, and if the reports are negative, they're just accurate reports on the state of play.
I think it's important, and I think that while we should be moving faster towards covering our own position on negotiating bilateral and regional agreements, we can't forget about the WTO. We have to put as much pressure on it as we can to try to reach a reasonable conclusion.
The negotiations about agriculture are stuck. They're also very important for us, because in the Uruguay Round we signed a bit of a blank cheque. We really didn't get paid for it, and our grains and oilseeds sectors are suffering for that now. They're suffering because the European Union and the United States have agricultural policies that are based on subsidizing their grains and oilseeds sectors so that they don't have to subsidize the livestock and other downstream sectors. Unless that sticks, we're going to be in a position where we're continuing to play catch-up, where we're going to be forced to provide emergency support to grains and oilseeds producers if we're going to keep them on the farm.
These subsidies are very important in the United States. There are 800,000 to one million farm families that depend on them. Don't expect them to go away; they're just going to put them in another box. They'll put them in the blue box and they'll put caps on the blue box, but anybody here who has farmed understands that the cap is meaningless, because you have crop rotation anyway and you have only a certain number of products that will benefit.
Decoupling is a myth. We're coming out with a paper on that within the next week or so, talking about how decoupling really is not the answer to avoid production- and trade-distorting subsidies. We have to take a very, very hard look at it, but we have to go to bat for our livestock producers, for our beef producers, for our hog producers, and get them the markets they expected they'd have before.
We were looking at a minimum 5% access. We don't have a minimum 5% access; we have two-tenths of 1% access for pork in the European Union. We don't have an awful lot more in Japan, and the systems are rigged. We have to get into those markets. If we can't sell our grain, we have to upgrade it.
The best way to upgrade it is that you put it through an animal, and you slaughter it and you export meat. If we're not on the same footing as the other people who are doing that, we're going to lose the biggest natural advantage in the world for producing agricultural products that we're sitting on top of because we're not collecting what we should be collecting. If we can't get it through negotiation, I think we're going to have to get it through challenging.
I'm not as concerned about services, because I know from discussions with the government that they're not going to put these sensitive sectors on the trading block. It has been a consistent government position.
There are always suspicions of government. I think this consultation process has been pretty transparent, and people can make their views known. That's why Mr. Sinclair is here today making his views known. He has valid concerns. I'm not as concerned about them, but his concerns are valid.
When we get into NAMA, what nobody is talking about is the 800-pound gorilla that's sitting in the room. The 800-pound gorilla is China. Nobody wants to cut their non-agricultural tariffs with China.
I just got back from China. These 40- and 60-storey skyscrapers are going up in Beijing like mushrooms. The Chinese laugh and say their national bird is the building crane. The place is booming. People are moving there to produce things. Who wants to drop their tariffs for the Chinese to take over?
If Brazil or India is negotiating with you on a tariff, the real beneficiary is probably going to be China. And tariffs you're looking to bring down in many areas, as the Chinese progress in technology, are also going to benefit the Chinese. It doesn't mean that you shouldn't do anything, but you should recognize that there are a lot of people who are happy in Geneva to see the negotiations hung up on agriculture or other issues, because in fact they don't want to move on NAMA.
There's a lot of pressure to go to more formula cuts on NAMA. It's not as big a deal for us because we've already adjusted to the United States. But when you go out there and you see countries where we're trying to get in over 20% and 30% tariffs, trying to cut them by 60%, that's a big cut for them to look at with respect to China, particularly as long as China is benefiting from the same cheap dollar that the United States is by riding on its coattails.
I think if I'm saying anything to you, it's that the WTO is not dead, but if we don't get a fair amount of movement between now and that ministerial meeting in June, effectively it is. I'm not concerned about the trade promotion authority in the United States. The trade promotion authority is only a mechanism for the United States to extract more concessions, because their administration can't carry an agreement without Congress. If the deal is worthwhile, they'll extend the TPA. If they don't like the deal, they won't pass it.
I'm happy to answer any questions.