13 



dian situation, and we will certainly have to deal with it in Mexico. 

 The Acreage Reduction Program, the Export Enhancement Pro- 

 gram, and a whole range of other tools that we use have to be 

 clearly understood as to their implications in future farm policy de- 

 bates. 



So I think those three concerns, Mr. Chairman, have to be ad- 

 dressed, and I hope this hearing this afternoon will lend a better 

 understanding in those areas as well. I thank you. 



The Chairman. Thank you very much. I should note that seven 

 of our members also serve on the Finance Committee, so while 

 these opening statements may have seemed somewhat long, I hope 

 this gives you somewhat of an idea where we stand. 



Secretary Espy, please go ahead, sir, and then Ambassador 

 Kan tor. 



STATEMENT OF HON. MIKE ESPY, SECRETARY, UNITED 

 STATES DEPARTMENT OF AGRICULTURE; ACCOMPANIED BY 

 JOSEPH O'MARA, SPECIAL TRADE NEGOTIATOR, USDA, AND 

 EUGENE MOOS, UNDERSECRETARY FOR INTERNATIONAL 

 AFFAIRS AND COMMODITY PROGRAMS, USDA 



Secretary ESPY. To Mr. Chairman, to Senator Lugar, and to the 

 other members of this committee, I am delighted to be here, de- 

 lighted to be with you and joined by Ambassador Mickey Kan tor 

 to discuss NAFTA and its impact on agriculture. 



Mr. Chairman, I do have a rather lengthy statement which I 

 don't choose to read, so if I could have your consent to have it en- 

 tered as a part of the record, I would appreciate it. 



The Chairman. Of course. 



Secretary Espy. Mr. Chairman, much has been said about 

 NAFTA. Many of the arguments we have heard — not today — have 

 been surrounded by hyperbole, immersed in rhetoric, and depend- 

 ing on where you stand or sit, passage of this agreement either 

 heralds the Second Coming or evidences the mark of the Devil him- 

 self. 



So, today, I would like to in my own way present the facts as I 

 see them and try to set the record straight on why we in this ad- 

 ministration and in this USDA believe that NAFTA is a good deal 

 for U.S. agriculture, a good deal for all of our farmers and all of 

 our ranchers. 



It has been said here already, Mr. Chairman, in the opening 

 comments. It is a win- win situation for agriculture if you look at 

 it from a macro point of view, simply because, as Senator Lugar 

 said, a third or fully up to 40 percent of the crops grown in Amer- 

 ica are really grown and targeted toward the export market. And 

 if we don't aggressively pursue markets and increasing market 

 share, I fear the consequences for our supply management system. 

 There will be deleterious impacts on food prices and certainly prob- 

 lems with the farm program budget. 



If we don't pursue an aggressive trade strategy and specifically 

 if we don't pursue it within our hemisphere, our competitors cer- 

 tainly will. The European Community and Japanese will swoop in 

 and absorb these markets and the market share. If we don't pass 

 the NAFTA, then we will see, in my opinion, the Government of 

 Mexico begin to ratchet up their tariffs and their nontariff barriers 



