29462 EXTENSIONS OF REMARKS October 26, 1983 EXTENSIONS OF REMARKS BEEF AND CITRUS FRUIT EX- mestic politics of both the United States The Japanese respond that "fairness" PORTS TO JAPAN-ACTION and Japan. The conflicts over beef and must be tempered by Japan's overriding NEEDED citrus are connected to key issues of struc­ need for "food security." Japan is already tural adjustment for agriculture and indus­ heavily exposed to the uncertainties of try, especially the long-run role of rice in international markets for wheat, corn, and HON. DOUGLAS K. BEREUTER Japanese agriculture and that of automo­ soybeans. Moreover, the Japanese believe OF NEBRASKA biles and other 'smokestack' industries in that the present high degree of self-suffi­ IN THE HOUSE OF REPRESENTATIVES the American economy, as well as to the po­ ciency in rice and "consumer-ready" prod­ litical pressures that obstruct and facilitate Wednesday, October 26, 198~ ucts like beef and citrus could not be fur­ negotiations in the two countries." ther eroded without serious political conse­ e Mr. BEREUTER. Mr. Speaker, this ISSUES OF STRUCTURAL ADJUSTMENT quences at home. The political conse­ Member has spoken frequently in past quences of trade hit both countries. The months about our Nation's problems Some Japanese argue that a too-rapid lib­ Japanese showed that they understand the in exporting beef and citrus products eralization for beef and citrus would "under­ importance of the auto industry in U.S. poli­ to Japan. With President Reagan mine" the structural adjustment of Japa­ tics by agreeing to restrict auto experts nese agriculture to persistent and high-cost while the industry was in recession. scheduled to visit that country next rice surpluses. That process of adjustment is month, I think that we must once partly impeded by high and rising land In considering each of these views, it must again focus our attention on this im­ prices, which make consolidation into eco­ be understood that both "fairness" and portant agricultural issue. We cannot nomically efficient units very expensive. "food security" are extremely vague terms But here cause and effect are not easy to at best, and emotion-laden political catch­ allow this sad situation to continue. words at worst. Their use in negotiating po­ Soon the Japanese must be convinced separate. Protection from imports and sup­ port of prices not only maintain the existing sitions raises issues that go beyond negotia­ of the need for immediate change in structure of Japanese agriculture, they also tions over beef and citrus and extend to gen­ their protectionist policies. cause high land prices. Consequently, a eral problems of protectionism. A current issue of Challenge maga­ strong case can be made that greater im­ "Fairness" is a two-sided concept that can zine carried an enlightening article by ports and lower prices would speed up-not equally justify opening new markets and C. Peter Timmer and Michael Reich slow down-the process of adjustment. protecting existing employment in old in­ regarding this vexing problem. I hope The process of structural adjustment dustries. It tends to be a static concept used that my colleagues will read the fol­ therefore is at the heart of resolving the to block structural change, and it can easily lowing excerpts from that piece and current negotiating impasse. During the ad­ become an inflammatory symbol that fuels join me in seeking a permanent solu­ justment process, Japanese policy aims to trade wars. Certainly it is not "fair" for auto tion to this unfortunate trade prob­ "maintain the livelihood" of the Japanese or steel workers to lose their jobs or for Jap­ farmer. But that objective is inconsistent anese farmers to lose their livelihoods. A lem. with structural adjustment if it means con­ natural political response of governments is JAPAN AND THE U.S.: TRADING SHoTs OvER tinued livelihood in farming. Facing Japa­ to hide behind quotas. On the other hand, BEEF AND ORANGES nese producers of citrus and beef with great­ fairness can also be used in a positive manner, if both sides find ways to use the <By C. Peter Timmer and Michael R. Reich) er competition from imports creates a di­ lemma for policymakers because these two grains from increased trade to compensate Disputes over beef and citrus mask the sectors are being used to generate incomes the losers and to assist the adjustment proc­ weightier issues of autos, steel, electronics, for farmers who must reduce rice produc­ ess. The United States and some Japanese and grain which require basic adjustments tion due to large rice surpluses. Thus the economists have argued, for example, that in Japan's agricultural sector and in Ameri­ Japanese see the orange and beef sectors as deficiency payments on beef could maintain can smokestack industries. basic parts of the rice adjustment process, the income of Japanese livestock producers The recent round of negotiations and con­ not simply as commodities that stand alone. as well as benefit Japanese consumers flicts over agricultural trade between the This dilemma of Japanese agricultural through lower prices, and aid U.S. producers United States and Japan reminds us that policy has a direct parallel in American in­ through increased trade. the economics and politics of trade are not dustrial policy. It is as if auto workers in De­ "Food security"<or even "industrial securi­ easily separated. At first glance it seems lu­ troit were trained to produce buses and rail­ ty") is a two-sided concept. Even for food dicrous that beef and oranges should way cars in response to Japanese efficiency staples the term is hard to define, and it is become the focus of attention in a trade re­ in auto production, only to discover that frequently confused with food self-sufficien­ lationship dominated by automobiles, elec­ Japan can also produce these goods more cy. Food security may involve a production tronics, steel, and grain. Many Japanese cheaply. Understandable as it may be, the strategy, a storage strategy, a financial have made precisely that point. They argue Japanese desire to maintain the livelihood flexibility strategy, or even long-term trade that in concentrating on the demand that of Japanese farmers in farming is no more agreements. Most countries are concerned Japan liberalize imports of oranges and feasible than is the U.S. desire to maintain about food security because of sharp fluctu­ high-quality beef, U.S. negotiators have lost the livelihood of American auto workers in ations in prices for important foodstuffs in sight of the substantial exports of American the auto industry. If Japan justifies its international trade. Japan was stung by the agricultural commodities to Japan. access to the U.S. auto market by arguing U.S. embargo on soybeans in 1973 and has Overall agricultural trade between Japan that "structural adjustments" are necessary long been suspicious of open trading in the and the United States certainly illustrates a for American workers to compete with Japa­ thin and highly unstable world rice market. basic interdependence. As Fred Sanderson nese industrial products, then the same ar­ of the Brookings Institution noted, more gument holds in reverse for Japanese farm­ AGRICULTURAL PROTECTION AND FOOD SECURITY farmland in the United States is devoted to ers and American agricultural products. Japan is not alone in adopting agricultural growing crops for Japan than there is farm­ This contrast expresses the essence of the protection in pursuit of food security. Many land in Japan itself. Indeed, more American American negotiating argument about "fair­ other countries do the same. But ironically, land is devoted to growing feedstuffs for ness." The United States provides relatively agricultural protection can reduce food se­ Japanese livestock than Japanese land is de­ free access for goods that Japan can curity. As documented and argued by_ D. voted to growing rice for the main staple of produce efficiently; therefore, Japan should Gale Johnson, dumping adjustment prob­ the Japanese diet. In a real way, the United provide free<r> access for goods that the lems onto a residual world market makes States depends on Japan as a market nearly United States can produce competitively. the markets themselves less stable. The in­ as much as Japan depends on the United The U.S. Trade Representative refers to stability reduces food security for those States as a supplier. this argument as "equity in market access" countries still trading, thus pressuring them Nevertheless, "an examination of the con­ and as "fair trade." Since no question exists to withdraw as well. But the domestic costs flicts over beef and citrus reveals the stakes about the competitiveness of American farm of such autarky are extremely high, both to for the agricultural economies and the do- products, access should start there. consumers and taxpayers as the European e This "bullet" symbol identifies statements or insertions which are not spoken by the Member on the floor. October 26, 1983 EXTENSIONS OF REMARKS 29463 Community and Japan both know full well and citrus are important issues for the spe­ sive to consumers and ultimately to workers <along with U.S. dairy and sugar consum­ cific interest groups and became strong sym­ in export industries. Delayed adjustment ers>. The central problem is how the gains bols for U.S. industrial interests that want and the protection that makes the delay from trade can be realized without paying market access to Japan, they are peripheral possible could risk destroying the delicate an enormous political price to organized to the major problems of agricultural ad­ fabric of world trade itself.e farm blocs. justment in Japan. And it is those problems Here is where the negotiations over beef that have the largest potential conse­ and oranges assume dimensions well beyond quences for bilateral trade.