Senator STONE. The record will accept it and we will record your statements.

Mr. BOSWORTH. I would like to briefly say first I do not want to give you the impression that the administration, in general, or the State Department in particular is in any way complacent about our agricultural exports. We are not.

As I indicated, agricultural exports constitute one of the major strengths of the U.S. balance of trade and provide encouragement in an otherwise not so encouraging balance-of-payments projections.

But the fact is that agricultural exports have been doing well, and this reflects not only the efficiency of the American agricultural sector, but a number of other factors pertaining to our economic position. Senator LUGAR. That is a very debatable proposition.

Relatively, one can make a case-but goodness knows, the whole point of this committee's work-how in the world are we going to move to substantially higher ground?

Mr. BOSWORTH. I agree with the need to expand our exports Senator. There is a pressing need to investigate all ways in which U.S. agricultural export performance might be strengthened. But our agricultural exports have in recent years been growing, not only in volume terms, but also as a share of total U.S. exports. In fact the U.S. share of the total world agricultural trade has been expanding satisfactorily and strongly over the past decade.

Our performance has really been quite good. This does not mean we should be complacent. We are not. We clearly should improve this performance if at all possible.

In my statement I was trying to indicate that our own interests are not served by engaging in a credit competition with other major exporters. None of us have an interest in selling our agricultural supplies abroad any more cheaply than is necessary to compete for markets.

If we extend credit terms for agricultural commodities beyond 3 years and by this expand our share of the world market, it is inevitable that the other major exporters will retaliate by doing the same thing.

The case you cited involving Brazil is one of those cases I alluded to in my testimony, the extension of credits beyond 3 years in this case was not primarily done for commercial reasons. I would be happy to provide additional information on that and the other sales in which credits beyond 3 years were extended.

But the case of China is somewhat different. Perhaps the major constraint on our position in the Chinese market is not that CCC credits do not go out beyond 3 years, but that China is not eligible for CCC credits.

So the Chinese market is not in itself a justification for a mediumterm CCC credit program.

Senator STONE. Thank you very much, Senator Lugar.

Just following that briefly, Mr. Bosworth, there is an extraordinarily revealing article in the morning's Washington Post, dateline, Hong Kong. I ask your comment.

Chinese administrators have indicated in the past that the lack of full diplomatic relations with Washington will continue to hinder

trade. The high tariff charges in Chinese goods coming back into the United States and the limited U.S. market for such goods are even greater barriers. So you have here not only the often-repeated formulation, but also have two specific complaints by Chinese traders: one, higher tariff charges on goods coming into the United States and, two, limited markets for their goods, which would help them pay in their balance-of-payments problems.

What you can say about that-or do you think that we need further study of that, and recommendations by the administration?

Mr. BOSWORTH. I am not myself an expert on U.S.-Chinese bilateral relations or bilateral trade, but will be pleased to obtain for you more analyses from our side of the current Chinese trade situation.

Mr. Chairman, the statement you read coming from the Chinese Government sounds like an almost classic defense of liberalized world trading systems; namely, we cannot buy from you if we cannot sell to you.

Senator STONE. No. 1. And No. 2, tariff barriers?

Mr. BOSWORTH. Right.

Senator STONE. Would you do a little study on that? And when you supply Senator Bellmon and Senator Lugar with their answers, would you give the chairman and our subcommittee something along the lines of these two points?

Mr. BOSWORTH. I would be very happy to, Mr. Chairman.*

Senator BELLMON. You mentioned this matter of credit that was not a subject of MTN. I wonder why. It seems to me it would be a very necessary part of any discussions coming-trying to put trading on an equal

Mr. BOSWORTH. I think, Senator, if we were to find that competition in the area of export credit terms was becoming a significant factor, we would undoubtedly want to discuss it in MTN, as we are now doing for such things as export subsidies. This has not been a significant distorting factor in world trade and for that reason it has not been brought up directly in the MTN context.

Senator BELLMON. On the first page of your statement, you say that you call attention to the fact that the level of exports may be up, but that lower average prices will probably increase in overall dollar earnings.

That is very distressing to a producer who has already been subsidizing these exports to the tune of billions of dollars.

Is the administration not concerned that we cannot go on much longer providing this level of commodities at these low prices?

Mr.. BOSWORTH. Well, we certainly have no interest in selling our commodities less expensively abroad than we absolutely have to. There have been some encouraging developments in the last several weeks in international commodity markets such as a rather significant strengthening in grain prices. Perhaps my statement is too pessimistic in that regard. Maybe there will be some increase in dollar earnings if that strengthening continues.

Senator BELLMON. In my State, wheat elevators are down 25 cents this week. Prices are getting worse up there.

*See p. 49 for the response submitted by Mr. Bosworth.

Mr. BOSWORTII. But during the period of February and March and the first part of April, Senator, there was, I think, a rather general strengthening in prices, albeit from very depressed levels.

Senator BELLMON. I was in Japan in December, and maybe the same story this morning showed that the cost of meat in Japan, say sirloin, is $16 a pound, compared to maybe $1.50 here. The fish catch is down. They obviously need more meat imports. They can never be self-sufficient.

What is MTN going to do to help open that market to our importers? What have you done?

Mr. BOSWORTH. Well, we have done two things, Senator; first, in our recent bilateral discussions with the Japanese-which were led by Ambassador Strauss-we did get a commitment from Japan to allow a significant increase in meat imports.

Senator STONE. We got an increase that was not significant?
Senator BELLMON. Not significant?

Mr. BOSWORTH. Second-the question of meat trade is one of the principal agricultural sectors under negotiation in the MTN. I think it is now too early to see what the outcome of these negotiations will be.

Senator BELLMON. Dollar trade surplus?

Mr. BOSWORTH. That is right.

Senator BELLMON. I cannot understand. Whatever it was, we got a few thousand tons.

Senator STONE. A few hotel tons. No access to the general grocerystore market.

Senator BELLMON. We farmers think you have let us down badly in the State Department.

Senator STONE. As a matter of fact, our chairman has a statement that what the State Department needs is an "American desk." But I want you to have the last word, Mr. Bosworth, because you are our guest.

Mr. BOSWORTH, I have no really last words, Mr. Chairman, other than to say that in my view-and I think in the view of my colleagues in the State Department, the State Department is the American desk.

Senator STONE. That is a good last word; and we thank you for coming here, Mr. Bosworth. We appreciate it.

Mr. BOSWORTH. Thank you.
Senator STONE. Mr. Hughes?

STATEMENT OF THOMAS R. HUGHES, ADMINISTRATOR FOR THE FOREIGN AGRICULTURAL SERVICE, U.S. DEPARTMENT OF AGRICULTURE; ACCOMPANIED BY KELLY HARRISON, GENERAL SALES MANAGER AND ASSISTANT ADMINISTRATOR FOR MARKET DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE Mr. HUGHES. Senators, I would like to introduce. Mr. Kelly Harrison, General Sales Manager and also the Assistant Administrator for Market Development.

I have a statement and I just wanted to paraphrase from it, because a good deal of it is information that the committee is very familiar with and it would just be repetitious. I just want to make a couple of points from it.*

One, the statement on the Soviet Union. I think you would be interested in knowing-and you have really already received some of this information that the Soviet Union has now purchased 13.3 million tons of corn and wheat-9.8 million corn and 3.5 million wheat-under the U.S.-U.S.S.R. Grains Agreement, for delivery in the current agreement year ending next September 30. We have discussed purchases of 15 million tons with the Soviets, and this total may still be a good estimate for the year. Meanwhile, the Peoples' Republic of China came into the U.S. market for 1 million tons of wheat, and this figure may also be increased. We are hopeful that this will happen.

On pages 3 and 4, I want to make a couple of points on what we have been doing in FAS. Just briefly, we are interested in a very strong international market policy to increase our exports.

A strong international market policy is basic to these goals. With the support of Congress we have taken a number of specific actions in the past 15 months to enhance export market development. For the most part, these actions were built on an existing structure of market development, Public Law 480, CCC credit, and other programs that have worked successfully over the years. These programs involve cooperation with private business, State agriculture and marketing organizations. Some of the witnesses from Florida will testify to this later, along with representatives of some 40 cooperator organizations created especially to further export development. We have done several things, and I would just like to mention some specific things.

We have increased program funding by about 15 percent for export market development cooperators.

FAS and the cooperator organizations have worked to take advantage of wheat and feed grains opportunity in new market areasdeveloping, Communist, and OPEC countries-while at the same time paying keen attention to servicing older markets so important to U.S. farmers. A wheat sales office is being opened in Morocco and a new feed grains office in Singapore, which will bring to 20 the number of U.S. grain cooperators sales offices in overseas markets. Also, we are expanding attaché coverage in the Arab countries.

In London, a new agricultural trade office will be opened May 25 to house in one building the cooperator organizations that work with FAS in developing foreign markets. This office, the first of its kind, will present a "one-stop" approach to European importers and will give U.S. agriculture higher visibility. The staffs will work not only with the United Kingdom market but also parts of continental Europe.

The U.S. Meat Export Federation, which is a new cooperator with FAS, is sharply expanding its activities. A sales office recently opened in Tokyo, and a second will be opened shortly in the new London agricultural trade office.

*See p. 172 for the prepared statement of Mr. Hughes.

The Federation will work toward lowering trade barriers in Japan and other markets. In the past year, U.S. exports of animal products exceeded imports of those products.

The total fiscal year 1978 budget for CCC credit has been more than doubled, to $1.7 billion, to support exports.

Functions within the Department of FAS have been reorganized to better coordinate the work of the General Sales Manager with the market development work of FAS. The two agencies have undertaken a system of integrated export market program planning. The objective is to best fit the Sales Manager's CCC credit and Public Law 480 tools and the FAS market development programs into the specific needs of each major current and potential market in export growth plans of up to 5 years each.

The administration asked for and the Congress approved more funds and more flexibility for Public Law 480.

In addition, Secretary Bergland met several times in Washington and in Brussels with European community officials and Ambassador Strauss traveled to Brussels in a successful effort to break the deadlock over agriculture in the Multilateral Trade Negotiations in Geneva.

We are a little more optimistic than we have been in the last few months in regard to these negotiations.

Secretary Bergland traveled to European, Japanese, and Southeast Asian markets-in part to promote U.S. exports and emphasize the reliability of the United States as a supplier. He will be in the Soviet Union and East European countries in May to discuss trade and cooperation.

An easing of Japanese restrictions against imports of high-quality beef and citrus is being negotiated.

All of these actions will help. We must continue, however, to be alert and receptive to additional tools that can help us to export more farm products.

Thank you, Mr. Chairman, for the opportunity to appear. I would be pleased to receive any questions the subcommittee might have. We are hopeful we will continue to expand our export opportunities. I will be very glad to reply to any questions, comments. Senator LUGAR. Do you have any comments about the bills that have been introduced, that the committee is considering today?

You have given a good summary of a number of things the Department is doing. Specifically, we are taking a look at the intermediate credit in the CCC, and related factors. What comments does the Department have about this?

Mr. HUGHES. The OMB has made a decision not to support this legislation.

Senator LUGAR. So your comments

Senator STONE. On any of the bills?

Mr. HUGHES. Well, particularly the ones that deal with intermediate credit.

Senator STONE. OK.

Senator LUGAR. That explains why your testimony is restricted just to a recitation of what the Department has been doing, and