In a letter delivered today, Grassley asked that several key initiatives be announced when Clinton visits Iowa on Friday. Grassley wrote, "Farmers need your immediate support. Commodity and livestock prices are plummeting. Inaction has led to lost domestic and foreign market opportunities worth hundreds of millions of dollars to America's farmers."
Grassley's recommended the following action by the White House to expand markets for corn and pork, in particular.
1.Double the ethanol market for farmers by protecting ethanol's current 450 million gallon market in Chicago and Milwaukee and opening the door for ethanol to displace MTBE in California and other areas of the country. Grassley urged the president to order the Environmental Protection Agency to take action to guarantee ethanol's role in Phase 2 of the Reformulated Gasoline Program.
To address the California market, Grassley said EPA must amend Section 80.41 of its Reformulated Gasoline Program regulations to allow oxygen averaging on an annual basis within non-attainment areas. The Clean Air Act requires 2.0 wt. percent oxygen, but it does not require this goal to be met on a per gallon basis. EPA instead developed an arbitrary 1.5 percent minimum per gallon. If this arbitrary per gallon standard is replaced with a 2.0 percent yearly average, then ethanol use could be increased during the winter months when there are no RVP concerns, and subsequently reduced during summer months.
For all other RFG areas, Grassley said the president should direct EPA to account for the full air quality benefits provided by ethanol, included greater carbon monoxide reduction. Grassley said this will encourage expanded, year-round use of ethanol.
Grassley also said the president would need to make a public statement that he would veto any effort to eliminate or allow waivers of the two percent oxygen requirement under the Clean Air Act's RFG program. "A strong signal needs to be sent to the petroleum industry as well as allies in Congress that RFG oxygen standards are here to stay," he said. "Otherwise, the California petroleum interests will continue to pollute water supplies with MTBE instead of switching over immediately to ethanol."
2.Endorse legislation introduced by Sen. Barbara Boxer. Grassley is co-sponsoring the bill to begin an immediate phase-out of MTBE. California Gov. Gray Davis allows oil companies three years before they have to stop using MTBE, despite the negative environmental impact of MTBE. Grassley told the president that his support is needed to pass this legislation.
3.Regain the market access and protocol commitments China offered in April in the context of its applications for accession to the World Trade Organization. Grassley said that under the terms of the market access deal that was negotiated by U.S. Ambassador Charlene Barshefsky, China's tariffs on pork and other meat would have been reduced to 12 percent. Currently, the combination of 30-40 percent tariffs on U.S. pork and arbitrary sanitary standards keep most Iowa pork out of China.
Grassley said the two years of work that went into reaching the favorable terms was all but lost when President Clinton decided not to accept China's market access commitments this spring. "It will take a sustained commitment and a big effort on the part of the president to resurrect the agreement, but it must be done to help American producers gain access to the Chinese market. It would be unconscionable for the United States to let China join the WTO under any lesser terms," Grassley said.
A 1997 study by Iowa State University concluded that the annual benefit of liberalizing China's pork market would improve pork producer income by $300 million each year. Twenty-four percent of U.S. pork is produced in Iowa, so access to the market would result in a $72 million annual increase for Iowa producers.
4.Submit legislation to Congress to renew fast-track trade negotiating authority. Grassley said that a credible effort by the administration and the president to win passage is the only way it can be achieved. "A critical element in the formula to increase farm is the president bringing our trading partners to the bargaining table to work for an end to unfair barriers that block our farmers from selling in foreign markets," Grassley said. "To be effective and ultimately success, the president must be able to negotiate under fast-track authority." The U.S. lost its unchallenged leadership in the world trade community when fast-track lapsed in 1994.