4
P R O C E E D I N G S
- - - - -
Whereupon --
DR. BRUCE L. GARDNER
a witness, called for examination, having been
first duly sworn, was examined and testified as
follows:
EXAMINATION
BY MS. STINSON:
Q. Would you please state your name for the
record.
A. Bruce Gardner.
Q. Where do you work, Mr. Gardner?
A. At the University of Maryland.
Q. What is your position there?
A. I am a professor of agricultural and
resource economics.
Q. And how long have you held that position?
A. Since the summer of 1981.
Q. I have your resume, but rather than attach
that as an actual exhibit to this deposition,
maybe we can identify this by document numbers
5
and we will just have this for posterity. Let me
show you what has been given to me as being your
resume. Is that in fact you and your
background?
A. Yes.
Q. Would you read the document number on the
bottom.
MR. SAXE: Is this the first page?
MS. STINSON: There is a cover sheet.
THE WITNESS: This number here?
BY MS. STINSON:
Q. Yes.
A. DBG0000001.
Q. Et seq.
A. Through 28.
Q. Before I go into some of the publications
and your work, can you tell me generally if you
have a particular area of specialty within your
specialty of agricultural economics?
A. Well, I have done things in almost every
area of agricultural economics, which is a
specialty of economics, but more than anything
6
else I have concentrated on agricultural policies
and the analysis of the policies.
Q. You are aware, I'm sure, that we are here
regarding the so-called Everglades SWIM plan and
the litigation involving that in Florida?
A. Yes.
Q. You have been retained by the U.S. Justice
Department to possibly be a witness in that case;
is that your understanding?
A. Yes.
Q. When were you retained?
A. It was in August last year when I first
talked to Keith. I don't remember the date.
Q. August of 1992?
A. Uh-huh.
Q. Have any of the written works you've done,
and there are a zillion pages of them, but do any
of your publications deal with the sugar
industry?
A. Some of them have addressed sugar policy
in the context really of the whole range of
agricultural policies, though.
7
Q. Can you tell me and you are welcome to
look at this if it would help you, which
publications --
A. Well, I wrote a book. It is called The
Governing of Agriculture, which discussed sugar
among all of the other commodities. It was not
focused on sugar.
Q. But it has some discussion of the sugar
industry?
A. No, it is more in this book I was
reviewing a lot of work that had been done on a
lot of commodities and I constructed some tables
that would show the extent of protection that
different industries had and so sugar would have
a role in those tables.
Q. And when was that published?
A. 1981.
Q. Any other publications?
A. Well, sugar would have been mentioned in a
similar way in several of them. For instance,
under Consequences of Policies in the Seventies,
again, that was a fairly wide ranging discussion
8
of agriculture policy and one of those policies
is sugar.
Q. If you could help me out by citing to
those that would deal with sugar.
A. Well, again, dealing with is an
overstatement. But there would have been a
similar kind of discussion of sugar, among other
commodities on the consequences of foreign
policies of the seventies and this article here
(indicates). That is a chapter in a book which
is a general survey.
Q. That is U.S. Agricultural Policy?
A. Yes.
Q. Its Economic --
A. Uh-huh. Would you like me to go through
the whole list?
Q. Yes, if you would.
A. That's a general review also.
Q. Agricultural Policy?
A. But I think in that one I concentrated
entirely on the grains.
This one similarly may have also a little
9
on sugar.
Q. For the record that is the Why, How and
Consequences.
A. And similarly with this Agricultural
Protection in Industrial Countries, that would
cover sugar among other commodities.
This one may have a little bit on sugar,
too. Farm Commodity Programs as Economic
Transfers.
Q. Okay.
A. And this one also, Causes of Farm
Commodity Programs.
This paper on International Commodity
Grains, which was just a mimeographic report and
was never published, but I believe I did have a
section on the international sugar agreement. It
doesn't bear on U.S. sugar policy --
Q. But it bears on sugar?
A. It bears on sugar, yes.
I'm trying to think of this paper on crop
insurance. I looked at several county programs.
Again, I don't believe sugar was one of them. If
10
sugar was in there, it would have been sugar
producers who covered them under the U.S. crop
insurance programs. I can't remember if I ended
up with sugar in any of those sample counties.
I think I mentioned some sugar issues in
"U.S. Farm Policy Implications for the EEC."
That's all.
Q. Thank you.
MR. SAXE: May I see that for one moment,
please?
MS. STINSON: Sure.
BY MS. STINSON:
Q. Dr. Gardner, have you ever testified as an
expert witness in any judicial administrative
proceeding before?
A. No, I haven't.
Q. I am sure Mr. Saxe has told you about
this, but let me just say if you don't understand
what I'm asking, please feel free to tell me so.
This is not a test. I will attempt to rephrase
the question if you don't understand it.
I believe in your resume I noted that you
11
were at Texas A&M and had edited/coedited a
publication with Dr. Richardson?
A. Yes.
Q. Did you become involved in this proceeding
through your friendship with him?
in this
A. No, no.
Q. Or working with him?
A. No.
Q. What have you been retained to do
proceeding, as you understand it?
A. Well, it is evolving still. I think what
has been happening is, as I understand it, I am
retained as an expert witness to provide input on
several aspects, possibly, but it is not clear
what exactly to me yet except sugar policy comes
up and the trade agreements come up.
Q. Have you reviewed the SWIM plan and the
proposals in there?
A. I have seen some documents having to do
with it. I have not reviewed them in depth.
Q. What is your understanding of the action
that is proposed and contested in the
12
litigation?
A. Again, I have some -- I have been -- I
have heard some discussion of what is happening
and it had to do with phosphates.
Q. Do you understand the actual project that
is proposed in the SWIM plan that is protested by
petitioners?
A. You mean the things that have to be done
to --
Q. Clean up the phosphates?
A. Yes.
Q. Yes. What is your understanding of what
is going to be required?
A. Well, as I recall there are several
aspects to it but one is the management of
groundwater in the area.
It seems that there is an issue about
the -- setting aside certain areas that water can
go into which will contain plants that will use
up the phosphates so that the water that leaves
those areas will have less phosphates in them.
And there is an issue about the financing of the
13
acquisition of these areas.
Q. Have you been asked to look at or
determine the regional economic impact of those
actions that are proposed in the SWIM plan?
A. Well, I have heard the issues discussed,
but I haven't understood that my area of
expertise will be to pass a judgment on them.
Q. Have you reviewed the report contracted
for by the water management district for
evaluating the economic impact of implementing
the SWIM plan done by the Hazen and Sawyer
report? Have you reviewed that?
A. I have not reviewed it in depth. Again I
have heard it discussed, but I have not read
every word in it. I have looked through it.
Q. Have you formed any opinions as to the
methodology or the reliability of the report?
A. I really haven't.
Q. Are you familiar with the FLIPSIM model
for evaluating impact?
A. That is something that I have heard of and
when I was at Texas A&M and James Richardson was
14
working on that model, I had some sense of what
he was doing then. That was 10 years or more.
So I have not seen detail of the model as it
exists today.
Q. It is not a model that you've used?
A. I have not used it, but I have seen the
results of it. Let's say that I have seen the
consequences or what other people have done using
it.
Q. What other studies can you recall or
evaluations/analyses in which FLIPSIM has been
used?
A. I don't have any now but when I was at
Texas A&M when they were developing the model it
was being used to -- let's step back one second
and make sure that we are talking about the same
thing. FLIPSIM, that stands for farm level --
that is the FL and it is a simulation of what
happened to firms over time. That was being used
to look at Texas cotton farms and some work that
was going on when I was at Texas to see how many
of them would survive 15 years with what
15
probability.
Q. Have you seen it used since you have been
away from Texas A&M?
A. No, I haven't. I have seen it referred
to, but I have not really looked at the
consequences of using it.
Q. In the documents produced to me was some
information on GATT and NAFTA. Are you generally
familiar with those agreements?
A. Of course those agreements have evolved as
they have come along and I have been more
familiar with some stages when they were being
negotiated than others, but generally I am
familiar with them.
Q. Have you reviewed those to determine what
possible effect they may have on sugar?
A. I have read the NAFTA summaries and the
write-ups that the Department of Agriculture has
put out on the provisions of the NAFTA and I have
given some consideration as to how they would
affect commodities, not specifically sugar. But
some of the Department of Agriculture materials
16
have done some assessment of NAFTA.
Q. Have you seen analyses of NAFTA done by
sugar interests?
A. I have seen a couple of short pieces that
I believe it was Mr. Polopolus had in some
University of Florida pamphlets.
Q. What you have given me as part of the
document production is a document entitled
Preliminary Analysis of the Effects of North
America Free Trade Agreement on U.S. Agricultural
Commodities which contains a section on effect of
NAFTA on the sugar industry.
A. Yes.
Q. Are there other publications of the U.S.
Department of Agriculture or anyone else, for
that matter, relating to the effect of NAFTA on
sugar that you have reviewed?
A. This is the main one. It may have been
mentioned in some general discussions of NAFTA
that were put out, but I don't believe that those
general discussions get into any commodity
specific elements. That's the main --
17
MR. SAXE: Excuse me, Donna. Dr. Gardner
indicated to me subsequent to his production he
did acquire some general published materials
which are arguably responsive. These came very
late in the week last week and I'm not sure, you
may want to get into that to determine whether
you are going to want copies of these published
materials because they are not listed on the
curriculum vitae nor were they produced in the
previous document production.
MS. STINSON: I appreciate that.
BY MS. STINSON:
Q. Can you tell me without having them what
these additional publications are?
A. Yes. They are called the Sugar Situation,
An Outlook Report. The December 1992 issue was
in there and a couple of previous ones.
And there was a -- I don't know if it is a
transcript. I haven't really looked at it in
detail yet, and it might have been a debate
between someone from the sugar industry and a man
who I worked with at The Department of
18
Agriculture as it relates to sugar.
Q. Who is that?
A. I don't remember who the person from the
sugar industry was.
Q. No, the person that you worked with.
A. Oh, Dan Sumner.
MS. STINSON: Off the record.
(Discussion off the record.)
BY MS. STINSON:
Q. I gather from your discussion earlier that
you have never concentrated in any way on the
sugar industry in the United States in terms of
your previous work?
A. No, I have not concentrated on it except
that I suppose the closest I came to
concentrating on it was because I was at the
Department of Agriculture for a couple of years
when we were developing the Farm Bill in 1990
principally, somewhat in 1989, I went through
educational processes on all of those commodities
one at a time so at that time I did get a sense
of what the administration was recommending and
19
the state of the debate let's say on the Hill on
each of the commodities. And when sugar's time
came up to be discussed, I spent time on sugar.
Q. Please tell me what your understanding is
of the effect NAFTA will have on the sugar
industry in the United States, and the potential
effects.
A. Well, first, I think you have to know a
couple of things. NAFTA has not yet been agreed
to so that -- and normally we would have a full
draft agreement, but we don't have -- I have not
seen all of the details spelled out. What I have
seen are descriptions of the main features that
NAFTA will have. But you have to remember that
one of the things with the new administration is
that there will be some side agreements on NAFTA
so we can't treat it as a completed treaty or
completed agreement yet.
So I have some tentative notions of what
NAFTA would do based on the broad thrust of its
provisions as we know them and of course there
are some particular ones that are in there for
20
sugar.
Q. Okay.
A. And those will have some particular
effects.
Q. Tell me what those are.
A. Again, I don't know that they will all end
up being exactly as they are stated now.
Q. Given what we know now of NAFTA, obviously
it is speculation to some degree because it
hasn't happened yet, but explain to me what the
potential effects are, what may happen given the
current state of NAFTA.
MR. SAXE: Objection to form. I want to
note for the record that it is not quite clear
what we know now about NAFTA. I think Dr.
Gardner indicated he had seen some less than
final terms and descriptions of terms, but I'm
not sure what you mean by what we know now about
NAFTA.
BY MS. STINSON:
Q. Well, in answering my question it would be
helpful if you would tell me what provisions you
21
are referring to in terms of talking about what
effect they may have so we are on the same
wavelength.
A I would say generally the agreement of
course reduces barriers to trade, with particular
to imports, both for Mexicans, for things that we
send them and on our part for things which come
from Mexico and the question arises of what will
the resultant trade flows be.
The general sense that I have is that
there will not be large changes in trade flows
for just about every commodity. I think the main
ones effected would be more like corn and some of
the meats, but even there depending on what is
done in Mexico to their domestic policies.
So my reading overall is that sugar would
not be significantly effected by this agreement
one way or the other based on what I know now.
One thing that makes it difficult now it
is not a matter of just trade agreements, it is
what each country does with its policies which is
not specified in the agreement.
22
Q. Under NAFTA isn't it true that the United
States would reduce tariffs on Mexican sugar
under certain conditions?
A. That will undoubtedly happen that it will
reduce tariffs. Although it is hard to know what
the binding restraint on U.S. sugar imports is.
Q. Can you explain that to me.
A. The tricky thing about NAFTA in general is
that we are talking about bilateral trade between
the U.S. and Mexico. And we want to know say for
any commodity how would the results of the change
in bilateral trade affect one of our domestic
industries, like sugar.
You also have to know what happens to
trade in that same commodity between the United
States and all of the other countries in the
world so in the case of sugar, for example, we
have a quota and if it should happen that Mexico
sent more sugar, which isn't quite clear to me
that it will, but if it were to happen, you would
see some offset in the quota of imports from
other countries and what really is going to make
23
a difference to the U.S. is what is the total
imports into the U.S. as opposed to just Mexico
and so that is a complicating element.
Q. Have you done any study to determine
actually what those may be based on the state of
sugar production in other countries?
MR. SAXE: Objection to form. I think it
may be a little unclear in what sense one does
studies about what future actions might or might
not be.
BY MS. STINSON:
Q. You can answer my question if you
understand it. If you don't understand it, I can
try again.
A. Well, you are saying if I made
projections?
Q. Yes.
A. I have not done that.
Q. Have you gathered information other than
the publications you've mentioned to me and
produced to me regarding Mexico's sugar industry
and the possible future for that as it would
24
affect the U.S. sugar industry?
A. What I have is what you have although
those documents that Keith mentioned I just
received about the sugar situation from USDA do
address Mexico's prospects and other countries,
too. But I don't have any other documents.
Q. If there are, as I understand, some fairly
significant changes in reducing tariffs
between -- on sugar from Mexico and this is not
my area of expertise, so help me understand it --
why is it that you don't think that there will be
much impact? Why are these changes being made if
there will not be an effect?
A. In general, not only for sugar, for other
commodities also, the reason that you don't get a
lot of effect for the NAFTA agreement with
respect to Mexico, protection is already fairly
low. The significant protection, and this is
true in peanuts and cotton, and it is true in the
commodities where we have protection, it is a
generic kind of protection that goes across all
countries and is part of a domestic program that
25
we have. Of course one of the things that will
have to be worked out in NAFTA that I don't know
the details of is how will our domestic policies
change as a result of NAFTA and how will the
Mexicans change theirs particularly with respect
to corn being a big issue.
Q. What domestic policies are you speaking
of?
A. Well, if there were going to be one for us
it would be the sugar program, but as I
understand it we don't have to change our sugar
program because of NAFTA.
Q. You mean that we are not required to by
NAFTA?
A. Right.
Q. Again, pardon me for seeming ignorant,
what is the interrelationship between the
domestic program and NAFTA and how would changing
the domestic sugar program affect the effects
from NAFTA?
A. Well, there is no direct link, but we have
a sugar program that keeps the price in the
26
United States higher than the general world price
of sugar. And the only way that can be done is
through limiting the quantity of imports that
come into the United States.
The way that could conceivably fit into
NAFTA is NAFTA would somehow force us to bring
more sugar into the United States than we would
otherwise have to and so that would be the
potential way. But the reason that it seems to
me unlikely that any consequence will come of
that is, as I understand NAFTA as it is in place
now, our domestic sugar program will stay in
place very much as it is.
Q. Doesn't NAFTA lift the restrictions under
certain circumstances of sugar being imported
from Mexico?
A. It does.
Q. So wouldn't that then affect the ability
to keep the prices higher through the domestic
program?
A. The reason I would say that it is unlikely
is that first of all, we already have sugar
27
imports from other places and what one has to do
to keep a sugar program is work with the total
volume of imports so that even if the worst case
from the sugar industry came to pass, which I
don't think is likely, but even if it did, there
would be some adjustments in the program. It
would affect the operation of the sugar program,
but I would say not the results.
Q. The U.S. would get more sugar from Mexico
and less from other countries, is that what you
are telling me?
A. That's a possibility. Again, I would not
expect it to happen from what I have seen so
far.
Q. Why is that?
A. Because those circumstances that NAFTA has
that could allow that to happen to me don't seem
likely to happen which has to do with the net
production position of Mexico.
Q. That Mexico would become a net exporter of
sugar, is that the circumstance you are referring
to?
28
A. Yes, under the provisions of NAFTA it
isn't just their becoming an exporter, but they
would have to become a net exporter through a set
of conditions that would be very much like they
are having a comparative advantage in sugar.
There are a number of safeguards in the NAFTA
which would prevent them from using their
policies to create a surplus.
Q. Do you mean by that that they would
actually have to grow it, they couldn't import it
from somebody else and then turn around and
export it?
A. Yes, and some countries will subsidize
production of a commodity.
Q. Is that prohibited by NAFTA?
A. I am not sure that it is prohibited in
that language exactly, but it is clear to me from
looking at the discussions of NAFTA that every
attempt is made to prevent the Mexicans from
becoming exporters of sugar as a result of their
policies. It seems to me if there were a case
that emerged as of course Congress and others
29
will be discussing about NAFTA down the road, if
it looked like there were a loophole of some kind
as the debate proceeds on that, then there will
be steps taken to close that loophole, I would
guess.
Again, I don't want to speculate how an
international negotiation would go, but there is
a general sense that the countries are agreeing
to have free trade but with a sense that we don't
want to damage each other's industries
unnecessarily.
Q. You indicated a moment ago that you
believe that the worst case scenario is the
removal of price supports from domestic sugar?
MR. SAXE: Objection. I don't know that
Dr. Gardner characterized that as his worst case
scenario, did he?
BY MS. STINSON:
Q. I think you were talking about the worst
case scenario of the sugar industry?
A. I think I said from the point of view from
the industry.
30
Q. But that worst case scenario is what,
the
removal of price supports, as you understand it?
A. No, I was not thinking about removal of
price supports.
Q. What were you thinking about?
A. If you -- suppose you had a scenario in
which there were possibilities for the Mexicans
to become sugar exporters for two successive
years, allow more sugar in, that's what I meant
by the worst case scenario.
Q. When you were at the Department of
Agriculture working on I believe the Farm Bill
in '79 --
A. No, 1990.
Q. -- 1989-1990, I mean, was there discussion
then when you were learning about sugar of
removing price supports and subsidies for sugar?
A. There were a number of options discussed,
but I don't believe that was ever one of them.
(Interruption at door.)
MR. SAXE: Would you read where we left
off.
31
(The record was read as requested.)
MR. SAXE: Thank you.
BY MS. STINSON:
Q. Was not the continuation of the price
support system, the various components of it, for
the sugar industry highly controversial at the
time the Farm Bill was being developed in
1989-1990?
A. There were a number of controversies. I
don't recall that sugar really was one of them
that was contentious. I don't believe that it
was. There were some discussions, as I recall
about a 16 cent versus 18 cent level. That was
about the range of discussion.
Q. To analyze the effect of NAFTA on the
sugar industry, what additional research or
gathering of information do you feel that you
would need to do to make a projection of some
sort?
A. Well, one could do more of what the
Department of Agriculture has already done in
their studies of the prospects for Mexico and the
32
U.S.
Q. What do you mean by that?
A. Well, what they have done already is get
some indicators of cost of production in the two
countries, consumption trends, acreage trends,
and those are the kinds of things that you would
have to work with. The difficulty here is we are
talking about what will happen seven, eight,
nine, ten years down the road so it is not
something that you can forecast away the way our
crop forecasters do with this year's orange
crop. It is much more conjectural.
Q. Do you have access or have you obtained
the information the Department of Agriculture has
already put together on cost of production and
acreage trends?
A. Only what is in the publications that have
been sent.
Q. Do you plan to try to obtain additional
information?
MR. SAXE: Objection to form, counsel. If
you are inquiring into what the United States
33
strategy will be in developing the case or
testimony, I think that is an improper inquiry.
Could you maybe rephrase the question.
MS. STINSON: I will try.
BY MS. STINSON:
Q. You indicated, I believe, that one could
obtain additional information on the cost of
production, acreage trends, et cetera, to do a
projection or an analysis of the effect of NAFTA
on the sugar industry. Do you propose to do
that?
MR. SAXE: Objection, again. I think that
is the same question. If we read back Dr.
Gardner's answer, I think he indicated that USDA
has already done a significant amount of that
material and Dr. Gardner indicated that he
supposed that kind of analysis was what could be
done if one wanted to proceed further. So I
think that answers your question.
MS. STINSON: Well, no.
BY MS. STINSON:
Q. Have you at this point sought additional
34
information beyond that which is obtainable from
the Department of Agriculture?
A. No, I haven't.
Q. Do you have information on the actual
amounts of sugar being imported to the U.S. from
Mexico and other foreign countries?
A. There is a publication called Foreign
Agricultural Trade of the United States, which
lists all of our imports of most of the main
tariff lines from every country.
Q. Is this like a reference manual used by
folks?
A. It is a monthly -- no, quarterly series.
They put some things out monthly, some things
quarterly and then they have an annual summary by
fiscal year and by calendar year. That's really
the source of detailed import data for the past
that -- but that doesn't get you a long ways
out. That's a document that I haven't asked for
and haven't looked at, but it is in every
library.
Q. Have you reviewed the transcript you
35
indicated you had of the debate or whatever it
was between somebody from the sugar industry and
somebody from the Department of Agriculture?
A. I read over it. I'm not sure that it was
a transcript either. It might have been two
separate pieces of paper that were just put down
side by side. Whether that is a transcript of a
debate or a debate in words, if you will, without
interchange, I'm not sure.
MR. SAXE: Off the record.
(Discussion off the record.)
MR. SAXE: Donna, Dr. Gardner does have
copies here that I have reviewed briefly of late
received publications that might be responsive to
the document request. In lieu of our discussion
earlier about providing you a list of these
documents and then having you select from it, we
would agree to just let you review these
documents now and you can indicate whether you
want any of those produced during the deposition
today and will do that after we conclude the
deposition.
36
MS. STINSON: We can do like we did for
Dr. Boggess and copy the first page.
MR. SAXE: If you decide that you want
copies of these documents, that would be fine.
BY MS. STINSON:
Q. Of documents that you've given me there is
one that just says NAFTA Opposing Views and has a
view, I take it, by someone from the sugar
industry and a view of somebody from agriculture
which gives opinions of what the effect of NAFTA
will be; is that correct?
A. That's my understanding. I just read that
quickly. That is why I wasn't sure if it was a
debate or what it was.
Q. There are two documents from what looks
like Agriculture Outlook Conference, Outlook
'93. One is U.S. sugar production and
processing statistics. Do you know, is that
basically just graphs and tables without any
commentary of what the effect --
A. I don't know.
Q. You don't know.
37
A. No, no text.
Q. Have you reviewed the Outlook '93
publication, U.S. Sweeteners Market Recent
Developments?
A. No, I haven't read it yet.
Q. You indicated that you read briefly
through the opposing views publication. Have you
reviewed it in enough detail to form an opinion
as to basically which side of the commentary you
agree with or do a critique of either side?
A. Well, I couldn't do a detailed critique,
obviously, but from what I have understood from
my prior reading of what is in the NAFTA, it
sounds to me that Mr. Sumner is more on track
than the sugar industry representative.
Q. Also in the documents that were provided
to me is a letter and some information regarding
phosphorus reduction credits to be used as a
possible alternative or supplement to the
proposals in the SWIM plan. Are you familiar
with that proposal?
A. Very vaguely.
38
Q. Have you been asked to analyze the use of
some form of market credits as a method for
reducing phosphorus run off?
A. No, I haven't.
MS. STINSON: Off the record.
(A brief recess was taken.)
MR. SAXE: Donna, these are duplicate
copies of the recently produced set of documents
from last Friday down in Tallahassee.
(Pause in the proceedings.)
BY MS. STINSON:
Q. Dr. Gardner, in reviewing the debate
between the U.S. sugar industry and the
Department of Agriculture it appears that there
is a difference of opinion as to what effect the
elimination of tariffs will have on the extent of
import or export between the two countries; is
that a fair characterization of your reading of
this?
A. Well, it is a little more complicated than
that in that the issue is not just the removal of
tariffs, it is the set of rules that would enter
39
into play under NAFTA.
Q. Okay. Correct me if I'm wrong, but as I
read this briefly, as I understand it the
representative of the Department of Agriculture
believes that the various provisions of NAFTA may
or could result in more sugar being sold to
Mexico rather than the other way around? Is that
your understanding?
A. Well, you have read that more recently
than I have, but I do recall some such
statement.
Q. You do?
A. But I would have to look at it again to be
sure.
Q. Why don't you do that. You indicated that
you believe that the Department of Agriculture
side was more on point and I would like to know
what particulars you believe to be true.
MR. SAXE: Dr. Gardner, why don't you take
a moment to read that through.
MS. STINSON: Sure.
(Pause in the proceedings.)
40
BY MS. STINSON:
Q. Can you answer my question after having
looked through the report?
A. Yes, in a general sense. Of course, if
you read the two sides here, it is not so much
that one is saying A and the other is saying B,
or not A, contradicting what the other one says,
it is that they are focusing on different aspects
of what will happen under NAFTA. I will say that
the USDA person is giving more the general thrust
of what is expected to be achieved with the NAFTA
from both the U.S. and the Mexican point of
view.
For example, he puts fairly heavy emphasis
on the idea that it is going to be good for real
income growth in Mexico and, therefore, you will
see an increased consumption. And the level of
income that Mexico is at, that sort of increase
in the standard of living, usually in fact all of
the cases that we have evidences for, sugar is
one of those goods that responds to income
growth. That is true across the board, and it is
41
one of the things that makes free trade
agreements generally good for the countries which
engage in them.
On the other hand, the sugar industry
representative is basically thinking, as
certainly is his job, what could go wrong from
the point of the sugar industry. And if you
imagine the worst possible set of circumstances
from the point of view of the sugar industry
happening, that's a scenario that that person
lays out.
The reason that I say that USDA is more on
track is that I think that they are not thinking
about the worst possible case for a particular
industry even if it has a very low probability of
occurring, which is what I would say are the
chances of the scenario that the sugar industry
representative is talking about. It could
happen, that Mexico would become a very, very
large net exporter say, in two successive years,
but I would say that that is quite unlikely.
But, I think that is something that --
42
that is an issue that can be looked at more and
there is possibly more evidence which can be
brought to bear on it.
But the second thing, if Mexico did become
a sugar exporter, it does not necessarily cause
any substantial harm to the sugar program because
the sugar program has features in it that adjust
for different countries sending more or less to
the U.S. as we talked about before. The
importation under the sugar regime can be
reallocated from one country to another.
It is not sufficient for this agreement to
create a problem for sugar that Mexico becomes an
exporter, even of course if Mexico hasn't been an
exporter, but even if they did, there is room for
adjustment in terms of the sugar program.
So I guess the reason that I say my
reaction is that USDA is more on the right track
is that in the sugar industry case they are
taking this possibility of what I would say is
fairly limited problems and starting off by
saying NAFTA is a disaster for the sugar
43
industry, something like that is the quotation
that I read at the beginning and it seems to me
that is just a case that you can't make.
Q. What leads you to say that you believe it
could be quite unlikely that Mexico would become
a net exporter of sugar?
A. Just based on the historical record and
again although this is something that I haven't
looked at the latest elements, the supply and
demand internally in the two countries and the
cost of production. But as I understand what I
have seen. The U.S. is quite competitive with
sugar and Mexico and is getting more
competitive.
Q. In terms of cost of production?
A. Yes. In fact Florida is relatively
competitive in the U.S. industry.
So the overview is that it just strikes me
that the industry spokesman which is taking a
view which is natural for him to take, he is
worried for problems in his industry, but he is
overstating the problem.
44
Q. Let me ask you about some other documents
that you have produced. One is entitled Comments
of Ron Luke regarding basically the Hazen and
Sawyer report on which there are some handwritten
notes. Are those your notes?
A. That's my handwriting, all right.
Q. Can you read them?
A. Yes, I can read them.
Q. Let me ask you, from where did you get
this document?
A. I must have gotten this at a meeting in
Keith Saxe's office because that's when I made
these comments, and -- what I wrote on here is
not about the Luke effort. It was on the top of
a pile of papers that I had when I was listening
to a discussion when I made some notes.
Q. Have you reviewed the Luke paper?
A. No, I haven't.
Q. I guess that ends that.
Have you reviewed the article on sugar and
the North American free trade agreement by
Polopolus and Alvarez?
45
A. There are several pieces there. There are
several short ones and I have looked through all
of them briefly and read a few paragraphs which
seemed to me -- I see that I checked one here
that I noted when I read through it.
Q. The check you pointed out to me is next to
a sentence that says, "In a real slipup by the
United States negotiators Mexico will be
permitted an unlimited sugar quota in the U.S.
market if they become net exporter for two
successive years following the sixth year of the
agreement."
Can you tell me what it is about that
sentence which attracted your attention, whether
you agree or disagree?
A. I disagree. I think that was a very
pointed statement of a slipup where there was no
slipup.
Q. The last sentence of that article states,
"While there are various safeguards and slow
down to the full impact of the agreement, it is
certain that Florida agriculture will experience
46
adverse economic situations for sugar among other
commodities." You have the word "sugar" circled
with a little question mark by it. Why is that?
A. Because I was not certain at all that
sugar would have trouble.
Q. Have you reviewed or analyzed -- strike
that.
The last paper in here has to do with
subsidies to the sugar industry, primarily as I
understand it.
Have you been asked to look at the issue
of the amount of subsidies to the sugar industry
in Florida?
MR. SAXE: May I see the article?
(Pause in the proceedings.)
THE WITNESS: I haven't been asked
anything very specific.
BY MS. STINSON:
Q. Have you looked at the issue of subsidies
to the sugar industry in Florida?
A. You remember when we went through the
curriculum vitae, I have looked at sugar
47
subsidies and industries and I have looked at
sugar in that context with all of the other
commodities. I haven't done separate studies of
sugar. I have mostly used what I saw in some
literature that is referred to in those papers.
Not those papers, but ones that are in my
curriculum vitae. I sort of used those results.
But I wouldn't say that I have any sort of
assessment of my own and the extent of protection
of sugar.
Q. In this last article let me ask you about
some handwritten notes. I presume that they are
not and if they are not, please tell me. On a
page summary of estimated annual subsidies you
have a figure of 878 circled with a comment by
it. Can you tell me what the comment is and what
you meant?
A. I don't remember. This was done a long
time ago. I'm pretty sure I was asking how this
$878 fits in the $53 net return above which must
appear somewhere else in the paper. So what I
was asking about to myself and I don't remember
48
if I asked anyone else, but what was the
relationship between this 878 and that 53.
Q. Also you have here a copy of the final
report issued by Hazen and Sawyer which I learned
the other day is actually not the final report,
but it contains what I presume are your
handwritten comments on the front. Are those
comments related to that document or was this the
case of a handy sheet of paper?
A. Yes, these are generic comments. I see
that I have the names here of two people at the
Economic Research Service. These are some
instructions, just on the business end of our
cooperation, what I would have to do. It has
nothing to do with this paper.
Q. Given that those were taken in a meeting
with counsel I will not pursue that. I presume
that those are attorney/client privilege if they
are not related to his review of that document.
A. No, they are not.
Q. Have you been in meetings besides meetings
with counsel, with other economists working on
49
this issue with you, or with the water management
district or have you attended any funding council
meetings in Florida?
A. No, the only meetings have been with
Keith.
Q. Have you discussed the --
MR. SAXE: Could you reread the previous
question, please.
(The record was read as requested.)
MR. SAXE: Are you asking whether Dr.
Gardner has been in meetings that included
counsel and other economists?
MS. STINSON: No, apart from meetings
where counsel was present.
MR. SAXE: Thank you.
BY MS. STINSON:
Q. Have you spoken to other economists who
were working on this matter for the U.S. Justice
Department, such as professors at Texas A&M?
A. Yes, I have spoken to them.
Q. What has been the substance of those
discussions?
50
A. I don't remember that there has been any
real substance to them. It has been -- I talked
to Ron Lacewell who is one of these other people
last week and the gist of it was he was telling
me about the boxes that he had packed up to send
to Keith of various materials. I don't think
that we talked anything of substance about the
case.
Q. Was there anyone else that you have spoken
to?
A. Again, I have spoken to Lonnie Jones, but
we did not go over any of the pros and cons of
what is in any of these papers.
Q. Did you already know Lacewell and Jones
prior to this proceeding?
A. Yes.
Q. Have you reviewed analyses of the economic
impact or analysis of the Hazen and Sawyer
analysis of economic impact done by Dr. Populous
or Richardson?
A. If it is not in those Florida state items,
I haven't seen it. I don't believe that they
51
mention any of this. That was more generic
material about sugar in those University of
Florida pamphlets. That's the only thing with
Populous or Richardson.
Q. In discussing NAFTA earlier you indicated
some hesitancy because it was still preliminary
at this time. Do you know whether there is a
time frame for final approval?
A. I don't know the details. For one thing,
NAFTA was to some extent a political issue in the
campaign and Governor Clinton at the time said
that he would be looking at parts of the NAFTA
agreement and perhaps negotiating side
agreements.
I don't believe that there has been any
timetable announced for doing that, but I think
that the intention is still there to do that.
Q. There is no time frame within NAFTA itself
within which the U.S. must act to ratify the
agreement?
A. Not that I know of. But there are time
frames involved. I just don't know the details
52
of them. But there was a signing at some point,
in December, I believe, that triggers some time
path of events.
Q. But you don't know the details of it?
A. I don't know the details of it and I don't
know that they are actually irrevocable, that you
couldn't have amendments to change them.
MS. STINSON: I don't have any other
questions.
MR. SAXE: May I take a look at that top
document, please?
(Pause in the proceedings.)
MR. SAXE: I have no questions at this
time.
(Whereupon, at 2:51 p.m., the deposition
16 was concluded.)
- - - - -
53
DISTRICT OF COLUMBIA, to wit:
I, Doreen M. Dotzler, before whom the
foregoing deposition was taken, do hereby certify
that the within-named witness personally appeared
before me at the time and place herein set out,
and after having been duly sworn by me, according
to law, was examined by counsel.
I further certify that the examination
was recorded stenographically by me and this
transcript is a true record of the proceedings.
I further certify that I am not of
counsel to any party, nor an employee of counsel,
nor related to any party, nor in any way
interested in the outcome of this action.
As witness my hand and notarial seal
this ________ day of __________________, 1993.
___________________________
DOREEN M. DOTZLER
Notary Public
MY COMMISSION EXPIRES: 4 /14/97
54
I N D E X
DEPOSITION OF DR. BRUCE L. GARDNER
FEBRUARY 1, 1993
| EXAMINATION BY: |
PAGE |
| MS. STINSON |
4 |
|
|
|
| EXHIBITS: |
PAGE MARKED |
| NONE |
|
55
CERTIFICATE OF DEPONENT
I hereby certify that I have read and
examined the foregoing transcript, and the same
is a true and accurate record of the testimony
given by me.
Any additions or corrections that I feel
are necessary, I will attach on a separate sheet
of paper to the original transcript.
___________________________
DR. BRUCE L. GARDNER
I hereby certify that the individual
representing himself/herself to be the
above-named individual, appeared before me this
_____________ day of ______________, 1993, and
executed the above certificate in my presence.
---------------------------------------
NOTARY PUBLIC IN AND FOR
---------------------------------------
MY COMMISSION EXPIRES:
--------------------------------------
56
WITNESS: DR. BRUCE L. GARDNER
DATE: February 1, 1993
CASE: Sugar Cane vs. South Florida Water
Please note any errors and the corrections
thereof on this errata sheet. The rules require
a reason for any change or correction. It may be
general, such as "To correct stenographic error,"
or "To clarify the record," or "To conform with
the facts."
PAGE LINE CORRECTION
REASON FOR CHANGE
|
