[Senate Hearing 108-301]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-301

  PROPOSED UNITED STATES-CHILE AND UNITED STATES-SINGAPORE FREE TRADE 
                               AGREEMENTS

=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 14, 2003

                               __________

                          Serial No. J-108-23

                               __________

         Printed for the use of the Committee on the Judiciary



91-367              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001

                       COMMITTEE ON THE JUDICIARY

                     ORRIN G. HATCH, Utah, Chairman
CHARLES E. GRASSLEY, Iowa            PATRICK J. LEAHY, Vermont
ARLEN SPECTER, Pennsylvania          EDWARD M. KENNEDY, Massachusetts
JON KYL, Arizona                     JOSEPH R. BIDEN, Jr., Delaware
MIKE DeWINE, Ohio                    HERBERT KOHL, Wisconsin
JEFF SESSIONS, Alabama               DIANNE FEINSTEIN, California
LINDSEY O. GRAHAM, South Carolina    RUSSELL D. FEINGOLD, Wisconsin
LARRY E. CRAIG, Idaho                CHARLES E. SCHUMER, New York
SAXBY CHAMBLISS, Georgia             RICHARD J. DURBIN, Illinois
JOHN CORNYN, Texas                   JOHN EDWARDS, North Carolina
             Bruce Artim, Chief Counsel and Staff Director
      Bruce A. Cohen, Democratic Chief Counsel and Staff Director


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Cornyn, Hon. John, a U.S. Senator from the State of Texas........     6
Feinstein, Hon. Dianne, a U.S. Senator from the State of 
  California, letter.............................................     4
Graham, Hon. Lindsey O., a U.S. Senator from the State of South 
  Carolina.......................................................    16
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......     1
    prepared statement...........................................    28
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, 
  prepared statement.............................................    38

                               WITNESSES

Ives, Ralph F., III, Assistant U.S. Trade Representative for 
  Southeast Asia, the Pacific and APEC, and Lead Negotiator for 
  the Singapore Free Trade Agreement.............................     8
Vargo, Regina K., Assistant U.S. Trade Representative for the 
  Americas, and Lead Negotiator for the Chile Free Trade 
  Agreement......................................................     6

                       SUBMISSIONS FOR THE RECORD

Business Week, July 21, 2003, article............................    23
Congressional Research Service, Ruth Ellen Wasem, Washington, 
  D.C., report...................................................    25
Ives, Ralph F., III, Assistant U.S. Trade Representative for 
  Southeast Asia, the Pacific and APEC, and Lead Negotiator for 
  the Singapore Free Trade Agreement, prepared statement.........    32
Kennedy, Hon. Edward M., Hon. Dianne Feinstein, Hon. Maria 
  Cantwell, November 5, 2002, joint letter.......................    37
New York Times, May 30, 2003, article............................    40
Temporary Entry Provisions of the Implementing Legislation for 
  the Chile and Singapore Free Trade Agreements (FTAs)...........    43
Vargo, Regina K., Assistant U.S. Trade Representative for the 
  Americas, and Lead Negotiator for the Chile Free Trade 
  Agreement, prepared statement..................................    45
Zoellick, Robert B., United States Trade Representative, 
  Executive Office of the President, Washington, D.C., letter....    52

 
  PROPOSED UNITED STATES-CHILE AND UNITED STATES-SINGAPORE FREE TRADE 
                               AGREEMENTS

                              ----------                              


                         MONDAY, JULY 14, 2003

                              United States Senate,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 4:06 p.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Orrin G. 
Hatch, Chairman of the Committee, presiding.
    Present: Senators Hatch, Graham, Cornyn, and Feinstein.

 OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 
                       THE STATE OF UTAH

    Chairman Hatch. Well, we are happy to convene this 
Committee hearing. We are here today for the Committee's first 
hearing of what I hope will be many on international trade 
agreements and implementing language related to those areas in 
the agreements that concern matters under the jurisdiction of 
the Judiciary Committee.
    Specifically, today we will examine some of the provisions 
in the proposed bilateral Free Trade Agreements between the 
United States and Chile and the United States and Singapore.
    I would like to commend the administration in reaching 
these agreements with Chile and Singapore. Both Chile and 
Singapore are countries that represent economic stability and 
growth in their respective regions. The trade agreements will 
provide new market access for American products, including 
agricultural, manufactured products, telecommunications 
equipment, and other high-technology products.
    Both of these agreements contain chapters on matters of 
longstanding interest to this Committee. These include 
immigration, intellectual property, antitrust, e-commerce, and 
telecommunications. In all of these areas except immigration, 
no changes in any U.S. laws under this Committee's jurisdiction 
require amendment.
    In many ways, the substance of the negotiations on matters 
of Judiciary Committee concern with respect to these two 
important treaties has focused on ways to encourage our trading 
partners to harmonize their law with current U.S. standards, 
and we should be proud of this dynamic.
    Today, I expect the Committee will focus its attention on 
the provisions in the agreements that relate to legislative 
language being drafted to implement the immigration aspects of 
the treaties. Key issues include provisions that relate to the 
temporary entry of investors, visitors for business, and 
temporary professional workers.
    As I understand it, over the last several months on six 
occasions the Office of the United States Trade Representative 
has briefed the Committee on immigration issues related to 
these agreements. I want to acknowledge and thank the USTR for 
consulting with the Committee. We need to continue this spirit 
of cooperation as we move forward on these and other trade 
agreements.
    In the last week, USTR staff and Committee staff have 
worked closely together as the immigration language has been 
circulated and revised. Last Wednesday, Committee staff and a 
representative from USTR, Ted Posner, met to identify and 
attempt to resolve issues related to immigration. Many of us 
know and respect Ted from his days as one of Senator Baucus' 
trade counsels on the Finance Committee. I should also mention 
the good work of Kent Shigetomi on the immigration portions of 
these agreements.
    In any event, since the Wednesday meeting that walked 
through the proposed language, a series of informal staff-level 
consultations have occurred. In fact, it was my hope that the 
Committee would be able to hold what is known as a mock markup 
last Thursday. But as anyone who follows the Judiciary 
Committee knows, we spent another 12 hours on asbestos and we 
were unable to get to the trade agreements.
    My colleagues on the Committee will recall that Senator 
Grassley, who, in addition to serving on this Committee, chairs 
the Finance Committee, urged us to take up these trade matters 
in the hope that the full Senate can adopt these treaties 
before the August recess. I wholeheartedly agree with Chairman 
Grassley that the full Senate should act on the Chile and 
Singapore Free Trade Agreements before we adjourn in August, if 
at all possible.
    Under the Trade Promotion Act of 2002, implementing 
legislation for trade agreements are fast-tracked, which means 
that once the administration transmits the language, we can 
vote for or against it, but cannot amend it.
    The TPA legislation also calls for close consultation 
between the administration and Congress. This consultation 
takes place in a number of forms. It includes the statutorily 
created Congressional Oversight Group on Trade, on which 
Senator Leahy, Senator Cornyn and I serve to represent the 
interests of our Committee.
    The informal staff briefings between USTR and other 
agencies and Congressional staff are another type of 
constructive interaction. While not statutorily required, the 
so-called mock markup is another prudent mode of inter-branch 
of Government communication. This amounts to an occasion for 
the relevant committees to give the administration their 
informal advice in the very formal setting of an executive 
business meeting on any implementing language that the 
administration is developing for subsequent submission to the 
Hill under the fast-track procedures.
    Unfortunately, we were unable to reach the mock mark item 
on last Thursday's agenda. We have had the benefit of several 
more Judiciary Committee staff and USTR staff interactions over 
the last several days.
    I would suggest that another function of today's hearing 
will be for members of this Committee to convey any unresolved 
concerns they would have raised on Thursday directly to the 
senior USTR officials responsible for negotiating these two 
agreements.
    I have heard, and to some extent share the concerns that 
some members of the Committee, including Senator Feinstein, 
have about the truncated schedule we are operating under and 
the somewhat fluid nature of the language over the last week.
    I do appreciate U.S. Trade Representative Robert Zoellick's 
attempt to gain our views and to keep this Committee apprised 
of the status of progress on these agreements and the 
development of the implementing language that the 
administration plans to introduce shortly.
    I want to emphasize that members of this Committee will 
expect satisfactory answers and resolution to the questions and 
concerns that may be raised during today's hearing. If there 
are reasons why our input cannot be accommodated, we expect to 
know why.
    We live in a global economy where free trade is vital to 
our Nation. An integral part of this global economy is the 
flexibility to move existing personnel from one country to 
another in order to provide much needed support of the 
companies that conduct business abroad. Further, if we want our 
trading partners to allow American citizens to enter their 
borders to conduct business, we must also reciprocate by 
granting their citizens the same type of privileges.
    While I support the principle of free trade and understand 
the benefits of agreements such as these to the U.S. economy 
and job market, I will never agree to legislation that does not 
reflect sound immigration policy, just as I would never agree 
to any compromise of national security for the sake of selling 
more products overseas. I would never sacrifice the well-being 
of hard-working Americans and their families by weakening our 
immigration laws.
    Prior to today's hearing, members of this Committee raised 
several concerns about a variety of immigration issues. These 
include the potential for indefinite stay by the foreign 
workers and the risk that foreign workers may be brought into 
the United States to interfere with labor disputes. Another 
concern that I have heard is whether this agreement and 
implementing language could be viewed as circumventing the 
existing sensitive numerical limits on H1-B professional 
workers' visas.
    I understand that many of our colleagues on the House 
Judiciary Committee have made it clear that trade agreements 
may not be the best place to change immigration law and policy.
    I want to make sure that our two representatives from USTR 
today, Ms. Vargo and Mr. Ives, will go back and give Ambassador 
Zoellick a message: Presenting the Judiciary Committee with 
implementing language related to particular trade agreements 
that raise general issues of immigration policy may not be the 
best path to travel in future trade agreements.
    Having said that, I wish to emphasize that many on this 
Committee have worked together and with USTR to resolve their 
concerns with and improve the immigration implementing 
legislation.
    I am hopeful that when the administration transmits its 
formal legislative package, members of the Judiciary Committee 
will be satisfied with the outcome with our consultations with 
USTR.
    Despite the fact that we were unable to hold a mock markup 
last Thursday, I hope that today's real hearing can serve that 
same type of formal mechanism for the Judiciary Committee to 
give the administration our informal comments before the fast-
track procedures are instituted.
    With that, I will turn to the distinguished Senator from 
California for any remarks she would care to make.

  STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR FROM THE 
                      STATE OF CALIFORNIA

    Senator Feinstein. Thank you very much, Mr. Chairman. I 
would like to ask you to submit to the record the statement of 
the ranking member, Senator Leahy, on this issue.
    Chairman Hatch. Without objection.
    Senator Feinstein. I would like to submit some documents 
for the record--the Congressional Research Service document 
entitled ``Immigration Issues in Free Trade Agreements''; 
secondly, temporary entry provisions of the implementing 
legislation for the Chile and Singapore Free Trade Agreements; 
thirdly, ``Special Visas Used for Tech Workers Is Challenged''; 
and, finally, an excellent commentary piece, ``Is a Stealth 
Immigration Policy Smart?''
    Chairman Hatch. Without objection.
    Senator Feinstein. I mention that last one because I think 
that is what has happened with respect to this bill, and I very 
much regret I cannot support this as it stands right now.
    I believe that the USTR has negotiated a whole new 
immigration program with no authority of this Congress to do 
so. Specifically, the legislation before us would create new 
categories of non-immigrants for free trade professionals, 
permit the extension or renewal of these visas each year, 
require the entry of spouses and children accompanied or 
following to join those professionals; require that the United 
States submit disputes about whether it should grant certain 
individuals entry to an international tribunal. I would never 
find that acceptable.
    The definition of specialty occupation that is contained in 
this legislation is vague and unclear. It will likely be very 
broadly interpreted. Such interpretation could make it 
difficult to ensure that temporary workers are entering under 
the new visa category specifically to fill a skills shortage.
    As drafted, visas for the temporary foreign workers could 
be indefinitely renewable. This, in effect, could transform 
what on paper is a temporary visa entry program into a 
permanent visa program. This is unacceptable.
    Under this legislation, employers could renew their 
employees' visas each and every year with no limits, even while 
they are also bringing in new entrants to fill up annual 
numerical limits for new visas. This effectively would 
hamstring Congress' ability to limit such entries when it is in 
the national interest to do so.
    The legislative language would weaken the labor 
certification attestation process which is now required from 
employers under the H1-B program. In fact, it would prohibit 
any approval procedures or labor certifications or labor market 
tests the Labor Department might ordinarily impose before 
approving the entry of foreign workers.
    Today, the labor certification process is one of the only 
safeguards in the H1-B system for ensuring that employers do 
not abuse temporary workers or undermine the U.S. labor market. 
This weakening is unacceptable.
    Unlike the H1-B visa, the legislation would not require 
that employers seeking temporary workers attest that they are 
actively trying to recruit U.S. workers for the positions 
filled by the foreign workers. Thus, if employers do not like 
the more stringent requirements of the H1-B program, they can 
simply recruit foreign nationals from Chile and Singapore to 
circumvent the H1-B visa program's requirements.
    The provisions would not provide the Department of Labor 
authority to investigate instances of U.S. worker displacement 
and other labor violations pertaining to the entry of foreign 
workers. Again, this is unacceptable.
    In the last two fiscal years, the Department of Labor 
investigated 166 businesses with H1-B violations. As a result 
of those investigations, H1-B employers were required to pay 
more than $5 million in back pay awards to 678 H1-B workers. 
This suggests to me that there is substantial fraud being 
practiced in this program.
    Finally, I am deeply concerned about a provision in the 
trade agreement that would require the United States to submit 
to a panel comprised of international arbiters certain cases 
when the United States denies a temporary work visa to an 
individual. This is unacceptable.
    Now, Mr. Chairman, the United States Constitution gives the 
Congress plenary power over immigration. The negotiation of 
such visa provisions demands Congressional oversight and input, 
and public scrutiny, especially during a time when security 
issues are of such paramount concern to us all.
    I do not believe that this Committee, indeed this Congress, 
should relinquish our plenary power over immigration to any 
administration or to any panel of international arbiters. I do 
not believe that an immigration program belongs in a free trade 
bill. So either these immigration provisions come out or I am 
certainly not going to support this bill and I will do 
everything I can to prevent it from being passed in the Senate.
    Thank you very much.
    Chairman Hatch. Well, thank you, Senator.
    Senator Cornyn is going to conduct this hearing, and so he 
would like to make a statement and I am going to turn the Chair 
over to you, Senator Cornyn.
    Maybe I could just recognize the ambassadors who are here. 
I would like to acknowledge the presence of the Chilean 
Ambassador, Andres Bianchi, in the back there--Ambassador, we 
are so happy to have you here and I apologize for the other day 
not being able to make our appointment together; please forgive 
me--and Singaporean Ambassador Chen Heng Chee. We welcome them 
both. We are pleased to have both of you here with us this 
afternoon, and it is my hope and the hope of many that the 
ratification of these treaties will strengthen our relationship 
between our governments, and more importantly our citizens. In 
any event, we are honored with your presence and we appreciate 
having both of you here.
    Senator Cornyn.

STATEMENT OF HON. JOHN CORNYN, A U.S. SENATOR FROM THE STATE OF 
                             TEXAS

    Senator Cornyn [presiding.] Thank you, Mr. Chairman. There 
are obviously some substantive concerns that have been raised 
about the temporary entry provisions and I think we have 
already heard about those, the temporary nature of the visits, 
funding for new visa programs, and the protection of American 
workers, time limitations for these temporary visas and 
numerical limitations.
    The draft of the proposed language distributed throughout 
the Committee represents the latest negotiations between the 
members of both parties on this Committee and the U.S. Trade 
Representative.
    With regard to the substance of the immigration provisions, 
there have been and continue to be concerns, but I believe 
there is largely agreement. Indeed, we want to promote trade, 
but we want to protect American workers from those who abuse 
our immigration laws.
    I want to applaud the U.S. Trade Representative's Office 
for its effort in reaching these agreements with Chile and 
Singapore. The U.S.-Chile Free Trade Agreement will provide 
numerous opportunities for United States workers and 
manufacturers. U.S. companies currently operate at a 
disadvantage because competitors such as Canada, Mexico, and 
the European Union have free trade agreements with Chile. Our 
lack of an agreement costs American exporters $800 million per 
year in sales, affecting approximately 10,000 United States 
jobs.
    The agreement with Chile will eliminate tariffs immediately 
on more than 85 percent of consumer and industrial goods, and 
most remaining tariffs will be phased out within the next 4 
years. The result will be a $4.2 billion increase in the U.S. 
GDP and a $700 million increase in Chile's GDP.
    The U.S.-Singapore Free Trade Agreement will have a similar 
effect on trade and economic liberalization in Southeast Asia. 
Despite its small size, relatively speaking, the economy of 
Singapore is robust and highly competitive. Approximately 1,300 
American firms have a significant presence in Singapore, 
including 330 regional headquarters. The establishment of a 
free trade agreement with Singapore will further increase 
opportunities for American workers through improved market 
access.
    We look forward to hearing the testimony of the two 
representatives here today from the USTR, Ms. Vargo and Mr. 
Ives.
    Have you agreed on who should go first?
    Mr. Ives. Ladies first.
    Ms. Vargo. I guess we just did.
    Senator Cornyn. I guess you won the flip of the coin, so we 
will be pleased to hear from you.

  STATEMENT OF REGINA K. VARGO, ASSISTANT UNITED STATES TRADE 
 REPRESENTATIVE FOR THE AMERICAS, AND LEAD NEGOTIATOR FOR THE 
                   CHILE FREE TRADE AGREEMENT

    Ms. Vargo. Thank you very much. With your permission, I 
would like to make a written submission for the record.
    Senator Cornyn. Without objection.
    Ms. Vargo. Mr. Chairman, Senators Cornyn and Feinstein, and 
members of the Committee, I am honored to appear before you 
today to discuss the benefits that a U.S.-Chile free trade 
agreement will offer American businesses, workers, farmers, and 
consumers. At the outset, I want to thank each of you and your 
staffs for the suggestions and the support you provided during 
the negotiation of this agreement.
    The agreement, the result of a long-term bipartisan effort 
and an open, transparent negotiating process, makes sound 
economic sense for the United States and Chile, and represents 
a win-win, state-of-the-art agreement for a modern economy.
    This agreement makes sound economic sense for the United 
States. Over the past 15 to 20 years, Chile has established a 
thriving democracy and an open economy built on trade. It is 
one of the world's fastest growing economies and its sound 
economic policies are reflected in its investment-grade capital 
market ratings, unique in South America.
    Last year, our bilateral trade stood at $6.4 billion, with 
$2.6 billion in U.S. exports, but we can do better. Chile 
already has FTAs with Mexico, Canada, MERCOSUR, and, since 
February, the European Union. This has disadvantaged U.S. 
exporters.
    The National Association of Manufacturers, for example, 
estimates the lack of an FTA with Chile as costing the United 
States at least $1 billion in lost exports annually. An FTA 
with Chile will ensure that we enjoy market access, treatment, 
prices, and protection at least as good as our competitors. 
Consumers will benefit from lower prices and more choices. The 
agreement will also help spur progress in the Free Trade Area 
of the Americas, and will send a positive message particularly 
in the Western Hemisphere, that we will work in partnership 
with those who are committed to free markets.
    The U.S.-Chile FTA is truly a bipartisan effort. 
Negotiations were launched under the Clinton administration in 
December 2000. After 14 rounds, negotiations were concluded 
under the Bush administration in December 2002. The agreement 
was signed on June 6 in Miami, in an historic ceremony with 
Ambassador Zoellick and his Chilean counterpart, Minister 
Soledad Alvear.
    Let me just add that throughout the negotiations, we 
conducted an extensive consultative process of public hearings 
and briefings, and frequent consultations with Congressional 
staff, private sector advisers, and civil society groups to 
develop positions and provide regular updates on progress in 
the negotiating rounds.
    The result of this process yielded an exemplary agreement. 
Four features distinguish the U.S.-Chile FTA from the other 150 
or so FTAs that other countries and the EU have concluded.
    First, it is comprehensive. All goods will be duty- and 
quota-free within 12 years, with 87 percent of bilateral trade 
receiving immediate duty-free access. Second, it promotes 
transparency. Transparency provisions, both in the transparency 
chapter and throughout the agreement, promote open, impartial 
procedures and underscore Chile's commitment to a rules-based 
global trading system.
    Regulatory procedures require advance notice, comment 
periods, and publication of all regulations, similar to our 
Administrative Procedures Act. There is an explicit provision 
that requires bribery in government procurement to be treated 
as a criminal offense. Dispute settlement provisions, both 
state-to-state and investor-state, provide for open hearings, 
public release of submissions, and the opportunity for 
interested third parties to submit views and objectives that 
the United States has long sought in the WTO.
    Third, it is modern. Strengthened protection for 
intellectual property rights in investment, the broad scope of 
services obligations, and new provisions on telecommunications, 
electronic commerce, express delivery, and professional 
services recognize the digital age and the emergence of new 
industries.
    Finally, in keeping with TPA mandates, it uses an 
innovative approach that supports and promotes respect for the 
environment and workers' rights, with enforceable obligations 
in the agreement subject to effective dispute settlement 
designed to encourage compliance.
    The conclusion of a Chile FTA has provided momentum to 
other hemispheric and global trade liberalization efforts by 
breaking new ground on new issues and demonstrating what a 21st 
century trade agreement should be.
    Thank you, and I would be happy to answer any questions you 
may have.
    [The prepared statement of Ms. Vargo appears as a 
submission for the record.]
    Senator Cornyn. Thank you, Ms. Vargo.
    Mr. Ives.

STATEMENT OF RALPH F. IVES, III, ASSISTANT UNITED STATES TRADE 
 REPRESENTATIVE FOR SOUTHEAST ASIA, THE PACIFIC AND APEC, AND 
     LEAD NEGOTIATOR FOR THE SINGAPORE FREE TRADE AGREEMENT

    Mr. Ives. With your permission, I would like my full 
statement to be in the record.
    Senator Cornyn. Without objection.
    Mr. Ives. Thank you, Mr. Chairman, Senator Cornyn, Senator 
Feinstein, and other members of this Committee, for inviting me 
to testify today on the U.S.-Singapore Free Trade Agreement, 
and for this Committee's guidance during the negotiating 
process. I welcome this opportunity to review the FTA and 
present the administration's request for favorable 
consideration of legislation needed to implement the FTA.
    The U.S.-Singapore FTA reflects a bipartisan effort to 
conclude a trade agreement with a substantial and important 
trading partner. The FTA was launched under the Clinton 
administration in November 2000 and signed by President Bush 
and Singaporean Prime Minister Goh on May 6, 2003.
    The U.S.-Singapore FTA will enhance further an already 
strong and thriving commercial relationship. Singapore was our 
12th largest trading partner last year, with two-way trade 
exceeding $40 billion and U.S. investment in Singapore of over 
$27 billion.
    The comprehensive U.S.-Singapore FTA is the first FTA 
President Bush has signed with any country and our first with 
any Asian nation. It can serve as a foundation for other 
possible FTAs in Southeast Asia, as President Bush envisaged 
under his Enterprise for ASEAN Initiative.
    Let me summarize some of the highlights of the U.S.-
Singapore FTA, which is comprehensive in scope covering the 
full range of areas in an FTA.
    Under this FTA, Singapore will provide substantial access 
for all types of services, treat U.S. service suppliers as well 
as it treats its own, ensure we receive the best treatment as 
any other foreign supplier receives, and allow our business 
persons temporary entry to engage in business activity. The FTA 
uses an approach that ensures the broadest possible trade 
liberalization.
    This FTA also provides important protection for U.S. 
investors by ensuring a secure and predictable legal framework. 
The FTA's provision on intellectual property rights provides 
strong protection for new and emerging technologies, and 
reflects standards of protection similar to those in U.S. law.
    Enhanced transparency is another important feature of this 
FTA in the form of an entire chapter devoted to transparency 
and specific transparency provisions in many other chapters.
    The chapter on electronic commerce breaks new ground in its 
treatment of digital products, for example, establishing for 
the first time explicit guarantees that the principle of non-
discrimination applies to products delivered electronically. 
Similarly, the telecommunications chapter covers the full range 
of telecommunications issues, while recognizing the U.S. and 
Singapore's respective right to regulate these sectors.
    The FTA contains a number of provisions to ensure that the 
United States and Singapore are the actual beneficiaries of the 
agreement. For example, the FTA contains obligations on how 
customs procedures are to be conducted to help combat illegal 
transshipments.
    Finally, the dispute settlement provisions of the FTA 
encourage resolution of disputes in a cooperative manner and 
provide an effective mechanism should such an approach not 
prove to be successful. This FTA commands wide support in our 
private sector. The administration looks forward to working 
with this Committee and the full Congress in enacting the 
legislation necessary to implement this agreement.
    Thank you, Mr. Chairman. I would be pleased to respond to 
questions.
    [The prepared statement of Mr. Ives appears as a submission 
for the record.]
    Senator Cornyn. Thank you very much, Mr. Ives.
    We have heard in both your opening remarks that trade is 
positive for the American economy, and I agree. However, I hope 
you have gotten the message that you are on shaky ground when 
the executive branch makes agreements on immigration matters in 
these agreements.
    Will you explain for the Committee why it was important to 
include immigration provisions in each of these agreements?
    As you can tell, there is some concern about infringement 
of Congress' plenary powers on immigration matters. Do you 
believe you have consulted with the Congress adequately in this 
process prior to entering into the agreements with Chile and 
Singapore, and can you tell us to what extent you have worked 
with members of this Committee, as you undoubtedly have, in 
preparing the implementing language for these agreements?
    Ms. Vargo, would you respond first, please?
    Ms. Vargo. Thank you. I would like to begin by noting that 
what we are talking about here is the temporary entry of 
business persons and not permanent immigration or employment, 
and that both FTAs specifically exclude citizenship, permanent 
residence, or employment on a permanent basis.
    Temporary entry relates to the ability of business persons 
to enter for a temporary period in order to engage in 
activities related to business, and American businesses need to 
be able to send their employees to other countries to conduct 
meetings, negotiate contracts, make sales, establish offices, 
provide services, or administer investments. The ability of 
U.S. business persons to enter foreign countries quickly and 
dependably is directed related to our competitiveness overseas.
    Now, with regard to this specific agreement, we provided in 
our notice of intent to enter into negotiations with Singapore 
and Chile, which we provided to the Congress in October of 
2001, I believe, a specific interest in negotiating in this 
subject area.
    In particular, we said that we would seek appropriate 
provisions to ensure--and this was both in Chile and in 
Singapore--that we would facilitate the temporary entry of U.S. 
business persons into their territories, while ensuring that 
any commitments by the United States are limited to temporary 
entry provisions and do not require any changes to U.S. laws 
and regulations relating to permanent immigration and permanent 
employment rights.
    Now, over the course of the negotiation we held regular 
communications with Congress as we tabled each new provision in 
the agreement. But I would particularly note that during the 
period between about October and December of 2002, as we were 
nearing conclusion, we held about 20 different consultations 
with the Congress on this topic of temporary entry.
    During those consultations, three particular issues were 
brought to our attention as being of keen concern. One of those 
was that we would require a labor attestation. And, in fact, we 
did provide in the agreement that that can be done, and 
indicated in the side letter that it would be modeled off of 
the current H1-B labor condition application.
    The second important point we heard was that there was a 
desire for a numerical limit, and so we negotiated a limit in 
both the Chile and the Singapore agreements that were several 
multiples of their current use of H1-B, while we managed to 
avoid having either country place a limit on the U.S. use of 
temporary entry into their markets.
    And then, thirdly, there was a concern about a fee, that 
the H1-B program provided for a $1,000 fee. It goes largely 
into worker retraining, job retraining, and scholarship 
programs which we had not contemplated up to that point under 
the agreement. And so we made sure to change the language in 
the agreement to the broader standard, which was to not unduly 
impair or delay trade in goods or services, or the conduct of 
investment activities under this agreement.
    So we thought that with those three particular areas that 
we had, in fact, met the major points of concern that had been 
brought to our attention. Obviously, in the last week or two we 
have been engaged in much more extensive discussions with the 
Judiciary Committees, and under those discussions we identified 
more than a half dozen different areas where we think we have 
been able to step up and meet virtually every issue that has 
been brought to our attention.
    If you would like, Senator, I can elaborate on what those 
are right now.
    Senator Cornyn. Why don't we save those perhaps for follow-
up questions?
    Ms. Vargo. Fine. So I think at this point that, yes, we 
have heard very much the concern that has been stated by this 
Committee that immigration policy is the prerogative of the 
Congress. And I think that through the clarifications in the 
statement of administrative action and the provisions that we 
will be putting forward in the implementing legislation, we 
will have narrowed the scope of the activity that we are 
talking about here so that it really relates to that which is 
part of our international services negotiations, or what is 
called Load 4, providing services through people located in the 
other person's territory.
    Thank you.
    Senator Cornyn. Mr. Ives, do you have anything you would 
like to add with regard to the question of engaging in 
negotiations which would appear to get involved in the 
Congress' business on legislating on immigration matters, what 
you have done in terms of your consultation and discussion with 
the Congress?
    Mr. Ives. Thank you, Senator. I think Ms. Vargo answered 
the question quite thoroughly. The only additional points I 
would like to make are the fact that the text of at least the 
Singapore FTA, and I believe the Chile FTA, was available to 
Congress in December of last year and we published the 
Singapore FTA on the Internet in March and the Chile FTA in 
April. So they have been widely available not only just to 
members of Congress but the public for quite some time.
    Thank you.
    Senator Cornyn. Mr. Ives, let me ask you, then, it appears 
that the temporary entry provisions are reasonable. Can you 
tell us whether Singapore or Chile are currently extending the 
similar degree of courtesy and convenience to our professional 
workers when they enter their country?
    Let me then ask you to also tell us what are the 
consequences if we choose not to reciprocate in terms of the 
convenience and courtesy that has been negotiated to this point 
in these agreements.
    Mr. Ives. Well, I can answer with respect to Singapore. 
Singapore currently does extend the courtesy of allowing our 
professionals and business visitors to enter Singapore and 
conduct their business. So we do have that privilege currently 
with Singapore.
    I wouldn't want to suggest that Singapore would act 
otherwise should we not pass this, but the agreement would 
provide us greater security that Singapore would continue to 
offer this privilege for us.
    Senator Cornyn. Ms. Vargo, do you have anything else to add 
in that regard?
    Ms. Vargo. Yes, thank you. Besides the nature of enjoying 
the reciprocal obligations on the part of Chile--and I will 
note again that they have no numerical caps on their 
professionals--professional services from the very beginning 
was one of the major objectives of Chile in our U.S.-Chile FTA.
    They regarded very much their ability to come along and 
meet us on issues of concern to us, like telecommunications or 
financial services or e-commerce, as having a direct bearing on 
our ability to be able to address with them new opportunities 
for them in the professional services area. So it was a key 
area.
    Senator Cornyn. Thank you very much.
    Senator Feinstein.
    Senator Feinstein. Thanks very much. I would like to just 
clear something up, if I may.
    On November 5 of last year, Senator Kennedy, Senator 
Cantwell and I wrote a letter to Mr. Zoellick and we pointed 
out in that letter that we believed these proposals may have 
far-reaching consequences that would permanently alter U.S. 
immigration policy. We named a number of other countries with 
whom we believed the administration was seeking to develop 
similar agreements.
    Then we said, ``We urge you to more effectively communicate 
with Members of Congress and other stakeholders, including 
worker representatives.'' These proposals have been made 
available only recently. Although representatives from your 
office for Committee staff on Friday, November 1, the 
information that was provided was limited and lacking in 
specificity. My staff reports to me that there were indeed 
briefings, but either the wrong briefer was present or couldn't 
answer the question, or they were, in general, unsatisfactory.
    On March 19, we received a response to our letter from Mr. 
Zoellick which I would like to place in the record, but it 
makes some comments about these consultations and then it 
mentions three specific concerns that came up. First, staff 
wanted to be able to require a labor attestation similar to the 
labor condition application required under the H1-B program; 
second, et cetera, and third.
    However, the final bill, Annex 14.3, number 3, says this: 
``Neither party may, as a condition for temporary entry under 
paragraph (1), require prior approval procedures petitions, 
labor certification tests, or other procedures of similar 
effects''--this is what is before us, this is the bill--``or, 
(b), may impose or maintain any numerical restriction relating 
to temporary entry under paragraph (1).''
    What we have here is a template that will, if carried out--
and I believe the administration intends to carry it out with 
other nations--totally undermine the Congress of the United 
States with respect to immigration policy. It is a way of 
getting around it, clear and simple.
    The negotiating objectives that Congress laid out for the 
USTR in the Trade Act of 2002 do not include even one word on 
temporary entry. There is no specific authority in TPA to 
negotiate new visa categories or impose new requirements on our 
temporary entry system. Yet, that is exactly what USTR has done 
in these two agreements.
    So my question is under what authority did the USTR include 
immigration law provisions in the trade agreements? I have sat 
on the Immigration Subcommittee for 10 years. No one ever 
picked up the phone and called me, nor was my staff asked for 
any input.
    I come and represent the State in the Union that is most 
affected by all of this and no one has given me any 
opportunity, other than we wrote this letter and still there 
was no opportunity.
    So my question is under what authority did USTR include 
these immigration law provisions in these agreements?
    Ms. Vargo. Thank you. While it is true that the TPA 
negotiating objectives do not specifically address temporary 
entry, there are a number of aspects of the TPA objectives that 
are relevant to temporary entry of professionals with respect 
to the opening of foreign country markets for U.S. services and 
investment.
    The TPA Act calls for reduction or elimination of, quote, 
``barriers of international trade in services, including 
regulatory and other barriers that deny national treatment.''
    Senator Feinstein. How does that affect a temporary worker 
program which becomes a permanent program?
    Ms. Vargo. Well, I would be happy to address separately why 
it is not a permanent worker program. It is a temporary--
    Senator Feinstein. No. I would really like to know what 
your authority is, your legal authority, to negotiate an 
immigration program in a trade agreement.
    Ms. Vargo. Well, as I began my remarks, we do not believe 
that this is a negotiation of immigration policy, since it does 
not relate to citizenship, permanent residence, or permanent 
employment.
    There are two aspects to the TPA objectives--equal access 
for small business and reducing barriers to trade in services--
that we feel are relevant, that provisions of temporary entry 
are relevant to the ability of U.S. service providers to 
conduct business through services that they provide and 
professionals that are listed overseas.
    I do understand the concern that you have raised about the 
idea that through the renewal program that that might suggest 
that there would be a possibility of continuing to roll over 
the application to stay here for temporary employment.
    I think it is worth noting in that regard two things. One, 
there is now a provision in the implementing legislation that 
says that any time the annual renewal enters into its sixth 
year, it will count against the broader numerical limit that is 
under the H1-B program.
    The second thing that we have done is we have also applied 
a higher threshold to these workers. They will have to indicate 
that they are here in the United States, that their stay is 
temporary, that they are not seeking permanent employment here, 
and that, in fact, they have a permanent residence overseas. 
That is a higher threshold than is required on a routine basis 
off of the H1-B program.
    Senator Feinstein. I would counter that by saying these 
agreements do govern the entry of foreign nationals, and that 
is a power that has been reserved for the Congress.
    I would like to mention a GAO report which was issued on 
immigration benefit fraud, and the report detailed ongoing 
vulnerabilities of the H1-B visa program and reported that 
there was widespread fraud within the L1 visa programs.
    The former Immigration and Naturalization Service's 
California Service Center found through a series of 
investigations and analyses widespread L1 visa fraud by foreign 
companies, particularly in the Los Angeles area, and identified 
this fraud as a growing problem. In one study, an official in 
the Operations Branch stated that follow-up analysis of 1,500 
L1 visa petitions found only 1 petition that was not 
fraudulent.
    I would like to ask this question: What was the rationale 
to submit any denial of a worker's permit to an international 
tribunal? What was the rationale for that?
    Ms. Vargo. If I could address the first concern you raised 
about the investigative authority, because clearly this is an 
important issue, it was not included directly in the free trade 
agreement because that investigative authority was set to 
sunset and we did not want to be placing obligations on our 
trading partners that were more onerous than those countries 
might bear who did not have free trade agreements with us.
    There will be a clarification in the statement of 
administrative action that if Congress reauthorizes any of the 
expiring H1-B program provisions, it may apply them to the H1-
B(1) visas as long as they are consistent with U.S. obligations 
under the agreement, and this investigative authority certainly 
would be consistent.
    With regard to your second question, Senator, since these 
are provisions relating to the temporary entry of business 
persons, which we see as relating to the way international 
services are negotiated--it is part of our broad GATS 
structure--these obligations are subject to dispute settlement 
under the agreement, which could mean an independent panel 
would rule on them. But I want to make it quite clear that any 
independent--
    Senator Feinstein. Independent international panel.
    Ms. Vargo. No. It would be a panel that would be a roster 
of people selected by the United States and Chile. So it is not 
the same thing as going to any international panel. It would be 
a bi-national panel, people that each of us had selected.
    Senator Feinstein. So in other words, the sovereignty of 
the United States and the elected representatives of the United 
States would be subject to an international panel?
    Ms. Vargo. They could rule on the issue, but they could not 
require us to implement their ruling. That would be our own 
choice, so we do not lose our sovereignty in that area. If we 
chose not to implement, they would be entitled to take steps 
that would rebalance the obligations in the agreement, but they 
could not force us in any way to implement the ruling.
    Mr. Ives. Senator, may I expand on the dispute settlement 
issue?
    Senator Feinstein. Yes.
    Mr. Ives. One of the concerns that I heard you raise is 
that individual cases could be brought to a dispute settlement 
panel. The FTA makes clear that it is not individual cases, but 
it has to be a pattern of practices that are not in compliance, 
and also that the business person has exhausted the available 
administrative remedies regarding the particular issue. So it 
is not individual cases. There has to be a pattern before any 
panel would consider this.
    Senator Feinstein. Then I don't know why the panel is even 
there if it is not meaningful. I don't know what game is being 
played by putting a panel in that makes a decision that the 
United States doesn't have to abide by in a trade bill. It 
doesn't seem to make much sense to me.
    I am curious about another thing. Why isn't the H1-B 
program sufficient? Why can't people come in under an H1-B 
program as opposed to the L program?
    Mr. Ives. Well, in the case of Singapore I think it is 
worthwhile to point out that currently, as we understand it, 
approximately 660 Singaporeans currently use the H1-B program. 
So it is not a large number from Singapore. The purpose of the 
agreement is to provide a certain degree of security for our 
trading partners, just as we hope to receive a certain degree 
of security from them by putting it in a trade agreement.
    Senator Feinstein. Well, how would that provide security?
    Mr. Ives. Well, in the sense that because the provision is 
subject to dispute under the agreement, if there is a pattern 
or practice, then, as Regina Vargo indicated, there would have 
to be a rebalancing if we did not have a pattern or practice of 
providing professional Singaporeans entry into the United 
States.
    Senator Feinstein. It wouldn't be because the company 
doesn't have to even look for an American worker before they 
hire a foreign worker first? It couldn't be because this 
entitles the individuals to bring their families in, and it 
couldn't be that the way it is set up it can easily become a 
permanent immigration program?
    Mr. Ives. Well, again, we did not see it as that when we 
negotiated the agreement.
    Senator Feinstein. Mr. Chairman, the bottom line is I think 
the immigration section should be removed from the bill and 
that this should just be a trade agreement. I suspect that when 
you actually read the agreement, there is going to be 
substantial objection on our side because the Business Week 
commentary clearly establishes that this is some form of 
prototype for future trade programs which also incorporate 
immigration programs.
    Perhaps we erred in not really airing a lot of this when 
the North American Free Trade Agreement came through. But now 
this is a small program, it is true, but if you read this, 
``The administration hopes to use the new visa idea as a 
template for continuing trade talks with Australia, Morocco, 
and countries in Central America. At the same time, developing 
nations, led by India and China, are clamoring to make the new 
visa provisions available to all 146 nations in the World Trade 
Organization. The result could be a vast influx of foreign 
professionals from many low-wage nations competing with 
American citizens for high-paying jobs.''
    My State has a 7-percent unemployment rate. Very shortly, 
people are going to exhaust unemployment compensation in large 
numbers, over a million of them. And yet we will be absorbing 
tens of thousands of L visas and H1-B visas. It doesn't make 
sense.
    Thank you, Mr. Chairman.
    Senator Cornyn. Senator Graham, do you have questions you 
would like to ask at this time?

 STATEMENT OF HON. LINDSEY O. GRAHAM, A U.S. SENATOR FROM THE 
                    STATE OF SOUTH CAROLINA

    Senator Graham. I know this is not really on point in terms 
of the country we are talking about, but I was coming in today 
and I represent what is left of the textile industry in the 
South. A good part of it is in South Carolina.
    I know we are here talking about immigration, but generally 
speaking two out of three textile jobs will be lost to overseas 
competition in some form, and that very much disturbs me 
because those are jobs that provide health benefits and a 
decent place to work and a decent wage to many people in South 
Carolina and throughout the South traditionally.
    One thing that struck me coming over today was the infusion 
of engineers that are coming our way from India. Apparently, 
India in any particular year produces as many computer 
engineers as the world combined and it is having an effect on 
our market in the sense that companies are outsourcing 
dramatically computer services that were originally based in 
this country to India.
    When you combine that outsourcing with the ability in trade 
agreements for companies to bring in highly skilled workers, I 
just wonder where this takes us. You know, 10 years down the 
road when you have labor forces being such that you can take a 
very high-skilled or medium-skilled job and perform it 
elsewhere outside this country because there are no 
environmental laws to worry about, there is no minimum wage, 
there is certainly not nearly as complex tax treatment, where 
do you see this going in terms of, as she has mentioned, the 
immigration aspect of trade?
    What impact will that have on our economy in terms of 
people coming from Singapore and Chile to compete with 
Americans or to outsource? What ability do we have in Congress 
to look into this? What have you done in terms of fashioning 
these agreements to look at the consequences to a more liberal 
policy of allowing people to flow back and forth in terms of 
job markets?
    We will start with Singapore.
    Mr. Ives. Senator, in terms of Singapore, as I indicated, 
the number of Singaporeans using this provision is likely to be 
relatively small. Currently, as I said, only 660 Singaporeans 
used the H1-B program. In response to Congressional concerns, 
we put a total cap on Singaporeans using the professionals 
category of 5,400. So the impact of Singaporeans coming in 
should be quite modest.
    At the same time, the United States has investments of 
over--
    Senator Graham. But we agree the reason we are putting in 
these caps is what?
    Mr. Ives. In response to Congressional concerns.
    Senator Graham. Do you share those concerns?
    Mr. Ives. After listening to this Committee, and we also 
had the opportunity to listen to members of the House 
Committee, we share those concerns.
    Senator Graham. Based on your knowledge of just immigration 
and trade, in general, do you see this concern being just as 
real in a situation with India or China or other large nations?
    Mr. Ives. Well, I can really only speak regarding 
Singapore, and given the relative size, I would assume the 
concerns would be greater with larger countries.
    Senator Graham. What about Chile?
    Ms. Vargo. Well, first, I think I would say that there is 
nothing in the FTA that directs itself to outsourcing. But with 
regard to aliens coming into the United States, certainly one 
of the important provisions is that they must be paid the 
prevailing wage.
    We kept the four basic core elements of the H1-B that there 
be no strike or lockout, that they have safe working 
conditions, that they get the prevailing wage, and I am trying 
to think for a moment what the fourth one is.
    Senator Graham. Would that apply to professionals?
    Ms. Vargo. Pardon me?
    Senator Graham. Would that apply to professionals?
    Ms. Vargo. That specifically applies to professionals.
    The second point I would make is, again, the numbers for 
Chile here are small, 1,400. And in our consultations with 
Congress, hearing of the concerns that you have in this area, 
we have indicated that those limits for Chile and Singapore 
will now count under the total H1-B cap, and that after 5 years 
renewals under those temporary entry applications will count 
against the total cap.
    Senator Graham. What kind of worker are we talking about 
coming in, generally speaking, from Chile? What type?
    Ms. Vargo. An engineer, an accountant, a lawyer, computer 
programmer.
    Senator Graham. The same in Singapore?
    Mr. Ives. Yes.
    Ms. Vargo. The basic definition is still the same as the 
H1-B, a bachelor's degree--
    Senator Graham. Is there a shortage of lawyers in America?
    Senator Cornyn. I wasn't worried until I heard about that.
    Ms. Vargo. Well, if you wanted to interpret the provisions 
of this agreement and you wanted to now how it would rest under 
Chilean law, you might want a Chilean lawyer to come up here 
for a little while to advise you.
    Senator Graham. That is true. That is a good point, but 
primarily that is what you are talking about, expertise related 
to trade?
    Ms. Vargo. Yes.
    Senator Graham. But it is not limited to that, is it?
    Ms. Vargo. Well, I don't want to say expertise related to 
trade. It is trade in services. I mean, when you say trade, I 
heard just trade in goods. Trade in services, which is very big 
for the United States; two-thirds of our economy is services, 
80 percent of our employment is services.
    Senator Graham. What would be the average difference in pay 
between an engineering graduate in Chile and the United States?
    Ms. Vargo. I don't know the answer to that question, but if 
he came up to the United States, he would have to be paid the 
prevailing U.S. wage or higher under this temporary entry 
procedure.
    Senator Graham. That is true of every category?
    Ms. Vargo. Yes.
    Senator Graham. Thank you.
    Ms. Vargo. True of every professional category. I don't 
know as much about the traders, investors, business visitors, 
but some of those categories are just different. Visitors can't 
even earn an income here.
    Senator Cornyn. Ms. Vargo, in attempting to distinguish the 
temporary entry provisions under these agreements, you 
attempted to distinguish them from traditional matters that 
immigration laws deal with--legal permanent residency, 
citizenship.
    Remind us, what is the term of the temporary entry that 
would be provided for under these agreements.
    Ms. Vargo. It is a 1-year term. It is renewable each year. 
As I mentioned, we have added a higher threshold now in that 
renewal to have to establish that it is temporary, that they 
are not seeking permanent employment. I think this is what is 
called the presumption of immigrant intent; that the work is 
temporary, that 1 day they will leave. They have a permanent 
residence abroad.
    And then as I mentioned, after 5 years now, a renewal will 
count against the cap the same as the initial application in 
each year, which is a point that Senator Feinstein made as a 
concern.
    Senator Cornyn. So it is an annual period renewable for a 
period up to 5 years?
    Ms. Vargo. No, it has no limit as to how long it can be, 
but in the sixth year it will begin to count against the cap.
    Senator Cornyn. I believe Senator Feinstein was asking 
about consultations with the Committee, and I just would like 
for you to confirm for the record that consultations with the 
Committee staff--and that would be on a bipartisan basis--
occurred on November 1, 2002, November 25, 2002, December 12, 
2002, and January 24, 2003.
    There was a conference call. I assume that was in the 
nature of a briefing or interaction--and if you have more 
information, I will ask you to provide confirmation that it 
occurred on April 28, 2003. And then there was a briefing on 
July 9, 2003, with staff.
    Can you confirm those consultations and what process was 
involved in consulting with the Congress, and specifically this 
Committee and its staff?
    Mr. Ives. Senator, I am not sure of these exact dates, but 
we will go back and confirm that these were the dates. We know 
we consulted extensively with this Committee, as we did on the 
House side, but we can confirm these exact dates as soon as we 
get back to USTR.
    Senator Cornyn. Thank you. If you would do that, I would 
appreciate it very much.
    Ms. Vargo. It is my understanding, Senator, that those 
dates are correct.
    Senator Cornyn. One of the concerns for various members of 
this Committee, obviously, is the protection of American 
workers and their families. In the agreement language for both 
of these countries, it appears there is room to provide 
adequate labor protection for the American workers in your 
implementing language.
    Can you explain to what extent you intend to provide labor 
protection in the implementing language, Ms. Vargo?
    Ms. Vargo. Well, when we say labor protections, I would 
imagine you are talking about the kind of attestation 
requirements that are contained in the current labor condition 
application under the H1-B.
    Senator Cornyn. Could you explain--
    Ms. Vargo. What that is?
    Senator Cornyn. --what that is, please?
    Ms. Vargo. Yes. First of all, a U.S. company is required to 
make this labor attestation. That company would have to certify 
that it is going to pay the temporary entrant the prevailing 
U.S. wage or higher, that there is not currently a strike or a 
lockout at the workplace, that the workplace is a safe 
workplace that meets U.S. workplace requirements. I presume 
that is OSHA and other things. Lastly, they also have to notify 
the other workers in the workplace of their intent to hire a 
foreign worker.
    Senator Cornyn. I understand, after hearing Senator 
Feinstein explain her concerns, why she is concerned about 
these agreements perhaps providing a template for further 
agreements which would appear to encroach on Congress' plenary 
authority to legislate in immigration matters. I can tell that 
it will be a concern not only of Senator Feinstein, but other 
members of the Committee as well.
    Can you speak to that concern about to what extent the 
agreements that you have negotiated here for these two 
countries, which in and of themselves involve rather limited 
numbers of temporary entrants into the country--in the case of 
Singapore, 5,400, I believe the figure was, and in the case it 
was 1,400. Obviously, if this template is going to be extended 
to other countries, those numbers could increase significantly.
    Could you address that, please?
    Mr. Ives. I can only authoritatively speak regarding the 
Singapore FTA, but I can assure you, Senator, in working with 
this Committee for the past several months on the temporary 
entry provisions, USTR has heard very clearly and understands 
the strong concerns of this Committee and other Members of 
Congress regarding the provisions of the temporary entry 
provisions in this FTA and regarding the concerns about 
including that in future FTAs. Those concerns are very 
important to us and we will examine those concerns in terms of 
how we proceed for future FTAs.
    Senator Cornyn. Well, I think what threatens American 
workers and a concern I would have specifically is not the 
arrival of temporary professional workers, but exploitation by 
some employers of foreign workers by offering them wages below 
the prevailing wage rate.
    I think that legitimate American businesses have no 
incentive to hire a foreign worker over an identically 
qualified American. In fact, what our free market system 
thrives on is the competition on a level playing field and I 
don't see how this would be undermined.
    I do still have the concern, I must say, that Senator 
Feinstein raised, and we will look forward to continued 
discussion both here and perhaps on the floor on that subject. 
But in the end, I think even with the ease of the application 
process provided in this agreement, I would imagine that it is 
administratively much easier for an American employer to hire 
an identically qualified American worker than it would be to 
hire someone from abroad.
    So I don't know to what extent it is a concern, and I am 
glad to hear that you have provided for protection against 
exploitation at sub-standard wages of these temporary workers.
    Senator Feinstein, if you have other questions, we will 
turn to you.
    Senator Feinstein. Well, I do, and I have a number I would 
like to send in writing, but let me ask a question on the caps.
    USTR originally sought to create the new Singapore and 
Chile visa categories without any numerical caps, until Members 
of Congress raised strenuous objections. Now, both agreements 
include caps on the number of professionals, the 1,400 for 
Chile and 1,500 for Singapore, that are separate from and in 
addition to the global H1-B cap.
    The USTR seems to want to reject part of the amendment they 
agreed to from the House Judiciary Committee on this issue and 
would like to allow workers to still come in under the 
Singapore and Chile caps even if the global H1-B cap has been 
filled. This would upset the balance reached in determining the 
appropriate caps for H1-B workers.
    Why do you believe your office was justified in 
establishing new visa programs that allow employers to 
circumvent the H1-B cap established by Congress?
    Mr. Ives. Well, Senator, first of all, when we initially 
negotiated the agreement, we recognized we were, in the case 
of, I think, both Singapore and Chile, dealing with countries 
that had highly qualified professionals and there would 
probably not be a large use of this program. I indicated the 
number of Singaporeans currently using this program.
    When Congress expressed a concern about this, we did 
establish caps that are in the agreements themselves, and that 
was an attempt to be responsive to Congressional concerns. In 
addition, in recent consultations with Congress we agreed that 
those caps would be part of the H1-B program. So, again, we are 
trying to be responsive to the concerns of Congress.
    Finally, an additional attempt to be responsive is, as Ms. 
Vargo indicated, after 5 years those Singaporean and Chilean 
H1-B visas would be part of the overall H1-B global limit. So 
we have attempted to address Congressional concerns regarding 
this issue.
    Senator Feinstein. Okay, thank you. I want to ask you this. 
You keep going to the point that this is a temporary work 
program, and yet as I understand it, it can be extended, 
renewed, every year, for infinity. Additionally, workers can 
bring their families. Therefore, to me, it is a permanent 
program.
    The indefinite renewability of 1-year visas increases the 
power of employers to intimidate guest workers and resist their 
demands for better wages or benefits. Under the H1-B program, 
by contrast, workers are granted a 3-year visa that can be 
renewed only once, for a total of 6 years.
    So my own view of reading this thing is that you have 
decided a way of getting around the H1-B program, and you have 
done these L visas and they form a permanent foreign worker 
program. That is really of deep concern to me. Now, tell me why 
I shouldn't believe that if you can renew them every year for 
any number of years.
    Mr. Ives. Well, again, Senator, if the number of 
Singaporean and Chilean professionals comes in under the 
overall H1-B cap, then the total number of H1-B visas is 
capped.
    Senator Feinstein. But that is a product of the House, 
right? The original intent of USTR was to establish this.
    Mr. Ives. Well, again, we didn't know the concerns of the 
Congress until fairly recently in terms of that particular 
aspect and we addressed them as soon as we understood the 
concerns.
    Senator Feinstein. There is a Labor Advisory Board. Did you 
consult with the Labor Advisory Board in developing this 
agreement?
    Mr. Ives. I believe we consulted with all the committees in 
developing this agreement.
    Senator Feinstein. Is the answer you did consult with them?
    Mr. Ives. Yes. We consulted with all the--there are 31, I 
believe, advisory committees. We consulted with all 31 
committees.
    Senator Feinstein. Is that the same thing as the briefings 
you gave our staff?
    Mr. Ives. I am not sure.
    Senator Feinstein. The thing that bothers me about this--
and I will be very candid--in my history, I have always had a 
relationship with USTR where either the head or the second hear 
would pick up the phone and call me and say there is something 
you should know in an agreement. I really appreciated that and 
I guess I forgot how much I appreciated it until this 
administration.
    I don't think consultation is having a staff briefing. 
Consultation is talking with the member. The staff doesn't 
vote; the member votes. The member makes the decision; at least 
I make my own decisions. So because you had my staff to a 
briefing doesn't mean that you have talked with me about it, 
and I am really surprised on something that sets as big a 
precedent as this agreement does. Now, perhaps you have talked 
with other members, but I certainly wasn't one of them.
    Mr. Chairman, rather than take your time, I have a number 
of questions I would like to submit in writing and hopefully 
can get a response to them before this matter comes before the 
Committee for markup.
    Senator Cornyn. Certainly, and I know the witnesses will 
respond promptly to those written questions by Senator 
Feinstein or any other member of the Committee who may have had 
a conflict and is not here or any of those of us who are 
present.
    Senator Graham, do you have anything?
    Senator Graham. Just one last question, basically, trying 
to find out the forces that pushed this. When it came time to 
talk about this trade agreement, what were the forces that were 
pushing the liberalization or the ability to get workers from 
Chile and Singapore in professional categories to come to the 
United States? What are those forces? Why do we need this? Why 
is this essential to the trade agreement?
    Ms. Vargo. I think our service providers, in particular, 
are concerned that they would have easy access or sufficient 
access to the Chilean market to be able to conduct their 
business. In the course of the negotiations that we had here, 
Chile did some things, such as liberalize. They had a 
particular provision that required that 85 percent of any 
business start-up had to be nationals, which they modified in 
the course of the agreement, a few things that our businessmen 
felt made it easier for them to do business in Chile.
    As I mentioned, from Chile's position, they are a very 
small country and one of their key areas of interest was 
professional services. They felt that this particular area 
would have a lot to do with whether or not they would be able 
to engage in this area to the full extent possible, especially 
given the distance that Chile is from the U.S.
    Senator Graham. So are we responding to Chile or are we 
responding to American companies?
    Ms. Vargo. No. I think at the first order, we are 
responding to the concerns raised by U.S. companies about being 
able to get into these other markets. But I wanted to make the 
additional point that in this particular negotiation, which is 
not necessarily true of all negotiations, this was a matter of 
considerable interest to Chile as well. And our ability to 
address that, I think, also increased our ability to get Chile 
to seriously entertain obligations in areas like e-commerce and 
telecommunications and financial services and other areas that 
they saw were basically of interest to the U.S.
    Senator Feinstein. Would you yield for a moment?
    Senator Graham. Absolutely.
    Senator Feinstein. I just met with the Chilean ambassador, 
who is in this room now, and that is not what he told me.
    Senator Graham. Well, I didn't mean to create a problem, 
but I was curious. I will let you all work that out.
    Singapore?
    Mr. Ives. Well, in terms of Singapore, I think it was first 
and foremost a question of U.S. service providers indicating 
that the ability to go in and out of Singapore, while currently 
available, they would like that assurance in the agreement. So 
in the first instance, we were addressing the concerns and 
requests of U.S. businessmen.
    Senator Graham. To expand the professional category of 
immigrants?
    Mr. Ives. I am not sure they were that specific. They just 
thought the professional category should be more flexible than 
it is in the NAFTA, which has very specific categories of 
professionals. This is a little bit more flexible, but still 
requires a high degree of professional expertise.
    Senator Graham. Has Singapore suggested that this is 
important to them that we expand the number of professional 
workers that can come here?
    Mr. Ives. I think Singapore was satisfied with the 
conditions as they were negotiated. It was not a huge issue 
with Singapore, but it was important for the overall package.
    Senator Graham. Thank you.
    Senator Cornyn. Senator Feinstein, do you have anything 
further?
    Senator Feinstein. No, Mr. Chairman.
    Senator Cornyn. Well, thank you very much for appearing 
here today to answer the questions we have. I think the 
concerns are obvious and will be explored further.
    With that, this hearing of the Senate Judiciary is now 
adjourned.
    [Whereupon, at 5:27 p.m., the Committee was adjourned.]
    [Submissions for the record follow.]

    [GRAPHIC] [TIFF OMITTED] T1367.001
    
    [GRAPHIC] [TIFF OMITTED] T1367.002
    
    [GRAPHIC] [TIFF OMITTED] T1367.003
    
    [GRAPHIC] [TIFF OMITTED] T1367.004
    
    [GRAPHIC] [TIFF OMITTED] T1367.005
    
    [GRAPHIC] [TIFF OMITTED] T1367.006
    
    [GRAPHIC] [TIFF OMITTED] T1367.007
    
    [GRAPHIC] [TIFF OMITTED] T1367.008
    
    [GRAPHIC] [TIFF OMITTED] T1367.009
    
    [GRAPHIC] [TIFF OMITTED] T1367.010
    
    [GRAPHIC] [TIFF OMITTED] T1367.011
    
    [GRAPHIC] [TIFF OMITTED] T1367.012
    
    [GRAPHIC] [TIFF OMITTED] T1367.013
    
    [GRAPHIC] [TIFF OMITTED] T1367.014
    
    [GRAPHIC] [TIFF OMITTED] T1367.015
    
    [GRAPHIC] [TIFF OMITTED] T1367.016
    
    [GRAPHIC] [TIFF OMITTED] T1367.017
    
    [GRAPHIC] [TIFF OMITTED] T1367.018
    
    [GRAPHIC] [TIFF OMITTED] T1367.019
    
    [GRAPHIC] [TIFF OMITTED] T1367.020
    
    [GRAPHIC] [TIFF OMITTED] T1367.021
    
    [GRAPHIC] [TIFF OMITTED] T1367.022
    
    [GRAPHIC] [TIFF OMITTED] T1367.023
    
    [GRAPHIC] [TIFF OMITTED] T1367.024
    
    [GRAPHIC] [TIFF OMITTED] T1367.025
    
    [GRAPHIC] [TIFF OMITTED] T1367.026
    
    [GRAPHIC] [TIFF OMITTED] T1367.027
    
    [GRAPHIC] [TIFF OMITTED] T1367.028
    
    [GRAPHIC] [TIFF OMITTED] T1367.029
    
    [GRAPHIC] [TIFF OMITTED] T1367.030
    
    [GRAPHIC] [TIFF OMITTED] T1367.031
    
