[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
                    HEARING ON IMPLEMENTATION OF THE
                UNITED STATES-OMAN FREE TRADE AGREEMENT

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

                                HEARING

                               before the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 5, 2006

                               __________

                           Serial No. 109-59

                               __________

         Printed for the use of the Committee on Ways and Means




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                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

E. CLAY SHAW, JR., Florida           CHARLES B. RANGEL, New York
NANCY L. JOHNSON, Connecticut        FORTNEY PETE STARK, California
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM MCCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. MCNULTY, New York
PHIL ENGLISH, Pennsylvania           WILLIAM J. JEFFERSON, Louisiana
J.D. HAYWORTH, Arizona               JOHN S. TANNER, Tennessee
JERRY WELLER, Illinois               XAVIER BECERRA, California
KENNY C. HULSHOF, Missouri           LLOYD DOGGETT, Texas
RON LEWIS, Kentucky                  EARL POMEROY, North Dakota
MARK FOLEY, Florida                  STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas                   MIKE THOMPSON, California
THOMAS M. REYNOLDS, New York         JOHN B. LARSON, Connecticut
PAUL RYAN, Wisconsin                 RAHM EMANUEL, Illinois
ERIC CANTOR, Virginia
JOHN LINDER, Georgia
BOB BEAUPREZ, Colorado
MELISSA A. HART, Pennsylvania
CHRIS CHOCOLA, Indiana
DEVIN NUNES, California

                    Allison H. Giles, Chief of Staff

                  Janice Mays, Minority Chief Counsel

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                                                                   Page

Advisory announcing the hearing..................................     2

                               WITNESSES

Office of the U.S. Trade Representative, Hon. Susan Schwab, 
  Deputy U.S. Trade Representative...............................    10

                                 ______

The Ballard Group LLC, Hon. Frances D. Cook......................    34
Turner Construction--International LLC, Nicholas E. Billotti.....    39
Muscat American Business Council, and DynCorp International, 
  Michael P. Weitzel.............................................    42
American Federation of Labor-Congress of Industrial 
  Organizations, Richard L. Trumka...............................    45
Dow Chemical Company, Roger R. Schwartz..........................    52

                       SUBMISSIONS FOR THE RECORD

Hamod, David, National U.S.-Arab Chamber of Commerce, statement..    65
Keating, Frank, American Council of Life Insurers, statement.....    69
Ranchers-Cattlemen Action Legal Fund, statement..................    70
United States Chamber of Commerce, statement.....................    72


                       HEARING ON IMPLEMENTATION
                       OF THE UNITED STATES-OMAN
                          FREE TRADE AGREEMENT

                              ----------                              


                        WEDNESDAY, APRIL 5, 2006

                     U.S. House of Representatives,
                               Committee on Ways and Means,
                                                    Washington, DC.

    The Committee met, pursuant to call, at 10:40 a.m., in room 
1100, Longworth House Office Building, Hon. William M. Thomas 
(Chairman of the Committee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
March 29, 2006
FC-20

               Thomas Announces Hearing on Implementation

             of the United States-Oman Free Trade Agreement

    Congressman Bill Thomas (R-CA), Chairman of the Committee on Ways 
and Means, today announced that the Committee will hold a hearing on 
the implementation of the U.S.-Oman Free Trade Agreement (FTA). The 
hearing will take place on Wednesday, April 5, 2006, in the main 
Committee hearing room, 1100 Longworth House Office Building, beginning 
at 10:30 a.m.
      
    Oral testimony at this hearing will be from both invited and public 
witnesses. Invited witnesses will include Ambassador Susan Schwab, 
Deputy U.S. Trade Representative. Any individual or organization not 
scheduled for an oral appearance may submit a written statement for 
consideration by the Committee and for inclusion in the printed record 
of the hearing.
      

BACKGROUND:

      
    On March 12, 2005, formal negotiations were launched to enter into 
an FTA between Oman and the United States. These negotiations concluded 
on October 3, 2005, and on January 19, 2006, U.S. Trade Representative 
Rob Portman signed the U.S.-Oman FTA.
      
    Oman has been a strong ally of the United States, contributing 
significantly to U.S. combat operations in Iraq and hosting thousands 
of U.S. military personnel during Operation Enduring Freedom in 
Afghanistan. In addition, Oman has played a leading role in the Persian 
Gulf area in opening trade with Israel and does not implement any 
aspect of the Arab League Boycott of Israel. Under the leadership of 
Sultan Qaboos, Oman has enacted a wide range of economic and political 
reforms, including promoting women to key roles such as Ministers and 
as the Ambassador to the United States.
      
    A U.S.-Oman FTA would be the fourth U.S. agreement with an Arab 
country, following the U.S.-Jordan FTA signed in 2000, the U.S.-Morocco 
FTA signed in 2004, and the U.S.-Bahrain FTA signed in 2006. The U.S.-
Oman FTA is an integral part of the Administration's strategy to create 
a Middle East FTA by 2013. The market access commitments in the U.S.-
Oman FTA would immediately eliminate duties of all current bilateral 
trade in consumer and industrial products. Under the agreement, Oman 
would also provide immediate duty-free access for U.S. agricultural 
products in 87 percent of its agricultural tariff lines, and both 
nations would eliminate tariffs on any remaining products within 10 
years. The agreement also provides strong protections for intellectual 
property and one of the highest levels of access for U.S. services 
industries in any FTA to date.
      
    United States-Oman two-way goods trade was $1.1 billion in 2005. 
The United States exported $593 million in goods to Oman, with major 
exports including aircraft, vehicles, machinery, electrical machinery, 
and optical and medical equipment.
      
    In announcing the hearing, Chairman Thomas stated, ``This FTA 
builds on our strategic efforts cited by the 9/11 Commission Report to 
promote free and open economic and political systems in the Middle East 
and is another key part of our goal of establishing a Middle East Free 
Trade Area. Oman has been a strong partner of the United States and 
through this agreement has made some of the strongest market access 
commitments in any FTA to date. In addition, Oman has made significant 
progress, just as Bahrain, in improving its labor standards. I look 
forward to moving this agreement quickly and expanding economic 
opportunity in the Middle East.''
      

FOCUS OF THE HEARING:

      
    The hearing will examine the U.S.-Oman FTA and the benefits that 
the agreement will bring to American businesses, farmers, workers, 
consumers, and the U.S. economy, as well as to the U.S. strategic 
relationship in the region.
      

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

      
    Requests to be heard at the hearing must be made by telephone to 
Michael Morrow or Kevin Herms at (202) 225-1721 no later than 12:00 
p.m. Friday, March 31, 2006. The telephone request should be followed 
by a formal written request faxed to Allison Giles, Chief of Staff, 
Committee on Ways and Means, U.S. House of Representatives, 1102 
Longworth House Office Building, Washington, D.C. 20515, at (202) 225-
2610. The staff of the Committee will notify by telephone those 
scheduled to appear as soon as possible after the filing deadline. Any 
questions concerning a scheduled appearance should be directed to the 
Committee staff at (202) 225-1721.
      
    In view of the limited time available to hear witnesses, the 
Committee may not be able to accommodate all requests to be heard. 
Those persons and organizations not scheduled for an oral appearance 
are encouraged to submit written statements for the record of the 
hearing in lieu of a personal appearance. All persons requesting to be 
heard, whether they are scheduled for oral testimony or not, will be 
notified as soon as possible after the filing deadline.
      
    Witnesses scheduled to present oral testimony are required to 
summarize briefly their written statements in no more than five 
minutes. THE FIVE-MINUTE RULE WILL BE STRICTLY ENFORCED. The full 
written statement of each witness will be included in the printed 
record, in accordance with House Rules.
      
    In order to assure the most productive use of the limited amount of 
time available to question witnesses, all witnesses scheduled to appear 
before the Committee are required to submit 300 copies, along with an 
IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, of 
their prepared statement for review by Members prior to the hearing. 
Testimony should arrive at the full Committee office, 1102 Longworth 
House Office Building, no later than close of business on Monday, April 
3, 2006. The 300 copies can be delivered to the Committee staff in one 
of two ways: (1) Government agency employees can deliver their copies 
to 1102 Longworth House Office Building in an open and searchable box, 
but must carry with them their respective government issued 
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government officials, the copies must be sent to the new Congressional 
Courier Acceptance Site at the location of 2nd and D Streets, N.E., at 
least 48 hours prior to the hearing date. Please ensure that you have 
the address of the Committee, 1102 Longworth House Office Building, on 
your package, and contact the staff of the Committee at (202) 225-1721 
of its impending arrival. Due to new House mailing procedures, please 
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one of the following two time frames: (1) expected or confirmed 
deliveries will be delivered in approximately 2 to 3 hours, and (2) 
unexpected items, or items not approved by the Committee office, will 
be delivered the morning of the next business day. The U.S. Capitol 
Police will refuse all non-governmental courier deliveries to all House 
Office Buildings.
      

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``109th Congress'' from the menu entitled, ``Hearing Archives'' (http:/
/waysandmeans.house.gov/Hearings.asp?congress=17). Select the hearing 
for which you would like to submit, and click on the link entitled, 
``Click here to provide a submission for the record.'' Once you have 
followed the online instructions, completing all informational forms 
and clicking ``submit'' on the final page, an email will be sent to the 
address which you supply confirming your interest in providing a 
submission for the record. You MUST REPLY to the email and ATTACH your 
submission as a Word or WordPerfect document, in compliance with the 
formatting requirements listed below, by close of business Wednesday, 
April 19, 2006. Finally, please note that due to the change in House 
mail policy, the U.S. Capitol Police will refuse sealed-package 
deliveries to all House Office Buildings. Those filing written 
statements who wish to have their statements distributed to the press 
and interested public at the hearing can follow the same procedure 
listed above for those who are testifying and making an oral 
presentation. For questions, or if you encounter technical problems, 
please call (202) 225-1721.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. All submissions must include a list of all clients, persons, 
and/or organizations on whose behalf the witness appears. A 
supplemental sheet must accompany each submission listing the name, 
company, address, telephone and fax numbers of each witness.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                 

    Chairman THOMAS. Today, the Committee will discuss the 
implementation of the U.S.-Oman Free Trade Agreement (FTA). 
This FTA, continues the strong precedent set by the United 
States-Bahrain FTA in terms of our trade relations with the 
Persian Gulf regions.
    This Agreement will make 100 percent of U.S. imports and 
exports in consumer industrial goods duty free on the day the 
Agreement enters into force. It provides duty-free treatment to 
87 percent of our agricultural products from day one, 
understanding that the two-way trade between the United States 
and Oman is less than $800 million in the most recent 
statistical year, 2004. The International Trade Commission 
(ITC) agrees that although it is small, it is positive. Like 
the FTA with Bahrain, clearly, this Agreement has significance 
beyond its immediate markets.
    The one thing that I will not recount in particulars, as I 
am going to recognize the gentleman from Florida, is the long, 
strong friendship the U.S. has shared with Oman, signing their 
first treaty in 1833. I also would like to make note that there 
are letters that we have received from Oman that I would like 
to make a part of the record, in which the Ministry of Commerce 
and Industry has described specific steps the Omanis intend to 
take, including specific dates for action in regard to labor 
standards. That, I think, provides a measuring stick, one, 
which they will live up to, but two, should give additional 
comfort, looking forward, to what Oman will look like when the 
agreement enters into force.
    [The letters follow:]
                                                         Embassy of
                             The Sultanate of Oman Washington, D.C.
[GRAPHIC] [TIFF OMITTED] T0441A.001

March 3, 2006

The Honorable William M. Thomas
Chairman, House Ways and Means Committee
2208 Rayburn House Office Building
Washington, DC 20515-2105

    Dear Chairman Thomas:
    This will provide a reply to your request regarding Oman's ability 
to adapt its labor rights regime in a manner similar to that which the 
Kingdom of Bahrain had committed in seeking Congressional approval of 
the U.S.-Bahrain Free Trade Agreement.
    We have reviewed the correspondence between the Kingdom of Bahrain 
and Ambassador Portman regarding issues and commitments of the Kingdom 
with respect to its labor right. regime. I have discussed these issues 
with the Minister of Industry and Commerce, H.E. Maqbool Ali Sultan, 
who has also conferred with the Minister of Manpower, H.E. Juma Al 
Juma. The Sultanate of Oman will:
    1. Clarify its law that more than one Representative Committee may 
be formed in order to represent workers in their relations with a 
single enterprise.
    2. Oman shall consult with the International Labor Organization and 
shall clarify that Representative Committees may belong to more than 
one federation.
    3. The Ministry of Manpower will review remedies available to 
workers for unlawful termination of a worker for participating in a 
strike. In the event a legal preference for remedies is advisable and 
in compliance with I.L.O. standards, Oman will consider requiring 
reinstatement as the preferred remedy in such cases.
    4. Oman shall continue to participate in consultations with the 
International Labor Organization to address and improve Oman's evolving 
labor rights regime, including further clarification of collective 
bargaining rules.
    5. Oman will take steps to reduce government involvement in 
Representative Committee operations in order to conform to I.L.O. 
Convention 87.
    Our review of the Bahrain commitments indicate that other 
representations made by Bahrain are not readily comparable with Oman's 
laws and practices. Nevertheless, if you believe otherwise, we will be 
pleased to further discuss these issues with you.
[GRAPHIC] [TIFF OMITTED] T0441A.002

    CC: Angela Ellard; Majority Staff Director, Trade Subcommittee, 
House Ways and Means Committee
                                 ______
                                 
Sultanate of Oman
Ministry of Commerce and Industry
Muscat

Date: 26 March 2006

The Honorable William Thomas
Chairman, Ways and Means Committee
United Stats House of Representatives
2208 Rayburn HOB
Washington, DC 20515

    Dear Chairman Thomas,

    I sincerely appreciate the opportunity to work with you on the 
passage of the U.S.-Oman Free Trade Agreement and I welcome you 
interest in our labor laws. Over the last few years Oman has made 
significant progress in reforming our laws to comply with the 
International Labor Organization (``ILO'') core labor standards. We are 
currently consulting with the ILO to further modernize our law and 
practices, taking into account the ILO standards. Therefore, Oman makes 
the following commitments:
    1. Oman is hosting an ILO delegation in April of this year in order 
to determine how to incorporate ILO Convention 98 into our labor laws. 
Oman will then seek the views of the Council of Oman, the Council of 
Ministers, the Chamber of Commerce & Industry, representative 
committees and other interested parties (hereinafter, ``Interested 
Parties''). Thus, Oman will be able to issue a Ministerial Decision, 
after consultation with Interested Parties, no later than October 31, 
2006 that incorporates the standards of ILO Convention 98 into Omani 
labor laws.
    2. The Ministerial Decision referenced in number 1 above will 
clarify that Article (106) of the Omani Labour Law allows workers, at 
their option, to be reinstated for any termination that resulted from 
lawful union activity.
    3. After consultation with Interested Parties, Oman will issue a 
Royal Decree amending Royal Decree 35/2003 (the Omani Labor Law) by no 
later than October 31, 2006 that states that more than one 
representative Committee may be formed in order to represent workers in 
their relations with a single enterprise.
    4. After consultation with Interested Parties, Oman will issue a 
Royal Decree amending Royal decree 35/2003, as noted in point 3 above 
to amend Articles (108-110) of the Labour Law reflect that each 
representative Committee may belong to the Main Representative 
Committee and that other main representative bodies may be formed. This 
action will be taken no later than October 31, 2006.
    5. After consultations with Interested Parties, Oman will issue a 
Ministerial Decision by no later than October 31, 2006 ensuring that 
penalties for anti-union discrimination are adequate to deter acts of 
discrimination.
    6. After consultations with the ILO and with Interested Parties, 
Oman will issue a Ministerial Decision by no later than October 31, 
2006 that will ensure that technical standards for strikes do not 
exceed the standards of the ILO.
    7. As provided by the Basic Law of Oman, Oman does seek the views 
of Interested Parties, before making any changes in the legislation and 
will commit to continue this practice in the future.
    8. After consultations with Interested Parties, Oman will amend 
Ministerial Decisions 135/2004 & 136/2004 by no later than October 31, 
2006 in order to remove all government involvement in representative 
Committees' activities.

Yours sincerely,

Maqbool Ali Sultan
Minister of Commerce & Industry

                                 

    Chairman THOMAS. For the remainder of the time, I recognize 
the gentleman from Florida, the Chairman of the Subcommittee on 
Trade, Mr. Shaw.
    Mr. SHAW. Thank you, Mr. Chairman. I would like to express 
my pleasure that we are discussing the implementation of the 
U.S.-Oman FTA. Today we move forward on a FTA that I hope, in 
the end, will result in strong support similar to what we saw 
with the U.S.-Bahrain FTA, which received 327 yea votes in the 
House of Representatives. It is true that the size of Oman's 
economy is small relative to the U.S. economy. In fact, 
according to the Congressional Research Service, total U.S.-
Oman trade was $1.1 billion in 2005, accounting for only 4/
100ths of 1 percent of all U.S. trade. Despite this small level 
of trade, there are some real benefits in this agreement for 
American producers.
    As mentioned earlier, the Agreement will provide 
immediately duty-free access to 87 percent of all agricultural 
tariff lines. My home State of Florida will receive duty-free 
treatment of many citrus products, and I am very pleased to see 
that Mr. Billotti, in his written testimony, noted that his 
construction work in Oman is generating new opportunities for 
Florida companies. However, beyond the benefits to American 
companies and workers, the people of both countries will 
benefit from the continued development and deepening of the 
good relationship between us. It is certainly in our best 
interest to foster strong economic growth in the economy of our 
allies, and there is little question that Oman has been a solid 
ally of ours for some time, as spoken by the Chairman.
    Particularly, I would like to applaud Oman and its 
leadership in dismantling the Arab League boycott of Israel. 
Additionally, Oman has no law which establishes or enforces 
primary, secondary or tertiary boycotts, and it does not apply 
the boycotts in practice. On September 28th, 2005, Oman's 
Minister of Commerce and Industry, Mr. Maqbul, wrote to 
Ambassador Portman to reiterate that Oman does not apply any 
aspect of the boycott. I would like to ask unanimous consent to 
include this letter in the record.
    Chairman THOMAS. Without objection.
    [The information follows:]

28 September 2005

The Honorable Robert Portman,
U.S. Trade Representative
600 17th Street, NW
Washington DC 20508,
United States of America

Dear Ambassador Portman,

    Please accept my congratulations on your recent appointment to 
serve as the U.S. Trade Representative.
    It has come to my attention that questions have arisen regarding 
Oman's participation in the Arab Boycott of Israel. I would like to 
assure you that Oman does not apply any aspect of the boycott, whether 
primary, secondary or tertiary or have any laws to that effect. Oman 
has no restriction whatsoever on U.S. companies trading with Oman or 
doing business with Oman, regardless of its ownership or relations with 
Israeli companies, and the government is taking steps to ensure that 
all Ministries are aware of the situation and remove any boycott 
language that may unintentionally remain in their contracts.
    As a Member of the World Trade Organization (WTO), Oman did not 
invoke the non-application provisions of the WTO Agreement toward any 
other Member, and therefore has all WTO rights and obligations with 
respect to all Members.

Your sincerely,

Maqbool Bin Ali Sultan
Minister of Commerce and Industry

                                 

    Mr. SHAW. The incredible change that can be fostered 
through trade relations can bee seen in the Qualified 
Industrial Zone (QIZ), a program in Egypt, which provides trade 
benefits to Egyptian companies that use Israeli content. 
Skeptics said that launching QIZs in Egypt would lead to 
protests against working with Israel. They were right that QIZs 
led to protests, but it couldn't have been more wrong about the 
reason. Egyptian workers protested because more of them wanted 
the ability to work in these jobs; jobs that helped ties 
between Israel and the Arab world. All over, Oman has been in 
the forefront of the Persian Gulf Region in developing strong 
ties with Israel.
    After the signing of the Egyptian-Israeli Peace Treaty in 
1979, Oman was one of the few Arab countries that did not break 
off relations with Egypt. It was also one of the few countries 
in the region to host an Israeli Prime Minister, when Prime 
Minister Rabin visited Oman in 1994. If we are to have any 
success in convincing countries to end the boycott, then we 
must stand ready to build relationships with those countries 
that do. With this his FTA, the U.S. can again show countries 
the economic benefits that are available to them if they reject 
this boycott. Mr. Chairman, I thank you for this time. I have 
run over, I appreciate it and yield back.
    Chairman THOMAS. Thank the gentleman. The Chair would 
recognize the Ranking Member, the gentleman from New York, for 
any comments he may wish to make at this time.
    Mr. RANGEL. Thank you so much. Welcome to the Committee. I 
will be yielding to the Ranking Member of the Subcommittee on 
Trade, but I am glad to see that the Chairman raised some 
questions or at least indicated that he had received some 
answers as it relates to basic International Labor Standards 
(ILS), and I see that you have referred constantly to labor 
standards consistent with internationally recognized 
principles. I assume you feel that one of the things that have 
torn this Committee apart on trade has been the interpretations 
of these standards. At some point I would like to know whether 
you have reached out to the Members of this Committee to try to 
get some agreements as to what the United States Trade 
Representative (USTR) thinks these standards should be, and how 
much time we have to deal with these questions. I really 
believe that more of these trade agreements should be 
bipartisan, and where efforts have been made to reach out, we 
have had tremendous success. I would like to yield to Mr. 
Cardin, who may be able to share whether or not the USTR has 
been working directly with him.
    Mr. CARDIN. Let me thank Mr. Rangel for yielding.
    First, let me just concur with the comments made about Oman 
being a longstanding friend and ally of the U.S., for all of 
the reasons that have been stated, and I hope we can conclude a 
FTA. However, I must raise an important concern that prevents 
me from endorsing the Agreement at this time. The structure of 
the Oman FTA, like those of other recent trade agreements, 
provides that the country must only enforce their own laws when 
it comes to basic labor standards. This is the only enforceable 
provision in the chapter on labor, and there is no requirement 
that the countries bring their laws into compliance with 
internationally recognized standards. When ``enforce your own 
laws'' is the model we use in our trade agreements, it is 
important that a country's labor laws meet basic international 
standards. Unfortunately, at this time, Oman's labor laws do 
not meet these standards.
    Last month, Oman committed to issue several ministerial and 
royal decrees by October 31, 2006, to address certain areas 
where its laws fall short of basic international labor 
standards. Mr. Chairman, I believe Oman's commitments are an 
important step in the right direction. However, there is more 
work that needs to be done if we are able to get the type of 
bipartisan support that the U.S.-Bahrain FTA had. As you 
recall, the key to broad congressional support for the U.S.-
Bahrain FTA was a detailed agreement reached between the U.S. 
Government and the government of Bahrain regarding labor laws. 
This Agreement had four key parts. First, Bahrain was able to 
demonstrate that its existing labor laws, as applied, were 
consistent with basic international standards. Oman has not yet 
satisfied this requirement, as Oman has not committed to apply 
its laws immediately in an International Labor Organization 
(ILO) consistent manner in the areas where its laws, as 
written, do not currently meet international standards.
    Second, Bahrain made a commitment to make formal changes to 
all of its laws that were not fully ILO compliant. Oman is 
committed to issuing ministerial decisions to address seven 
areas in which the country's laws currently, do not comply with 
ILO standards. However, it is unclear whether these ministerial 
decrees override previously enacted contradictory provisions 
and Oman's labor laws. In addition, Oman has not committed to 
making changes to address three other areas in the law that are 
not fully ILO compliant.
    Third, Bahrain made a commitment to introduce the formal 
changes to its laws immediately, committing that certain 
changes would be submitted to the Parliament before the House 
voted on the FTA, and certain other changes would be submitted 
within 3 weeks of the House vote. Oman has not committed to 
take immediate action to address these areas in which laws fall 
short of basic ILO standards. Instead, Oman has committed to 
issue certain ministerial and royal decrees by October 31, 
2006.
    Fourth, prior to the Committee on Ways and Means markup of 
the U.S.-Bahrain FTA, U.S. Ambassador Portman sent a letter to 
the government of Bahrain, reflecting a joint agreement between 
the two countries that Bahrain's commitment to continuing 
applying its laws in an ILO consistent manner, and to formally 
change its laws to comply fully with ILO standards, would be 
considered as, ``matters arising under the agreement,'' and 
subject to consultations. No such commitment has been made with 
respect to the enforcement of commitments made thus far by 
Oman. Mr. Chairman, I think we are on the right path, but there 
are several additional steps that must be taken before this 
Agreement can gain the broad bipartisan support. Let me just 
make my final comment to point that Oman currently benefits 
from the U.S. Generalized System of Preferences (GSP), and of 
course, as part of that, they must be moving toward ILO 
standards. I think it is important that the final agreements 
that are reached meet the standards of the Bahrain FTA, and we 
are not there yet. I hope we can get there, and I will look 
forward to working with the Committee.
    Chairman THOMAS. I thank the gentleman for his comments. 
Just to clarify, the letters that the Chairman requested to put 
in the record, were letters to the Chairman from the Omanis, 
and the Omanis responded back to the Chairman. The Chairman's 
idea for a letter directly was based upon our friends on the 
minority side's similar actions with Morocco and Bahrain. I 
think it is a good idea. Although they were not shared with the 
majority prior to having them sent, our concern was the content 
of the letters, I am hopeful that the minority's reaction to 
the Chairman's letter would not be based upon the manner, as I 
indicated, but on the contents, and I believe the gentleman 
from Maryland's comments were focused on the contents of the 
letter, and I appreciate that.
    Mr. CARDIN. We are not concerned about how we get the 
commitment, so we are very much working--and as I said, I think 
the letter exchange between you and the Omanis was a positive 
step, so we look forward to----
    Chairman THOMAS. As the Chair thought, the letters from the 
minority to Morocco and Bahrain--I just heard some comments 
about that and I wanted to clarify the record--our job was to 
try to get it right, and that would be something substantive 
that we could focus on.
    Mr. RANGEL. Mr. Chairman, would you yield?
    Chairman THOMAS. Gentleman from New York.
    Mr. RANGEL. Could you share with a copy of the Chairman's 
letter?
    Chairman THOMAS. Yes. It is in the record and it will be 
available to everyone.
    Mr. RANGEL. That would help too.
    Chairman THOMAS. As would the Morocco and the Bahrain 
letters would have as well. Now it is my pleasure to have 
before the Committee, the Honorable Susan Schwab, who is the 
Deputy USTR, and thank you very much. You may address the 
Committee in the time you have in any way you see fit. Any 
written testimony will be made a part of the record.

   STATEMENT OF THE HONORABLE SUSAN C. SCHWAB, DEPUTY UNITED 
STATES TRADE REPRESENTATIVE, OFFICE OF THE UNITED STATES TRADE 
                         REPRESENTATIVE

    Ms. SCHWAB. Thank you, Mr. Chairman. I will be submitting 
written testimony for the record. Mr. Chairman, Chairman Shaw, 
Congressman Rangel, Members of the Committee, let me begin by 
thanking you and other Members on the Committee who have worked 
in such close partnership with us on our FTAs. I am also 
grateful to the cochairs of the Middle East Economic 
Partnership Caucus, Congressmen Ryan, Meeks, Jefferson, 
English, Chandler and Issa, who have been extremely supportive 
of this agreement.
    I appreciate the opportunity to discuss the U.S.-Oman FTA 
with you today. This and other FTAs that the Committee has 
considered are important elements of U.S. policy in the Middle 
East, with potential benefits that extend well beyond their 
immediate trade implications.
    With this Agreement, Oman has made legally binding 
commitments to liberalize trade with the U.S. The FTA will 
provide new market access opportunities for U.S. manufacturers, 
farmers and service providers. It will also create an economic 
environment conducive to additional economic opportunities for 
the people of Oman.
    Beyond substantial trade liberalization, the FTA will help 
support ongoing economic, political and social reforms in Oman, 
and promote the benefits of pursuing market opening policies in 
other countries in the region. Embracing trade will benefit the 
people of the Middle East as they strengthen their ties with 
countries outside the region and with each other.
    The Administration's trade agenda is a fundamental part, 
therefore, of the President's vision of developing economic 
growth and democracy in the Middle East. In May 2003, the 
President announced a plan of graduated steps for Middle 
Eastern countries to increase trade and investment with the 
U.S. and others in the world economy, and to create a U.S.-
Middle East Free Trade Area (MEFTA), by 2013. Oman is the fifth 
Middle Eastern country to have negotiated an FTA with the U.S., 
building on our existing agreements with Israel, Jordan, 
Morocco and Bahrain. We are also negotiating an FTA with the 
United Arab Emirates, and have Trade and Investment Frameworks 
Agreements (TIFA), with most other countries in the region. 
These are important steps in implementing the President's 
initiative.
    The 9/11 Commission urged the U.S. to expand trade in the 
Middle East in order to ``encourage development, more open 
societies, and opportunities for people to improve the lives of 
their families and to enhance prospects for their children's 
future.'' The President and USTR take this recommendation very 
seriously, and the Oman FTA is an important milestone in our 
progress.
    On the first day the Agreement enters into force, 100 
percent of bilateral trade in industrial and consumer products, 
with the exception of certain textile and apparel products, 
will flow duty-free, as was indicated by the Chairman and 
Subcommittee Chairman Shaw. Oman will also provide immediate 
duty-free access for 87 percent of the lines of U.S. exports of 
agricultural products with major potential benefits to American 
exporters. Services regimes will also be liberalized, including 
banking and securities, insurance, telecommunications, express 
delivery, distribution, health care, construction, architecture 
and engineering.
    We are also very pleased with the legal and regulatory 
environment changes that will be going on in Oman as a result 
of this Agreement that will assist foreign investors who want 
to see a 21st century commercial environment in which to 
invest. The labor laws, labor law reforms, intellectual 
property rights reforms, all are important parts of this 
Agreement, as are provisions in the FTA related to 
transparency, public notification and anti-bribery provisions. 
The FTA's labor and environment provisions fully meet the 
negotiating objectives set out in the Trade Act of 2002 
(P.L.107-210) and these provisions are included in the core 
text of the Agreement. The Agreement requires that each party 
not fail to effectively enforce its labor and environmental 
laws. Moreover, each country commits to ensure that its 
policies provide for and encourage high levels of environmental 
protection, to strive to ensure that its labor laws provide for 
labor standards consistent with internationally recognized 
principles, and we can talk more about that later, and strive 
not to weaken or reduce labor or environmental laws to attract 
trade and investment.
    Oman passed a new labor law in the year 2003 that allows 
for the creation of worker representative Committees for the 
first time. It also removed its 1973 enacted prohibition on 
strikes. The Agreement enjoys widespread support from our 
private sector advisory Committees. I look forward to answering 
any questions you might have about this important agreement.
    [The prepared statement of Susan Schwab follows:]

      Statement of The Honorable Susan Schwab, Deputy U.S. Trade 
        Representative, Office of the U.S. Trade Representative

INTRODUCTION
    Mr. Chairman, Congressman Rangel, and Members of the Committee:
    I would like to thank Chairman Thomas, Congressman Rangel, and 
others on the Committee who work in such close partnership with us on 
our free trade agreements. I am also grateful to the co-chairs of the 
Middle East Economic Partnership Caucus--Congressmen Ryan, Meeks, 
Jefferson, English, Chandler and Issa--who have been extremely 
supportive of this agreement.
    I appreciate the opportunity to discuss the United States-Oman Free 
Trade Agreement (FTA) with you. This and other recent FTAs that the 
Committee has considered are important elements of U.S. policy in the 
Middle East. With this agreement, Oman has made legally binding 
commitments to liberalize trade with the United States. The FTA will 
provide new market access opportunities for U.S. farmers, 
manufacturers, and service providers. It will also be an important 
force in encouraging increased direct foreign investment in Oman and in 
creating an economic environment conducive to additional employment 
opportunities for the people of Oman.
    Beyond substantial trade liberalization, the FTA will help support 
ongoing economic, political and social reforms in Oman, and promote the 
benefits of pursuing market liberalizing policies in other countries in 
the region. Embracing trade will benefit the people of the Middle East 
as they strengthen ties with countries outside the region and with each 
other. The more nations trade with one another, the better the chances 
for ending political instability and economic stagnation.
    The Administration's trade agenda is a fundamental part of the 
President's vision of developing economic growth and democracy in the 
Middle East--a region of almost 350 million people and a $70 billion 
trading relationship with the United States. In May 2003, the President 
announced a plan of graduated steps for Middle Eastern nations to 
increase trade and investment with the United States and others in the 
world economy, and to create a United States-Middle East Free Trade 
Area (MEFTA) by 2013. This trade agenda is one element of a 
comprehensive approach to address the economic, social and political 
challenges facing the region and U.S. interests in the area.
    Our strategy toward countries in the region--to engage them at 
their individual levels of progress, to provide them access to the U.S. 
market based on mutual benefit, and to require that they adopt high 
standards for trade and investment--is working. Oman is the fifth 
country in North Africa and the Middle East to have negotiated an FTA 
with the United States, building on our existing agreements with 
Israel, Jordan, Morocco and Bahrain. We are also negotiating an FTA 
with the United Arab Emirates and have Trade and Investment Framework 
Agreements (TIFA) with most of the other countries in this region, 
which provide opportunities to enhance our bilateral trade and 
investment relationships. These are important steps on the path to 
implementing the President's MEFTA initiative.
    The 9/11 Commission urged the United States to expand trade with 
the Middle East in order to ``encourage development, more open 
societies, and opportunities for people to improve the lives of their 
families and to enhance prospects for their children's future.'' The 
President and USTR take this recommendation very seriously.
    Working in close partnership with Congress has been critical to our 
successes to date. The Trade Act of 2002 put in place procedures that 
make it possible to negotiate and implement the types of agreements 
that not only address the pressing need for engagement with regions 
such as the Middle East, but also bring real benefits to American 
workers and the U.S. economy.

THE AGREEMENT
    The United States-Oman FTA will eliminate tariffs and non-tariff 
barriers and expand trade between the two countries, generating new 
opportunities for U.S. workers, consumers, farmers, manufacturers and 
service providers.
    On the first day the agreement enters into force, 100 percent of 
bilateral trade in industrial and consumer products, with the exception 
of certain textile and apparel products, will flow duty-free. In 
addition, Oman will provide immediate duty-free access for 87 percent 
of U.S. exports of agricultural products. This will mean new 
opportunities for U.S. companies that produce machinery, automobiles, 
optical and medical instruments. And it will mean new opportunities for 
U.S. producers of vegetable oils, sugars and sweeteners for beverages.
    Under the FTA, Oman will provide substantial market access across 
its entire services regime, providing new opportunities for U.S. 
companies involved in banking and securities, insurance, 
telecommunication, express delivery, distribution, health care, 
construction, architecture and engineering.
    This Agreement will also help ensure a secure and predictable legal 
and regulatory environment in Oman that foreign investors want to see 
in 21st century commerce. Under the Agreement, Oman will provide 
effective enforcement of labor and intellectual property laws. This 
will help make Oman a more attractive place for investors and create 
new opportunities for the Omani people.
    The Agreement's rules of origin provisions on regional cumulation 
allow FTA partners in the region to combine inputs into products and 
qualify for preferential tariff treatment. This feature will facilitate 
connecting our bilateral agreements as we move toward a more 
integrated, region-wide agreement. It will also encourage trade among 
countries in the region, an important yet currently missing ingredient 
for the region's development.
    The Agreement also includes important transparency, public 
notification, and anti-bribery provisions. Application of these 
provisions will also help to improve the business and investment 
environment in Oman by providing more certainty and predictability for 
firms and individuals operating and investing there and promoting the 
rule of law.
    The FTA's labor and environment provisions fully meet the 
negotiating objectives set out in the Trade Act of 2002. These 
provisions are included in the core text of the agreement. The 
Agreement requires that each Party not fail to effectively enforce its 
labor and environmental laws. If they consistently fail to enforce 
those laws in a manner that affects our trade, then they face the 
prospect of monetary penalties that will be directed to solve the 
problem, or potentially face the loss of preferential trade benefits. 
Moreover, each country commits to ensure that its laws and policies 
provide for and encourage high levels of environmental protection, to 
strive to ensure that its labor laws provide for labor standards 
consistent with internationally recognized labor principles, and to 
strive not weaken or reduce labor and environmental laws to attract 
trade and investment. Also notable are provisions calling for panel 
expertise in the event of labor or environmental disputes, as well as a 
mechanism that would allow for monetary assessments to be used to 
assist a country in addressing a labor or environmental violation. The 
Agreement also establishes processes for further cooperation on labor 
and environmental issues.
    Oman passed a new labor law in 2003 that allows for the creation of 
worker representative committees for the first time. The law details 
procedures for dispute resolution and removes a 1973 prohibition on 
strikes. Oman recognizes the need to continue its efforts on labor 
rights, and is working to raise awareness and educate workers about 
their rights and to establish new worker representative committees. 
Oman is working with the ILO on these efforts.
    The Agreement enjoys widespread support from our trade advisory 
committees. The most senior committee, the Advisory Committee for Trade 
Policy and Negotiations (ACTPN), ``unanimously endorses the United 
States-Oman Free Trade Agreement,'' and found the agreement ``is in the 
best economic interest of the United States.'' In addition, the ACTPN 
views the agreement as ``an additional step toward the goal of a Middle 
East Free Trade Area,'' and noted that the agreement ``will improve and 
strengthen overall U.S. relations with the countries in the Middle 
East.'' Committees representing sectors such as consumer goods, 
services, information technology, intellectual property, and 
agriculture also expressed broad support for the Oman FTA.
    We recognize that the Labor Advisory Committee has concerns about 
all FTAs that the United States has concluded to date, and that such 
concerns relate as well to the Committee's assessment of this 
agreement. We are convinced that the disciplines and consultative 
mechanism in the FTA will play a major role in further improving the 
labor situation in Oman.

CONCLUSION
    For decades, Oman and the United States have shared a desire for 
peace, stability, and economic opportunity in the Middle East. This 
Agreement is an important new step in our partnership that will not 
only remove trade barriers, but also cement our long-standing 
friendship and growing commercial ties and create new economic 
opportunities for both of our countries.
    This Agreement also helps the advancement of economic and political 
freedom in the region and is an essential building block for the 
Administration's goal of assisting the countries in the Middle East to 
build more market-oriented, liberalized economic regimes.
    With your guidance and support, we will continue to pursue the 
President's MEFTA initiative. As the next step in implementing that 
initiative, we look forward to working with you and building bipartisan 
support for legislation implementing the U.S.-Oman FTA this spring.
    I would be pleased to respond to questions or comments from Members 
of the Committee.

                                 

    Chairman THOMAS. Thank you, Ambassador. Any Member wish to 
inquire of the Ambassador? The gentleman from New York.
    Mr. RANGEL. Thank you, Mr. Chairman. Let me thank the 
Chairman, as well as you, for referring to the labor standards 
that we would find acceptable, and especially for inclusion in 
a very general way in your statement before us today. You 
indicate that you are striving to ensure its labor laws provide 
for labor standards consistent with internationally recognized 
labor principles, and then you relate that Oman is working with 
the ILO on these efforts. Can we assume that the USTR office is 
suggesting that the ILO standards be one in which the U.S. and 
the government of Oman can agree to?
    Ms. SCHWAB. Congressman Rangel, I highlighted the labor 
provisions in my opening statements because it occurred to me 
that that might be a topic of some discussion today at the 
hearing. These labor provisions are a very important part of 
these agreements, and as you know, we have approached these on 
a case-by-case basis based on the state of labor laws and 
reforms in any given country.
    To talk specifically about ILO core labor standards, as you 
know, there are four core labor standards, we address four core 
standards within these agreements. If you are talking about the 
specific dotting of ``i's'' and crossing ``t's'' of the ILO 
treaties, it is important to note that the U.S., for example, 
has ratified two of the eight treaties that correspond to the 
four standards. It is uneven in terms of the countries that 
have ratified others. For example, you will find that Sri Lanka 
and Belarus have ratified all eight. Sudan and Bangladesh have 
ratified seven.
    Mr. RANGEL. I guess I didn't word my question correctly. 
You know, with intellectual and so many other issues, there is 
an American standard that we request, and I am pleased to see 
that the Chairman has asked the government of Oman as to what 
they intend to do to protect the workers. If we are going to do 
this on a country-by-country basis and not have an American 
standard, whether we abide by the standard or not, if the 
country is saying it wants to, you don't have an objection to 
these countries having a higher standard in terms of agreeing 
to ILO provisions just because we don't abide by or haven't 
signed? There is no objection to their unilaterally agreeing, 
is there, with USTR?
    Ms. SCHWAB. Well, and in fact, in part, as a result of 
these FTAs, our FTA partners in many cases have really advanced 
their commitment to and their changes in their labor laws to 
reflect core ILO standards. For example, in the case of Oman, 
the case we are talking about here, Oman passed a major labor 
law reform.
    Mr. RANGEL. I am not saying there hasn't been improvement. 
What I am trying to do, since we--I am trying to find out 
whether we can get more bipartisan support. You refer to that 
in your statement. You know what the major objections have been 
in each and every trade agreement that has come before this 
Committee. It has been unclear to me, unless you have discussed 
it with the staff of the Democrats, as to what USTR believes is 
acceptable as it relates to getting countries not to enforce 
their own laws--they may not have their own rules--and not just 
to deal with improvement, because I am emotionally impressed 
with many of the developing countries' improvement. To have a 
standard that Republicans and Democrats can say ``this is what 
America stands for.'' This is what we believe workers, minimum 
standards for workers no matter what country it is. I just 
can't break through the language in which the USTR is willing 
to accept that could be a standard, so that you don't have to 
deal with the partisanship that exists on the Committee because 
of a serious difference of opinion as it relates to the labor 
standards.
    I am just saying, is there any reason why you can't go 
further and say, ``These are basic standards?`` You can call 
them ILO, you can call them USA. You can say, ``This is what we 
expect.'' Is there any way that you can give us guidance 
besides country-by-country as to what is it the U.S. of America 
demands of a country as it treats its workers, as it relates to 
right to assembly, to organize and to bargain?
    Ms. SCHWAB. I think there are fewer differences than your 
question implies.
    Mr. RANGEL. Does your office have basic standards that, 
instead of us having to deal with country-by-country, does your 
office have standards that we can talk with and know that when 
it gets to this Committee, that that is already incorporated in 
an agreement, and we can then discuss other issues. Why do we 
always have to get weighed down with this issue as to why there 
is no basic standard that we have?
    Chairman THOMAS. The gentleman's time has expired. Let me 
pursue a line of questioning that might illuminate for the 
gentleman from New York, some of the reasons why procedure may 
be carried on the way it is. If in fact you have--and the 
gentleman ran through some of the typical labor concerns, 
assembly, organize, bargain--clear ILO points, and that if we 
were to use the ILO standards, and that there had to be 
explicit agreement with the specific ILO standards, and the 
U.S. wanted to have a FTA with itself, would we meet those 
standards in terms of the specificity of the International 
Labor Organization's specific, explicit written requirements?
    Ms. SCHWAB. The core ILO standards are broadly articulated, 
as you know. Refer to free association, the right to organize--
--
    Chairman THOMAS. In other words, you would have to look at 
what is going on, the specifics of what a country is doing more 
than a list of objective criteria, which if they say, ``Yes, I 
am for eight, I am for seven, I am for six,'' and if you are 
for five or more you are okay. The idea of trying to create an 
absolute objective checklist is not a way to deal with--in the 
Chair's opinion, and I assume in USTR's opinion, with reality. 
For example, we have heard Bahrain. Bahrain is being held up as 
an example of what we would like. Well, frankly, all Bahrain 
promised to do was to introduce certain measures. Now, why 
would introducing certain measures be a more comforting 
criteria than Oman's specificity of October 31, 2006, something 
will happen?
    Well, the reason is you have to look at the governmental 
structure. Bahrain is a monarchy, but they have a parliament. 
They can't tell you on October 31st something is going to 
happen. All they can do is promise to introduce it, and we hope 
the process works the way we hope it will work, and that the 
result will be what we want. Why in the world could Oman say, 
``Hey, October 31st, it's done,'' because Oman is a sultanate 
that has a consulting group, and they will be consulted with, 
but the Omani Minister has the ability to write in a letter 
that October 31, 2006 it will happen.
    As far as I am concerned, if I get those two commitments, I 
have a higher comfort level with the Omanis' commitment because 
of its certainty. If we are going to get into an examination of 
the governmental structure, and we are excited because Bahrain 
is going to introduce something into a parliament, we all feel 
comfortable because of our commitment to a more democratic 
structure, although we all certainly know that a commitment to 
that process means no guarantee on result. Whereas, with the 
Omanis, they have guaranteed a result.
    I think the reason you don't have a simple, easy, 100 
percent agreed-upon checklist is that everybody deals with it 
in different ways. What we are looking for is a fundamental 
core commitment, because then it makes all kinds of sense, that 
if you can see that they have done what we consider basic, we 
can require them to match their own laws, and where they fail 
to do that, those laws being minimally adequate. I think where 
you really get a difference is not in all those machinations, 
it is in the fact that the requirement of what it is they 
should have in their law so that we can punish them if they 
don't match up to it, is far beyond what anyone would consider 
reasonable or appropriate. The goal would be to move in a 
significant way, the world labor movement forward, but not 
necessarily benefit a particular country in terms of its 
attempts.
    I cannot tell you how eloquent the President of Peru was, 
in which he said, ``Please look at my formal labor structure. 
The one the government can control--judge us on that. If you 
are going to judge us on the informal labor structure, then 
look at my history, one of 16 children, had to go shine shoes 
at 6 years of age, try to drag themselves out of abject 
poverty, and are they going to follow some international labor 
standard as they are trying to scratch out an existence. Don't 
judge me by that,'' he asked, and, frankly, I agree with him.
    Our job is to look at where they are, where they commit to 
be, and our comfort level, that in fact, is going to happen, so 
that when these agreements go into effect, we will hold them to 
their standards because their standards are minimally 
acceptable. The gentleman from Florida.
    Mr. SHAW. Thank you, Mr. Chairman. Very, very briefly, I 
want to talk more about the politics of the Middle East and the 
effect that this agreement, the acceptance or rejection would 
have on it. One of the best ways to combat terrorism from that 
part of the world is to build bridges into that part of the 
world. I will use an old expression, you destroy your enemies 
by making them into your friends, and there are some good 
people in that part of the world, and unfortunately, the few 
bad people over there are extremists and are creating terrible, 
terrible problems on a worldwide basis. What effect would the 
acceptance or rejection of this particular agreement have upon 
those bridges that we are trying to build?
    Secondly, how would it affect the Commission 
recommendations of 9/11 if we had a slim majority or a large 
majority passing this bill? I believe that in the end we will 
come together as Democrats and Republicans and iron out the few 
problems that we have, but I think we do at this point, at this 
hearing, need to look into the upside and the downside of the 
action of Congress.
    Ms. SCHWAB. Congressman, you raise a very important point. 
I mentioned the President's MEFTA initiative, and we are well 
on our way. This is the fifth FTA that would be a piece of that 
puzzle. One of the things that perhaps a lot of us don't 
realize is the extent to which these kinds of FTAs are very 
high profile in the countries involved, the countries where we 
are negotiating. This is a major issue in Oman, for example.
    Therefore, a dramatic embracing of this FTA by this 
Committee, by the U.S. Congress, would be a very welcome 
development and a strong positive signal that the U.S. would be 
sending to the people of Oman about the importance that we 
place--and not just the people of Oman, by the way, but also on 
others in the region is implied by your question--about the 
importance that we place on the region, and the implications of 
the FTA are not just economic implications. Again, as you 
noted, they have political implications and social implications 
going forward.
    The rejection of this agreement by the Congress would be an 
extremely negative development, and obviously, the larger the 
margin, the stronger the positive message being sent. With 
economic liberalization, we see political liberalization. The 
President spoke of this in the State of the Union address. We 
are striving for a world that is moving away from economic 
isolationism. Thank you.
    Mr. SHAW. Thank you. I yield back, Mr. Chairman.
    Chairman THOMAS. The gentleman from Michigan.
    Mr. LEVIN. Thank you, Mr. Chairman. I was going to ask you 
a question about intellectual property and pharmaceuticals, why 
this agreement goes beyond the CAFTA language. I want to 
respond to the Chairman. The question is not conventions. We 
all have signed the declaration. The declaration commits each 
country to carry out the labor standards, the five 
international standards. To make that commitment real, it has 
to be in their laws and practices. Raising the convention 
issue, I think is really a diversion.
    Likewise, the notion that Mr. Thomas has raised that if it 
is spelled out in exact detail, essentially the U.S. might be 
caught within it. No one is talking about writing the National 
Labor Relations Act 1935 (Ch. 372, 49 Stat 449), into an 
agreement. It is the basic standards in implementing them. I 
remind the Chairman and everybody else, in order for it to be 
actionable, it has to be a violation that would directly affect 
trade relations between the countries. Putting labor standards 
into trade agreements is not an open invitation to getting at 
the labor laws of one country or another. The matters have to 
affect trade and affect them directly.
    I want to get back to this issue relating this country, 
Oman, but quickly. The Chairman talks about Peru. The problem 
with Peru's labor laws are not that they don't apply to the 
informal sector, that is one problem, but they are woefully 
inadequate in terms of ILO standards in terms of the formal 
sector, and that is a major problem that we will be talking 
about. In terms of Bahrain, the Chairman says look at the 
difference. In this case you have a system of government where 
the leader can decree by himself, and so then the question 
arises, why wait until October or November? Why not make sure 
that before the agreement is carried out, the trade agreement 
is agreed to, that the laws are in place? If it can be done 
just like this, what we say is, let them do it as is necessary 
in other provisions of trade agreements.
    Chairman THOMAS. If the gentleman will yield briefly on my 
time on that point?
    Mr. LEVIN. Yes.
    Chairman THOMAS. I said the government of Oman is 
different. It is a consultative government. They do have a 
formal consultative process. If the gentleman is asking us for 
the government of Oman to violate its formal consultative 
process so that you can have in place what you want when you 
want it, that would be done immediately. All I said was, they 
could give you the final outcome because it is consultative. 
The process does take time. It does involve actual 
consultations. That is why it is not done immediately.
    If the gentleman is requesting that the government of Oman 
not do what it normally does when it makes changes, that is, of 
course, a request we can make of them, and I will join with you 
in asking them not to follow the procedure they use in their 
country to make changes, if that is the request you want to 
make.
    Mr. LEVIN. I am glad that was on your time.
    Chairman THOMAS. It is on my time.
    Mr. LEVIN. It is not my request.
    Chairman THOMAS. Well, okay, then. I won't----
    Mr. LEVIN. I am not suggesting that they violate their laws 
or their processes. They have the ability to act and to act 
promptly, and not to essentially have us act on an agreement 
with promises. I simply suggest--and I guess I will go back if 
there is time and ask our Ambassador--I will go through the 
various core labor standards, and ask if by any stretch of the 
imagination, today, they are met. The answer is, in terms of 
the core labor standards, they are not met. They are not met. 
They are far from it. Interference in the right of workers to 
associate. Employers can participate in meetings of employees. 
If you are not speaking Arabic, you are not allowed to 
participate in the process.
    The ILO makes clear that there are violations across the 
board today, and what is being suggested here is that the 
government says it will do, and so, we are supposed to move 
ahead on a statement as to what a government will do, and those 
are vague. We don't do that, Mr. Chairman, as to any other 
provision of a trade agreement. We don't do that. We don't take 
a statement of intention. What we do is insist on the 
embodiment of what we have agreed in the laws and actions of a 
country.
    I fully understand, and I finish with this; the importance 
of Oman, but for our representative to say here with a straight 
face that this country is abiding by its obligations under the 
declaration is simply pretending something that is not true. It 
is not true. Why do we not sit down, Mr. Chairman, and work on 
this together? With Morocco--I finish--we were active. We 
wanted--the more participation the better from the majority. I 
am glad there was a letter to you. I suggest we sit down on a 
bipartisan basis with the government of Oman and figure out how 
they are going to comply with their obligations, and to do it 
promptly within their processes, so that we have something in 
place when we move on this. That is all we are asking.
    Chairman THOMAS. The gentleman's time has expired.
    The gentleman from California?
    Mr. HERGER. I request recognition.
    Chairman THOMAS. Does the gentleman yield to the Chair?
    Mr. HERGER. I yield.
    Chairman THOMAS. Thank the gentleman. The gentleman has 
laid out his criteria on what he wants with Oman in which we 
don't do what he says that we are going to be doing here with a 
guaranteed date of enactment. I tell the gentleman, that is 
exactly what we are doing with Bahrain, except we do not have a 
conclusion in the agreement with Bahrain. We had a promise that 
they would introduce legislation. the gentleman's own criteria 
is not carried out with the agreement with Bahrain. Yet, that 
has been held up as a model that we really, really like. One 
thing I do hope we have around here is at least consistency.
    I thank the gentleman, and----
    Mr. HERGER. Thank you, Mr. Chairman.
    Three years ago the President proposed to establish a MEFTA 
area within 10 years, and in his words, to bring the Middle 
East into an expanding circle of opportunity. This is the 
message we are now carrying through the U.S.-Oman Free Trade 
Agreement. Certainly, there is forward movement in terms of the 
particular sectors we all typically watch, service, investment, 
Intellectual Property, or in my case, agriculture. For example, 
all the agriculture is covered by the agreement whether 
immediate or over time. The Technical Advisory Committee for 
Grains and Seeds fully endorsed the FTA reached with Oman, 
noting that the industry will benefit from the immediate tariff 
reductions, as well as by Oman's movement toward the science-
based Sanitary and Phytosanitary Measures Agreement (SPS) 
guideline, more transparency, and these procedures.
    Similarly, the Fruits and Vegetables Advisory Committee 
noted that the FTA will provide equity and reciprocity within 
the fruits and vegetable sector. Still, we are realistic about 
potential market access in Oman. With $12 million in total 
agriculture products exports to Oman in 2005 to a population of 
3 million, there is obviously much more to this Agreement than 
market access in any particular sector. In this spirit and in 
the spirit of the MEFTA, Ambassador Schwab, how do you view 
this agreement as contributing to our efforts against terrorism 
and how does free trade between the U.S. and Oman help support 
our other objectives, those of reform and political 
liberalization in the Middle East?
    Ms. SCHWAB. Thank you, Congressman. Thank you for that 
question. As I had indicated, Oman is part of the President's 
MEFTA initiative, and you spoke about his commitment to have 
MEFTA by the year 2013. This is an important step leading to 
that. This is the fifth FTA that we have negotiated that we 
have concluded in the Middle East. Israel, Jordan, Morocco, 
Bahrain, and now Oman. We are in negotiations with the United 
Arab Emirates, for example. We have TIFAs with a variety of 
other countries in the region, and it is absolutely the case, 
and stressed by the 9/11 Commission, about the important link 
between development and the openness of societies. This is an 
integral part of our effort to see reform in the Middle East, 
and, as the 9/11 Commission said, more opens societies and 
opportunities for people to improve the lives of their 
families, and to enhance prospects for their children's future. 
This is a process that we take very seriously.
    Obviously, the economic implications are important, and we 
find when we negotiate FTAs, that those countries really are 
believers in open trade, and become very important allies for 
us, for example, in WTO negotiations. We are able to set 
standards that are higher than the standards that we are able 
to set in the WTO. Aside from the obvious trade-specific 
implications, there are very important geopolitical 
implications here, and I thank you for the question.
    Mr. HERGER. Madam Ambassador, again, I thank you and the 
Administration for this outstanding work, and I think it is so 
important that we do recognize not only is this of tremendous 
benefit to our economy, but it helps set the standard in our 
war on terrorism and on other FTAs. Again, I thank you for your 
work.
    Ms. SCHWAB. Thank you, Congressman.
    Mr. RYAN. [Presiding.] Mr. Cardin.
    Mr. CARDIN. Thank you, Mr. Chairman.
    It is a pleasure to have you before us again--it is the 
first time I believe. It is nice to have you before our 
Committee. Let me get back to the legal issues on ILO standards 
and try to get the USTR's position on this. Do we know what the 
legal effect of ministerial decisions are as it relates to 
decrees that are inconsistent with the current laws in Oman? Do 
they supersede the laws permanently, or is it necessary also to 
change the laws? What are the legal effects of these 
ministerial decrees?
    Ms. SCHWAB. Our understanding--and this is, perhaps, one of 
the reasons that each country has a somewhat different formula 
in terms of how it conforms to its commitments. Each country 
has a different way of enshrining these particular commitments 
and in the case of Oman, as you noted, there is a commitment to 
do by decree a variety of elements that had been requested. The 
date of commitment, the date that they have agreed to have this 
done by decree, is the end of October. My understanding is the 
end of October--this was a question raised earlier--is in part 
because the Shura, which is the legislative body with which the 
extensive consultations take place is adjourned for much of the 
time between June and the end of September, so that is part of 
it.
    In terms of what has the force of law and practice, my 
understanding is, these have the force of law. We do know that 
in 2003, the fundamental labor reform legislation or laws were 
passed in Oman. This is the basis of these changes. In terms of 
the practices----
    Mr. CARDIN. Yes, I want to get to them as well, but also, 
the fact that they are not going to be in session during the 
summer months, it would seem to me we should be asking that 
this action be done before they go on summer recess. After all, 
I believe there may be some interest in Congress taking up this 
Agreement for approval before we return from our August recess. 
It would seem to me that we should be expecting the Omanis to 
act before they go into recess, rather than October. I just 
point that out.
    The other point, if you would address, deals with 
compliance. In Bahrain, the USTR was able to get a commitment 
that we could raise issues under the labor sections of the 
Agreement if they don't comply with the exchange of letters on 
the changing of their laws and acting and practice in ILO 
standards. My question is, are we going to seek a similar type 
of ability to raise these issues under the FTA if Oman either 
does not change its practice or change its laws, or is not in 
compliance of ILO understandings that we have?
    Ms. SCHWAB. I think, Congressman Cardin, we are pleased 
with the commitments that the Omanis have made to the Chairman. 
These have been----
    Mr. CARDIN. If they do not comply, what would be our 
options? If they don't change the laws, what would be our 
options?
    Ms. SCHWAB. Under our agreement, under the FTA agreement, 
they are committed, they have committed to enforce their laws.
    Mr. CARDIN. I understand that, but if they do not change 
their laws in October, if after we were--suppose we were to 
ratify this in June, and the Omanis do not change their laws, 
what would be our options?
    Ms. SCHWAB. Let me suggest that when we negotiate these 
agreements, it is under the assumption that each side is going 
to implement the agreement.
    Mr. CARDIN. No, that is not correct. We have legally 
binding commitments to enforce the terms of the FTA, and we 
could be taken under dispute settlement if we don't comply with 
our commitments to open market and remove obstacles. My 
question is, if they do not change their labor laws, what 
options do we have legally under the agreement?
    Ms. SCHWAB. Well, as you know, labor is not the--labor law 
issues are not the only issues in FTAs where there are side 
agreements and side letters.
    Mr. CARDIN. I know. Do we have any options for enforcement? 
I mean, enforce your own laws is in the agreement. They have a 
responsibility to enforce their own laws, but if they don't 
change their laws by the side agreements that have been raised, 
do we have the right under the Agreement to raise the issues?
    Ms. SCHWAB. Congressman Cardin, let me suggest that 
empirical--the former academic in me comes out here. I 
apologize. The empirical evidence is that with every one of our 
FTAs, the countries that have made commitments associated with 
the FTA. For example, in the case of Oman, they started making 
agreements and changes in their laws----
    Mr. CARDIN. In Bahrain, we have that commitment to be able 
to bring it up under the agreement, and from the way that you 
are responding, you are not giving me any comfort that we have 
the ability to enforce the letter that our chairman has 
referred to and put in the record.
    Ms. SCHWAB. Congressman, up to this point that dialog, that 
exchange has taken place between the government of Oman, and 
the Ways and Means Committee.
    Mr. CARDIN. We look forward to USTR giving us the final 
exchanges of understanding with Oman, because it is going to be 
critically important for the support, broad support to get this 
agreement passed.
    Mr. RYAN. The time of the gentleman has expired. I would 
like to point out to the gentleman that under the FTA, both 
countries are entitled to change their own laws, even after the 
agreement is made, in either direction.
    Mr. LEVIN. Would the Chairman yield for 1 second?
    Mr. RYAN. Yes, go ahead.
    Mr. LEVIN. That is one of the problems, because under this 
agreement, even if the laws were in place, they could later 
weaken them, and we would have no recourse. What you point out 
is----
    Mr. RYAN. If you want to take that course, we are never 
going to have any FTA.
    Mr. LEVIN. That is not true of any other provision. It is 
not true of tariff or anything else in this agreement.
    Mr. RYAN. The gentleman will suspend. Mr. Doggett.
    Mr. DOGGETT. Thank you very much.
    Do I understand that the provisions in this agreement 
concerning the environment are the same as we had in Bahrain, 
and the same as the trade representative's office is seeing for 
Peru and Ecuador and Colombia and so forth?
    Ms. SCHWAB. Yes, Congressman.
    Mr. DOGGETT. Those provisions really don't mandate that any 
country comply with multilateral environmental agreements that 
it might have signed, do they?
    Ms. SCHWAB. The environmental provisions of these 
agreements refer to the basic commitments that each side 
undertakes, the fact that each side will enforce their own 
laws. Iin many cases, these countries have undertaken 
international commitments, and many of these agreements, 
including this one, have consultative and technical assistant 
components.
    Mr. DOGGETT. There's no penalty for totally disregarding an 
international environmental agreement that a country has agreed 
to, is there?
    Ms. SCHWAB. There are consultative mechanisms that exist 
within the agreement, and----
    Mr. DOGGETT. You can consult at any time with these 
countries, can't you?
    Ms. SCHWAB. Yes. Although when you are talking about 
consulting under trade agreements, there are stronger 
implications about what that means under trade agreements. In 
addition, obviously, there is a focus on the enforcement of 
laws and each country----
    Mr. DOGGETT. Just centering in on that then, and knowing 
that what we are doing here is not just about Oman, it is also 
about the Galapagos Islands and other environmentally sensitive 
areas. All that you do is require that a country strive to 
ensure that it doesn't weaken its laws, and it seems to me that 
striving to ensure is very different than insuring, that you 
can strive not to take dollars from Jack Abramoff, but you 
might still take them, or you can strive to provide adequate 
armor to our troops, but you might not make it. If a country 
fails to strive, the only remedy that is provided is that they 
pay a fine to themselves; isn't that right?
    Ms. SCHWAB. Well, the fine is used to help remedy the 
problem, so a fine to themselves is in the way the fine is 
used. We have some influence over where that money goes, so 
that is quite different from the money going to----
    Mr. DOGGETT. To the extent that it is a fine limited to $15 
million, it is something you pay yourself to improve your 
environmental laws?
    Ms. SCHWAB. It is a fine that is used in consultation with 
us in this particular case, or vice versa, that is used to 
improve the environmental circumstance. Therefore, it is a 
remedy that is geared specifically to solving the kinds of 
problems that you have identified.
    Mr. DOGGETT. That is not if they weaken their laws, but if 
they fail to strive to ensure they don't weaken them.
    Let me ask you about another subject that I think is also 
something that what we are doing in Oman applies everywhere, 
and that is the concern that the American Medical Association 
has raised to Ambassador Portman about the office seeking to 
reduce tariffs on tobacco and other trade restrictions on 
tobacco. This Agreement requires, this agreement with Oman, 
that their current duty, which is a high one on tobacco, be 
phased out for U.S. tobacco, which will result in decreasing 
the price of cigarettes. Decreasing the price, as even this 
Administration has recognized in its signing the world's first 
public health treaty, the Framework Convention on Tobacco 
Control, will result in more use, addiction to smoking and more 
smoking. With big tobacco having run into at least a few 
barriers in addicting American children to tobacco and 
resulting in many ultimate deaths, doesn't this tobacco 
decrease and resulting price cut just make it easier for big 
tobacco to kill children in other parts of the world?
    Ms. SCHWAB. Congressman, as you know, when we negotiate 
these FTAs, these are comprehensive agreements. They are 
comprehensive agreements where we want to see barriers 
eliminated on both sides. In this particular agreement, the 
slowest phasing of the tariff reductions are applied to 
alcohol, tobacco and pork, not surprisingly, given the cultural 
and religious implications. As to the ability of the government 
of Oman to address smoking in it society, that is up to the 
government of Oman, and whether it chooses to place excise 
taxes or others internally is quite a different matter than 
what tariff is charged at the border.
    Mr. DOGGETT. Finally, as it relates to the investor state 
provisions, you do provide a mechanism in this agreement for 
Oman to use international arbitration to resolve any investment 
disputes that would extend to services such as any agreement 
over management of ports or any other kind of service that Oman 
might choose to engage in, or any future company that 
incorporated in Oman might choose to engage in. They would use 
international tribunals, not our courts; is that correct?
    Ms. SCHWAB. If you are referring to dispute resolution 
mechanisms, we have dispute resolution mechanisms articulated 
within the FTA. They differ in that in some cases there are 
WTO-related provisions, sometimes there are FTA-related 
provisions and in some cases, commercial arbitration.
    Mr. DOGGETT. If there were a dispute over a port 
management, we would go to the international----
    Mr. RYAN. The time of the gentleman has long expired. Mr. 
Linder? No questions. Mr. Becerra? Excuse me. Ms. Tubbs Jones 
is next.
    Ms. TUBBS JONES. Mr. Chairman, Thank you very much. Madam 
Ambassador, how are you today?
    Ms. SCHWAB. Thank you, very well.
    Ms. TUBBS JONES. When my colleagues have been asking you 
questions, you seem to have a problem with answering yes or no, 
and I am just curious about if we could get a yes or no answer 
to some of the questions that have been asked. For example, if 
there is an agreement with regard to a letter as we have in 
this instance, where the persons or the country says they are 
going to implement a labor standard and they do not implement 
the labor standard, what is the recourse?
    Ms. SCHWAB. Congresswoman, I apologize if my answers have 
seemed long-winded. It may be attributable to the time that I 
have spend in academia. I will endeavor to provide shorter 
answers. Unfortunately, the questions that are being asked 
don't lend themselves to yes and no answers. For example, in 
the case of the labor provisions of the FTA, in some cases a 
violation would result in consultations. In some cases a 
violation would result in kind of the fine that we were talking 
about. Really, it depends on----
    Ms. TUBBS JONES. Understanding there is some violation--
some implementation of some violation, but we could not go back 
and then say, ``This Agreement is over with,'' if there were a 
labor standard violation that was implemented? We couldn't cut 
up the agreement under the WTO, and say, ``See you later?``
    Ms. SCHWAB. You have asked a question that I don't--you 
know, if I can get back to you in writing on that? I can not 
imagine an economic circumstance where we would toss any 
agreement that has been signed by the U.S., approved by the 
Congress of the U.S. through the passage of implementing 
legislation, and signed into law by the President. I can not 
think of a situation where it could unilaterally be tossed 
overboard on economic grounds.
    [The written response from Ambassador Schwab follows:]

    The agreement allows either party to withdraw from the agreement 6 
months after having provided written notification to the other party.
                                ------                                

    Ms. SCHWAB. On the other hand, if, for example, you are 
talking about an issue related to national security--let's take 
a national security example.
    Ms. TUBBS JONES. Yes.
    Ms. SCHWAB. If there were a national security problem with 
the implementation of some part of the Agreement, the FTA, and 
in fact, all of our WTO agreements, have an essential security 
out. In that case, we could step outside of a trade agreement 
for national security reasons. Any country can do that. 
Unfortunately, some of our trading partners have used that--
sort of have abused that and used national security as an 
excuse for protectionism. In that particular instance--that is 
an example where there is a specific out.
    Ms. TUBBS JONES. Okay. For example, if Oman has inadequate 
protection against forced labor, inadequate protection against 
the worst forms of child labor, and inadequate protection of 
foreign workers from forced labor, and there is no way in which 
we could destroy an agreement if they don't comply with those 
situations, which they don't currently comply with, it really 
doesn't make any sense that we should enter into this agreement 
at all if we don't know that those three things cannot be taken 
care of.
    Ms. SCHWAB. I think, Congresswoman, any objective observer 
of what Oman has done in the labor arena in the last several 
years in anticipation of, and in connection with the FTA, would 
say that they have made dramatic improvements both in the law 
and in the practice of their treatment of workers. For example, 
when you talk about foreign workers, they are covered by the 
right to organize, the right of free association. They are 
covered by the collective bargaining provisions that are in the 
labor laws.
    Now, recognizing that 2003 was when this new law was 
enacted, clearly, Oman has a ways to go in the implementation 
arena. We know that they are consulting closely with the ILO, 
for example, to figure out how they could educate their 
workers----
    Ms. TUBBS JONES. I understand, Mr. Chairman, I am out of 
time, but it is her long answers, not my long questions that 
are taking up my time.
    Ms. SCHWAB. Oh, I apologize. I was looking at the clock and 
I thought you still----
    Ms. TUBBS JONES. I didn't tap, he did.
    Mr. RYAN. I tapped.
    Ms. TUBBS JONES. Mr. Chairman. Will you allow her to finish 
the answer, Mr. Chairman?
    Mr. RYAN. Yes.
    Ms. SCHWAB. Just summing up very quickly, I think Oman has 
recognized that they have a ways to go in terms of the 
implementation. I think there are very clear steps that have 
been delineated in terms of commitments that they have made, in 
terms of their ability to implement those commitments, and 
absent the FTA and negotiations for the FTA, we would not have 
seen these kinds of improvements.
    Ms. TUBBS JONES. Therefore, even though they have a long 
way to go, you still recommend we implement such an agreement?
    Ms. SCHWAB. Absolutely, yes.
    Ms. TUBBS JONES. Thank you.
    Mr. RYAN. Thank the gentlelady.
    Let me take some time. I appreciate the gentlelady. I think 
what we haven't discussed in this hearing is the big picture 
here, and I want to make basically three points, but first on 
the big picture.
    This is an area where we have had some great bipartisan 
successes I think in trade agreements with the Middle East. 
This is part of a broader picture, and that broader picture is, 
through these trade agreements, we are able to successfully 
bring together our countries. We are able to successfully bring 
together the people of America with the people of the Middle 
East to foster greater understanding. With these trade 
agreements, we are also able to bring forward more openness and 
more freedom in these other societies, these closed societies. 
When we get these trade agreements, we strike a blow for 
women's rights. We strike a blow for workers' rights. We strike 
a blow for freedom and free enterprise, and we help put into 
place the institutions that bring more democracy and freedom, 
and so this is a good thing, and it is something that is a very 
fairly non-controversial part of our foreign policy.
    Mr. CARDIN. Would the gentleman yield on that point?
    Mr. RYAN. Sure.
    Mr. CARDIN. I appreciate that, because I agree with 
everything you said. I just would ask the USTR to be sensitive 
on the worker rights provision that you just----
    Mr. RYAN. That is what I want to go to next.
    Mr. CARDIN. Just a response to your question with Ms. TUBBS 
Jones, the letter is not enforceable. What you negotiated in 
Bahrain, we can bring up for consultation under the Agreement. 
What Mr. Thomas got in exchange, there is no opportunity under 
the agreement. My only point was, and I appreciate you 
yielding, is, please, as you submit the final documents to us, 
give us something that will give us hope that these minimum 
worker rights are going to be adhered to after we have approved 
the agreement, because attention is very short lived.
    Mr. RYAN. Okay. Point taken. Point number two. Look where 
Oman is today. Oman is a phenomenal ally to the U.S. Oman has 
historic ties to our country. They have been a great ally in 
the war on terror. They have been a voice of moderation in the 
Arab world. One area that I think is probably most important is 
in the area of women's rights. Oman has the first woman 
ambassador to the U.S. She is here with us today. They have 
women in elected office. They have appointed women to the 
Ministry and the Judiciary. In fact, Oman is the only country 
in the Gulf with women in all three branches of government. 
Women constitute nearly 30 percent of the workforce in Oman. 
This is important. They have already made great strides in 
other areas.
    Let's now talk about labor. In labor, this is where we are 
all agree there is need and room for improvement. We passed, I 
think, the biggest bipartisan vote of a trade bill, in this 
Congress at least, or in a long time, was the Bahraini trade 
agreement. The question is: does the Omani trade agreement meet 
what we now kind of consider the Bahrain standard or not? I 
believe it does, but we need to discuss to make sure we both 
agree that it does.
    Let's compare it to the Bahrain agreement for a moment. 
Bahrain committed to seek accession to the ILO Conventions 98 
and 138, and incorporate this into their laws. Oman's issues 
are more with the Conventions 87 and 98. They are seeking 
accession to these conventions, and they will incorporate them 
into the laws, and they have already given us a date certain, 
by October 31st, 2006. Sandy, just let me finish, if you will.
    They submitted to their parliament, amendments. Bahrain 
submitted to their parliament amendments to improve anti-union 
discrimination and work to ensure that penalties are stiff 
enough. Oman has committed to doing the same thing by 
ministerial decree. Bahrain amended its laws to allow for more 
than one union per employer. Oman has committed to doing the 
same thing. Bahrain eliminated the requirement that all unions 
belong to one federation. Oman has committed to doing the same 
thing. Bahrain insured that technical requirements for a strike 
do not exceed ILO standards. Oman has committed to doing the 
same thing. Bahrain provided notice to labor panels and other 
bodies to have them reflected in actions even before the law 
was changed. Oman will seek the view of interested parties. 
That comes to this timing issue. I would argue that we want 
them to take a little bit of time to put these agreements in 
place so that they consult interested parties, so that they can 
consult ILO, the technical aspects of it, the labor unions' 
interested parties. It does take some time to do this, and they 
ought to be able to take some time to do it so that it is done 
right in the first place.
    Mr. LEVIN. Would the gentleman yield?
    Mr. RYAN. Sure.
    Mr. LEVIN. First of all----
    Mr. CARDIN. Let me just ask unanimous consent the gentleman 
be given an additional five minutes, because I think this is an 
important point.
    Mr. RYAN. I guess I am the Chair. This is a little new for 
me up here, so, yes.
    [Laughter.]
    Mr. LEVIN. First of all, when you talk about the Bahrain 
standard, it is not being suggested that you can take the 
Bahrain standard and apply it to every other country.
    Mr. RYAN. No, it is not.
    Mr. LEVIN. The Chairman said case-by-case, and I hope no 
one thinks that the Bahrain standard is applicable in other 
cases just across the board. Bahrain, like Oman, has a power 
structure that allows for very, very quick action. Let that be 
clear. Number two, in the case of Bahrain, there was a 
statement by the government that in practice the rights of 
workers, and by the way, this isn't just a narrow issue, this 
relates to globalization, the sharing of the benefits of 
globalization. Globalization is in trouble in part because in 
many countries the majority of people aren't receiving the 
benefits of it. the Bahrainian government told us that in 
practice, even if the laws did not reflect it, that these basic 
opportunities for workers were in place. I don't care, frankly, 
what USTR tries to say. With all due respect, it isn't true 
today, it simply is untrue. They made some changes a few years 
ago. If you go through the realities today, they don't meet 
these basic international standards, not ours.
    Number three, Congressman Ryan, we have been talking with 
them since October, and let's sit down and do this on a shared 
basis. We have taken on this talking to governments in part 
because no one else was doing it. We didn't exclude Republicans 
from these discussions. With Morocco it was left to us, and 
they made changes, and they had practices in place in a 
tradition of workers having freedoms. I mean the Middle East is 
vital. We prefer to move with an agreement with Oman, but let's 
not play let's pretend. That is what you are doing.
    Mr. RYAN. I am going to have to reclaim my time on that 
point. Mr. Levin, I think the important question and issue here 
is, where are they now, and where are they going to be? We 
received two letters in the last month from the Oman 
Government, one with five commitments, another one with eight 
commitments, to, by ministerial decree, making important 
changes, clarifying workers have the option to reinstatement 
for improper termination due to union activity; allowing more 
than one worker representative Committee per enterprise; 
allowing for more than one federation representing a group; 
ensuring penalties for anti-union discrimination are 
sufficient; ensuring technical standards for strikes do not 
exceed the requirements for ILOs. Many other very, very 
important worker rights are being committed to, and will be 
implemented by ministerial decree. I, for one, want to make 
sure that they take a little bit of time to do it correctly, 
get the ILO in there to make sure that they are drafted 
properly.
    Mr. LEVIN. Would you yield for a simple question then?
    Mr. RYAN. Sure.
    Mr. LEVIN. What is lost if the Omani government says it 
will do it by October? What is----
    Mr. RYAN. I think they are saying October 31st.
    Mr. LEVIN. Why not wait, as is true for other provisions of 
a trade agreement, to see if these changes are in place? Why 
not wait if we care that much about this?
    Mr. RYAN. My response would be we didn't do that with 
Bahrain. Why would we want to do----
    Mr. LEVIN. They were in place.
    Mr. RYAN. --with Oman now?
    Mr. LEVIN. The practices were in place, and because there 
was a qualify of discussion between the Bahrainis and 
ourselves. The practices were in place. You have here the 
ability of a government to meet ILO standards, and to do it 
within four or 5 months. To say, go ahead on the basis of 
statements, is an indication, Mr. Ryan, of a lack of certainty. 
I won't say seriousness. Certainty that is true of every other 
provision. We don't take promises----
    Mr. RYAN. I am going to reclaim just because I want to 
manage time fairly efficiently here. In my opinion, that is 
another way of saying we don't trust you, and until you do it, 
we are not going to act.
    Mr. LEVIN. We don't say that about any other part of the 
agreement.
    Mr. RYAN. Let me reclaim time and yield to the gentleman 
from Florida, and then I will make another point.
    Mr. SHAW. I will only take 10 seconds to say, Mr. Levin, 
what you stated is wrong. Those laws were not in place with 
regard to Bahrain.
    Mr. LEVIN. It was in practice.
    Mr. SHAW. That is not all together true either, that is not 
all together true either. Are we going to look and see what is 
going on and then go ahead? I think the question here before 
the Committee should be, is it to the best interest to the U.S. 
and to Bahrain, or to Oman, to go ahead with these agreements, 
or isn't it? That is the only question, I think, as far as this 
Committee is concerned. I yield back. Thank you for the time.
    Mr. RYAN. I will just take a minute to only we need to sit 
down and talk this out together, and it seems to me we have an 
extraordinarily good faith effort to improve, substantially 
improve worker rights in Oman, and that, I think, is largely 
because of points and concerns raised by the minority. we have 
great movement on the issues that were articulated very well by 
the minority side of the aisle. I think we have tremendous 
movement. You, obviously, don't think it is enough movement. We 
need to work that out. We need to figure this out.
    Let's go back to the big issue here, and that point is, 
this is a good thing for our country to pass these trade 
agreements, especially these trade agreements in the Middle 
East, so that we can improve not only our economic ties with 
the Middle East, but we can improve our cultural, political 
ties as well, and that we can put into these trade agreements 
the building blocks planting the seeds of openness and freedom 
so that we can improve peace and prosperity in a region that so 
desperately needs it. We have made these bipartisan in the 
past. I would like to think we are going to be able to continue 
to do that in the future. This is a good start and a good step 
in the right direction. I hope we can bring this to a 
conclusion fairly quickly.
    With that, I will----
    Mr. RANGEL. Before the Chairman yields, especially before 
you yield, where did you get this----
    Mr. RYAN. I will yield to the gentleman from New York.
    Mr. RANGEL. Where do you get this concept about Republicans 
and Democrats talking about labor provisions?
    Mr. RYAN. You and I talked on Monday.
    Mr. RANGEL. I was talking to you as the acting Chairperson, 
not just----
    Mr. RYAN. Well, I----
    [Laughter.]
    Mr. RANGEL. Where is this policy----
    Mr. RYAN. I will reclaim my time, but you and I had a long 
talk about this very topic on Monday.
    Mr. RANGEL. You were not the acting Chairman then.
    Mr. RYAN. I am a Republican Member of the Committee.
    Mr. RANGEL. Then what you are saying is that you have the 
ability now to say it is the policy----
    [Laughter.]
    Mr. RYAN. Reclaiming my time, okay, nice point. Are there 
any other Members who wish to seek time? Mr. Johnson, did you 
have a point you wanted to make? Mr. McCrery?
    Mr. BECERRA. Mr. Chairman?
    Mr. RYAN. Mr. Becerra. Mr. Becerra is recognized.
    Mr. BECERRA. Thank you, Mr. Chairman. I enjoyed listening 
to the exchange, and I would only point out to the acting 
chairman that there has been good movement, and we should 
always recognize our friends and our partners when they move in 
the right direction, or at least move in a direction we think 
is constructive.
    To the government of Oman and its people, we want to make 
sure it is clear that we appreciate what they are spelling out 
for us in these letters and the movement that they have 
expressed toward their labor laws and their practices, and we 
wish to see them continue that movement. As a President that I 
think the acting chairman or Mr. Ryan would agree had it right, 
when Ronald Reagan said, trust but verify, that is all we are 
asking, it that we be able to verify that these things will 
occur. Ambassador Schwab, thank you very much for being here. 
Welcome. Let me see if I can try to ask some questions that 
will require short responses. Actually, let me ask you a couple 
quick questions that you should be able to respond to pretty 
quickly. Do you own a home?
    Ms. SCHWAB. Do I own a home? Yes, sir.
    Mr. BECERRA. Do you own a car?
    Ms. SCHWAB. Yes.
    Mr. BECERRA. When you purchased that home, did you purchase 
it just on a verbal arrangement or agreement with the person 
selling you that home?
    Ms. SCHWAB. No.
    Mr. BECERRA. No. You got something in writing, correct? 
When you purchased your car, new or used, did you purchase it 
based solely on the verbal representations made by that car 
salesman?
    Ms. SCHWAB. Yes.
    Mr. BECERRA. You did?
    Ms. SCHWAB. It is a family--you don't want the details.
    [Laughter.]
    Mr. BECERRA. I probably don't. Have you purchased any other 
cars?
    Ms. SCHWAB. Yes.
    Mr. BECERRA. In essence, you have purchased vehicles, you 
purchased a home, and in each case you come at least home with 
a document verifying the substance of that agreement that you 
got when you either purchased or sold a home or purchased and 
sold a car, correct?
    Ms. SCHWAB. Yes.
    Mr. BECERRA. I think that is what we are saying with regard 
to these trade agreements. We are purchasing something here. We 
are purchasing the goodwill, the partnership with these friends 
in these other countries or governments, but we want to know 
what we got. If we do it based simply on a verbal agreement, or 
a handshake, we ain't got nothing. let me ask you another 
question. Would this Administration, would the U.S. Trade 
Representative accept an agreement, a trade agreement with Oman 
or any other country that said, ``enforce your own laws,'' 
country, when it comes to pharmaceuticals?
    Ms. SCHWAB. Different parts of FTAs and the WTO are treated 
differently.
    Mr. BECERRA. I understand, but I am just asking you 
specifically. I think that you can just tell me if you think 
the administration or the U.S. Trade Representative would be 
accepting of this if we had a trade agreement, negotiated a 
trade agreement that said simply: ``Oman, enforce your own laws 
with regard to how you treat pharmaceuticals,'' would we agree 
to that provision?
    Ms. SCHWAB. The implication is in contrast to----
    Mr. BECERRA. No, no, no. There is no need to contrast. I am 
just asking isolate just that provision on pharmaceuticals. 
Forget about everything else for now. If the provision on 
pharmaceuticals said, ``Enforce your own laws, country, Oman, 
Central America, whatever country, enforce your own laws with 
regard to pharmaceuticals,'' would we support that provision?
    Ms. SCHWAB. No.
    Mr. BECERRA. If we had a provision with regard to 
intellectual property that told a country, ``Enforce your own 
laws,'' would we agree to that trade agreement?
    Ms. SCHWAB. No, nor have we done so in labor if that is 
where you are going, sir.
    Mr. BECERRA. The trade agreement with Oman says, ``Enforce 
your own laws,'' correct?
    Ms. SCHWAB. There are a variety of provisions within----
    Mr. BECERRA. Forcible provisions of the trade agreement 
say, ``enforce your own laws.''
    Ms. SCHWAB. There are a variety of dispute resolution and 
consultative mechanisms with----
    Mr. BECERRA. Based on enforcing your own laws.
    Ms. SCHWAB. Among other things, yes.
    Mr. BECERRA. What other legal requirements, mandated 
requirements are there under the trade agreement under law----
    Ms. SCHWAB. There are consultative requirements related 
to----
    Mr. BECERRA. Consultative, as you heard Mr. Doggett say, 
anyone can consult at any point in time. That is not a mandated 
activity that forces you to do something.
    Don't try to confuse the issue. It is very simple. Just the 
way you wouldn't buy a car without something that guarantees 
you a right to defend yourself in court, or buy a home that you 
didn't know if it had shoddy construction done to it. This 
country should not enter into agreements where we can't enforce 
the laws. If the only thing you tell a country is ``enforce 
your own laws'' and those laws are already weak, we undermine 
our own ability to protect working men and women, not just in 
this country, but in those countries abroad. it is a much 
simpler test than you or anyone else would like to make it 
look. It is fairly simple and straightforward, that if you just 
tell a country the enforce its own laws and they are deficient, 
you are setting yourself up, at least your men and women in 
your country who work--into a bad deal. I think I have lost the 
remainder of my time.
    Ms. SCHWAB. Mr. Chairman, I would hope I would have an 
opportunity to respond to the question.
    Chairman THOMAS. [Presiding.] Briefly.
    Ms. SCHWAB. Briefly. The reason it is important for me to 
respond, is that it relates to some statements that Congressman 
Levin also made, and that has to do with the current state of 
affairs in terms of the current law in Oman. It is important to 
note that the current law in Oman, the law that would be 
enforced under this FTA, made some dramatic improvements in 
Oman's laws as they affect worker rights, and that includes the 
right to associate, to bargain collectively, the repeal of 
their right to strike. If you want empirical evidence--and 
these are the provisions of law that are enforceable under this 
agreement--take the right to strike. There were, as we 
understand it, 33 work stoppages involving over 6,000 workers 
last year. We know that there are collective worker groups. We 
can give you the names of the people who head them up--and some 
of them are women, by the way--in this Mid-Eastern country. 
there is a lot that has been done, recognizing that there is 
progress to make, but there are laws on the books that are 
effective, that are enforceable under this----
    Mr. BECERRA. Don't forget President Reagan's admonition, 
trust but verify.
    Chairman THOMAS. The gentleman's time has expired.
    The gentleman from Louisiana.
    Mr. MCCRERY. Yes, thank you, Mr. Chairman. I want to thank 
Ambassador Schwab for her testimony today and her persistence 
in trying to answer the questions factually, and I look forward 
to the next panel's presentations. I think that is important.
    Chairman THOMAS. Would the gentleman yield briefly?
    Mr. MCCRERY. I yield.
    Chairman THOMAS. For purposes of illustration, there could 
easily be a series of questions and I don't expect anyone to 
react to them, but they could be directed toward any one member 
of this panel, or in fact, you, Ms. Schwab. It would go 
somewhat along this line if you really want to get carried 
away. Are you married?
    Ms. SCHWAB. Yes, sir.
    Chairman THOMAS. Did you get any written contract in terms 
of what you were going to do in terms of obligations and 
responsibilities? You still went through with the ceremony?
    I am just telling you, that line of questioning may be 
interesting, but anyone else wish to be recognized, and I thank 
the gentleman----
    Mr. MCCRERY. I yield the balance of my time----
    Chairman THOMAS. I thank the gentleman for the time and 
yield back.
    Mr. RANGEL. Why don't you follow through on your question? 
This was getting interesting.
    [Laughter.]
    Chairman THOMAS. I tell the gentleman that each Member 
should apply it to themselves and ask themselves that question. 
That, to me, would be far more interesting. Except I am 
interested in the cardio. We will talk later.
    [Laughter.]
    Chairman THOMAS. Do you yield back?
    Mr. MCCRERY. I did.
    Chairman THOMAS. Any other Members? The gentleman from 
Pennsylvania.
    Mr. ENGLISH. Madam Ambassador, I want to thank you for your 
presentation here today. Again, as the gentleman from Louisiana 
put it, for endeavoring heroically to answer some of these 
questions. I have to say, looking at the labor offer that Oman 
has made, I take a great deal of comfort in it because I have 
looked at the track record of Oman. Oman has been one of our 
best strategic allies in the region. They have been with us 
when it was very unpopular in the region to be with us. This 
relationship is very, very important, and I certainly would 
hate to think that this small FTA would create another occasion 
for one of our good friends in the Middle East to become a 
political punching bag, and I, for one, don't want to allow 
that to happen.
    The Sultan of Oman has done an extraordinary job since he 
assumed his position, replacing his father, of westernizing and 
modernizing his society and his culture. Obviously, by our 
standards, they still have a distance to go, but what they have 
done on the labor front, in my view, is very dramatic, and is 
something I think deserving of applause, and I will leave it 
for some of my friends, who have raised these issues, to take 
all of that into account.
    My question has to do with Oman's economic profile, 
recognizing it is a small market, but it appears that the U.S. 
is at a relative disadvantage compared to blocks of trading 
partners when it comes to getting into that market, 
particularly, the EU-15 and Asia. How will this FTA allow us to 
penetrate with U.S. exports into the Oman market at levels 
comparable to European and Asian exports, and can U.S. 
producers expect to see gains in exports of a broader nature 
than the current concentration of machinery, transportation 
equipment and measuring instruments?
    Ms. SCHWAB. Congressman, Thank you very much for your 
question, and thank you for your support of this FTA and your 
active engagement in the Middle East Economic Partnership 
Caucus. Although U.S.-Oman trade is relatively small, I would 
note first of all that the U.S. last year ran a small trade 
surplus with Oman, and we do expect, as implied by your 
question, for U.S. exports to Oman to go up in the context of 
this Agreement in a variety of areas. 100 percent of industrial 
and consumer goods go duty-free upon date of entry, and 
virtually all agricultural products, 87 percent of the lines in 
agriculture go duty-free. This is very significant.
    It is also in services, and some of the areas that you have 
mentioned, with work that we will be doing, for example, with 
Oman in standards and certification. That has the potential for 
opening new markets. In textiles and apparel with this 
assessment's rules of origin, there is potential for increased 
U.S. exports that have not been there before, in addition to 
the export areas that you mentioned, which we would expect to 
grow, automotive, medical, optical equipment and so on.
    Mr. ENGLISH. Thank you.
    Thank you, Mr. Chairman.
    Chairman THOMAS. Thank the gentleman.
    Thank you very much, Ambassador.
    Chairman THOMAS. The Chair would request the next panel. 
The Hon. Frances D. Cook, Chairman, Ballard Group and former 
U.S. Ambassador to Oman; Nicholas Billotti, President and Chief 
Executive Officer of Turner Construction International from New 
York; Michael P. Weitzel, Program Manager, DynCorp 
International, Muscat American Business Council in Muscat, 
Sultanate of Oman; Richard L. Trumka, Secretary-Treasurer, 
American Federation of Labor, AFL-CIO; Roger R. Schwartz, 
Business Vice

President, Polyethylene, the Dow Chemical Company in Midland, 
Michigan. I always thought everything was Maryland.
    You all have written statements, and we will be pleased to 
make it a part of the record, if you, in the time you have, 
wish to address us in any manner you see fit. It just seems 
appropriate the Chair would start on the far left with 
Ambassador Cook, and then move down the line.

   STATEMENT OF THE HONORABLE FRANCES D. COOK, CHAIRMAN AND 
  PRINCIPAL, THE BALLARD GROUP, LLC; AND FORMER UNITED STATES 
                       AMBASSADOR TO OMAN

    Ms. COOK. Thank you, Mr. Chairman, distinguished Members of 
the House Ways and Means Committee, and friends, good 
afternoon. Thank you for inviting me to appear before you in 
support of the passage of the U.S.-Oman Free Trade Agreement. 
My comments are in my personal capacity as an American citizen 
and as former U.S. Ambassador to Oman. They are uncleared by 
the Department of State.
    I will summarize my remarks, and the full text you have for 
the record.
    I am going to try to speak to some of the issue raised in 
conjunction with the passage of this FTA in the hearing this 
morning, and try to explain Oman a little bit as I came to know 
it.
    The key to understanding Oman, I think, is the Sultan 
himself. In only 35 years he has taken his nation from an 
almost closed and near medieval state, to the vibrant and 
welcoming country that we know today. From three small primary 
schools, Oman now has 600,000 children in the classroom, and 
English is required from grade one. From an American missionary 
run 12-bed hospital, Oman is now recognized by UNICEF as 
providing among the best primary health care in the world.
    From less than 10 miles of hard-surface road, Oman now 
boasts thousands of kilometers of super highways. From a few 
sleepy fishing ports, Oman now boasts the 11th busiest state of 
the art container terminal in the world, built during my time 
in Oman by an American company, I would add. How has the Sultan 
managed such a transformation, working with much smaller 
hydrocarbon revenues than other Gulf states, while dealing with 
a historically disputatious and tribally based population? 
Therein, I think, lies the political skills of the man.
    From 1970 he enunciated very big goals, they were really 
dreams, for a people who were just emerging from a grinding 
insurgent war in the south. The Sultan proclaimed that a modern 
state living in peace with its neighbors was his goal, but he 
never coerced or forced changes on his citizenry. He has 
proceeded on an evolutionary, gradual, deliberate track. After 
each move or new institution is announced and has been accepted 
and absorbed, he moves things on up a notch. This has been as 
true of reforms in education and the Omani legal system, as it 
is in gender equality and in Oman's evolving political 
institutions.
    I was there when Oman's first constitution, called the 
Basic Law or Statute, was announced. Omanis are proud of their 
country, but I don't think I have ever seen them prouder than 
that day. The document that he gave them actually includes 
something that we would call a bill of rights that would be 
recognizable as such to our Founding Fathers in Philadelphia.
    The role of religion, in my own analysis, is what has 
helped Sultan Qaboos in his reform program, specifically, the 
predominant Ibadhi brand of Islam, which is preponderant in 
Oman. Its chief characteristic is a deep tolerance of others. 
When you combine that with Oman's historical seafaring 
tradition and long exposure to others' cultures and religions, 
it produces a people who are secure in knowing who they are and 
who can therefore accommodate other people and beliefs more 
easily it seems than other groups in the Middle East.
    The Ibadhis, for example, worship alongside other sects of 
Islam, the Sunni, the Shi'a, in their mosques, just as they are 
used to seeing churches built on land granted by the Sultan, 
and Hindu temples in their cities. The Sultan's unwavering 
quest for peace in the region has led Oman almost uniquely to 
pioneer in several other areas, some of which have been 
mentioned already this morning. Alone in the Arab Gulf, Oman 
has negotiated and formalized all of its land borders and had 
them registered at the United Nations. Alone in the Arab Gulf, 
indeed in the whole Middle East, Oman stood by Egypt after Camp 
David. Alone in the Arab Gulf, Oman still hosts a Track II 
Middle East Peace Process Institution, the MEDRC, with full 
Israeli membership.
    Water, most experts agree, will likely be the source of 
future tensions in the region, so MEDRC Center works to develop 
lower-cost desalinization methods for coastal states and to 
rationalize water usage in the region. I still recall the day 
when the Permanent Secretary of the Israeli Foreign Ministry 
came into my office in Muscat to show me a one million dollar 
Israeli contribution check to MEDRC. They have since added 
another million to the pot, and that has been created and 
continues to be overseen by Ministry of Foreign Affairs in 
Oman.
    It is a little hard to talk about Arab-Israeli relations 
right now because they have deteriorated after the second 
Intifada, but during that time there was a great flowering, and 
we welcomed Israel's first trade representative to Muscat in 
1996, and helped him set up an office. During that time we even 
had Israeli firms participate in trade fairs in Oman, and Omani 
trading houses sent management personnel to Israel to establish 
commercial ties. I even welcomed some Israeli friends, who came 
with their children to vacation in Oman. That was a very 
hopeful time, but I think it was also an important lesson, that 
small states with visionary leaders can show the way. I would 
hope that these pioneering efforts by Oman will be remembered 
in Washington.
    Let me move quickly to the labor situation in Oman.
    Mr. RYAN. [Presiding.] Ambassador, could you wrap up, 
please?
    Ms. COOK. Yes, please, okay. I would just say that all of 
the Gulf states have had large expatriate labor forces because 
they have tried to develop quickly with their oil resources 
while they are getting their own population educated. I think 
the recent reforms that you have been informed of today are 
absolutely in the right direction, and they will be honored.
    One of the things I want to demonstrate, I think, in my 
comments is that Oman does honor its agreements. It has honored 
its agreements with us from the beginning, and I think that 
they have earned the kind of respect and friendship that this 
treaty implies. Thank you very much.
    [The prepared statement of Ms. Cook follows:]

  Statement of The Honorable Frances D. Cook, Chairman and Principal,
       The Ballard Group LLC, and former U.S. Ambassador to Oman

    Mr. Chairman, distinguished members of the House Ways and Means 
Committee, and friends:
    Thank you for inviting me to appear before you in support of 
passage of the U.S.-Oman Free Trade Agreement. In preparation for this 
hearing, I reviewed earlier testimony, and asked myself what further 
information I could provide, to facilitate the Congress' decision-
making in this matter? Unlike other witnesses, I have actually resided 
I Oman, so I bring personal experience to the table. I am the daughter 
of a union member, and have honored, throughout my lifetime, the 
contributions of working men and women to our own development, as a 
society, and a nation. I believe, in fact, the Congress and the AFL-CIO 
rightly focus on labor commitments in all trade agreements negotiated--
by any administration--in our globalizing world. I was in Oman when the 
first tentative steps were taken with Israel, so I can speak to that 
issue. Finally, my specialization in the Foreign Service was in the 
political-military sphere, so I'd like to review, briefly, for you, the 
absolutely key role that Oman has played in our various engagements 
against Middle East extremism in recent decades--and the support the 
Sultanate provides to our men and women in uniform. More broadly, I'll 
discuss my personal support for the notion (as stated in the 9/11 
Commission's final report) that any comprehensive U.S. strategy abroad, 
must include economic policies and engagements that encourage broad 
economic development and provide opportunities for families to enhance 
prospects for their children's future. The FTAs that USTR is now 
negotiating in the region are key components of that effort.
Understanding Oman
    The key to understanding Oman, which remains relatively unknown in 
America, is the Sultan himself. In only 35 years, this remarkable 
leader has taken his nation from an almost closed, and near-medieval 
state, to the vibrant and welcoming country we know today----
    --from 3 small primary schools, Oman now has 600,000 children in 
the classroom, and English is required from Grade One;
    --from an American missionary-run 12 bed hospital, Oman is now 
recognized by UNICEF as providing among the best primary health care in 
the world;
    --from less than 10 miles of hard surface road, Oman now boasts 
thousands of kilometers of super highways----
    --and from a few sleepy fishing and dhow ports, Oman now boasts the 
eleventh busiest, state of the art, container port in the world . . . 
built during my time in Oman by an American company (Sealand, now owned 
by Maersk) I'd add.
    How has the Sultan managed such a transformation, working with much 
smaller hydro-carbon revenues than other Gulf states, while dealing 
with an historically disputatious, and tribally-based population? 
Therein lies the genius of the man, I believe. From 1970, he enunciated 
very big goals--dreams, really--for a people just emerging from a 
grinding insurgent war in the country's south. The Sultan proclaimed 
that a modern state, living in peace with its neighbors was his goal. 
But he never coerced or forced changes on his citizenry. He has 
proceeded on an evolutionary, gradual, deliberate track--after each 
move, or new institution, has been accepted, and absorbed, he moves on 
up a notch. This has been as true of reforms in education, and the 
Omani legal system, as it is in gender equality, and in Oman's evolving 
political institutions. I was there when Oman's first constitution, 
called the Basic Law or Statute, was announced. Omanis are proud of 
their country and their Sultan, but I don't think I've ever seen them 
prouder than on that day. They understood that the Sultan had given 
them a document--he wrote it himself, he told me--and a roadmap 
forward, that exceeded anything else we have seen from the Arab world. 
It even includes what we Americans call a Bill of Rights, that would be 
recognizable, as such, to our Founding Fathers in Philadelphia.

The Role of Religion
    My own analysis, for what it is worth, is that Sultan Qaboos has 
been aided in his reform programs by the predominant Ibadhi brand of 
Islam which is preponderant in Oman. Deep tolerance of others is a 
hallmark of Ibadism--and when combined with Oman's historical seafaring 
tradition (Omanis were head of the Foreign Traders Committee in the 
Port of Shanghai in the 11th and 12th centuries; many of today's 
government ministers grew up in East Africa, when Zanzibar and coastal 
East Africa was part of Oman's empire), it produces a people who are 
secure in knowing who they are, and who can therefore accommodate other 
people and beliefs more easily, it seems, than other groups in the 
Middle East. Ibadhis worship alongside others sects of Islam (Sunni, 
Shi'a) in their mosques, just as they are used to seeing churches 
(built on land grated by the Sultan) and Hindu temples in their cities. 
This kind of balanced world view, combined with a longstanding and 
unwavering quest for peace in the region, has led Oman, almost 
uniquely, to pioneer in several areas . . .

Peace is the Goal
    --alone in the Arab Gulf, Oman has negotiated and formalized all of 
its land borders, and had them registered at the United Nations. (It 
doesn't get much coverage here, but throughout my stay in Oman, there 
were deadly confrontations, on various other borders in the oil-rich 
Arabian peninsula, and that remains the case today.)
    --alone in the Arab Gulf (indeed in the Middle East), Oman stood by 
Egypt after Camp David (an Omani representative was among those killed 
when dissident Egyptian military personnel assassinated President Anwar 
Sadat in the reviewing stand in Cairo)
    --alone in the Arab gulf, Oman still hosts a Track II MEPP 
institution, MEDRC--with full Israeli membership. Water, most experts 
agree, which is in inadequate supply throughout the Middle East, will 
be the source of future tensions in the region. So, the MEDRC Center 
works to develop lower cost desal methods, for coastal states; and to 
rationalize water usage in the region. I still recall the day when the 
then-PermSec of the Israeli Foreign Ministry came to my office in 
Muscat to show me the $1 million Israeli contribution (it has since 
grown to $2 million) to the functioning of MEDRC, which was created, 
and continues to be overseen by one of the finest diplomats I knew in 
my long career at State, the Under Secretary of the Omani Foreign 
Ministry. (I'd add that that diplomat, along with his Minister of State 
for Foreign Affairs, were sent by Sultan Qaboos to PM Rabin's funeral 
in Jerusalem. Before taking up my post in Muscat, I had the honor of 
discussing, with PM Rabin, his trip to Oman, and can describe his 
attitude toward Oman later during the Q & A, if there is interest.)
    Arab relations with Israel have been complicated greatly by the 
lack of recent progress toward overall peace, and by second 
``intifada''--and the endless televising of its brutality into Middle 
Eastern homes. I was in Oman during the period between the two 
``intifidas''. I welcomed Israeli's trade representative to Muscat in 
1996, and help him set up an office (that was an embassy in everything 
but name), reciprocating what Oman had in Tel Aviv. During that time, 
we even had Israeli firms participate in a trade fair in Oman, and 
Omani trading houses sent management personnel to Israel to establish 
commercial ties. My Israeli colleague and I were pleased to welcome on 
a visit Israeli's trade rep from Qatar (the only other state to have an 
Israeli trade office in the Gulf), and during this period I also 
welcomed Israeli friends who came to Oman on vacation, with their 
children, and stayed with me at the official U.S. residence. What a 
hopeful time that was! It is a bit painful for me now, to recall those 
days (the trade office effort is was ``suspended'' in 2000), but 
Americans did learn an important lesson about Oman's commitment to 
Middle East peace--and that small states, with visionary leaders, can 
show the way. I would hope that these pioneering efforts by Oman, based 
on their own analysis of how to develop relations, across an historic 
divide, are not forgotten in the current atmosphere in Washington.

Labor in Oman
    Let me move quickly to the labor situation in Oman. Labor is a 
complex issue in all of the GCC states in the Gulf, due to their 
reliance on foreign labor--in order to develop modern economies 
quickly, using new oil monies, while their own people are being 
educated. Oman, which has the second largest population in the GCC, is 
now in the midst of a large ``Omanization'' process, putting trained 
Omanis to work in slots formerly held by expats--at the same time it is 
opening up to tourism, and all of the jobs that will undoubtedly create 
for locals.
    When I was served in Oman 1995-1999, my labor reporting officer and 
I were aware that Oman did not have in place the various protection 
mechanisms required by the ILO. We asked a lot of questions, and 
nudged--not because of any instruction from Washington, nor because 
there was any apparent labor unrest--but because it was an appropriate 
activity for representatives of a nation which values its working men 
and women. I have been very pleased, through this FTA process, to learn 
that the excellent Labor Minister, who was named just as I was leaving 
Oman, put priority on Oman's ILO compliance, and enacted a 
comprehensive labor code in 2003. This is obviously a work in 
progress--with ``Omanization'' and training undoubtedly remaining the 
top labor priorities in the Sultanate--but I refer you back to earlier 
comments on evolution and gradualism in all of Oman's modern reforms. 
Nonetheless, the right to organize and to strike is now law--and the 
Minister of Commerce reports 33 strikes (involving 6000 workers) in 
2004 alone. So, I think Oman is now ahead of most of its neighbors, in 
implementing a modern labor code. I'd think we'd want to encourage that 
move, rather than harm it, through the FTA process. I can also speak to 
the conditions of the large population of foreign workers in Oman, in 
the Q & A session, if that would be of interest to this Committee.

Close Security Cooperation is the Foundation of our Ties
    Again, because of the Sultan's vision, our security ties with Oman 
are both the longest-lived, and the most proven, in the region. A quick 
glance at a map will demonstrate why they are as valuable today, as 
when they were initiated in the Carter Administration.
    Again, the Sultan moved in this arena far before any of his GCC 
peers. (After being educated at Sandhurst, he served with the British 
Army in Germany--where he came to know the U.S. military at Garmisch, 
he once told me.) In fact, Kuwait offered Oman a multi-million dollar 
``package'' of incentives NOT to sign an access agreement with the 
United States, so leery were they of a foreign presence in the Gulf 
after the British departure! Ten years later, at the time of the first 
Gulf war--to expel Iraq from Kuwait--the prepo supplies and equipment 
we had in Oman, valued then at over $1.5 billion, saved 4-6 months in 
the build-up prior to the commencement of hostilities. Again, look at 
the map and consider the attitude of our host in Oman--you then won't 
be surprised also to learn that the first humanitarian food deliveries 
CENTCOM made to Somalia came from the Oman prepo, just as the first 
supplies to the Balkans, by EUCOM, came from the same place. Still, we 
have no ``bases'' in Oman, and seek none. Our supplies--Harvest Falcon 
sets, fuel, military hospital kits, emergency food rations, and 
vehicles--are all co-located on Omani air bases, where Oman's highly 
professional military treat our soldiers, airmen and contractors, with 
great professionalism. We have run some very select operations from 
Oman over the years, which would be best discussed in a classified 
session. But two which have been in the media, are Oman's help in the 
``Earnest Will'' reflagging operation, in the late 80s, out of Masirah 
Island. And the first combat use of American B-1's, was also out of 
Oman, during my time there. In all these delicate security operations, 
in a very dangerous part of the world, Oman's size abets its vaunted 
discretion. U.S. strategists have considered themselves lucky to deal 
with a leader, over the decades, who understands both our historic 
reluctance to use military power--and our commitment to our troops to 
provide the best possible support once we opt to engage. As someone who 
spent part of her career negotiating military access agreements, as 
well as a renewal in Oman, I have never had the slightest doubt that 
the reason Oman has been such a steadfast partner for the United States 
of America, is that the Sultan has always viewed our security 
cooperation as profoundly in Oman's best interest. In that, he is 
right.
    In conclusion, let me just note that the Sultan was also right to 
instruct his Ministry of Commerce to engage in a series of trade 
negotiations--with WTO, with India, with us. Oman will benefit not only 
from the greater transparency and enhanced regulatory environment that 
these agreements require, but--in spite of the now small amount of 
foreign trade between our two states--America will gain, too. A level 
playing field, and strict IPR enforcement, in signatory states, will be 
a big boost to U.S. industries--many of which are only now looking to 
invest abroad, and spread their wings to the export markets of the 
world. This is a win-win proposition for both sides (the best 
agreements always are), because it advances, in a significant way, 
America's historic goals of peace and development in the Middle East 
region. The Sultanate of Oman, as I've tried to demonstrate, has 
clearly earned the right to be treated as a full-fledged partner of our 
nation. And, I hope this committee, and the Congress, will so vote.
    Thank you for your attention.

                                 

    Mr. RYAN. Thank the Ambassador. Mr. Billotti, and I also 
want to let every witness know that your written statements 
will be included in the record, so if you could keep your 
statements to 5 minutes, we would appreciate that.

 STATEMENT OF NICHOLAS BILLOTTI, PRESIDENT AND CHIEF EXECUTIVE 
 OFFICER, TURNER CONSTRUCTION INTERNATIONAL LLC, NEW YORK, NEW 
                              YORK

    Mr. BILLOTTI. Thank you, Mr. Chairman. I will spare you 
from the entirety of my written text. Mr. Chairman and 
distinguished Members of the Committee, thank you for the 
opportunity to testify today on the proposed FTA between the 
U.S. and the Sultan of Oman. My name is Nick Billotti, and I am 
the President and CEO of Turner Construction International, 
which is a subsidiary of the Turner Corporation, the U.S.'s 
leading general building contractor. Internationally, Turner 
manages projects of more than 8.2 million square meters in 
building area, with a value in excess of U.S. $12.2 billion. We 
are headquartered in New York City, and we provide 
comprehensive, professional building services in Africa, Asia 
Pacific, Europe, Latin America, the Middle East. Our area of 
expertise centers on program management, project management and 
construction management.
    We have been working in the Middle East for over 30 years 
on many landmark projects, and we have formed many strategic 
relationships with companies in the region. As members of the 
business community in Oman, we work hard to build strong 
relationships with our local clients, architects, 
subcontractors, laborers and government. Additionally, we are a 
member of the American Business Council of Oman.
    Today, we are active on three major programs in Oman. We 
work to manage the design, the procurement and the construction 
of a large resort called Al Jissah, which is a combination of 
three hotels that is valued at approximately $145 million. We 
are working on an enormous theme park entitled The Wave, which 
is valued at approximately $800 million, and we are also 
working to build support facilities for F-16 fighter planes at 
Thumrait Air Base in Oman.
    I can tell you from my own experience of 30 years in 
dealing with the Middle East, that our business deals in Oman 
have all been extremely fair, they are wholly transparent. We 
have no sponsor. We have no agent. We have no barriers to 
entry, and on a personal level we enjoy the relationships that 
we have developed with so many of our Omani clients.
    I will tell you as a construction manager, we have a great 
deal of influence on the selection of architects, engineers, 
and for the selection of so much of the equipment and materials 
that are put into the projects. As an American based company, 
we have an affinity for American based architects and engineers 
because of the expertise that they bring. I will tell you, on 
all three of our projects, we have American architects and 
engineers working. Those architects, and particularly 
engineers, have a great deal to do with the manufacturers that 
are specified for the supply of major pieces of plant and 
equipment, and there are numerous examples on the project's on 
which we work, where Americans have been very successful in 
trade with Oman.
    I will tell you that if this FTA goes through, it will give 
us even greater incentive to recommend to our clients for the 
purchase of American manufactured goods and materials. In our 
view, the FTAs that are currently being negotiated with 
countries in the Middle East will help both sides economically, 
increasing exports, generate jobs and developing common 
business practices. Labor has been a particular hot button 
today, and I will tell you, on those projects where Turner is 
involved, we work extremely hard to enforce the same standards 
that we employ here in the U.S. The same personnel policies 
that we employ in the U.S. are mirrored for all of the staff 
that work for us in Oman.
    The safety standards that we employ on projects here in the 
U.S. are written into our contracts for the contractors and the 
subcontractors who work on our projects. as Americans 
participate in the economy of Oman, we tend to take those 
standards that we employ and introduce them, and I think Oman 
is better for that, and I think that we are better for that. 
Agreements such as the one contemplated today represent the 
firm base from which U.S. interests, already present in the 
country, can move ahead for the benefit of both countries. A 
snapshot of our work--this is the propaganda portion--in Oman 
can be found in a recent issue of the U.S.-Arab Tradeline. It 
is the monthly newsletter of the National U.S.-Arab Chamber of 
Commerce, and in our opinion, the newsletter provides excellent 
overview of U.S. and Oman relations, and with your permission, 
Mr. Chairman, I request that this special issue of the 
Tradeline be included in the record of today's hearing. I thank 
you for the opportunity to testify.
    [The information is being retained in the Committee files.]
    [The prepared statement of Mr. Billotti follows:]

   Statement of Nicholas E. Billotti, President and Chief Executive 
     Officer, Turner Construction--International LLC, New York, NY

    Mr. Chairman and distinguished members of the committee: Thank you 
for the opportunity to testify today on the proposed Free Trade 
Agreement (FTA) between the United States and the Sultanate of Oman.
    My name is Nick Billotti, and I am President & CEO of Turner 
Construction--International, a subsidiary of The Turner Corporation, 
the United States' leading general builder. Internationally, Turner 
manages projects of more than 8.2 million square meters in building 
area, with a value of some U.S. $12.2 billion.
    Headquartered in New York, Turner Construction--International 
provides comprehensive professional building services in Africa, Asia-
Pacific, Europe, Latin America and The Middle East. Our area of 
expertise centers on program management, project management, and 
construction management.
    Turner has worked in the Middle East for over 30 years on many 
landmark projects and we have formed strategic relationships with many 
companies in the region. As members of the business community in Oman, 
we work hard to build strong relationships with local clients, 
architects, subcontractors, laborers, and the government. Additionally, 
Turner is a member of the American Business Council of Oman.
    American firms have a reputation for quality in Oman and Turner is 
doing its best to live up to that reputation. We bring high standards 
to every project we work on and we insist that our clients adhere to 
those standards, especially as they concern the health and safety of 
our staff and the subcontractors on our jobsites.
    Working with our clients and the government in Oman has been a 
positive experience with transparency in all of our business dealings. 
In fact, Turner has never experienced a lack of transparency in our 
work in Oman. We have found that the standards on our jobsites are not 
compromised and regulations are strictly adhered to by our clients and 
their subcontractors. Turner works hard to enforce these standards to 
ensure that our jobsites are well staffed with workers who are properly 
fed, properly clothed and paid on a timely basis.
    Over the past several years, Turner has fostered strong ties with 
many Omani firms that work on our projects as general contractors and 
laborers. We are planning to hire qualified Omani engineers and 
architects to join Turner as it benefits our organization to have local 
staff on our team.
    Additionally, our staff at The Wave project is planning a mentoring 
program for local students who are pursuing engineering degrees. This 
is similar to programs that Turner runs in the U.S. and will give Omani 
students an opportunity to work for an American company and gain 
firsthand job experience.
    Today, Turner is currently working on the three distinguished 
projects in Oman which are indicative of the strong and growing ties 
that exist between U.S. business and the Sultanate:
    Turner served the project manager for the recently completed 
Shangri-La Barr Al Jissah Resort in Muscat, a project with a 
construction value of U.S. $145 million. The resort includes a total of 
680 rooms and suites in three separate hotels. This luxury hotel is 
scheduled to celebrate its grand opening this month.
    As an extension to the successful work just completed at the Barr 
Al Jissah, Turner has been assigned to work on a new program for the 
construction of 125 residential units on the grounds. The residential 
complex will consist of 75 apartments, 30 townhouses and 20 villas.
    In both of these efforts, Turner led a global team of engineers, 
contractors, and consultants including the U.S.-based design firm, 
Wimberly Allison Tong & Goo, and managed the inclusion of many 
suppliers from the U.S. who exported their goods to the project such as 
Superior Boiler Works and Baltimore Aircoil--two leading manufacturers 
of mechanical equipment.
    Turner is also working as project and construction manager for 
Oman's tourism and beach front residential project, The Wave, also in 
Muscat, an $800 million construction project which will include a Greg 
Norman signature golf course, a 300-berth marina, villas, apartments 
and several themed hotels. Both the architect for the project, OBM, and 
golf course designer, Greg Norman Golf Design, are based in Florida.
    Finally, at the Thumrait Air Base for the Sultanate, Turner is 
managing construction of facilities for twelve U.S. manufactured F-16 
fighter jets. This exhibits not only Turner's commitment to the nation, 
but also the U.S. aircraft manufacturing community.
    In addition to these projects, Turner was also a corporate sponsor 
for ``A Celebration of Omani Culture'' at the Smithsonian Castle in 
Washington, D.C. in June, 2005.
    In my travels to Oman, I have become acquainted with a beautiful 
country where the people are open and extremely generous. I have been 
particularly impressed by the Omanis' respect for the environment and 
their desire to incorporate standards that respect the environment into 
their construction projects. For example, our clients have made special 
efforts to preserve the coral reef and the turtle breeding grounds at 
the Bar Al Jissah, and we are working with the client at The Wave to 
create an eco-sensitive building program.
    Overall, I believe that industry and tourism, the pillars of Oman's 
sustainable development, are segments in which American businesses will 
continue to flourish and that there is great potential for Turner to 
work on additional projects in the Sultanate.
    In our view, the Free Trade Agreements that are currently being 
negotiated with countries in the Middle East will help both sides 
economically: increasing exports, generating jobs and developing common 
business practices. With each new project and private transaction 
between U.S. and Omani firms that conform to the international 
marketplace, this already solid trading partnership will continue to 
improve and grow in value to the citizens of Oman and the overall U.S. 
services industry of the region. Agreements such as the one 
contemplated today, represent a firm base from which U.S. interests 
already present in the country can move ahead for the benefit of both 
countries.
    Specific to the construction industry, I believe the FTA will bring 
practical benefits to U.S. firms. Our firm's early involvement in 
construction projects often allows us to influence clients' choice of 
consultants on the project, including the selection of architects, 
engineers and others.
    We often suggest U.S.-based firms, as we are familiar with the 
high-quality of their work. In turn, these consultants usually specify 
American-made materials for these large projects. It is part of 
Turner's job to help clients obtain the best value for their projects. 
This FTA will help us recommend U.S.-based companies to clients at more 
competitive prices.
    A snapshot of Turner's projects in Oman can be found in a recent 
special issue of U.S.-Arab Tradeline, the bimonthly newsletter of the 
National U.S.-Arab Chamber of Commerce. In our opinion, this newsletter 
provides an excellent overview of U.S.-Oman relations. With your 
permission, Mr. Chairman, I request that this special issue of 
Tradeline be included in the record of today's hearing.
    Thank you for the opportunity to testify today.

                                 

    Mr. RYAN. Thank you, Mr. Billotti. Mr. Weitzel?

   STATEMENT OF MICHAEL P. WEITZEL, PROGRAM MANAGER, DYNCORP 
INTERNATIONAL; AND PRESIDENT, MUSCAT AMERICAN BUSINESS COUNCIL, 
                   MUSCAT, SULTANATE OF OMAN

    Mr. WEITZEL. Thank you, Mr. Chairman, distinguished 
Members. I really appreciate this opportunity to come before 
you today to speak. My name is Mike Weitzel, and I am the 
President of the Muscat American Business Council. I am also 
the Program Manager for DynCorp International's War Reserve 
Materiel contract with Central Command's Air Forces. DynCorp 
International, as you know, is an international company that 
employs over 14,000 employees in some 35 countries, with 
revenues of over $2 billion.
    Both as an active duty Air Force Colonel assigned to U.S. 
Central Command (CENTCOM) and U.S. Central Command Air Forces 
(CENTAF), and after retiring as the War Reserve Material (WRM) 
Program Manager, I have experienced firsthand the partnership 
our country has long enjoyed with the Sultanate of Oman. I am 
based in the Middle East and live in Muscat, its capital.
    The Muscat American Business Council (MABC) was established 
in October of 2004. Its goals are to increase knowledge, 
strengthen business ties and stimulate the exchange of 
information between the American business community and Omani 
businesses and government. The MABC forms a forum for issues 
that impact the business community, and offers a single voice 
for communications with ministries and government 
decisionmakers. Membership is open to all companies in Oman 
that have an America interest, and we have over 45 companies 
that are members of our organization.
    Right to the point. One of our members talked--his name is 
Michael Hansen. He is an Oman Marketing and Services Company 
executive, and he said this is how the FTA is going to make a 
difference for his company. Honda, which is one of the cars 
that he sells, has a model called the Pilot here in the U.S. It 
is known as the MRV back in Oman. They are looking at 
increasing the number of vehicles to send to Oman. The FTA will 
reduce the logistical cost of bringing that over to Oman, 
increasing the sales of the Pilot, and it is manufactured in 
the U.S. He also talked about the Rheem Air Conditioners that 
are manufactured in the U.S. and sold in Oman. The FTA is going 
to reduce the cost of those Rheem Air Conditioners, thereby 
increasing American jobs.
    Yaser Tobeh, a General Manager of the Dhofar Power Company, 
provided the following example for the FTA's potential benefit 
to the Oman economy. ``The growth of our business relies 
directly on the number of customers and bulk consumers that get 
connected to our system in Salalah and the Dhofar region. With 
the Salalah Free Zone under construction, the FTA would 
encourage U.S. investors and companies to bring businesses or 
industries into the zone, which means more power connections,'' 
which means more investment, which means more profit, which 
means more investment, and on and on and on. He felt that it 
was going to make a big difference for his company.
    Oman is the size of New Mexico, with a population, as 
mentioned earlier, of over 3 million people, and they have made 
great strides in a short period of time. Since 1970, as 
Ambassador Cook mentioned, the renaissance has taken place in 
Oman. It is a wonderful place to live and it is a wonderful 
place to work. In act, I am kind of jealous of the Turner 
Construction Company with the wonderful resorts and areas that 
they are building and bringing more tourists into Oman, which 
is a good thing and also a bad thing for those of us who live 
there.
    In December of 2005, I participated in the Regional Labor 
Dialog, a 3-day event organized by the U.S. Embassy and the 
Oman Ministry of Manpower as a part of the U.S. Department of 
State's Middle East Partnership Initiative. Held in Muscat, the 
event was well attended by government and private sector 
interest from across the region, including labor ministers from 
10 different nations. Issues such as work conditions, third 
country workers, guest laborers and women in the workplace, 
were discussed openly and energetically. It was a significant 
event, and well attended, and well thought of.
    We have every reason to be optimistic in the MABC. Oman's 
willingness to meet high standards required of FTA partners is 
a testament to the progressive spirit and determination of the 
Omani people and its leader, the Sultan Qaboos bin Said. The 
Muscat American Business Council supports the FTA as good 
business and good policy. We look forward to doing our utmost 
to support the agreement by increasing awareness locally and 
enhancing opportunities for trade between these two countries. 
Having more American products on the shelves in Oman will be a 
sure sign of the FTA's success. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Weitzel follows:]

       Statement of Michael P. Weitzel, Program Manager, DynCorp 
International, and President, Muscat American Business Council, Muscat, 
                           Sultanate of Oman

    Mr. Chairman and distinguished members of the Committee on Ways and 
Means, I thank you for this opportunity to testify on the proposed 
U.S.-Oman Free Trade Agreement. My name is Michael P. Weitzel, and I 
serve as president of the Muscat American Business Council--MABC.
    I am employed by DynCorp International as Program Manager of the 
U.S. Air Force's War Reserve Materiel (WRM) Program in the Central 
Command (CENTCOM) Area of Responsibility (AOR). DynCorp International 
provides support services to the U.S. and foreign governments as well 
as private companies worldwide. We have over 14,000 employees in 35 
countries and revenues of nearly $2 billion. Both as an active duty Air 
Force Colonel assigned to CENTCOM and then CENTAF and, after retiring, 
as the WRM Program Manager, I have experienced first hand the 
partnership our country has long enjoyed with the Sultanate of Oman. I 
am based in the Middle East and have spent the last two years in Oman's 
capital city, Muscat.
    The Muscat American Business Council was established in October 
2004. Its goals are to increase knowledge, strengthen business ties, 
and stimulate the exchange of information between the American business 
community and Omani businesses and government. MABC provides a forum 
for issues that impact the business community and offers a single voice 
for communication with ministries and government decision makers. 
Membership is open to companies in Oman with U.S. affiliation or 
interest in U.S.-Oman relations. 45 companies joined MABC in its first 
year.
    The FTA is good for business. That, quite simply, is the bottom 
line. The agreement encourages trade by eliminating tariffs; promotes 
investment by creating a more transparent and therefore more inviting 
business environment; it requires partners to commit to standards--
internationally recognized and agreed standards--regarding labor and 
intellectual property rights. The agreement is designed for mutual 
benefit, to create jobs and stimulate investment in both the U.S. and 
Oman.
    In a recent article, Oman's Minister of Commerce and Industry, H.E. 
Maqbool Ali Sultan, identified FTA benefits to both sides as follows: 
``Oman needs a larger, global market to achieve their long-term goal of 
establishing a viable non-oil sector. The FTA will contribute to 
economic diversification. . . . The U.S. stands to gain from increased 
exports, which have grown each year since 2003. Imports from the U.S. 
January--October 2005 were $432.1 million, an increase of 23.6% from 
the previous year.'' It is interesting, also, to note results of the 
U.S.-Jordan FTA, which was signed in 2000. Trade between Jordan and the 
U.S. prior to the agreement was approximately $300 million; by 2003, it 
had more than tripled to over $1 billion.
    MABC member Michael Hansen of Oman Marketing and Services Company 
translates statistics into tangible examples of benefit to the U.S. 
economy. The Honda SUV model MRV, known as the "Pilot" in the U.S., and 
the Honda Odyssey are produced in the U.S. and supplied to Oman and the 
GCC region. Honda is evaluating whether to increase the supply of cars 
to be produced in the U.S. for sale in Oman and the wider GCC region. 
This will create jobs in America. Rheem air conditioners are 
manufactured in the U.S. and sold in Oman by Oman Marketing and 
Services Company. FTA implementation would mean elimination of import 
duty and therefore a reduction in the high logistics costs from the 
U.S. to Oman. Increased sales are the end result.
    MABC member Yaser Tobeh, General Manager of the Dhofar Power 
Company, provides the following example of the FTA's potential benefit 
to Oman's economy. He writes, ``The growth of our business relies 
directly on the number of customers and bulk consumers that get 
connected to our system in Salalah and the Dhofar region. With the 
Salalah Free Zone under construction, the FTA would encourage U.S. 
investors and companies to bring businesses or industries into the 
Zone, which means more power connections and more system expansions, 
thus providing growth to our utility.'' And while the Dhofar Power 
Company would benefit, U.S. investors would also benefit from the 
company's increased production made possible by additional sales and 
profits.
    Oman, the size of New Mexico, with a population approaching three 
million, has made dramatic strides in a short time. Prior to 1970 when 
Sultan Qaboos bin Said assumed leadership, the country was closed to 
outside influence; infrastructure and social services were negligible. 
Today, Oman has a modern infrastructure, outstanding educational and 
medical facilities, and women are welcomed in the workplace. The 
economy is growing, there is a significant campaign underway to achieve 
economic diversification, and major infrastructure development.
    Work is in progress to improve ports in Salalah and Muscat, to 
build a new port in Duqm, and the newly completed port of the 
industrial city of Sohar has been commissioned. Also underway are plans 
for a new terminal at the existing Seeb airport, plus additional 
airports elsewhere. A residential resort called The Wave is being built 
now and, for the first time, foreigners will be able to own property in 
Oman. Cultivation of tourism, and in particular eco-tourism, is a 
priority. Properties such as Shangri La's recently opened Barr Al 
Jissah Resort, which includes three luxury hotels in a location of 
spectacular beauty, and largely built by the Dallas-based firm Turner 
Construction, will--I am both happy and sad to say--make Oman a much 
sought-after destination.
    Recent steps to enhance local labor conditions and comply with ILO 
labor requirements demonstrate Oman's commitment to the FTA. Prior to 
2003, Oman functioned under an archaic labor law that simply did not 
keep pace with the Sultanate's ratification of core international labor 
standards and specifically forbade strikes. Today, workers are joining 
the rapidly growing number of unions and engaging in collective 
bargaining and even strikes with the full protection of the Omani 
government. The Omani government is not simply writing new laws--it is 
putting its modern labor policies into practical effect.
    In December 2005, I participated in the Regional Labor Dialogue, a 
three-day event organized by the U.S. Embassy and Oman's Ministry of 
Manpower as part of the U.S. Department of State's Middle East 
Partnership Initiative (MEPI). Held in Muscat, the event was well 
attended by government and private sector interests from across the 
region, including labor ministers from ten nations. Issues such as work 
conditions, third country workers, child labor laws, and women in the 
workplace were discussed openly and energetically. This in itself is 
significant and noteworthy progress.
    DynCorp International has operations throughout the region 
including Bahrain. As a result of the U.S.-Bahrain Free Trade 
Agreement, our company has a workers' union. We view this as a plus, 
and we work together with the DynCorp Workers Trade Union and the 
General Federation of Bahrain Trade Unions (GFBTU) as they develop and 
take on the responsibilities of organized labor. We intend to be 
leaders in the implementation of the U.S.-Oman FTA labor provisions, 
and will be supportive of the formation of workers' representative 
groups in Oman.
    Beyond economics, Oman is a positive presence in the region and a 
valued partner in the Global War on Terror. It is a country that 
rejects extremism and supports moderation and tolerance. For the last 
three decades, Oman has been a trusted ally and has enabled the United 
States to maintain its stabilizing military presence in the Gulf. At 
last week's MABC meeting, Salem bin Nasser Al Ismaily, CEO of the Omani 
Center for Investment Promotion & Export Development (OCIPED), spoke on 
the subject of Economic Freedom in the Arab World. He emphasized the 
integral link between trade and security. They go hand in hand, and 
more trade means a better chance to end political instability as well 
as economic stagnation. Unemployment is a problem in Oman; the FTA will 
increase the number of jobs available for Omanis. We believe efforts to 
create jobs and raise standards of living will contribute positively to 
stability in the region.
    We have every reason to be optimistic. Oman's willingness to meet 
the high standards required of FTA partners is a testament to the 
progressive spirit and determination of the Omani people and their 
leader, Sultan Qaboos bin Said. The Muscat American Business Council 
supports the U.S.-Oman FTA as good business and good policy. We look 
forward to doing our utmost to support the agreement by increasing 
awareness locally and enhancing opportunities for trade between these 
two countries. Having more American products on the shelves in Oman 
will be a sure sign of the FTA's success.

                                 

    Mr. RYAN. Thank you, Mr. Weitzel. Mr. Trumka.

 STATEMENT OF RICHARD L. TRUMKA, SECRETARY-TREASURER, AMERICAN 
  FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS

    Mr. TRUMKA. Thank you, Mr. Chairman, Representative Rangel 
and Members of the Committee. I want to thank you for the 
opportunity to testify today on behalf of 9\1/2\ million plus 
working men and women of the AFL-CIO. In our view, the Oman FTA 
provides the wrong answers to the challenge faced in Oman and 
the U.S. The Agreement is based on a failed model that neither 
addresses the problems confronted by workers in Oman, nor 
contributes to the creation of good jobs and decent wages at 
home. The workers' rights provisions are entirely inadequate to 
ensure that fundamental human rights are respected, and the 
dispute settlement mechanism for workers' rights and 
environmental protections is far weaker than that available for 
commercial provisions.
    At the same time, flawed provisions on services, 
investment, government procurement and intellectual property 
rights will undermine the ability of both governments to 
protect public health, strong communities and the environment. 
As you know, we have argued that Oman's labor laws are 
egregiously out of compliance with the ILO core labor 
standards, and we remain deeply concerned about the lack of 
fundamental protection for Omani workers in both law and 
practice. Despite some improvements made to Oman's legal 
framework, Oman's labor laws today do not provide for the 
exercise of the most important and fundamental workers' rights, 
that is, freedom of association and the right to organize and 
bargain collectively. Omani labor laws provide the government 
with an entirely inappropriate level of oversight and control 
over the activities, meetings, finances and selection of 
representatives of the National and Industrial Worker 
Representative Committees. In addition, current laws fail to 
explicitly protect workers who participate in the worker 
committees from anti-union discrimination, and they do not 
spell out protections for workers who choose to engage in 
strikes.
    We understand that the Omani government sent letters to 
Chairman Thomas, pledging to make certain changes in bringing 
its labor laws into compliance with the ILO standard by October 
31st, 2006. We applaud those efforts, and we welcome this offer 
on the part of the government. However, we continue to have 
serious concerns. Congress should delay further proceedings on 
the Oman FTA until after these important changes have been 
fully implemented. It is essential to see the precise 
legislative language before it can be ascertained whether or 
not the reform laws do actually meet ILO standards.
    Also, while Oman might issue a new decree changing the law, 
it has no history of labor movement. Employers in Oman must 
have time to be educated on the role of workers representatives 
in fostering positive employment relations. This will not 
happen immediately, and certainly not by October 31st, the date 
by which the Omani government indicates decrees will be 
completed. Workers representatives must be given the tools and 
opportunities and time to organize workers into trade unions 
and fulfill their responsibilities to protect workers rights. 
We expect that this will take time. The effectiveness of these 
changes will not be seen overnight. It will also take time to 
monitor and judge whether or not any new decrees have been 
successful. Even more important to the AFL-CIO, the labor 
provisions included in the Oman FTA do not include any 
enforceable provisions preventing the weakening of or 
derogation from domestic labor laws. Only one labor right 
obligation, the obligation for a government to enforce its own 
labor laws, is actually enforceable through dispute settlement. 
All the other obligations contained in the labor chapter are 
explicitly not covered by the dispute settlement system. This 
directly violates the Trade Promotion Authority (TPA) which 
instructs our negotiations to treat all negotiating objectives 
equally.
    This means that if Oman's labor laws are brought fully into 
compliance with ILO standards over the coming months, the U.S. 
Government would have absolutely no recourse to dispute 
settlement or enforcement if a future Omani government were to 
reverse those gains, or weaken, or gut Omani's labor laws after 
congressional passage of the FTA. Because of this, Omani 
workers do not have any voice in electing their government; 
they would not be in a position to vote out of office a 
government that chose to weaken the labor laws. In addition, 
any vote on the Oman FTA must take into account the broader 
economic reality that we are facing today.
    Now, our executive council adopted a statement in March 
calling for a moratorium on all FTAs, including Oman, until we 
rewrite them to protect and advance workers' interest. The 
labor provisions in the Oman FTA are woefully inadequate and 
clearly fall short of the TPA negotiating objectives. They will 
be extremely difficult to enforce, and fines may be inadequate 
to actually remedy violations. Given Oman's historic failure to 
respect core worker rights, and the troubling inadequacies in 
the current laws, it is especially problematic to implement an 
FTA with weak labor protections at this time. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Trumka follows:]

     Statement of Richard L. Trumka, Secretary-Treasurer, American 
   Federation of Labor-Congress of Industrial Organizations (AFL-CIO)

    Good afternoon, Mr. Chairman, Representative Rangel, and members of 
the Committee. I thank you for the opportunity to testify today on 
behalf of the 9 million working men and women of the AFL-CIO on the 
U.S.-Oman Free Trade Agreement (FTA). Trade policy in general, and this 
agreement in particular, are of great interest and concern to our 
members, to America's workers, and to workers in Oman as well.
    In our view, the Oman FTA provides precisely the wrong answers to 
the challenges faced in Oman and the United States. The agreement is 
based on a failed model that neither addresses the problems confronted 
by workers in Oman, nor contributes to the creation of good jobs and 
decent wages at home. The workers' rights provisions are entirely 
inadequate to ensure that workers' fundamental human rights are 
respected, and the dispute settlement mechanism for workers' rights and 
environmental protections is far weaker than that available for 
commercial provisions. At the same time, flawed provisions on services, 
investment, government procurement, and intellectual property rights 
will undermine the ability of both governments to protect public 
health, strong communities, and the environment.
    In addition to the problems outlined above with the Oman FTA 
template, which are common to all the FTAs negotiated by this 
Administration, we continue to have very serious concerns about Oman's 
2003 Private Sector Labor Law, and the Ministry of Manpower's decrees, 
which outline the detailed implementation procedures. As you know, we 
have argued that Oman's labor laws are egregiously out of compliance 
with the ILO core labor standards, and we remain deeply concerned about 
the lack of fundamental protections for Omani workers in both law and 
practice. Despite some improvements made to Oman's legal framework, 
Oman's labor laws today do not provide for the exercise of the most 
important and fundamental workers' rights: freedom of association and 
the right to organize and bargain collectively.
    ILO standards call for workers to be able to form their own 
organizations, free of interference from employers or government. Omani 
labor law, in contrast, provides the government with an entirely 
inappropriate level of oversight and control over the activities, 
meetings, finances, and selection of representatives of the national 
and industrial ``worker representative committees.'' In addition, the 
laws fail to explicitly protect workers who participate in the worker 
committees from anti-union discrimination, nor do they spell out 
protections for workers who choose to engage in strikes. The Omani 
Government claims the forthcoming Ministerial Decree outlining 
procedures on the Right to Strike will be reviewed by the ILO to ensure 
compliance with ILO Standards.
    We understand that the Omani government has sent a letter to 
Chairman Thomas (dated March 26, 2006), pledging to bring its labor 
laws into compliance with ILO standards by October 31, 2006. We applaud 
and welcome this offer on the part of the government.
    However, we continue to have some serious concerns. Congress should 
delay further proceedings on the Oman FTA until after these important 
changes have been fully implemented. We have plenty of experience with 
labor legislation, and we know that it is essential to see the precise 
legislative language before we can ascertain whether or not the 
reformed laws do actually meet ILO standards.
    Second, while Oman might issue a new decree changing the law, it 
has no history of a labor movement. Employers are reluctant to accept 
the representative committees, let alone actual trade unions with 
collective bargaining rights. Employers in Oman must have time be 
educated on the role of worker representatives in fostering positive 
employment relations.
    This will not happen immediately and certainly not by October 31, 
2006, the date by which the Omani Government indicates the decrees will 
be completed. Omani worker representatives are currently at a distinct 
disadvantage compared to the Government and employers. This new legal 
framework will be a good start. But worker representatives must be 
given the tools, opportunities and time to organize workers into trade 
unions and fulfill their responsibilities to protect worker rights. We 
can expect this will take more time in Oman, as their worker rights 
were virtually non-existent, lagging far behind even Bahrain. The 
effectiveness of these changes will not be seen overnight. It will also 
take time to monitor and judge whether or not any new decrees have been 
successful.
    Even more important, the labor provisions included in the Oman FTA 
do not include any enforceable provisions preventing the weakening of 
or derogation from domestic labor laws. This means that even if Oman's 
labor laws are brought fully into compliance with ILO standards over 
the next couple of months, the U.S. government would have absolutely no 
recourse to dispute settlement or enforcement if a future Omani 
government were to reverse those gains and weaken or gut Oman's labor 
laws after Congressional passage of the FTA. And because Omani workers 
do not have any voice in electing their government, they would not be 
in a position to vote out of office a government that chose to weaken 
their labor laws.
    In addition to our concerns on Oman's labor situation, any vote on 
the Oman FTA must take into account the broader economic reality that 
we are facing today. Our trade deficit hit a record-shattering $726 
billion last year; we have lost more than three million manufacturing 
jobs since 1998; and average wages have not kept pace with inflation 
this year--despite healthy productivity growth. The number of people in 
poverty continues to grow, and real median family income continues to 
fall. Offshore outsourcing of white-collar jobs is increasingly 
impacting highly educated, highly skilled workers--leading to rising 
unemployment rates for engineers and college graduates. Together, 
record trade and budget deficits, unsustainable levels of consumer 
debt, and stagnant wages paint a picture of an economy living beyond 
its means, dangerously unstable in a volatile global environment.
    The AFL-CIO Executive Council adopted a statement in March calling 
for a moratorium on all new free trade agreements, including with Oman, 
until we can rewrite them to protect and advance workers' interests.
Labor Provisions of the Oman FTA
    Unfortunately, the Oman FTA labor provisions actually constitute a 
step backwards from existing labor rights provisions in the U.S.-Jordan 
FTA and in our Generalized System of Preferences (GSP) program. In the 
Oman agreement, only one labor rights obligation--the obligation for a 
government to enforce its own labor laws--is actually enforceable 
through dispute settlement. All of the other obligations contained in 
the labor chapter, many of which are drawn from Congressional 
negotiating objectives, are explicitly not covered by the dispute 
settlement system and are thus completely unenforceable.
Labor Rights in Oman
    Again, while the government has made numerous pledges, current 
Omani law does not come close to meeting International Labor 
Organization (ILO) criteria for compliance with core labor standards, 
and the weak and inadequate labor rights protections in this agreement 
will allow these severe deficiencies in Oman's labor laws to persist.
    The most serious issue is Oman's systematic denial of workers' 
freedom of association. The Omani government is in egregious violation 
of ILO conventions and universally accepted international practice. 
Again, we cannot expect these problems to be solved overnight.
    The Omani Government claims, in the March 26 letter Chairman 
Thomas, that ``a significant number of strikes occur every year since 
the adoption of the 2003 Labour Law with no prosecution or retribution 
of any form for such work stoppages which is evidence that the freedom 
to strike exists under Omani law.''
    This assertion has yet to be proven. No documentation has been 
provided by the Omani authorities as to the dates, issues, and parties 
involved in actual strikes. Such information would constitute actual 
evidence that ``the freedom to strike exists under Omani law.'' If the 
law is unclear, and there is little or no evidence of the practice 
being different, the Omani Government cannot claim to adhere to the 
requirements of 87 and 98 on the right to strike.
    In Oman's legal system, it is not clear what takes precedence on 
labor rights, a law developed by the parliament and approved by the 
Sultan, or a Ministerial Decree? Which is considered ``Omani law''? If 
the Omani Government does not amend its 2003 Labor Law to come into 
conformity with the Ministerial Decrees, then how will a judge 
determine which standard to apply, given the violations of 87 and 98 
present both the 2003 Law and the current Ministerial Decrees governing 
the internal procedures of the representative committees? The Bahraini 
Government made a commitment to amend both the 1976 Labor Law, as well 
as the 2002 Trade Union Law. The Omani Government should make a similar 
commitment.
    A review of Oman's current Labor Law, issued by decree in 2003,\1\ 
also reveals a pattern of exceptions to the very standards it proclaims 
as law, from the exclusion of foreign domestic workers and civil 
servants from protection under the law, to loopholes that allow for a 
wide variety of interpretations of basic rights. This leaves workers 
dependent not upon the law, but upon the discretion of powerful vested 
interest groups that form the core of a semi-authoritarian regime.
---------------------------------------------------------------------------
    \1\ Omani Labour Code of 26 April 2003
    Ministry of Information
    The New Labor Code was issued by Royal Decree No. 35 of 2003, and 
abrogates the previous Labor Law issued by Royal Decree Nov. 34 of 
1973.
    www.omanet.om/arabic/goverment/gov20.asp?cat=gov
---------------------------------------------------------------------------
    Ministry of Manpower Decrees 135 and 136, issued in 2004, outline 
stringent and inappropriate government oversight parameters for both 
worksite level committees and a national committee intended to serve as 
a national representative body.\2\ The government reserves the right to 
``be notified one month prior to each meeting of the general assembly 
with a copy of the invitation letter, agenda, documents and papers 
relating to the issues to be discussed,'' and to ``delegate who it 
chooses to attend the meeting.'' It also requires the committees to 
provide minutes of all meetings to the government and reserves the 
right to review the dues structure. All of these requirements 
constitute violations of ILO standards of freedom of association.
---------------------------------------------------------------------------
    \2\ Sultanate of Oman, Ministry of Manpower, ``Ministerial Decision 
No. (135/2004), ``On Principles of Formation and work of Representative 
Committees in Establishments,'' and Ministerial Deicion No. (136/
2004)--``On Principles of Formation and Work of the Main Representative 
Committee.''May 11, 2004, Translated by POLE: Ahmed Al-Sawei.
---------------------------------------------------------------------------
    In its defense of the provision allowing Ministry delegates to 
attend worker committee meetings, the government has said that ``the 
presence of the representative from the Ministry is to help the 
committee in case of their need to consult with the Ministry on any 
issue.'' It certainly seems that if the worker committees need advice 
from the government, they could ask for it, rather than having a 
government presence at all their meetings ordained in labor law.
    The government has claimed that ``eleven members [of the Main 
Representative Committee] were all elected from the existing 
Representative Committees and are all workers.'' This is untrue. The 
government appointed at least some of the members of the Main 
Representative Committee, and five of them actually serve in management 
positions within their companies, either as CEOs or Personnel Managers.
    Any paid representative of an enterprise with management 
responsibilities should be disqualified from running for office on 
either the enterprise level or Main Representative Committee. The 
candidates in the next round should be allowed to campaign publicly, 
and democratic elections should be held to decide the officers.
    Although the workplace level committees allow for a semblance of 
rank and file participation through the General Assembly, workers may 
not join the assembly until they have completed one year of employment. 
The Minister of Manpower is directly responsible for ratifying the 
election results for both the workplace and national committees, and 
may object to any nominee to the administrative bodies who does not 
meet a set of stringent conditions, including fluency in written and 
spoken Arabic language, a condition which would disqualify most 
foreign-born worker from leadership positions (contrary to the USTR 
factsheet). Non-citizens account for as much as 80% of the private-
sector workforce (according to the State Department 2004 annual human 
rights report). Under ILO Standards for Leadership Positions, workers 
should be able to choose their representatives free of Government or 
employer interference.
    The labor law also decrees that membership in the administrative 
body [of the worker committee] is terminated in the case that a member 
``commit[s] any act that causes material or moral harm to . . . the 
public interest of the Sultanate.'' Again, this is totally 
inappropriate.
    The current labor law prohibits the administrative body of the 
worker committees outright from ``join[ing] any organization or 
authority with headquarters outside the Sultanate,'' from sending 
``delegations outside the Sultanate or receiv[ing] delegations,'' and 
even from holding ``public festivities or present[ing] public 
lectures'' without the approval of the Minister. ILO standards 
explicitly lay out that unions may affiliate to international 
organizations of their choosing, and certainly the government has no 
business monitoring the travel, visitors, or public festivities and 
lectures of workers' organizations.
    In a March 10 letter to the Committee on Ways and Means, the Omani 
government indicated that Article (6) of the Oman's labor law does 
provide legal consequences in the case of the employer refusing the 
request of a representational committee to negotiate additional 
benefits schemes.
    This appears to be a misrepresentation as Article 6 reads: ``The 
employer may execute projects whereby the workers obtain more generous 
benefits than prescribed, or he/she may provide the workers with other 
benefits, conclude agreements covering more generous conditions than 
those prescribed in this law. If a provision of this law infringes with 
one or more of the conditions set by the referred projects or 
agreements, the most beneficial provision to the worker applies.'' 
While this clause gives the employer the option to execute ``projects'' 
it fails to mention a committee's role in negotiating such terms with 
the employer. The fact that no collective bargaining agreements exist 
in Oman indicates that employers do not feel compelled to allow workers 
to infringe on their unilateral exercise of power.
    This provision relies upon employer largesse, permitting such 
``schemes'' to take place if the employer desires it, but not requiring 
employers to engage in collective bargaining.
    While all workers in Oman are denied basic labor rights, the large 
foreign workforce, who constitute the majority of private-sector 
workers in Oman, are especially vulnerable to abuse and exploitation. 
Foreign workers have the right to remain in the country for the 
duration of their work contracts; but employers are known to hold the 
passports of guest workers, and in the worst cases of abuse, even deny 
individuals the ability to extract themselves from dangerous or cruel 
work conditions. Laws protecting workers from forced labor are not 
enforced. According to the State Department:
    The Government did not investigate or enforce the law effectively. 
Foreign workers at times were placed in situations amounting to forced 
labor. Employers have withheld documents that release workers from 
employment contracts and allow them to change employers. Without such a 
letter, a foreign worker must continue to work for his current employer 
or become technically unemployed, which was sufficient grounds for 
deportation.\3\
---------------------------------------------------------------------------
    \3\ State Department COUNTRY REPORTS ON HUMAN RIGHTS PRACTICES 2004 
http://www.state.gov/g/drl/rls/hrrpt/2004/41729.htm
---------------------------------------------------------------------------
    Oman has an equally problematic record on trafficking in persons, 
according to the State Department's 2004 Trafficking in Persons Report:
    Oman is a destination country for women and men who migrate legally 
and willingly from South Asia--primarily from India, Bangladesh, 
Pakistan, Sri Lanka, and the Philippines--for work as domestic workers 
and laborers but are subsequently trafficked into conditions of 
involuntary servitude. Some of these workers suffer from physical and 
sexual abuse or withholding of ages or travel documents . . . According 
to a noted human rights activist, several dozen foreign children 
trafficked for the purpose of exploitation as camel jockeys were 
reportedly seen near the border with the United Arab Emirates.\4\
---------------------------------------------------------------------------
    \4\ TRAFFICKING IN PERSONS REPORT--Released by the Office to 
Monitor and Combat Trafficking in Persons, June 3, 2005:
    http://www.state.gov/g/tip/rls/tiprpt/2005/46614.htm
---------------------------------------------------------------------------
    Even should the current Omani regime alter it's existing workers' 
rights restrictions, the proposed FTA would allow Oman to undermine 
workers' fundamental rights in the future. Even for the one labor 
obligation in the FTA that is subject to dispute resolution--the 
requirement to effectively enforce domestic laws--the procedures and 
remedies for addressing violations are significantly weaker than those 
available for commercial disputes in the agreement. This directly 
violates TPA, which instructs our negotiators to seek provisions in 
trade agreements that treat all negotiating objectives equally and 
provide equivalent dispute settlement procedures and equivalent 
remedies for all disputes.
    The labor enforcement procedures cap the maximum amount of fines 
and sanctions available at an unacceptably low level, and allow 
violators to pay fines that end up back in their own territory with 
inadequate oversight. These provisions not only make the labor 
provisions of the agreement virtually unenforceable, they also differ 
dramatically from the enforcement procedures and remedies available for 
commercial disputes:

      In commercial disputes, the violating party can choose to 
pay a monetary assessment instead of facing trade sanctions, and in 
such cases the assessment will be capped at half the value of the 
sanctions. In labor disputes, however, the assessment is capped at an 
absolute level, no matter what the level of harm caused by the 
offending measure.
      Not only are the caps on fines much lower for labor 
disputes, but any possibility of trade sanctions is much lower as well. 
In commercial disputes, a party can suspend the full original amount of 
trade benefits (equal to the harm caused by the offending measure) if a 
monetary assessment (capped at half that value) is not paid. In a labor 
dispute, the level of trade benefits a party can revoke if a monetary 
assessment is not paid is limited to the value of the assessment 
itself--capped at $15 million.
      Finally, the fines are robbed of much of their punitive 
or deterrent effect by the manner of their payment. In commercial 
disputes under the Oman FTA, the deterrent effect of punitive remedies 
is clearly recognized--it is presumed that any monetary assessment will 
be paid out by the violating party to the complaining party, unless a 
panel decides otherwise. Yet for labor disputes, the violating country 
pays the fine to a joint commission to improve labor rights 
enforcement, and the fine ends up back in its own territory. No rules 
prevent a government from simply transferring an equal amount of money 
out of its labor budget at the same time it pays the fine. And there is 
no guarantee that the fine will actually be used to ensure effective 
labor law enforcement, since trade benefits can only be withdrawn if a 
fine is not paid. If the commission pays the fine back to the offending 
government, but the government uses the money on unrelated or 
ineffective programs so that enforcement problems continue un-
addressed, no trade action can be taken.

    The labor provisions in the Oman FTA are woefully inadequate, and 
clearly fall short of the TPA negotiating objectives. They will be 
extremely difficult to enforce with any efficacy, and monetary 
assessments that are imposed may be inadequate to actually remedy 
violations. Given Oman's failure to respect core workers' rights and 
the huge inadequacies in its labor laws, it is especially problematic 
to implement an FTA with weak labor protections at this time.
    In addition to the very serious problems with the labor provisions 
of the Oman agreement outlined above, commercial provisions of the 
agreement also raise serious concerns.
Trade Impacts of the Oman FTA
    While the overall trade relationship with Oman is small relative to 
the economy of the United States, it is possible that the agreement 
will result in a deteriorating trade balance in some sectors, including 
sensitive sectors such as apparel. Even where the market access 
provisions of the agreement themselves may not have much of a negative 
impact on our trade relationship, these provisions when combined with 
rules on investment, procurement, and services could further facilitate 
the shift of U.S. investment and production overseas, harming American 
workers.
    The dramatically lower costs of energy in Oman provide enormous 
opportunities for energy-dependent industries to use the country as an 
export platform. As is the case with the United Arab Emirates (UAE), 
where a foreign glassware manufacturer has set up shop and may use the 
UAE's natural gas--which costs less than 1/12th of what it does in the 
U.S.--to flood the U.S. market with glassware, a similar opportunity 
exists with Oman.
    Chemical manufacturers, energy interests and others could similarly 
benefit from Oman's energy pricing structure. Oman, like many other 
energy-rich nations, has a built-in advantage in low energy costs. But, 
beyond this initial advantage, energy costs to
    Oman's manufacturing interests do not reflect market prices. 
Additionally, the failure of the United States to have a comprehensive 
energy policy to ensure long-term stable supplies and affordable prices 
puts the U.S. at a substantial disadvantage. The failure of the Bush 
Administration to aggressively address energy costs has serious 
repercussions for our manufacturing sector and, indeed, for all energy 
consumers. The U.S.-Oman FTA will exacerbate that disadvantage by 
providing enhanced access to the U.S. market without addressing the 
non-market pricing of energy.
    Investment: In TPA, Congress directed USTR to ensure ``that foreign 
investors in the United States are not accorded greater substantive 
rights with respect to investment protections than United States 
investors in the United States.'' Yet the investment provisions of the 
Oman FTA contain large loopholes that allow foreign investors to claim 
rights above and beyond those that our domestic investors enjoy. The 
agreement's rules on expropriation, its extremely broad definition of 
what constitutes property, and its definition of ``fair and equitable 
treatment'' are not based directly on U.S. law, and annexes to the 
agreement clarifying these provisions also fail to provide adequate 
guidance to dispute panels. As a result, arbitrators could interpret 
the agreement's rules to grant foreign investors greater rights than 
they would enjoy under our domestic law. In addition, the agreement's 
deeply flawed investor-to-state dispute resolution mechanism contains 
none of the controls (such as a standing appellate mechanism, 
exhaustion requirements, or a diplomatic screen) that could limit abuse 
of this private right of action. Finally, the marked difference between 
the dispute resolution procedures and remedies available to individual 
investors and the enforcement provisions available for the violation of 
workers' rights and environmental standards flouts TPA's requirement 
that all negotiating objectives be treated equally, with recourse to 
equivalent dispute settlement procedures and remedies.
    Intellectual Property Rights: In TPA, Congress instructed our trade 
negotiators to ensure that future trade agreements respect the 
declaration on the Trade Related Aspects on Intellectual Property 
Rights (TRIPs) agreement and public health, adopted by the WTO at its 
Fourth Ministerial Conference at Doha, Qatar. The Oman FTA contains a 
number of ``TRIPs-plus'' provisions on pharmaceutical patents, 
including on test data and marketing approval, which could be used to 
constrain the ability of a government to issue compulsory licenses as 
permitted under TRIPs and the Doha Declaration.
    Government Procurement: The FTA's rules on procurement restrict the 
public policy aims that may be met through procurement policies at the 
federal level. These rules could be used to challenge a variety of 
important procurement provisions including domestic sourcing 
preferences, prevailing wage laws, project-labor agreements, and 
responsible contractor requirements. We believe that governments must 
retain their ability to invest tax dollars in domestic job creation and 
to pursue other legitimate social objectives, and that procurement 
rules which restrict this authority are inappropriate.
    Safeguards: Workers have extensive experience with large 
international transfers of production in the wake of the negotiation of 
free trade agreements and thus are acutely aware of the need for 
effective safeguards. The safeguard provisions in the Oman agreement, 
which offer no more protection than the limited safeguard mechanism in 
NAFTA, are not acceptable. U.S. negotiators should have recognized that 
much faster, stronger safeguard remedies are needed. The Oman FTA has 
failed to provide the necessary import surge protections for American 
workers.
    Services: NAFTA and WTO rules restrict the ability of governments 
to regulate services--even public services. Increased pressure to 
deregulate and privatize could raise the cost and reduce the quality of 
basic services. Yet the Oman agreement does not contain a broad, 
explicit carve-out for important public services. Public services 
provided on a commercial basis or in competition with private providers 
are generally subject to the rules on trade in services in the Oman 
FTA, unless specifically exempted.
Conclusion
    Congress should reject the Oman FTA, and send a strong message to 
USTR that future agreements must make a radical departure from the 
failed NAFTA model in order to succeed.
    American workers are willing to support increased trade if the 
rules that govern it stimulate growth, create jobs, and protect 
fundamental rights. The AFL-CIO is committed to fighting for better 
trade policies that benefit U.S. workers and the U.S. economy as a 
whole. For the reasons stated above, we urge the Congress to reject the 
U.S.-Oman FTA and begin work on a more just economic and social 
relationship with Oman.

                                 

    Mr. RYAN. Thank you, Mr. Trumka. Mr. Schwartz?

     STATEMENT OF ROGER SCHWARTZ, BUSINESS VICE PRESIDENT, 
   POLYETHYLENE, THE DOW CHEMICAL COMPANY, MIDLAND, MICHIGAN

    Mr. SCHWARTZ. Mr. Chairman and distinguished Members of the 
House Ways and Means Committee, thank you for the opportunity 
to provide testimony on behalf of the U.S.-Oman FTA. The Dow 
Chemical Company is a diversified chemical company that 
harnesses the power of science and technology to improve living 
daily. The company offers a broad range of innovative products 
and services to customers in more than 175 countries, helping 
them to provide everything from fresh water, food, 
pharmaceuticals, to paints, packaging and personal care 
products. Built on its commitment to principles of 
sustainability, Dow has annual sales of $46 billion and employs 
42,000 people worldwide.
    Dow is a 109-year-old American company headquartered in 
Midland, Michigan, and in 2004 we announced a joint venture 
agreement with the government of the Sultanate of Oman, and the 
Oman Oil Company, to design, build and operate a petrochemical 
complex in the Sohar Industrial Port Area. The complex includes 
feedstock production facilities, and ethylene gas-cracking 
unit, and world-scale polyethylene production units based upon 
the state of the art catalyst and process technology. As a 
company, we are very excited about this project. Oman is one of 
the key locations in the Middle East where Dow is 
preferentially investing due to its proximity to the Asian 
markets and access to cost-competitive hydrocarbon feedstocks 
which we need to make these products.
    The FTA helps in our development by gaining market access 
for American products and manufacturing inputs to support the 
growth of our production in Oman, and ultimately makes us more 
competitive in the Asia-Pacific consumer market. The project is 
a key step in Dow's strategy of having cost competitive, 
geographic and product positions that will enable value growth. 
The project is a true partnership, helping the Omani government 
to meet its objectives of attracting foreign investment, 
diversifying the economy, creating job opportunities, and 
laying the foundation for future downstream industries, or 
helping us to access cost competitive feedstocks for the fast-
growing markets in Asia. While we began our discussion with the 
Omanis prior to the launch of the FTAs, we have been 
tremendously impressed by the speed and the progress made in 
the U.S.-Oman FTA negotiations. In particular, we give 
significant credit to the Omani negotiating team for their very 
progressive attitude toward liberalization, not just in the 
reduction of tariffs, but augmenting and improving domestic 
rules on intellectual property protection, investor rights, and 
government procurement.
    The Omanis are already signatories of the plurilateral 
Chemical Harmonization Tariff Agreement, that not only helps my 
company but also supports simplification and efficient trade of 
chemical products worldwide. This Agreement is yet another 
example of the tremendous progress on reforms within Oman, and 
the Sultan's progressive agenda. The Sultan has fostered a high 
degree of political stability within the country by instituting 
a new constitution which has created a more democratic 
infrastructure, including a deputy prime minister post, 
bicameral legislature and guarantees for basic civil liberties. 
Ultimately, Oman is a key growth opportunity for American 
companies, particularly those like Dow that are heavily reliant 
on sustained access to low-cost energy and feedstocks. With our 
value park concept of bringing in manufacturing partners to co-
locate near our facilities, the FTAs will support additional 
American investment, creating significant new employment and 
economic opportunities in downstream plastic industries. This 
is a concept that we have already successfully implemented at 
Dow Chemical's Germany operations in Schkopau, a former East 
German site.
    Dow views Oman as yet another strategic investment that 
enhances our global reach, accessing low-cost natural resources 
in a geographically strategic location to ultimately 
participate in the tremendous consumer growth in the Asia 
markets. That pattern of growth helps us as an American company 
deliver significant value back to our shareholders. The FTA is 
not only a recognition for Oman's progress on economic reform 
and trade liberalization, but serves as a high-quality, high-
standard benchmark for further progress on the President's 
vision for MEFTA by 2013. Oman serves as a living example of 
the benefits of progressive reform. We are pleased to be a 
partner in Oman's development, and urge the House to recognize 
Oman's progress on economic reform and trade liberalization 
with an expeditious and positive vote on this agreement. Thank 
you.
    [The prepared statement of Mr. Schwartz follows:]

Statement of Roger R. Schwartz, Business Vice President, Polyethylene, 
                 The Dow Chemical Company, Midland, MI

    Mr. Chairman, and distinguished members of the House Ways & Means 
Committee, thank you for the opportunity to provide testimony on behalf 
of the U.S.-Oman Free Trade Agreement.
    The Dow Chemical Company is a diversified chemical company that 
harnesses the power of science and technology to improve living daily. 
The Company offers a broad range of innovative products and services to 
customers in more than 175 countries, helping them to provide 
everything from fresh water, food and pharmaceuticals to paints, 
packaging and personal care products. Built on a commitment to its 
principles of sustainability, Dow has annual sales of $46 billion and 
employs 42,000 people worldwide.
    Dow is a 109-year-old American company, headquartered in Midland, 
Michigan.
    In 2004, we announced a joint venture project with the Government 
of the Sultanate of Oman and Oman Oil Company (OOC) to design, build 
and operate a petrochemical complex in the Sohar Industrial Port Area. 
The complex will include feedstock production facilities, a gas 
cracker, and world-scale polyethylene production units based on state-
of-the-art catalyst and process technology.
    As a company, we are very excited about this project. Oman is one 
of the key locations in the Middle East where Dow is preferentially 
investing, due to proximity to Asian markets and access to cost-
competitive hydrocarbon feedstocks which we need to make many of our 
products.
    The FTA helps our development by gaining market access for American 
products and manufacturing inputs to support growth of our production 
in Oman and ultimately make us more competitive in the Asia/Pacific 
consumer markets. This project is a key step in Dow's strategy of 
having cost competitive geographic and product positions that will 
enable value growth.
    The project is a true partnership--helping the Omani government to 
meet their objectives of attracting foreign investment, diversifying 
the economy, creating job opportunities and laying the foundation for 
future downstream industries while helping us to access cost-
competitive feedstocks to supply the fast-growing markets of Asia.
    While we began our discussions with the Omanis prior to the launch 
of the FTAs, we have been tremendously impressed by the speed and 
progress made in the U.S.-Oman FTA negotiations. In particular, we give 
significant credit to the Omani negotiating team, for their very 
progressive attitude towards liberalization, not just in the reduction 
of tariffs but augmenting and improving domestic rules on intellectual 
property protection, investor rights and government procurement.
    The Omanis are already signatories to the plurilateral Chemical 
Harmonization Tariff Agreement (CHTA)--not only helpful to my company 
but also to supporting simplified and efficient trade in chemical 
products.
    This agreement is yet another example of the tremendous progress on 
reforms within Oman and the Sultan's progressive agenda. The Sultan has 
fostered a high degree of political stability within the country by 
instituting a new Constitution, which has created a more democratic 
infrastructure--including a deputy Prime Minister post, bicameral 
legislature and guarantees for basic civil liberties.
    Ultimately, Oman is a key growth opportunity for American 
companies--particularly those, like Dow, that are heavily reliant on 
sustained access to low cost energy and feedstocks. With our value park 
concept, bringing in manufacturing partners to co-locate with our 
facility, the FTA will support additional American investment, creating 
significant new employment and economic opportunities in down stream 
plastics industries. This is a concept we have already successfully 
implemented at the Dow Chemical Germany Schkopau site, in the former 
East Germany.
    Dow views Oman as yet another strategic investment that enhances 
our global reach--accessing low-cost natural resources in a 
geographically strategic location to ultimately participate in the 
tremendous consumer markets of Asia.
    That pattern of growth helps us, as an American company, deliver 
significant value back to our shareholders.
    The FTA is not only a recognition for Oman's progress on economic 
reform and trade liberalization, but serves as a high-quality, high-
standard benchmark for further progress on the President's vision for a 
U.S.-Mid East Free Trade Area by 2013. Oman serves as a living example 
of the benefits of progressive reform.
    We are pleased to be a partner in Oman's development--and urge the 
House to recognize Oman's progress on economic reform and trade 
liberalization with an expeditious and positive vote on this agreement.

                                 

    Mr. RYAN. Thank you. Let me start with just one question to 
you, Ambassador Cook. You are perhaps the best qualified to 
answer this. The Sultan has made a lot of concrete commitments 
in the area of labor issues, and you mentioned briefly in your 
testimony that your experience with the Sultanate is that they 
honor their words. I would like to see if you could elaborate 
more on that point specifically. This trade agreement is 
progressing based upon the agreements made by Oman in the area 
of labor. What in your estimation--how should we evaluate that? 
How do you believe, based on your track record with them and 
your understanding of the government, we should interpret those 
agreements and our faith in those taking place?
    Ms. COOK. Thank you very much, Mr. Chairman. My experience 
with them has been over a range of issues, not just on labor or 
on trade but I could give you a couple of quick examples to 
show how they do honor their word. One of them is in the 
military sphere. As you know, we negotiate military access 
agreements in countries where we keep troops. If that has to be 
implemented, usually under very difficult circumstances, it is 
trying for the host nations.
    One specific example is a fatality of a local citizen, 
which occasionally occurs where we have troops abroad--that was 
a very sensitive issue for Oman, where a troop killed an Omani 
driving accident. It was nothing more than an automobile 
accident, but you can understand how such an incident can be 
very sensitive, as indeed it is in Washington, D.C., when it 
occurs with diplomatic vehicles. They honored that agreement to 
the letter. It was obviously a very difficult issue for them 
locally, abut they carried out every bit of--it was handled in 
48 hours. That one is extremely sensitive, and something that 
they did honor very quickly in my time there.
    They have done that as well with our various agreements 
with DOD for access to our facilities. those are legal 
agreements that they have honored in my time there that have 
been difficult for them to honor, but they honor it without 
flinching. There was no attempt to negotiate or renege 
something-else. They did what they said they would do in the 
treaty, and that was it.
    Mr. RYAN. Thank you. Mr. Rangel?
    Mr. RANGEL. Mr. Chairman, I think those questions are so 
unfair because it detracts from the credibility of our former 
ambassador, who obviously served our country well, and has a 
good working relationship with the Sultan. You know, if we did 
business that way, just on trust, we don't need any agreement. 
If the President said, ``You are ambassador. Work out something 
with these people,'' and you came back and told the President, 
``We worked it out. I trust them,'' it would not look good on 
the U.S., nor on our embassy in that country.
    Just because we differ doesn't mean that the we challenge 
the credibility of the Sultan. He is a nice man, but when we 
get out there and represent our constituents, we can't say, 
``You told us trust him.'' You know that, and you know it. We 
need to have something that is the U.S. policy. We have to talk 
to make certain we are talking the same language, since, I 
think, we basically want to reach the same goal.
    Mr. Trumka, are your union officials willing to help out 
some of these countries that have cultural differences that can 
assist them in the language, whether it is ILO, or no matter 
what it is? It is just basic decency that we are talking about, 
and the ability of poor people to acquire funds so that they 
can buy U.S. products. Are you willing to go and help them 
since we have to assume that there is good faith involved in 
this by USTR, by our embassy, and by the countries and the 
Congress?
    Mr. TRUMKA. Yes, very much so, sir. Not only are we willing 
to, we have been doing just that for any number of years, for 
decades, trying to help workers in other countries through the 
ILO, through the ICFTU, the International Confederation of Free 
Trade Unions, to help them get a better standard of living, 
help them get more enforceable rights and to help them increase 
their standard of living, of course we are. In fact, we have 
actually participated in negotiations in other countries with 
companies to help those workers get a better standard of 
living.
    Mr. RANGEL. I would guess that if the USTR would ask what 
is the biggest impediment to getting bipartisan trade 
agreements, they would say it is labor. Have they consulted, to 
the best of your knowledge, with the leaders in your 
organization to see how we could work out those language 
differences?
    Mr. TRUMKA. They have not.
    Mr. RANGEL. Well, that is something maybe we can talk 
about, Mr. Acting Chairman, because communications is so 
important since there are so many people who don't want to 
listen on both sides. They shouldn't be using ILO as an excuse 
because we are not looking to support the ILO. We are looking 
for basic standards that everyone can agree upon, and they have 
to be minimum standards.
    Mr. Billotti, you had indicated that the actions of your 
construction company in the U.S. is reflected in part in how 
you do business abroad in Oman. The Mayor of the city of New 
York had to set up a special commission because of the apparent 
absence of minorities in these construction jobs in New York, 
and I would assume, around the country. I don't know how 
familiar you are in New York City, but they don't have--well, 
what do you think about the hiring practices of your 
construction company in New York?
    Mr. BILLOTTI. Of my construction company in New York? Well, 
I am most familiar with what we do outside of the U.S. That is 
my area of expertise.
    Mr. RANGEL. I know, but you say that you reflect U.S. 
policies.
    Mr. BILLOTTI. Yes. We have taken our U.S. personnel 
policies and we mirror them in places where we do business.
    Mr. RANGEL. Well, if you deal with foreigners within a 
foreign country, I would like to know how you deal with 
Americans in New York City who are minorities.
    Mr. BILLOTTI. That is a very good and fair question, and I 
can't speak to the specific accomplishments or statistics, but 
I do know that we go out of our way to form joint ventures with 
local minority companies in Brooklyn where I am from, and 
Manhattan, in the Bronx, where we will be building the new 
Yankee Stadium, but to us, minority participation is a very, 
very important part of our industry, and I could just----
    Mr. RANGEL. Well, as you travel in New York City, you do 
see then the absence of minorities working on these sites, so 
much so that the unions and the Mayor and construction people 
have joined a special commission to see what we can do to 
change this obscene policy of the absence of minorities.
    Mr. BILLOTTI. Again, I am not in a position to speak to the 
specifics of the industry in New York City. I can tell you 
though that Turner's policy has been, and continues to be, to 
attract minority participation in our industry.
    Mr. RANGEL. Would you send me something on that as soon as 
possible?
    Mr. BILLOTTI. Absolutely, I would be happy to.
    [The written response from Mr. Billotti follows:]

May 18, 2006
Congressman Charles Rangel
163 West 125th Street, Suite #737
New York, NY 10027

    Dear Congressman Rangel:

We met recently at the U.S. House of Representatives' Committee on Ways 
and Means hearing regarding the implementation of the U.S.-Oman Free 
Trade Agreement. At the hearing, you asked me about minority 
participation in the projects Turner Construction is involved in the 
U.S. and specifically in New York City, Turner's headquarters for 
almost 100 years. As the leading general builder in the U.S., Turner 
recently announced that it had awarded over $1 billion worth of 
construction contracts to minority and women owned businesses (M/WBEs) 
during 2005. This is the first time in the history of Turner that the 
company has surpassed the $1 billion mark.
    By establishing joint venture and association partnerships, 
utilizing supplier and prime contractors, Turner was able to continue 
the company's ongoing commitment to minority and women owned business 
and secure more than 2900 contracts with M/WBE firms in 2005. Turner is 
committed to supporting communities in areas where we do business and 
has a longstanding record of this support across the U.S. The company 
has received well over 100 awards for leadership in utilization of M/
WBEs. Our objective is to increase the visibility, improve the economic 
viability and expand opportunities for these businesses.
    In New York, we have increased the total volume of work awarded to 
MWBEs from $300,275,574 in 1995 to $978,851,957 in 2005. Specifically, 
within your own Congressional District, District 15, Turner has worked 
on City University of New York/City College of New York, Columbia 
University and Harlem Center with minority and women-owned businesses 
over the last several years. I have attached a report from our New York 
business unit's Community Affairs department which highlights our MWBE 
work locally. I believe that companies must reflect the communities in 
which we live and work. The utilization of M/WBE firms is critical to 
the overall success of the construction industry and of Turner. Our 
environment, culture, policies, programs and practices reflect the high 
value we place on diversity and outreach to M/WBEs.
    In closing, I would again like to thank you for allowing me to 
speak in support of the U.S.-Oman Free Trade Agreement. Please feel 
free to contact me should you or other committee members desire 
additional information about the M/WBE participation

Sincerely,

Nicholas Billotti
President and CEO
Turner Construction--International

    cc: U.S. House of Representatives' Committee on Ways and Means

Congressman William Thomas
Congressman E. Clay Shaw
Congresswoman Nancy Johnson
Congressman Wally Herger
Congressman Jim McCrery
Congressman Dave Camp
Congressman Jim Ramstad
Congressman Jim Nussle
Congressman Sam Johnson
Congressman Phil English
Congressman J.D. Hayworth
Congressman Jerry Weller
Congressman Kenny Hulshof
Congressman Ron Lewis
Congressman Mark Foley
Congressman Kevin Brady
Congressman Thomas Reynolds
Congressman Paul Ryan
Congressman Eric Canter
Congressman John Linder
Congressman Bob Beauprez
Congresswoman Melissa Hart
Congressman Chris Chocola
Hilton O. Smith, Turner Construction

                                 

    Mr. RANGEL. What is Turner's policy in terms of hiring non-
citizens?
    Mr. BILLOTTI. In terms of hiring non-citizens?
    Mr. RANGEL. People who are not citizens of the U.S. of 
America.
    Mr. BILLOTTI. Working inside the U.S. or outside of the 
U.S.?
    Mr. RANGEL. Inside the U.S.
    Mr. RYAN. I will have to ask you to answer briefly. Time 
has expired.
    Mr. RANGEL. Yes, we are over time.
    Mr. BILLOTTI. We only hire people who are either U.S. 
citizens or who have valid work permits in the U.S. to work in 
the U.S.
    Mr. RANGEL. Thank you.
    Mr. RYAN. Mr. Camp.
    Mr. CAMP. Thank you. Mr. Chairman, I want to thank all of 
our witnesses for their testimony. Thank you very much.
    My question is really to Mr. Billotti and Mr. Weitzel and 
Mr. Schwartz. If you could just briefly answer. You all have 
experience in the region. Based on that experience in the 
region, I would like to know how closely these countries and 
their citizens follow developments in the U.S. on our 
relationship, and how do you believe the people of the region 
would react if action on the agreement is delayed or if 
Congress seeks to reopen it for negotiation? If you could just 
comment. Mr. Billotti, why don't you start?
    Mr. BILLOTTI. In my experience, they follow what happens in 
the U.S. very closely, and if this agreement was not to go 
forward, I think it would have a detrimental affect on 
relations with Oman.
    Mr. CAMP. Thank you. Mr. Weitzel?
    Mr. WEITZEL. We have three English newspapers in Muscat, 
and every one of them has an American section. We know what is 
going on back home, plus television has CNN everywhere, and Fox 
News, the whole bit. We are very aware of what is going on. The 
FTA has been discussed and talked about in the business 
community from the very beginnings of the time when 
negotiations started, and there is excitement, there is 
anticipation that--it is like Christmas, if you will, with a 
new toy coming out the door. There will be a lot of 
disappointment if it is delayed, and the business community is 
ready to execute and make this happen, and make it good for 
both Omani and the U.S.
    Mr. CAMP. All right. Mr. Schwartz?
    Mr. SCHWARTZ. My experience is the Omanis are very proud of 
their relationship with the U.S., and that they are excited 
about this FTA agreement going forward, and I think it would be 
a very big disappointment, and very much impact our 
relationships with the country.
    Mr. CAMP. Thank you.
    Thank you, Mr. Chairman.
    Mr. RYAN. Mr. Levin?
    Mr. LEVIN. Thank you.
    A couple of quick comments. I think commercial benefits of 
this Agreement are clear. In fact, I think all of you, except 
Mr. Trumka--I don't think he is--one way or another, are 
involved with the commercial benefits, right, your companies or 
your consulting business? It is clear there are commercial 
benefits, and there are important commercial benefits.
    Secondly, I hope nobody thinks this is a question of 
goodwill between our two nations, it isn't. I think Democrats 
prefer to be able to vote for an FTA. I think whether it is in 
October, November or September, or late July is hardly a matter 
that would affect goodwill between our Nations. It seems to me 
a bit of an exaggeration. It is clear there has been progress 
in the country under the Sultan. No one is challenging that.
    Mr. Rangel and I are not sure who is left, who is 
listening, but he asked a good question. In no other provision 
do we rely on promises. We don't, whether it is tariff 
reductions, intellectual property, investment procedures, we 
don't say it is good enough that they say they will do better. 
I just want to emphasize the reason this matters, it is not a 
narrow issue, but it affects the whole pattern and path of 
globalization, and we are learning more and more what happens 
in a country where globalization benefits are not shared. I 
just want to quickly refer, while Mr. Ryan is here, I just want 
to go through what appear to be some of the shortcomings, and I 
have just a minute or two.
    It is true, there is a labor law reform, and it was a step 
forward, but this appears to be the fact today, that in these 
representative Committees, that is what they are called, they 
have to notify a ministry a month before a meeting, provide a 
copy of the agenda. The company can send a delegate to these 
meetings, but the representative Committee cannot join any 
organization with headquarters outside of Oman. Those are clear 
violations of ILO standards. You have to be an employee for a 
year before you can belong to a representative Committee. That 
is another clear violation. This appears to be the language 
under the 2003 law. I read: the employer has the sole 
discretion--no, the employer may establish schemes from which 
his workers may get advantages which are more beneficial than 
what is prescribed or provided than with other benefits or 
enter into agreements with them, the terms of which are more 
beneficial than the terms provided for in this law.
    That is not at all a mandate to bargain collectively. It is 
permissive as we read it. Then under the 2003 law relating to 
Committees, it appears that employers can elect people to these 
Committees. Also, the law requires a single main representative 
Committee and requires that all representative Committees 
belong to it. That is a clear violation of freedom of 
association. it is because of this larger issue that we raise 
these questions, and there is no use trying to skirt them, and 
I am not sure who is here, I think I do from the Omani 
government. I simply urge that there be a major effort to sit 
down and to talk about these issues, and see if there cannot be 
remediation meeting the basic standards before this matter 
comes up for a vote. There is no reason, Mr. Acting Chairman, 
why that can't happen.
    Mr. RYAN. Thank you. The gentleman's time has expired. Mr. 
English.
    Mr. ENGLISH. Thank you, Mr. Chairman, acting or otherwise. 
I want to thank this panel for really providing some thought-
provoking insights on this very important FTA. Because the 
issue has been raised, and because three of you represent 
organizations that have operations in Oman, can you please 
comment, Mr. Schwartz, Mr. Weitzel and Mr. Billotti, how have 
you found the overall business climate and working conditions 
in Oman compared to other nations in the Persian Gulf Region, 
and to what extent is Oman a model for other nations in the 
region as a country that has dramatically modernized itself 
since 1970? Mr. Schwartz.
    Mr. SCHWARTZ. Currently our project in Oman is in the 
design stage, so we don't have a big employment workforce there 
to comment on, but I can comment, based upon my visits there, 
my interactions with the Omani people, people have been very 
impressed with the interaction, how progressive they are in 
terms of how they operate, and how much women are involved in 
the workforce. My perception is a very progressive labor 
environment.
    Mr. ENGLISH. Mr. Weitzel?
    Mr. WEITZEL. Sir, our organization has operations in Qatar, 
Bahrain and Oman, so I can tell you that the three countries 
are different, but yet, Oman is unique in the fact of its 
openness, in my opinion. The government is willing to speak and 
talk with the companies that have questions. In preparing my 
testimony, we sent an e-mail to the Minister of the Interior, 
and he sent back an answer the very same day.
    The companies, the Omani companies, are very interested in 
finding out ways to get into the American market and bring 
products over to Oman. Compared to the other countries, they 
are a step ahead in the business world because they do not have 
the hustle and bustle of Qatar and the construction that is 
going on there. They just seem to be a little bit faster in 
accepting the changes that come about, and I am very pleased 
that they are doing that because it means business for 
everybody.
    Mr. ENGLISH. Mr. Billotti?
    Mr. BILLOTTI. The Turner Company works in all of the Gulf 
nations with the exception of Yemen. I have traveled the region 
for 30 years now, and I have worked in Saudi, the UAE, and all 
of the countries. I find that the Omanis are a little bit 
different and I think that is because they don't have the same 
oil, gas or petroleum wealth that so many of the other Gulf 
countries carry. I think because of that, they are more open. 
They certainly tend to be more appreciative of some of the 
business standards and ethics that we try to bring, and our 
working relationship, I have to honestly say, has probably been 
as good or better in Oman than in any of the other Gulf 
nations, even though we do more work in Dubai, for instance, 
and Abu Dhabi and even in Saudi.
    Mr. ENGLISH. Mr. Trumka, I want to congratulate you for 
raising issues about labor standards in Oman, and certainly 
this is something that our Committee has been very interested 
in and very concerned about, and accordingly, we have been very 
pleased with the statement that the Omani government has 
provided us, a commitment to move toward those ILO standards as 
we advance the FTA.
    One thing that was missing from your testimony, I know that 
we have received analysis from USTR and the Department of 
Commerce about the point that the gentleman from Michigan made, 
that there are clearly commercial benefits from this FTA. With 
some FTAs, Mr. Trumka, you know, we have had legitimate 
concerns about job loss on the U.S. Do you have any economic 
analysis or study that suggests that we would experience 
significant job losses in the U.S. if we were to enter into 
this Omani FTA?
    Mr. TRUMKA. Thank you, Representative English. First of 
all, in my full testimony, I answer some of those questions. We 
would be glad to provide additional amplification if you are 
interested in it. There is some chance that in energy-intensive 
industries that there will be job loss to Oman from the U.S., 
not nearly as significantly as NAFTA or the other FTAs that 
have been entered into.
    Mr. ENGLISH. I think Mr. Schwartz would probably point out 
and I will conclude on this point, that although low energy 
costs are obviously one of the reasons why Dow finds Oman 
attractive, nevertheless, the jobs that would likely move to 
Oman, as I understand it, would be jobs that would otherwise be 
offshore anyway because they are so energy price sensitive. I 
will examine your testimony in detail, and if you have anything 
else concrete to provide the Committee about actual potential 
job losses, we would certainly like to see them, because so 
far, the overpowering evidence here is that although the 
benefits will be modest from this FTA, clearly, there are net 
benefits.
    I thank the Chairman for your indulgence.
    [The response from Mr. Trumka was not received at the time 
of printing.]
    Mr. RYAN. Thank the gentleman. Mr. Cardin?
    Mr. CARDIN. Thank you, Mr. Chairman, and let me thank all 
the witnesses for their testimony.
    During the CAFTA debate, I was visited by a lot of 
representatives from the business community in support of 
CAFTA, and I went over with them some of the discussions I had 
on workers' rights and the fact that we could have made greater 
gains in CAFTA on workers rights, but that it was mainly our 
country that was holding back the progress on workers rights. 
The business representatives were surprised to hear that.
    I guess my point is similar to the discussion I had with 
the first panel, with our Trade Representative, in that with 
Bahrain we negotiated for stronger provisions on workers' 
rights, and it was like pulling teeth, not with the people from 
Bahrain, with the people from our Administration.
    My point is this, where is the business community on 
workers' rights? What do you want to see accomplished in 
international agreements? I find that when labor and business 
works together, there is nothing we can't accomplish. When we 
did the Trade Promotional Authority, TPA, we had a huge fight 
in this Congress on workers' rights, and we got no support from 
the business community to give us the opportunity to negotiate 
stronger workers' rights internationally. My own observation is 
that we have some of the strongest protections for workers than 
any country that we trade with, although at times, I wonder 
whether that is being enforced properly.
    My point is this, your silence speaks volumes. You want us, 
and I want to open up markets. Part of your priority to raise 
standards in this regard so that American workers, American 
businesses, American manufacturers can have a better 
competitive environment internationally. It seems to me it 
makes sense to do that. I will check my files. I don't remember 
receiving a single letter urging us to be more aggressive on 
workers' rights from any of the business groups that you all 
represent today. I would love to have your comments.
    Mr. BILLOTTI. I have to comment to that. I tell you, the 
Turner Company, and particularly, those of us who work 
internationally are absolutely committed to worker rights. 
There are some deplorable conditions that exist outside of the 
U.S., places like the Middle East, places in Latin America, 
places in Asia where we have work. Our staff has worked 
extremely hard in enforcing safety standards and organizing to 
know that people are fed properly, that they are paid on time. 
We had people go out to a labor camp to inspect it. This is not 
our labor camp, but a contractor's, and we forcibly closed that 
labor camp because it did not come close to any humane 
standards.
    The Turner Company, whether we may or may not have written 
and taken issue through the U.S. Congress, but I can tell you 
that as a practical matter, each and every one of us who work 
out in the field in so many of these locations outside of the 
U.S., work every day to enforce labor standards. It is to our 
benefit, because workers who are well paid, who are well fed, 
who are housed properly, are better workers, and it increases 
the productivity. We do it for selfish reasons. We want people 
to work for us and to work hard for us.
    Mr. CARDIN. Will you support Congress' effort to give the 
U.S. Trade Representative greater authority to negotiate worker 
standards internationally in trade agreements?
    Mr. BILLOTTI. I can't imagine how I could say no to that.
    Mr. CARDIN. Thank you. I would appreciate other Members' 
views on it.
    Mr. WEITZEL. Sir, we have almost 800 employees in Oman, and 
269 of them are Omanis, and the rest are expatriates. We are 
excited about the opportunity that the Omanis are going to be 
given with their representative groups. We have set up an 
English language course formed down at one of our operations at 
Thumrait Air Base. We want to see them mature as a workers' 
representative group into a union and into taking care of their 
concerns and rights. It is something, three operations have to 
occur. The workers have to get knowledge and they have to 
become mature in being a representative group. The government 
has to do the same thing. It is foreign to them to have a 
union. The courts must also do that same thing because they 
have to learn how to adjudicate union cases.
    The trends and the thoughts and the ideas of the courts 
need to focus on what is right for the workers and what is 
right for the companies.
    Mr. CARDIN. I will just make this final observation. Unless 
it becomes part of core trade agreements, you are not going to 
get the respect from the other countries to do what they need 
to do to raise international worker rights.
    Mr. RYAN. Thank the gentleman. Mr. Becerra.
    Mr. BECERRA. Thank you, Mr. Chairman. First, welcome and 
thank you very much for being here, and Ambassador Cook, 
especially. Thank you for the insights on how things operate, 
what we should expect with regard to the Omani government and 
the people. I think for the most part, every Member here would 
agree with what you are saying. They have proven over the years 
that they are really a friend, someone who really wants to 
continue a partnership with us, and I think most of us would 
agree that they have made progress, meaningful progress, with 
regard to the labor standards. The difficulty is, we know they 
still have a bit to go, and the difficulty some of us have, is 
that if we don't try to make sure that our agreements get them 
there. Then what we do is in essence give them a pass if they 
should not get there in the future; it only hurts American 
working men and women and Omani working men and women.
    If you take a look, and I know all of you had a chance to 
sit through the first part of the discussion with Ambassador 
Schwab, and now this discussion. We have not had a discussion 
about a disagreement with any other aspect of the trade deal 
except this, the treatment of labor and environment, and how it 
is treated differently. Why we would want to treat the 
protection of working men and women in America differently than 
we treat products from America, I am not sure, or why we would 
want to treat industrious men and women who work in America 
differently than the intellectual property that is amorphous 
that we protect, I am not sure, but that is the crux of this.
    Quite honestly, I think those of you who followed some of 
these trade debates, probably you know this as well, that if we 
could handle this issue, we would have what we used to have, 
robust bipartisan agreement on trade deals that would show a 
clear face of the U.S. when it comes to trading with our 
partners, and it is unfortunately, because most of these trade 
deals that have passed in the last few years have passed by one 
vote, and that is the worst face you want to show your 
competitors, even your foreign partners, because you want to 
show a very united front in America when it comes to that trade 
deal.
    Quite honestly, I think as some of you have just indicated, 
especially from the business community, we are really not that 
far away. What some of us are saying is what President Reagan 
said, trust but verify. We want to know that it is in the 
agreement that we will continue to lift standards, and by the 
way, we are willing to also give time so some of those 
countries that are developing have that opportunity to get 
there. We do not expect them to be there yesterday.
    If all you say is enforce your own laws, how does that 
work? Mr. Billotti, let me ask you this. If all the work that 
you do, all of a sudden you found that the contractors in Oman 
simply had to abide by a law which said Oman contractors and 
subcontractors get preference when it comes to disputes, and 
therefore, they are entitled to have representation in court, 
but foreigners are not; would that seem right to you?
    Mr. BILLOTTI. Well, it certainly wouldn't seem right. If it 
doesn't take place, and we wouldn't participate.
    Mr. BECERRA. See, that is the point, none of us expects 
that to be the case. Where there are areas of deficiency, as we 
know exists on some of the labor side, what we want to make 
sure is that they continue to cleanse those, so that we do have 
appropriate laws. I think some of you have just said it from 
the business community. You wouldn't expect to see us wanting 
to reach agreements with countries that aren't going to respect 
whether it is intellectual property, financial services laws, 
or certainly labor laws, because it makes it tough for you to 
compete. I continue to say that the biggest losers when we 
don't have good agreements on these labor provisions, are 
American companies, because as you just expressed, we probably 
bring higher standards into some of these countries than what 
exist. It is going to be tough for American companies to 
continue to want to do that if you have got other competitors 
from other countries who don't care to bring up standards.
    At some point you are going to have to decide, do I compete 
with them at the lower standards to be able to match them, or 
do I continue to just have a higher cost? Ultimately, American 
companies lose. I don't think American companies go abroad 
simply to take advantage of cheap labor. I think we go out 
there because we see there is a good business decision being 
made, and also it benefits all of us here and abroad when you 
all produce more, create more jobs. You still have to hire an 
American here to do the accounting if nothing else because of 
the work that you have done abroad.
    Rather than have a question, let me just make a plea to 
you, as I think the gentleman from Maryland--to help us. We are 
that close to having deals that are again bipartisan with 
robust votes in favor on both sides of the aisle. We are not 
far apart on the language. Some of us are simply saying, let's 
have that floor so you can't see companies go below it. That is 
clear and enforceable. Right now these agreements don't have 
enforceable language to protect working men and women, not just 
in America, but in those other countries as well. Let's, again, 
respect that the Omani government has been moving forward.
    I don't really have a question there. If any of you wish to 
comment with the time that I have remaining, I would be more 
than willing to open up the floor.
    Mr. RYAN. Sorry, but the gentleman's time has expired. We 
will just have to call it at that. I want to thank the 
witnesses for taking the time to come here. Some traveled great 
distances. I want to thank the first panel. This hearing is 
adjourned.
    [Whereupon, at 1:08 p.m., the Committee was adjourned.]
    [Submissions for the record follow:]

    Statement of David Hamod, National U.S.-Arab Chamber of Commerce

    ``From the first recorded contact--the arrival in Muscat of a ship 
hailing from Boston named the Rambler in September 1790--until the 
present day, the bonds between Oman and the United States have been 
warm and enduring. Both nations share a seafaring heritage, mutual 
commercial interests, a tradition of tolerance and a desire for contact 
with other cultures as some of the distinguishing features of this 
long-term relationship.'' U.S. Embassy, Muscat, Oman
    Mr. Chairman, Mr. Ranking Member, and distinguished members of the 
House Ways and Means Committee: Thank you for the opportunity to 
testify today on the proposed Free Trade Agreement (FTA) between the 
United States and the Sultanate of Oman. My name is David Hamod, and I 
serve as President & CEO of the National U.S.-Arab Chamber of Commerce 
(NUSACC). I have also been a regular visitor to Oman for most of the 
past two decades.
    NUSACC, established nearly 40 years ago, is widely regarded as the 
voice of American business in the Arab world. We are America's longest 
serving chamber of commerce dedicated to
    U.S.-Arab business, with membership rolls that now include more 
than 1,500 companies. With offices in New York, Houston, Los Angeles, 
and our headquarters in Washington DC, NUSACC is a nexus for U.S.-Arab 
business and the only chamber of its kind that covers the nation from 
coast to coast.
    Moreover, NUSACC is the only entity in the United States with 
official recognition conferred by the League of Arab States and the 
General Union of Arab Chambers of Commerce, Industry, and Agriculture. 
As such, we serve as the U.S. point of contact for the national 
chambers of commerce in the 22 Arab nations--including the Oman Chamber 
of Commerce and Industry. We also have longstanding relationships with 
the American Business Council of the Gulf Countries (ABCGC) and the 
Muscat American Business Council.
    NUSACC supports free trade agreements between the United States and 
our trading partners around the world because we believe that such 
agreements create ``win-win'' opportunities. In our view, the FTAs that 
are currently being negotiated with countries in the Arab world will 
help both sides to increase exports, generate jobs, develop business 
practices that are well suited to the international marketplace and, 
over time, improve the quality of life in the United States and the 
Middle East.
    We are pleased and honored that the House Ways and Means Committee 
has invited us to provide this ``big picture'' assessment of U.S.-Oman 
relations and why we believe that an FTA between our two nations would 
be in the best interests of the United States and Oman alike.
    Under the thoughtful leadership of H.M. Sultan Qaboos bin Said al 
Said, Oman has been transformed from an economic backwater to one of 
the most progressive and attractive nations in the region. And unlike 
some of its neighbors in the Arabian Gulf area, Oman has achieved this 
status without the benefit of huge energy reserves--relying instead on 
the resilience, determination, and entrepreneurial spirit of its 
people.
    According to our chamber's forecast for 2006, U.S. merchandise 
exports to Oman are on track to reach nearly $1 billion this year--
which translates into more than 15,000 direct U.S. jobs. The 2006 
figures represent an increase of nearly 56 percent over 2005, when U.S. 
merchandise exports totaled $593.3 million.
    The U.S. has become the third largest exporter to Oman, and if our 
two nations implement this FTA, market share for U.S. products in Oman 
is expected to close in on that of the United Arab Emirates and Japan, 
ranked first and second, respectively. The UAE is an important hub for 
re-exports to Oman. If and when the U.S.-Oman FTA enters into force, it 
is safe to assume that the FTA will increase profit margins for U.S. 
exporters by cutting out some of the transshippers and ``middlemen'' 
who drive up the costs of U.S. products. And as for Japan, it is moving 
aggressively to sign its own FTAs with Oman and other nations in the 
region.
    Under the terms of the FTA, according to the Office of the U.S. 
Trade Representative, 100 percent of bilateral trade in industrial and 
consumer products, and no less than 87 percent of agricultural tariff 
lines, will become duty-free immediately upon entry into force of this 
agreement. The United States and Oman will phase out tariffs on the 
remaining products within ten years.
    With this in mind, our chamber encourages the U.S. Congress to 
support the Free Trade Agreement with the Sultanate of Oman for a 
variety of reasons:
    Successful Market for the United States--In recent years, Oman has 
steadily grown its commercial relationship with the United States. As a 
result, there are upwards of 100 U.S. companies with a presence in 
Oman, and U.S. firms are playing an important role in Oman's strategic 
planning for the 21st century.
    A little over a year ago, for example, the Dow Chemical Company 
entered into a partnership with the Oman Oil Company to build a 
polyethylene complex at the Sohar industrial port zone. H.E. Maqbool 
Ali Sultan, Oman's Minister of Commerce & Industry, hailed the new 
partnership as a ``further milestone in the Omani Government's 
objective to attract foreign investment, diversify the economy, create 
job opportunities, and lay the foundation for future downstream 
industries.''
    Equally impressive was the initial public offering (IPO) last year 
for shares of AES Barka, the largest operating independent power and 
water project in Oman. Led by the AES Corporation of the United States, 
the IPO was oversubscribed by more than 16 times, according to 
BankMuscat, amounting to nearly half a billion U.S. dollars. The 
company, which has an installed capacity of 427 MW and 20 million 
gallons of water, started commercial production in June 2003 and, 
within the first year, it reached profitability. The project was named 
``Investment Project of the Year--2003'' at the Oman Awards for 
Excellence.
    Another high profile undertaking involving a U.S. company is the 
$3.5 billion Dolphin project, in which Occidental Petroleum is a joint 
venture partner. This ambitious project is linking the gas networks of 
Qatar, the UAE, Oman and, eventually, the Indian subcontinent. Under a 
deal reached in March 2003, Oman Gas Company (OGC) began supplying gas 
to Dolphin in the fourth quarter of 2003, and deliveries will continue 
for a period of up to five years. This agreement marks the first cross-
border gas delivery in the history of the GCC.
    Open Economy--Oman has made significant progress over the years in 
integrating its economy into the global marketplace, and an FTA with 
the United States would further reinforce Oman's efforts to promote 
economic liberalization. According to Economic Freedom of the World: 
2005 Annual Report, published by The Fraser Institute 
(www.freetheworld.com), Oman has the seventeenth freest economy in the 
world. This ties Oman with Finland and places the Sultanate ahead of 
such nations as Germany (#19), Taiwan (#24), Spain and Japan (tied for 
#30), South Korea (#35), and Italy (#54).
    Just a few years ago, some of Oman's tariffs ranged as high as 15 
percent (e.g.--food products). Today, according to the National 
Association of Manufacturers, Oman's applied tariff rates range from 
4.5 percent to 5.7 percent. The Government's decision to lower tariffs 
is helping to make U.S. products more competitive in the Omani market, 
thereby serving Oman's consumers and curbing overland imports from 
Dubai, the re-export capital of the Arabian Gulf.
    Respect for the Rule of Law--The best objective measure of Oman's 
adherence to the rule of law may be Transparency International's 
Corruption Perception Index 2005, which ranked Oman 28th in the world--
tied with Israel--with a low level of perceived corruption. 
(www.transparency.org) Oman ranks number one in the Arab world and 
placed higher than such nations as Taiwan (#32) and Italy & South Korea 
(tied for #40) among the 159 nations that were studied. TI's Corruption 
Perceptions Index draws on 16 different polls from ten independent 
institutions.
    Oman is also making headway in its efforts to promote good 
governance. For example, the Central Bank of Oman (CBO), in association 
with the Arab Banking Union and the Oman Chamber of Commerce and 
Industry, has been hosting seminars on the role of corporate governance 
in Arab banking institutions. One such seminar recently attracted 
corporate leaders from throughout the Arab world.
    Political Stability and Investment Appeal--Under the leadership of 
H.M. Sultan Qaboos, Oman has been one of the most stable nations in the 
Arab world for more than three decades. This is not easy, given the 
``tough neighborhood'' that the Middle East can sometimes be. Oman has 
a well deserved reputation for diplomacy and moderation, two traits 
that have enabled the Sultanate to stay on good terms with just about 
everyone in the region. Because of Oman's commitment to tolerance, the 
Sultanate has also been very successful at accommodating traditional 
Islam while at the same time hosting a wide variety of cultures among 
Oman's many expat residents and foreign visitors.
    Oman remains heavily dependent on oil, which makes up approximately 
40 percent of the country's GDP, more than 80 percent of the country's 
exports, and some 75 percent of the government's revenues. Such 
dependence is of great concern to the Government of Oman because the 
life cycle of the nation's oil fields is in decline. With this in mind, 
Oman is aggressively pushing for diversification and privatization, 
particularly in the form of ``Omanization''--replacing expatriate 
workers with Omanis.
    In an effort to make Oman more attractive to prospective partners 
around the world, Oman has waived requirements that foreign businesses 
had to enter into exclusive agency agreements. In addition, a 
ministerial decision was issued in 2000 waiving the requirement for 
foreign firms to partner with a 51 percent Omani-owned company in order 
to obtain an import license.
    Oman has also created a series of incentives in recent years that 
will encourage investments by U.S. partners and others. Some of these 
incentives include tax exemptions for five years for industrial 
enterprises that contribute to Oman's economy, a stable currency with 
full convertibility, no personal income tax and no foreign exchange 
controls, tax and import duty exemptions, and interest-free long-term 
loans for industrial and tourism projects that involve foreign 
investment. Oman also touts its price stability, with an inflation rate 
that has not exceeded one percent since 1992.
    NUSACC sees these efforts to liberalize Oman's economy as important 
steps along the path to a U.S.-Oman Free Trade Agreement.
    Adherence to International Agreements--Oman is a member of the 
World Trade Organization (WTO) and is making steady progress in its 
efforts to support intellectual property rights (IPR). The Omani 
trademarks regime consists of Royal Decree 68/87, Decree Law No. 635/
1991 and Royal Decree 33/91. Oman's latest Copyright Law, No. 37/2000, 
updated the earlier Royal Decree 47/96, enacted in 1996. In addition, 
Oman has joined the Patent Cooperation Treaty and has asked the World 
Intellectual Property Organization (WIPO) to register the Sultanate as 
a signatory to the Paris and Berne Conventions on IPR.
    According to the International Intellectual Property Alliance 
(IIPA), Oman is enforcing its copyright laws and bringing down piracy 
levels. The piracy level for business software was 87 percent in 2000 
and dropped to 71 percent two years later. The piracy level for motion 
pictures is even more impressive: from a high of 100 percent in 1995, 
it has dropped to below 25 percent--making it one of the lowest rates 
in the region. However, the IIPA reports that there is still room for 
improvement when it comes to the WIPO Copyright Act and the 
Performances and Phonograms Treaty.
    During my visits to Oman 15 years ago, the telltale signs were 
everywhere that there was relatively little enforcement of intellectual 
property rights. Pirated computer software, bootleg videos, and 
designer clothing knock-offs were widely available. Following its 
accession to the WTO, however, Oman began cracking down in earnest on 
IPR violations. Today, with support from the private sector, Omani 
authorities are keeping the heat on IPR offenders, routinely conducting 
sting operations on illicit video producers and busting rings of 
counterfeiters.
    Strategic Support--The Sultanate of Oman, with its close proximity 
to the strategic Straits of Hormuz, is an important asset for the 
United States military in the Middle East. Over the years, Oman has 
provided invaluable support to the U.S. forces in terms of forward 
deployments of U.S. servicemen and women and the pre-positioning of 
U.S. materiel. Oman hosts an estimated 3,000 U.S. servicemembers, 
particularly from the U.S. Air Force.
    According to the U.S. Department of Defense, ``Oman has been a 
coalition partner for over thirty years. Oman's active participation 
during the Gulf crisis and their willingness to allow access to port 
facilities and air bases make them vital to any coalition success in 
the region.''
    Supporting the Fight Against Terrorism--Oman has been a strong and 
reliable partner in the war against terrorism. Since 2001, the 
Sultanate has taken decisive steps to combat money laundering and to 
shut down any financial resources that might be available to 
terrorists. Oman is also hoping to become the second Arab nation to put 
the U.S. Container Security Initiative in place, allowing U.S. 
personnel to inspect cargo bound for the United States.
    Oman has been unequivocal about its willingness to stand ``side by 
side'' with the United States in America's fight against terrorism. 
H.E. Yousef Bin Alawi Bin Abdullah, the Head of Oman's Delegation to 
the United Nations, stated in New York not long after 9/11, ``We would 
like to reaffirm again our solidarity with the United States of America 
in fighting all forms of terror against humans wherever they are.'' He 
went on to say, ``Stemming from my country's firm position of 
condemning terrorism in all its forms, and in compliance with the goals 
of the United Nations of maintaining international peace and security, 
my country ensures its support toward the international efforts in 
fighting terrorism. . . .''
    Commitment to Human Development--When it comes to capacity building 
through social policies, Oman is one of the most progressive nations in 
the region, thanks to the enlightened leadership of H.M Sultan Qaboos. 
The Sultan has encouraged women to play a leading role in the 
development of Oman on the grounds that to ``exclude women is to 
exclude 50 percent of the country's potential.'' In large part as a 
result of the Sultan's encouragement over the years, there are more 
female graduates these days than male graduates.
    Women in Oman have the right to vote and run for office in 
Consultative Council elections, held every four years. Oman has three 
women in its Cabinet, and it is no coincidence that Oman has produced 
the first fully accredited female ambassador to the United States from 
the Arab world, H.E. Hunaina Sultan al-Mughairy.
    A strong commitment to education is a key component of a nation's 
ability to encourage economic development, and Oman has one of the most 
respected literacy rates in the Arab world. The Omanis have made 
remarkable progress since 1970, when H.M. Sultan Qaboos acceded to the 
throne. Before 1970, Oman had only three schools, and only boys were 
allowed to receive an education. Today, Oman boasts upwards of 1,000 
schools, and boys and girls are equally represented.
    There was also a time in Oman when the opportunity to learn English 
was only available to small number of Omanis. Today, in recognition of 
English as the lingua franca of international commerce and diplomacy, 
English is being taught in the first grade, with five lessons per week.
    One academic success story that connects the United States to Oman 
is The American International School of Muscat (TAISM), which ``pursues 
academic excellence for students in the international community through 
an American-based education that develops ethical, responsible, and 
globally conscious life-long learners.'' TAISM, designed to afford 
expatriate children of all nationalities with an educational program in 
the context of an American-based curriculum, is accredited by the New 
England Association of Schools and Colleges (NEASC) and the Council of 
International Schools (CIS).
    Respect for Workers' Rights--Oman joined the International Labor 
Organization in 1994, and the Sultanate has come a long way over the 
years in its efforts to encourage labor reform and support the rights 
of workers. This is still a work in progress, but NUSACC is encouraged 
by steps that Oman has taken and continues to take.
    In NUSACC's view, the most significant step forward came in 2003 
with the passage of a new labor law (Royal Decree 35) that enables 
workers--Omanis and foreigners--to join ``worker representative 
committees.'' These committees represent an important step forward in 
effectively granting workers the right to strike, engage in collective 
bargaining, and take their employers to court. According to the Office 
of the U.S. Trade Representative, ``Oman is currently working with the 
ILO on additional regulations to ensure that the implementation of 
collective bargaining provisions is consistent with international labor 
standards.''
    Environmental Protection--Under the leadership of H.M. Sultan 
Qaboos, a lifelong environmentalist, Oman has been dedicated for 
decades to the preservation of nature. Oman was the first country in 
the Arab world to establish a full-fledged Ministry of Environment, and 
Oman was one of the first nations in the region to design a strategic 
plan for the environment. As part of that nation's efforts to raise 
public awareness, Omani Environment Day is celebrated each year on 
January 8.
    In addition to establishing the Ministry of Regional Municipalities 
and Environment to handle environmental issues, H.M. Sultan Qaboos 
sponsors a major biennial conservation award, the first of its kind in 
the Arab world. The award is presented as part of the UNESCO ``Man and 
the Biosphere'' Program to highlight outstanding contributions to 
environmental preservation.
    In recognition of his environmental stewardship, H.M. Sultan Qaboos 
has received the prestigious John C. Phillips Memorial Medal from the 
World Conservation Union and the Order of the Golden Ark from the World 
Wildlife Fund (WWF). In cooperation with the WWF, Oman has established 
six nature preserves to protect and support the breeding of endangered 
species.
    When the United States and Oman inked the Free Trade Agreement on 
January 19, 2006, U.S. Trade Representative Rob Portman noted, ``With 
our signatures today, we cement our long-standing friendship and 
growing commercial ties and create new economic opportunities for both 
of our countries . . . For decades, Oman and the United States have 
shared a desire for peace, stability and economic opportunity in the 
Middle East. Today we take an important new step in our partnership.'' 
The U.S. is well aware of ``Oman's enthusiasm for open trade and free 
markets,'' concluded Ambassador Portman. ``We welcome that spirit and 
we are pleased to have Oman as a partner in our efforts to raise living 
standards and promote peace through trade.''
    In many ways, these statements echo sentiments of the House Ways 
and Means Congressional delegation that visited Oman in late 2004. That 
report stated, ``The delegation strongly supports the negotiation of an 
FTA with Oman and is pleased to see the commitment and drive by Oman to 
conclude such negotiations. . . . Oman has undertaken significant 
economic and political reforms in a short time, particularly in the 
banking and insurance sectors, demonstrating its capacity and 
willingness to use objective, transparent standards.''
    A wide range of business leaders and U.S. policymakers recognize 
Oman's genuine commitment to reform and to enhancing free trade with 
the United States. With this in mind, NUSACC lends its full support to 
a U.S.-Oman Free Trade Agreement, and we look forward to doing our part 
to help turn this vision into a reality in the months ahead.
    Thank you for the opportunity to testify today, Mr. Chairman. I 
would be pleased to answer any questions that you may have.

                                 

    Statement of Frank A. Keating, American Council of Life Insurers

    Mr. Chairman, Mr. Ranking Member and distinguished members of the 
House Ways and Means Committee: Thank you for the opportunity to submit 
a statement on behalf of the American Council of Life Insurers in 
support of the proposed United States--Oman Free Trade Agreement. Our 
industry looks forward to swift and successful passage of the 
aforementioned agreement.
    The American Council of Life Insurers (``ACLI'') represents three 
hundred seventy-seven (377) member companies operating in the United 
States that account for 91 percent of total assets, 90 percent of the 
life insurance premiums, and 95 percent of annuity considerations in 
the United States. Internationally, ACLI members account for over 99 
percent of life insurance premiums generated in overseas markets by 
U.S. based life insurance and retirement security companies.
    ACLI applauds the achievement of U.S. trade negotiators in 
concluding the U.S.-Oman Free Trade Agreement because we believe it 
continues the high standard of commercially meaningful free trade 
agreements (``FTAs'') which support our bilateral objectives in these 
markets and facilitate progress in the World Trade Organization's Doha 
Development Negotiations. We fully support the ongoing U.S. strategy of 
bilateral and regional FTAs as a mechanism for expanding market 
opportunities for U.S. insurance and retirement security exporters.
    ACLI's members are proud of the positive contribution we make to 
the U.S. financial services export surplus and are committed to further 
expand our global market presence through trade negotiation and 
facilitation to further create wealth and jobs at home in towns across 
America. We are also proud that our industry's products help build 
individual and national economic stability in markets where they are 
freely available, and that in turn supports strong and growing global 
economies throughout the world.
    While Oman is a relatively small insurance market by global 
standards with a population of under three million, the Omani insurance 
premiums as a percentage of GDP (1. 28%) and per capita spending on 
insurance (U.S.$103) are both well above the regional averages. As the 
vision of a broader Middle East Free Trade Area gains support, these 
positive Omani market indicators, coupled with a young and growing 
regional population, make this agreement a strong foundation upon which 
to build even more advanced regional objectives.
    Overall insurance premiums in the region grew by 4.1% in real terms 
in 2004 against the backdrop of Oman's 2004 7.5% growth rate, based 
largely on an increasingly efficient, open and transparent regulatory 
system. The Omani government has demonstrated an understanding of the 
importance of an innovative and dynamic insurance market and it has 
endeavored to build one for all companies operating in the market. In 
addition to a virtually perfect set of commitments on market access and 
national treatment for our industry, the U.S.-Oman FTA disciplines on 
transparency and administrative procedures will lock in important pro-
competitive regulatory practices that allow U.S. companies to provide 
new and innovative products. The value of these disciplines can not be 
overstated in building U.S. market share.
    As a highly regulated financial service, transparency and 
administrative procedures commitments are regionally and globally 
critical to our success and the regulatory, and by extension, market 
stability of the nations in which we operate. Vague, inconsistent or 
capricious regulation and supervision is in many ways worse than 
outright barriers to market access and expansion. By contrast, in 
signing this agreement, Oman has committed to provisions based largely 
on the U.S. Administrative Procedures Act.
    Put in a broader context, the transparency and other ``rule of 
law'' provisions in this agreement also set a strong foundation for the 
Omani regulatory and legal environment which has tangible benefits for 
our companies as foreign stakeholders in the Omani economy. This in 
turn allows access to competitive insurance and benefits products, 
which is beneficial for Omani workers and families and represents one 
of the best elements of U.S. commercial diplomacy.
    Described more specifically, through this FTA, Omani citizens will 
have increased access to world standard financial services products to 
help them protect their families and take individual responsibility for 
their economic futures. Second, Omani workers will have increased 
access to world standard life insurance, retirement security and health 
insurance products. Third, Omani businesses will have increased access 
to world standard employee benefits and risk management technologies. 
Our companies therefore look forward to advancing their stake in this 
marketplace. By any yard stick, this agreement is a major step forward 
for all involved.
    In conclusion, we believe the U.S.-Omani FTA builds on all previous 
FTAs and represents a gold standard for future bilateral and 
multilateral agreements, while extending traditional American values of 
transparency, economic empowerment and rule of law to the Middle East. 
ACLI looks forward to Congress' approval of the proposed United States-
Oman Free Trade Agreement, and would be pleased to provide any further 
information that the subcommittee may request.

                                 

           Statement of Ranchers-Cattlemen Action Legal Fund

    The Ranchers-Cattlemen Action Legal Fund--United Stockgrowers of 
America (R-CALF USA) appreciates this opportunity to submit testimony 
on the U.S.-Oman Free Trade Agreement (Oman FTA). R-CALF USA is a non-
profit association that represents over 18,000 U.S. cattle producers in 
47 states across the nation. R-CALF USA's mission is to represent the 
U.S. cattle industry in trade and marketing issues to ensure the 
continued profitability and viability of independent U.S. cattle 
producers. R-CALF USA's membership consists primarily of cow/calf 
operators, cattle backgrounders, and feedlot owners. Various main 
street businesses are associate members of R-CALF USA.
    R-CALF USA believes that U.S. cattle producers can compete and 
thrive in global markets if the rules that regulate those markets are 
fair. Today, U.S. exports of cattle and beef are thwarted by high 
import tariffs abroad, large subsidies to cattle and beef producers in 
other countries, and a failure to harmonize health and safety standards 
to allow for increased trade while protecting animal health and 
consumer safety. In addition, the highly perishable nature of our 
product demands the creation of special rules for cattle and beef trade 
that reflect the special needs of our producers and protect them from 
import surges and excess price volatility. While many of these issues 
may be most comprehensively addressed at a global level, progress can 
also be made through a strategic program of bilateral and regional 
negotiations.
    The Oman FTA is one example of how such negotiations can be pursued 
to benefit the U.S. cattle and beef industries. Oman is not a 
significant producer or exporter of cattle and beef. Oman has a small 
domestic cattle herd of 335,000 head and produces about 4,160 metric 
tons of beef and veal a year.\1\ Oman exports little beef to the world, 
and none to the U.S.\2\ Though Oman is a net importer of beef, its 
market has so far been largely untapped by U.S. producers. Currently, 
Oman imports more than two-and-a-half times more beef and veal than it 
produces.\3\ All in all, Oman imported nearly $22 million worth of 
bovine meat products from the world in 2004.\4\
---------------------------------------------------------------------------
    \1\ FAOSTAT Agricultural Production Database, Live Animals, 
Livestock Primary, and Agriculture & Food Trade, United Nations Food 
and Agriculture Organization, available on-line at http://
faostat.fao.org/.
    \2\ Id.
    \3\ Id.
    \4\ Id.
---------------------------------------------------------------------------
    Yet U.S. exports of beef and veal to the region make up a very 
small percent of those imports. Even before Oman closed its border to 
imports of U.S. beef after the discovery of a Canadian animal infected 
with BSE in Washington state in late 2003, U.S. shipments of beef and 
veal regularly accounted for less than 5 percent of all of Oman's beef 
and veal imports.\5\ If all bovine products are included, such as beef 
offal and beef preparations, the U.S. has accessed an even smaller 
portion of the Omani import market, less than 1 percent on average 
since 2000.\6\ Though Oman lifted its temporary BSE ban in April 2005, 
significant U.S. exports have yet to resume.
---------------------------------------------------------------------------
    \5\ U.S. export statistics from U.S. Department of Commerce, Census 
Bureau, Foreign Trade Statistics.
    \6\ Id.
---------------------------------------------------------------------------
    Under the Oman FTA, Oman's tariffs on all imports of beef products 
from the U.S. go to zero immediately. This will eliminate Oman's 
current tariff of 5 percent on imports of frozen beef, beef offal, bull 
semen, and prepared beef products from the United States. Under the 
FTA, Omani beef exports to the U.S. are also granted immediate duty-
free access, as long as they enter under the general ``all others'' 
quota available to exporters of beef to the U.S. under U.S. WTO 
commitments. Some out-of-quota exports from Oman will also have duty-
free access under an additional, dedicated quota of 15,000 kilograms if 
the general U.S. beef quota is exhausted. This dedicated quota will 
grow gradually until it allows unlimited imports from Oman in 10 years, 
and tariffs on any Omani beef entering out-of-quota will phase out over 
the same 10 years. Since Oman produces only a minimal amount of cattle 
and beef, the majority of which is currently consumed domestically 
within Oman, this additional market access is unlikely to have a 
significant impact on U.S. producers. The net impact of liberalization 
of cattle and beef trade under the FTA should be to allow U.S. 
producers to access more of the Omani beef market and build an 
important, strategic presence in the Middle Eastern region.
    While R-CALF USA supports the Oman FTA, it is worth noting that the 
agreement does not incorporate the rules of origin for cattle and beef 
that R-CALF USA has sought in preferential trade agreements. R-CALF USA 
believes that preferential trade agreements should include a ``born, 
raised and slaughtered'' (BRS) rule of origin for cattle and beef to 
ensure that the benefits of the agreement accrue to product of the 
country, or countries, participating in the agreement. While the 
failure to include a BRS rule of origin is not especially significant 
in the Oman agreement, it could be critical in other ongoing FTA 
negotiations. Stronger rules of origin are particularly important in 
FTAs with countries where the risk of circumvention is substantial, and 
where the third countries that would potentially benefit from 
circumvention are themselves resisting entering into FTA negotiations 
directly with the United States. In these situations, rules of origin 
must be strengthened to prevent diluting the benefits of the agreement 
and to ensure that third countries are not allowed to benefit from 
preferential access to the U.S. market without providing reciprocal 
access to U.S. products.
    R-CALF USA is encouraged by the fact that, along with the Oman FTA, 
an increasing number of newly proposed FTAs promise potentially 
substantial benefits for U.S. cattle producers. As trade in cattle and 
beef is liberalized through such agreements, it is important that, 
overall, the agreements achieve a balance between the size of new 
export markets opened for U.S. producers and the volume of potential 
foreign production given preferential access to the United States. It 
is critical that FTAs with countries that differ significantly from 
Oman--that have large domestic herds, produce significant quantities of 
beef, and/or are net exporters of cattle and beef--should be assessed 
on their own merits and may require longer phase outs of U.S. tariffs, 
backloading of expansion of tariff rate quotas (TRQs) and additional 
provisions to ensure that trade in cattle in beef will work for U.S. 
cattle producers.
    While supporting the Oman FTA, R-CALF USA will continue to push for 
improvements in overall U.S. trade policies regarding cattle and beef 
and assess future trade agreements on a case-by-case basis. In 
particular, R-CALF USA believes U.S. trade negotiators should pursue a 
strategic program of bilateral, regional, and multilateral trade 
negotiations that:

      Reduce global market distortions such as high import 
tariffs abroad, restrictive quotas, and large subsidies to cattle and 
beef producers in other countries;
      Upwardly harmonize health and safety standards to allow 
for increased trade while protecting animal health and consumer safety;
      Include a ``born, raised and slaughtered'' rule of origin 
for beef receiving preferential market access; and
      Create special rules for cattle and beef trade that 
reflect the highly perishable nature of our product and the special 
needs of our producers by protecting them from import surges and excess 
price volatility.

    Until distortions in international cattle and beef markets are 
addressed comprehensively at a global level, the U.S. should pursue 
FTAs strategically to move toward the goals outlined above. Because the 
Oman FTA represents an important step in the right direction for U.S. 
cattle and beef producers, R-CALF USA urges its support.

                                 

  Statment of the Chamber of Commerce of the United States of America

    On behalf of the Chamber of Commerce of the United States of 
America (U.S. Chamber), we are pleased to present the House Committee 
on Ways and Means with this testimony regarding the U.S.-Oman Free 
Trade Agreement (FTA). International trade plays a vital part in the 
expansion of economic opportunities for American workers, farmers, and 
businesses. As the world's largest business federation--representing 
more than three million businesses and organizations of every size, 
sector, and region--the U.S. Chamber views efforts to expand trade 
opportunities as a national priority.
    As such, the U.S. Chamber has helped lead the business community's 
effort to make the case for initiatives to expand trade, including 
global trade negotiating rounds under the purview of the World Trade 
Organization (WTO) and its predecessor, the General Agreement on 
Tariffs and Trade, as well as bilateral and regional FTAs. We do so 
because U.S. businesses have the expertise and resources to compete 
globally--if they are allowed to do so on equal terms with our 
competitors.

Trade, Growth, and Prosperity
    America's international trade in goods and services accounts for 
nearly a fifth of our country's GDP. As such, it is difficult to 
exaggerate the importance of the Congressional vote in 2002 to renew 
Presidential Trade Promotion Authority (TPA). As we predicted, this 
action by Congress helped reinvigorate the international trade agenda 
and has given a much-needed shot in the arm to American businesses, 
workers, and consumers. The leadership demonstrated by the many members 
of the House Committee on Ways and Means was critical to this progress.
    The evidence is overwhelming that trade is a powerful tool to 
strengthen the U.S. economy. As the Office of the U.S. Trade 
Representative has pointed out, the combined effects of the North 
American Free Trade Agreement (NAFTA) and the Uruguay Round trade 
agreement that created the WTO have increased U.S. national income by 
$40 billion to $60 billion a year. In addition, the lower prices for 
imported goods generated by these two agreements mean that the average 
American family of four has gained between $1,000 and $1,300 in 
spending power--an impressive tax cut, indeed. It is also widely 
recognized that jobs in the export sector pay a premium of 
approximately 15% on average.
    When TPA lapsed in 1994, the international trade agenda lost 
momentum. The Uruguay Round was implemented, but no new round of global 
trade negotiations was launched as the 1990s wore on. Moreover, the 
United States was compelled to sit on the sidelines while other 
countries and trade blocs negotiated numerous preferential trade 
agreements that put American companies at a competitive disadvantage. 
As we pointed out during our 2001-2002 advocacy campaign for approval 
of TPA, the United States was party to just three of the roughly 150 
free trade agreements in force between nations at that time. The 
passage of TPA allowed the United States to demonstrate once again the 
leadership in the international arena that has seen trade emerge as a 
primary engine of growth and development since 1945.

General Benefits of Free Trade Agreements
    The FTAs the United States has negotiated since 2002 represent an 
ambitious and comprehensive approach to opening markets one country or 
region at a time. While the U.S. Chamber is strongly backing the Doha 
Development Agenda negotiations for a new global trade-expansion 
agreement, we believe it is entirely appropriate to leverage both the 
breadth of the DDA and the depth of FTAs. In this fashion, U.S. 
business can attain important new market opportunities in the years 
ahead.
    As noted above, the United States is an extraordinarily open 
economy. Consider how U.S. tariffs compare with those of countries 
where FTA negotiations have recently been concluded, are underway, or 
were recently proposed. According to the World Bank, the United States 
has a weighted average tariff rate of less than 2%. By contrast, the 
weighted average tariff of Panama is 7%, Thailand 8%, Peru 9%, Colombia 
and Korea 10%, and Oman 14%.
    We made this point repeatedly in 2004-2005 during our advocacy 
campaign for Congressional approval of the U.S.-Dominican Republic-
Central America Free Trade Agreement (DR-CAFTA). The United States 
eliminated tariffs on nearly all imports from Central America and the 
Caribbean in 1983 through the Caribbean Basin Initiative. In 2003, 77% 
of Central American and Dominican industrial products (including 99% of 
non-apparel industrial products) and 99.5% of agricultural products 
entered the United States duty-free. On the other hand, U.S. consumer, 
industrial, and agricultural exports to these countries faced average 
tariffs in the 7-11% range. As we often pointed out during the DR-CAFTA 
campaign, this was like going into a basketball game 11 points down 
from the tip off.
    An academic observer may regard as insignificant the resulting 12% 
price disadvantage that follows from these lopsided tariffs (to cite 
the difference in average tariffs between the United States and Oman). 
However, business men and women face narrower margins than these every 
day, very often with the success or failure of their firm on the line. 
Best of all, a free trade agreement can fix this imbalance once and for 
all.
    The way free trade agreements level the playing field for U.S. 
workers, farmers, and business is borne out in the results attained by 
America's FTAs. For example, the U.S.-Chile Free Trade Agreement was 
implemented on January 1, 2004, and immediately began to pay dividends 
for American businesses and farmers. U.S. exports to Chile surged by 
33% in 2004, and by a blistering 85% in 2005. In fact, U.S. exports to 
Chile have risen nearly two-and-a-half fold in the agreement's first 
two years of implementation, reaching $6.7 billion in 2005.
    Other recent FTAs have borne similar fruits. Trade with Jordan has 
risen four-fold since the U.S.-Jordan Free Trade Agreement was signed 
in 2000, fostering the creation of tens of thousands of jobs in a 
country that is a close ally of the United States. The U.S. trade 
surplus with Singapore nearly quadrupled over the first two years of 
implementation of the U.S.-Singapore Free Trade Agreement (2004-2005), 
reaching $5.5 billion last year. And over the 12 years since 
implementation of the North American Free Trade Agreement (NAFTA), by 
far the largest and most important of these agreements, U.S. exports to 
Canada and Mexico have surged by $189 billion (to a total of $331 
billion in 2005), sustaining literally millions of new jobs and 
businesses.
    One of the most compelling rationales for these FTAs is the benefit 
they afford America's smaller companies. America's small and medium-
sized companies are leading the charge into foreign markets, accounting 
for more than three-quarters of exporting firms to markets which have 
recently completed FTAs or are in the process of doing so. As a 
corollary, it suggests how smaller businesses stand to gain 
disproportionately from the market-opening measures of a free trade 
agreement:
    Beyond the highly successful track record of America's FTAs as 
measured in terms of new commerce, the U.S. Chamber and its members 
also support free trade agreements because they promote the rule of law 
in emerging markets around the globe. This is accomplished through the 
creation of a more transparent rules-based business environment. For 
example, FTAs include provisions to guarantee transparency in 
government procurement, with competitive bidding for contracts and 
extensive information made available on the Internet--not just to well-
connected insiders.
    FTAs also create a level playing field in the regulatory 
environment for services, including telecoms, insurance, and express 
shipments. In addition, recent FTAs have strengthened legal protections 
for intellectual property rights in the region, as well as the actual 
enforcement of these rights.

The Agreement with Oman
    On January 19, 2006, the United States and Oman signed a free trade 
agreement. With bilateral trade surpassing $1.1 billion in 2005, the 
FTA is of particular interest to U.S. exporters of telecommunications 
equipment, oil and gas equipment, medical equipment, and electrical and 
manufacturing equipment. As noted above, Oman has a weighted average 
tariff of 14%, presenting U.S. exporters with relatively high barriers 
to market access; the FTA will eliminate all tariffs on industrial and 
consumer products immediately upon entry into force.
    The FTA also addresses agriculture products. Under the agreement, 
U.S. agriculture exports in 87% of the agriculture tariff lines will be 
given immediate duty-free access to the Omani market. All remaining 
tariffs on agricultural products between the two countries will be 
phased out over the next ten years.
    From a services standpoint, this agreement will allow additional 
opportunities for U.S. companies in the banking, insurance and 
securities sectors. The agreement will allow for U.S. financial 
services companies to create subsidiaries in Oman and enter into joint 
ventures with Omani companies. The agreement will also provide for a 
framework which ensures transparency in these sectors and assurances to 
U.S. investors.
    From a regional standpoint, the U.S.-Oman FTA is an important 
strategic step in the overall U.S. foreign policy in the Middle East. 
The Bush Administration has announced its intention to create a Middle 
East Free Trade Area by 2013. The United States already has FTAs with 
Bahrain, Israel, Jordan, and Morocco and is in negotiations with the 
United Arab Emirates. Congressional approval of this FTA is a crucial 
step in attaining the MEFTA goal. Passage of this comprehensive 
agreement will set a high standard for future FTAs with Gulf 
Cooperation Council member countries and other countries in the region.
    The U.S. Chamber looks forward to leveraging this agreement for our 
member companies and the broader U.S. business community. The Chamber 
has an accredited affiliate in Oman--the Muscat-American Business 
Council--which we intend to work with as a means of fostering increased 
bilateral trade and investment between the two countries--once this 
agreement is entered into force. The existence of this business council 
is evidence of the interest by both the Omani and American business 
communities of furthering trade, investment and commercial ties.

Conclusion
    Trade expansion is an essential ingredient in any recipe for 
economic success in the 21st century. If U.S. companies, workers, and 
consumers are to thrive amidst rising competition, new trade agreements 
such as the DDA and the various free trade agreements cited above will 
be critical. In the end, U.S. business is quite capable of competing 
and winning against anyone in the world when markets are open and the 
playing field is level.
    The U.S. Chamber appreciates the leadership of the House Committee 
on Ways and Means in advancing the U.S. international trade agenda, and 
we applaud your efforts to move forward with the U.S.-Oman FTA. We 
stand ready to work with you on this agreement and other challenges in 
the year ahead. Thank you.

                                  
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