[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
ECONOMIC AND SECURITY CONCERNS IN TOURISM AND COMMERCE: H.R. 3232 AND
H.R. 1776
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMERCE, TRADE,
AND CONSUMER PROTECTION
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 11, 2008
__________
Serial No. 110-146
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
U.S. GOVERNMENT PRINTING OFFICE
62-207 WASHINGTON : 2010
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected].
?
COMMITTEE ON ENERGY AND COMMERCE
JOHN D. DINGELL, Michigan, Chairman
HENRY A. WAXMAN, California JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts Ranking Member
RICK BOUCHER, Virginia RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey FRED UPTON, Michigan
BART GORDON, Tennessee CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois NATHAN DEAL, Georgia
ANNA G. ESHOO, California ED WHITFIELD, Kentucky
BART STUPAK, Michigan BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York JOHN SHIMKUS, Illinois
GENE GREEN, Texas HEATHER WILSON, New Mexico
DIANA DeGETTE, Colorado JOHN B. SHADEGG, Arizona
Vice Chair CHARLES W. ``CHIP'' PICKERING,
LOIS CAPPS, California Mississippi
MIKE DOYLE, Pennsylvania VITO FOSSELLA, New York
JANE HARMAN, California ROY BLUNT, Missouri
TOM ALLEN, Maine STEVE BUYER, Indiana
JAN SCHAKOWSKY, Illinois GEORGE RADANOVICH, California
HILDA L. SOLIS, California JOSEPH R. PITTS, Pennsylvania
CHARLES A. GONZALEZ, Texas MARY BONO MACK, California
JAY INSLEE, Washington GREG WALDEN, Oregon
TAMMY BALDWIN, Wisconsin LEE TERRY, Nebraska
MIKE ROSS, Arkansas MIKE FERGUSON, New Jersey
DARLENE HOOLEY, Oregon MIKE ROGERS, Michigan
ANTHONY D. WEINER, New York SUE WILKINS MYRICK, North Carolina
JIM MATHESON, Utah JOHN SULLIVAN, Oklahoma
G.K. BUTTERFIELD, North Carolina TIM MURPHY, Pennsylvania
CHARLIE MELANCON, Louisiana MICHAEL C. BURGESS, Texas
JOHN BARROW, Georgia MARSHA BLACKBURN, Tennessee
BARON P. HILL, Indiana
DORIS O. MATSUI, California
______
Professional Staff
Dennis B. Fitzgibbons, Chief of Staff
Gregg A. Rothschild, Chief Counsel
Sharon E. Davis, Chief Clerk
David L. Cavicke, Minority Staff Director
(ii)
Subcommittee on Commerce, Trade, and Consumer Protection
BOBBY L. RUSH, Illinois, Chairman
JAN SCHAKOWSKY, Illinois ED WHITFIELD, Kentucky
Vice Chair Ranking Member
G.K. BUTTERFIELD, North Carolina CLIFF STEARNS, Florida
JOHN BARROW, Georgia CHARLES W. ``CHIP'' PICKERING,
BARON P. HILL, Indiana Mississippi
EDWARD J. MARKEY, Massachusetts VITO FOSSELLA, New York
RICK BOUCHER, Virginia GEORGE RADANOVICH, California
EDOLPHUS TOWNS, New York JOSEPH R. PITTS, Pennsylvania
DIANA DeGETTE, Colorado MARY BONO MACK, California
CHARLES A. GONZALEZ, Texas LEE TERRY, Nebraska
MIKE ROSS, Arkansas SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York MICHAEL C. BURGESS, Texas
JIM MATHESON, Utah MARSHA BLACKBURN, Tennessee
CHARLIE MELANCON, Louisiana JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
----------
Page
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 1
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 3
Hon. Jan Schakowsky, a Representative in Congress from the State
of Illinois, opening statement................................. 4
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, opening statement.................................. 4
Hon. Mike Ross, a Representative in Congress from the State of
Arkansas, opening statement.................................... 5
Hon. Roy Blunt, a Representative in Congress from the State of
Missouri, opening statement.................................... 7
Hon. Bill Delahunt, a Representative in Congress from the
Commonwealth of Massachusetts, prepared statement \1\.......... 8
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, prepared statement............................. 124
Witnesses
Geoffrey Freeman, Senior Vice President of Public Affairs, Travel
Industry Association........................................... 16
Prepared statement........................................... 18
Answers to submitted questions............................... 167
Patrick Long, Director, Center for Sustainable Tourism, Division
of Research and Graduate Studies; Professor, College of
Business, East Carolina University............................. 28
Prepared statement........................................... 30
Answers to submitted questions............................... 178
Lois C. Greisman, Associate Director for the Division of
Marketing Practices, Bureau of Consumer Protection, Federal
Trade Commission............................................... 43
Prepared statement........................................... 45
Jeffrey Rechenbach, Executive Vice President, Communication
Workers of America............................................. 59
Prepared statement........................................... 61
Tim Searcy, Chief Executive Officer, American Teleservices
Association.................................................... 70
Prepared statement........................................... 72
David L. Butler, Director, Call Center Research Laboratory,
University of Southern Mississippi; Executive Director,
National Association of Call Centers........................... 78
Prepared statement........................................... 79
Submitted Material
U.S. Department of Commerce, statement for the record............ 9
U.S. Department of the Treasury, written response to questions
for the record................................................. 121
``Coming to America Congress should pass bill to promote foreign
tourism,'' editorial, The Dallas Morning News, September 6,
2008........................................................... 125
``Fly Coach, Share a Room,'' The New York Times, September 9,
2008........................................................... 126
``The Tourism Industry and Economic Issues Affecting it,'' CRS
Report, July 29, 2003.......................................... 128
``Government Advertisement of Tourism: Recent Action and
Longstanding Controversies,'' CRS Report, December 28, 2005.... 147
----------
\1\ The prepared statement of Mr. Delahunt was unavailable at the
time of printing.
ECONOMIC AND SECURITY CONCERNS IN TOURISM AND COMMERCE: H.R. 3232 AND
H.R. 1776
----------
THURSDAY, SEPTEMBER 11, 2008
House of Representatives,
Subcommittee on Commerce, Trade,
and Consumer Protection,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 11:08 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Bobby L.
Rush (chairman) presiding.
Members present: Representatives Rush, Schakowsky, Barrow,
Ross, Weiner, Whitfield, Stearns, and Blunt.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. The subcommittee will come to order.
Before we begin, I want to just take a moment, if I might,
to express my gratitude to both my vice chair--well, first of
all to my vice chair for during my absence convening the
hearings and doing all that she could to provide very capable
leadership to this subcommittee during my extended absence.
Jan, I really want to thank you so much. You are a great
member, a great American and a great friend. Thank you so much
for all that you have done.
I want to also extend my commendations to my ranking
member, who has been very cooperative and has really worked
hard during my absence in a bipartisan way to make sure that
this committee functions in a bipartisan manner and that this
committee maintains its long history of being one of the most
successful subcommittees in the Congress based on
bipartisanship and based on inclusion and based on fairness, so
I want to thank my ranking member, Mr. Whitfield, for his
cooperation.
And lastly, I want to thank the staff on both sides, the
Republican staff and the Democratic staff members, for their
work over the past months. We have done some tremendous work
and we really set a pace in this subcommittee that I believe
will be very difficult for others to emulate. So thank you so
very much.
Now on to the business of the day. The first bill that the
subcommittee will take up today is H.R. 3232, the Travel
Promotion Act of 2007. This bill will create a nonprofit
corporation for travel promotion, which will be funded by fees
charged to foreign visitors from their visa waiver program
countries and matching contributions from the travel and
tourism industry. The corporation will be tasked with running
public awareness campaigns about U.S. entry requirements in
foreign countries as well as generally promoting tourism to the
United States. As our witnesses will tell us, the U.S. share of
international arrivals has shrunk over the past 7 years in
comparison to the rest of the world and I think that this
legislation is a creative approach to help our country reverse
this trend. We are conducting this hearing on this day--as we
all know that 9/11 had a dramatic impact on the tourism
industry which we are trying to rebound presently.
While I wholeheartedly support increasing tourism to the
United States, I do have several concerns with H.R. 3232 as it
is written. For the sake of brevity, I will concentrate on two
areas, namely oversight and how the Corporation for Travel
Promotion is funded. With regard to oversight, I am sure that
adequate checks and balances for the corporation are in place.
I would welcome a discussion of the roles that the Departments
of Commerce, Homeland Security, Justice, State, and Treasury
might play in overseeing the corporation's operations and
funding. In terms of funding, I would like to explore whether
the corporation should be allowed to contribute up to 80
percent of required matching funds in the forms of goods and
services and whether funding for the corporation should be
subject to the congressional appropriations process.
The second piece of legislation the subcommittee will
consider is H.R. 1776, the Call Centers Consumer's Right to
Know Act introduced by Mr. Altmire of Pennsylvania. H.R. 1776
would require the employee of a call center when initiating or
receiving a phone call to identify his or her physical location
at the beginning of the phone call. While the job market for
call centers in the United States remains robust, there are
also disturbing trends that these jobs are increasingly being
offshored to foreign countries. H.R. 1776 is an attempt to
confront this emerging tide of offshoring and keep these jobs
right here in the United States. Mr. Altmire should be
commended for his legislative effort. However, this
subcommittee needs to resolve several issues regarding this
bill.
First, we need to get a handle on the actual status of the
labor market for call center jobs here in America. Second, we
have to determine technical jurisdictional issues involving the
FCC's ability to enforce the bill's mandates, and lastly, we
need to determine if H.R. 1776 will in fact accomplish its
goals and help maintain or relocate call center jobs here in
the United States.
I am considering a more forceful approach to Mr. Altmire's
bill, in which a call center employee would not only be
required to identify his or her location but also would be
required to actually transfer the customer to a domestically
based call center upon request of said customer. I hope to
fully deliberate on these matters during this hearing in
preparation for a possible markup of these two bills during the
remaining weeks of the 110th Congress. It is important that we
pass smart, effective legislation as is the proud tradition of
this subcommittee. Hopefully we can work together in a
bipartisan manner. When we have disagreements, I hope that we
can disagree respectfully.
With that, I yield back the balance of my time.
Mr. Rush. And now I recognize the ranking member of this
subcommittee, my friend, Mr. Whitfield of Kentucky, for any
opening statement that he would like to make.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Whitfield. Mr. Chairman, thank you so much, and I might
say on behalf of the entire committee that we are all
particularly excited that you are back with us. We know that
you have been experiencing a serious illness and that you have
made a remarkable recovery, and you have been in our thoughts
and prayers and we all look forward to working with you and
look forward to your continued distinguished career in the U.S.
Congress.
All of us also excited about this hearing today on these
two important pieces of legislation. I am delighted to see our
whip is with us today, Mr. Blunt, who is one of the primary
cosponsors of this legislation, H.R. 3232, the Travel Promotion
Act. Obviously tourism continues to play an important role in
the United States, and with our economy floundering a little
bit, the more we can do to encourage foreign travelers to come
to America, the better it is from an economic standpoint for
all of us. I am particularly interested in the testimony today
relating to this legislation as it relates to the establishment
of this nonprofit corporation. I think that is an interesting
way to go, and, I think Chairman Rush mentioned this in his
testimony, I am particularly interested in this initial $10
million from the general fund at the Treasury to provide the
initial expenses for this corporation and I am assuming that
that money will be paid back and I understand that there is a
fee that will be imposed on certain travelers coming to the
United States, and I would like to know, does this money
actually have to be appropriated or not? And those are some
questions that we can get into as we go forward with this
hearing.
Another thing that I am particularly interested in hearing
today also is from Dr. Long, who will be focusing on tourism in
rural areas of our Nation. There are many rural areas around
the country that are having significant economic problems and
anything that we can do to promote tourism to rural areas, and
that is one of the intents and purposes of this legislation,
would certainly be beneficial to all of us.
In addition, as the chairman noted, we are going to be
hearing testimony on the Call Center Consumer's Right to Know
Act, H.R. 1776, and I look forward to the testimony of
witnesses on that bill also. I know we do have some concerns
with that bill but hopefully with the testimony from the
witnesses, we can learn a lot more about that.
I appreciate the time and effort of our witnesses that are
here today. I am sorry that the Commerce Department and
Treasury Department are not here to testify but I think they
have submitted testimony. We look forward to this hearing, Mr.
Chairman, and once again, we are delighted you are back.
Mr. Rush. And now it is my pleasure to recognize the vice
chairman of the subcommittee, my friend from the great State of
Illinois, Ms. Schakowsky, for an opening statement.
OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you so much, Mr. Chairman. I just
want to tell you what a thrill it is to see you back in the
chair. Having seen you since you returned, every time I see
you, you look better and better and that is very encouraging to
all of us. I just want to welcome you back to the Congress and
to the home of our subcommittee.
I am going to submit most of my testimony for the record
because we are, unfortunately, going to have a number of
interruptions of this committee. I do want to say regarding
tourism that it does worry me that our share of international
tourism has dropped in the last 10 years. It is surprising to
me in a way because of the value of the dollar. I was just
abroad and I know how little it seems our dollar is worth and
it would be a bargain to come here. So I am concerned about
some of the barriers that we ourselves may have put up that I
think bear looking at. The security entry to the United States
may be part of disincentive. I think the chairman and I have a
particular interest since we are very interested in the
Olympics coming to Chicago and making it as easy as possible
for people to come and paving the way for our being selected.
I am alwo concerned that there is no explicit prohibition
in the bill that specific businesses would not benefit from the
publicly-financed advertising in the bill. I think that
individual businesses ought to do their own advertising,
although I see signs everywhere for come to Greece, come to
Jamaica. That kind of thing I think is totally appropriate.
In terms of H.R. 1776, the Call Center Consumer's Right to
Know Act, I think we need to look at this from a jobs and a
security angle, obviously call center jobs but also the
security of our personal and financial information being
handled by call centers overseas. I am not totally convinced
that this is the right way to go but I am looking forward to
the testimony.
With that, Mr. Chairman, I yield back. I will put the rest
in the record.
Mr. Rush. The chair thanks the vice chair.
Now it is my honor and pleasure to introduce the former
ranking member of the subcommittee, Mr. Stearns of Florida, for
the purpose of opening statement.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Thank you, Mr. Chairman, and like my other
colleagues, let me welcome you back. You are an inspiration to
all of us to see you here and I know how difficult it has been
for you, and I think it is nothing but good news to see you and
we encourage you and look forward to working with you.
Also, I think many of us have to be very proud on this
subcommittee of the accomplishment that we passed the Consumer
Products Safety Improvement Act. The President signed this Act.
This is a long time in coming. It is a bipartisan bill. We were
very successful after many weeks and almost months with the
Senate in the conference, so I think all of us in this
committee can be very proud of that bipartisan effort.
Statistics show, particularly in my area of the country in
Florida, that when it comes to travel and tourism, the United
States, while having been a leader for many years, is starting
to fall behind. We have a problem because there is just a
noticeable decline in the share of tourism over the past decade
and so that is why I welcome this bill that we have today. In
2001, travel to the United States declined by 8 percent,
despite the fact that global travel is on the rise. An
unfortunate variety of factors can be attributed to the
decrease, including a more negative global perception of the
United States. We have instituted tough entry requirements
because of 9/11 and we have also had economic factors but the
dollar's value is very good to foreigners, so we are hoping
that tourism will increase. I am particularly concerned that we
are not moving quickly enough. This bill, H.R. 3232, the Travel
Promotion Act, I think is a very good bill. I support it. Many
other countries are currently engaging in effective government
advertising and are successfully attracting tourists at high
rates. It is important the United States pay attention to the
changing trends and we too begin focusing on a plan which will
ensure that the United States remains one of the top
destinations in the world, especially for those coming from
Visa Waiver Program countries.
The government has a vital role here. A lot of people do
not believe so, but I think the bill we are considering today
contains a solid foundation for boosting U.S. tourism and
getting the government involved in effective advertising and
outreach via a private-public campaign and the creation of a
nonprofit corporation, the Corporation for Travel Promotion. As
with any bill, there will be some amendments and I look forward
to that. I would like to thank Mr. Blunt and Mr. Delahunt for
their initiative here.
In closing, Mr. Chairman, I think I will mention something
about the other bill we are considering, H.R. 1776, the Call
Center Consumer's Right to Know Act. This is a bill that is
aimed to protect American consumers by requiring call center
employees to identify their physical location at the beginning
of the call. While the United States is a world leader in call
center employment and the U.S. share of the industry employs
almost 6 million people, concerns have arisen about the rate at
which the United States is losing call centers to other parts
of the world where labor is obviously significantly cheaper.
This legislation attempts to rectify this issue and I think it
is important to examine the implications of the bill closely
and take into account the testimony of our panel of witnesses
today.
With that, Mr. Chairman, I yield back.
Mr. Rush. The chair thanks Mr. Stearns.
Now it is my pleasure to recognize the distinguished member
of this committee, Mr. Ross of Arkansas, for the purpose of
opening statement.
OPENING STATEMENT OF HON. MIKE ROSS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ARKANSAS
Mr. Ross. Thank you, Mr. Chairman, and we are very
delighted to have you back with us and presiding over this
hearing today on two important pieces of legislation: H.R.
1776, the Call Center Consumer's Right to Know Act and H.R.
3232, the Travel Promotion Act of 2007. I, along with 234 of my
colleagues in the House and 48 in the Senate, have cosponsored
this bill. In addition, 46 members of this full committee, or
80 percent of the members of the House Energy and Commerce
Committee, are cosponsors of the bill. Clearly there is strong
bipartisan support for this legislation, and I believe that is
because we all recognize the tremendous role the travel and
tourism industry plays in our country's economy. Mr. Chairman,
given the fact that 80 percent of the members of the Energy and
Commerce Committee and 234 of my colleagues in the House and 48
in the Senate have cosponsored this legislation, it is my hope
that following this hearing today and the short time remaining
in the 110th session of Congress, we can move to a markup of
this bill and get it to the floor for a vote of the members of
the United States House of Representatives.
The tourism industry is responsible for approximately 7.5
million American jobs and $104.9 billion in tax revenues for
federal, state and local governments. In my home state of
Arkansas alone, approximately 57,700 people are employed by the
travel and tourism industry, and visitors to Arkansas generated
approximately $902,300,000 in 2004. As such, promoting travel
to the United States is extremely important to me. This bill is
what I call commonsense legislation which will create American
jobs here at home, strengthen our economy here at home and
increase our Nation's image abroad at no cost to the American
taxpayer. Travel to the United States since 2001 has declined
by 8 percent, despite a 30 percent increase in global travel. I
believe that this legislation is a good, positive first step to
remedy this growing problem by creating more U.S. jobs and
generating much needed economic growth.
The Travel Promotion Act creates a travel campaign jointly
managed by our government and the private sector. The
legislation specifies that travel promotion be funded at no
cost to U.S. taxpayers by the private sector together with a
modest fee paid by foreign travelers. It establishes a travel
promotion fund whereby private industry can contribute up to
$100 million or matched with a government contribution financed
by a $10 fee paid by foreign travelers from visa waiver
countries. American travelers frequently pay similar fees when
traveling to other countries. These countries spend millions of
dollars to entice visitors to come to their countries and I
believe that it is past time that America does the same. I am
concerned about our Nation's economy and our international
image abroad. However, I am hopeful that this hearing and this
legislation can reverse this decline by bringing new visitors
to the United States, generating new visitor spending and
raising millions of dollars in new federal tax revenue.
Once again, thank you, Chairman Rush and all the witnesses
for coming today before the subcommittee, and I look forward to
hearing the testimony. With that, Mr. Chairman, again I can't
thank you enough for scheduling this hearing. Again, it is my
hope that we can follow this hearing up with a markup in the
few days left in the 110th session of Congress, given the
enormous support for this bill, 80 percent of the House Energy
and Commerce Committee, as well as more than 200 of my
colleagues in the House.
Again, Mr. Chairman, welcome back. We are delighted to have
you back with us. With that, I will yield back the balance of
my time.
Mr. Rush. The chair thanks the gentleman.
The chair recognizes now the distinguished gentleman from
the great State of Georgia, my home State, Mr. Barrow.
Mr. Barrow. Mr. Chairman, I have no opening statement. In
the interest of time, I will waive an opening statement but I
would want to take this opportunity to commend you once again
and to express my compliments to the chair and my great feeling
over your return among us. It has been great to see you on the
floor. It is even better to see you back in the chair. God
bless you, sir, and thank you for being with us, and with that,
I will yield back.
Mr. Rush. The chair thanks the gentleman.
At this time I would like to ask that Mr. Blunt, who is not
a member of the subcommittee but a member of the full
committee, be allowed to give an opening statement. Are there
any objections? With none said, the chair now recognizes Mr.
Blunt for a 5-minute opening statement.
OPENING STATEMENT OF HON. ROY BLUNT, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MISSOURI
Mr. Blunt. Mr. Chairman, I won't take the 5 minutes. I am
so glad that you are back and we are having this hearing. You
and I have been good friends, ironically since we traveled
together about 10 years ago to represent our country at a NATO
parliamentary meeting. Good things happen when people travel.
That is one of the things we are talking about here today.
Also, Mr. Delahunt and I have spent a lot of time over the
last year-and-a-half working on our legislation, H.R. 3232. I
certainly am pleased to hear the comments from all of my
colleagues that relate to that legislation. The fee that Mr.
Ross mentioned is a fee that is going to be collected anyway.
We think this would be an appropriate use for that fee before
it gets diverted into some other use, which is one of many
reasons that I join Mr. Ross's view and the view of others that
hopefully we can move this bill quickly through our committee
and to the floor. Certainly foreign travelers stay longer, they
spend more, and, particularly important on the 7th anniversary
of 9/11/2001, they like us better, and encouraging all of those
things to happen, starting with they like us better, is one of
the real reasons that we should be interested in this, one of
the real reasons that Mr. Delahunt and I worked together on
this legislation, and Mr. Chairman, you and the other members
of the committee that have cosponsored this legislation give us
real encouragement that hopefully we can make this important
step in the right direction before that fee is diverted
somewhere else and as we focus on this important sector of our
economy.
Again, Mr. Chairman, welcome back and thank you so much for
having a hearing on both of these bills today and for letting
me join the subcommittee for a few minutes, and I have a
written statement to submit for the record.
[The prepared statement of Mr. Blunt was unavailable at the
time of printing.]
Mr. Rush. The chair thanks the gentleman, and as announced
earlier, the Committee now stands in recess until the
conclusion of the 9/11 memorial service. I have been informed
that the ceremony will last approximately 20 to 30 minutes. The
Committee stands in recess.
[Recess.]
Mr. Rush. The Committee is called to order. The chair asks
unanimous consent that Mr. Delahunt's statement be inserted
into the record at this time. Is there any objection? Hearing
none, the chair orders that the statement be inserted into the
record at this time.
[The prepared statement of Mr. Delahunt was unavailable at
the time of printing.]
Mr. Rush. Now we will move to our witnesses. I really want
to thank you for being here. I want to thank you for your
patience. It is really a testimony to your commitment on these
issues that you, one, take time out from your precious day's
time to come to appear before this subcommittee, and two, that
you have allowed yourselves to remain while we conduct some
other business in the affairs of the Nation.
Our first witness is Mr. Geoffrey Freeman, who is the
senior vice president of public affairs for the Travel Industry
Association. Mr. Freeman will speak on behalf of TIA, which is
a not-for-profit trade organization that represents the U.S.
travel industry. The second witness is Dr. Patrick Long, who is
the director of the Center for Sustainable Tourism at East
Carolina University. The Center for Sustainable Tourism is
devoted to implementing sustainable practices in business
operations, public policies, and personal travel behaviors. Dr.
Long will speak about H.R. 3232's effects on promoting rural
tourism.
I would like to note, as previous speakers have already
noted, that the subcommittee did invite the Departments of
Commerce and Treasury to testify at today's hearing. The chair
is disappointed that neither agency was able to produce a
witness. However, I do thank the Department of Commerce for
providing written statements on the legislation, and I now ask
unanimous consent that they be inserted in the record at this
point. Are there any objections? Hearing none, the statements
will be inserted into the record.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] T2207.001
[GRAPHIC] [TIFF OMITTED] T2207.002
[GRAPHIC] [TIFF OMITTED] T2207.003
[GRAPHIC] [TIFF OMITTED] T2207.004
[GRAPHIC] [TIFF OMITTED] T2207.005
[GRAPHIC] [TIFF OMITTED] T2207.006
[GRAPHIC] [TIFF OMITTED] T2207.007
Mr. Rush. Again, to our witnesses who are present, the
subcommittee welcomes and thanks you for your testimony. And
now the first witness will be Mr. Geoffrey Freeman, who I
previously introduced. Mr. Freeman, you have 5 minutes for an
opening statement.
STATEMENT OF GEOFFREY FREEMAN, SENIOR VICE PRESIDENT OF PUBLIC
AFFAIRS, TRAVEL INDUSTRY ASSOCIATION
Mr. Freeman. Thank you, Chairman Rush and Ranking Member
Whitfield. We appreciate this opportunity, and Chairman Rush,
allow us to echo everyone else's comments and welcome you back
to Washington.
In the years since 9/11, the United States has instituted
countless new security policies in order to protect the
homeland. The Administration, Congress, and many others are to
be applauded for the success of those policies and the fact
that America has not been attacked again. Many of those
policies have also had unintended consequence, either from poor
implementation or by creating a perception around the world
that travelers are no longer welcome in the United States.
Helping fuel that perception is the foreign press, a press that
is all too willing to highlight America's inefficiencies or
discourage travelers. One of the best examples of this is a
full-page story that ran in the Times of London this past
January, a story titled ``Travel to America, No Thanks'' and
featured a picture of the Statue of Liberty holding a stop
sign. The story went on to tell its readers 10 places around
the world they could travel without having to go through the
unnecessary security hassles that we often feature here in the
United States. Whether the story was true or not, whether the
accusations were true or not, didn't matter. It fed a
perception around the world that travelers were no longer
welcome. This was one of many stories over the past 7 years
that have discouraged travelers from visiting the United
States.
To be clear, America's security is job number one and the
policies we have implemented are, by and large, the right
security policies. But basic economics say that with every
obstacle we put in place, you have to have a corresponding
effort to welcome visitors to the United States or else, and
that ``or else'' that we have confronted over the past 7 years
is a decline in travel. However unfounded the concerns may be
about America's security policies, the United States welcomed 2
million fewer overseas visitors in 2007 than we did in 2000,
this despite an extraordinarily weak dollar and the fact that
there are 35 million more people traveling long distances today
than there were 7 years ago. The cumulative economic impact of
the decline of 46 million visitors over 7 years is $143 billion
in spending, $23 billion in tax receipts, and in 2007 alone,
340,000 jobs that America could have had had it simply kept
pace with global travel trends.
Welcoming overseas visitors to the United States is a no-
brainer. When overseas visitors come to the United States, they
spend an average of $4,000 per person per trip. That compares
to an average of $1,200 by Mexican or Canadian visitors. And
these visitors that spend $4,000, they don't use our healthcare
system, they don't use our education system and they are not a
strain on Federal, State or local resources. We can't welcome
enough safe and secure overseas visitors.
So what is it going to take to welcome more visitors? It is
really a three-part plan. We have to build an efficient visa
system, we have to build a smart and welcoming entry process
and we have to better communicate our security policies and let
travelers around the world know that America welcomes them. We
applaud Congress for the important steps it has taken over the
past 2 years to address America's visa system and the entry
experience. Very significant steps have been taken to improve
each of those areas. That leaves us with the last step,
communicating our security policies and letting travelers know
that we welcome them here in the United States.
H.R. 3232, the Travel Promotion Act, which has enormous
bipartisan support, as Mr. Ross touched on earlier, would
combine public sector accountability with private sector
execution to help the United States welcome millions of
additional visitors each year. The Corporation for Travel
Promotion will clearly explain U.S. travel policies, promote
the United States as a whole as a premier travel destination
and reverse negative perceptions, and best of all, it is funded
with no money from U.S. taxpayers. The funding comes from the
private sector and a $10 fee on visa waiver travelers who do
not spend $131 on a U.S. visa.
Around the world, travel promotion programs are creating
jobs, increasing spending and generating taxes for our
competitors. What do the U.K., Japan, Australia, and dozens of
other countries around the world know that the United States
doesn't? What they accept and what they know is that travel
promotion makes dollars and cents. For too long the United
States has stayed silent while the foreign press deters
travelers and while other countries attract our visitors and
while critics with a pre-9/11 mindset say that the U.S.
government has no role in attracting overseas travelers. The
government put in place many reasonable security barriers after
9/11. It is time that the government partner with the private
sector to limit the negative impact of those barriers.
Before you finalize your work for this year, we strongly
urge you to pass the Travel Promotion Act and help provide the
American economy with the stimulus it needs. Thank you.
[The prepared statement of Mr. Freeman follows:]
[GRAPHIC] [TIFF OMITTED] T2207.008
[GRAPHIC] [TIFF OMITTED] T2207.009
[GRAPHIC] [TIFF OMITTED] T2207.010
[GRAPHIC] [TIFF OMITTED] T2207.011
[GRAPHIC] [TIFF OMITTED] T2207.012
[GRAPHIC] [TIFF OMITTED] T2207.013
[GRAPHIC] [TIFF OMITTED] T2207.014
[GRAPHIC] [TIFF OMITTED] T2207.015
[GRAPHIC] [TIFF OMITTED] T2207.016
[GRAPHIC] [TIFF OMITTED] T2207.017
Mr. Rush. Thank you very much, Mr. Freeman.
And now Dr. Patrick Long. Dr. Long, you have 5 minutes for
an opening statement, and we welcome you again. Thank you so
much.
STATEMENT OF PATRICK LONG, DIRECTOR, CENTER FOR SUSTAINABLE
TOURISM, DIVISION OF RESEARCH AND GRADUATE STUDIES; PROFESSOR,
COLLEGE OF BUSINESS, EAST CAROLINA UNIVERSITY
Dr. Long. Thank you, Mr. Chairman and Ranking Member
Whitfield, for the opportunity to testify today on H.R. 3232. I
am Patrick Long, Director of the Center for Sustainable Tourism
at East Carolina University, Greenville, North Carolina. I am
also past chairman and past president of the National Rural
Tourism Foundation authorized by Congress under the Tourism
Policy and Export Promotion Act of 1992.
A number of years ago, Charles Kuralt had a conversation
with Douglas Duncan, newspaper editor of the Chelton, Nebraska,
Clipper. Duncan explained in that conversation how you know
when you are in a small town. He started by noting that you
know you are in a small town when Third Street is on the edge
of town. He went on to say that you know you are in a small
town if you are born on June 13 and your family receives gifts
from the local merchants because you are the first baby born
that year. You know you are in a small town if you dial a wrong
number and talk for 15 minutes anyway. You know you are in a
small town if you can't walk for exercise because every car
that passes you offers a ride. You know you are in a small town
when the biggest business in town sells farm machinery. And you
know you are in a small town if someone asks you how you feel
and spends the time to listen to what you have to say.
Although rural life in the United States is ever changing,
it provides both a nostalgic and a real attraction to our
international visitors. Certainly more cosmopolitan today than
Duncan described to Kuralt, rural areas continue to have
limited economic options. What they do have is a wealth of
history, culture, natural resources, and rural ambience that
can serve as the basis of a tourism economy. I come before you
today to offer a reminder that Congress formally recognized in
1992, the important role that tourism plays in the economic
revitalization of rural areas by enacting the National Rural
Tourism Foundation. Recognizing the potential for rural
tourism, the Act noted the following. Many local communities
with significant tourism potential are unable to realize the
economic and employment opportunities that tourism provides
because they lack the necessary local resources and expertise
needed to induce tourism trade. And secondly, increased efforts
directed at the promotion of rural tourism will contribute to
the economic development of rural America and further the
conservation and promotion of natural scenic, historic,
educational and recreational resources for future generations
of Americans as well as foreign visitors.
We support the goals of H.R. 3232 and believe much can be
done at the congressional and agency levels to promote
international visitor travel and to streamline the entry
process. Under this bill, the provision of a coordinated
clearinghouse of U.S. travel information and requirements with
a promotional component has the potential to jump-start
stagnant inbound travel. International tourism expenditures are
of great importance to the U.S. economy. In my home State of
North Carolina, there were over 358,000 international visitors
in 2007, generating expenditures of $607 million.
Recognizing the importance of increasing the flow of
international tourists who research has shown are interested in
experiencing at some point rural America, I come before you
today as past chairman of the foundation to make the case for
those rural communities that are not currently a visible part
of our country's tourism product and badly need tourism as an
economic revitalization tool. There are few states in the U.S.
without a substantial number of rural communities struggling
economically that wouldn't benefit from assistance in their
tourism planning, implementation and promotion. From the many
stopping points along Route 66, which has its auspicious
beginnings in the district represented by the Honorable
Chairman Bobby Rush, we see the uniqueness of countless
national treasures. These rural communities are the potential
draw for thousands of tourists looking for a scenic ride, a
good meal, comfortable lodging, and a unique shopping
experience. In particular, these communities can build their
capacity to serve the needs of our international visitors.
My comments today therefore are not so much about the
legislation before you, which appears to be strongly supported
by the tourism industry as well as by an impressive number in
Congress, but rather to ask you to be mindful of the needs of
rural America. What I would ask is that in addition to
supporting the Travel Promotion Act, that you consider ways to
strengthen the capacity of the previously authorized national
rural tourism foundation to meet its original charge, to serve
as a catalyst to the economic revitalization of rural America
through tourism. Thank you.
[The prepared statement of Dr. Long follows:]
[GRAPHIC] [TIFF OMITTED] T2207.018
[GRAPHIC] [TIFF OMITTED] T2207.019
[GRAPHIC] [TIFF OMITTED] T2207.020
[GRAPHIC] [TIFF OMITTED] T2207.021
[GRAPHIC] [TIFF OMITTED] T2207.022
[GRAPHIC] [TIFF OMITTED] T2207.023
[GRAPHIC] [TIFF OMITTED] T2207.024
[GRAPHIC] [TIFF OMITTED] T2207.025
Mr. Rush. The chair recognizes himself for 5 minutes of
questioning. My first question is directed to Mr. Freeman and
Dr. Long. Data from the Department of Commerce's International
Trade Association showed international arrivals in the United
States have steadily increased since 2007. An entry fee such as
the one proposed by H.R. 3232 may serve as a further
disincentive for visitors to come to the United States, thus
possibly reversing this trend. Do you think that this is
accurate? Please explain your opinion and provide supporting
evidence, and I would ask you to give short and concise answers
in the interest of time. Mr. Freeman.
Mr. Freeman. Thank you. We appreciate the Department of
Commerce's concerns and have had many conversations with them
about those. There are two important numbers to look at here.
First of all, there is international travel. International
travel includes the entire world including Canada and Mexico,
and then there is overseas travel. When you look at
international travel, it is true that the United States
returned to pre-9/11 levels at the end of 2007 but that boom in
travel is driven almost entirely by Canadians and Mexicans.
Before 9/11, the United States welcomed 50 million visitors, 25
million from Canada and Mexico and 25 million from overseas. In
2007, we got back to welcoming 50 million visitors, 30 million
from Canada and Mexico, 20 million from overseas. Clearly, when
you look at overseas travelers, the travelers who spend $4,000
on average per trip as opposed to the $1,200 Canadian or
Mexican travelers spend, this is where we are seeing a problem.
From an economic standpoint, there is an issue there, and from
a public diplomacy standpoint. When these travelers aren't
coming to America, we are missing that opportunity to win
hearts and minds around the world. Travelers from the U.K.,
Japan, Australia, and other overseas countries are avoiding the
United States post-9/11. As to whether or not any type of fee
could discourage travel to the United States, I think the only
thing we can do is look at what these countries do and what
does the evidence suggest. Every country I mentioned has a fee
in place, either an entry fee or an exit fee, that Americans
and other travelers currently pay as we go into or out of those
countries. The fees that we pay to those countries fund, among
other things, their travel promotion programs against the
United States and every one of those countries is seeing an
increase in travel that the United States is not seeing. The
fact is that the average traveler spends $4,000. We don't
believe a $10 fee invested in promotion would be a deterrent,
it would lead to an increase of millions of visitors.
Mr. Rush. Thank you, Mr. Freeman.
Dr. Long, do you have anything to add to this or do you
agree with Mr. Freeman?
Dr. Long. I concur with my colleague, Mr. Freeman, on that.
I feel that a $10 fee, as we all experience when we travel to
other countries paying those fees, would certainly not be a
deterrent for anyone wanting to come to see the products that
we have for tourism in America.
Mr. Rush. Thank you. To the both of you again, building on
the last question, section 5 of H.R. 3232 also stipulates that
the initial loan from the Treasury to the Corporation for
Travel Promotion must be repaid within 5 years. Section 5
contemplates no penalty for non-repayment of the loan. What
happens if the corporation fails to repay this loan in time, or
worse, defaults? Do you believe that a penalty should be
included in Section 5 as a consequence of failure to repay the
loan in time or defaults on the loan? Would you please answer
with a yes or no answer?
Mr. Freeman. I believe the sponsors of the bill put that
language in there in order to provide the entity with startup
costs. The private sector, the corporation have to pay that
back with interest within a certain number of years, as you
mentioned. We absolutely concur that there should be penalties
if that money is not paid back.
Mr. Rush. Dr. Long?
Dr. Long. I am not familiar enough with that aspect of the
bill to respond in a reasonable fashion.
Mr. Rush. Mr. Freeman, I only have a few minutes left of my
time. I would direct your attention to Section 5B of H.R. 3232,
which establishes a travel promotion fund to partially fund the
Corporation for Travel Promotion. This section caps annual
transfers from the fund at $100 million. Can you tell me why
this level was chosen?
Mr. Freeman. I believe what it accounts is a maximum of
$100 million. For every dollar the private sector puts on the
table, there is a matching fee through the visa waiver fee that
would be applied. That dollar is capped at $100 million. That
is the absolute maximum that the visa waiver fee would
contribute to this program. I think in reality, it would take
several years to get the private sector and the whole program
up and running, and I think it would be some time before you
would have a $100 million max, but that should be yet another
sign of the accountability measures in this program, that those
funds are capped rather than left open.
Mr. Rush. Thank you. My time is up, and now the chair
recognizes the ranking member, Mr. Whitfield, for 5 minutes for
questioning.
Mr. Whitfield. Thank you, Chairman Rush, and thank you, Dr.
Long and Mr. Freeman, for your testimony. Dr. Long, let me ask
you. You had referred to the National Rural Tourism Foundation,
and is there anything in this legislation, H.R. 3232, that
would strengthen that foundation or gives you reason to believe
that at least it would be helpful for that foundation to be
more effective?
Dr. Long. We are not asking for any change in the proposed
legislation as you see it before you. We do know that
increasing visitation to this country will certainly increase
the opportunity for local communities to benefit from this. The
point that I bring to you is that there are many communities
that are not prepared to receive those dollars and that in any
future thinking, whether it is directly in future tourism
legislation or whether it is agency funding such as
agriculture, commerce, whatever the case may be, that the
goodwill of the foundation be kept in mind.
Mr. Whitfield. You all probably have larger crowds than
rural Greenville now with the East Carolina Pirates, right?
Dr. Long. The Pirates have done a good thing for the
reputation of that school and that part of the State.
Mr. Whitfield. Thank you.
Mr. Freeman, this initial $10 million, does that have to be
appropriated?
Mr. Freeman. I believe the way the language is written,
that money does not have to be appropriated. It is a $10
million loan from the Treasury paid back with interest by the
private sector.
Mr. Whitfield. So this legislation, if it passed, would
authorize the government to transfer up to $10 million for
initial costs?
Mr. Freeman. I believe so.
Mr. Whitfield. OK. Now, I noticed that this whole program,
this whole corporation is dependent upon this $10 fee being
collected, and section 6, the first sentence says, ``If a fully
automated electronic traveler authorization system to collect
basic biographical information in order to determine in advance
of travel the eligibility of an alien to travel to the United
States is implemented, then a fee would be imposed.'' Is that
system going to be implemented?
Mr. Freeman. Yes, indeed, it is. On January 12 of next
year, the Department of Homeland Security is implementing a new
program whereby millions of travelers who come to the United
States via the visa waiver program will now have to register
with the U.S. government in advance of their trip to the United
States. I think all of us should be concerned about the effect
this could have on travel lacking a significant communications
program to let the world know how this program will work. While
DHS has not put a fee in place initially because we do not
believe they wanted to go through a rulemaking process in the
few short months they have left in this Administration, we do
believe that a fee will be implemented in a future
administration and that will present the opportunity for the
matching funds.
Mr. Whitfield. And how did you all decide to implement this
fund in the Treasury Department? This legislation directs that
a fund be set up in the Treasury Department.
Mr. Freeman. Again, I believe the sponsors of the
legislation in working on this, the transfer of the money from
Homeland Security, which collects the electronic system for
travel authorization fee, or will----
Mr. Whitfield. So Homeland Security would collect the $10
fee?
Mr. Freeman. The fee is collected through Homeland
Security, and in order for it to make it to the Corporation for
Travel Promotion, the rules simply require it to go through the
Department.
Mr. Whitfield. How much is the fee today that they collect?
Mr. Freeman. Again, the program begins in January of next
year. Because they didn't want to go through a rulemaking this
year, there isn't a fee set. That will be determined by the
next administration. We believe that fee that they will set
will be in the range of $10.
Mr. Whitfield. So there would be an initial $10 million
loan that would be repaid with interest, then in 2009 there
would be a match of 50/50, and then 2010, the corporation would
have to pay 100 percent, I suppose.
Mr. Freeman. Well, in 2009, there would be the $10 million
loan. The purpose, just so everyone is aware, of that $10
million loan is to enable the Corporation for Travel Promotion
to retain the staff it needs first but then to begin doing the
research and the development so we can hit the ground running,
know which countries we are targeting, know what our promotion
is in those countries. In 2009, I believe, according to the
legislation, it is a 2:1 contribution. For every dollar the
private sector puts on the table, there are $2 from this fee,
and for every year thereafter it is a 1:1 contribution.
Mr. Whitfield. Now, is there anything in this legislation
that would mandate that the private sector contribute? I mean,
is there a mechanism that----
Mr. Freeman. It is a voluntary contribution, and indeed, I
think that is what we hope, all of us would hope would work
rather than mandating the private sector in a sense be taxed to
do this. This is something that the private sector is currently
saying, the travel community is coming to you and saying we
want to put money on the table. We have seen what has happened
over the past 7 years when we haven't communicated. Help us
help the country by bringing more visitors in.
Mr. Whitfield. And this is primarily through the travel
industry association? I mean, you all would be the ones out
there trying to convince people?
Mr. Freeman. Well, I think we would be working closely with
the Corporation for Travel Promotion to ensure the private
sector and the private sector would include companies, it would
include local convention and visitor bureaus. It could include
State tourism offices to contribute to the fund to bring people
to the United States. The fact is, if you are not willing to
visit the United States, then you are not going to go to
Illinois, you are not going to go to Kentucky, you are not
going to go to those other places if you have concerns about
visa and entry policy.
Mr. Whitfield. And the----
Mr. Rush. The chair has the responsibility of alerting the
gentleman that his time has expired and we have to move on. The
chair now recognizes the gentlelady from Illinois, Ms.
Schakowsky, for 5 minutes of questioning.
Ms. Schakowsky. Thank you. I have a couple of questions.
Mr. Freeman, I represent a very diverse district and my
office probably spends about 80 percent of its time dealing
with issues of immigration and visas. I personally spend a lot
of time on the telephone calling embassies around the globe
trying to get someone another interview, guaranteeing
personally that they will go back. You seem to feel though that
the provisions of the Homeland Security situation aren't the
problem as long as we explain them to people. Maybe it depends
on countries but I was just at an Indian wedding of a very
prominent family and I would say about half a dozen of those
guests were only there because I got on the phone and made
those calls. Otherwise they wouldn't have been permitted into
the United States. What is your experience?
Mr. Freeman. I think that as we look at the problem, as we
look at the decline of 46 million travelers over the past 7
years, it isn't simply due to communications. It is a three-
legged stool. The first part is the visa problem. In a country
like Brazil right now, the wait time to simply get an interview
for a visa is 100 days. That is not making us more secure, it
just suggests that we are more inefficient than we need to be.
We are not staffed appropriately. The same problems have
existed in India for quite some time. We have similar problems
in China. We need a visa system that meets the 30-day standard
that the State Department has set for itself. Unfortunately,
the State Department to date has not built a business plan
despite report language from this Congress last year asking it
to do so, to find every consulate where the wait time is over
30 days and tell Congress how they are going to get that wait
time below----
Ms. Schakowsky. So this legislation, I am sure advertising
is attractive but not if the result is that people then apply
for visas and can't get them. I think a lot of people like
myself don't necessarily plan 100 days in advance. They find a
good deal and they plan a couple months ahead. Will this work?
Mr. Freeman. This legislation will absolutely work in a
number of countries around the world. When you look at a
country like Brazil or a country like India where there are
visa problems, those need to be addressed, and obviously the
problem needs to be addressed in those countries before you can
start marketing yourself as a destination, and that is why we
have been working with so many in Congress to address those
problems. I do believe in India, the wait times about 18 months
ago were up to 150 days to get an interview for a visa. In
recent weeks, the wait times have been down to about 15 days.
We need to communicate that. We need to promote that. It isn't
just about posters around the world saying come to the United
States. When we put new security policies in place, when we
improve the visa system, when we launch an international
register traveler program to expedite the processing, we need
to tell the world we are doing these things, not leave it to
the foreign press.
Ms. Schakowsky. We do, although a lot of those people who
finally get the interview end up getting denied to come to the
States too. I know. As I said, I spend a lot of time doing
that. I think we have to streamline somehow, to streamline our
process without risking our security.
I wanted to ask both of you, do you support a provision
that would make sure that the corporation doesn't support a
specific business such as I cited in my opening statement?
Mr. Freeman. Absolutely, and I believe that was the intent
of the sponsors. The role of this entity is to encourage people
to travel to the United States. Once they are a captive
audience, then Florida, California, various hotels, theme
parks, others, they can fight over them, but if they are not
considering the United States, then nobody else, whether it be
Illinois, California, Florida, or the rest, can convince them,
can educate them on visa or entry policy. It is the role of
this entity to communicate U.S. security policy and encourage
people to visit the United States, not one specific entity or
destination.
Ms. Schakowsky. Dr. Long, I think it was the New York Times
that did a whole piece on crumbling barns in rural America and
how all these wonderful old barns are just falling apart and
somehow changing the character of rural America. Your testimony
got me thinking about just how charming and intriguing it would
be, I think, to promote a rural America tour, and I would be
interested in helping with that. We have some wonderful places
in Illinois that have exactly that kind of atmosphere that you
mentioned.
Dr. Long. Well, I realize that our focus today is
international travelers, but if you think about the shortening
of the travel experience due to energy costs and the like, we
are going to see a lot more domestic folks that are going to be
traveling outside of urban areas that are going to rediscover,
recapture their desire to visit rural America.
Ms. Schakowsky. Oh, I would think even international
travelers might be interested in the flavor of rural America.
Dr. Long. Yes, and I didn't mean to misinterpret that, but
in addition to that international draw, rural America would
benefit from the increased domestic expenditures as well.
Ms. Schakowsky. Thank you.
Mr. Rush. Thank you. At this time we want to thank the
witnesses for their testimony. Again, our sincere apologies for
the delay, but thank you for your fine testimony. So we want to
thank the witnesses for their time and you are now excused.
Thank you so very much.
The chair has another commitment and now would like to ask
the vice chair if she would please come and chair the second
part of this hearing. Thank you so much.
Ms. Schakowsky [presiding]. We are going to begin. I am
Congresswoman Jan Schakowsky, the vice chair of the committee,
taking over the chair now. The second panel is made up of Lois
Greisman, Associate Director for the Division of Marketing
Practices, Bureau of Consumer Protection, the Federal Trade
Commission; Jeffrey Rechenbach, Executive Vice President,
Communication Workers of America; Tim Searcy, Chief Executive
Officer of American Teleservices Association, ATA, and our
fourth witness, Dr. David Butler, Director of Call Center
Research Laboratory of the University of Southern Mississippi,
Executive Director, National Association of Call Centers. We
will begin with Ms. Greisman, 5 minutes.
STATEMENT OF LOIS C. GREISMAN, ASSOCIATE DIRECTOR FOR THE
DIVISION OF MARKETING PRACTICES, BUREAU OF CONSUMER PROTECTION,
FEDERAL TRADE COMMISSION
Ms. Greisman. Thank you, Chairman Schakowsky and Ranking
Member Whitfield. I am delighted to be here this afternoon. As
you know, my oral remarks represent my own views. The written
statement is that of the Federal Trade Commission.
I would like to take this time just to highlight a few
points from that statement. The Commission's experience with
call centers arises in connection with its telemarketing
initiatives which focus primarily on deceptive and abusive
practices. Combating telemarketing fraud has been a top
priority for the Commission for well over a decade. In total,
the Commission has filed more than 375 cases, the vast majority
of which target garden-variety frauds yet highly pernicious
frauds such as business opportunities, investment promotions,
sale of bogus products in the weight-loss area and so on.
Since 2003, as I am sure you are well aware, and the
implementation of the Do Not Call Registry, the Commission also
has focused considerable attention to protecting consumers'
privacy by limiting the number of unwanted telemarketing calls
that they receive. Indeed, consumers have now placed more than
168 million telephone numbers on the Do Not Call Registry just
since 2003, and it has been a remarkable success, due in part,
I believe, to the Commission's rigorous law enforcement program
and also to significant efforts by the telemarketing industry.
In that regard, I thank American Teleservices Association, Tim
Searcy.
In a nutshell, the Commission's law enforcement experience
in the telemarketing arena is broad and robust but the law
enforcement mission, as I mentioned, has been focused on
deceptive and abusive practices, outright lies, implied lies or
privacy invasion, rather than examination of the sort of labor
and international trade policy issues that I think really lie
at the heart of H.R. 1776. So it is against that backdrop that
the Commission's testimony flags four specific aspects of the
bill with some concerns.
The first one addresses the bill's potential breadth. It
would appear to require disclosure of the call center's
physical location, whether operating in the United States or
abroad, and appears to reach even local pizza parlors or
doctors' offices. Second, we have some concerns about the
definition of call centers as it might reach online
transactions, particularly online service assistance. Resolving
ambiguity as to the bill's coverage would improve enforcement
and also, we believe, provide critical guidance to industry as
it would comply with any new requirements. Third, the bill's
certification of compliance requirement may present any
enforcement agency with costly burdens, and the bill itself
does not seem to have any enforcement mechanism for a failure
to certify. Last but not least, because I think this goes to
the very efficacy of H.R. 1776, we are concerned that the FTC's
jurisdictional limitations would substantially complicate and
indeed might undermine effective enforcement of the bill, and
these jurisdictional limitations include depository
institutions, airlines and insurance companies, which perhaps
are among many of the very entities that use overseas call
centers. Having such entities beyond the statutory reach of the
FTC would, we believe, frustrate enforcement.
So for those reasons, the Commission respectfully suggests
that another agency without such limitations and one versed in
the labor and international trade policy issues at the core of
H.R. 1776 might prove better situated to administer and enforce
the bill. The Commission is pleased to continue to provide
further assistance, and I assure you, will vigorously protect
American consumers from telemarketing fraud. I will be happy to
answer any questions.
[The prepared statement of Ms. Greisman follows:]
[GRAPHIC] [TIFF OMITTED] T2207.026
[GRAPHIC] [TIFF OMITTED] T2207.027
[GRAPHIC] [TIFF OMITTED] T2207.028
[GRAPHIC] [TIFF OMITTED] T2207.029
[GRAPHIC] [TIFF OMITTED] T2207.030
[GRAPHIC] [TIFF OMITTED] T2207.031
[GRAPHIC] [TIFF OMITTED] T2207.032
[GRAPHIC] [TIFF OMITTED] T2207.033
[GRAPHIC] [TIFF OMITTED] T2207.034
[GRAPHIC] [TIFF OMITTED] T2207.035
[GRAPHIC] [TIFF OMITTED] T2207.036
[GRAPHIC] [TIFF OMITTED] T2207.037
[GRAPHIC] [TIFF OMITTED] T2207.038
[GRAPHIC] [TIFF OMITTED] T2207.039
Ms. Schakowsky. Thank you.
Jeffrey Rechenbach now.
STATEMENT OF JEFFREY RECHENBACH, EXECUTIVE VICE PRESIDENT,
COMMUNICATION WORKERS OF AMERICA
Mr. Rechenbach. Thank you, Chairman Schakowsky, Ranking
Member Whitfield and subcommittee members for the opportunity
to testify before you today in support of H.R. 1776, the Call
Center Consumer's Right to Know Act, introduced by Congressman
Jason Altmire. My name is Jeff Rechenbach. I represent the
600,000 active members of the Communications Workers of
America, or CWA, and I have asked that my written testimony be
entered into the record.
CWA represents 150,000 customer service workers across our
Nation. Customer service workers are professionals who want to
provide quality service and have the opportunities for secure
careers. That desire is being undermined by a race to the
bottom and the outsourcing of customer service work. The Call
Center Consumer's Right to Know Act is bipartisan and simple.
It seeks to improve the level of customer service American
consumers receive while creating good-paying jobs. It simply
gives consumers the right to know the location of the call
center and the representative with whom they are speaking. I
believe the legislation could be improved if consumers were
able to request that they be transferred to an American-based
call center if they so desire.
I would not criticize the abilities or the work ethic or
the character of call center workers in other countries or
demean their cultures in any way. In fact, through our
international union brothers and sisters, we established a
worldwide Customer Service Professional Week and it is the
first week of October this year. In our view, any fault found
with the quality of outsourced customer service work is simply
the result of poor management practices and the difficulties
with supervision and accountability when operations are
subcontracted. It is a product of the race to the bottom where
outsourcing favors cutting costs over quality service.
Recently, through collective bargaining, CWA and AT&T
reached an agreement to bring back from offshore 5,000 call
center jobs. This was a win-win. However, with low coverage of
collective bargaining, we should not expect that returning work
from offshore and eliminating subcontracting foreshadows a new
trend for American workers. Too much of U.S. management is
caught in the treadmill of lowering wage rates and consequently
lowering quality through outsourcing.
It is estimated that 4 million Americans work in call
centers. Remarkably, the Bureau of Labor Statistics does not
have a category for customer service agents nor does it canvas
communities to survey for wages for these workers. An increase
in service sector jobs would ease the pain for Americans who
lost their good-paying manufacturing or textile industry jobs
because of offshoring. We have lost over 3.6 million
manufacturing jobs since NAFTA, according to the U.S. Bureau of
Labor Statistics, and we continue to hemorrhage U.S.
manufacturing jobs. While this job loss figure is staggering,
forecasts regarding the number of service sector jobs that we
can expect to see offshored are even more sobering. Forester
Research Company estimates that the United States will lose 3.3
million service sector jobs by 2015. This number is considered
by many to be a conservative estimate. In 2002, Forester
attempted to estimate the number of high-tech jobs that would
be offshored. By 2004, Forester had found that its estimate was
38 percent lower than what had actually happened.
Unfortunately, recent developments have exacerbated this
problem. According to the U.S. Trade Representative, the
American government provided more than $650 million in trade-
related assistance to the signatories of the Central American
Free Trade Agreement. This included money that went to
education programs which taught English to future call center
workers in Central America. The result has been an exodus of
call center jobs. The number of call center jobs created in
Costa Rica doubled to 50,000 between 2005 and 2007.
Madam Chairman, what this bill is really all about is
giving American families a chance to be better consumers. Let
them make the choice as to whether or not they want to spend
their dollars with a company that helps sustain American
communities with good-paying jobs or whether they want to look
the other way on that notion. When I go to buy a shirt, I can
clearly see a label telling me where it was made. The same is
true with suits, shoes, most food, electronics and even cars. I
can make a choice: do I want to buy a shirt made in the United
States or am I OK buying one made in a foreign land. Quality,
price, and land of origin should and can be part of the choice
in dealing with service-based industries as well.
Madam Chairman, members of the subcommittee, thank you for
holding a hearing on this important legislation, and I look
forward to your questions.
[The prepared statement of Mr. Rechenbach follows:]
[GRAPHIC] [TIFF OMITTED] T2207.040
[GRAPHIC] [TIFF OMITTED] T2207.041
[GRAPHIC] [TIFF OMITTED] T2207.042
[GRAPHIC] [TIFF OMITTED] T2207.043
[GRAPHIC] [TIFF OMITTED] T2207.044
[GRAPHIC] [TIFF OMITTED] T2207.045
[GRAPHIC] [TIFF OMITTED] T2207.046
[GRAPHIC] [TIFF OMITTED] T2207.047
[GRAPHIC] [TIFF OMITTED] T2207.048
Ms. Schakowsky. Thank you.
Mr. Searcy.
STATEMENT OF TIM SEARCY, CHIEF EXECUTIVE OFFICER, AMERICAN
TELESERVICES ASSOCIATION
Mr. Searcy. Thank you, Madam Chairman and members of the
committee for the opportunity to come and speak to you today on
this important issue.
As CEO of the American Teleservices Association, I
represent more than 2 million professionals in all aspects of
customer service. The mission of the ATA is to assist in
balancing the interests of consumers and legitimate business
using contact centers. Consumer protection is of paramount
interest to the members of the ATA. For this reason, ATA
members are advised and required to conform to a strict code of
ethics including compliance with federal and State laws. The
ATA has also worked to create an accreditation process for
contact centers including third-party audits to ensure that
firms are complying with these laws and to promote best
practices in compliance and consumer protection. The ATA's
self-regulatory organization has received early praise from
both the Federal Trade Commission and the Federal
Communications Commission in public comments. It has been a
pleasure to create a relationship with the FTC and Lois
Greisman's office in which we are able to work together to
focus on fraudulent issues in teleservices and to bring bad
characters and bad actors out into the light.
As part of a very complex patchwork of Federal and State
laws, many elements of disclosure already exist to inform the
consumer about the individual and the company with whom they
are in contact. Disclosures to comply with these laws require
identification of the caller, the company engaged in the call,
the purpose of the call and the nature of the goods or
services. Additionally, there is a requirement to transmit the
calling party number and the company name to be retrieved by a
customer using caller identification technology.
The particular type of disclosure contemplated in House
Resolution 1776 is a burdensome additional expense without
clear benefit to the consumer. Each time additional disclosures
or compliance requirements are added to a call, call lengths
are increased and the cost of doing business by phone increases
as well, while the quality of the interaction with the consumer
declines. The rising costs of compliance and regulation are
causing many firms to contemplate automation only or offshore
solutions to stay cost-competitive. Currently, members of the
teleservices industry can expect to pay tens of thousands of
dollars annually to stay in compliance with Federal laws, but
when State laws are added to the compliance regimen, costs
skyrocket to over $200,000 per year. The cost of doing business
is the primary impetus for choosing alternative solutions to
domestic live operator contact centers. With no other financial
option and in a challenging economic environment, companies are
choosing overseas contact centers and automated IVR, or
interactive voice response systems, to handle calls for
everything from sales to service.
A term of the industry which has frequently been seen in
print is ``rightsourcing.'' Because firms have taken a broader
view of the customer relationship and the economics which
govern profitability, companies have begun to very carefully
select which locations are best suited for various types of
customer interaction. It is with no small irony that we are
beginning to see companies from Spain, France and Australia
choose U.S. contact centers to handle calls on their behalf
because of both the expertise and the labor costs.
I would like to offer two options to requiring location
disclosure at the beginning of the call. The ATA believes that
a reduction in overall compliance costs could be a means to
make domestic contact centers even more affordable. Exclusive
federal jurisdiction alone could reduce the costs to industry
by an estimated $200 million or more per year and make onshore
solutions more desirable. By creating one set of laws, firms
would no longer have to manage an impossible patchwork of
overlapping and sometimes contradictory rules.
Secondly, I agree with Mr. Rechenbach: Consumers should
have a choice to know the location of a company's contact
center if they are interested. If you want to find out where
goods and services have been purchased, if you want to know
where something has been made, you can look at the label to
determine, but that is your choice, that is something that you
take interest in. No federal law currently exists which
mandates that an entity disclose a contact center's location
upon request. The American Teleservices Association's SRO
requires firms that seek accreditation as best practices
providers to disclose their location when asked. The ATA would
be very supportive of turning this practice into law.
In summary, profitability of the contact center industry is
highly dependent upon efficiency and the amount of time spent
on the phone with consumers. Additional and unnecessary
disclosures during a call increase the amount of time spent per
call and reduce the number of people that can be reached and/or
calls that can be handled during a given period of time. Also,
creating an unnatural communication at the start of the call
will only deteriorate the consumer experience by creating a
robotic interaction when they are seeking to relate to a human
being.
Prior to any change in federal law, adequate investigation
and study needs to be done to determine the appropriate course
of action. ATA believes current disclosures required by the TSR
and the TCPA are adequate for contact centers to conduct
business effectively while keeping consumers informed of their
rights. However, the consumer has the right to know upon
request the location of their call center.
Thank you for the opportunity to voice our opinion and
testify.
[The prepared statement of Mr. Searcy follows:]
[GRAPHIC] [TIFF OMITTED] T2207.049
[GRAPHIC] [TIFF OMITTED] T2207.050
[GRAPHIC] [TIFF OMITTED] T2207.051
[GRAPHIC] [TIFF OMITTED] T2207.052
[GRAPHIC] [TIFF OMITTED] T2207.053
[GRAPHIC] [TIFF OMITTED] T2207.054
Ms. Schakowsky. Thank you.
Dr. David Butler.
STATEMENT OF DAVID L. BUTLER, DIRECTOR, CALL CENTER RESEARCH
LABORATORY, UNIVERSITY OF SOUTHERN MISSISSIPPI; EXECUTIVE
DIRECTOR, NATIONAL ASSOCIATION OF CALL CENTERS
Dr. Butler. Thank you, Madam Chairman and members of the
committee. I am not going to read from anything because I will
put everyone to sleep. I would like to make a couple of points.
My background is as an academic and I collect data on the
call center/contact center industry and I would like to bring
some baseline facts to bear since this bill is talking about
jobs. Number one is, the United States government and its
entities do not do a good job of collecting information on this
industry. At present, the S.I.C. code and the N.A.I.C.S. code
associated with this industry both collect improper and wrong
information on this industry, so relying on those two pieces of
data collection, you get an inaccurate count of the contact and
call center industry in the United States. Number two, to even
get a remotely good count, you have to go to the Bureau of
Labor Statistics occupational code, and even within there you
have to consolidate eight separate codes to be able to get even
a decent resolution of what is happening in this industry.
In that vacuum, we started collecting data on the number of
call centers open, closed, expanded, adding jobs and
contracting in the United States since 2002 to the present.
Right now, if you consolidate all those years, the United
States has gained over 87,000 jobs in the call center industry.
Only one year, 2003, was there a net loss in jobs. So as a
starting point, we need to understand that this is a net job
gain industry in the United States.
Within the United States, we track 11 subsectors in this
industry. Only one of those sectors, the reservation
distribution sector, is actually losing jobs and that is losing
jobs both in the United States and near shore and offshore and
that is because of technology changes. Whenever I booked my
flight out here, I purchased it online. I printed my boarding
pass this morning from the hotel. I didn't talk to a call
center operator or reservation person. Those jobs have been
lost to technology more than they have been lost to offshore
operations.
The last two issues I would like to make are regarding the
bill itself. At present, the way the bill is written for
disclosure, I think it will have minimal impact on the call
center industry. By disclosing where someone's geographic
location is, I believe consumer choice of making a choice of
offshore or not offshore, that was something that would
probably been more effective about a decade ago when this was a
more sensitive topic. If the bill were changed to actually have
a request to move to an American operator or American customer
service representative, I think that would have more
significant impact, but the unintended consequence of
potentially moving jobs offshore, especially from U.S. third-
party providers that own and operate call centers offshore is
significant, so I think there are some repercussions on the
negative side that need to be examined before we move forward.
Thank you.
[The prepared statement of Dr. Butler follows:]
[GRAPHIC] [TIFF OMITTED] T2207.055
[GRAPHIC] [TIFF OMITTED] T2207.056
[GRAPHIC] [TIFF OMITTED] T2207.057
[GRAPHIC] [TIFF OMITTED] T2207.058
[GRAPHIC] [TIFF OMITTED] T2207.059
[GRAPHIC] [TIFF OMITTED] T2207.060
[GRAPHIC] [TIFF OMITTED] T2207.061
[GRAPHIC] [TIFF OMITTED] T2207.062
[GRAPHIC] [TIFF OMITTED] T2207.063
[GRAPHIC] [TIFF OMITTED] T2207.064
[GRAPHIC] [TIFF OMITTED] T2207.065
[GRAPHIC] [TIFF OMITTED] T2207.066
[GRAPHIC] [TIFF OMITTED] T2207.067
[GRAPHIC] [TIFF OMITTED] T2207.068
[GRAPHIC] [TIFF OMITTED] T2207.069
[GRAPHIC] [TIFF OMITTED] T2207.070
[GRAPHIC] [TIFF OMITTED] T2207.071
[GRAPHIC] [TIFF OMITTED] T2207.072
[GRAPHIC] [TIFF OMITTED] T2207.073
[GRAPHIC] [TIFF OMITTED] T2207.074
[GRAPHIC] [TIFF OMITTED] T2207.075
[GRAPHIC] [TIFF OMITTED] T2207.076
[GRAPHIC] [TIFF OMITTED] T2207.077
[GRAPHIC] [TIFF OMITTED] T2207.078
[GRAPHIC] [TIFF OMITTED] T2207.079
[GRAPHIC] [TIFF OMITTED] T2207.080
[GRAPHIC] [TIFF OMITTED] T2207.081
[GRAPHIC] [TIFF OMITTED] T2207.082
[GRAPHIC] [TIFF OMITTED] T2207.083
[GRAPHIC] [TIFF OMITTED] T2207.084
[GRAPHIC] [TIFF OMITTED] T2207.085
[GRAPHIC] [TIFF OMITTED] T2207.086
[GRAPHIC] [TIFF OMITTED] T2207.087
[GRAPHIC] [TIFF OMITTED] T2207.088
[GRAPHIC] [TIFF OMITTED] T2207.089
Ms. Schakowsky. Thank you. I thank all of our witnesses. I
am going to begin with a few questions.
Mr. Rechenbach, the suggestion that Mr. Searcy made that we
codify the notion that when a person calls and they want to
know the location, that they would be required to give it. Do
you think that would be adequate, and if not, why not?
Mr. Rechenbach. Well, I certainly think it would be a step
in the right direction but I don't think it actually addresses
the overall issue. I think many people would like to know ahead
of time and wouldn't be schooled in the notion that they could
ask for this information, ask for where that call is being
generated from. So I think the notion of having somebody just
self-identify right up front would be a much better solution to
keeping that work here in the United States.
Ms. Schakowsky. And let me ask you this. Explain to me how,
any one of you can, how effective you think H.R. 1776 actually
would be in creating and preserving American call center jobs.
Let me start again with you, Mr. Rechenbach. How does this
bring the jobs home?
Mr. Rechenbach. We think there has already been a trend
among American corporations that have felt some backlash by
outsourcing work overseas. We think by putting that information
out front, that will encourage more of these corporations to
bring this work back here to the States. You know, I can't
codify that with any kind of notion of what those numbers would
look like, but as you see these trends start to move this way,
we saw this backlash against automated calls. A lot of people
started to push back on automated calls and want to talk to a
human being, and we have seen the number of those calls begin
to decrease as a result of that. I think this would have that
same kind of effect on American corporations, recognizing that
American consumers feel more comfortable, more at ease talking
with an American representative.
Ms. Schakowsky. Do you want to say something, Mr. Searcy?
Mr. Searcy. Well, I think Mr. Rechenbach makes an
interesting point, which is that the fair market is already
allowing for consumers to make choices and for companies to
respond to those choices. If they have been moving activity
back to the United States, although I agree with Dr. Butler,
there has been a net increase in jobs, not a net decrease in
jobs, the reality is that businesses are making decisions that
are in their best interest and in the consumers' best interest.
The second thought is that the consumer wouldn't be educated
necessarily to go ahead and put this into place where they
would ask for the location of the contact center. Our do-not-
call experience from 5 years ago indicates that very quickly
consumers become aware of their rights. Otherwise we wouldn't
have 168 million names on the do-not-call list. Through both
press and word of mouth, I think this would be a choice that
the consumer would be aware of and be able to make at their
choosing.
Ms. Schakowsky. Let me ask another question. One of the
issues that I raised that I may have just missed hearing
addressed by the four of you is this issue of protecting
personal and financial information. When we are dealing with a
call center that actually may be located in another country or
just contracted with an American company, how can we make these
companies comply with the same kinds of laws on privacy and
security that we demand from U.S. call centers? Can anybody
answer that?
Ms. Greisman. Madam Chairman, it is my position that if a
U.S. company is outsourcing certain of its servicing of
contracts or other work that the outsourced entity is governed
currently by U.S. laws, and that is the position of the Federal
Trade Commission.
Ms. Schakowsky. So you do that regardless of the source of
the call? And I am not talking about fraud and abuse that you
were discussing, I am talking about just the systems that
control the privacy of our data. Do you monitor that and
enforce that?
Ms. Greisman. If the FTC has jurisdiction over the U.S.
entity and that U.S. entity outsources part of the processing
servicing of whatever customer functions, it is our position
that we do have jurisdiction, that the outsourced entity also
must comply with----
Ms. Schakowsky. And have you had any enforcement issues
with that?
Ms. Greisman. Nothing readily comes to mind in the security
context. Certainly going back to telemarketing fraud, we have
taken action against entities that do business in the United
States and have part of their operations outside of the United
States.
Ms. Schakowsky. Does anybody else want to comment on this?
Mr. Searcy. Madam Chair, I completely agree with Lois about
this but I would also comment, it is U.S. companies who
outsource and they pay for them so the jurisdiction is not so
much that you would go to India to enforce, you can enforce on
the company here. So consequently with the FTC, it really puts
a burden on the company to make certain that the outsourcer
that they are working with is in compliance because the group
that is going to receive the enforcement is within our borders.
Ms. Schakowsky. Right. If I could, Mr. Ranking Member, just
go on for just a minute. If the company is overseas, are there
any additional enforcement barriers to making sure that the
security is in place? I am assuming they may be doing some
subcontracting to a call center. They may not own it outright.
Is that true?
Mr. Searcy. They do subcontract.
Ms. Schakowsky. I understand the jurisdictional question
but are there any additional barriers to making sure that those
subcontractors, which I imagine could be set up anywhere, are
actually protecting our information with the same scrutiny as
we would if they were here in the United States?
Mr. Searcy. We absolutely do, and I would say even more so,
the reason being the industry has taken a very serious look at
what the implications are, the downside if that data was not
protected, and for that reason, you will find there is more
monitoring and more internal enforcement, meaning the companies
have a much greater investigatory effort into the firms they
are working with.
Ms. Schakowsky. Have there been data breaches overseas?
Mr. Searcy. Not that have required enforcement. I know that
in the last 5 years, there have been data breaches overseas but
nowhere in the same category nor the same rate as we have seen
here domestically, and none of which have been raised to the
point of being an issue about what data should go overseas or
not.
Ms. Schakowsky. You wanted to say something quickly?
Mr. Rechenbach. Yes, just very quickly, the simple fact is
our laws don't apply in foreign countries, and if it is
subcontracted out to a foreign company, we won't have recourse,
and I think we have all seen the WTO continues to release weak
consumer protections year after year, so I think there is a
very deep and genuine concern that we ought to have that our
data, that our information about American citizens could be
potentially exposed to being stolen or manipulated by other
interests.
Ms. Schakowsky. That is actually, I would think, a matter
of fact or not. Is that the case? That is the concern I am
raising if they subcontract? Dr. Butler?
Dr. Butler. If I could speak on this, we are talking about
multiple entities. Number one, U.S. corporations that house
contact centers inside their own entity, that is not an issue.
Number two, U.S. outsourcers. These are third-party providers
housed in the United States with call centers in the United
States and overseas. Their jurisdiction is in their company
operations both locations.
Ms. Schakowsky. OK. I am talking about just overseas.
Dr. Butler. Then we are talking about third-party providers
like WIPRO and other companies that are solely overseas. If
they are contracting with a U.S. company and accessing their
data from U.S. servers, the United States has jurisdiction
because that is U.S. data, even if they are reaching over into
the United States. And I think the legal piece you are trying
to get around is covered under the Safe Harbor agreement that
the United States has and signed with some of the EU countries.
I think that is a provision, if anything you are going to get
into with data protection, that is the mechanism by which you
would be accessed.
Ms. Schakowsky. I think that is one of the concerns that
American consumers might have.
I really feel the need to move on because we are going to
have a vote in a very short time. Mr. Whitfield.
Mr. Whitfield. Well, even if an outsourced company in
another location with a call center, we did not have
jurisdiction over that call center to protect American
consumers, there is nothing in this legislation that would
provide that protection, is there? This legislation seems
pretty simple. It wouldn't address that problem, would it?
Ms. Greisman. There is nothing in it that I see.
Mr. Whitfield. Right. Now, Ms. Greisman, does the Federal
Trade Commission support this legislation?
Ms. Greisman. The FTC has taken the position that there
probably is another agency better suited to administer and
enforce it, given the jurisdictional limitations under the FTC
Act.
Mr. Whitfield. Which agency would that be?
Ms. Greisman. I am really not in a position to identify
one, but one better versed in labor issues and international
conditions.
Mr. Whitfield. So Mr. Searcy, does your organization
support this legislation?
Mr. Searcy. No, sir, we do not.
Mr. Whitfield. Dr. Butler, do you support this legislation?
Dr. Butler. Actually we don't support nor do we not support
it. We are trying to provide some good data to have everyone
make an informed and educated decision.
Mr. Whitfield. Now, Mr. Rechenbach, from your testimony, it
appears that you had two reasons for supporting this
legislation. One was quality of service to American consumers
and two was consumers have a right to know. On the quality
issue, could you elaborate on quality issues that you all are
concerned about?
Mr. Rechenbach. Well, I think we have seen a drive where
cost has become a higher concern than quality of service and so
many providers that provide a cheaper service will opt for a
lower quality and outsource this customer contact work that may
have been in the past done in the United States or it may be
new work that is getting generated as new industries are
created. So it really is in the eye of the beholder, if you
will, as to whether or not you are getting a good quality job
overseas or a good quality job from a worker here in the United
States. I like to think that a good-paying job here in the
United States is going to be giving you a better quality of
service. We found, particularly in the call centers that we
have organized, where you pay somebody a decent wage, turnover
rates are dramatically lower, there is much more retention of
workers, and as a result, a better quality job gets provided by
those individuals.
Mr. Whitfield. I guess the thing that I am a little bit
concerned about this legislation, I mean, it is a very simple
piece of legislation, it is not complicated, but if I am a
Delta Airlines customer and I call about my airplane ticket and
there is a call center in India and they come on the line and
they say we are here to answer your questions about your
airplane ticket, and by the way, we are located in India, then
if they don't say that, then that gives me the right to call
the FTC or some other federal agency and say hey, I made this
call and they didn't tell me they were in India, and then under
this legislation, that agency would have had to do a rulemaking
and adopt a civil penalty for that company and so this federal
agency would be running around taking complaints from people
saying well, they didn't identify, and then you would have to
do an investigation. I mean, it seems like a very complicated
process without very many practical results from it.
With that, I yield back the balance of my time, Mr.
Chairman.
Mr. Weiner [presiding]. Thank you.
Does anyone care to respond?
Mr. Searcy. Yes, sir, I would make one comment. I
completely agree with Representative Whitfield. In addition to
the expense and the difficulty, you also would create a
situation in which to certify this based on the fourth
provision with an H.R. 1776. The only way to prove that indeed
you had disclosed every time would be to tape every single
phone call, which if we want to talk about privacy issues, I
can assure you, this will cross that line.
Mr. Whitfield. Then Ms. Greisman would listen to those
tapes.
Mr. Searcy. I would imagine someone on Ms. Greisman's staff
would have to listen to those tapes.
Mr. Weiner. Can I pick up on that? Mr. Searcy, very often
we hear our constituents and we have all had the experience as
well, have a recording at the beginning of the conversation
saying that this conversation could be recorded for quality
assurance. Is that a widespread practice? Is it actually
recorded?
Mr. Searcy. Actually many of the calls are recorded. It has
become common in some cases because of the use of technology to
record every single call and to go ahead and use technology to
monitor every call. You will go through and you will do voice
recognition to find out if there are errors or mistakes or
something in legal disclosure that hasn't been done properly,
so there is indeed a great deal of monitoring that goes on, a
great deal of tape recording that goes on, on inbound calls.
Those are calls coming in for customer service, not as much for
outbound calls.
Mr. Weiner. So to a large degree, the concern that Mr.
Whitfield raised about how you find out or how you know, how
you enforce as an employer, how you make sure your employees
are doing it, to a large degree, that type of taping and
recording is going on already, isn't it?
Mr. Searcy. It is a common but not prevalent business
practice, meaning that not everyone does it and not most of
everyone does it.
Mr. Weiner. I don't know who can answer this, perhaps you
can, Mr. Searcy, when someone makes a garment or a lot of
products, frankly, they have to go through the process of
creating a label that says where it was made and sewing it into
the garment and making sure that they have it right, that
something that came from Bangladesh or from Korea or from the
United States is correctly identified. It may or may not have
any impact on a consumer's decisionmaking but it is there and
it is so deeply ingrained in our values and in our culture that
we almost expect it to be there even if we don't look at it,
and maybe if someone sees something that says made in Korea,
there is no real practical way to check if it was made in Japan
or made in Taiwan but they have it there. It is kind of like
chicken soup; it does no harm. It strikes me that this
legislation is also like chicken soup, that it provides an
additional piece of information. Maybe I think in the sponsors'
view, it might lead more companies to say you know what, I
don't want them saying I am calling from Bangalore, I want to
say I am calling from Baltimore, but from the perspective of
consumers and policymakers, I don't really see what harm exists
to have that additional piece of information. I have seen in
your testimony, and forgive me for arriving late back from New
York, but I have seen your testimony about the added expense
that would be involved. I am not buying it. ``Hi, this is
George, I am calling you from India, how can I help you with
your PC today,'' how is it any different than a ``Made in
United States of America'' label that some of us find on our
garments or on our sporting equipment or anything else?
Mr. Searcy. It is a very good question. We propose an
alternative, which is upon request. See, it doesn't say made in
India or made in China or made in Bangladesh on the front of my
suit but inside where I can go find the label, if I so desire,
I can find that. We believe that indeed current law does have a
shortcoming. Consumers should be able to ask upon request where
are you calling me from or where am I reaching you today, and
the person should be obligated by law to tell them so that the
consumer has the protection if they are interested but not the
expense if they lack that interest. Many, many years ago, made
in Japan was a very negative statement and then Japan improved
its quality to the point that made in Japan was an issue of
pride. I don't want to see us in a position where U.S. contact
centers versus other countries. We have to take something that
was built here and have other countries provide a superior
level of service where consumers would possibly choose to
select that contact center instead of ours. We are in a better
position to let people do this upon request.
Mr. Weiner. Mr. Rechenbach.
Mr. Rechenbach. You mentioned earlier the notion of the
recording that comes on before the call, that this call be
monitored for quality assurance. I don't know that it would
cost any more to include in a message like that, this call is
being handled by a technician in Costa Rica and may be
monitored for quality assurance. So this cost issue I think
really doesn't rise to the level of concern that it ought to.
What really is the issue here is giving American consumers that
opportunity to make an informed choice. You know, I am a union
guy. I like to think I buy mostly union-made products but I
will make a consumer decision from time to time that doesn't
reflect that. Every now and then I will see something I want, I
know it is made somewhere else, a piece of electronic gear, and
I go ahead and purchase it nevertheless. Consumers would have
the same option when it comes to their services here, to make
that choice, but they can only make it if they have that piece
of information identified for them.
Dr. Butler. Mr. Chairman?
Mr. Weiner. Yes, fire away, Dr. Butler.
Dr. Butler. If I could speak to this, a couple elements.
Number one, I don't think the analogy between manufacturing and
service works. If we are going to draw the analogy fully, then
every piece of software that comes through which may be
designed or created in multiple countries on a 24-hour rolling
basis, does every piece of software when it comes up need to
say made in these 15 different countries. I am not sure if the
analogy works perfectly there. Secondly, you were asking what
companies are going to be impacted or is this really going to
do anything, the companies that are going offshore to save
money aren't going to bring them back because of disclosure. I
really don't believe that because they are not going to lose
money by bringing it back onshore. Those that have chosen to
keep them in the United States for market share purposes, for
loyalty, for American pride, aren't going to move it offshore
even if you tried to pay them to. It is those that are in the
balance, which is a narrow group, that are thinking about maybe
going offshore, this may be a deterrent or it may make them
think twice, ``do we want to have that label on it.'' So it is
a very narrow group of call centers that we are talking about
that may or may not be impacted, not the industry as a total
group.
Mr. Weiner. You are the experts, I am not, but it could
well be that as a value added, as with so many other disclosure
things, people make it a point of attention for their
consumers. They say our call centers stamped right on the box
of a Dell computer are entirely in the United States. It may
turn out to be something that becomes a source once it is
disclosed and required to be disclosed. For years and years in
this country, there was no real requirement to have a clear
disclosure of what your credit card interest rate was until the
mid-1980s or so. Then suddenly they all started competing to
have lower rates or different kinds of rates and the like, so I
would dispute that. I think with more information, the
marketplace will decide and consumers will decide how to use
that information, which gets me back to the premise of the
bill, which is arm consumers with information and who knows,
you might have companies that will make a decision based on the
reaction to that. I can see overnight Web sites popping up with
another column in the chart about what PC you buy where the
call center is. I can see people saying, all right, well that
is something I want to check, that is one of the boxes that I
want to check, and the analogy was not about whether or not you
should have disclosure everywhere but it is the relative value
of it that Mr. Whitfield pointed out, like what do you do with
that information. I don't know. Some people do nothing with it.
Some people will create a buying club around it.
I just have one final question. I know I have gone over my
time. I have had the experience frequently where I have people
tell me their name and I know it is not their name. ``Hi, it is
Rose.'' ``You don't sound like you are a Rose.'' So I think we
are seeing instances in the marketplace where the pendulum is
swinging in the opposite direction where there are actually
subtle attempts to make it appear as if someone is calling you
from next door when they probably aren't.
Mr. Whitfield, do you have any further questions?
Mr. Whitfield. No, sir.
Mr. Weiner. Do I have any further business I need to do?
I ask unanimous consent to insert into the record the
written response of the Department of Treasury on H.R. 3232.
Without objection.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] T2207.090
[GRAPHIC] [TIFF OMITTED] T2207.091
[GRAPHIC] [TIFF OMITTED] T2207.092
Mr. Rush. All witnesses should be advised that they may
receive written follow-up questions from the committee.
Without objection, with the gratitude of the committee, the
hearing is adjourned.
[Whereupon, at 1:50 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
STATEMENT OF HON. MICHAEL C. BURGESS
I would first to like pause and remember the men and women
killed on September 11, 2001. On this the seventh anniversary
of their sacrifice, I think it's important to remember the
lives lost on that horrible day.
Since 9/11, our country has acted to protect our nation
from any - and all - future acts of terrorism. These actions
were necessary to protect this country which we all love.
While we aggressively fight terrorism, the proponents of
the bills before us seem to believe that our actions in this
fight are a sign the United States is not still welcoming to
foreigners to legally visit or do business.
I disagree that one of the fundamental aspects of our
country - its openness - has been changed as a result of our
Fight against Terror. Our borders are always welcome to those
who want to come here to visit our marvelous monuments and
historic landmarks, study at the greatest universities and
colleges in the world, and enjoy all the benefits that our
country is uniquely privileged to have.
Sadly, the numbers from the Travel Industry Association
show that the number of foreign visitors has decreased since
September 11. And it appears that the decline has had a real
economic effect. According to the TIA, the decrease in tourism
has resulted in a $140 billion decline in the economy and a
loss of approximately 230,000 jobs.
And it's not just foreign travel which has been deterred.
American citizens also don't want to deal with the hassle of
traveling and since 9/11 this has cost our economy $25 billion
dollars. As someone that flies to and from my home district to
Washington each week, I can't say I don't blame them.
I believe that H.R. 3232 has two features that the American
taxypayer will appreciate in an attempt to spur more American
tourism: zero cost to them and accountability from a non-
partisan, non-political board. A fund will be set up where the
private travel industry will contribute up to $100 million
dollars, and a 14 member non-partisan, non-political board
(comprised of one member of various industry sectors) will keep
the spending of this money accountable.
I've cosponsored this bill. I look forward to this moving
through our committee
While I'm not a cosponsor of H.R. 1776, I can see that this
bill might have some merits. More disclosure for customers
about who they are speaking with over the phone when it might
relate to a private banking matter, a health issue, or any
other everyday reason we use a call center is probably a good
thing.
I look forward to hearing from the panelists today. Thank
you.
----------
[GRAPHIC] [TIFF OMITTED] T2207.093
[GRAPHIC] [TIFF OMITTED] T2207.094
[GRAPHIC] [TIFF OMITTED] T2207.095
[GRAPHIC] [TIFF OMITTED] T2207.096
[GRAPHIC] [TIFF OMITTED] T2207.097
[GRAPHIC] [TIFF OMITTED] T2207.098
[GRAPHIC] [TIFF OMITTED] T2207.099
[GRAPHIC] [TIFF OMITTED] T2207.100
[GRAPHIC] [TIFF OMITTED] T2207.101
[GRAPHIC] [TIFF OMITTED] T2207.102
[GRAPHIC] [TIFF OMITTED] T2207.103
[GRAPHIC] [TIFF OMITTED] T2207.104
[GRAPHIC] [TIFF OMITTED] T2207.105
[GRAPHIC] [TIFF OMITTED] T2207.106
[GRAPHIC] [TIFF OMITTED] T2207.107
[GRAPHIC] [TIFF OMITTED] T2207.108
[GRAPHIC] [TIFF OMITTED] T2207.109
[GRAPHIC] [TIFF OMITTED] T2207.110
[GRAPHIC] [TIFF OMITTED] T2207.111
[GRAPHIC] [TIFF OMITTED] T2207.112
[GRAPHIC] [TIFF OMITTED] T2207.113
[GRAPHIC] [TIFF OMITTED] T2207.114
[GRAPHIC] [TIFF OMITTED] T2207.115
[GRAPHIC] [TIFF OMITTED] T2207.116
[GRAPHIC] [TIFF OMITTED] T2207.117
[GRAPHIC] [TIFF OMITTED] T2207.118
[GRAPHIC] [TIFF OMITTED] T2207.119
[GRAPHIC] [TIFF OMITTED] T2207.120
[GRAPHIC] [TIFF OMITTED] T2207.121
[GRAPHIC] [TIFF OMITTED] T2207.122
[GRAPHIC] [TIFF OMITTED] T2207.123
[GRAPHIC] [TIFF OMITTED] T2207.124
[GRAPHIC] [TIFF OMITTED] T2207.125
[GRAPHIC] [TIFF OMITTED] T2207.126
[GRAPHIC] [TIFF OMITTED] T2207.127
[GRAPHIC] [TIFF OMITTED] T2207.128
[GRAPHIC] [TIFF OMITTED] T2207.129
[GRAPHIC] [TIFF OMITTED] T2207.130
[GRAPHIC] [TIFF OMITTED] T2207.131
[GRAPHIC] [TIFF OMITTED] T2207.132
[GRAPHIC] [TIFF OMITTED] T2207.133
[GRAPHIC] [TIFF OMITTED] T2207.134
Geoffrey Freeman, Answers to Submitted Questions
Questions Submitted by Hon. Bobby L. Rush
1. Were previous government tourism advertising campaigns
effective? Please explain why or why not.
The United States government has not conducted a sustained,
nationally coordinated promotion campaign. In 2005 and 2006,
however, the Department of Commerce operated a pilot campaign
to promote the United States as an international travel
destination. Longwoods International, an economic consulting
firm based in Toronto, Canada retained by the U.S. government,
estimated that each dollar spent on travel promotion in the
United Kingdom (UK) by the Commerce Department's campaign
returned $117 in increased travel spending in United States.
Many countries around the world, and several U.S. states,
operate effective travel promotion campaigns.
Longwoods International has estimated that state travel
promotion campaigns in Colorado and Michigan offer a 50-to-one
return on investment (ROI) in terms of increased travel
spending and a ROI of nearly three-to-one in terms of increased
state tax revenue.
The State of Florida estimates that its state travel
promotion campaign returns three dollars in increased sales tax
revenue for every dollar spent on promotion.
The Australian government credits its national travel
promotion campaign with greatly increasing Australia's share of
the international travel market. Australia estimates that, in
2006, its marketing program in the United States had an ROI of
64-to-one in terms of increased spending by U.S. tourists and
six-to-one in terms of increased tax revenue to the Australian
federal government.
Oxford Economics, an international economic consulting
firm, estimates that the City of Philadelphia's travel
promotion campaign directed toward Western European travelers
has an ROI of 44-to-one in terms of increased travel spending
and three-to-one in terms of increased city sales and hotel tax
revenue.
Oxford Economics estimates that a moderately effective U.S.
travel promotion program would have a 35:1 return on spending
and a 6:1 return on tax revenues.
2. Does advertising directly affect the level of
international arrivals in the United States? Are there any
studies or data to support this conclusion? (The Subcommittee
is aware of the 2007 study published by Oxford Economics. Did
the Travel Industry Association commission this study?)
In testimony before the Senate Commerce Committee on March
20, 2007, Jamie Estrada, Deputy Assistant Secretary for
Manufacturing at the Department of Commerce discussed the
positive outcome temporary marketing campaigns in the United
Kingdom (UK) and Japan had on the U.S.'s ability to attract
more international visitors. Mr. Estrada used economic data to
show that the UK campaign returned $117 in spending on travel
to and within the U.S. for every $1 spent on advertising. Mr.
Estrada noted for the Committee that, "the promotion campaigns
in the United Kingdom and Japan demonstrate that marketing the
United States as a travel destination can be effective."
The 2007 study by Oxford Economics and Governor Tom Ridge
which shows that a modestly funded nationally coordinated
travel promotion campaign, combined with visa and entry reforms
enacted last year by Congress, would attract 1.6 million new
visitors per year, yielding $8 billion per year in new visitor
spending and $850 million per year in new federal tax revenues
was commissioned by the Discover America Partnership, which
included TIA and dozens of other organizations.
An earlier Oxford Economics study, commissioned by the UK
government, concluded that the UK's overseas travel promotion
campaign yields a ROI of 47-to-one in terms of increased travel
spending and six-to-one in terms of increased national tax
revenue.
Every U.S. state spends millions of dollars to attract
domestic and international travelers. Every one of those states
can testify that this spending leads to an increase in
visitors.
3. According to a 2005 Congressional Research Service
report, there are five main criticisms of having the Federal
government involved in tourism, including:
Private industry can pay for it on its own;
The U.S. is already a top international tourism
destination;
Advertising tourism will do little to reduce the
U.S. trade deficit;
Visits to the U.S. have been climbing for years;
and
Little evidence exists that advertising affects
tourists' destination preferences, which are instead motivated
by macro-variables, such as exchange rates.
How do you respond to these criticisms?
The greatest deterrents to visiting the United
States today are misperceptions of the American entry
experience and a lack of information on American security
policies. Therefore, a credible and effective promotion
campaign must be devised in partnership with the U.S.
government. That's why the public-private partnership, embodied
in H.R. 3232, the Travel Promotion Act, makes perfect sense.
The bill requires the private sector to fund 50 percent of a
travel promotion program, but the government must be a partner
to (a) enable the entity to effectively communicate ever-
changing U.S. security and entry policies, and (b) speak
overseas as "the USA" rather than a hodge-podge of private
companies and individual destinations. Travel promotion is less
of an issue of "who pays," and more an issue of "who speaks."
The position of the United States as a top
international tourism destination has slipped steadily since 9/
11. In 2000, the U.S. market share of the worldwide
international arrivals stood at 7.5 percent; by 2007 that share
had dropped to 6.3 percent. Where as the U.S. for many years
ranked as the world's third most visited destination, the most
recent data show that America has fallen to 4th place among the
world's most visited destinations (behind China). Finally, in
2007 the U.S. welcomed two million fewer overseas visitors than
it did in 2000 - despite an extraordinarily weak dollar.
International travel is a significant export in
our economy. As America's largest service export, travel and
tourism plays a key role in the U.S. economy including helping
to reduce the U.S. trade deficit. In 1996, international travel
provided the United States with a $26 billion positive trade
balance. The positive balance of trade fell to $18 billion in
2007. The Return on Investment (ROI) data for travel promotion
campaigns in Australia and Great Britain cited in the answers
to earlier questions clearly demonstrate that national travel
promotion campaigns are effective. Based on those data, it is
clear that a nationally coordinated U.S. travel promotion
campaign would result in annual export growth for international
travel to the U.S. and a reduction in America's trade deficit.
The United States welcomed 57 million
international visitors in 2007 - a 10 percent increase over
2006. Yet, "Long-haul" or "overseas" travel trends (which, by
definition, exclude Canada and Mexico) reveal a significant and
growing problem; the growth in U.S. overseas arrivals in the
last several years is lower than the growth in global overseas
travel. Here are the numbers: In 2000, the United States
welcomed 51 million international visitors: 25 million from
North America and 26 million from overseas. By 2007, the United
States welcomed 57 million visitors, but the breakdown had
shifted dramatically: 33 million from North America and only 24
million from overseas. Making matters worse, there are 35
million more people around the world traveling long-haul today
than in 2000. Not only did the United States fail to capture
any of these new travelers, we lost two-million long-haul
visitors. The United States, through passivity and inaction,
has ceded a critical market to the rest of the world.
The ROI data cited in the answer to question 2
clearly demonstrate that nationally coordinated travel
promotion campaigns are effective. Macro variables affect
travel patterns, but the data show that travel promotion
consistently has a very large positive impact on attracting
additional travelers.
4. H.R. 3232's findings note that the recent tightening of
entry requirements to the United States has reduced the growth
rate of international visits. If this is the case, why not
focus our initial tourism promotion efforts on reform of entry
requirements and procedures instead of chartering a non-profit
advertising campaign?
In 2007, the Discover American Partnership issued a three-
point plan to strengthen America's security and fix our
country's travel crisis titled A Blueprint to Discover America.
The report calls on the U.S. government to:
1.Create a 21st century visa system;
2.Modernize and secure our ports of entry; and
3.Change global perceptions of America through coordinated
communications.
Over the past year and a half, the travel community has
worked with Congress and the Administration to meet these three
objectives. Significant improvements in the visa process and
various entry procedures have been achieved. Some of these
improvements include:
Expansion of the Visa Waiver Program (VWP): New
countries will be added to the VWP pending compliance with new
security requirements. Expansion of the VWP improves the entry
process for millions of legitimate foreign travelers.
Increased Staffing at International Airports: Two
hundred more Customs and Border Protection officers will be
hired at America's top 20 international airports, thereby
alleviating some of the staffing constraints at the nation's
busiest ports of entry.
Authorization of the Model Ports of Entry Program:
America's top 20 international airports have been designated as
"model ports of entry," which means they will receive funds to
increase staffing, develop better queuing procedures and
improve customer service. Congress appropriated $40 million in
FY 2008 for the model ports program.
International Registered Traveler Program: Global
Entry, an international registered traveler program was
launched in 2008 as a pilot in seven U.S. airports to ease the
flow of pre-screened frequent international visitors who pose a
low security risk to the U.S.
The travel community has worked with Congress and the
Administration to accomplish these first steps and will
continue to press the federal government to build the most
secure and efficient travel process. However, the U.S.
government has no coordinated means for communicating these
changes to overseas travelers nor is the U.S. promoting itself
as a travel destination. Welcoming more visitors from around
the world does require improving the visa system and the entry
experience, but doing so is of marginal benefit if the
government does not tell the rest of the world about these
improvements.
5. How does H.R. 3232 guarantee that all parts of the
United States will benefit from increased tourism, not just
popular destinations like Washington, D.C., and New York City?
Put another way, advertisements must target a particular
location. How does H.R. 3232 ensure that places like
Williamston, N.C., and Milledgeville, Georgia, are mentioned in
tourism promotion advertisements by the Corporation for Travel
Promotion?
The role of the Corporation for Travel Promotion is to more
effectively communicate U.S. travel policies to prospective
international travelers. As it relates to travel promotion
specifically, the goal is to promote international travel to
the United States as a whole. It is not the purpose of this
program to promote any specific destination. Any scenes of
America shown in such promotions will feature rural and urban
America and will be geographically balanced in order to
highlight all regions of the country. The places in America
that stand to benefit the most from a national-level
communications and promotion campaign are those that can least
afford to do promotion on their own - smaller and more rural
destinations.
6. Section 5(b) of H.R. 3232 establishes a travel promotion
fund to partially fund the Corporation for Travel Promotion.
This section caps annual transfers from the fund at $100
million. Why was this level chosen? Why not, for example, a
level of $50 million?
Brand Architecture, one of the foremost travel promotion
consulting firms in the world, built a strategic travel
promotion spending plan for the United States. The purpose of
this plan was to determine what the United States would need to
spend per traveler to compete in top global markets for
international visitors. Brand analyzed foreign competitors'
marketing programs as part of its research and ultimately
concluded that for the United States to run the most effective
travel promotion program it would need to spend between $150
million to upwards of $200 million per year. Since the
Corporation will need to devise a travel promotion campaign
that will recoup significant losses in overseas travel plus
communicate new and changing security programs, it is
appropriate for H.R. 3232 to cap the growth of the program at
the maximum recommended amount. For charts detailing Brand's
spending plan see Appendix A and B.
H.R. 3232's structure enables the funds for the travel
promotion program to grow to $200 million. As noted, $100
million of the total will come from transfers from the Travel
Promotion Fund collected through the Treasury. However, no
funds collected by the Treasury will be transferred until the
private sector first invests monies in the fund. Therefore,
reaching the $100 million cap in funds from the Treasury will
depend largely on the private sector's ability to raise $100
million in matching funds. We believe the $100 million cap in
Treasury funds provides accountability to the program by
limiting its size to one that will provide the most benefits to
the U.S economy. Decreasing the $100 million cap to $50 million
would inhibit the Corporation's ability to meet the funding
recommendations of leading marketing experts for a competitive
and effective travel promotion program; ultimately, hurting the
goal of giving the U.S. a competitive advantage in the global
travel market.
7. Section 5(c) requires the Corporation for Travel
Promotion to contribute matching funds annually to those
transferred to it from the travel promotion fund established in
section 5(b) of the bill. Furthermore, section 5(c) (2) permits
the Corporation to make up to 80 percent of its matching
contributions in the form of goods and services, whose fair-
market value the Corporation would determine. I am concerned
that this would be incentive for the Corporation to overvalue
its in-kind contributions in order to contribute less in
overall matching funds. What is your opinion of lowering the 80
percent level of in-kind contributions (to perhaps 20 percent)
and directing a Federal agency (e.g., the Department of the
Treasury) to determine the value of those contributions instead
of the Corporation?
As the private sector component of the Corporation for
Travel Promotion is funded entirely on voluntary contributions,
it is important to provide contributors with a variety of ways
to support promotion activities. Examples of extremely valuable
in-kind contributions include:
Television, radio and/or print advertising time/
space;
Material and/or advertising production;
Travel costs for journalists on "familiarization"
trips; and
Provision of paid consultants or staff to offer
counsel to the Corporation.
Permitting significant in-kind contributions (80%)
increases the likelihood of a successful travel promotion
program by:
Enabling broader (beyond the travel industry) and
deeper private sector support;
Lessening the Corporation's dependency on budget
cycles or strong economic times in order to access cash
contributions; and
Unlocking greater matching funds thereby enhancing
the depth and breadth of America's travel promotion efforts.
In order to provide a fair mechanism for determining the
value of in-kind contributions, the Board of Directors of the
Corporation could be required to provide the Secretary of
Commerce with market value determination procedures that (a)
define market value, and (b) provide an independent mechanism
of valuing all donated goods and services.
8. H.R. 3232 institutes a new fee for foreign travelers who
use the Electronic System of Travel Authorization (ESTA), a
federally administered program. Such a fee would arguably
constitute Federal revenue and therefore be property of the
American taxpayer. This being the case, do you believe that
using these fees to fund the Corporation is an outlay of
Federal revenue and therefore a cost to the American taxpayer?
The fees transferred to the Corporation from the ESTA
program should not be considered a cost to the American
taxpayer. It is current practice for the Department of Homeland
Security (DHS) and the Department of State to use fees
collected from foreign nationals to pay for various security
and immigration programs. The fee collections protect the U.S.
taxpayer from paying for programs primarily utilized by foreign
nationals. Instead of counting on DHS to seek appropriated
funds from Congress to run ESTA, Congress afforded DHS the fee
authority it needs to run the program using funds collected
from foreign nationals. U.S. Customs and Border Protection
(CBP) has indicated in its ESTA rule that it will implement an
ESTA fee in the future, if it is necessary to operate the
program. Considering that DHS did not request any newly
appropriated funds from Congress to run the program in 2009,
the year the program is being launched, it is likely that a fee
will be necessary. H.R. 3232 would collect a nominal $10 fee
above the fee DHS decides to collect from Visa Waiver Program
(VWP) travelers to run the ESTA program. Aside from being the
primary users of ESTA, VWP travelers will also be beneficiaries
of the travel promotion campaign because they will learn about
ESTA and other U.S. entry policies through the campaign.
Furthermore, the long-term viability of both ESTA and the
travel promotion program is improved by using a fee mechanism
that will be easy to project from year to year instead of
relying on the appropriations process which can be
unpredictable. A fee mechanism provides Congress with the
opportunity to support the security of the VWP and increase
travel and tourism without having to increase taxes on the
American public to pay for the programs.
Finally, a fee-based system rather than an appropriation
ensures that Congress's desire for a travel promotion program
is protected against bureaucratic maneuvering or Administration
lethargy. In 2003, Congress appropriated $50 million to the
Department of Commerce for a modest travel promotion program.
Due to Commerce's inability to spend the money, more than $40
million was rescinded and Congress's desire for a travel
promotion program was not met.
9. Section 5(b)(2) of H.R. 3232 permits the Secretary of
the Treasury to transfer monies from the travel promotion fund
to the Corporation for Travel Promotion at least quarterly. As
these funds would come in the form of fees required of foreign
travelers by a federally administered program, namely the
Electronic System for Travel Authorization (ESTA), should these
transfers be subject to the annual Congressional appropriations
process? Please explain your opinion.
The fees transferred to the Corporation should not be
subject to the annual Congressional appropriations process.
Please see the answer to question 8.
10. Section 7 of H.R. 3232 permits the Corporation for
Travel Promotion to invest funds it has received. Some of these
funds would come in the form of transfers from the travel
promotion fund, which would be funded by fees assessed to
foreign visitors who use the Electronic System for Travel
Authorization. It is likely that the Corporation would be able
earn extra income from these investments and thereby have
control of more funds than would otherwise have been
transferred to it by the Treasury. It is also possible that the
Corporation could lose money in its investment - money, it
should be reiterated, that partially comes from the Treasury.
This being the case, why should the Corporation be permitted to
invest funds it has received from the Federal government?
Second, would this authority to invest circumvent control that
the Treasury might have over the Corporation's budget? Please
explain your opinion.
TIA interprets Section 7 of H.R. 3232 to be an
accountability measure used to ensure that the Corporation will
only invest funds it has in-hand in obligations of the United
States. We do not have a position on whether or not the entity
should be permitted to invest funds.
11. Section 5 of H.R. 3232 permits the Corporation for
Travel Promotion to borrow up to $10 million from the Treasury
in order to establish itself. This loan would be subject to an
interest rate meant only to help the Treasury recoup losses on
the loan due to the effects of inflation. Instead of this rate,
do you believe that the prevailing rate of interest should be
charged to the Corporation, as with any other loan, so that the
Treasury can earn money on its investment? Please explain your
opinion.
TIA supports the language included in Section 5 of H.R.
3232 which guarantees that the reimbursement of the $10 million
loan include interest at a rate determined by the Treasury to
ensure that there is no loss of real purchasing power to the
Treasury. While we do not have a position on whether that rate
of interest should change, we believe the current structure
will allow Treasury to receive a significant return on
investment on these funds. As mentioned in a previous question,
Oxford Economics estimates that a moderately effective U.S.
travel promotion program would have a 35:1 return on spending
and a 6:1 return on tax revenues.
12. Building on the last question, section 5 of H.R. 3232
also stipulates that the initial loan from the Treasury to the
Corporation for Travel Promotion must be repaid within five
years. Section 5 contemplates no penalty for non-repayment of
the loan. What happens if the Corporation fails to repay this
loan in time or worse, defaults? Do you believe that a penalty
should be included in section 5 as a consequence of failure to
repay the loan in time or defaulting on the loan?
TIA would support inclusion of legislative language in
Section 5 that would improve the accountability for the
repayment of the $10 million Treasury loan either through a
formalized repayment system or a penalty for failure to repay
the loan.
13. Data from the Department of Commerce's International
Trade Administration show that international arrivals in the
United States have steadily increased since 2007. An entry fee,
such as the one proposed by H.R. 3232, may serve as a further
disincentive for visitors to come to the United States, thus
possibly reversing this trend. Do you think this is accurate?
Please explain your opinion and provide supporting evidence.
While total overseas travel to the United States has
steadily increased since 2007, "overseas" travel which excludes
Mexico and Canada is actually down 8 percent from 2000. This is
an important distinction because overseas visitors spend an
average of $4,000 per trip while, the average Canadian and
Mexican visitor spends an average of $1,200 per trip. As
America's economy slows, overseas visitors are a greater
stimulant - driving spending, creating jobs and producing
billions of tax dollars for localities, states and the federal
government. Furthermore, before 9/11, the United States
traditionally welcomed more overseas visitors than North
American visitors.
Clearly, the travel community would not endorse a fee on
international travelers if it thought it would lead to a
decline in travel. To the contrary, experience and research
demonstrate that a fee-funded program will have a significant
return on investment. A 2007 study by Oxford Economics shows
that a modestly funded nationally coordinated travel promotion
campaign, combined with visa and entry reforms enacted last
year by Congress, would attract 1.6 million new visitors per
year, yielding $8 billion per year in new visitor spending and
$850 million per year in new federal tax revenues.
Furthermore, the travelers from visa waiver countries who
would pay the fee are avoiding the expense ($131) and the
enormous inconvenience associated with obtaining a visa. A
nominal $10 fee on travelers who, on average, spend $4,000 per
person to visit the United States is a reasonable and
affordable convenience charge. Lastly, other countries with
fees and travel promotion campaigns have continued to see an
increase in international arrivals. Please see the chart below:
[GRAPHIC] [TIFF OMITTED] T2207.135
14. Do you think that the duties assigned by H.R. 3232 to
the Corporation for Travel Promotion, such as spreading
information abroad about U.S. entry requirements and generally
promoting tourism, could be performed by already-existing U.S.
agencies? If not, please explain why.
The Travel Promotion Act blends the best of both worlds -
public sector policy expertise and accountability with private
sector marketing expertise and execution.
While individual government agencies are doing what they
can with their existing budgets to develop communication plans
about new and changing security policies, and to increase
travel, the reality is that most do not have the necessary
dedicated resources and expertise to communicate security
changes for each new and evolving program or to counter the
misperceptions about the entry process that confuse and
discourage travelers. H.R. 3232 creates a mechanism to dedicate
significant resources (without increasing U.S. taxes) for a
well-funded, nationally coordinated travel promotion program.
This public-private partnership model has garnered strong
bipartisan support from Congress because it seeks to utilize
both the government and the private sector.
15. The Corporation for Travel Promotion's board would be
made up of representatives from the tourism and travel
industry. One of the main duties of the Corporation would be to
spread information about U.S. entry policies abroad. Should the
Corporation's board be expanded to include someone competent in
immigration issues, for example a representative from the
American Immigration Lawyers Association?
The goal of the Corporation for Travel Promotion is to
share information with short-term, non-immigrant visitors
traveling to the United States for business, pleasure and other
temporary purposes. TIA encourages experts from the Departments
of Homeland Security and State to provide counsel and guidance
to the Board in the areas of visa and immigration policy. While
we believe the current structure will include individuals
competent in these areas, TIA is not opposed to the inclusion
of an individual whose primary expertise is immigration.
16. Because the Corporation for Travel Promotion would deal
with issues that touch upon the jurisdiction of several Federal
agencies, including the Departments of Commerce, Homeland
Security, State, and Treasury, do you believe that those
agencies also should have oversight authority over the
Corporation?
Yes, and these agencies and others that either have
jurisdiction over travel entities or provide programs or
services relating to international travel are members of the
Tourism Policy Council. This Council will consult on a regular
basis with the Corporation for Travel Promotion in order to
provide timely information and expertise to better inform the
communications and promotion activities of the Corporation.
17. H.R. 3232 would update the membership of the Tourism
Policy Council (TPC), an interagency body that seeks to ensure
that U.S. policies and programs facilitate and enhance travel
to the United States. Do you believe that including the
Corporation in the TPC would give a private sector organization
a unique and inappropriate position among government agencies
responsible for the development of public policy?
The Tourism Policy Council (TPC) was created well before
the events of September 11, 2001, and its mission and work
should appropriately evolve to meet the new challenge of
balancing border security with international travel
facilitation. By including the Corporation in the TPC, it
affords the Corporation the opportunity to exchange information
with all the appropriate federal agencies in order to ensure
the success of the communications and promotion programs - and
vice versa. H.R. 3232 simply formalizes a long tradition of the
TPC to seek counsel from outside experts and dialogue with the
travel community.
Questions Submitted by Hon. Ed Whitfield
1. The Corporation receives a $10 million loan from the
Treasury for initial startup costs. How will the Corporation
generate funds to repay the loan? Will the Corporation have
revenues?
The Corporation staff will lead an effort to raise money
from the private sector, and entities such as the Travel
Industry Association and other private sector partners will
play an active role in supporting such efforts. Funds raised
will be used to match dollars generated by the ESTA-related
fee, but the federal government is not obligated to contribute
any money unless the private sector first produces funds to be
matched.
2. The budget of the corporation could reach $200 million
by the third year. How will money be used? What are the
preliminary cost estimates for services necessary to fulfill
the goals of the corporation?
The activities of the corporation will be governed by the
board of directors established by the Act. A survey of other
large-scale national travel promotion campaigns conducted by
the consulting firm Brand Architecture International suggests
those programs spend 40-50 percent of their budget on
advertising, 2-4 percent on market research, 10-15 percent on
providing practical travel information, including information
on security and entry policies, 2-3 percent on providing
information via the Internet, 15 percent on fairs, trade shows
and workshops, and the balance on miscellaneous other
activities.
The government of Australia, with a population one-
fifteenth of that of the United States, spends more than $100
million (U.S. dollars) per year on overseas travel promotion.
The Australian travel promotion effort is a successful one and
serves as a good benchmark for a minimum level of effort on the
part of the United States.
3. What portion of the Corporation's budget will be
required to pay salaries and expenses?
The Board of the Corporation will be responsible for hiring
staff and setting salaries. Accountability measures in the bill
require the Corporation to submit a report with a comprehensive
and detailed inventory of amounts obligated or expended by the
Corporation during the preceding fiscal year to the Commerce
Secretary and Congress. Furthermore, the Corporation must also
submit a copy of its forthcoming budget to the Commerce
Secretary together with an explanation of any expenditure
provided for by the budget in excess of $5,000,000 for the
fiscal year. Finally, the Corporation shall make its budget
information available to the public and shall provide public
access to the budget and explanation on the Corporation's
website.
4. What mechanisms are there to ensure the private sector
fulfills its matching funds requirement?
Section 5 of H.R. 3232 requires that no funds be made
available for travel promotion until non-Federal sources have
provided an amount in the aggregate equal to 50 percent or more
of the funds made available from Federal Sources. In subsequent
fiscal years, non-Federal sources must provide an amount equal
to 100 percent of the amount made available from Federal
sources.
The private sector will be motivated to contribute matching
funds by their desire to see a nationally coordinated promotion
campaign succeed, the leverage they will achieve by
participating in the campaign and the ROI they will receive (in
the aggregate) for their contributions.
The benefits of increased international travel to the
United States are too great for the private sector to ignore.
5. Under the legislation, the corporation can use up to 80%
of in-kind goods and services from industry for its required
matching funds. What type of goods and service do you
anticipate will be provided that could total $80 million
dollars per year?
As the private sector component of the Corporation for
Travel Promotion is funded entirely on voluntary contributions,
it is important to provide contributors with a variety of ways
to support promotion activities. Examples of extremely valuable
in-kind contributions include:
Television, radio and/or print advertising time/
space;
Material and/or advertising production;
Travel costs for journalists on "familiarization"
trips; and
Provision of paid consultants or staff to offer
counsel to the Corporation.
Permitting significant in-kind contributions (80%)
increases the likelihood of a successful travel promotion
program by:
Enabling broader (beyond the travel industry) and
deeper private sector support;
Lessening the Corporation's dependency on budget
cycles or strong economic times in order to access cash
contributions; and
Unlocking greater matching funds thereby enhancing
the depth and breadth of America's travel promotion efforts.
In order to provide a fair mechanism for determining the
value of in-kind contributions, the Board of Directors of the
Corporation could be required to provide the Secretary of
Commerce with market value determination procedures that (a)
define market value, and (b) provide an independent mechanism
of valuing all donated goods and services.
6. How will the corporation ensure that its matching fund
obligation is honored fairly among all the interested parties?
All contributions to the Corporation for Travel Promotion
are completely voluntary. There is no obligation to contribute
or ensure that contributions are "fairly" distributed among
entities.
7. Is there a penalty for private sector entities that fail
to contribute to the annual private sector matching fund?
The funds raised by the private sector for purposes of
financing the Corporation for Travel Promotion are purely
voluntary in nature; it would not be appropriate or legal for
there to be penalties assessed on specific travel organizations
that does not contribute. Knowing that if the U.S. had kept
pace with global overseas travel since 2001, it would have had
an additional 46 million visitors, $140 billion in visitor
spending, $23 billion in tax receipt is proper incentive for
the private sector to contribute to the travel promotion
program.
Question Submitted by Hon. Cliff Stearns
1.In your opinion, to what extent, if any, will the
initiation of a fee (tax) on foreign travelers from Visa Waiver
Program countries have on the Corporation's attempt to improve
America's image abroad? Do you anticipate a negative reaction?
The best mechanism the United States has for improving its
image in the world is by increasing the number of international
visitors to our country. A study by the Discover America
Partnership revealed that those who have visited the United
States are 74% more likely to have a favorable opinion of the
country. A travel promotion program is imperative to welcoming
more visitors to the country.
Clearly, the travel community would not endorse a fee on
international travelers if it thought it would lead to a
decline in travel. To the contrary, experience and research
demonstrate that a fee-funded program will have a significant
return on investment. A 2007 study by Oxford Economics shows
that a modestly funded nationally coordinated travel promotion
campaign, combined with visa and entry reforms enacted last
year by Congress, would attract 1.6 million new visitors per
year, yielding $8 billion per year in new visitor spending and
$850 million per year in new federal tax revenues.
Furthermore, the travelers from visa waiver countries who
would pay the fee are avoiding the expense ($131) and the
enormous inconvenience associated with obtaining a visa. A
nominal $10 fee on travelers who, on average, spend $4,000 per
person to visit the United States is a reasonable and
affordable convenience charge. Lastly, other countries with
fees and travel promotion campaigns have continued to see an
increase in international arrivals. Please see the chart below:
[GRAPHIC] [TIFF OMITTED] T2207.135
----------
Patrick Long, Responses to Question from Hon. Bobby L. Rush
This current discussion of federal tourism policy and the
appropriate role of the federal government specific to tourism,
as well as the questions below, in my mind fall into the
categories of function, structure, and funding. In absence of a
federal office that would provide oversight of all federal
tourism functions and coordinate all federal programs that
support tourism and which could be the public partner in any
comprehensive public-private partnership, the debate centers
around if and how best, to craft a private-sector promotional
program, how to fund it, and how to position it for oversight
within the Federal system..
With any proposed promotional program such as the one being
considered there will be differences of opinion and hopefully,
healthy debate. It appears in this case that such is happening
although already substantial support has been shown for this
legislation with 236 members of Congress signing on as co-
sponsors. H.R. 3232 does not propose a federal tourism office;
its scope is narrowed to a travel promotion component. But,
sanction and oversight from the federal government is still
necessary for this promotional effort in order to insure a
funding mechanism sufficient to make the whole effort
worthwhile as well as to ensure the integrity of its
implementation.
Tourism is clearly an important economic engine for the
U.S.-at all levels of geo-political jurisdictions. In most
cases, state governments have found a mechanism to allow for
the expenditure of public funds for the management and
promotion of tourism; they typically do so within the framework
of a designated state office. The questions you have posed
below are important and thoughtful questions; hopefully they
can be resolved within the available timeframe.
1. Were previous government tourism advertising campaigns
effective? Please explain why or why not.
There have been a number of effective international
advertising campaigns, particularly the "America! Catch the
Spirit" effort in the mid 80's under the then, USTTA. The
existence of the international regional offices to support
tourism provided additional support. States like Illinois and
Florida and cities like Chicago and Las Vegas seem to find
acceptable return on their advertising dollars.
2. Does advertising directly affect the level of
international arrivals in the United States? Are there any
studies or data to support this conclusion? (The Subcommittee
is aware of the 2007 study published by Oxford Economics. Did
the Travel Industry Association commission this study?)
I am not familiar with the Oxford Economics study but the
most acceptable government sources for data on this matter seem
to come from the Bureau of Economic Analysis and the OTTI. It
would be best to ask them to conduct a trend analysis on
arrivals and match that with factors which have affected these
arrivals.
3. According to a 2005 Congressional Research Service
report, there are five main criticisms of having the Federal
government involved in tourism, including:
Private industry can pay for it on its own;
The U.S. is already a top international tourism
destination;
Advertising tourism will do little to reduce the
U.S. trade deficit;
Visits to the U.S. have been climbing for years;
and
Little evidence exists that advertising affects
tourists' destination preferences, which are instead motivated
by macro-variables, such as exchange rates.
How do you respond to these criticisms?
I would question whether visits to the US have been
climbing for years as available data indicates a steady decline
from 2001 to last year. Arrivals to my knowledge have improved
percentage-wise recently but that is calculated off a declining
number. Many major US industries (e.g. agriculture, forestry,
manufacturing, fishing, energy) receive some type of government
support/investment and have some type of public-private
partnership even though they do not have the positive balance
of trade results that tourism can report. It is not quite clear
why the hesitation by congress to support the tourism industry
in some minimal fashion. Suggesting that the exchange rate is
the only force that affects arrivals does not take into
consideration that the tourism research literature seems to
indicate an effective marketing (not simply advertising)
program can make a difference. Canada and New Zealand both
appear to have effective public-private funding models which
should be analyzed in light of our country's needs.
4. H.R. 3232's findings note that the recent tightening of
entry requirements to the United States has reduced the growth
rate of international visits. If this is the case, why not
focus our initial tourism promotion efforts on reform of entry
requirements and procedures instead of chartering a non-profit
advertising campaign?
A multiple prong approach here would seem to make sense as
with many situations. Making it efficient and easier to enter
the US is an important step; in addition, regularly reminding
potential travelers that we have an incredible array of
products and services would seem to make for a nice combined
effort.
5. How does H.R. 3232 guarantee that all parts of the
United States will benefit from increased tourism, not just
popular destinations like Washington, D.C., and New York City?
Put another way, advertisements must target a particular
location. How does H.R. 3232 ensure that places like
Williamston, N.C., and Milledgeville, Georgia, are mentioned in
tourism promotion advertisements by the Corporation for Travel
Promotion?
There is no guarantee at this point and that should be a
consideration in crafting this bill. Options might include a
geographically-balanced regional distribution of the proposed
corporation board or a balance of representation of small,
medium and large tourism entities. It could be that national
travel regions or themes be identified each year (rural,
cultural, sports, family, etc.). I personally feel there needs
to be representation of truly rural-based communities on this
board, not simply recognized, although smaller, high end resort
destinations. The reality is that if those who are the
potential private sector large financial supporters do not feel
represented on this proposed corporation board and thus not
feel they have an active voice, it could be a deterrent to
their full participation.
6. Section 5(b) of H.R. 3232 establishes a travel promotion
fund to partially fund the Corporation for Travel Promotion.
This section caps annual transfers from the fund at $100
million. Why was this level chosen? Why not, for example, a
level of $50 million?
I am not aware why the $100 million figure was selected but
suspect whoever chose that figure thought it was reasonable in
light of the amounts being spent by our competitors, both close
and distant. That amount is not unreasonable, particularly if
the revenue projections from the visa waiver fee can support
this level of funding. This figure can be adjusted at some
later point depending upon emerging factors or new information;
a sliding scale might even be considered which could be
implemented over time.
7. Section 5(c) requires the Corporation for Travel
Promotion to contribute matching funds annually to those
transferred to it from the travel promotion fund established in
section 5(b) of the bill. Furthermore, section 5(c)(2) permits
the Corporation to make up to 80 percent of its matching
contributions in the form of goods and services, whose fair-
market value the Corporation would determine. I am concerned
that this would be incentive for the Corporation to overvalue
its in-kind contributions in order to contribute less in
overall matching funds. What is your opinion of lowering the 80
percent level of in-kind contributions (to perhaps 20 percent)
and directing a Federal agency (e.g., the Department of the
Treasury) to determine the value of those contributions instead
of the Corporation?
To maintain integrity with taxpayers it probably is best to
have a third-party determination or a designated government
agency make this call. Such oversight also might deter a bit
the criticism that any geographically dominant major tourism
company or destination would only be thinking about its
immediate region in determining its level of donation whether
cash or in-kind. The industry would appear to be receptive to
an adjustment of the balance of in-kind and cash contributions.
8. H.R. 3232 institutes a new fee for foreign travelers who
use the Electronic System of Travel Authorization, a federally
administered program. Such a fee would arguably constitute
Federal revenue and therefore be property of the American
taxpayer. This being the case, do you believe that using these
fees to fund the Corporation is an outlay of Federal revenue
and therefore a cost to the American taxpayer?
The argument can be made that this effort is funded by new
dollars generated by non-US residents but if such revenue flows
through a government agency that should be acknowledged and
dealt with appropriately for the integrity of the process. If I
am correct, all 50 states have publicly funded tourism
marketing programs and these programs and the manner in which
they are publicly funded, seem to be acceptable. One should be
thoughtful how a financial audit would present this and how
such would be interpreted.
9. Section 5(b)(2) of H.R. 3232 permits the Secretary of
the Treasury to transfer monies from the travel promotion fund
to the Corporation for Travel Promotion at least quarterly. As
these funds would come from in the form of fees required of
foreign travelers by a federally administered program, namely
the Electronic System for Travel Authorization (ESTA), should
these transfers be subject to the annual Congressional
appropriations process? Please explain your opinion.
I am not familiar enough with the appropriations process
in this case to respond to this question. The guide here should
be maintaining full integrity of the process and full
disclosure in whatever decision is made. There is too much at
stake for this program to appear that it is not fully above
board.
10. Section 7 of H.R. 3232 permits the Corporation for
Travel Promotion to invest funds it has received. Some of these
funds would come in the form of transfers from the travel
promotion fund, which would be funded by fees assessed to
foreign visitors who use the Electronic System for Travel
Authorization. It is likely that the Corporation would be able
earn extra income from these investments and thereby have
control of more funds than would otherwise have been
transferred to it by the Treasury. It is also possible that the
Corporation could lose money in its investment - money, it
should be reiterated, that partially comes from the Treasury.
This being the case, why should the Corporation be permitted to
invest funds it has received from the Federal government?
Second, would this authority to invest circumvent control that
the Treasury might have over the Corporation's budget? Please
explain your opinion.
I see the argument and concern here but not sure how to
recommend this issue be best handled. The issues of investment,
potential losses, oversight authority and penalties take a good
deal more thought than current timing allows. I suppose one way
to handle this would be to deduct any loses from investments
from future yearly allocations.
11. Section 5 of H.R. 3232 permits the Corporation for
Travel Promotion to borrow up to $10 million from the Treasury
in order to establish itself. This loan would be subject to an
interest rate meant only to help the Treasury recoup losses on
the loan due to the effects of inflation. Instead of this rate,
do you believe that the prevailing rate of interest should be
charged to the Corporation, as with any other loan, so that the
Treasury can earn money on its investment? Please explain your
opinion.
Providing a preferential rate of interest makes it more
difficult to justify this whole endeavor to the American
public. If such a rate were provided it would be in the best
interests of the Corporation Board to add to its charge
educating the American public on how international tourist
expenditures positively affect the countries revenue flow,
taxes, business development, etc., both nationally and on a
more local basis.
12. Building on the last question, section 5 of H.R. 3232
also stipulates that the initial loan from the Treasury to the
Corporation for Travel Promotion must be repaid within five
years. Section 5 contemplates no penalty for non-repayment of
the loan. What happens if the Corporation fails to repay this
loan in time or worse, defaults? Do you believe that a penalty
should be included in section 5 as a consequence of failure to
repay the loan in time or defaulting on the loan?
Not quite sure how a penalty would be collected should the
situation arise if payment could not be made in the first
place. The industry will have its reputation on the line here
and I doubt would want the negative publicity that would go
with a "foreclosure" as it would affect any public-private
partnership or support from government for many years to come.
13. Data from the Department of Commerce's International
Trade Administration show that international arrivals in the
United States have steadily increased since 2007. An entry fee,
such as the one proposed by H.R. 3232, may serve as a further
disincentive for visitors to come to the United States, thus
possibly reversing this trend. Do you think this is accurate?
Please explain your opinion and provide supporting evidence.
I do not feel that a fee of up to $10 would be a deterrent
particularly when such fees are common in so many other
countries we travel to. Regarding the increase in 2007 of
international arrivals, after so many years of decline, one
year "doth not a trend make".
14. Do you think that the duties assigned by H.R. 3232 to
the Corporation for Travel Promotion, such as spreading
information abroad about U.S. entry requirements and generally
promoting tourism could be performed by already-existing U.S.
agencies? If not, please explain why.
I suppose an agency such as the U.S. Foreign Commercial
Services could do so to some degree where they are located. The
reality is what agency would it be assigned to do this and how
good a job would they do? What potentially could be lost is a
concentrated, targeted, coordinated, sustained effort of
promotion within the context of the travel experience by people
trained and highly motivated to do so. The federal government
does not have a great track record recently of providing such
service and it can so easily become politicized.
15. The Corporation for Travel Promotion's board would be
made up of representatives from the tourism and travel
industry. One of the main duties of the Corporation would be to
spread information about U.S. entry policies abroad. Should the
Corporation's board be expanded to include someone competent in
immigration issues, for example a representative from the
American Immigration Lawyers Association?
I see no reason why not--the number of Corporation Board
members should be dictated by reason and in a manner that
ensures having the best representation to make this whole
effort work. I would argue there needs to be representation
from rural areas which typically attract immigrant workers for
agriculture, landscaping and tourism, and badly need assistance
in the planning, implementation and promotion of their tourism
industry.
16. Because the Corporation for Travel Promotion would deal
with issues that touch upon the jurisdiction of several Federal
agencies, including the Departments of Commerce, Homeland
Security, State, and Treasury, do you believe that those
agencies also should have oversight authority over the
Corporation?
There may be legal reasons that I am not aware of that
would dictate the reporting relationship. Additionally, the
proposed legislation identifies a number of government
departments which I suspect anticipate substantial involvement.
That being said, it becomes increasingly complex the more
departments this corporation would be required to report to. I
would look to the most streamlined but acceptable reporting
process that meets the needs of these various departments. I
suspect there are models in other situations within the federal
government from which to draw from to address this dilemma.
17. H.R. 3232 would update the membership of the Tourism
Policy Council (TPC), an interagency body that seeks to ensure
that U.S. policies and programs facilitate and enhance travel
to the United States. Do you believe that including the
Corporation in the TPC would give a private sector organization
a unique and inappropriate position among government agencies
responsible for the development of public policy?
On-going communication with the major federal agencies
(TPC) is absolutely critical to success but likely could be
accomplished by naming the Corporation to an ex-official member
status.