[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



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?

                    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:]

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    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:]

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    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:]

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    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:]

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    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:]

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    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:]

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    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:]

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    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:]

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    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.
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            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.

                                 
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