[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
IMPACT OF CHINA'S ANTITRUST LAW AND OTHER COMPETITION POLICIES ON U.S.
COMPANIES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS AND
COMPETITION POLICY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
JULY 13, 2010
__________
Serial No. 111-117
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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57-430 PDF WASHINGTON : 2010
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COMMITTEE ON THE JUDICIARY
JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California LAMAR SMITH, Texas
RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, Jr.,
JERROLD NADLER, New York Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina ELTON GALLEGLY, California
ZOE LOFGREN, California BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas DANIEL E. LUNGREN, California
MAXINE WATERS, California DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr., TRENT FRANKS, Arizona
Georgia LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois TED POE, Texas
JUDY CHU, California JASON CHAFFETZ, Utah
TED DEUTCH, Florida TOM ROONEY, Florida
LUIS V. GUTIERREZ, Illinois GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DANIEL MAFFEI, New York
JARED POLIS, Colorado
Perry Apelbaum, Majority Staff Director and Chief Counsel
Sean McLaughlin, Minority Chief of Staff and General Counsel
------
Subcommittee on Courts and Competition Policy
HENRY C. ``HANK'' JOHNSON, Jr., Georgia, Chairman
JOHN CONYERS, Jr., Michigan HOWARD COBLE, North Carolina
RICK BOUCHER, Virginia JASON CHAFFETZ, Utah
CHARLES A. GONZALEZ, Texas F. JAMES SENSENBRENNER, Jr.,
SHEILA JACKSON LEE, Texas Wisconsin
MELVIN L. WATT, North Carolina BOB GOODLATTE, Virginia
MIKE QUIGLEY, Illinois DARRELL ISSA, California
DANIEL MAFFEI, New York GREGG HARPER, Mississippi
JARED POLIS, Colorado
Christal Sheppard, Chief Counsel
Blaine Merritt, Minority Counsel
C O N T E N T S
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JULY 13, 2010
Page
OPENING STATEMENTS
The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in
Congress from the State of Georgia, and Chairman, Subcommittee
on Courts and Competition Policy............................... 1
The Honorable Howard Coble, a Representative in Congress from the
State of North Carolina, and Ranking Member, Subcommittee on
Courts and Competition Policy.................................. 2
WITNESSES
Mr. Shanker A. Singham, Partner, Squire Sanders, LLP, on behalf
of the United States Chamber of Commerce, Washington, DC
Oral Testimony................................................. 4
Prepared Statement............................................. 6
Mr. Tad Lipsky, Partner, Latham & Watkins, LLP, Washington, DC
Oral Testimony................................................. 18
Prepared Statement............................................. 20
Ms. Susan Beth Farmer, Professor of Law, Pennsylvania State
University, Dickinson School of Law, University Park, PA
Oral Testimony................................................. 27
Prepared Statement............................................. 29
The Honorable Thomas O. Barnett, Partner, Covington & Burling,
LLP, former Assistant Attorney General of the Antitrust
Division, United States Department of Justice, Washington, DC
Oral Testimony................................................. 39
Prepared Statement............................................. 42
APPENDIX
Material Submitted for the Hearing Record........................ 71
OFFICIAL HEARING RECORD
Material Submitted for the Hearing Record but not Reprinted
Submission entitled: Symposium, Fourth Annual Latin American Round
Table on Competition & Trade, Barriers to Entry in Mexican
Telecommunications: Problems and Solutions This submission is
available at the Subcommittee and can also be accessed at:
http://www.brooklaw.edu//media/PDF/LawJournals/BJI_PDF/
bji_vol27i.ashx
IMPACT OF CHINA'S ANTITRUST LAW AND OTHER COMPETITION POLICIES ON U.S.
COMPANIES
----------
TUESDAY, JULY 13, 2010
House of Representatives,
Subcommittee on Courts and
Competition Policy
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 4:10 p.m., in
room 2237, Rayburn House Office Building, the Honorable Henry
C. ``Hank'' Johnson, Jr. (Chairman of the Subcommittee)
presiding.
Present: Representatives Johnson, Jackson Lee, and Coble.
Staff Present: (Majority) Christal Sheppard, Subcommittee
Chief Counsel; Eric Garduno, Counsel; Rosalind Jackson,
Professional Staff Member; (Minority) Stewart Jeffries,
Counsel; Tim Cook, Staff Assistant; and John Mautz, Legislative
Director.
Mr. Johnson. The hearing on the impact of China's Antitrust
Law and Other Competition Policies on U.S. Companies will now
come to order. And without objection, the Chair is authorized
to declare a recess. We have called this hearing because there
is concern within the U.S. business community that China's new
anti-monopoly law, AML for short, might be applied or
interpreted in a discriminatory manner. The net effect of this
would weaken the ability of U.S. companies to compete in China.
If this is happening, it would contribute to the uneven balance
of trade we already have with China and ultimately lead to more
American jobs shipped overseas.
China is a sovereign nation entitled to design its laws the
way it wants. At the same time it is unfair for Chinese
companies to benefit from our antitrust laws which do not
discriminate against them, while at the same time, applying
their AML in a discriminatory manner against U.S. companies. In
these troubled economic times, we must be vigilant in ensuring
U.S. companies and entrepreneurs are not discriminated against,
particularly in markets as big and important as China. This is
why Congress and the Administration have given so much
attention to examining a variety of Chinese economic policies,
including its currency valuation, intellectual property
enforcement and indigenous innovation rules.
We today are adding to this effort by focusing upon China's
anti-monopoly law. The results regarding the AML that have been
expressed to date and which our witnesses will focus on include
the seemingly uneven application of the merger review
requirement, the potential for the abuse of dominance
provisions to encompass normal business activity and the
ambiguity in how the AML's abuse of intellectual property
provision will be applied. Our witnesses will also focus upon
the status of State-Owned Enterprises, SOEs, under the AML. I
understand that up to 50 percent of China's GDP comes from SOEs
and that generally China's SOEs operate as commercial entities
like the Verizons and Fords of the world rather than, say, a
state run utility. I think it is important that the AML is
applied to China's SOEs like any other businesses, though I am
told this is not the case. I look to the witnesses today to
verify this and for them to elaborate on how SOEs and the
concept of a planned economy fit into the antitrust regime. I
also want to note that I am planning to lead a congressional
delegation to China during the August recess to see firsthand
various aspects of how the Chinese competition laws and their
enforcement affect American business.
I am very much looking forward to the trip and the
opportunity to interface with Chinese competition policymakers
on these issues. Lastly, while it is important that China
establish a level playing field with regard to its antitrust
laws it should also be mentioned that the AML is brand new. The
Chinese should be commended for updating their antitrust law.
This is a positive development for all businesses in China,
both Chinese and foreign. And an important step as China
becomes a key player in international economic relations.
Because the AML came into effect less than 2 years ago, the
Chinese government is still developing and implementing
regulations for most of the AML's provisions. That is why at
present I see no reason to start ringing bells over the AML.
Nevertheless, we must keep our attention on how China goes
about applying and enforcing the AML. I also think we should
make it a priority to continue working with the Chinese to
ensure discrimination based upon country of origin and the
closing off of the Chinese market to American businesses does
not occur. To this end, I hope the witnesses can provide
constructive advice on how best to engage Chinese policymakers
to ensure that the AML isn't applied in a discriminatory
manner. I will now recognize my colleague, Howard Coble, the
distinguished Ranking Member of the Subcommittee, for his
opening remarks.
Mr. Coble. Thank you, Mr. Chairman, for calling the
hearing. Good to have our panel of witnesses with us today. Our
trade philosophy is that the United States can and should
compete in the global market. By opening trade and competition
with other countries, those countries have a new opportunity to
prosper economically and build new long lasting relationships
that are driven by mutual interests. We have benefited from our
trade with China, but we have also experienced some serious
difficulties, mainly job losses. While I firmly believe, Mr.
Chairman, that the United States can compete with any country,
this only applies if there is a level playing field. That means
the equivalent rules and standards and ensuring matters such as
product safety, accurate currency rates, rights and protections
for workers, intellectual property protection and enforcement,
environmental protection, nuclear nonproliferation and most
importantly human rights are paramount. The United States and
China have engaged in a constructive dialogue for nearly 3
decades. We have not always agreed but we work through our
disagreements to forge a strong relationship it seems to me.
During this time, China has moved from a state controlled
economy to an economy and society that reflect mutual interests
embodied in its trade policies.
In North Carolina, trade with China has had a significant
impact. Many of our textile plants sit empty and many other
products including furniture that were once manufactured in our
district are now either a symbol or shipped to North Carolina
retail stores from China. North Carolina is rebuilding and
retooling, but we also need a level playing field where we can
compete against other countries, not unlike China.
To that end, we have the opportunity today to discuss
competition policy in China and how it impacts the United
States. The United States was the first country to codify a
competition law, the Sherman Antitrust Act of 1890. Since that
time, over 100 nations have implemented some form of
competition act. These laws have the potential to lower prices
and increase innovation for products and services around the
globe but if they are implemented improperly, they can unfairly
benefit comic companies at the expense of foreign rivals.
In 2007, China, as you pointed out, Mr. Chairman, adopted
the Anti-Monopoly Law. While the AML bears all the hallmarks of
a modern competition statute, we have yet to see how it will be
implemented. I look forward to hearing from our panel of
witnesses today about the potential of the AML. I am also
interested to learn what more Congress and the Administration
can do to ensure that China can benefit from our experiences
developing competition policies. A sound and effective
competition policy is in our mutual interest in seems to me.
And I am hopeful that today's hearing will help us understand
China's AML and why it is in our mutual interest. I yield back
the balance of my time, Mr. Chairman.
Mr. Johnson. Thank you, Mr. Coble. Without objection, any
other Members' opening statements will be included in the
record. And at this time, I am now pleased to introduce the
witnesses for today's hearing.
Our first witness is Mr. Shanker Singham, a partner at
Squires Sanders law firm where he specializes in antitrust and
international trade law, including WTO and market access
issues. Mr. Singham is speaking on behalf of the global
regulatory cooperation project of the U.S. Chamber of Commerce.
Mr. Singham is also the chairman of the International
Roundtable on Trade and Competition Policy. Welcome, sir.
Our next witness is Mr. Tad Lipsky, a partner at the law
firm of Latham & Watkins where he specializes in U.S. and
international antitrust and competition law. I also want to
note that from 1992 through 2002, he served as the chief
antitrust lawyer for the Coca-Cola company, a company which is
close to my heart. And welcome, sir.
Next we have Professor Susan Beth Farmer, a professor of
law at Penn State's Dickinson School of Law where she teaches
courses in American and comparative antitrust law. She was also
a Fulbright scholar in 2008 at the University of International
Business in Economics in Beijing, China, where she researched
and studied the Chinese legal testimony, particularly the AML.
Welcome.
And last but not least, we have Mr. Thomas Barnett, a
partner at the law firm of Covington & Burling where he
specializes in global antitrust and competitive law. From 2005
through 2008, he was the assistant attorney general of the
Antitrust Division of the United States Department of Justice.
I want to thank you all for your willingness to come and
participate in today's hearing. Without objection, your written
statements will be placed into the record and we would ask that
you limit your oral remarks to 5 minutes. You will note that we
have a lighting system that starts with the green light and in
4 minutes it goes to yellow and then in 5 minutes red. After
each witness has presented his or her testimony, Subcommittee
Members will be permitted to ask questions subject to the 5-
minute limit. Mr. Singham, please begin.
TESTIMONY OF SHANKER A. SINGHAM, PARTNER, SQUIRE SANDERS, LLP,
ON BEHALF OF THE UNITED STATES CHAMBER OF COMMERCE, WASHINGTON,
DC
Mr. Singham. Chairman, Members of the Subcommittee, I am
honored by the opportunity to address you today on the subject
of China and competition policy on behalf of the U.S. Chamber
of Commerce. As we noted in our written testimony, China's
transition to a market economy where competition on the
business merits is the norm continues to be a challenging one.
It should not surprise anyone given the history, but China's
attempts to move in this direction should be applauded.
However, there are some systemic issues that the U.S.
Government must consider in developing a responsible approach
to China and its transition. First, China's transition is not
yet complete. And there are profound challenges in the
operation of a competition agency embedded in an economy that
has not yet fully accepted competition policy as a normative
organizing principle. In these cases, there is a danger that
competition agencies may become another tool in the hands of an
industrial policy focused government to distort markets rather
than to ensure their competitiveness. We have seen evidence of
a number of policies, such as compulsory licensing in China's
new patent law and China's indigenous innovation policies that
are focused on skewing the marketplace away from business
competition on the merits and toward preferring certain
technologies and certain firms. China's competition law, the
AML, will not operate in isolation. Indeed it would not be
surprising if China's competition agencies were used to achieve
some of the industrial policy goals that some of the more
recent developments in intellectual property and indigenous
innovation are intended to express.
While we generally applaud the development of the
competition law in China, which is a significant part of
China's transition to a market economy, we note that in the
unique market that is China, there remain concerns as to
whether the AML will deliver on its goal of ensuring that firms
of all nationalities operating in China will find a competitive
marketplace there. We have summarized these concerns in our
written testimony and they are broadly one. Will China's state-
owned enterprises as well as its state privileged private firms
be subject to the same disciplines as other private
enterprises?
The AML, as written, suggests differential treatment will
be applied and this will lead to anti-competitive market
distortions. Currently, China is forcing a number of
administrative mergers without competition review to better
position certain China SOEs in the market.
Two, will China use its AML to erode intellectual property
rights of U.S. and other foreign firms in order to give
advantage to that China competitiveness? Based on the revisions
to the patent law which increase the scope for the use of
compulsory licensing and other methods of technology transfer,
as well as China's recent indigenous innovation policy, this
danger is real.
Three, is there a danger that China will rely on
discredited antitrust doctrines to promote industrial policy
goals in the areas of merger control and unilateral conduct by
giving greater weight to the welfare of competitors as opposed
to consumers. Of particular concern is the use of discredited
doctrines to build an anti-competitive approach to refusals to
deal at essential facilities that would be completely outside
the mainstream of international best practice. The type of
analysis that the Chinese competition agencies are pushing with
respect to unilateral conduct in particular, which involves
branding certain firms dominant and then severely restricting
their scope of action is very problematic.
In response to this concern, the U.S. Government should be
careful and consistent in its own messaging on domestic policy
as only departure from consumer welfare and business
competition on the merits however slight will likely be seized
on by China to justify its own policy. Four, there is concern
about China's approach with respect to activates in both public
and private sector where cartels formed in China have
significant impacts on U.S. and other foreign markets. We
believe as we make clear in our written testimony that all of
the distortions referred to above some of which may emanate
from the application of the AML have some which come from other
laws and policies are anti-competitive market distortions,
ACMDs which incidentally are not necessarily unique to China.
But in China, these affect both U.S. firms, as well as Chinese
consumers in the Chinese economy. It is, therefore, in both the
interests of the U.S. and China to limit ACMDs and we suggest
in our written testimony ways in which this can be done.
To summarize, one, we suggest a new intra-agency process
built around ACMDs. This process would involve key stakeholders
in the U.S. Government that have vested interest in their
reduction, as well as sound application implementation and
enforcement of the AML. We suggest this group report to
Congress on the competition effects of ACMDs. We suggest
evaluation of the potential for international agreements on
ACMDs and we support the excellent technical assistance
programs that the FTC and DOJ already provide to recognize the
fundamental reality in the Chinese market. In summary, we are
very willing to help the Committee as it tackles this subject
and we can respond to any questions the Committee has.
Mr. Johnson. Thank you, Mr. Singham. Next, Mr. Lipsky,
please.
[The prepared statement of Mr. Singham follows:]
Prepared Statement of Shanker A. Singham
__________
TESTIMONY OF TAD LIPSKY, PARTNER, LATHAM & WATKINS, LLP,
WASHINGTON, DC
Mr. Lipsky. Thank you, Mr. Chairman. Thank you very much to
the Subcommittee for this opportunity to appear. Shanker in his
written testimony and in his brief oral statement, has just
summarized the matter very effectively and it is also obvious
from your own introductory statements that the level of
knowledge you have about the development of the AML and the
current situation we are in is already pretty well developed.
We agree that the law is new and many of the potential problems
have been identified are largely questions of implementation
and I would identify myself very strongly with the Chairman's
statement that we need to--I don't recall his exact words, but
the feeling was we need to continue and intensify our
engagement with the Chinese agencies and the Chinese officials
who concern themselves with antitrust enforcement in China and
who develop policy. And Congressman Coble, you have asked the
very simple question, what can we do?
So let me, in my very brief oral summary of my statement,
try to contribute to that question because I support the idea
of continuing and intensifying our engagement. First, the
United States should have a coherent message about what
antitrust law is all about. We stand, I think, first in the
world in identifying ourselves with the purpose of antitrust
being to encourage competition on the merits, policy that
rewards innovation, efficiency, productivity and
competitiveness to maximize the wealth that our societies can
create with our scarce resources. I think other nations are
either--do not implement or do not implement as effectively
that approach to antitrust, and I think the United States has a
lot to say and why this is a policy that makes sense and why a
failure to unify antitrust policy around the concept of
competition on the merits renders the enforcement of the law
incoherent, unpredictable and susceptible to parochial
influence, ultimately dragging down economic performance and
conflicting with many of the economic and trade goals that you
identified in your opening statements.
So the United States, number one, should be a vigorous
advocate of competition on the merits as the central focus of
antitrust. As Shanker mentioned, this makes it imperative that
the U.S. antitrust agencies conduct themselves with great care
when they present views on issues of antitrust policy to the
business community and the public. The whole world watches
these 100 jurisdictions that now have be antitrust enforcement
when the United States speaks about antitrust because we have
still, by far, the longest and strongest tradition of antitrust
enforcement. When we put forth new ideas, we have to make sure
that great care is taken to make sure that abroad where there
is much less experience with antitrust, things are not taken
the wrong way.
Our current policy discussion on the possibilities of
extending the reach of section 5 of the Federal Trade
Commission Act I submit would stand as an example of how we
might have been a little bit careless in conducting a domestic
dialogue without thinking very carefully about how that
dialogue is heard at foreign antitrust agencies. Once we have a
coherent message, we neat advocacy and we need engagement with
the Chinese agencies as has been mentioned. Shanker mentioned
the possibility of an interagency task force with regard to
China. I support that.
Let me just mention one other idea here in my brief time.
So far as I am aware, even though we rely on our antitrust
agencies to have dialogue with China and other foreign
antitrust agencies, so far as I am aware there is no direct
recognition in the statutes that authorize our antitrust
agencies to act in their organic statutes or in their
appropriation statutes. There is nothing that directly
authorizes them to engage in these activities of having
dialogue with the Chinese officials, nor with the officials of
any other antitrust agency around the world or with the
international organizations that concern themselves with
antitrust policy.
This would be the international competition network, the
competition committee of the OECD and some others that have
been mentioned. There is an excellent recommendation in the
Antitrust Modernization Commission Report that there be some
specific budgetary and recognition and some recognition in the
authority for the agencies so that they are encouraged to
engage because Congress has, in effect--if Congress would, in
effect, certify and approve and fund efforts of this nature, I
think they would feel much more at liberty to be presenting the
kind of dynamic advocacy that I think it sounds like all of us
here recognize is required.
Let me conclude my remarks there. Thank you very much for
the opportunity to appear. And, of course, I will be glad to
answer any questions.
Mr. Johnson. Thank you, Mr. Lipsky.
[The prepared statement of Mr. Lipsky follows:]
Prepared Statement of Tad Lipsky
__________
Mr. Johnson. Next, Professor Farmer.
TESTIMONY OF SUSAN BETH FARMER, PROFESSOR OF LAW, PENNSYLVANIA
STATE UNIVERSITY, DICKINSON SCHOOL OF LAW, UNIVERSITY PARK, PA
Ms. Farmer. Thank you. Chairman Johnson and Ranking Member
Coble, I appreciate the invitation to discuss the developments
of the Chinese antitrust law and their effect on American
business. International competition law and enforcement
certainly raises important policy issues and congressional
attention is appropriately focused on these considerations. The
AML, however, is only 2 years old. It went into effect in 2008
and in that short time, three separate agencies have been
organized to enforce the various aspects of the law. They have
issued many rulings, guidelines and procedures and have begun
to investigate and take decisions on individual cases. Of
course, the AML had been in development for more than a decade.
So the 2-year life of the law may understate its actual
development. Importantly, a number of the decisions and the
regulations will affect and have affected American businesses
operating in China. In order to assess the impact of the AML, I
would start with the words of American Justice Oliver Wendell
Holmes. He explained that the life of law has not been logic,
it has been experience and these experiences included the felt
necessities of the time, the prevalent moral and political
theories and intuitions of public policy. He concluded that the
law embodies the story of a nation's development through many
centuries and it cannot be dealt with as if it contained only
the axioms found in a math book.
China's experience shows the difficulties of moving from
theory to law to implementation rules to the construction of
the efficient apparatus for implementation and then finally to
enforcement within a system that has frankly grown far more
quickly than its administrative capacities. Based on that
background, I would like to comment on a few features of the
AML that you both raised as important considerations. First,
the AML considers the same kinds of categories of businesses as
the American Sherman and Clayton Acts. The general prohibitions
concern anti-competitive agreements, monopolization or abuse of
the dominant position and anti-competitive mergers.
However, the AML goes further and because there are Chinese
characteristics to be considered and it has separate sections
on the important category of the Chinese economy state-owned
enterprises and administrative monopolies.
In addition, China has chosen to have three enforcement
agencies enforcing separate sections of the law which however
are not airtight. It is important that they be able to
communicate with each other and that their regulations are both
consistent and transparent. There are some overlaps and there
may be some differences of concern.
Finally, unlike current American policy, Chinese law
explicitly incorporates other noncompetition factors into the
analysis. This is found in Article 1 and Article 4. The
sections on merger control and abuse of dominance regulated by
MOFCOM and the SAIC probably affect American business more than
other of the provisions of the AML. During the first year of
the AML, MOFCOM reviewed 52 transactions. There is no official
statistics available for the second year, but if the review is
moving along at the same pace, the Commission may have reviewed
up to 100 mergers. During the first year, out of the 52
transactions, only one was prohibited and 5 were approved with
conditions. All of these mergers involved one or more American
parties. The abuse of dominance section and the merger control
provision both contain explicit statements that national
security, economic development, noncompetition issues may be
considered in deciding the merger and determining whether or
not a firm with a large share of the market has dominance. This
is a concern. However, it is important to note that both of the
agencies have been busy issuing their own rules and regulations
and SAIC is a good example in that it has issued 2 regulations,
one in 2009 a revision just a few months ago asking for and
receiving comments from American experts, including some
sitting at this table and they were listened to.
So while there are some important differences between the
American antitrust law and the Chinese, it appears that they
are committed to capacity building. And while the development
certainly involves Chinese characteristics, there is a trend
toward viewing antitrust through a lens of consumer welfare
along with the majority of jurisdictions, including the
American. Thank you.
Mr. Johnson. Thank you, Professor Farmer.
[The prepared statement of Ms. Farmer follows:]
Prepared Statement of Susan Beth Farmer
__________
Mr. Johnson. Now, Mr. Barnett.
TESTIMONY OF THE HONORABLE THOMAS O. BARNETT, PARTNER,
COVINGTON & BURLING, LLP, FORMER ASSISTANT ATTORNEY GENERAL OF
THE ANTITRUST DIVISION, UNITED STATES DEPARTMENT OF JUSTICE,
WASHINGTON, DC
Mr. Barnett. Thank you, Mr. Chairman, for the opportunity
to address the Subcommittee on this important topic. I should
say I am testifying in my personal capacity today. I view the
AML as holding great promise. The adoption of this competition
law regime in China is part of the transformation of the
Chinese economy from a centrally directed economy to a market-
based economy and that is a very critical change. My experience
with the AML principally comes from my time as the head of the
Antitrust Division. During that time, we were heavily engaged
with the Chinese officials who are drafting the AML. I spent
time on two trips in Beijing meeting with various senior
Chinese officials as well as many of my staff meeting in
Beijing as well as in the United States. Our impression was
uniform, that the Chinese officials were well informed, open to
exchanging ideas and sincerely focused on crafting a first-
class competition law regime.
They understand what the U.S. Supreme Court has explained.
Our competition laws rest on the premise that unrestrained
interaction of competitive forces yields the best allocation of
resources, lowest prices, highest quality and greatest material
progress. On a closely related point, the U.S. Antitrust
Modernization Commission which this Committee helped to
establish has underscored that regulation or governmental
control can be the antithesis of competition, tending to
preserve monopolies and other noncompetitive market structures.
Accordingly, by reducing barriers to entry and encouraging
investment and innovation, the AML and the market oriented
approach that it represents should promote economic growth in
part by providing greater opportunities for U.S. businesses in
China. With respect to the AML itself, as many people have
noted, the Chinese government succeeded in crafting a
competition law that generally falls within international
norms.
And I would like to think that our consultations made a
difference. They listened to our comments and as various
iterations of the AML came out, they incorporated those
comments and improved the final product. I would particularly
commend the AML for including a prohibition on the use of
administrative powers to create a monopoly or restrict
competition. These are some of the most enduring and harmful
types of restrictions on competition. There are provisions in
the AML which do not necessarily reflect an international
consensus, Professor Farmer has pointed out the three different
agencies. There are also prohibitions on dominant firms
charging too high or too low a price, something that is very
difficult to administer and that can be counterproductive. The
key question as many have noted is implementation. It needs to
be enforced in a way that promotes economic growth with a focus
on efficiency and improving welfare. This fundamental challenge
is as true in China as it is here in the United States and
around the world. The short version is it is too early to tell
how it is being enforced in China.
To take an example that the Chairman pointed out, Article
55 of the AML talks about the right to exercise intellectual
property rights, but also talks about how it can be an abuse
without defining where the line is. That is a line that we are
still looking to see drawn. Our focus, I suggest, should be on
helping the Chinese agencies to implement the law in a
principled and effective manner that will spur economic growth
and which should have the effect of opening opportunities for
U.S. and other businesses operating in China.
Specifically, the U.S. agencies should continue to exchange
ideas and best practices with Chinese agencies, both in general
and in specific enforcement matters. Second, private businesses
operating in China need to ensure their compliance with the
AML, but they should also participate in the policy
discussions. Both the Chinese agencies and the business
community can learn from each other in this process. Third, we
should encourage further agency guidance. Each of the agencies
has been issuing guidance. Indeed the NDRC issued something
today with a call for public comment for which I commend them.
Fourth, we should encourage participation by the Chinese
agencies in international organizations such as the
International Competition Network. That very dialogue can help
promote better practices and convergence. As I said, the AML
holds great promise. If implemented in a manner consistent with
international norms, the AML should provide a win-win-win
situation for all involved including not only Chinese
consumers, but U.S. businesses. Mr. Chairman, thank you for the
opportunity to participate in the hearing.
[The prepared statement of Mr. Barnett follows:]
Prepared Statement of Thomas O. Barnett
__________
Mr. Johnson. Thank you, Mr. Barnett. We will begin
questioning. This question is for all of the panelists. It has
been asserted that China's state-owned enterprises are not
subject to the AML. Do you believe this? Let me ask you this
question also. If China's state-owned enterprises are not
subject to the AML, what recourse, if any, do other countries
have in addressing competitive distortions that are created by
non-application of the AML to state-owned enterprises?
Mr. Singham. Mr. Chairman, I think the application of the
AML to state-owned enterprises, the language could be at best
somewhat ambiguous and at worst there is a direct equivalent
application between private firms and state-owned enterprises.
However, the Chinese agencies do have the right to conduct
competition advocacy directly with state-owned enterprises and
with administrative agencies to promote competitive outcomes,
and I think one of the things that we could be encouraging the
Chinese competition agencies to do is to engage in complete and
effective competition advocacy with state-owned enterprises.
It is certainly important that there is a level playing
field and that competition law apply to state-owned enterprises
as well as private firm, but it is important to note that that
does not necessarily mean that exactly the same antitrust tests
would be applied as between private enterprises and state owned
firms. State-owned firms are revenue maximizers at best. They
are able to sustain low cost pricing for long periods of time.
They gain benefits from their connections to government and
therefore the tests that you might apply would be different and
we would encourage the Chinese agencies to bear that in mind as
they conduct that type of advocacy. But we would certainly
think that it is very important for the agencies to engage in
constructive competition advocacy and that we take advantage of
our technical assistance programs that the FTC and DOJ are
engaged with the Chinese on to stress the importance of
advocacy.
Mr. Johnson. What is the difference between advocacy and
enforcement in this context?
Mr. Singham. The difference is under the law, a different
approach will be applied between private firms and state-owned
enterprises in terms of actual implementation. So what the
Chinese have done through the AML is create a vehicle for the
Chinese competition agencies to directly advocate competition
and advocate pro competitive solutions to state-owned
enterprises. Every country's competition agency ought to be
conducting competition advocacy with respect to domestic
regulation as well as actual state-owned enterprises and so
forth.
Mr. Johnson. But what about enforcement?
Mr. Singham. Well, we certainly would like to see
enforcement both with private firms and state-owned
enterprises. As you pointed out in your opening statement,
China's state-owned enterprises are operating as commercial
companies. In China, they have effects in the U.S. market, they
have effects in third country markets and U.S. firms that are
competing against China state-owned enterprises in China, in
the U.S. and in third-country markets need to have some
assurance that the benefits and privileges that state-owned
enterprises are receiving as a result of their connections to
government do not lead to artificial reductions in cost and
therefore an advantage that does not derive from business
competition on the merits. I should point out that there is a
spectrum of state owned enterprises in China.
You have one extreme, a fully government owned company; on
the other extreme, you have a private firm that simply benefits
from state privileges and tax preferences and so forth. And so
the real problem with respect to state-owned enterprises and
competition in China is the network of anti-competitive market
distortions that benefit certain firms in China and disbenefit
other firms and obviously have been impact on U.S. firms as
well.
So you can't really answer your question without developing
some tools that the U.S. Government would be able to deploy to
deal with these anti-competitive market distortions. Be they
tax distortion, be they special regulatory exemptions, however
the distortion occurs. But we need to develop some tools to be
able to deal with those from a competition perspective.
Mr. Johnson. All right. Thank you, Mr. Lipsky.
Mr. Lipsky. Thank you. I think Shanker has dealt very
effectively with this question. I think a way to consider a way
to think about the problem, think back to the days when our own
aviation air transportation industry was heavily regulated.
There was an administrative agency, the Civil Aeronautics
Board, airlines could not enter a route or leave a route
without the permission of the Civil Aeronautics Board. They
could not merge without permission. They could not make
agreements without permission. As a matter of fact, they
couldn't even have a discussion about a potential agreement
without the permission of the CAB.
In that format, the only thing that was left to the
competition agencies was actually to appear before the Civil
Aeronautics Board and say please allow more competition, allow
prices to be more flexible, allow more carriers to enter and
leave routes.
So this is a very long-term process. We should think of
this as the beginning of a very long road to implement all of
the things that China needs to do to make the full transition
from the legacy of central planning to a competitive economy
that much more resembles the United States, other OECD
jurisdictions. This is why we need to get organized for
advocacy with the Chinese and the same could be said with some
other countries because if you look at all of the steps
necessary for the transition, it not only involves placing more
and more assets and productive activities in private hands,
reducing the involvement of the government, the government
ownership, the government financing, the government management,
the presence of government officials in private firms. That is
a very tall order and a very grand transformation. There is no
silver bullet or magic words we can say. We need to think of
this as a long-term prospect of making the transition complete.
And that would be my recommendation.
Mr. Johnson. So you are pretty much saying just kind of
stay the course, wait and see what develops?
Mr. Lipsky. I don't think I am saying wait. I am saying we
need to ramp up our involvement. We need to ramp up the
dialogue, the commitment, the way that we articulate, the very
good values and economic principles and legal approaches that
are already reflected in our law. I am not saying they
translate directly to the Chinese case. In many respects they
won't. But we need to keep focus on the issue, keep dialogue
with the officials, keep proving to them again and again this
lesson of history that the free market competition is the best
way to get a productive and innovative and progressive economy,
creating benefits for all of the consumers, both the Chinese
and the countries like the United States with which the Chinese
trade. So I guess it would be constant pressure constantly
applied is maybe the way I would put it.
Mr. Johnson. All right. Thank you. Professor.
Ms. Farmer. Thank you. I agree that reducing the state-
owned enterprises is an important goal and China has been
working on that, making slow but some steady progress because
frankly a state owned enterprise may not be as efficient as a
privately owned one.
Mr. Johnson. I am sorry. Would you say the last part?
Ms. Farmer. An SOE may provide large employment, but it may
not be as efficient. There are a couple of tea leaves that we
may be able to read. Just recently, the State Council has
adopted a policy encouraging foreign investment. And since a
number of the large industries are currently state-owned, this
may indicate some opening wedge. State-owned enterprises are
not limited to railroads and public utilities. They include
construction, salt and tobacco. Two recent cases send mixed
messages. There was a private monopolization case filed against
China Netcom. The case was settled in favor of the private
individual. So that suggests that the AML may well apply. On
the other hand, there was a recent telco merger which
apparently was not notified to MOFCOM and the justification was
apparently that the telcos are state-owned enterprises and they
were regulated by the sector regulator. So there is still a
little bit of flux in the system. But I certainly agree with
the other panelists that continued progress on lowering state
ownership would be a positive development.
Mr. Johnson. Does that include state-owned ownership? Does
that include ownership by persons who are in key positions
within various units of Chinese society?
Ms. Farmer. Yes, I think Mr. Singham was quite correct in
explaining that it is a fairly complicated picture. It is not
just ownership by the central government.
Mr. Johnson. Mr. Barnett.
Mr. Barnett. Mr. Chairman, I think it is important to keep
perspective here in that it is quite clear that 2 years ago,
none of these state-owned enterprises were subject to any anti-
monopoly law. Today you have a law that on its face says that
they must comport or operate their businesses in accordance
with the law. And certainly that is a position that the United
States should encouraging to the extent that they are engaged
in commercial enterprises, they should be subject to the same
competition laws as any other commercial enterprise.
From my perspective, though, I am going to dissent slightly
from Mr. Lipsky's predicate, although I agree with his
conclusion. The U.S. Government, I think, to commend it has
been very engaged with the Chinese on this front on a
multiprong effort, everything from the trade folks over at USTR
to the competition agencies, the FTC and the DOJ, as well as
the Department of Commerce, USAID in part working with the
Chamber. There has been an intensive focus on trying to
encouraging the Chinese to explain to them, as Professor Farmer
was saying, these state-owned enterprises, if you protect them,
you are going to protect inefficiency. If you want to promote
and maintain the kind of economic growth that you have enjoyed
for the last 15 years or so, you are going to need real
competition to drive innovation, drive costs down.
And there are officials in China who, I believe, understand
that and who are pushing toward the application of these
competition laws to all entities, including state-owned
enterprises. Is it clear that they have accomplished that yet?
No. And that is why I agree with the conclusion that the U.S.
Government should--and the U.S. business community should
remain very focused on trying to encouraging them in that
direction.
Mr. Johnson. So you believe that they are headed in that
direction. What is your suspicion as to the outcome?
Mr. Barnett. I suspect it is going to be a slow process
that will not an steady process it may well be, you know, 3
steps forward, 1 or 2 steps back. As I think Mr. Lipsky was
pointing out, these are complicated issues. Even in the United
States they are complicated issues. And so in the long run,
though, I believe that you will see more and more of these
state-owned enterprises probably both becoming more private and
in any event more subject to competition law discipline if you
will. And so I am an optimist on this front. But I do think
patience and persistence are called for.
Mr. Johnson. Will that process lead to more individual
freedoms in China?
Mr. Barnett. That is the a fascinating question. There are
certainly many who believe that economic liberty and other
liberties, political liberties often go hand in hand. I guess
what I would focus on is to say if the AML is implemented in
the way it is set up to be implemented, that it will lead to
greater economic liberty, greater material wealth for Chinese
consumers, Chinese citizens and that that is ultimately a good
on multiple fronts. But how it plays out in other realms, I
leave that to other experts.
Mr. Johnson. Anyone care to give an opinion about that?
Mr. Singham. Well, I would agree with Mr. Barnett's comment
there that economic freedom is derived from the kind of
competition policy, competitive marketplace where consumers are
empowered and become real economic actors in their own right.
It doesn't answer the question. It doesn't tell you that this
will lead ultimately to greater freedom measured by other
indicia. But certainly this is a pathway to greater levels of
economic liberty for Chinese citizens and for Chinese firms.
Mr. Johnson. All right. I will now yield to questions from
Mr. Coble, the Ranking Member.
Mr. Coble. Thank you, Mr. Chairman. I thank the panel again
for being with us. Mr. Barnett, you referenced the tension
between China's recognition of intellectual property rights and
its condemnation of the abuse thereof. How do you see this
balance playing out today, A? And, B, are you concerned that
China may try to appropriate U.S. companies' intellectual
property for their own use?
Mr. Barnett. I do think that there is a risk that the
Chinese competition agencies, as well as other competition
agencies around the world can look at the normal exercise of an
IP right, a refusal to license or a request for a royalty rate
that the licensee views as too high as something that violates
their competition laws. From my perspective, that would be an
unfortunate and counterproductive implementation of the AML. We
have not really seen that yet, but it is something that we
should very much keep an eye on because the agencies, I don't
believe, have indicated clearly where they will draw the line.
On this point, I want to underscore something that Mr.
Lipsky said. This is an issue in the United States and Europe
and elsewhere as to what is a lawful exercise of an IP right
and what is an abuse. In having our domestic dialogue and/or
our dialogue with our European counterparts and other, it is
very important that we keep in mind that others, including the
Chinese agencies are watching carefully what we say and do. And
that that should be part of the thinking as we engage on these
issues.
Mr. Coble. Thank you, sir. Professor Farmer, in our
discussion of state-owned enterprises, some of you raise
concerns about prominent Chinese officials owning Chinese
companies. Does this mean that you have concerns about U.S.
officials owning or having significant ownership in U.S.
companies?
Ms. Farmer. That is a difficult question to answer.
Mr. Barnett. If I understand the question, there is the
issue that the U.S. Government has in the last couple of years
become a major shareholder for example in a number of large
U.S. corporations. And that is an issue that while it may have
been necessary given the circumstances at the time, in my own
view that is something that the U.S. Government should be
trying to get out of as quickly as possible so that it can then
let the market, the private market continue to work without
direct governmental involvement.
Mr. Coble. By the same token, Mr. Barnett, or Professor
Farmer, do you think that the Chinese should also withdraw?
Mr. Barnett. I would say if you are talking about
commercial activity as opposed to traditional governmental
activity, I believe it is better to have that kind of activity
in the private sector. It is ultimately, as Professor Farmer
was alluding to, likely to lead to more efficient companies,
higher quality products, lower prices to consumers.
Mr. Coble. I got you. Thank you.
Mr. Barnett. In both countries.
Mr. Coble. Thank you, thank you, Professor. Mr. Lipsky, you
alluded over 100 countries have some sort of antitrust or
competition law, including the European union. Today's hearing
focuses on concern that China could use its recently enacted
anti-monopoly law to discriminate against modern competitors.
Have United States companies faced this kind of discrimination
from other nations with antitrust regimes and if so how was it
handled or how it was disposed of?
Mr. Lipsky. Let me answer this way, not necessarily
focusing specifically on the European union's competition law,
but competition laws of general applicability, which is what
most antitrust laws are, applying to restrictive agreements,
mergers acquisitions and all kinds of structural transactions.
These are extremely broad and powerful systems of law. And to
the extent they are enforced seriously, you have tremendous
potential for very serious effects on the structure of
particular industrious and on trade in particular commodities
and services.
In many jurisdictions, we find a lot of the same issues
that we have been discussing with respect to China today,
namely the potential that these very powerful legal tools will
be applied in a way that is not transparent, that tends to
favor parochial interests, rather than to pursue competition on
the merits. So we have had a lot of issues trying to get--just
as we are trying to do with China today, trying to get other
jurisdictions to clarify, to commit themselves to
nondiscrimination, to non-protectionist policies. And a good
place may be to look for a kind of catalog as to how to go
about this.
The antitrust section of the American Bar Association has
for at least about 18 years now had a regular program of
becoming aware of and commenting upon the adoption of antitrust
laws, amendments to antitrust laws, the issuance of regulations
pursuant to antitrust law, including in China, and under a
certain authority of the American Bar Association, the section
of antitrust law in combination with other sections like the
section on international law has commented and has made
specific recommendations with respect to the laws, the
regulations and the procedures, remedies, virtually any topic
you can think of.
And so there is a very broad menu of jurisdictions and
legal principles and procedures and remedies where this very
same potential that we are discussing with respect to China
today also exists and there again, the solution is engagement.
We can't force these other jurisdictions to conform their
antitrust laws to our ideas. But we can persuade. We can show
them the lessons of history. So that is a concern in many, many
jurisdictions throughout the word.
Mr. Coble. Thank you, Mr. Lipsky.
Mr. Singham, what rights and remedies does a U.S
corporation have for anti-competitive conduct in China by a
Chinese company? And does China recognize private rights of
action? And, finally, if so, has any non-Chinese company
brought suit or initiated suit against a Chinese company for
violation of the AML.
Mr. Singham. There have been private cases in China
involving violations of the AML. A number of those cases have
sort of fallen on technicalities, but your question raises
another serious point, to what extent can U.S. companies and
other foreign companies rely on Chinese courts and how does
that system operate in conjunction with the AML? And certainly
there are some concerns about the ability of the courts to, A,
grasp these issues and, B, to operate in ways that aren't
distorted by protection of Chinese companies' type interests.
That's not unusual, and that's not unique certainly to China.
That's the case in many, many countries that are new to
competition law.
I think training of judiciaries has been an effective way
of engraining competition principles and competition culture
into judiciaries of many countries. I think that's something we
would certainly recommend with respect to China.
Mr. Coble. I thank you. I thank the panel.
Mr. Chairman, I yield back.
Mr. Johnson. Yes, if it's okay, I would like to engage in
another round of questions.
Mr. Coble. Yes.
Mr. Johnson. All right. Thank you.
Mr. Singham, I believe you mentioned that there had been
100 cases filed within the last couple of years in China. Was
that you or was that Mr. Lipsky? Or that was you, Ms. Farmer?
One hundred cases, and I think five had been approved with
conditions, and one had been denied.
Ms. Farmer. Yes, that's the merger control regulation. We
don't have official statistics for the full 2 years, but we
know that 52 cases were notified and reviewed over the first
year. And of those 52, one, the Coke Huijuan Juice merger, was
prohibited and five additional were approved with additional
conditions. And of those five they involved one or both parties
that were non-Chinese firms. So if the number of pre-merger
filings is approximately the same, then MOFCOM may have
reviewed up to 100 mergers, but the statistics have not been
released yet.
Mr. Johnson. Are they going to be released or is that a
matter of secrecy?
Ms. Farmer. Obtaining information in a timely manner can be
difficult, because these are relatively new agencies that are
still engaged in capacity building, but the information does
become available.
Mr. Johnson. Anyone else have any comment about how the
U.S. can actually monitor the progress of the application of
the AML? Yes, sir.
Mr. Barnett. Well, Mr. Chairman, it is difficult to get
specific information, but one of the things that I encourage
the U.S. Government to focus on when engaging the agencies is
the importance of transparency and good process in their
decision making. And that includes not only during the review
process, ensuring that the parties know what's going on, know
what the issues are and understand what the evidence is but
when you make a decision that you explain the decision to the
parties and to the world. That type of sunlight, if you will,
can be a good disciplining force on the decision-making process
and can help others understand what you're doing, I think.
And I commend the current Attorney General, Christine
Varney, who has made this one of the centerpieces of her
international dialogue, the importance of this kind of
transparency in merger review and other cases; and I couldn't
agree more with it.
Ms. Farmer. If I could turn from merger cases to
monopolization or dominance cases. Five--at least five have
been filed, not by the government but private parties. It's
interesting to note that they are occurring in Beijing and
Shanghai. The Supreme Court of China has determined that these
cases are so complicated that they should be filed at the
immediate court level or in the intellectual property section
of the lower court because these courts are experienced in
dealing with complex cases and economic consideration. So I
think that's a salutary feature of the law going forward.
Mr. Johnson. Mr. Singham.
Mr. Singham. I think we've talked a lot in this hearing
about the importance of persuasion and persuading the Chinese
competition agencies to adopt an economic-welfare-oriented
approach to competition policy implementation. I think that's
very important, and we should continue to do that. But I would
agree with Mr. Barnett that I think the agencies have done a
very good job of trying to persuade the Chinese about the
benefits of economic welfare and consumer welfare as a guiding
light for competition policy enforcement.
But I think we also have to be realistic. And China's
competition policy and the AML does not sit in a vacuum. It
doesn't rely entirely on academic niceties. I think Professor
Farmer alluded to this. And in view of that realism I think
what we need to do is have greater tools for accountability so
that where there are divergences from those types of normative
principles, especially whether there are that are beyond
international best practice. And I think there is a serious
risk that we may well see this in the area of intellectual
property and competition policy.
Mr. Johnson. What kind of tools are you talking about? You
mean for U.S. companies or outside companies or what are you
referring to?
Mr. Singham. I think the starting point--and I think Mr.
Lipsky made this comment as well--is----
Mr. Johnson. I'm sorry to keep asking questions about what
others have gone over.
Mr. Singham [continuing]. The need to really organize
ourselves on how we address competition policy not just in
China but in other countries as well in terms of how we express
our views best in the interagency process. We have a history of
being very successful with countries that have newly
incorporated competition laws or antitrust laws in terms of
technical assistance, but many of those countries are countries
that have basically accepted competition policy as an
organizing principle in the economy.
And the China of today is not necessarily the China of even
5 or 6 years ago. I think it is very important that we
therefore reorganize or at least organize an additional
interagency process around these kinds of anti-competitive
market distortions. Simply because a competition agency is
doing something does not mean that it is pro-competitive. There
may be many examples of competition agency action that actually
take you away from a competitive market, and we need to ensure
that where that occurs we have tools for engaging the Chinese
in a dialogue and that we have a metric-based, rule-based way
of doing that so we are not sort of constantly playing whack a
mole with each new regulation or decision or whatever comes out
of China but we have a consistent policy that's based on
persuasion certainly, persuading people of what the normative
principles ought to be in competition policy enforcement and
why it is good for their own economies but also with a bit of a
stick as well.
Mr. Johnson. Yes, Mr. Lipsky. It just seems like we're
dancing tenderly. We're tiptoeing in terms of testimony, I'm
saying. This is not getting right to the--I suppose this is a
tough issue to deal with with a sledgehammer.
Mr. Lipsky. It is tempting to look for a silver bullet or
something concrete to do that will materially advance things.
I wanted to just address there's a mild suggestion that has
crept into the remarks here that I was perhaps critical of
previous U.S. Government in action on this issue, and I want to
remove any such suggestion by saying that there should be--I
think we're all saying there should be additional focus, there
should be additional resources, there should be encouragement,
there should be recognition, there should be better structure
and organization to monitor what's happening in China; and the
same could be said elsewhere.
I didn't mean to cast aspersions, but, nevertheless, I
believe it is still correct to say that there's no place in the
statutes of the United States or in the statements that
accompany budgetary appropriations or authorization, there is
no place that says, Department of Justice Antitrust Division,
Federal Trade Commission, please do this, please monitor how
these other antitrust laws affect U.S. business. It is I think
perhaps indirect, and it's implicit. It has certainly become a
custom and a very creditable custom in the agencies to engage
in these matters.
And yet I have to say that, having been at this for a
while, every time there is a change in leadership at the
Antitrust Division or at the Federal Trade Commission, the
officials that we would expect to really take the opportunity
and spearhead the American interest in foreign antitrust
enforcement and how it affects the global economy and U.S.
business, there is always a momentary--a moment of butterflies
in the stomach where you hear, well, I hear he doesn't like to
travel or I hear she won't participate in the Japan-U.S.
bilateral because she won't eat sushi under any circumstances.
There's always a question as to how the personal preferences
and predilections of the senior officials will affect the way
that the United States agencies participate in this very, very
important dialect.
Well, it shouldn't be a question of personal predilection.
It should be a welcome responsibility.
Mr. Johnson. Should that come through some form of
legislation or some regulatory rule?
Mr. Lipsky. Well, certainly the first step would be simply
to recognize that it is a proper activity, an activity that the
Congress is aware of and acknowledges. And I don't know----
Mr. Johnson. I hear you right now and--but I'm just
wondering, in your view, what would need to be done in order to
ensure that we have some continuity in this area between
changes in our personnel?
Mr. Lipsky. I believe that even the simplest expression of
recognition, support, and encouragement of this activity,
whether it was in the authorization legislation or report or
many flexible ways that Congress could deal with this short of
enrolled legislation it seems to me.
I'm confident that the agencies--I would be very interested
in Mr. Barnett's view on this, but I'm confident that an
explicit congressional recognition of the value and importance
of this function would be embraced eagerly by the officials of
these agencies.
Mr. Johnson. Yes, sir.
Mr. Barnett. I heartily endorse the sentiment that the
agencies should be engaging with many other countries, but
China in particular in many ways, one of the most important.
I guess I would say to me it's mainly a question of making
sure they have adequate resources. I believe and it was
certainly my perception at the time that I understood quite
clearly that Congress was interested in our focusing on that.
There are multiple ways for Congress to do that. There was
certainly not an authority or lack of authority to do it, given
the amount of time and resources that we devoted to it. But it
could well be that even more resources are valuable.
In that respect, and also to address the continuity point,
one specific thing that probably could use more--even more
focus or more opportunity is not so much the exchange between
senior officials but opportunities to interact at the career
level, at the staff level. And I'll use the example of the
relationship between the U.S. agencies and the European
Commission.
There used to be a lot--well, there can be divergences, but
there used to be a lot more. The agencies have now developed a
relationship so they talk on almost on a daily basis on major
matters, and they educate each other, and they end up coming to
more convergent results. And we've not seen the same sort of
divergence we saw 10 years ago.
It's very dif--it's harder to do that with the Chinese
agencies, but if we can find ways for career staff to spend
time with the career staff of the Chinese agencies--and,
remember, Professor Farmer talked about capacity building.
These are complex issues, and you're asking people who grew up
in a centrally directed economy to apply a set of principles
that derive from a market-based economy that's not necessarily
intuitive to them. It's hard to overestimate the importance of
training the rank and file on these principles, on the
economics and how to do this best. That I think is largely a
matter of resources.
Mr. Johnson. Are the Chinese receptive to that kind of
dialogue?
Mr. Barnett. They were. I certainly raised this expressly
with them when I was in Beijing even before the AML was
enacted, looking ahead and realizing that implementation would
be key. And we talked about--they seemed very open to it.
In that regard, I will commend--I think it is in Mr.
Singham's testimony--there is, for example, one program with
the USAID that sets up a series of conferences and seminars,
and that's a positive thing. But I'm talking about more of this
and more person-to-person interaction. I think they will be
cautious about it, but I think they are eager to learn. And if
you structure it in the right way I think they will be open to
it.
Mr. Johnson. Yes, sir.
Mr. Singham. I think there's one issue that we haven't
addressed necessarily here that we need to address in order to
do all these things more effectively, and that is there is a
disconnect between the level of authority of the competition
agencies in the U.S. with respect to other members of the U.S.
Government. And particularly in countries that are new to
competition or new competition agencies, those agencies are not
very powerful at all. They have very little political power
within their own systems. And so there is a slight disconnect
there in terms of our expectations of them.
And particularly in China there are many decisions that are
really competition decisions that are not made and will not be
made by the competition agencies in China going forward. They
will be made by other branches of the government, and they will
be imposed to some extent the Chinese competition agencies. And
for that reason, while I agree with everything that everyone
has said here in terms of the persuasion, the technical
assistance, the--even to the extent Mr. Barnett suggested the
placement of resident advisors, which I think is one of the
best methods of technical assistance that you can find
generally--we also need to have some tools--and these may be
legislative tools--that gives some measure of accountability
where an anti-competitive market distortion occurs either
because the competition agency is engaged in it or because it
is going on in the Chinese market and the competition agency is
doing nothing about it. That enables us to be more effective in
our advocacy of competition policy concerns.
We suggested in our written testimony reform of the
interagency process and also congressional reports by that
interagency group, the reports from that interagency group to
Congress on anti-competitive market distortions, measurable
market distortions that have welfare-damaging impacts. Because
that is also a tool that can be used in China and in other
countries to demonstrate that a particular anti-competitive
market distortion visits a certain amount of harm on that
country's own consumers and their own economy. And that would
enable us to build up those forces and people within countries
not just in China but around the world who want to have
competition policy implementation enforcement based on
economics and not on support of national champions or what have
you.
Mr. Johnson. All right. Mr. Coble.
Mr. Coble. Thank you, Mr. Chairman.
I have two questions, Mr. Chairman.
Mr. Singham, how would you would rate the current
Administration's engagement with China on the issues of
competition policy?
Mr. Singham. I would commend the current Administration as
well as the previous Administration on engagement with China on
a very, very difficult issue. I think everyone is agreed that
the transition of a country from a completely centrally planned
economy to a market economy is a hugely challenging task, and I
think the current Administration is doing a good job of
engaging in the technical assistance area and engaging in other
dialogues with the Chinese to persuade them to adopt a
competition policy that is more in line with international best
practice than was the case 2 or 3 years ago in our ongoing
discussion with them which has been going on for about 15 years
on this competition law.
I would say, though, that the Administration is limited in
its ability to be effective because of the paucity of tools
that it has. In our written testimony, we suggest increasing
the toolbox to enable actors not just in DOJ and the Federal
Trade Commission but in other agencies that have a stake in a
competitive market in China to also engage.
Mr. Coble. Thank you, sir.
Mr. Lipsky, finally, it is virtually impossible to discuss
China without talking about the country's human rights
situation. Google recently had its licensed renewed in China
despite a very public dispute with the country regarding
censorship. In the meantime, Google's share of the Chinese
market seems to have fallen relative to its Chinese competitor
Baidu. While the licensing issue does not seem to implicate
China's AML per se, it seems possible that China could pursue a
lengthy and costly legal campaign against a company that is
critical of any of China's internal policies. Is this a real
concern and, if so, how should it be addressed?
Mr. Lipsky. Well, the--I am not privy to the details of
that particular dispute----
Mr. Coble. And nor am I.
Mr. Lipsky. But the generic issue of mixing these different
policy considerations always has the potential to lead to the
perception that the competition aspect has been inappropriately
mixed with a non-competition policy and thus that the
competition enforcement standard has been distorted. And I
would point out that the history of monopolization proceedings
in the United States has also from time to time raised this
question, abuse of dominance proceedings in the European Union
have raised this question, and we need to be vigilant. We need
to urge transparency. That really is the only way to control
the inappropriate or the abusive reliance on competition law
proceedings to achieve what is not an economically efficient
result.
The case United States vs. IBM lasted 13 years. There were
some very lengthy, expensive, and complex proceedings brought
under section 5 of the Federal Trade Commission Act against the
breakfast cereal makers and against the oil companies. And that
same potential always exists, and it will exist under the
cognate provisions of the Chinese law. And so I think we just
have to be vigilant, urge transparency, insist on
accountability, and continue to pursue that over time.
Mr. Coble. Thank you.
Mr. Chairman, I yield back.
Mr. Johnson. Thank you.
Sheila Jackson Lee, our distinguished congresswoman from
Houston, Texas.
Ms. Jackson Lee. Mr. Chairman, thank you so very much; and
my apologies to the witnesses. I have just landed, flying into
Washington, D.C. But I am delighted that I was able to make the
hearing before it had concluded.
I want to thank the Chairman and the Ranking Member for
what is a vital discussion; and I hope that you will engage me
as I pursue some issues that I think are very, very important.
I have been engaged in this issue for a number of years ago
the Member of the Judiciary Committee when Chairman Hyde was a
Member and a Chairman, of course, and raised a number of issues
about the abuse of intellectual property. And certainly as I
respect our friends and allies in China and have marveled at
the ability to develop a very thriving middle class, one that
is continuing to grow, I've also been appalled at the extensive
abuse of intellectual property, much of it coming from the
United States.
Many of our friends are prone to talk about the trillions
of dollars of debt that we have--I think $14 trillion may be
the number at this point--and look awry at any efforts that our
present government, my party, has engaged in to invigorate the
economy which sometimes calls for stimulating it. But part of
our crisis, if you will, goes a lot to the imbalance of export
and import.
And, frankly, I do not want to be quoted to suggest that
the abuse of intellectual property is such a cause of it, but I
would say that the inequities in markets like China and China
having a large part of our debt, which makes me enormously
unhappy because I think the playing field in China is not even
uneven. It doesn't exist. We were advocates of China getting
into the World Trade Organization as I understand that they are
in. But, more importantly, this Congress went against its
better judgement and supported the PNTR, the Permanent Normal
Trade Relations, and I think the U.S. Chamber of Commerce might
have been enthusiastic about it. We thought it was going to be
a quid pro quo.
Now all we get from China is lost jobs and closed doors. We
get the sanctioning and censorship of Google and others. As the
Ranking Member mentioned, we get continued human rights
violations. And we get a big, empty bank account where we are
losing money, even more so now with the approach that they are
taking on trade, but, more importantly, over the years where
they have abused intellectual property, where they have gained
their economic edge because they have stood up on the backs and
shoulders of Americans, from my perspective.
So my question to the--I am not interested in soft-pedaling
this potential crisis, meaning the AML laws that may, in
essence, make us more than second-class international citizens.
It may not even put us on the ballpark, if you will. Probably
be something like some of the soccer games that we saw and the
rulings of some of those referees that ruled us out.
So I would like to pose to Mr. Singham, who is with the
U.S. Chamber of Commerce, that we may find it a grand
opportunity to be in alliance. Why is everyone soft-pedaling
some of the legal schemes that are being proposed? And if these
AML laws thrive, then they'll have some other laws, which is,
knock three times at our door, we'll think about it and let you
know in about 10 years whether you can do business in China or
whether you can do it in an even playing field.
So I would like to know some real solutions to laws that
can be passed by a sovereign entity, which China is, to make
them part of the international arena and, to be very frank with
you, to get back some of the bounty that they've taken from the
American people and others around the world that have advanced
them to our disadvantage.
Mr. Singham.
Mr. Singham. Congresswoman, you make some excellent points;
and I'd like to--and you make your point that it is sort of way
beyond the narrow scope of the AML, but I agree and I said in
my oral testimony and the written testimony that it is very
important that we do not regard the AML in a vacuum, that in
China it is not in a vacuum.
Other policies and other laws in China do affect the
implementation of the AML, but you raise a much, much greater
and bigger point which is the issue of trade liberalization and
competitive markets, which is essentially trade liberalization
only really works when you have competitive markets inside the
border and how can we get there with respect to China.
One of the things that we absolutely have to do--and I
would agree with you on this point--it is to ensure that we are
not competing--U.S. firms are not competing with firms that
have their costs artificially reduced through anti-competitive
market distortions, whether they are in China or anywhere else,
quite frankly. And so I would agree with you that we need to
have a much more proactive approach to the issue of anti-
competitive market distortions.
When trade barriers were high, it didn't really matter what
happened inside markets that we were trading with. As trade
barriers have come down, these kinds of behind-the-border
barriers, these kinds of anti-competitive distortions have
become much, much more significant.
I would certainly argue that they are just as if not more
important now than the sort of traditional border trade
barriers, and that's one of the reasons that the U.S. Chamber
has set up a global regulatory corporation project to try to
align some of these policies and try to deal with this
particular problem, which affects not only U.S. firms but it
affects U.S. jobs, it affects--because it is not just a
competition in China or in the U.S., but it is a global
competition, and U.S. firms are competing globally, and supply
chains are competing globally. And where there are these kinds
of distortions you are going to have an effect on the
profitability of U.S. firms and their ability to employ U.S.
people.
I agree with you. There's a complete alignment here between
U.S. firms and U.S. workers on this point. We ought to be able
to say that business competition on the merits is the way that
economies grow. And we ought to be able to agree that that is
how economies develop, that is how consumers are empowered, and
that's how the global economy grows. We all have a vested
interest in that.
While we say that, we ought to be able to say to our
people, let competition decide our outcomes. Business
competition on the merits, let that be the decider of outcomes.
But we will be aggressive if we see that countries or
government departments are artificially distorting their
markets and, therefore, lowering the costs in an artificial way
of businesses that are competing directly or indirectly with
U.S. firms.
So in our written testimony we've advocated a revision of
the interagency process around anti-competitive market
distortions, a way of measuring anti-competitive distortions so
that we are actually dealing in real data and metrics. We've
talked about looking at evaluating international agreements on
anti-competitive market distortions. Many of these provisions
already exist in existing trade agreements or the beginnings of
them exist. We are debating now in the Trans-Pacific
Partnership Agreement a chapter on competition policy that
deals with some of these issues.
If the AML is used by Chinese competition agencies in the
way that you fear, we ought to have a set of tools to look at
that interference, which is what it would be in the market as
an anti-competitive distortion, and we ought to have a way of
dealing with that. So I think there we are in a lot of
agreement.
Just on your point about intellectual property abuse--and
this is critical because, as other members of the panel have
noted intellectual property abuse--many competition agencies
are taking the view, not the U.S. but other country's
competition agencies--many other country's competition agencies
are taking the view that refusal to license the intellectual
property is by itself an abuse, is by itself a competition
problem that the competition agency should get involved in. And
we see some of that certainly in the provisions of the SAIC and
other parts of the Chinese government in terms of how we will
apply Article 55 on abuse of intellectual property.
But I would make this point. For those competition
agencies, competition policy and intellectual property are
intention. But if you have a welfare-enhancing economic
approach to competition policy and implementation, there is no
tension between competition policy and intellectual property
policy. Both policies have the same innovation and welfare-
enhancing goals. So if we can succeed--however we do it, with
whatever tools we can use, but if we can succeed in getting and
insuring that the AML is applied in ways that make economic
sense, that are welfare enhancing, then we will not have a
situation where the AML is being essentially abused to erode
the intellectual property rights of U.S. and other firms.
Now there are certainly cases where firms do abuse
intellectual property rights, and I'm not talking about that
right now. But the key here is to ensure that the AML is
implemented in a way that is based on economics, sound
economics and consumer welfare. If you do that, then all the
provisions that could be used--could be abused, I would say, to
erode intellectual property rights won't be used in that way.
So I think that's the key with respect to intellectual
property.
Ms. Jackson Lee. Mr. Chairman, if you would indulge me for
a moment, I'm on a line of questioning.
I think intellectually, Mr. Singham, you're absolutely
right, if we analyze it in the way that you've analyzed it. And
of course I think the modems and policies that you're speaking
of I assume is policies that the U.S. Chamber of Commerce is
looking at as you engage in doing business or helping your
members do business--a lot of your members are very large
companies--as they do business internationally around the
world.
I'm reading just a paraphrase of the language of AML, and
what strikes me is language that says monopolistic conduct and
economic activities within China, which is what AML is supposed
to apply to, and foreign conduct that eliminates or has a
restrictive effect on competition. Now, if you have one judge,
then any foreign business that comes out of a climate of
capitalism versus government-owned, directed, controlled
businesses as China does could be found to be in violation of
the AML, and it could be in violation on the basis of they are
getting too much of the market share and making too much money.
And so if I might--if someone else wants to launch in and
let me yield to any of the other persons about the danger of
language that, in essence, would close the door. Our companies
that might make the first trip over--and I'm, obviously, using
metaphors because we've been over--would be large companies to
a certain extent and could be easily accused of conduct that
eliminates or has a restrictive effect on competition and be a
foreign entity.
My thought is the Chairman has held this hearing and what
are we doing in terms of protective laws from our perspective?
We're in the WTO. We've got the PNTR. I have not seen major--I
shouldn't say that. I assume the existence of Google and
others--there is probably a long litany of companies,
obviously, doing business there. The question is, where is the
balance?
But do we now need to look at laws that would match the
laws that China has if they are laws that are preventative or
blocking rather of our businesses from the United States--and
that's what I'm framing my question around--loss of jobs and
the businesses that have either gone there or not been able to
thrive because they have been blocked from coming into China.
Do we not need laws that respond to that kind of litmus test?
Mr. Lipsky.
Mr. Lipsky. Let me address this concern as follows:
The law that you referred to, the provision of the AML that
you've referred to, is in many respects consummate with legal
norms that have emerged in other jurisdictions. In other words,
in the United States, we have a statute which says that foreign
conduct can be reached under U.S. antitrust law so long--I'm
paraphrasing and simplifying quite a bit--but essentially as
long as that conduct has a substantial direct and foreseeable
effect on U.S. commerce.
Ms. Jackson Lee. Just for a moment, I understand that we
interpret our laws differently or at least in a more open
manner than I perceive a law like this as it relates to China.
So I think we're talking about two different approaches in
interpretation of individual laws.
Mr. Lipsky. Well, to the extent that the law is interpreted
to create the kind of disadvantage for U.S. companies or
foreign companies, we do have some historical experience with a
somewhat similar situation where trade remedies were proposed.
There was a provision of our trade act--I am not a trade
expert, Shanker is, and he may wish to comment--but I think it
was referred to as Special 301. It was a provision--as far as I
know, there was never a successful proceeding invoked under
that provision.
There was a very intense, competitive battle reflected in
the Kodak/Fuji case. Ultimately, I think a trade complaint was
filed on behalf of Kodak. But, as I recall, it was not a
Special 301 complaint. It was--they stepped right to the brink
of invoking that provision but never invoked it.
So we can certainly consider similar provisions to the
extent we are encountering tilting of the playing field under
the guise of competition law enforcement. Or, in that case, I
think it was actually an accusation of lack of competition law
enforcement in Japan.
My own feeling, having not studied the matter carefully but
just based on my own experience with this and similar disputes
of this nature, is that what we are advocating is probably more
likely to work out better for all parties in the long run. I
think if we think of our relationship to China with respect to
trade and related matters primarily and a partnership, I mean,
our success is bound up with theirs and vice versa. If they do
hold a lot of debt, that means they have a great percentage in
our success.
So we're going to be in this dialogue for the very long
run, and I'm not saying we shouldn't use sticks. If there is
serious trade distorting--unjustified trade distorting conduct,
wouldn't discourage Congress from applying the appropriate
stick. But you can't use only sticks. You have to feel your way
through the dialogue. It's like any long-running, important
partnership. Both parties have to give and take. There are a
huge number of issues on the table in the bilateral
relationship between the United States and China, and I----
Again, we're kind of at the inception of the AML. A lot of
jurisdictions go through tremendous adjustments. When the
European Union implemented its rules on restrictive agreements
in 1962, it was kind of a bureaucratic catastrophe, because
they elicited thousands and thousands of petitions from
businesses who were afraid that their arrangements were going
to be condemned, and then they had bureaucratic gridlock for
years and years. So I'm sure I could think of examples of
United States enforcement. Our initial experience with the
Sherman Act and the Clayton Act was not an entirely happy
experience.
So I think the door has in a sense just opened, and we need
to look at the record as it rolls out and pay close attention
and try to insist on transparency and accountability and impose
a little discipline and encourage our executive branch to get
on it and stay on it and see where we are as time progresses.
Mr. Johnson. Mr. Barnett.
Mr. Barnett. If I could make expand slightly on that, to
put it in perspective. You raise a lot of very important
issues, but one way to think about this is should we view the
AML itself as something that's good or something that's bad for
U.S. businesses? In my view, it should by viewed as generally
something good. There is certainly the potential for it to be
applied in a way that could be protectionist or harmful to U.S.
businesses and Chinese consumers, but, importantly, it is
substituting for a regime that before had much more direct ways
to exclude U.S. businesses from operating in China. It is an
instrument to open up the markets there.
There is a long ways to go, as Mr. Singham has pointed out.
And you've not heard the witnesses say that the AML has been
abused in very clear circumstances. What you've heard is that
it may be in the future. A lot of the examples that have been
pointed to of concern are other laws in other areas.
In that respect, there is an additional potential benefit
to the AML. Not everyone in China thinks the same way. You now
have individuals at the various agencies, to the extent that
they are persuaded that a market-based economy is the way to
encourage growth and a focus on opening up markets to
competition, including foreign competition, they can be a voice
within the government to advocate for opening up and bringing
down trade barriers. We have seen that type of advocacy be
effective in other countries.
So without minimizing your point that those are very
serious issues and agreeing that we should bring a lot of
different tools to bear on it, I just want to put in
perspective that the AML itself can be an engine for good.
Mr. Singham. Yes, I think that's right. One of the most
important provisions in the AML is the provision that deals
with advocacy and competition advocacy by Chinese competition
agencies with other branches of the Chinese government.
Now if you look at--as Mr. Barnett said, if you look at
what we had before the AML, there was really no way that there
would be a voice of competition or a voice for competition in
any branch of the Chinese government. So we shouldn't
underestimate how important that is.
Now that it is there, it doesn't mean it will be a force
for positive pro-competitive markets necessarily, but I think
it is incumbent on us to try to work with the Chinese,
recognizing the efforts that have been made and to develop the
kind of individuals who can lead the charge on promoting
competitive markets in China.
It's interesting that in the field of competition what a
difference individuals can make. I did a lot of work with
Brazil when Brazil was starting its road on competition policy
and happened to have some very, very good heads of competition
agencies in Brazil who made huge inroads into what was also a--
perhaps not as planned as the Chinese economy but was emerging
from import substitution and a sort of command economy in
Brazil. So I think we shouldn't underestimate the power of
these competition agencies to be a force for pro-competitive
markets.
I would say, in answer to your question about laws and so
forth, that there are a number of laws already on the books
that apply--could be applied in this area. Mr. Lipsky mentioned
the Kodak/Fuji case. Where there are anti-competitive practices
in foreign markets that have an effect in the U.S. under the
Foreign Trade Antitrust Improvements Act, you can rely on U.S.
antitrust law.
There was a case in New York involving a vitamin C cartel
where the Chinese government essentially said that it was a
state-owned enterprise and the state basically forced the anti-
competitive activity. And this was a defense in the case that
was brought in New York.
I think those are cases where, under the FTAIA, our
antitrust agencies could meaningfully be involved.
And on the trade side, many of our trade laws, section 337,
section 301, the GSP preferences that we have, there are many,
many trade laws that apply disciplines where there is anti-
competitive activity. Now, historically, that has been rarely
used; and it tends to be contained to private anti-competitive
activity.
I think the one area where legislative--some analysis of
potential legislative solution could be explored is the area of
where you have a market where the anti-competitive activities
are primarily in the public sector or primarily government
anti-competitive activities. But we ought to include those
within what we count as anti-competitive practices for the
purposes of those laws. So I think that certainly could be
done. That would require us to apply the same discipline as to
ourselves.
And the Antitrust Modernization Commission, which has been
mentioned on this panel, did make a recommendation to look at
the state action exemption. The state action exemption protects
state activity and allows states to essentially get away from
anti-competitive activities where they are acting as states, as
opposed to market participants. We need to revisit that, quite
frankly. But there's a lot of those types of laws that we refer
to in our written testimony where we can do that.
But I do agree with what Mr. Barnett said, is we need to
bear our problems. We do need to address the problems and
develop tools to address the problems, but we also need to take
a 25,000-foot look and say, well, there has been progress here.
Let's try and build up----
Ms. Jackson Lee. If you could wrap up, and I appreciate it.
Professor, I didn't know if you want to finish.
Let me just thank the Chairman and indicate and comment to
the answer to my question is, of course, I think, Mr. Barnett,
you're right. The underlying premise of anti-monopolistic laws
is good. I mean, our laws, our antitrust laws started with a
framework to enhance competition opportunity.
Those of who are still practicing law--I practiced law
previously--know that, depending on what side of the case you
are, sometimes our antitrust laws are paper tigers. You've seen
mergers come and go and meet a basic standard and most people
say how in the world could we allow these two entities to
merge? They've obviously created an anti-competitive
marketplace.
I would only offer that this is a very important hearing;
and I think all of these variables have to be integrated--
deficits, the abuse of intellectual property, the potential--
and I use that example because it is the most consumer-based,
glaring example of when technology and design and talent that
is taken from another and is utilized in this instance by China
with anti-monopolistic laws if misinterpreted or used in a one-
sided manner. No matter what country or what company is
attempting to interact with China it is to the disadvantage of
the overall market or the overall economy as we look at the
world economy. And my point is let us not tiptoe through the
violence.
I would like to help China have a vigorous marketplace that
has its doors open to all of us, and I'd like for the United
States in particular to benefit from its partnership with
China. My disappointment is that--and maybe I need a 10-year or
20-year view. I voted on the PNTR in the late '90's--is to
actually look at what the benefit is bringing to the United
States when we engage in the PNTR. It seems that we always get
a lopsided impact when we engage in----
Mr. Chairman, I think that we should continue to be
cautious. I think this review is very important. We want an
invigorated market, but we don't want a lopsided market. I look
forward to more extensive testimony and considering legislation
or not depending upon how we see the future.
I thank the Chairman and I thank the witnesses very much
for their testimony. I yield back.
Mr. Johnson. Thank you. I thank the gentlewoman from Texas.
I also thank the witnesses. This has been a relatively long
hearing, but at least there were no breaks and so you could
keep moving along with the discussion. So I want to thank you
all for contributing to it and for coming. This is a very
important hearing, and I look forward to this Committee
following up on some of the recommendations that have been made
by you. Thank you very much.
Let me see, I'm getting a little ahead of myself here.
Members will have 5 legislative days to submit any additional
written questions which we will forward to the witnesses and
ask that you answer as promptly as possible to be made a part
of the record.
Without objection, the record will remain open for 5
legislative days for the submission of any other additional
materials.
With that, this hearing for the Subcommittee on Courts and
Competition Policy is adjourned.
[Whereupon, at 6:02 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record