[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
THE TRADE ADVISORY COMMITTEE SYSTEM
=======================================================================
HEARING
before the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
JULY 21, 2009
__________
Serial No. 111-28
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
CHARLES B. RANGEL, New York, Chairman
FORTNEY PETE STARK, California DAVE CAMP, Michigan
SANDER M. LEVIN, Michigan WALLY HERGER, California
JIM McDERMOTT, Washington SAM JOHNSON, Texas
JOHN LEWIS, Georgia KEVIN BRADY, Texas
RICHARD E. NEAL, Massachusetts PAUL RYAN, Wisconsin
JOHN S. TANNER, Tennessee ERIC CANTOR, Virginia
XAVIER BECERRA, California JOHN LINDER, Georgia
LLOYD DOGGETT, Texas DEVIN NUNES, California
EARL POMEROY, North Dakota PATRICK J. TIBERI, Ohio
MIKE THOMPSON, California GINNY BROWN-WAITE, Florida
JOHN B. LARSON, Connecticut GEOFF DAVIS, Kentucky
EARL BLUMENAUER, Oregon DAVID G. REICHERT, Washington
RON KIND, Wisconsin CHARLES W. BOUSTANY, JR.,
BILL PASCRELL, JR., New Jersey Louisiana
SHELLEY BERKLEY, Nevada DEAN HELLER, Nevada
JOSEPH CROWLEY, New York PETER J. ROSKAM, Illinois
CHRIS VAN HOLLEN, Maryland
KENDRICK B. MEEK, Florida
ALLYSON Y. SCHWARTZ, Pennsylvania
ARTUR DAVIS, Alabama
DANNY K. DAVIS, Illinois
BOB ETHERIDGE, North Carolina
LINDA T. SANCHEZ, California
BRIAN HIGGINS, New York
JOHN A. YARMUTH, Kentucky
Janice Mays, Chief Counsel and Staff Director
Jon Traub, Minority Staff Director
______
Subcommittee on Trade
SANDER M. LEVIN, Michigan, Chairman
JOHN S. TANNER, Tennessee KEVIN BRADY, Texas, Ranking Member
CHRIS VAN HOLLEN, Maryland GEOFF DAVIS, Kentucky
JIM McDERMOTT, Washington DAVID G. REICHERT, Washington
RICHARD E. NEAL, Massachusetts WALLY HERGER, California
LLOYD DOGGETT, Texas DEVIN NUNES, California
EARL POMEROY, North Dakota
BOB ETHERIDGE, North Carolina
LINDA T. SANCHEZ, California
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
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C O N T E N T S
__________
Page
Advisory of July 21, 2009, announcing the hearing................ 2
WITNESSES
Lisa A. Garcia, Assistant USTR for Intergovernmental Affairs and
Public Engagement, United States Trade Representative.......... 7
Loren Yager, Ph.D., Director, International Affairs and Trade,
Government Accountability Office............................... 14
Daniel Magraw, President and Chief Executive Officer, Center for
International Environmental Law; Member, Trade and Environment
Policy Advisory Committee...................................... 48
__________
Timothy K. Hoelter, Vice President, Government Affairs, Harley-
Davidson Motor Company; Chairman, Industry Trade Advisory
Committee 04, Consumer Goods................................... 56
Ellen R. Shaffer, Ph.D., MPH, Co-Director, Center for Policy
Analysis on Trade and Health................................... 64
Owen E. Herrnstadt, Director of Trade and Globalization,
International Association of Machinists and Aerospace Workers;
Liaison, Labor Advisory Committee.............................. 77
Brian T. Petty, Senior Vice President, Government Affairs
International Association of Drilling Contractors; Chairman,
Industry Trade Advisory Committee 02, Automotive Equipment and
Capital Goods.................................................. 87
SUBMISSIONS
.................................................................
American Association of Exporters and Importers, Statement....... 103
Michael J. Stanton, Statement.................................... 106
Coalition for a Prosperous America, Letter....................... 112
V.M. (Jim) DeLisi, Letter........................................ 113
Humane Society International, Statement.......................... 115
Maine Citizens' Trade Policy Commission, New Hampshire Citizens'
Trade Policy Commission, and Vermont Commission on
International Trade and State Sovereignty, Statement........... 116
Maine Citizen Trade Policy Commission, Statement................. 117
Susan Kohn Ross, Letter.......................................... 118
Raymond C. Offenheiser, Statement................................ 119
Susanna Rankin Bohme, Letter..................................... 126
Edward J. Black, Letter.......................................... 127
The Council of State Governments Eastern Regional Conference,
Statement...................................................... 128
The Society of Chemical Manufacturers and Affiliates, Letter..... 129
Vermont Commission on International Trade and State Sovereignty,
Letter......................................................... 131
William A. Gillon, Statement..................................... 132
Maralyn Chase, Peggy Pierce, Jill Cohenour, Steven D'Amico, and
Susi Nord, Statement........................................... 134
HEARING ON TRADE ADVISORY
COMMITTEE SYSTEM
----------
TUESDAY, JULY 21, 2009
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Trade,
Washington, DC.
The subcommittee met, pursuant to call, at 10:09 a.m., in
Room 1100, Longworth House Office Building, the Honorable
Sander M. Levin [chairman of the subcommittee] presiding.
[The advisory of the hearing follows:]
HEARING ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
Chairman Levin Announces Hearing on Trade Advisory Committee System
July 21, 2009
By (202) 225-6649
House Ways and Means Committee Trade Subcommittee Chairman Sander
M. Levin today announced that the Committee on Ways and Means
Subcommittee on Trade will hold a hearing on how the system of trade
advisory committees is functioning, and on how to increase transparency
and public participation in the development of U.S. trade policy. The
hearing will take place on Tuesday, July 21, 2009, in Room 1100,
Longworth House Office Building, beginning at 10:00 a.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Subcommittee and
for inclusion in the printed record of the hearing. A list of invited
witnesses will follow.
FOCUS OF THE HEARING:
The hearing will examine the development of trade policy from
several perspectives. The Subcommittee will ask the Administration to
discuss its recently-initiated policy review and consultations
concerning the trade advisory committees. The Subcommittee is
interested to hear from stakeholders whether administrative or
statutory changes, building on revisions implemented in recent years,
might broaden the range of views represented and permit the advisory
committees to provide more timely and useful recommendations. Finally,
the Subcommittee is requesting testimony on steps that could be taken
to encourage public outreach and promote greater public engagement in
U.S. trade policy.
BACKGROUND:
Established under the Trade Act of 1974, the trade advisory
committee system is intended to provide a formal mechanism through
which U.S. trade negotiators receive information and advice from the
private sector with respect to U.S. negotiating positions before and
during trade negotiations. The system is arranged in three tiers: the
President's Advisory Committee for Trade Policy and Negotiations
(ACTPN), five policy advisory committees dealing with environment,
labor, agriculture, Africa, and intergovernmental issues, and 22
technical advisory committees in the areas of industry and agriculture.
The trade advisory committees have participated in the formulation of
policy for all trade negotiations and provided advice to the Executive
and Congress on concluded trade agreements prior to implementation.
Since 1974, the scope of U.S. trade agreements has expanded beyond
tariffs and other ``border'' measures to encompass subjects such as
intellectual property rights, food and product safety, environmental
regulations and labor rights. The subcommittee will consider the extent
to which environmental, labor, public health, development, and civil
society stakeholder perspectives are or should be represented on the
advisory committees. In the context of the Trade Act's requirement that
advisory committee representation should be ``balanced'' or
``representative,'' is it appropriate either to establish separate
advisory committees devoted to these concerns or to ensure that
existing advisory committees include such stakeholders?
In announcing the hearing, Chairman Levin said, ``The new
Administration is committed, and properly so, to making sure our
international trade discussion is open to new perspectives. Now is a
good time to look at how the trade advisory committees can be part of
developing better trade policies.''
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the World Wide Web at http://democrats.waysandmeans.house.gov.
Chairman LEVIN. The subcommittee will come to order.
Welcome, everybody.
I think we all know that this morning this subcommittee is
going to take a look at how the advisory committee structure
relating to trade is working. This is, I think, a particularly
timely effort because the new administration has started a
review of the advisory system, and there is legislation that is
pending on this issue.
The staffs working together have prepared a memo on the
advisory structure, and as I had a chance to read this
excellent memo, I was struck by a few points.
First of all, it is a rather elaborate structure. It covers
so many areas. There is some thought that it needs to have a
broader participation. Clearly this has been, as I said, an
elaborate structure, with 28 different advisory committees, and
the negotiators in the administrations in the past have had
interchange with these various committees. So that is the first
point, an elaborate structure that perhaps should be even
expanded.
The second point that has come through in these materials
as we prepare for today is how trade has changed since these
structures were started. The breadth of trade issues has
dramatically increased, and so, therefore, the mandates to the
various advisory committees, that mandate has also changed.
But the third point, and I think we will be discussing this
today, is how effective the advisory committees have been, how
much meaningful interchange there has been between the
committees and USTR and the rest of the administration in the
past. And I do think we need to very much focus on that issue,
because as trade has become more and more important in the last
35 to 40 years, as the scope of it has very much increased, I
think the role of advisory committees therefore has become more
salient, at least it should have become more salient.
So I hope today, Mr. Brady, that you and I and our
colleagues can really hone in on the issue of the effectiveness
of these committees and how we can improve their effectiveness.
I think that is such an important issue. Though we may be
tempted to ask witnesses about issues beyond the role of
advisory committee, that structure, I do hope that we can
really maintain a focus on the issue before us because it is
that important.
So, Mr. Brady, if you will make your opening statement,
which we are looking forward to, and then we will start the
hearing with two panels.
The first will be from Lisa Garcia, who is an assistant
U.S. trade rep, who I think you are heading up the review
within USTR; and also from Dr. Loren Yager, who is working on
this issue and has had a lot of experience.
So, Mr. Brady, if you will make your opening remarks, and
then we will launch right into the testimony.
Mr. BRADY. Thank you, Chairman Levin.
I agree with you. Policymakers should have access to the
views of stakeholders on all sides of trade issues. A critical
question today is, how best can we allow everyone to have a
voice while still maintaining the effectiveness and flexibility
of the information flow? Like you, I am eager to hear testimony
on this key part.
Let me put up on the screen sort of where we are today on
input. Here is the Tier 1 committee, the President's Advisory
Committee For Trade Policy Negotiations, the five committees
that advise USTR and the President on general policy areas.
Then you will see 6 agriculture technical advisory committees,
and then 16 industry trade advisory committees, and each of the
yellow boxes within that structure are committees that have
labor, environment, public health, universities or State and
local government representatives on there providing their
input.
Without question, the private sector and the administration
coordinate extensively on trade. The President has the Advisory
Committee on Trade Policy Negotiations, which includes
representatives from labor, environment, industry, ag and small
businesses.
USTR has also created policy advisory committees to provide
advice on cross-cutting social and economic issues, such as
labor and environment. USTR and the Departments of Commerce and
Agriculture also meet with the industry and agriculture trade
advisory committees which provide technical nuts and bolts
advice on functional trade issues at the ground level.
But this formal structure isn't the only game in town. USTR
also holds public hearings, seeks comments through Federal
Register notices, and holds meetings with relevant sectors and
nongovernmental organizations. The Bush administration did it,
and the Obama administration is doing it.
The anti-counterfeiting trade agreement negotiation is a
case in point, and USTR has been seeking comments not only from
clear advisers within the industry trade advisory committees
but also from other noncommercial interests and the general
public. The Investment Working Group that reports to the ITAC
chairs is another example of effective ad hoc information flow.
I am encouraged that more people want to be part of the
advisory committee system. That tells me the system must be
performing reasonably well. Folks don't typically line up to
jump on a sinking ship.
But there is another side that is far less encouraging, and
sadly, it hits much closer to home. We in Congress have our own
housekeeping to do when it comes to providing opportunities for
Americans to share their views on trade policy. I note with
more than a tinge of disappointment that, on that score, we are
failing.
It is all supposed to start right here in this committee,
the Ways and Means Committee, which has jurisdiction over trade
agreements, but we are, unfortunately, redefining the phrase
``ground zero.'' We have convened zero hearings in the 110th
and 111th Congress on our pending free trade agreements since
they have been signed.
Members on our side have asked for and would warmly welcome
a hearing, for example, on how to identify benchmarks in
Colombia, and I think members of the public would jump at the
chance to testify here on that topic and give us their very
diverse views.
We have held a grand total of zero hearings on the Trade
Preference Programs, a tool to promote the economies of our
developing trading partners; although I should add Chairman
Levin and I and staff are in discussion on how we gather input
from people because there are a lot of good ideas on how to
move forward on preferences.
Unfortunately, the new Democrat leadership in both Chambers
have called zero meetings of the Congressional Oversight Group.
This is the statutorily mandated group in which all committees
with jurisdiction communicate to the administration what we are
hearing from our constituents, the people that put us here. The
statute requires that the Congressional Oversight Group convene
within 30 days of the beginning of each Congress. We haven't
done so this Congress or last.
USTR, though, needs to consult better with Congress, too,
so we have the information we need to engage productively with
the American people. It may not shock you that Republicans feel
shut out of the formulation of the administration's trade
policy. But what may be more surprising is that the frustration
appears to be bipartisan.
Max Baucus, chairman of the Senate Finance Committee,
readily acknowledged at a recent hearing he was not consulted
on the administration's decision to have a timeout on trade
until the articulation of a new trade policy framework and the
passage of health care reform in Congress. It was, in his
words, ``a shot out of the blue.'' ``I read about it in a
newspaper article,'' lamented the Montana Senator.
So while it is well and good and I think important to shine
light on the advisory committee system to assess whether it is
adequately performing its role, we must at the same time grade
ourselves. We need to review our own performance on how well we
are obtaining public input on trade.
Let me be clear, I am not talking about passing free trade
agreements, although I would love to see that. I am just asking
whether or not we are doing enough here in this hearing and
Congress to open up the dialogue with the American people on
pending and future trade initiatives.
This hearing is an excellent start, Mr. Chairman, and I
appreciate your leadership on this, but I am hopeful there is
much more we can do together in the future.
Thank you. I yield back.
Chairman LEVIN. All right.
We will hear the testimony. Let me just mention that a
number of the trade preferences do expire at the end of the
year, Mr. Brady, and we will be having meetings and hearings on
these preferences well before the end of the year, as you and I
have discussed.
Also, the administration has made clear that they are
beginning work and I think it is increasing its activity in
terms of a statement of overall trade policy of this
administration. It is a new administration. It has indicated a
desire to have new trade policies. I think everybody realizes
that there are other issues pending before this Congress which
have, I think, understandably preoccupied the attention of the
administration and of the House of Representatives and of the
U.S. Senate.
I believe there is no lack of inattention to trade issues.
Indeed, I think it is quite the opposite. I also think, though,
that it is vital that there be a basic framework for a new
trade policy rather than trying to take these ad hoc. I have
confidence that that process will continue in a very time-
relevant fashion.
So, we will focus today on the role of the advisory
committees. As I said, the structure has been there in recent
years. I am not sure how effective it has been. I think one of
the issues before us today is whether what is true on paper has
been true these 8-10 years in terms of the real back and forth
between the public and the administration and ourselves on
trade policy.
Okay. We are first going to hear from Lisa Garcia of USTR;
and then Dr. Yager, the director of International Affairs and
Trade for GAO.
Ms. GARCIA, if you would start. Your testimony will be
placed in the record. If you would, try to summarize it. Pick
and choose as you would like as to what you think are the most
relevant points as you have begun work within USTR and a review
of these committees.
Thank you both for joining us.
STATEMENT OF LISA A. GARCIA, ASSISTANT USTR FOR
INTERGOVERNMENTAL AFFAIRS AND PUBLIC ENGAGEMENT, UNITED STATES
TRADE REPRESENTATIVE
Ms. GARCIA. Chairman Levin, Ranking Member Brady and other
distinguished Members of the Subcommittee, on behalf of the
United States Trade Representative, USTR, thank you for the
opportunity to describe our advisory committee system and
USTR's outreach activities.
Ambassador Kirk is dedicated to crafting that policy in a
transparent manner by sharing with the public and seeking input
from stakeholders. The Office of the United States Trade
Representative considers the trade advisory committee system
and our outreach activities to be critical to both the crafting
and implementing of U.S. trade.
My written remarks include a brief description of the trade
advisory committee system, but I would like to focus my remarks
this morning on USTR's current review of the advisory committee
system. That review is ongoing. However, USTR is committed to
two results: first, making effective use of the committees; and
second, ensuring the committees are more representative of
diverse interests.
With regard to that result, USTR has already made
significant use of the committees. Ambassador Ron Kirk has
already met with the Advisory Committee For Trade Policy and
Negotiations, ACTPN; the Trade Advisory Committee for Africa,
TACA; the Trade and Environmental Policy Advisory Committee,
TEPAC; and the Labor Advisory Committee, LAC, liaison.
My office has maintained the Intergovernment Policy
Advisory Committee, IGPAC, and the State Point of contact, SPOC
monthly calls, and we have scheduled a call next week with the
Agriculture Policy Advisory Committee and the Agriculture Trade
Advisory Committee, ATAC, members.
Moreover, as GAO noted in its 2007 report, in the past,
some committees have not been fully utilized and have lapsed
entirely. We are committed to preventing that from happening
again. To that end, we have already begun work on selecting new
members for the ACTPN whose charter expires March of 2010. The
Department of Commerce, which jointly administers the ITACs
whose charters expire in February 2010 have similarly already
begun the process of rechartering and is on track to complete
this process before the deadline.
We have also already taken steps to expand the range of
interests to be represented on the committees. We believe that
the first logical step of the review was to focus on the Tier 1
ACTPN committee. That portion of the review is well along the
way. We have sent a list of potential candidates to the White
House. While it is not appropriate at this time to release
names or list the organizations these candidates represent,
since the vetting process is ongoing, I can share that several
candidates represent consumer and public health interests.
Thus, such voices will be represented at the very highest level
of the advisory committee system on the newly constituted ACTPN
and will have access to the USTR security advisor Web site and
will therefore have access to all the information that is made
available to other cleared advisers.
In addition, as part of the regularly scheduled chartering
effort, we seek additional opportunities for representatives of
civil society, consumer groups and public health interests to
serve on their Tier 2 committees. NGO representatives have
already been added to some of the Tier 3 committees where
appropriate. That review will include whether the current
committees are the right ones, as well as whether the
memberships fully represent the interests affected by the
sectors covered by those committees.
If certain interests cannot be adequately represented
within the existing committee structure, USTR will explore the
establishment of a new committee. We would want to ensure that
such a committee would be flexible enough to absorb
representatives from new interest areas as needed.
The advisory committee system is only one mechanism USTR
uses to outreach with the public and solicit their advice on
U.S. trade policy. We have launched a new interactive Web site.
The new site gives us the ability to share comments with the
ambassador and the opportunity to be part of our online
community.
As I have detailed, the Office of the United States Trade
Representative is making every effort to ensure that USTR's
work is both open and transparent and guided by the American
public that we serve. Working together, we can fulfill
President Obama's vision of a trade policy that works better
for American workers and families.
Once again, Mr. Chairman, I appreciate the opportunity to
testify before you today and before the Members of the
Subcommittee of Trade. I would be happy to answer any questions
that you might have.
[The prepared statement of Ms. Garcia follows:]
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Chairman LEVIN. Thank you very much, Ms. Garcia.
Dr. Yager, we look forward to your testimony. Thank you for
coming.
STATEMENT OF LOREN YAGER, PH.D., DIRECTOR, INTERNATIONAL
AFFAIRS AND TRADE, GOVERNMENT ACCOUNTABILITY OFFICE
Mr. YAGER. Mr. Chairman, Ranking Member Brady, Members of
the Subcommittee, thank you for the opportunity to appear today
before the subcommittee to provide insight from GAO's work on
the private sector trade advisory system.
Based on extensive stakeholder and advisory committee
input, we provided one report in 2002 on the trade advisory
system to the Congress and another on the subject of
congressional and private sector consultations in 2007, and we
have been working regularly with USTR and the other agencies to
update the status of our recommendations since that time.
In my statement today, I will highlight our findings and
recommendations in three key areas: first, in committee
consultations; second, logistics of the system; and, third, the
overall system structure, and I will discuss the changes that
have been made by U.S. agencies to respond to our
recommendations.
In terms of the committee consultations, our survey of
trade advisory committee members found high levels of
satisfaction with many aspects of committee operations and
effectiveness, yet more than a quarter of respondents indicated
that the system had not realized its potential to contribute to
U.S. trade policy. In particular, we received comments about
the timeliness, the quality and the accountability of
consultations.
As a result, we made a series of recommendations to USTR
and the other agencies to improve those aspects of the
consultation process. Specifically, we recommended that the
agencies adopt or amend guidelines and procedures to ensure
that the advisory committee input is sought on a continual and
timely basis; that consultations are meaningful; and that
committees receive feedback on how agencies respond to their
advice.
In response to those recommendations, USTR and the other
agencies made a series of improvements. For example, USTR
instituted a monthly conference call with the chairs of all
committees, and the agencies created a new secure Web site to
allow all cleared advisers better access to important
documents.
With regard to the logistics of the system, in 2002, we
found slow administrative procedures disrupted committee
operations and the resources devoted to commit management were
out of step with the required tasks. In several instances, for
example, committees ceased to meet and thus could not provide
advice in part because the agencies had not appointed members.
In our 2007 review, we still found several committees had
not been able to meet for periods of time, either because
agencies allowed their charters to lapse or had not started the
process of soliciting and appointing members soon enough to
ensure committees could meet. To address these concerns, we
recommended that USTR and the other agencies start the
rechartering process and the member appointment processes with
sufficient time to avoid any lapse in the ability to hold
committee meetings and to notify Congress if their committee is
unable to meet for more than 3 months due to an expired
charter.
USTR and the other agencies have taken numerous steps to
address these recommendations. For example, in a recent
communication, USTR described improved timelines, which should
allow the committee rechartering to take place without
disrupting committee business, and we will continue to follow
this issue for the Congress. However, I should point out that,
based on the information in the FACA Web site, some of the
committees have not been holding regular meetings in recent
years.
My third issue regards representation. In addition to the
need to improve certain committee logistics, we believe that
stakeholder representation should be considered in any review
of the system. In particular, as the U.S. economy and trade
policy have shifted, the trade advisory committee system has
needed adjustments to remain in alignment, including both a
consideration of committee coverage as well as committee
composition.
In our 2002 report, we found that the structure and
composition of the committee system had not been fully updated
to reflect changes in the U.S. economy and U.S. trade policy.
In 2007, several committee chairs we interviewed also expressed
the perception that the composition of their committees was not
optimal, either favoring one type of industry or group over
another or over nonbusiness interests. As a result, we made a
series of representations suggesting that USTR work with the
other agencies to update the system and make it more relevant
to the U.S. economy and to trade policy needs. We also
suggested that they seek to better incorporate new trade issues
and interests.
In response, USTR and the other agencies more closely
aligned the system structure and composition with the economy
and increased the system's ability to meet negotiator needs
more reliably. I understand the ongoing review revisits that
issue.
Mr. Chairman, we appreciate the opportunity to summarize
our work before the committee and will be happy to continue to
provide input into the ongoing discussions regarding the
system.
[The prepared statement of Mr. Yager follows:]
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Chairman LEVIN. Thank you very much. I do think that the
testimony from the two of you highlights a dynamic within the
discussion of trade over the last decade.
Ms. Garcia, you indicate that the new USTR has tried to
open up the channels of communication back and forth between
USTR and the private sector.
Dr. Yager, though, you do so somewhat gingerly. I think
your testimony indicates that, while the structure has been
there, it hasn't always been effective. Some of the groups
haven't met. There has been underrepresentation in certain
cases.
So, let me just say, I think what the two of you have said
really characterizes the state of affairs regarding discussion
of trade policy the last decade, and I think it has been true
of this subcommittee and this committee as well as the public
generally.
There has been such a polarization on trade issues, that I
think meaningful discussion and debate has tended to be
stifled. I think that has been true in the Congress, and I
think it has been true generally within the public.
I must say, and I want to focus on the advisory committee,
that it is hard for me to think of a very useful discussion and
a discussion in any depth of trade policy on this subcommittee
or the full committee the last decade. The only exception I
think was when we took up the rather controversial issue of
China PNTR.
The same was true of the advisory proceedings. I sat in on
the COG discussions for a number of years, and they were not
very meaningful. There wasn't a lot of back and forth. They
tended to become automatic.
My hope is that there will be, as I said, an evolution of a
new trade policy and much more effective discussion back and
forth within this Congress; between the Congress and USTR; and
between all of us in the public more generally.
We are going to have to consider the issue of preferences.
I hope that the advisory group, Ms. Garcia, will be in active
participation in the discussion of issues relating to the
preferences. There are some controversial issues within that
realm, and I think we are in need of having that kind of active
participation.
The same I think is true of the participation by some
groups that have felt uninvolved, who have felt that advisory
groups really related to the interests of one sector rather
than all of the sectors.
So I think we can look forward to a much more active
discussion, I hope, within the public and within the Congress
on trade issues, and I hope also between the House and the
Senate.
So let me ask you very quickly, Ms. Garcia, as you do your
work, is that kind of the aim of all of your efforts, to really
take the lid off, to see what the role of the advisory
committees has been, and to really try to see that there is
much more meaningful back and forth so that these meetings tend
not to be too automatic, and also to look at the issue of how
much the work of the advisory committees can become more
public? Because a lot of it I think is cloaked in secrecy,
sometimes because of security issues, but I think more
generally because of the fear that it would inhibit discussion
to have the work of the advisory committees become more public.
So, if you would, comment on what you think is the general
purpose of this review.
Dr. Yager, I will be brief and ask you to be brief, too,
comment on what you think is really needed to have a much more
vibrant discussion within the public, a less polarized
discussion, a discussion that is less about throwing labels
back and forth and a more substantive discussion.
Just tell us briefly what you are really after in this
review, Ms. Garcia.
And, Dr. Yager, don't be too polite. Tell us what GAO
thinks could be done to make this whole process more
meaningful. Just take a minute if you would, and then I will
turn it over to Mr. Brady.
Thanks.
Ms. GARCIA. Yes, sir. There is no doubt Ambassador Kirk
wants to engage the public when it comes to trade, and we want
the advisory committee system to be effective, inclusive and
transparent, while not adversely affecting our trade policy and
negotiations. We want the practice to be as transparent as
possible without compromising our position.
But it is my job, it is our team's job, to engage and to
really touch the public and help them understand how trade
affects their lives.
Chairman LEVIN. Let me just say a word then, and Dr. Yager,
you take over. The WTO negotiations have been on hold, but that
may change, and I have found that there isn't enough discussion
as WTO negotiations evolve between the advisory committees and
the administration and also between the administration and the
Congress. There is a feeling that the administration, this has
been true of past administrations, can't say so much because
they will tip off their bargaining positions. But that has
often made rather meaningless the back and forth between an
administration and the Congress and I think between the
administration and the advisory committees.
So as you look at the role of the advisory committees, I
hope the administration will take a really hard look as to how,
as the Doha round becomes more active, it can be more active
back and forth with the Congress and with the advisory
committees. Okay?
Dr. Yager, do you want to just say quickly----
Mr. YAGER. Chairman Levin, just a couple of quick things.
First off, of course, just to make sure the committees meet
and provide advice, there were some important logistical
changes that needed to be made, and I think, to a large extent,
USTR has outlined some steps in order to make sure that occurs.
Of course, one of the other important things is that the
committee members need to feel that their voices are heard.
There have been times in the past where the different
committees have come back and said they don't believe that the
input that they provided was meaningful, nor did they
necessarily hear from USTR that they would not be able to use
that input in the negotiations. So there are a couple of things
about the process which we think needed some attention, and
USTR has addressed a number of those logistical issues, as
outlined today, as well as in other statements.
As far as the broader question of getting the right people
in the room and making sure that it happens at the right time,
certainly the prior reviews that have been conducted by USTR
and others provides some insight; the broadening of the economy
at the very earlier stages of this system to include services;
More recently, the addition of the non-business interests such
as environment and others; and then, finally, some
simplification of the system that occurred in 2004. We think
these are guides to the current review.
But more than that, there is the shift in the trade policy
needs. Obviously the complexity of the negotiations has been
expanding very rapidly and there are new issues that need to be
considered, whether those are issues related to investment or
public health as some of the legislation suggests. And I think
USTR can also use its outreach. As Ms. Garcia noted, this isn't
the only way they get input. But maybe that is an excellent way
for them to understand what kind of groups can be included.
There are really only three criteria in The Federal
Advisory Committee Act, and those are affected, interested and
qualified persons. But by reaching out to those other groups
through other mechanisms, they can learn who are those types of
groups that are affected, interested and qualified to be part
of the trade committee structure and possibly incorporate
those. Because we do know that people who are part of the
structure feel that their input is valued, and others who are
not part of that structure don't realize or fully appreciate
that their input is given as much weight as those in the
system.
Chairman LEVIN. Mr. Brady, our ranking member.
Mr. BRADY. Thank you, Mr. Chairman.
I would respectfully disagree with the premise that trade
dialogue has been stifled over the past decade. To me, it has
been just the opposite. There has been aggressive hearings held
in the Ways and Means Committee and Trade Subcommittee for the
past decade. The informal groups and trying to put policy
together has been almost a weekly occurrence when we were in
the majority, in my view. Not that it can't always improve, by
the way.
I do think there is a difference between input and
agreement. I don't know about you, but I always think my input
is better when the person across from me is agreeing with my
view, and my guess is, today, I probably get less agreement
looking across the aisle, or at least with USTR, but maybe not
at the outset. And I do think it is important.
I look at your knowledge of trade. It is almost
encyclopedic. I look at the members, whether it is the new
preference programs or trying to harmonize existing ones, we
have a tremendous amount of knowledge and resources on this
committee and Ways and Means. I hate seeing Small Business,
Energy and Commerce, Foreign Affairs, holding 12 hearings and
us next to none. I just think we have a role we can play, and I
am anxious. Again, I am glad to see your expertise as one that
is important to bring to the table.
Another point I would like to make today, I would like to
ask Ms. Garcia a question too about the whole sort of bigger
picture on gathering input from these trade advisory
committees.
But, Dr. Yager, just so you know what I am going to ask you
in a moment, you really cited three areas from the GAO study
that you want to see progress made on. One dealt with the
continual timely meaningful input and feedback that these
groups get. The second one is, are they meeting? Are they fully
constituted, and are we staying on top of the process? The
third was the composition, broadening it, making sure it is
representative. In a minute, I am going to ask you, on a scale
of 1 to 10 on how we are doing on those three so we can see
what else we need to do?
Ms. Garcia, I think a guiding principle should be that all
input is important, irrespective of where it originates. USTR
should hear all sides. Transparency, where possible, is
important, too. I think another important principle is everyone
should be in the room, but it is not clear to me why everyone
should be in all the rooms simultaneously all the time.
Our trade advisory system is set up so that USTR receives
unvarnished information from all stakeholders. It is sent up to
USTR to organize and synthesize to the extent it is able all
the different viewpoints it has solicited and collected.
Putting everyone in the same room for all issues means the
parties tend to end up debating what trade policy should be.
That doesn't strike me as the best use of our resources or
their resources. It seems to me like it might make more sense
for everyone to submit their unvarnished views to USTR and then
have the President, the U.S. Trade Representative and their
staff debate what U.S. trade policy should be, given
Congressional direction, and then go out and implement it.
Not everyone is going to agree on what that U.S. trade
policy ends up being, but at least everyone will have the
opportunity to provide undiluted views to USTR to inform the
administration's thinking, analysis and decision making. In
that area, I think there is agreement. I do agree with Chairman
Levin on looking for ways we can better do that.
With that in mind, Ms. Garcia, I would like to hear sort of
the administration's view on this dynamic. And since you have
been reviewing the operation of trade committees, are there
specific areas USTR is focusing on that we need to be aware of?
Ms. GARCIA. Thank you, sir.
Our outreach first began with the ambassador always telling
us and reminding us that we can always improve, and we then
facilitated meetings, meetings with he and different groups,
different organizations. So that was first and foremost.
Then my office, Intergovernmental Affairs and Public
Engagement, then set out to kind of understand and build a
database that we could communicate with every day on whatever
issue, alert people, ensure that they are well aware of any
kind of news items, any kind of new actions made.
That has served us well. I have been on the job for 4
months, and we have gotten a great deal of calls back that
actually give us confidence that we are moving in the right
direction.
Mr. BRADY. Can we pull up that screen of existing ITAC
structure?
At this point in the game, you have got to finish your
review and sort of put your thoughts together, so I am not
looking for a definitive answer, but are you looking at--let's
get this up here. I apologize. I didn't give you any warning.
Is your thought to add and diversify representation on the
existing ag and industry trade advisory committee? There is the
flowchart up there. The ones in yellow have right now existing
environment, labor, public health, universities. Is your
thought that we would expand the number of advisory committees
themselves or add specific groups to the existing committees or
both?
Ms. GARCIA. Our review is ongoing. We began with the Tier
1, with ACTPN, so I can speak to that, in that we looked at the
charter and understood the language of the sectors that were to
be represented. And then we looked at the list and said, who
else needs to be a part of it? Trade policy affects many
American lives and so we had to ensure that it was a diverse
group.
The next natural kind of movement as we move forward with
the review are the Tier 3s, the ITACs, because their charter is
up early next year. So we are looking at that and working
closely with Commerce in understanding. The first step we did
is asked the members of the ITAC, how is it working? What can
we do better? Should we change names? Should there be a
combination? But we are absolutely asking those tough
questions.
Mr. BRADY. So do you expect some type of reorganization of
the existing 16 ITACs, or do you see the addition of more, and
I am not pushing you, or is that yet to be determined?
Ms. GARCIA. Yes, sir, it is more to be determined.
Mr. BRADY. Dr. Yager, I am running out of time. But can you
give us your thoughts? What progress was made?
Mr. YAGER. I would have to say that, in some ways, the
grades are still incomplete, but not necessarily because USTR
has not taken actions, but it takes some time for us to
understand the implications. One of those, of course, is the
pace of negotiations right now doesn't call for as active a set
of briefings and meetings as occurred a few years ago when
there were an extraordinary number ongoing, not just of the
private sector, but also of congressional staff.
I think one other thing that we would note is we understand
from the testimony that Ambassador Kirk has been holding
meetings with a number of the different panels, but in our
checking of the FACA Web site, those have not been put up on
the site. So it is not easy for people to understand what kind
of meetings are going on with the different advisory
committees. So we think they could certainly improve on that to
make sure that all meetings that are held are recorded so the
transparency of the system is maintained.
Mr. BRADY. Your thought though of the three areas from
meaningful, timely, to recomposition, or making sure they are
running and fully implemented, and then the composition. Are
any of those moving ahead better than others?
Mr. YAGER. We think the plans to ensure that the meetings
are continued, the plans to make sure they are rechartered and
members who are appointed appear to be very sound. They look
like they have put quite a bit of effort into making sure that
will happened. That was obviously a major problem and weakened
the committees and the ability of the negotiators to hear from
the trade advisory people. So certainly they have made great
progress in that area.
They have been responsive in the structure area as well. We
do believe that it would be beneficial for the public to know
why they placed certain members on particular committees. They
have made some changes to identify which groups those
individual members are representing. We think that is very
helpful because it was quite difficult for the public to
understand why those representatives were chosen and who they
represented. So we think they have made significant progress on
that third aspect as well.
Mr. BRADY. Thank you.
Mr. Chairman, thank you for the witnesses.
Chairman LEVIN. Mr. Van Hollen will inquire.
Mr. VAN HOLLEN. Thank you, Mr. Chairman.
I want to thank Chairman Levin and Ranking Member Brady for
having this hearing today, and like them, I hope that we can
achieve some sort of consensus moving forward when it comes to
U.S. trade policy. I look forward to that discussion and
dialogue going forward.
I think it is important to look at the role of the trade
advisory committees and how we can make them more useful and
more effective and also provide assurances to the public that
the full range of voices are at the table there. Clearly, the
trade advisory committee should have a large representation
from U.S. business interests. After all, we are trying to
advance a trade policy and increase our exports.
I think we would also agree it is important they have
representation from consumer interests and public health
interests. We have seen a number of instances recently of
challenges to our food safety system here in the United States,
and I think if we had more voices at the table advancing public
health interests, we would be well served.
I just had a couple of questions in that regard, because if
you look at the overall representation on the trade advisory
committees in the area of health, you have, as we should,
healthy representation from the health care industry, but very
little representation from public health groups. In fact, the
numbers I have show that of the 65 health-related advisers
throughout the tax structure, only two of them currently
represent public health interests.
So, Ms. Garcia, I was pleased to hear, as part of the
Presidential Advisory Committee, the top tier, you are going to
have voices that represent consumer interests and the public
health interests. Any idea when you are going to be making
those announcements?
Ms. GARCIA. We are working with the White House. It is
going through the formal vetting process. So I don't have a
timeline, but you and your staff will be one of the first to
know.
Mr. VAN HOLLEN. Thank you.
Mr. Doggett and I have introduced legislation to try to
ensure that, going forward, we have adequate representation
from public health interests, so it is not something left to
the whims of any particular administration, because we think
that the American public should be confident that, regardless
of what administration we have, there are representatives
looking out for their public health interests as part of the
trade advisory committee structure, and we have proposed the
creation of a Tier 2 policy committee that would advance the
public health interests at the table.
I see from your testimony that you are in the process of
trying to explore the best way to ensure those voices at the
table, and I think we are happy to work with you in terms of
structuring exactly what form that takes.
But would you agree that it is important to ensure the
ongoing representation from those public interest groups,
health interest groups, to have something in the legislation to
ensure, whether it is a committee dedicated exclusively to that
or ensuring that public health voices are there at the policy
level committees in adequate numbers, would you agree that we
should do something through the legislative process?
Ms. GARCIA. We will definitely use the review process to
determine what is the best way to ensure the public health
community is represented in our trade policy decision. At this
time, the review of the committee system, we haven't made that
determination. But we are focused and looking at steps that we
can take immediately.
Mr. VAN HOLLEN. Would you agree that under the current
system, the decision as to whether or not you have public
health representation in the structure is left entirely to the
executive branch?
Ms. GARCIA. We have public health representatives presently
at the Tier 2 level as well as at the Tier 3 level.
Mr. VAN HOLLEN. Right, we have them, but they can come,
they can go, based on the decisions of the executive branch.
Isn't that the case, depending on who is USTR or who the
President may be?
Ms. GARCIA. Correct.
Mr. VAN HOLLEN. Then wouldn't you agree, if we want to
ensure there are representatives looking out for the public
health on an ongoing basis, we should have something that
ensures that those voices are at the table?
Ms. GARCIA. I believe that, as we look to each of the
different tiers of the committees, we will ask those tough
questions and see which voices are not represented and ensure
that there is a balance.
Mr. VAN HOLLEN. Okay. Thank you. That wasn't quite
responsive, but we look forward to working with you.
Thank you, Mr. Chairman.
Chairman LEVIN. Mr. Van Hollen, since you had 25 seconds
left, I think this exemplifies the need to face these issues
and to really get the starch out of the discussion of trade and
make it a much more vibrant, realistic back and forth.
So I think your legislation helps to illustrate the need.
I think next is our friend from Kentucky, Mr. Davis.
Mr. DAVIS. Thank you, Mr. Chairman.
Ms. Garcia, I know the Commerce Department has taken a
leading role when it comes to managing and overseeing the Tier
3 ITACs, but I would like to follow up on this issue,
maintaining the integrity of the particular perspective that is
being communicated to the USTR.
Sometimes when we talk about inclusion of multiple
interests, we can get folks that don't even speak the same
language or have different definitions for the same terms.
Imagine putting engineers and production people and medical
people, et cetera, in the same room that don't have common
processes or procedures. There could be confusion or conflict
that could ultimately hamper the way these systems work.
Many of the Tier 3 ITACs have extremely broad mandates as
it is now. For example, ITAC 2 basically covers all capital
goods, from ball bearings to drilling equipment and everything
in between. ITAC 4 covers all consumers goods, from soap to
Harley Davidsons. ITAC 13 has textile producers and apparel
companies.
The point I am trying to point out is many of these
committees have a membership that is already so diverse and so
complicated that it is enormously difficult as it is to provide
information to USTR that both reflects a consensus and is also
helpful from a technical standpoint as opposed to the political
decisions that influence on a broader base that will be taken
into consideration on the first two levels.
This makes me wonder if including even more representatives
on these ITACs, which are designed to provide this technical
nuts and bolts advice, would complicate the mission so
substantially as to make the ITACs effectively useless. It is
kind of a moral equivalency issue where every voice is equal,
when if fact perhaps a person that has valid concerns that
would be represented at a Tier 1 or Tier 2 level might in fact
not be schooled in the actual technology or technical aspects
of trade or the products that are in discussion in that
industry specific ITAC. I think finding that right balance, as
you mentioned, is a very critical part, so we have meaningful
dialogue that benefits the country as a whole.
In any event, I am getting the impression that everybody
thinks the committee tier that they are on is not the tier that
informs key administration policy decisions. Some claim that
the Tier 1 ACTPN is secret. Other say Tier 2 is where the real
action is because those committee meetings are held by high-
ranking administration officials. The Tier 3 technical
committees have long been accused of being a black box and
there is a history of litigation on this very point.
Ms. GARCIA, isn't it the case that each of these tiers
plays a unique and specific role, and that together they
provide a base of information and input that the administration
is going to rely on in crafting trade policy?
Ms. GARCIA. Yes, sir. The committees, as they are now in
the three tiers, we rely on them and we ask advice and we seek
balanced advice, and we believe that membership is made up in
the three tiers. But, again, we are in a review, and those are
the types of questions that will we will be asking.
Mr. DAVIS. Do you have a concern that the potential with
Tier 1 and Tier 2 having a political tinge to it, which is not
necessarily a bad thing, based on the outcome of elections and
the administration, but at the Tier 3 level, because the level
of arcane technical detail that many of the products
necessarily have to deal with because of Federal regulations or
the unique needs of potential trading partners, are you
concerned that it might not politicize the Tier 3 and reduce
its effectiveness if the base is broadened out with many
additional interest groups being represented to try to come to
consensus?
Ms. GARCIA. I am sorry, I don't know if I understand your
question.
Mr. DAVIS. By adding a lot of additional groups that aren't
necessarily germane to the immediate product needs recommended,
do you think that could have the impact politicizing and thus
weakening the ability of the Tier 3 ITACs to do their job?
Ms. GARCIA. No, sir. Again, we depend upon the advisory
committee system to be effective, and in that effectiveness,
there is diversity in voices. I think that with that
inclusiveness and with some transparency, I think it would take
away any kind of questions or political questions that there
might be.
Mr. DAVIS. The other question I have is on the competitive
side when we talk about transparency; businesses that compete
against each other sometimes when they are asked for their
opinion at the Tier 3 level, thanks to the confidentiality,
share proprietary information about their businesses that could
affect thousands of employees, American citizens, who are
working here in this country.
Are you committed to assuring that that confidentiality
would be protected in this transparency process so that
proprietary trade and pricing information that is critical to
the way these businesses function and compete in both the
domestic and international economy would be protected?
Ms. GARCIA. Absolutely. We want this process and this
advisory committee to be open, but at the same time, we want to
ensure that we are not compromising our trade negotiations or
enforcement actions.
Mr. DAVIS. Thank you.
I yield back, Mr. Chairman.
Chairman LEVIN. Mr. Neal.
Mr. NEAL. Thank you very much, Mr. Chairman. There is an
obvious disconnect between the perception that the American
people have of the benefits of trade and the reality of what
most economists will testify to regardless of their political
persuasion. What kind of steps might be taken to further engage
the American people in these discussions of trade and how its
benefits accrue across the board?
I must tell you that trying to discuss this issue in some
sectors is nearly impossible, including some parts of my own
party who have a reaction that is largely based upon what their
constituents witness every day as opposed to this notion that
trade ought to lift everybody.
Ms. Garcia, Dr. Yager perhaps.
Ms. GARCIA. Yes, sir. With our outreach, it has been a
number one priority for Ambassador Kirk to ensure that the
first thing that we did was we updated the Web site and we made
sure that we reached out to an on-line community, new
generations that are coming of age and wanting to understand
about trade and inquiring about it. And so we made sure that
that was one way that we brought trade to the discussion.
The second is our outreach, is the Ambassador directly
meeting with people and at all levels, from all ages. And I
think with our work in my office, it is important that we keep
people in touch. We have a weekly newsletter that we highlight
as we grow our database.
Mr. NEAL. Dr. Yager.
Mr. YAGER. Yes, sir, Congressman Neal, I think that in some
ways the struggles that occurs within the system, whether it is
within a particular committee or within, for example, the
second tier where there really are difficult discussions about
which way a trade policy should go is, in fact, I think a good
outcome of the trade advisory system, because it does reflect
the debate and should reflect the debate that goes on within
the United States to handle and to try to come to decisions
about those very difficult issues.
So I think that to some extent a successful system will
address those most difficult issues within the United States so
that the United States can come to a position and then go to
the negotiations with a solid position, but I think that as we
have heard from others, there certainly are differences. Some
very difficult types of meetings occur when you have a broad
array of differences represented within the meeting. But in
some ways that is the purpose to accomplish that, to hear those
voices and then to come up with a single policy that can be put
forward.
Mr. NEAL. I think we all would agree that the opposition to
many of these bilateral agreements largely comes from
manufacturing States and regions. How might you suggest that we
proceed in convincing people who have either lost their jobs,
watched the plant close or are in danger of losing their jobs
that there are benefits to trade?
Ms. GARCIA. I think one of the first things that we will
look at and that I know we have been engaged in is looking
first and foremost to have town hall meetings and to go to
States or cities.
Mr. NEAL. If you are going to do that in Akron, Ohio, you
better bring a helmet.
Ms. GARCIA. Fair enough, fair enough. Again, it is about
going and being bold enough and engaging, and that is a
priority, and we are looking at doing things like that. But
also, you know, it is important to be able to talk about trade
and about the fact that we are also ensuring that enforcement
actions are being made and jobs are--regarding areas of
manufacturing as we trade those goods are being protected as
well.
Mr. NEAL. I thought the President's position a week ago on
community colleges offered considerable hope and opportunity
along the lines that would go far beyond town hall meetings
where you try to pursue an esoteric academic position. I
thought that the President's effort on the role that community
colleges might play in furthering this discussion made a good
deal of sense. I think that is a concrete proposal, as opposed
to this notion that we can have a seminar to discuss the
benefits of trade. One of the difficulties between perception
and reality is that when the discussions are over, trade
lawyers have their jobs, editorial writers have their jobs, and
trade representatives have their jobs. So oftentimes the
individual who is in the plant doesn't have his or her job. I
think the use of a community college system offers one real
possibility as opposed to the usual suggestion that we have had
just about retraining. I think that there are those
opportunities for individuals.
So thank you, Mr. Chairman.
Chairman LEVIN. I thank you. By the way, Mr. Neal, I think
we will hear from the second panel that, in answer to your
question, there is a feeling that we need to bring within the
advisory structure more vigorous, honest debate of differences
on trade policy, that there has been a failure the way it has
been positioned and staffed, or appointed, that there hasn't
been that diversity of view within the structure to make the
advisory committee structure work as effectively as it might.
Let's go on, Mr. Reichert, I think Congressman Reichert
from Washington, you are next.
Mr. REICHERT. Thank you, sir. This is for Ms. Garcia. I
represent a district in Washington State that is probably one
of the most trade dependent States in the country. One out of
every three jobs in Washington State is directly related to
trade. And I first have to say I was quite disappointed in one
of my first hearings here in late February when Secretary
Geithner appeared and presented his summary report on the
President's budget, and there was no mention of trade as a
piece of economic recovery, and it should be a centerpiece, in
my opinion, and a focus for our country. So I think it is sort
of the forgotten economic stimulus. It is not the end-all
answer to everything, but it certainly is one of the important
aspects of economic recovery.
So I am glad that we are having this hearing today and glad
we are investigating the effectiveness of trade advisory
committees and that entire system. But I do think, too, along
with all the other members here, it is important for all the
voices to be heard, including those of a trade dependent,
organized labor, organizations like longshoremen, for example,
and the machinists. They should have opportunities for input
into our Nation's trade policies.
So there has been a lot of focus on the technical sector
specific advisory committees which you have sort of outlined in
your testimony. But could you share with the committee what the
Office of the U.S. Trade Representative does outside of the
formal trade advisory process to ensure that all parties are
heard from, or even informed and educated?
Ms. GARCIA. The trade community as well as other
stakeholders have been an intricate part. I mean, we stay in
touch with them. And what we do with the on-line community, but
more than anything, I think what we have had to do is ensure
that we spread the word. And Ambassador Kirk recently had a
speech, and we ensured that many communities received and
understood what was actually being discussed, and why, and how
it affects them. So when it comes to our daily work, we touch
base with our stakeholders and we touch base with different
audiences, but we ensure that we stay in touch when it comes to
our outreach.
Mr. REICHERT. So there is no formal process is kind of what
I am hearing from you. Am I hearing correct, or is this kind of
an informal process that is set up to reach out to people
outside of the trade advisory groups? Is there a plan?
Ms. GARCIA. Yes, sir.
Mr. REICHERT. Can you describe the plan to me?
Ms. GARCIA. Well, it is a plan in that we actually touch
base with groups when it comes to upcoming discussions. So it
is us checking in with groups and with individuals. And we make
sure that they are well aware of what is going on that month or
that quarter.
Mr. REICHERT. Which groups and which individuals and what
communities are you speaking about when you are talking about
that communication process?
Ms. GARCIA. It is people that actually are interested and
have touched base with us.
Mr. REICHERT. For example.
Ms. GARCIA. Well, it is different trade associations, but
it is also small businesses, medium size businesses, State
groups that are dependent upon their ports, and so forth.
Mr. REICHERT. Can you give me a specific business or
community?
Ms. GARCIA. We have reached out to, I believe it was the
National Conference of State Legislators. They have a committee
and we go and we ensure that we talk about issues like ``buy
America'' provisions or procurement questions that they might
have.
Mr. REICHERT. It still seems a little bit unstructured to
me. I would look forward to working with you and the Ambassador
and the administration and in looking forward to making some
sort of structure that lays out a plan to reach out, educate,
and include everyone.
So Mr. Chairman, thank you, and I yield back.
Chairman LEVIN. Mr. Doggett will inquire.
Mr. DOGGETT. Thank you. I think there is a great bipartisan
interest in engaging more Americans to support more
international trade. But what we see today is that you cannot
expect to engage more by excluding all but a select few
commercial interests from the decision-making process that
develops our trade policy.
While hardly a substitute for the first ever hearing
devoted exclusively to trade and environment that I was
promised last year, again this year, and which should occur as
soon as possible in this subcommittee, today does focus on one
important aspect of the mindset, the traditional exclusion at
USTR of the broader public interest. If references to
considering the environment and workers that are often made in
talking about trade policy are to be anything other than just
rhetorical flourishes, they must be given meaning in the daily
operations of USTR.
Nine years ago I met personally with President Clinton to
discuss this issue. Now Chairman Henry Waxman and George Miller
joined me in meeting Ambassador Charlene Barshefsky to discuss
our concern that nongovernmental, public interest
representatives be added to the industry sector advisory
committees as they were called then.
The Clinton administration pledged to do just that. But
time has passed, and in a decade the acronym has changed but
not much else. The so-called Tier 3 committees have never
included outside public interests except for when a court has
forced them to do so.
I am pleased to have Ms. Garcia here, until recently an
Austinite, who is working with Ambassador Kirk, as she has
testified, to address this.
The team at USTR that is there today, this new team, cannot
be held accountable for the closed shop and the myopic trade
policy of the past, but it must be held responsible for
fulfilling the pledges of President Obama to change that. These
advisory committees are a very good place to start.
Dr. Yager, I think the work of GAO has been important in
demonstrating how totally meaningless the so-called public
participation in developing trade policy has often been. If
Ambassador Kirk called some of these committees recently, he
had one more meeting that occurred in the space of several
years during the last administration.
I would begin, Ms. Garcia, by asking you--and all my
questions are very specific--when can this Congress expect to
receive a complete report of the results of the review that you
have been describing so that the public can understand fully
how you are implementing and fulfilling the pledges of
President Obama for reform?
Ms. GARCIA. The review process, as I stated earlier, is
ongoing, yes.
Mr. DOGGETT. So I just want to know when it is reasonable
to expect that you will report all the details of that process
to this Congress.
Ms. GARCIA. As we follow along this review process, we are
following along the rechartering timeline.
Mr. DOGGETT. I want to talk about rechartering next. But
just the review itself that you are doing, this thorough review
to reform and conform to President Obama's pledges, when will
we have the report on that here in Congress so that we can
begin to understand how you are fulfilling his promise?
Ms. GARCIA. Yes, sir. I don't have a timeline.
Mr. DOGGETT. Will it be this year?
Ms. GARCIA. I hope so. Well, I hope so too, because what
has happened here has been going on for too long and your
opportunity to change it has been brief, but it demands
immediate action.
Let me ask you about something that Dr. Yager testified to
a minute ago. I am pleased that on behalf of President Obama
that Ambassador Kirk has visited with these various committees,
but there is no good reason why that shouldn't have been posted
so that we had full transparency as he noted. Let me ask you if
you will commit on behalf of USTR to conduct a thorough review
of all barriers to public access to trade policy, not just the
classification of documents, though that is important, but
anything else that keeps of sunlight out of this process, such
as providing timely notices of meetings, whether they are
telephone conferences or otherwise, the decision to open or
close meetings. And will you provide us a report on whether
these procedures are necessary, as I know they are sometimes,
or whether there are opportunities to reduce or eliminate
barriers to the public knowing what is going on between USTR
and those representatives on advisory committees?
Ms. GARCIA. Yes, sir. We are looking at what we can publish
but keeping the balance of course.
Mr. DOGGETT. When could we expect to have a report on that?
Ms. GARCIA. Again, I don't have a deadline. I don't have a
timeline.
Mr. DOGGETT. And just lastly, if you are already beginning
the chartering process, when I read these charters, some of
them are very narrow in terms of what they include in the
advisory committees. And so the advisory sommittee chartering
process is itself a decision on whether or not public health
representatives will be included.
Has there during the sharp periods where a court forced
prior USTR to have public representatives on these ITACs, or
industry sector committees, whatever they were called, do you
know of any evidence whatsoever that the concerns that have
been voiced here about the dangers that would result if the
public were representated on these ITACs? Is there any evidence
at all that that ever occurred where somebody related
competitive information or the ITAC just became such an area of
political conflict it couldn't do its job?
Ms. GARCIA. I have been on the job for 4 months. I am not
aware, but I can get that information.
Mr. DOGGETT. I welcome getting it, because I think these
arguments are raised, they don't have validity. Members of the
ITACs have one competitor revealing information to another
competitor who served on the committee. And so why can't the
public share in that? Why does it have to be a closed shop
where the public is excluded, but a few commercial interests
meet privately and share their views with USTR?
That is what we need to know. If there is in evidence there
has been harm in the past, there ought to be ways through
confidentiality to protect that, but please report back to us
promptly on what evidence there is that this has ever been a
problem during the times that the courts forced USTR to do what
it should have done on its own initiative.
Thank you.
Chairman LEVIN. All right, thank you very much. Mr. Herger.
Mr. HERGER. Thank you very much, Mr. Chairman. I would like
to follow up on that line of questioning actually with some
concerns that I have. The Federal Advisory Committee Act, or
FACA, is a broad, extremely well-intentioned statute, but it
uses a one-size-fits-all approach. The strategic activities
that USTR conducts often don't fit that broad, blunt approach.
So Congress wisely provided USTR with certain exemptions to
FACA. One important exemption is that the trade committee
meetings are not required to be open to the public when USTR
staff and the ITAC representatives are exchanging sensitive
information such as candid commercial information from the
businesses or the business side of negotiating positions from
the government side. Making these meetings public would give
our trading partners access to commercially sensitive
information and would also offer a clear line of sight into the
U.S. negotiating position. It would seem to me that this would
effectively destroy our ability to negotiate the best possible
trade result for U.S. workers, farmers, as well as the public
interest in these negotiations.
Another possible scenario is that the ITAC would simply
cease providing useful information to USTR altogether, because
they know it would be scooped up.
I was disappointed to learn that the Oversight and
Government Reform Committee reported a bill that would remove
some of the USTR's exemptions to FACA statute. In the past our
committee has exchanged letters with Oversight on this issue,
ensuring that they recognized our bipartisan jurisdictional
interests and addressed our concerns. I would hope that this
committee take similar action this year to ensure our
prerogatives are not overrun by other committees.
Ms. Garcia, could you expand on what would happen to the
role of ITACs in our trade agreement negotiations if our
trading partners were allowed to monitor ITAC meetings? And
would you describe if your agency is comfortable with the
substance of the FACA reform bill as reported by the Oversight
Committee?
Ms. GARCIA. As we look for opportunities of inclusiveness
and transparency we understand that we need to maintain a
balance not to compromise our trade policy, and that is
absolutely at the forefront of our review and ensuring that as
we work and visit with our negotiators when it comes to this
review.
Mr. HERGER. And why is that so important to have this
balance? Would you go into that just a little bit more?
Ms. GARCIA. I think as you are reviewing a structure you
always have to ask those types of questions. If we made this
choice, what then would happen. So it is absolutely something
that we are always asking ourselves and ensuring that that we
keep that balance.
Mr. HERGER. And do you recognize the concern that I have
expressed of opening up to our trading partners what it is we
are doing and the importance of keeping this within ourselves?
Ms. GARCIA. Yes, sir. Yes, sir. It is important that we
have this discussion and that we as an agency are looking at
this review. But there is no doubt there is a great deal at
hand and we want to keep that balance.
Mr. HERGER. I appreciate that, Ms. Garcia. Thank you, and I
yield back.
Chairman LEVIN. Thank you very much.
Mr. Etheridge, it is your turn.
Mr. ETHERIDGE. Thank you, Mr. Chairman. And let me thank
both of you for being here. I know today Ms. Garcia is about
the advisory committees, but since you are here I want to get
at least one question in. I am not going to ask you to respond
to it, but I will ask you to get me an answer back from
somebody.
Ms. GARCIA. Yes, sir.
Mr. ETHERIDGE. And let me give it to you. Because we talk
about advisory committees. They are very important because they
give input. I want to talk about a real live situation, where
people's lives are being turned upside down, they are losing
their jobs and being displaced. And it really is about
enforcing our trade agreements with other countries. So let me
just share that with you, and then I will come back to a couple
of questions on advisory committees. Because in my home State
we are looking at 11.1 percent statewide unemployment. Our
State is the 3rd worst in North Carolina in terms of a budget
crisis. We are a State that is heavily dependent on exports,
agricultural exports, manufacturing exports, et cetera.
And recently we were caught in a perfect storm with the
outbreak of H1N1, or so-called swine flu. It had nothing to do
with hogs except for the fact that it just said swine. So guess
what happened to our pork producers? They not only got hit in
the chin, they got hit everywhere else. And there is no
scientific evidence that that had any impact other than the
fact that nine countries now continue to hold restrictions on
U.S. pork products as a result of that, most notably China.
And here is my question and I that I want an answer to,
what is USTR and the administration doing or, better yet, what
will they do to ensure that those markets are open to U.S. pork
products since there is no scientific evidence that they are
linked? And hopefully I can get something back in writing on
that, because that is having a significant impact on our
farmers, but it is radiating all across the whole community.
And secondly, not only do our pork and poultry producers,
but all of our economy in our State benefit from access to new
markets. So obviously fair trade is important to our State and
I know we are looking at a number of opportunities, and I look
forward to talking about that in the days and weeks to come.
So my question to you on advisory committees is this,
number one, will the administration be seeking legislative
changes to the trade advisory system? And if so, what changes
are considered desirable?
Ms. GARCIA. Yes, sir, I would be happy to get back to you
with that information.
Mr. ETHERIDGE. Are you prepared to answer the last
question, and that is will the administration be seeking
legislative changes to the trade advisory committee system? And
if so, what changes are considered desirable? Do you feel you
need to get back to me in writing as well?
Ms. GARCIA. No, sir. At this time we are reviewing the
committee system and have not made that determination. We are
focused on looking at what we can do immediately in the short
term, but----
Mr. ETHERIDGE. Any timelines?
Ms. GARCIA. No, sir.
Mr. ETHERIDGE. Any idea of a timeline?
Ms. GARCIA. Yes, sir. We are working diligently with this
review and again following the rechartering process, you know,
but we are being efficient and will be timely reporting back to
you all.
Mr. ETHERIDGE. Will you be kind enough to keep this
committee informed and the members of this committee?
Ms. GARCIA. Absolutely.
Mr. ETHERIDGE. That would be very helpful just so we know
where we are going.
Dr. Yager, are there any specific recommendations that you
made either in the GAO 2002 report or the 2007 report that have
not been implemented by the respective agencies that would
ensure that our international trade discussion is open to new
perspectives and there is transparency in them that needs to be
there for the public interest?
Mr. YAGER. Yes, Mr. Etheridge, let me respond in two ways.
First, there is one outstanding recommendation that we have,
which is to clarify which issues the members that are appointed
represent and explain how they determined, how USTR and the
agency determined why they would place those particular members
on the committees. We think that would be very helpful for
those who would like to observe and be aware of how the trade
advisory system is working.
One other thing that we have noticed as we were doing the
work, and prior to this hearing, is that there does appear to
be a divergence right now between the practice of meeting and
what is written in the trade advisory system. So for example,
there seem to be a number of liaison groups that are meeting
particularly at the Tier 2 level where it is not the principals
that are named within the advisory committee structure, but it
is their liaison group that is meeting.
I think one of the things that we would suggest is that
when the practice that is occurring within the advisory system
diverges significantly from the stated policies, that it
probably warrants a review to determine whether any changes
need to be made.
Mr. ETHERIDGE. Do they meet on a stated regular basis or on
call?
Mr. YAGER. Well, I think what is happening is that in a
number of the particularly Tier 2 committees there is a group
of liaison officials who are meeting on behalf of their
principals. But those are not official meetings and therefore
they are not noted in the FACA Web site or in the database. So
we think that when a practice like that occurs, it probably is
worth looking to see whether those meetings should be happening
or if those are an effective way of gathering the input, and
maybe the system should be modified to be transparent about the
fact that those meetings are taking place.
Mr. ETHERIDGE. Thank you. Thank you, Mr. Chairman. I yield
back.
Chairman LEVIN. Mr. Nunes.
Mr. NUNES. Thank you, Mr. Chairman.
Mr. Chairman, I understand the administration is conducting
a review of the trade advisory committee system. We are of
course doing the same thing here by holding this hearing, and I
hope what we are trying to figure out is an offensive strategic
way to move forward on our trade initiatives. If that is our
goal, then I am all for this hearing.
However, if what we are really talking about is how to
provide groups who oppose trade with a greater ability to
affect the direction of this administration's trade agenda,
then I think we are wasting our time. Because as I survey the
current scene it seems to me that these groups are doing a
really good job at stopping our trade agenda in the existing
advisory committee structure as it currently stands.
When I look around, what I see is these groups have a
stranglehold on our efforts to expand exports. We are not
moving forward with pending trade agreements with Colombia,
Panama, South Korea, and we are not even negotiating new ones.
We are not holding hearings in this committee or subcommittee
on trade agreements. It appears to me that the unions and the
radical environmentalists are winning and the American people
are losing.
I will ask a simple question, Ms. Garcia and Mr. Yager, is
trade dead in this country? Do either of you see us moving
forward at all in any trade agreements?
Ms. GARCIA. The President believes that the United States
needs a new framework for trade. But to accomplish this trade
agreements need to include strong labor and environmental
standards. And we need to do a better job enforcing our trade
agreements, as well as domestic policies to help Americans
succeed in an increasingly dynamic economy. The President will
outline this framework in the near future.
Mr. NUNES. Well, I am waiting with bated breath to see what
we are going to do. But as for now I will take it as trade is
dead.
Mr. Yager, do you have a comment?
Mr. YAGER. I can make a brief comment, Representative
Nunes. We have done work for the Congress in I think a number
of areas which we believe would contribute to the discussion.
For example, we have done significant work on the trade
adjustment assistance policy, which assists dislocated workers.
We have done a significant amount of work on monitoring and
enforcement on existing trade agreements where we have given
some suggestions to the administration on how to better ensure
that the trade agreements are effectively implemented.
And finally, we made a significant investment in the
system; for example, this particular trade advisory system. We
stand ready to assist the Congress in any way to do additional
work to help you understand or to discuss the tradeoffs and the
issues raised by any of these issues.
Mr. NUNES. Now on that point, Mr. Yager, I think you guys
have done several studies at GAO, and you mentioned in your
testimony, I think I am quoting you exactly, but in the past 7
years you recommended changes on member appointment and
committee rechartering. You also stated that not enough time
has passed to assess whether the steps already taken fully
address the problem.
Can you expand on that a little bit? I think you were
headed there anyway.
Mr. YAGER. Yes. One of the things that Ms. Garcia mentioned
is that they have started the rechartering process well in
advance of the termination of those committees. And we think
that is necessary in order to ensure there isn't a significant
break in the process. So we will know whether that is effective
as the committee charters expire and they need to be
rechartered and add new members.
We do look at the plans and, if they are able to carry out
those plans, then it does appear that there will be no break
and this particular plan that has been put in place will be
effective. But since the recharters have not been necessary
yet, it is difficult to know whether the steps taken will in
turn be effective.
Mr. NUNES. For both of you, so the countries that we
negotiate with, are all their meetings open to the public? Like
when we negotiate with South Korea are they open to the public?
Ms. GARCIA. I am not sure on that specific example.
Mr. NUNES. Okay. So do other foreign countries, whether it
be Panama, Colombia, Chile, who we have negotiated trade
agreements with, did they have public interest groups sitting
at the table at every single committee? I think the answer is
no.
Ms. GARCIA. I am not sure, sir.
Mr. NUNES. Do you know?
Mr. YAGER. I don't know specifically about those countries.
I do know that when we speak to members of our countries and
discuss the process for gathering input in the United States we
have heard back from some countries that they appreciate the
processes that the United States have put in place; for
example, having to do with the rulemaking process, the public
input into rulemaking and others. And so we actually see that
some countries have adopted practices or at least taken some of
the practices that we have and utilized those because that
provides a greater degree of transparency than they had in the
past.
Mr. NUNES. Well, Mr. Chairman, I know my time is up, but I
would strongly encourage us here in this committee, the Ways
and Means Committee has the jurisdiction over these trade
agreements. And I would prefer as elected officials that we do
our job similar to how elected officials in other countries do
their job and not bring a lot of unelected individuals into
this process. I think the process is already long enough, takes
too long. At this point it seems like our trade agenda is, if
not dead, at least stalled.
I yield back.
Chairman LEVIN. I don't think it is dead. I don't think you
mean to say that we should shut out the public from
participation in discussion of trade policies, Mr. Nunes. I
don't think that is what you are saying.
Mr. NUNES. No. What I am saying, Mr. Chairman, specifically
is that we are elected by the people to do our job, and I think
if we begin to bring in outside interest groups into this
process, whether they be various NGOs or public health
organizations or that sort of thing, we are basically I think--
in my opinion, we would be delegating our job and our
responsibilities that we are elected on behalf of constituents
that we represent to others who are unaccountable, and that is
my concern.
Chairman LEVIN. We are not delegating any more than when we
hold town hall meetings that we are delegating our
responsibility.
Mr. Pomeroy is next.
Mr. POMEROY. Mr. Chairman, I would just say that I 100
percent disagree with the line of questioning of Mr. Nunes. And
I think a hearing like this is fun to kind of bring out the
varying perspectives. I tend to agree, to take the view that
there has hardly been a trade deal that our Ivy league
educated, silk shirted, trade negotiators couldn't lose in half
an hour. We need to have broad input into the process from
immediately impacted constituencies. So the advisory process is
established to create exactly that.
I think sometimes this whole negotiation business gets to
be a club. And they look at how many deals they can put up
whether or not there is a win on the board. Good deal, it is a
win, bad deal, it is a deal, it is a win. And I think that we
need to change that. I don't see trade deals that don't advance
U.S. interests--as far as I am concerned they are not worth
doing. We need to recalibrate a little bit in how we proceed in
that way.
Now one of the things that interests me is this note in the
GAO report that increasingly the U.S. advisory committee
information which is supposed to be considered and responded
to, not necessarily accepted, it sounds like there is going to
be quite explicit provisions for transparency in the dialogue
with an expectation the advisory committee hears back when
there is a departure from their counsel and that that is only
occurring about 50 percent of the time. Is that what the study
shows, Mr. Yager?
Mr. YAGER. That is correct. We did get significant feedback
that certain members, and I do not have a specific percentage,
but in our the survey of 2002 we asked that very question.
There was a considerable number that did not feel they were
being informed when the decision did not go their way and the
direction of trade policy was not accepted. So we did have a
recommendation that that we done more systematically, that kind
of feedback be provided more systematically.
Mr. POMEROY. Was there any trim line notice? Has that been
an increasing practice or that just the professional crew takes
or leaves the advice and moves forward without really complying
with the expectation they are to report back and maintain a
dialogue.
Mr. YAGER. Mr. Pomeroy, maybe the second panel can give you
up-to-date information. Our information, we do these snapshots
of the views of the committee members at certain points in
time. So I cannot give you information as to whether it has
improved since that time. As I mentioned earlier, I think the
pace of negotiations and the meetings right now is
significantly off where it was at one point. So I think there
is less opportunity to observe the system and see whether that
kind of feedback is being provided.
Mr. POMEROY. And there is more opportunity for our
negotiators to school up. I have been amazed at the
intellectual capacity of our negotiators to handle so many
specifics of so many sectors all at once, but nobody is perfect
and that is where this kind dialogue is so particularly
important to keep us on track. We have certainly seen that in
agriculture where some nuance of a particular crop versus a
State trading enterprise, it may look fine in theory but look
on the ground there is some application here that our
professional staff at USTR needs to know about. To the extent
the advisory committee broke down, there becomes a robust
dialogue between USTR and the congressional community. That is
a bit extraordinary. I think an ongoing, meaningful dialogue
with the advisory committee would be a far better practice. It
goes back to 35 years of trade policy, so it clearly has been
something contemplated, and I just would hope that I think your
report has value in terms of making certain we don't get a
little soft in terms of the honoring the dimensions of those
dialogues that are so important.
I thank the gentleman. I yield back, Mr. Chairman.
Chairman LEVIN. Thank you very much. Mr. Tanner will
inquire.
Mr. TANNER. Thank you very much, Mr. Chairman. I am sorry I
was delayed getting here. This is a topic of great interest to
this subcommittee and very important to our country.
Ms. Garcia, I want to ask you, many of us who see the
benefit of trade sometimes do not have the information
disseminated to the general public that would bolster our
positions, and I wonder, do you have a plan to talk about the
benefits of trade in a way that is a little more forceful and a
little more specific than we have seen in the past?
Ms. GARCIA. I am sorry, are you speaking--I just wanted to
make sure I understood the question.
Mr. TANNER. What is it that you don't----
Ms. GARCIA. Could you repeat the question, sir? I am sorry.
Mr. TANNER. Do you have a----
Ms. GARCIA. A plan.
Mr. TANNER. In the past we have had trade bills that I
thought were meritorious. From USTR we are not getting, in my
view, the information disseminated to the general public that
would bolster our arguments inside the Congress. I want to know
if you have any plans to make a more forceful or a more
widespread effort to educate people about the benefits of trade
and what it means to job creation in this country. I think it
has been woefully inadequate and would like to know if you have
a plan to address that.
Ms. GARCIA. Yes, sir. Our Web site that we recently
launched is interactive. So people can come on and blog, ask
the Ambassador questions, engage the USTR team, as well as
video blogs and so forth. So we are absolutely--you know, that
is important to us and we are working through different
mediums, but definitely our newly launched Web site.
Mr. TANNER. Thank you, Mr. Chairman. I yield back.
Chairman LEVIN. All right. I want to thank you on behalf of
all of us for this testimony and for the back and forth. I
think these issues are very much alive and trade is with us and
expanded trade is with us, issues relate to how we shape the
terms of trade, and the role of the advisory committees, I
think those roles are important, and this is a hearing and is a
step to try to make sure that the back and forth is real, not
theoretical.
So thank you again, and we will now call the second panel.
Dan Magraw is the President of the Center for International
Environmental Law and a member of the Trade and Environment
Policy Advisory Committee. Welcome, Mr. Magraw. Thank you.
Mr. Hoelter is Vice President, Government Affairs of
Harley-Davidson. I won't ask you how you journeyed here,
whether you came on a Harley-Davidson vehicle. Congressmen
sometimes ask people how they arrive here, but I won't ask you
that.
Dr. Shaffer is the Co-Director of the Center for Policy
Analysis on Trade and Health, and welcome to you Dr. Shaffer.
And Owen Herrnstadt is the Director of Trade and
Globalization for the International Association of Machinists,
the organization of which has been mentioned here briefly.
And Brian Petty is the Senior Vice President, Government
Affairs International Association of Drilling Contractors, and
a chairman of ITAC-2 on automotive equipment and capital goods.
Now, each of you have testimony, and thank you for
providing it on time. It doesn't always happen. And it has been
circulated among the members. So just proceed as you would
wish, either referring specifically to the testimony,
summarizing it, or highlighting what you think are the most
important futures, especially perhaps in terms of what you have
heard here today. Welcome to each of you, you have 5 minutes to
choose as you wish to proceed. Mr. Magraw, we will start with
you.
STATEMENT OF DANIEL MAGRAW, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, CENTER FOR INTERNATIONAL ENVIRONMENTAL LAW
Mr. MAGRAW. Thank you very much, Chairman Levin and Ranking
Member Brady and the other distinguished members of this
subcommittee, for holding this hearing on the critically
important topics of transparency and public participation in
U.S. trade policy. Congress wisely recognized the importance of
transparency in public participation in the 1974 Trade Act, and
your remarks this morning have simply reinforced that.
Thank you also for inviting me to speak regarding the
environmental aspects of the process. In this respect it is
important to note that for purposes of this conversation and
advice on trade policy that the term ``environment'' also
includes protecting human health from environmental threats.
With your permission, I would like to highlight several
aspects of my written testimony.
The Center for International Environmental Law, CIEL, and I
have considerable experience with the trade advisory committee
system. I currently serve on the Trade and Environment Policy
Advisory Committee, TEPAC, which is a Tier 2 advisory
committee, as did my predecessor at CIEL. I also served as a
senior official in three previous administrations and, in that
process, was present at the creation of TEPAC and also in its
implementation. In addition, a senior attorney from CIEL served
as the first public interest representative on a Tier 3
technical advisory committee for the chemical and
pharmaceutical industries.
My written testimony contains many specific observations
and suggestions. I would like to emphasize three points here.
The current system in many respects thwarts transparency and
public participation. U.S. trade policy and American interests
are worse off as a result, and fixing this will require strong
leadership by the administration and robust oversight from
Congress.
The first major point is that in spite of the changes that
were mentioned this morning by Mr. Yager, the current system
thwarts transparency and public participation in important
ways. A few examples include USTR often fails to inform or
consult TEPAC and other advisory committees. Just an aside, we
did not learn about the review that USTR is conducting until we
read the announcement of this hearing. So thank you for letting
us know that.
When we are informed it often occurs too late, after
decisions and texts have been finalized. Tier 2 committees do
not have adequate time to review and comment on free trade
agreements. The committees lack sufficient diversity. For
example, ITAC-3 contains 36 representatives from the chemical
and pharmaceutical industries but not a single public interest
representative.
Interaction between the tiers is inefficient or
nonexistent.
Finally, there is an excessive secrecy and unnecessary
classification of negotiating and other trade documents that
interferes both with the input we can give and also the input
that the public can give.
My second major point is that U.S. trade policy and
American interests are harmed by the lack of transparency,
consultation and public participation. Let me provide two
examples.
The U.S.-Korea free trade agreement contains unprecedented
appropriation provisions that radically shift power to foreign
corporations at the expense of legitimate U.S. laws protecting
health, safety, and the environment. USTR did not inform TEPAC
about the nature of these provisions. Instead, we learned about
them from another U.S. agency, which was not the Environmental
Protection Agency by the way, and insisted on being briefed. By
then it was too late. The text had already been finalized.
Here is another example where the absence of public
participation and transparency leads to poor U.S. trade policy.
USTR has been openly critical of the 2006 European regulation
for the Registration, Evaluation, and Authorization of
Chemicals, known as REACH. REACH is an ambitious law that
harmonizes health and safety requirements across the now 27 EU
member states with important implications for U.S. companies,
consumers, and citizens.
In 2009, we on TEPAC learned that some Tier 3 committees
had in December of 2008 submitted written recommendations to
USTR and the Commerce Department urging a formal technical
barriers to trade challenge. This recommendation followed years
of aggressive advocacy by ITAC-3, but USTR had failed to notify
TEPAC of this. Moreover, USTR strongly resisted requests by
TEPAC members to receive a copy of this recommendation,
asserting that TEPAC members were legally prohibited from
seeing the letter. They later shared the letter with TEPAC
members, but the Bush administration's policy opposing REACH
apparently remains unchanged. The result is a U.S. policy that
completely ignores valuable benefits to American businesses,
consumers, policymakers, and others.
My third and final major point is that this situation will
not be fixed without strong leadership by the administration
and robust oversight by Congress. Discrimination and corruption
in institutional cultures regarding transparency and public
participation will not change without the person at the top
insisting that they are important and must be paid attention to
so that U.S. trade policy supports sustainable development;
that is, that U.S. trade policy integrates environmental and
social policies with economic ones. This requires leadership
from the U.S. Trade Representative, the EPA administration, and
other high administration officials.
Advisory committee members also must exhibit leadership for
the system to be effective and not just window dressing. One
positive example is TEPAC's Subcommittee on Fishing Subsidies.
There were many reasons that this was successful, but an
essential element was that a TEPAC member, in this case an
environmental NGO, was willing and able to step up and lead.
Unfortunately, this is a rare example of the constructive
engagement by USTR that Congress intended. We can do better,
and I am cautiously optimistic that we will.
Thank you.
[The prepared statement of Mr. Magraw follows:]
Prepared Statement of Daniel Magraw
President and Chief Executive Officer, Center for International
Environmental Law; Member, Trade and Environment Policy Advisory
Committee
I. Introduction
Thank you Chairman Levin and Ranking Member Brady for the
opportunity to appear before this subcommittee. I am Daniel Magraw,
President and CEO of the Center for International Environmental Law
(CIEL), a nonprofit organization that uses international law and
institutions to protect the environment, promote human health, and
ensure a just and sustainable society.
I currently serve on the Trade and Environment Policy Advisory
Committee (TEPAC), a Tier 2 policy advisory committee. Previously I
served as a senior official in the U.S. government with direct
experience in the creation and implementation of this advisory
committee. In addition, a senior attorney from CIEL served as the first
public interest representative on a Tier 3 technical advisory committee
for the chemical and allied industries.
In this testimony, I will offer some lessons learned from CIEL's
experience with the trade advisory committee system. I will also
recommend administrative and legislative improvements to enhance
transparency and public participation and to ensure that U.S. trade
policy achieves sustainable development, which necessarily involves
integration of environmental, social and economic policies.
I have been asked to address the environment-and-trade aspect of
that integration. I would like to stress at the outset that the term
``environment'' includes human health. The U.S. Environmental
Protection Agency's statutes, for example, direct it to protect human
health and the environment.\1\ Environmental standards are set with
human health as a primary consideration. Moreover, trade rules'
restrictions on non-tariff barriers affect the United States' ability
to protect human health just as they do our ability to protect natural
resources. Thus when I use the term ``environment,'' I am also
referring to human health.
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\1\ See, e.g. 42 U.S.C. Sec. Sec. 7401-7671 (1990) [Clean Air Act];
7 U.S.C. Sec. 136 (1996) [Federal Insecticide, Fungicide and
Rodenticide Act].
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II. Transparency and Public Participation: Congressional Intent of the
Trade Act and FACA
Thirty-five years ago, Congress recognized the importance of
transparency and public participation in developing sound U.S. trade
policy. I applaud this subcommittee for its continuing oversight of
this important issue. The inclusion and consideration of diverse views
leads to stronger trade policy reflective of American interests. As the
GAO concluded in their 2007 report, ``to effectively perform the unique
role in U.S. trade policy [that] Congress has given trade advisory
committees, certain process issues need to be resolved.'' \2\
---------------------------------------------------------------------------
\2\ United States General Accounting Office, An Analysis of Free
Trade Agreements and Congressional and Private Sector Consultations
under Trade Promotion Authority, 66-67 (2007) [hereinafter GAO Report].
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When read together, the Trade Act of 1974\3\ and Federal Advisory
Committee Act \4\ (FACA) demonstrate Congress' commitment to the
development of U.S. trade policy with public participation and
transparency, subject to limited safeguards for legitimate trade
secrets. The Trade Act requires that the U.S. Trade Representative
(USTR) seek policy advice from trade advisory committees before
entering into trade agreements.\5\
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\3\ 19 U.S.C. Sec. 2155 (2006).
\4\ 5 U.S.C. app. Sec. Sec. 1-16 (2001).
\5\ 19 U.S.C. 2155(a)(1)(A)-(C); (b), (c) (2006).
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Additionally, by direct reference to FACA, the Trade Act creates a
presumption of open meetings, public notice, public participation, and
public availability. This mandate is only constrained when it ``would
seriously compromise the development by the United States government of
trade policy, priorities, negotiating objectives or bargaining
positions.'' \6\
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\6\ 19 U.S.C. 2155(f)(2) (2006).
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FACA requires that the membership of these advisory committees be
``fairly balanced'' with regard to the viewpoints represented and the
functions performed.\7\ Some courts have refused to apply that
standard, which has resulted in practice in a failure to achieve
balance.\8\ Additionally, FACA requires some degree of transparency by
directing that the committees ``ensure that the public [is] informed
with respect to the number, purpose, membership, activities, and cost
of advisory committees.'' \9\
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\7\ 5 U.S.C. app. Sec. 5(b)(2) (2001).
\8\ See Ctr. for Policy Analysis on Trade and Health (CPATH), et.
al. v. USTR, 540 F.3d 940 (9th Cir 2008).
\9\ 5 U.S.C. app. Sec. 3(2) (A)-(C) (2001).
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III. CIEL's Experience with the Trade Advisory Committee System
Let me share some of our direct experience with the trade advisory
committee system and offer lessons learned and suggestions for
improvement. As you know, this system includes three tiers of advisory
committees.
Tier 1--ACTPN
I do not serve on the Advisory Committee for Trade Policy and
Negotiations (ACTPN), the Tier 1 committee. However, despite my service
on a Tier 2 committee, my security clearance to review trade secrets,
and my professional involvement in trade issues, the workings of ACTPN
are essentially hidden from view. It is nearly impossible to determine
when ACTPN meets, with what agenda, what issues it addresses, or what
conclusions it reaches.
Tier 2--TEPAC
As a member of the Trade and Environment Policy Advisory Committee
(TEPAC), and having been involved in its creation and early operation,
I have a much better understanding of how this Tier 2 committee
functions. I have witnessed successful cooperation between the USTR and
TEPAC, such as when they worked together on fishing subsidies. A
constructive experience was possible for several reasons.
Perhaps most importantly, the elimination of fishing subsidies
presents a win-win-win situation: environmentalists want to end over-
fishing in the world's oceans, which is encouraged by subsidies; U.S.
industry wants to have a level playing field without being
disadvantaged by the subsidies provided to foreign fleets; and trade
policymakers want to eliminate subsidies as a general matter because
they distort trade. In addition, a strong and effective leader (Oceana)
on TEPAC put the committee into a proactive mode and headed the effort,
which occurred via a subcommittee of TEPAC. In addition, non-
governmental participants on the sub-committee could immediately see
classified negotiating documents because they already had clearance;
and the participants could rely on the familiarity and trust that had
been built up through their common experiences on TEPAC.
The TEPAC subcommittee's involvement led to a balanced and more
nuanced trade position. Moreover, endorsement of the U.S. negotiating
position validated USTR's assertions to other countries regarding its
environmental sustainability, which was reinforced by environmental
NGOs' activities in Geneva during the negotiations. This experience
thus helped forge, and supported, a constructive U.S. trade policy on
fishing subsidies.
I have also witnessed some serious shortcomings of TEPAC as a
vehicle to advise U.S. policy. I would like to draw your attention to
several procedural issues that hinder effective advice by TEPAC. In my
experience, TEPAC generally has very little or no access to actual U.S.
negotiating positions prior to or during U.S. negotiations. Instead,
TEPAC receives general, sometimes perfunctory briefings which lack
confidential information and often occur only after USTR has completed
negotiations. Negotiating texts which are put on the internal,
classified website are often out-of-date or already agreed to. This
situation makes it essentially impossible for TEPAC to guide or advise
U.S. trade policy in a meaningful way.
The Korea-U.S. Free Trade Agreement is an example of a failure of
transparency and consultation that led to deeply flawed U.S. trade
policy. Without consulting TEPAC, U.S. negotiators agreed to
unprecedented and damaging language in the investment chapter, in the
process deviating from the corresponding language in other FTAs and the
U.S. Model Bilateral Investment Treaty. The lack of involvement
occurred despite the fact that USTR was aware of TEPAC's interest
because of our repeated expressions of concern in reports to Congress
about investment language.
TEPAC finally learned of the new language only via other parts of
the U.S. government and only after we insisted on being briefed, but by
that time it was too late. The result was: the creation of two new
tests for expropriation that will make it easier for foreign investors
to successfully challenge U.S. laws and regulations regarding the
environment, health and safety; \10\ the insertion of a Korean legal
concept into the expropriation provision that none of the U.S.
negotiators could explain; \11\ and the inclusion of a factually
inaccurate footnote that also could lead to easier success in
challenging legitimate U.S. environmental, health and safety laws.\12\
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\10\ Korea-U.S. Free Trade Agreement, Investment chapter, Annex B,
paragraph 3(b) (the new, unprecedented tests are whether a regulatory
action is ``extremely severe'' or whether a regulatory action is
``disproportionate in light of its purpose of effect.'').
\11\ Id., para. 3(a), sub-paragraph (iii) (the Korean legal concept
is ``special sacrifice,'' which apparently is based on German law but
in any event appears nowhere in other U.S. agreements or international
law generally.
\12\ Id., n. 19 to sub-paragraph (ii) (the footnote assumes that
regulatory changes are more likely to occur in heretofore heavily
regulated sectors than in heretofore lightly regulated sectors, thus
ignoring the situation of merging technologies such as nanotechnology,
potential changes in scientific understanding of risks, and experience
in regulating a sector).
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Another example concerns implementation of the Peru-U.S. Trade
Promotion Agreement. Implementation of that agreement led to dozens of
deaths during violent protests against decrees (especially one
regarding forests) that were promulgated with virtually no public input
(under a kind of fast-track authority) and allegedly with the
explanation that the U.S. government had required the Peruvian
government to promulgate them in order to satisfy environmental and
other provisions of the agreement. Among other things, this raises
questions about the agreement's public participation provisions that
TEPAC, in its February 1, 2006 report to Congress, recommended be
improved as soon as possible and which TEPAC ``urge[d] USTR and
Congress to monitor closely.''
In response to questions, USTR staff repeatedly stated that TEPAC
had been ``robustly'' involved during the entire process involving the
decrees in question. I respectfully disagree. I urge Congress to
investigate this situation to better understand the role of the
agreement in this tragedy and the subsequent destabilization of a U.S.
ally. This should include whether the U.S. government insisted on the
decrees in question, how it acted to counter any assertions that it had
so insisted (if it had not), what positions it took vis-a-vis the
transparency and public participation required by the agreement, and
how it involved TEPAC throughout.
USTR is under no obligation to respond to TEPAC recommendations,
either consensus opinions or dissenting views. This makes it difficult
to determine whether USTR has considered or understood our advice. The
2007 GAO report and my own experience attest to the short time frame
for TEPAC to formulate a position and draft a report to USTR. The short
window (30 days) does not leave adequate time to craft a thorough
opinion, particularly when we often do not receive trade agreement text
until well after the 30-day window has begun. For example, TEPAC had
eleven business days to review the U.S.-Peru Environmental Cooperation
Agreement. Every TEPAC report to Congress since the passage of the
Trade Act of 2002 has unanimously stressed that 30 days is
insufficient.
Furthermore, TEPAC's reports on trade agreements are delivered to
USTR and then relayed to the President and Congress. This effectively
insulates TEPAC and other Tier 2 advisory committees from interaction
with Congress. Our experience is the congressional staff are often
unaware of TEPAC's views or even of its existence.
TEPAC's reports are not easily accessible to the public, a practice
in direct opposition to congressional intent of the 1974 Trade Act.
Stakeholders cannot expect to have meaningful engagement when they are
unaware of pertinent trade policies.
Some members of TEPAC would welcome more direct relationship with
congressional staff. The staff would also benefit from increased
interaction and involvement with the trade advisory committees.
Although USTR holds hundreds of meetings with congressional staff each
year, GAO reports that many legislative staff expressed frustration
with a sense that they did not have meaningful input.\13\ Congressional
engagement with trade advisory committees would allow both parties to
share views at critical junctures during trade negotiations. This
practice could enhance the transparency of the negotiating process and
lead to a more robust trade policy for the United States.
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\13\ GAO Report at 29.
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Tier 3--ITAC-3
Let me turn to CIEL's experience with a Tier 3 Industry Trade
Advisory Committee (ITAC). Following a 2001 settlement agreement of a
civil suit between public interest advocates and the USTR, CIEL
attorney Steve Porter was appointed to the ISAC-3 (now ITAC-3), the
industry trade advisory committee on chemical and allied industries.
After he stepped down the committee was slow to seek a replacement,
resulting in a judgment to enforce the settlement in the original civil
suit that prevented ITAC-3 from meeting pending another public interest
member.\14\ The seat was eventually filled by another qualified
representative. After this member stepped down, ITAC-3 has continued to
meet.
---------------------------------------------------------------------------
\14\ See Wash. Toxics Coalition v. Office of the United States
Trade Representative, 2003 U.S. Dist. LEXIS 25869 (W.D. Wash. 2003).
---------------------------------------------------------------------------
As members of ITACs, NGO representatives have the same obligation
to maintain confidentiality of trade secrets as industry
representatives. However, public interest representatives are hampered
in representing diverse views of their community: on ITAC-3, multiple
industry views are represented, but only one NGO was ever on the
committee. Today, the membership of ITAC-3 includes thirty-five members
representing the chemical and allied industries and not a single
environmental representative, despite the terms of a settlement
agreement.\15\
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\15\ See id.; Industry Trade Advisory Committee on Chemicals,
Pharmaceuticals, Health Science Products and Services (ITAC 3), http://
www.trade.gov/itac/committees/chem.asp (last visited July 16, 2009).
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The 2007 GAO report highlighted problems that committees have
recruiting representatives that are not representing for-profit
industries.\16\ In my experience, this is typically due to a lack of
financial resources.
---------------------------------------------------------------------------
\16\ GAO Report at 67.
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It is difficult to argue that the inclusion of a single public
interest representative on a committee comprising dozens of industry
members fulfills FACA's requirement that advisory committees be
``fairly balanced.'' One way to address this issue would be to provide
additional resources to recruit and retain public interest
representatives, to ensure diverse opinions on the ITACs. In the
absence of significant additional resources, increasing the number of
NGO ``chairs'' at these ITAC tables will solve this inequity because
they will not be filled.
Another possible remedy is to increase public transparency, as the
Trade Act envisioned. In this way, additional perspectives could be
brought to bear without the added burdens and delays of security
clearances and the committee selection process. Instead of more
``chairs,'' the Tier 3 committees might benefits from more ``windows.''
While others in the NGO community are aware of the opportunity for
public comment, many feel it is futile to participate.\17\
Opportunities for public involvement and comment should be meaningful
for stakeholders at key stages of the negotiating process.
---------------------------------------------------------------------------
\17\ GAO Report at 58
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What are the practical consequences of Tier 3 committee operating
with little or no participation by public interest representatives? An
important and timely example is the U.S. policy on the European Union
concerning their 2006 regulation on chemicals known as REACH (for the
Registration, Evaluation and Authorization of Chemicals).\18\ REACH is
an ambitious law that harmonizes health and safety requirements across
the now-27 E.U. Member States, with important implications for U.S.
companies, consumers, and citizens.
---------------------------------------------------------------------------
\18\ Regulation No 1907/2006, 2006 O.J. (L396) 1 (EC). [Regulation
on Registration, Evaluation, and Authorization of Chemicals (REACH)].
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Congress has already documented how U.S. chemical manufacturers and
their representatives succeeded in co-opting U.S. foreign policy on
REACH under the Bush administration.\19\ Key U.S. government documents
and communiques were based on unsubstantiated assertions by these
private interests while public interest input and Congressional
inquiries were shunned. Ironically the adoption and subsequent
implementation of REACH offers valuable benefits to American consumers,
exporters, policymakers and others. These include: free access to
health and safety information; harmonized rules across a market of
nearly 500 million consumers; safer ingredients and products available
to U.S. manufacturers, workers and consumers; and competitive
advantages for U.S. exporters that already offer superior products.
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\19\ U.S. House of Representatives, Committee on Government Reform,
Minority Staff, Special Investigations Division. A Special Interest
Case Study: The Chemical Industry, the Bush Administration, and
European Efforts to Regulate Chemicals, April 1, 2004. (available at
http://oversight.house.gov/Documents/20040817125807-75305.pdf)
---------------------------------------------------------------------------
In 2009 TEPAC members learned that ITAC members had submitted
formal recommendations to USTR and the Commerce Department urging a
formal Technical Barriers to Trade challenge to the E.U. REACH policy.
This recommendation followed years of aggressive advocacy by ITAC-3.
However, USTR had failed to notify TEPAC in a timely manner. Moreover,
USTR strongly resisted requests by TEPAC members to receive a copy of
this recommendation. USTR asserted that TEPAC members were legally
prohibited from seeing the letter. They later shared this with TEPAC
members. TEPAC has requested a legal opinion on whether there is such a
prohibition. With all due respect, I doubt there is.
This example raises troubling questions about USTR's regard for
advice from TEPAC. It also demonstrates that Tier 3 committees, which
are charged with providing technical advice, also engage in broad
policy advice. Yet the source of this advice is committees that are the
antithesis of FACA's fairly balanced standard. I believe that Congress
should not only call on USTR to initiate a thorough review of its ill-
advised policy on REACH, but it should also give serious consideration
to changes that will prevent future cases of Tier 3 committees
bypassing Tier 2 committees that have responsibility to advise U.S.
trade policy, such as TEPAC.
I do not suggest that the previous administration's misguided
policy was solely the result of the advice provided through the trade
advisory committee system. However, the failure to ensure effective,
meaningful public participation led to the formulation of a U.S. policy
to the detriment of clear and compelling U.S. interests.
Transparency, Participation and Role of Classifying Documents
It is axiomatic that in order to get public input on these
documents, stakeholders need to be able to know U.S. policy and
proposed policy. USTR routinely classifies trade negotiating texts and
other trade policy-related documents, however. Accordingly, one of the
perceived advantages of the advisory committees is that their members
have security clearances and thus can view and hear the contents of
classified documents. This situation has at least two important effects
detrimental to public participation: advisory committee members cannot
get input from experts and others who do not have clearances; and, more
problematically, the public at large cannot effectively participate at
all. I thus suggest that USTR's classification practices be scrutinized
to determine whether they meet legal requirements and are necessary for
U.S. interests considered as a whole.
Leadership
Aside from statutory or administrative changes, the situation
described above could be greatly improved through strong leadership by
Congress, the U.S. Trade Representative, EPA Administrator, and other
senior officials. These attitudes are extremely influential with
respect to how staffs deal with the advisory committees and how
seriously non-trade considerations are taken into account. At times in
the past, those attitudes have unfortunately led to the view that Tier
2 committees, at least, are primarily symbolic and that environmental
and social issues are peripheral: that it might be all right to
leverage them through trade policy but are not integral to it.
With the Obama administration's commitment to transparency and
public participation, which they have already demonstrated, I am
hopeful that congressional and agency staff can put a renewed emphasis
on cooperation and open dialogue within the trade advisory committees,
throughout the office of the U.S. Trade Representative and other
appropriate agencies. This systemic change can be a powerful catalyst
for improving the trade advisory committee system.
IV. Reflections on H.R. 2293
Finally, I would like to address pending legislation before the
Ways and Means Committee that is relevant to the trade advisory
committee system. The bill, H.R. 2293, would amend the Trade Act of
1974 to create a new Tier 2 policy advisory committee known as the
Public Health Advisory Committee on Trade (PHACT).\20\
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\20\ H.R. 2293, 111th Cong. (2009).
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The proposed PHACT bears important similarities to TEPAC, with a
primary focus on public health rather than environmental protection. Of
course, there are important overlaps between protection of public
health and environmental protection. In my opinion, PHACT could be a
positive addition to the trade advisory committee system. But it is
important that Congress avoid the problems that hamper the
effectiveness of other Tier 2 committees, including procedural
obstacles and a lack of timely and meaningful engagement by USTR staff
and other agencies.
Importantly, provisions of H.R. 2293 would also affect the
functioning of the Tier 1, other Tier 2, and Tier 3 trade advisory
committees. For example, reports regarding trade agreements would
address health and environmental concerns both in the United States and
in affected regions. Reports would be made publicly available on the
USTR website and appropriate agencies would be required to seek input
from trade advisory committees throughout the trade negotiating
process, including prior to negotiations. Furthermore, appropriate
agencies would be required to respond in writing to the information
submitted by trade advisory committees. This expands the role of the
advisory committees from existing legislation.
The 1974 and 2002 Trade Acts require committees provide a report to
appropriate agencies at the conclusion of trade negotiations and allows
them only 30-days to submit reports. The 2007 GAO report concluded that
these reporting deadlines are difficult to meet, especially as trade
agreement text is often not available on a timely basis and committee
members have other obligations.\21\ Involving committee members earlier
in the negotiating process, as H.R. 2293 would do, is a step in the
right direction to ensure that advisory committees have an opportunity
to engage early in the process.
---------------------------------------------------------------------------
\21\ GAO Report at 59.
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H.R. 2293 addresses many shortcomings of the current system.
However, the bill does not clarify the ambiguous standard of ``fairly
balanced'' in FACA.
V. Recommendations
The existing trade advisory committee system, while well-
intentioned, is hampered from achieving its full potential due to
legislative gaps, i.e. a failure to clarify ``fairly balanced,'' and
procedural impediments. For example, TEPAC is typically unable to offer
meaningful input prior and during negotiations, there is an inadequate
turnaround time for comments, and TEPAC receives no response from
Congress or the USTR after submitting comments. Additionally, there is
a sense among some participants that consultations are more symbolic
than substantive.
Tier 3 committees, such as some ITACs, appear to engage in policy
as well as technical advice, but without any semblance of fair and
balanced representation. This deserves serious scrutiny by Congress and
by the senior leadership of the Obama administration. It may be
impractical to recruit willing representatives to fill new chairs for
environmental, consumer, public health and other public interest
perspectives. Potential solutions may involve greater transparency,
more proactive public engagement, and other means to bring broader
perspectives to bear on the development of U.S. trade policy.
Although USTR is required to provide an opportunity for comment to
groups or individuals outside the trade advisory committee system, the
GAO Report deemed these consultations ineffective. The advisory
committees should be a mechanism by which public interest perspectives
can be heard and subsequently considered in the development of U.S.
trade policy. Making trade advisory committee recommendations available
on the website of USTR and other agencies, as proposed in H.R. 2293,
would be a step in the right direction.
Leadership from the U.S. Trade Representative, the EPA
Administrator, and other senior officials can play a crucial role in
inspiring these agencies to give the advisory committees their proper
role in the formulation of U.S. policy. That leadership must be
strengthened.
Here are several specific recommendations to improve public
participation and transparency.
The Subcommittee on Trade should exercise its
oversight authority by investigating the role of the Peru-U.S.
Trade Promotion Agreement and the U.S. government in the recent
troubles in Peru, including the degree to which TEPAC was
consulted.
The U.S. government should review its policy on
REACH, with full and meaningful involvement of all relevant
advisory committees and the public.
Any legal impediments to sharing information and
documents, including reports, between Tier 1, Tier 2, and Tier
3 advisory committees should be identified and removed, by
legislation if necessary.
Trade advisory committees at all levels should have
greater involvement from environmental and other public
interest stakeholders, with adequate resources to enable
participation.
USTR should review its practices in classifying
documents to ensure it meets legal requirements and is in the
best interest of the United States.
VI. Conclusions
In summary, the trade advisory committee system has an important
role to play in informing and improving U.S. trade policy. Greater
transparency and more meaningful public participation can substantially
improve this process in at least three ways. First, leadership by
Congress, the U.S. Trade Representative and other senior administration
officials can demonstrate the importance and value of active public
engagement. Second, changes in administrative procedures, such as
genuine engagement of the advisory committee prior to and during
negotiations, are necessary to ensure that input from advisory
committees is not too late to inform U.S. policymakers. Similarly,
continued efforts are needed to broaden representation and to include
more ``doors and windows'' to permit greater public accountability.
Finally, I urge Congress and the Obama administration to revisit the
congressional intent of the Trade Act of 1974 and FACA, in particular
by clarifying the ``fairly balanced'' standard and to consider other
legislative improvements. This re-commitment to core American values
will ensure that the trade advisory committees contribute to the
formation of a U.S. trade policy that serves broad U.S. interests.
Chairman LEVIN. Thank you very much. Mr. Hoelter, you are
next.
STATEMENT OF TIMOTHY K. HOELTER, VICE PRESIDENT, GOVERNMENT
AFFAIRS, HARLEY-DAVIDSON MOTOR COMPANY, CHAIRMAN, INDUSTRY
TRADE ADVISORY COMMITTEE 04, CONSUMER GOODS
Mr. HOELTER. Thank you, Mr. Chairman, Ranking Member Brady.
I appreciate the opportunity to be here. My name is Tim
Hoelter. I am Vice President for Harley-Davidson Motor Company
from Milwaukee. I am also Chairman of the ITAC-4, which is the
Consumer Goods Committee. I have submitted written comments for
the record, so what I will do in my verbal remarks today is
focus on a few key issues.
ITAC-4 perhaps has the most diverse industry membership of
any of the ITACs. We have representatives representing a broad
range of consumer goods, health care products. We have weed
whackers, we have washing machines, we have toys, we have pots
and pans, and a number of other things. But despite the fact
that our membership is diverse, we stand shoulder to shoulder
when it comes to embracing the principals of free and fair
trade, and all of us want to create opportunities to enhance
our exports overseas. And as an employee of Harley-Davidson let
me assure you that growing our own export business is one of
our number one priorities, because it brings work into our U.S.
factories and helps protect American jobs or in the current
environment mitigate the current job losses.
ITAC-4 regularly holds three to four meetings per year. Our
agendas include a half dozen or more trade matters on the
topic. We receive reports and updates from representatives of
the Department of Commerce or USTR staff. The reports vary of
course from meeting to meeting. They may concern things like
REACH, as we mentioned, import safety, Doha, China, India, you
name it. These are all important issues.
One thing I would like to emphasize is that our meetings
are typically closed to the public. Because we are all cleared
advisers this is invaluable as speakers are able to talk
candidly and directly on what the current U.S. Government
position is and what factors are driving the decision-making
process. The closed meetings also let us as members give advice
that is honest, focused, and we hope meaningful policymakers.
On occasion some of our members have served as treaty watchdogs
by alerting staff to specific instances where trading partners
were not living up to their obligations.
As a participant in the ITAC system for the past decade, I
appreciate the need to maintain transparency and to ensure that
all citizens have the ability to express their views on trade
issues. Providing channels of communication and an appropriate
forum for engagement for both industry and non-industry groups
alike leads to better decision making and more informed
decisions by those charged with establishing trade policy.
By the same token, advice and recommendations flowing to
policymakers from any one source needs to be clear and focused.
The advice needs to be actionable. Having multiple sources,
each providing ungarnished advice, is really good, even when it
differs, because it gives policymakers more options. On the
other hand, advice that is processed down to the lowest common
denominator to achieve consensus within a group whose members
reflect opposing interests is worthless to senior officials
charged with developing coherent trade policy. Advice that goes
through a strainer does our trade policymakers a profound
disservice.
Chairman Levin, Ranking Member Brady, I also want to thank
you for this opportunity, and I also want to share with you how
privileged I feel to serve our government in the trade advisory
system.
Thank you.
[The prepared statement of Mr. Hoelter follows:]
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Chairman LEVIN. Well, thank you very much.
Dr. Shaffer, you are next.
STATEMENT OF ELLEN R. SHAFFER, PH.D., MPH, CO-DIRECTOR, CENTER
FOR POLICY ANALYSIS ON TRADE AND HEALTH
Ms. SHAFFER. Thank you very much, Mr. Chairman, Ranking
Member Brady, Members of the Committee.
The global economy has transformed the way we conduct trade
and our ability to protect and improve the public's health.
Thank you for the opportunity to discuss how the U.S. trade
advisory committee system can produce healthy public policy on
trade.
I am the Co-Director of CPATH with Joseph Brenner. In 2004,
many Members of Congress were surprised to hear their
constituents echo our finding that the Australia free trade
agreement could interfere with reimportation of drugs into the
U.S. Both then Representative Rahm Emanuel and Senator John
McCain called for expanding public health representation on
trade advisory committees.
I would like to focus on three points mentioned in our
written testimony. First, the public health views are essential
to assure that the rapidly transforming global economy improves
people's lives.
Second, health related industries are robustly represented
on the trade advisory committees while public health is
virtually invisible.
Finally, both the law and sound policy require that Federal
advisory committees represent a fair balance of views and
interests. They should also be transparent and accountable.
Trade agreements can foster sustainable economic
development, democracy, and peace consistent with public health
principles. They can also delay access to affordable
prescription drugs and conflict with or subordinate policies
that protect people's health.
Recognizing these conflicts, this subcommittee in May 2007,
for example, initiated action to limit the impact to so called
TRIPS-Plus rules on intellectual property on access to
medicines in lower income countries. Further work remains on
this issue.
There is a range of vital human services such as water
supply, health care, and education, as well as financial and
commercial services that have been included in trade
negotiations and in trade disputes.
These issues call for public health leadership.
On other issues, like tobacco trade, the 1997 Doggett
amendment has banned using government funds to promote tobacco
products abroad, but this amendment must be renewed by the new
administration.
Thanks to a campaign by CPATH and our allies, there are now
technically two public health or three public health
representatives assigned to certain Trade Advisory Committees.
But since 2005, the number of representatives from health-
related industries, including pharmaceuticals, tobacco,
alcohol, processed foods and health insurance companies, has
grown from 42 to 65. They now sit on 31 committees instead of
25. The pharmaceutical industry alone increased their
representatives from 20 to 27. The scales must be balanced.
The GAO and others have recognized public health's
legitimate interest in trade policy. CPATH and, again, our
allies took the USTR to court in 2005 to compel increasing
public health representatives from zero to something. The court
said, surprisingly, that even in this stark case, the Trade Act
as written is too broad for courts to interpret and enforce.
Congress must establish in the law the need for public health
representation at all three levels of Trade Advisory
Committees.
Together with public health organizations around the
Nation, we strongly support H.R. 2293 which, among the other
things, would establish a new Tier 2 Public Health Advisory
Committee on Trade. As we have discussed, the members of a Tier
2 committee can receive confidential information and analyze it
with other cleared advisers who have a similar viewpoint. This
allows committee members to gain insight into new policies and
helps shape them, while the U.S. Trade Representative would
receive a range of views that reflect the public health
community.
It clarifies that members representing public health should
be nominated and represent organizations in the U.S. with an
interest in improving and protecting the public's health.
It calls for regularly scheduled communication among the
committees, policymakers and the public, and it calls for the
publication of minority views. There has to be a presumption
that reports are transparent and open to the public unless
there is a compelling interest to the contrary.
Finally, there should be USTR staff that is adequate to
support advisory committee members from NGOs that may be more
sparsely endowed than corporate representatives.
I want to echo what members have said, that at this moment
in history national economies are at a crossroads and the
questions of global trade policy are vital ones. It is
important to incorporate a meaningful public health
perspective. This is the time to set this enterprise on the
right course.
Thank you.
Chairman LEVIN. Thank you very much.
[The prepared statement of Ms. Shaffer follows:]
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Chairman LEVIN. Owen Herrnstadt, it is now your turn.
STATEMENT OF OWEN E. HERRNSTADT, DIRECTOR OF TRADE AND
GLOBALIZATION, INTERNATIONAL ASSOCIATION OF MACHINISTS AND
AEROSPACE WORKERS; LIAISON, LABOR ADVISORY COMMITTEE
Mr. HERRNSTADT. Thank you, Mr. Chairman, Ranking Member
Brady and distinguished colleagues of the subcommittee.
The International Association of Machinists and Aerospace
Workers represent workers in a variety of industries--aerospace
manufacturing, electronics, defense, transportation,
shipbuilding, woodworking and motorcycles, to name a few. Much
of what our members produce and service depends upon
international trade.
Like other unions, we have developed significant trade-
related expertise in many of the industries in which our
members work, and we recognize the importance of a Trade
Advisory Committee System that provides a mechanism for
creating a strong and unified national trade policy. The Trade
Act seeks to achieve this goal, as has been mentioned by others
on this panel and by the previous panel. It seeks to do this by
setting up the Trade Advisory Committee System that is based on
a three-tiered approach.
The tiers are all supposed to be well balanced, to bring in
diverse views. The first advisory committee, the ACTPN
committee, constitutes really the first tier; and despite a
clear statutory mandate to be broadly representative of the key
sectors and groups of the economy, ACTPN's composition has been
overwhelmingly weighted towards industry interests. Only one of
the over 30 ACTPN members represents labor.
The second tier of the advisory committee system consists
of five committees, one of which is the Labor Advisory
Committee for trade negotiations and trade policies. Although
the LAC's charter allows for up to 30 members, the previous
administration named only 13 members of that committee, in
contrast to other second tier committees, which had several
more members on that committee.
The third tier involves over 22 trade industry committees
and agricultural committees which look specifically at
technical areas. There are--and this was my cursory count and
also comes a little bit from the USTR Web site--over 300
industry executives represented on those various ITACs; and
from a quick review of the USTR Web site, there don't appear to
be any labor representatives on the third tier group.
In all there appear, from my quick count, over 400 industry
and trade association representatives on the entire three-tier
advisory committee system. Only 14 labor representatives were
included; and of these, 13 of them serve on the second tier,
the LAC.
The failure to include more diverse numbers on all three
tiers of the committee system impedes the advisory committee
system from achieving its goal to provide the administration
with information and advice from adverse groups.
In addition to the need for balanced composition,
committees also need to meet in a regular and timely fashion.
The GAO report well documents that the LAC did not meet for
more than a 2-year period. When meetings eventually resumed,
many members of the LAC did not pass the vetting process which,
according to the GAO report, in many cases took over a year to
complete. As a result of these delays, the administration lost
a valuable opportunity to gain much-needed insight from labor.
In addition, the consultation process can't work if the
exchange of information between the administration and the
advisory committee members is inadequate. During meetings,
little or no information that wasn't already available to the
public was exchanged. There were also sincere concerns over the
consideration that was given by that advice and information.
In order to improve the system, I have listed a variety of
recommendations in my written testimony. Some of them include
providing greater balance by increasing the number of labor,
environmental, consumer and other nongovernmental organizations
on the ACTPN; increasing the number of labor representatives on
the Labor Advisory Committee; including labor and other
noncorporate representatives on appropriate ITAC and ATAC
committees; expediting the vetting process; improving the
entire consultation process by engaging committees at the
earliest possible point of trade activities; and ensuring the
transparency of the entire Trade Advisory Committee System by,
among other things, requiring USTR, the Labor Department and
Commerce to report on an annual basis to Congress the number of
meetings held, as well as the agenda items discussed at each
meeting.
The Federal Trade Advisory Committee System is instrumental
in providing a mechanism for developing and implementing a
national trade policy that benefits all stakeholders and, of
course, the public. We are hopeful that the Congress and the
current administration will move swiftly to correct the
deficiencies that we have elaborated on.
Thank you.
Chairman LEVIN. Thank you very much.
[The prepared statement of Mr. Herrnstadt follows:]
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Chairman LEVIN. Mr. Petty.
STATEMENT OF BRIAN T. PETTY, SENIOR VICE PRESIDENT, GOVERNMENT
AFFAIRS INTERNATIONAL ASSOCIATION OF DRILLING CONTRACTORS;
CHAIRMAN, INDUSTRY TRADE ADVISORY COMMITTEE 02, AUTOMOTIVE
EQUIPMENT AND CAPITAL GOODS
Mr. PETTY. Mr. Chairman, Ranking Member Brady and Members
of the Subcommittee, I am Brian T. Petty, Senior Vice-President
of Government Affairs of the International Association of
Drilling Contractors and Chairman of the Industry Trade
Advisory Committee for Automotive Equipment and Capital Goods,
ITAC 2.
ITAC 2 is comprised of 27 members representing a wide
gambit of U.S. manufacturing interests, including automotive
manufacturers, auto parts makers and industries that sell to
them. In addition, our membership includes trade groups
representing the largest manufacturers of goods and equipment
and those companies supplying goods and services to them. We
also include significant construction, farm equipment, energy,
precision tools and packaging entities.
I formally served as Vice Chairman of the Industry Sector
Advisory Committee for Capital Goods, ISAC 2, which in 2004
which was consolidated into ITAC 2.
Accounting for a quarter of global manufacturing output,
the U.S. is still the world's largest manufacturer. If the U.S.
manufacturing sector stood by itself, it would be the eighth
largest economy in the world. Japan, Germany and China are the
next largest economies, but their GDP is significantly smaller
than that of the United States.
In 2008, U.S. manufacturing output was $5.18 trillion. More
goods are made in the United States today than at any time in
American history. The significance of manufacturing in the
economy is even greater than the macroeconomic data indicate,
for the manufacturing sector is what has enabled other sectors
of the economy to grow.
The industries represented by ITAC 2 represent close to
one-third of U.S. manufacturing output. In 2008, U.S. capital
goods production was $907 billion and auto industry production
was $479 billion. These industries account for 56 percent of
U.S. domestic exports of manufactured goods.
Capital goods are the largest single category of exports,
at $469 billion, while automotive exports were $121 billion in
2008. Automotive products are the single largest U.S. export,
followed by aerospace and semiconductors.
More than one in six U.S. private sector jobs depends on
U.S. manufacturing. Specifically, the manufacturing sector
supports more than 20 million jobs in the United States, 14
million jobs directly within manufacturing and 6 million others
in sectors such as commodities, wholesaling, transportation,
and finance and insurance dependent on the manufacturing
sector.
I also serve on the ITAC Committee of Chairs Investment
Working Group. The IWG was formed in 2003 and reauthorized in
2006. The IWG's purpose is to provide advice to the U.S.
Government on legislation, policies and issues concerning both
in-bound and outbound investment, as well as investment
treaties and agreements. The group was formed at a time when
the administration was engaged in an extensive review of
investment policy as required by the Trade Act of 2002.
Officials at USTR and the Departments of Commerce, State
and Treasury recognizes that need for private sector
consultation, but also realized that no single advisory
committee focused on investment matters. Rather, investment
experts were dispersed among various ITACs. The working group
was formed in response though this problem.
The IWG draws its membership from the roster of cleared
ITAC advisers. The main criterion for membership is that the
adviser has depth, knowledge and expertise in investment policy
and practice.
USTR and the Department of Commerce seek a diversity of
views by encouraging membership from all ITACs and limiting the
number of members from any single ITAC. The IWG meets and
deliberates independently, but reports its findings and
recommendations to the ITAC Committee of Chairs.
The IWG's most recent work product was entitled Investment
Policy Outlook for 2009, submitted by the ITAC Committee of
Chairs to Secretary Locke and Ambassador Kirk on April 23,
2009. Membership has ranged from 12 to 15. Currently there are
13 IWG members from eight different ITACs.
For the first 5 years of operation, 2003 to 2007, the IWG
included cleared advisers from nonbusiness NGOs, specifically
Friends of the Earth, the Mercatus Center at George Mason
University, and the Pacific Environmental Resources Center. But
only Friends of the Earth briefly participated, and after that,
none of them participated.
My history with the industry Federal advisory system goes
back to 1997 and has given me some substantial insight into its
efficacy in advising the USTR and Department of Commerce on
trade policy. As security advisers, we have common sectoral
interests in promoting exports and creating jobs and market
value in the U.S.
Some are counseling adding NGOs and representatives of
organized labor to the individual ITACs, notwithstanding the
fact there are advisory committees created precisely to provide
them the same or even better access to administration trade
policymakers. For example, the Trade Environment Policy
Advisory Committee meets routinely with the USTR to express the
environment community's views about emerging trade issues, and
organized labor has its own Labor Advisory Committee for Trade
Negotiations and Trade Policy. Just so, U.S. industry under the
ITAC system has the opportunity to speak clearly and with an
unvarnished opinion about what is in U.S. business's interests
and where U.S. economic interests lie.
The ITAC system was reorganized in 2004 after a thorough-
going study by the GAO proposed rationalizing the sectoral
system first established in the 1970s to reflect the 21st
century American economy. From where I sit and in this, I am
supported by the 26 other members of ITAC 2. This system has
worked very well.
Adding adverse or potentially contentious elements to the
individual ITACs would certainly chill free and frank
discussion and would be a major disincentive to recruit members
to the ITACs. We all give time and sacrifice something of our
day jobs in participating. I hope the subcommittee treads
lightly in promoting something which could discourage the
critical input of U.S. employers and, in particular, the
manufacturing sector substantially represented by ITAC 2.
Thank you for the opportunity to testify.
Chairman LEVIN. Well, thank you very much.
[The prepared statement of Mr. Petty follows:]
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Chairman LEVIN. So let's have a discussion, Mr. Petty. I
think your testimony and that of your colleagues, the four
others, now helps us shift into kind of the dynamics of the
advisory system. I think we need to spend a few minutes about
that.
You know, we have this chart that lays out Tier 1, Tier 2,
Tier 3, and let's take manufacturing. All of us care a lot
about that. There are manufacturing issues in a lot of the
negotiations, and that is surely true of the WTO negotiations.
We have the NAMA, we have the tariff issues, et cetera, et
cetera.
You seem to be saying--take us to manufacturing--that we
don't want a very diverse representation within that ITAC
group, and that it is better that there be within that ITAC
group business interests and not the involvement of diverse
points of view.
And the same might be true, for example, of the Health--I
guess that would be ITAC 3; it is not always clear--in that I
think you are saying that other points of view can be expressed
through, for example, the Tier 2 committee, say it is Labor,
say it is Environmental Issues.
But if there isn't a lot of back and forth of diverse
points of view within an advisory committee. Doesn't that
prevent the kind of enrichment of the dialogue with USTR? For
example, on Health, we have had a lot of discussion about the
health provisions within FTAs. And I don't want to go into any
one in particular, but we became in the Congress quite involved
in that in recent years.
So are you saying that within, say, the ITACs there should
be essentially representation from the business sector? And, by
the way, the business sector itself may have different points
of view, right?
Mr. PETTY. Yes.
Chairman LEVIN. So I don't quite understand how this system
works, if the advice comes from particular points of view
without meaningful back and forth among those points of view
being fed into USTR.
Mr. PETTY. I would respond that Tier 2 provides the
mechanism that may be failing now, for providing that access by
TEPAC, by the Labor analog. But I can tell you that I have
known people who have been on the TEPAC in years past, and they
enjoyed ready access to the USTR Ambassador himself or herself
and to top officials of the Department of Commerce that we, at
the ITAC level, don't see.
Chairman LEVIN. I understand that. That may be true.
But essentially--I will just take a couple of minutes and
then pass it over to Mr. Brady and the others. Apparently, you
seem to be saying that the advisory model should be more or
less this: that each of the entities would represent a
particular slice of interest--and I don't mean self-interest--
and that that should be fed in kind of on a parallel basis
without there having been within the advisory group what you
call an adverse or potentially contentious element.
Take the NAMA negotiations within the WTO and the whole
industrial sector set of issues. Are you saying that there
ought to be within the advisory structure the feed-in of
particular points of view that have talked to each other, but
not the benefit of the back and forth between what you call
contentious or adverse points of view?
Mr. PETTY. What I am saying is those other interests have a
place in the system already. The industrial interest and the
manufacturing interest cannot be represented on the labor Tier
2 committee, nor can it be represented on the TPAC committee.
And I would point out that the pending or proposed H.R. 2293
would set up a Tier 2 public health committee that would
exclude specifically commercial interests. So there is an
avenue for those voices to advise our trade policymakers.
I can tell you as a practical matter, it is difficult
enough to manage an agenda, to get a coherent view, consensus
view, from the manufacturing industry, which represents a wide
spectrum of employers in this country and a big chunk of the
economy, to give coherent advice without distractions or
confusion that might be created by people who don't really have
a stake in it, a direct stake in the technical advice being
provided on NAMA, on nontariff barriers on the Doha Round.
And I can tell you with absolute confidence that if that
element was introduced into our system, into my ITAC, people
would not re-up and a lot of people would not join. So it would
just wither away. The voice of business would be severely
diminished.
Chairman LEVIN. So essentially you see the advisory
structure having again the interests, though there may be some
differences within that group, working on parallel tracks
instead of their having meaningful back and forth that can then
be fed into USTR?
Where do the people with very diverse points of view meet--
and I will finish.
Take antidumping issues for a moment. Don't you need to
have a clash, if you want to put it that way, within the
advisory structure?
Mr. PETTY. I would say the Tier 2 and the ACTPN are part of
the advisory structure, and they have the opportunity to
express those views. I can tell you, on antidumping in
particular, within our own ITAC we have a wide diversion.
Chairman LEVIN. I know that. But don't you want to have--
take steel, and I will finish. Don't you want an advisory
structure that has the business and labor interests having some
opportunity to, in quotes, ``clash and feed'' that into the
advisory structure; or do you want each of these to be fed in
without the benefit of that difference of opinion into the
USTR?
Mr. PETTY. Mr. Chairman, I can't speak for steel, but I can
speak for the group that I represent, which I chair; and most
of those or a great many of them are not represented by
organized labor. Organized labor represents a distinct minority
of the U.S. workforce, so I am not sure having organized labor
at the table adds anything to the give-and-take.
Chairman LEVIN. You represent the construction industry?
Mr. PETTY. My paid job is the International Association of
Drilling Contractors.
Chairman LEVIN. No, but the construction industry is
involved in your ITAC?
Mr. PETTY. They are indeed, yes. They are elements of the
construction industry.
Chairman LEVIN. And within the construction industry,
whether it is organized labor or otherwise--okay, look, I am
not 100 percent sure of the answer, but I do think the question
needs to be asked.
Mr. Brady, you are next.
Mr. BRADY. Let me follow up on that questioning.
I think the key question today is not how can we design a
system to ensure that USTR does exactly what all facets of the
private sector or the people on the advisory committees tell it
to do, but how do we design a system so that USTR effectively
hears from all facets of the private sector so they can take
this oftentimes contradicting information and formulate trade
policy that makes sense for America.
My question to you: It seems to me each of the advisory
committees from Tier 1 to Tier 2 to Tier 3 get increasingly
deeper into the weeds on trade agreements, in a good way, as--
the overall strategy and policy of Tier 1, a little more broken
out in the sectors on Tier 2, and then in Tier 3 that technical
expertise so we can tell what the specific language of trade
agreements that are being proposed, how they would affect
American workers and our industry. It seems to me a pretty good
approach on this.
I will ask Mr. Petty and Mr. Hoelter, what is the impact
if, in effect, the advisory committees at the technical level
presynthesize--package, sort of, the consensus--rather than
creating an arena for vigorous airing of different views?
My thought is, I am not interested in dumbing down the
advisory committees at the technical level or creating a mini-
United Nations where debate goes on endlessly. It seems to me
the technical advisory committees are just that, technical. The
goal is to provide that information, that insight, into USTR as
they deal with specific issues.
Mr. Petty and Mr. Hoelter, following what Chairman Levin
had to say and given the role of the ITACs, what is the optimal
role for them to play?
Mr. HOELTER. Thank you. Let me take a crack at that.
Based on our own ITAC, the consumer goods ITAC, which I
mentioned has very diverse membership, diverse industry
membership, we do get into very technical details, and--
primarily concentrating on some of the more invidious barriers
to our export opportunities overseas, and those are the
technical barriers to trade.
For example, in my own company, we welcomed the accession
of China, because it is the largest motorcycle market in the
world. So now we can sell our product in China. The problem is
the Chinese can't use them. They are prohibited in many cities
from operating motorcycles in those cities.
We get into a great level of detail and have quite a lot of
discussion that I think opens the eyes of the staff members who
participate from both the Department of Commerce and U.S. Trade
Representative's Office.
So I do think we have enriching, robust dialogue among our
committee members and the industry expertise that they bring to
bear.
Mr. BRADY. Does USTR always agree with your views?
Mr. HOELTER. I don't think they will ever say, we accept
and agree and are going to carry your water for you. They are
diplomatic and thank us and take them back. I would also say,
too, I think there are other opportunities for all members of
our society and interest groups to take advantage of, I think,
the fairly open-door attitude I have seen with the U.S. Trade
Representative's Office and Department of Commerce in this
administration and past administrations. If meetings need to be
held or particular matters are outside the trade advisory
system and are not on our agendas, we can still have those
opportunities to raise them and have an audience.
Mr. BRADY. Thank you.
Mr. Petty.
Mr. PETTY. I would agree with Tim. Absolutely. I think that
we have enough of a heavy agenda when we meet, and we meet as
routinely as his does, and we have many telecoms to provide
specific advice. But the level of detail and the heavy agenda
that is provided at each meeting is all consuming. It is
sufficiently difficult to come to some kind of resolution and
give adequate advice and consensus views to our trade
policymakers in this current context.
Mr. BRADY. Is there a role for public health or labor, for
example, to be expanded on the Tier 1, the advisory ACTPN, or
Tier 2, where you are dealing with sort of a larger general
policy dialogue?
Mr. PETTY. That is someone else's call to make. It is
certainly something we would not resist, of course. But if it
is inadequate, I think it should be expanded.
But as I said, my conversation with people on TPAC in
particular over the decades, let's say, has been they have
enjoyed meetings with the very top people at USTR and the
Commerce Department; they have had ready access, and they get
closer to actually the people that make the decision than we
do. Ours is funneled up a long, long tree.
Mr. BRADY. Great. Thank you. My point is I want to make
sure the technical committees are doing their job, are
providing in a very complex world the knowledge and information
USTR needs to be able to create win situations for the United
States and our workers. So thank you all for your input.
Mr. Chairman.
Chairman LEVIN. Thank you for following up on that
question.
Mr. Doggett, you are next.
Mr. DOGGETT. Thank you, Mr. Chairman, and thank you to each
of you for your testimony.
The caricature of radical environmentalists and inept labor
union representatives running rampantly through these
committees and disclosing all the secrets to the Chinese and
the Germans and the Indians is not only silly, but I think it
is dangerous, the caricature we have heard from some this
morning.
Mr. BRADY. Mr. Chairman, look, I don't want to interrupt,
but----
Mr. DOGGETT. You are interrupting and I don't yield to you.
You can make your comments further. I didn't refer to you
specifically.
But ``radical environmentalist'' is a term used by one of
our colleagues. And it is caricature and it is silly and it is
dangerous mainly to our trade policy, because we will not build
broader support for more trade in this country until we deal
with some of the issues that are referred to.
And I also have to disagree with some of the testimony that
we just heard, because I have a great deal more confidence in
American business than some of the testimony suggests. I don't
believe that American business is so weak that it will wither
away if somebody files a minority report or that it cannot
withstand some serious professional discussion behind closed
doors about how best to shape our trade objectives and how to
respond to the negotiating positions of other countries.
No one is suggesting that we put it on the front page or
invite the Chinese to have a representative within these
committees if we are deciding on what our objectives are going
to be. But there are times in the process, as Mr. Magraw
pointed out in his testimony, that our foreign trading partner
knows exactly what our position is. The commercial interests
that have met behind closed doors in a private way know exactly
what our position is. The only people that don't know what our
position is are the American people. And it is that lack of
transparency at key points in the process that this hearing
really needs to focus on. And USTR needs to do more than a
superficial review but a real review.
Mr. Herrnstadt, let me ask you, if you had representatives
of steelworkers on steel or autoworkers on this auto committee
or machinists dealing with aircraft parts, do your members have
any interest in disclosing to our foreign trading partners
trade secrets of the industries that you work for?
Mr. HERRNSTADT. Well, we absolutely don't--do not. In terms
of the proprietary nature, let me also remind everyone that, at
least on the Tier 2 committee, we all do have security
clearances on that.
Mr. DOGGETT. You are actually subject to--you not only have
been vetted, but there are laws that because you are dealing
with secret information, you could be subject to some action if
you disclosed it, right?
Mr. HERRNSTADT. That is correct.
In addition to that, I would remind everyone just to take a
look at the statute when it comes to the ITAC. ``Such committee
shall insofar as practical be representative of all industry,
labor, agricultural or service interests in the sector or
functional areas concerned.''
Certainly the machinists union is well versed in issues
like nontariff issues. Certainly we have worked with Harley-
Davidson in the past, and that is one of the reasons that has
led to our historic labor relations that has brought that
company such great success.
In addition, if I could also add, the topics that are
covered in the two-tier system are, by statute, to be generally
policy oriented. They are cross-industrial because they do
represent--we do have labor representatives from a variety of
other industries.
The ITACs cover specific issues. I have never been to one,
but I understand it is things like export controls, maybe bits,
maybe other things like tariffs and so forth that we do have
expertise on.
Lastly, we really do need to get away from this old mind-
set that everything is so adversarial. I do believe that
particularly labor has a great deal of expertise in the
technical areas of these trade-related issues that we can add
to the function of such a committee, and in doing so add to the
information and advice the administration is seeking.
Mr. DOGGETT. Thank you. I think it is very clear from the
studies that the General Accountability Office has done that
any attention to the views of employee organizations, whether
they were union or nonunion, in the last decade, has been
negligible to nonexistent.
Mr. Magraw, let me ask you specifically about what
impediments there are presently to sharing documents and
information between advisory committees?
Mr. MAGRAW. Thank you, Congressman.
The main experience we had recently had to do with the
ITAC's recommendation regarding reach that I mentioned. What
initially happened is that we were told we couldn't share those
documents because of a legal impediment. I think the genesis of
that is that the ITAC 3, the ITACs report both to USTR and to
the Department of Commerce.
Several of us wondered if in fact there was any legal
impediment. There might be a politeness impediment to telling
the ITACs in question that their advice, which was, after all,
to the U.S. Government, was being shared with other people who
had clearances.
But that is not a legal impediment. We have asked for a
legal opinion and so far have not gotten one.
I think the main impediment actually, though, is practice.
I have never been involved in the Tier 1 ACTPN. No
representative of that or member of that has ever asked my
opinion of anything or informed me about it. I think I am able
to be asked because I have a clearance. There is no practice of
USTR that I know of at all that would bring an ITAC
recommendation to the attention of any of the Tier 2
committees.
I might point out, if I could take one second to say, this
technical advice is extremely important. I can see why labor
would have a tremendous amount to add to it. But, of course,
the ITACs are going far beyond technical advice; they are also
providing policy advice.
I completely agree with what I think was the gist of the
chairman's questions, that it is very important to have a give-
and-take and a dialogue. What the USTR gets now is narrow,
self-interested advice that isn't informed by a give-and-take
and, I think, is poor.
And I think it was Mr. Davis who pointed out earlier that
it is USTR's job to synthesize this result, the different
advice. But you want to get good advice, and if that involves a
minority opinion off of an ITAC, I think that would be fine.
Mr. DOGGETT. Thank you.
Thank you, Mr. Chairman.
Chairman LEVIN. Mr. Davis, I think you have the last series
of questions.
Mr. DAVIS. Thank you. I appreciate Mr. Magraw's point about
the give-and-take on an ITAC.
My concern in including everybody under the sun is, many of
the staffers that I have met in the organized labor movement
have never walked a factory floor like I have, and I would be
very concerned that somebody who doesn't know what a bill of
materials is, doesn't understand the difficulties and the
mathematical complexities in distribution requirements planning
might in fact take an ideological or emotional position over
the actual facts and jobs that are being affected, particularly
considering the minority of manufacturing employees being
represented nationally.
I also appreciate Mr. Herrnstadt's statement. I am not a
politician by background. I am just a guy that kind of grew up
around manufacturing, couldn't even get elected to the student
council. I am not a silver-tongued orator like the gentleman
from Texas.
But the one thing that I would say, from your comments, is
I appreciate your saying that we need to get away from this
mind-set that everything is adversarial. I think there are so
many issues related to process that are very, very critical
that we understand that are not partisan issues, they are not
emotional issues, they are technical issues. They are cause and
effect. We often miss that.
I think most folks should be able to have input at the
table, but at the same point having people who actually
understand fully the impact of this and are not pursuing
political agendas, I think, is very important from a technical
side.
It brings me to a question.
Mr. Hoelter, you noted in your testimony that the ITAC
advice needs to be clear, focused and unvarnished. You also
expressed concern about watering down advice to the lowest
common denominator to achieve group consensus. In a group whose
members might reflect opposing interests, it is effectively
worthless to USTR. You also say that such a result would do our
trade policymakers a profound disservice.
I understand there are political issues afoot, particularly
in the first two tiers, because of the importance of elections,
the outcomes of that, the will of the people ultimately. But
could you elaborate on your comment about this statement
regarding a profound disservice? What do you see to be the
issue here?
Mr. HOELTER. Well, maybe this is the wrong analogy, but
let's take bills just in the United States Congress. You have a
House bill, you have got a Senate bill. Both may be very, very
different and provide clear choices, but in our system, you
have to sit down at a conference committee and you hammer
things out and you dilute it, and there is a give-and-take that
goes on, and the bill then goes up to the executive.
What we are suggesting here and what I think really goes on
that I think would be more effective and has been working
within the ITAC process is to provide a variety of options that
then the policymaker, the executive in my example, can choose
or pick on almost a smorgasbord approach.
Mr. DAVIS. So you are suggesting, not unlike an executive
brief in a business or an operations brief, that there would be
a chart of possible courses of action that that decision-maker
or policymaker would be able to choose from?
Mr. HOELTER. Something like that.
I think what we should do is look at the entire system as
opposed to each--or look at the forest as opposed to each
individual tree, and do we have a rich forest with great
diversity of foliage and things that one can draw upon to come
up with what I said earlier is a coherent trade policy.
If I might comment on one other thing, I also believe that
it is the responsibility of industry to do a better job than we
have been on educating our own constituencies, our employees
and our stakeholders, about trade and about the benefits and
what it means on the shop floor to the ordinary worker or
someone who is a pencil-neck like myself. I think that is very
important.
Mr. DAVIS. I appreciate that. Our workers in the largest
machine tool manufacturer in North America in my district would
be sensitive to that.
Mr. Petty, GM, Chrysler and Ford all sit on the same ITAC
that you chair. Could you describe what this new dynamic would
be on your ITAC if labor unions, for example, were to
participate in all of your meetings and were to participate in
the drafting of your reports to the administration,
particularly if you had to arrive at a consensus report?
Mr. PETTY. It is hard to say. Again, I leave it to those
companies to answer that question on their own.
I just see the potential in not involving the Big Three, if
you will, but there are other members of my ITAC who may be
uncomfortable by having labor represented at the table. It
could be that the Big Three are very comfortable or basically
indifferent, but we haven't sensed that out.
I am just speaking of the view of the whole ITAC, and I
have polled them, that generally they think it would be a
disruptive intrusion into the process and would dilute the
quality of the advice given ultimately to the USTR and the
Department of Commerce.
Mr. DAVIS. Thank you. I see my time has expired.
Chairman LEVIN. Mr. Reichert.
Mr. REICHERT. Thank you, Mr. Chairman. I am going to
address my question to Mr. Herrnstadt.
As you probably know, I come from the Pacific Northwest. I
may have mentioned that in my earlier question. But running
between assignments from here to there, I have forgotten
exactly what I said the first questions.
So a lot of your members, as well as Longshoremen and
Teamsters, live and work in my district, and as I mentioned in
my remarks in the first panel, I am looking for ways to
increase the participation of your association and others when
it comes to providing input on trade.
These workers' livelihoods depend on international trade,
and they have so much to gain from trade, especially in
Washington State. Airplane parts, the parts that your members
manufacture, are key exports for my State and our country.
I just want to mention, I was really disappointed to see
opposition to the Colombian FTA. I traveled to Colombia,
visited with the President and union members on both sides of
the issue in Colombia. I understand there was a great impact on
the Caterpillar Company whose tariffs were about $200,000 to
$250,000 per piece of machinery as they were exported from the
U.S. and imported into Colombia.
If that trade agreement would have been in place, those
tariffs would have disappeared, and it certainly would have
been, I think, welcome to the workers at Caterpillar. That in
mind, I would like to work with you to achieve this goal, to
get people engaged in this. So my comments are to you.
I would like to ask Mr. Hoelter, you mentioned in your
testimony that in your experience the Commerce Department and
the USTR have maintained an open-door policy and an eagerness
to listen. In other channels, beyond the formal Trade Advisory
Committee System, those things work inside the system, but
outside the system.
Could you elaborate on that statement that you made, and do
you think that labor groups that oppose trade agreements so
beneficial to their members have adequate avenues for input
now, and do you think their perspectives would change if they
had other channels to communicate with the administration or
Congress on trade?
Mr. HOELTER. Thank you.
I cannot speak on behalf of the labor groups, but I can say
that, as to many of the challenges that my company faces
overseas, most of them being in the form of nontariff technical
trade barriers, it would be inappropriate for me as chairman of
ITAC 4 consumer goods to monopolize the dialogue when we have
our ITAC meetings with Commerce and USTR representatives there
with the issues that pertain only to my company.
We do have a full agenda. But from experience, there have
been many opportunities where we have been able to hold
meetings within the Department of Commerce and also at U.S.
Trade Representative's Office to get into the particulars of
particular issues that create great problems for us and
restrain our opportunities.
So, again, it is inappropriate to do that I think within a
committee, because I have to also defer to others who have
strong points of view and want to participate in the dialogue.
Mr. REICHERT. Mr. Herrnstadt, could you answer the last
question for me? Do you think that the perspectives of union
workers could be changed if they had other channels to
communicate with and learn more about trade and how it impacts
their jobs?
Mr. HERRNSTADT. Well, let me answer the first part of your
question.
I think that there needs to be a great deal more forum for
labor and the public at large to participate in the trade
policy. The Trade Advisory Committee System that we are talking
about is one of those, although it is inadequate; in the way it
is currently being run, it is completely deficient on that.
We have got 6.5 million jobs that have been lost since
December 2007. Two million of those were manufacturing jobs. We
have got to do things differently. We can't just sit back at
the status quo and say, if we include labor expertise in ITACs,
it will be the end of the system.
Mr. REICHERT. Sir, my time is about to expire. Could you
address the last question for me, please, before the red light
comes on?
Mr. HERRNSTADT. Sure. I believe that we need to do so much
more to make sure that the worker perspective is given towards
creating trade policy in this country, and we haven't given
adequate attention to that at this point.
Mr. REICHERT. Okay. My time has expired.
My question wasn't answered, but thank you, Mr. Chairman.
Chairman LEVIN. Well, you didn't hear an answer on the
first comment you made, but that is for another time I think.
I just want to say, Mr. Hoelter, before Mr. Herger finishes
our part of this, I thought your answer was admirably discreet
because your company has faced nontariff barriers in a number
of countries, and I think trade policy needs to worry about
being able to ship our goods to other countries as well as the
openness of our market.
And if I might say so, your discreet answer I think
somewhat underestimates--on purpose, in your case--the problems
that your company has faced exporting a product that is made in
the United States of America.
Mr. Herger.
Mr. HERGER. Thank you, Mr. Chairman.
Mr. Petty and Mr. Hoelter, given the proprietary nature of
your information exchanged with the government, what are your
thoughts on opening ITAC meetings to the public? What could
happen to U.S. negotiating interests if our trading partners
had access to that information exchange? And would that be
helpful or hurtful to all U.S. interests?
Mr. PETTY. Well, I will take it for starters.
It would certainly diminish the quality of the advice being
given by the current advisers. So if you open it to the public,
people are going to be much more hidebound in giving good
advice because they are going to be always watching their back.
They are worrying about implications about their own
competitive situation, they are worrying implications with
their workforce, they are worrying about implications for a
variety of lawyers that are on the periphery circling like
sharks. They wouldn't feel comfortable.
Frankly, from--again polling my ITAC, which is one of the
largest and most robust, they just wouldn't continue to
participate. Many of them would just fall away. It is just not
worth the time and trouble.
As far as advising or influencing U.S. trade policy and our
trade policymakers abroad, I think it clearly would take an
arrow out of their quiver. They wouldn't be as effective as
they could be in promoting American jobs. That is what it is
all about, and American exports.
Mr. HERGER. Thank you, Mr. Petty.
Mr. Hoelter.
Mr. HOELTER. Thank you. I would say that on our own ITAC,
since it does not represent really a sector of competing
interests, commercially competing interests, but rather a broad
range of companies that are involved in manufacturing consumer
goods, we don't have really the issue so much among ourselves
of disclosing trade secrets, if you will; but we do have the
interest of disclosing negotiating positions and suggestions, I
guess, to our government policymakers.
I think that we have to be very careful about opening up
our meetings to the public at large. Certainly perhaps some
agenda items can be disclosed. Meeting frequency can be
disclosed.
But even as the chairman just mentioned with my prior
remarks--I don't know if it was a compliment, but he did
describe them as being very discreet. I was trying to be
measured in what I felt about some of the trade barriers we
face in China and elsewhere. If I really told you how I felt, I
don't think that would be appropriate for this particular
forum, but that is because it is public. When we are behind
closed doors, I think we can sort of take the gloves off, if
you will, and be frank, honest, and have a really good, dynamic
exchange.
Mr. HERGER. That is very helpful, Mr. Hoelter and Mr.
Petty. Thank you very much.
I believe the whole purpose of this ITAC is to be able to
help our negotiators, be able to help our trade team. And it
sounds to me like this would be very detrimental, and
individuals participating would be holding back what otherwise
they would be much more forthcoming of.
I think what is important is that we have the best product
available. So I thank you very much for your testimony.
Thank you, Mr. Chairman. And with that, I yield back.
Chairman LEVIN. All right. I think we are finished. Thank
you very much to all five of you. It has been a most
interesting and, I think, important hearing.
We stand adjourned.
[Whereupon, at 12:57 p.m., the subcommittee was adjourned.]
[Submissions for the Record follow:]
Testimony By American Association of Exporters and Importers, Statement
Statement of the American Association of Exporters and Importers
1. Introduction and Overview
AAEI appreciates the opportunity to offer these comments on the
Trade Advisory Committee System, which is currently being reviewed by
the House Ways and Means Committee--Subcommittee on Trade in the U.S.
House of Representatives.
AAEI has been a national voice for the international trade
community in the United States since 1921. Our unique role in
representing the trade community is driven by our broad base of
members, including manufacturers, importers, exporters, wholesalers,
retailers and service providers, including brokers, freight forwarders,
trade advisors, insurers, security providers, transportation interests
and ports. Many of these enterprises are small businesses seeking to
export to foreign markets. With promotion of fair and open trade policy
and practice at its core, AAEI speaks to international trade, supply
chain security, export controls, non-tariff barriers, import safety and
customs and border protection issues covering the expanse of legal,
technical and policy-driven concerns.
As a trade organization representing those immediately engaged in
and directly impacted by developments pertaining to international
trade, trade facilitation and supply chain security, we are very
familiar with the operational impact of U.S. trade policies and
programs. Many AAEI members serve on the Commercial Operations Advisory
Committee and the International Trade Advisory Committees to various
federal agencies. Therefore, AAEI is deeply interested in the Trade
Advisory Committee System designed to assist U.S. officials concerning
implementation of international trade policy.
2. Commercial Operations Advisory Committee
The Commercial Operations Advisory Committee (``COAC'') was
established in the 1980's to assist the U.S. Department of Treasury
oversee the U.S. Customs Service. Specifically, Section 9503(c) of the
Omnibus Budget Reconciliation Act of 1987 authorized the Secretary of
Treasury to establish COAC as follows:
(1) The Secretary of the Treasury shall establish an advisory
committee which shall be known as the `Advisory Committee on
Commercial Operations of the United States Customs Service'
(hereafter in this subsection referred to as the `Advisory
Committee').
(2) (A) The Advisory Committee shall consist of 20 members
appointed by the Secretary of the Treasury.
(B) In making appointments under subparagraph (A), the Secretary of
the Treasury shall ensure that--
(i) the membership of the Advisory Committee is representative
of the individuals and firms affected by the commercial
operations of the United States Customs Service; and
(ii) a majority of the members of the Advisory Committee do
not belong to the same political party.
(3) The Advisory Committee shall--
(A) provide advice to the Secretary of the Treasury on all matters
involving the commercial operations of the United States Customs
Service; and
(B) submit an annual report to the Committee on Finance of the
Senate and the Committee on Ways and Means of the House of
Representatives that shall--
(i) describe the operations of the Advisory Committee during
the preceding year, and
(ii) set forth any recommendations of the Advisory Committee
regarding the commercial operations of the United States
Customs Service.
(4) The Assistant Secretary of the Treasury for Enforcement
shall preside over meetings of the Advisory Committee.
19 U.S.C. Sec. 2071. At that time, COAC's focus was on customs
procedures which had an impact on the trade community's commercial
operations.
Over the last several years, particularly since 2002, the COAC has
shifted its focus more to trade security issues to reflect the transfer
of the U.S. Customs Service to the U.S. Department of Homeland Security
(``DHS''), which now functions as U.S. Customs and Border Protection
(``CBP''). COAC's charter was revised in 2004 to reflect its new focus
on homeland security issues, particularly maritime cargo. The
membership of COAC reflected this change with more representatives with
supply chain security expertise, which previously were not involved in
import and export regulatory procedures.
In addition to the change in focus, COAC's government chairman was
relegated to the Commissioner of CBP instead of senior management of
DHS, who did not express interest in attending COAC meetings let alone
hearing COAC's views on significant policy issues, such as:
Customs-Trade Partnership Against Terrorism
``First Sale'' Rule
Uniform Rules of Origin
Importer Security Filing (``10+2'')
AAEI recommends a number of changes to COAC, which we believe will
return COAC to its traditional role in assisting the Departments (both
DHS and Treasury) properly provide advice to and report to the
Secretaries and the Congress concerning the operations of CBP.
Specifically, AAEI recommends the following changes:
Remove COAC from the Federal Advisory Committee Act
(``FACA''), 5 U.S.C. App. 2 Sec. Sec. 1--14. Specifically, we
suggest that Congress enact legislation adding a section to 19
U.S.C. Sec. 2071, stating:
Nonapplicability of FACA. The Federal Advisory Committee Act (5
U.S.C. App.) shall not apply to the Commercial Operations Advisory
Committee under this section.
For COAC to fulfill its statutory obligation to
Congress in assisting both Departments, DHS and Treasury, COAC
and CBP must collaborate on the development of agendas and
issues which are timely and relevant to the international trade
community. The statute states that COAC ``shall provide advice
to the Secretary of Treasury [and DHS] on all matters involving
the commercial operations of [CBP].'' The statute is expansive
in the scope of issues that COAC can advise on and report to
Congress with recommendations. Nowhere in the statute does it
state that advice and recommendations are limited only to those
issues deemed appropriate by CBP. COAC shall make the final
determination on all subject matters covered by its meeting
agendas.
COAC members shall choose their own Chairman, who
will recommend the establishment of sub-committees, create and
manage the agenda and prepare the annual reporting to Congress
and the Secretaries.
COAC should be free to establish subcommittees as
needed ``on all matters'' involving commercial operations of
CBP. The membership of such subcommittees should not be limited
to members of COAC or FACA appointments as such issues may
require either specific expertise not represented within the
current membership of COAC, or may require a wider segment of
the trade community who should be consulted on such issues
before COAC can render advice to CBP and recommendations to
Congress.
In order to avoid conflicts of interest, industry
members selected for COAC should not derive any income,
directly or indirectly, from CBP. COAC members who are employed
with firms who are contractors or consultants to CBP have a
direct conflict of interest with the mission of COAC since the
Committee's work often reviews, assesses and critiques the very
projects which a member's firm has developed for CBP.
COAC members should be selected based on well-
established criteria which are transparent and published well
in advance of the solicitation for applicants. Moreover, COAC
members should be chosen through a selection committee
comprised of both government and industry representatives to
ensure that the membership as a whole is balanced among the
broad spectrum of interests of the international trade
community. The current system whereby the agency forwards names
to Congress for comments or vetting is too opaque, and may not
necessarily produce the best mix of COAC members based on
professional experience.
If changes are made to trade advisory committees
through legislation, we recommend that any such changes
grandfather existing 11th term COAC members to ensure they
complete their 2nd year term with the 12th term COAC, if they
elect to do so.
In order to fulfill its statutory obligation to
provide timely and relevant recommendations to Congress
regarding commercial operations of CBP, COAC must be free to
submit comments to Congress on the impact on commercial
operations of any existing or pending statutory or regulatory
matters.
To fulfill the spirit of the transfer of functions
from the Secretary of Treasury to the Secretary of Homeland
Security, COAC meetings must presided over by both the
Assistant Secretary of Treasury for Trade and Assistant
Secretary for Policy of the U.S. Department of Homeland
Security under 6 U.S.C., Section 203, and the Department of
Homeland Security Reorganization Plan of November 25, 2002 as
modified by a note in Section 542 of Title 6. CBP should not
preside over COAC meetings which reviews the agency's
performance relating to commercial operations.
3. International Trade Advisory Committees
Because of the importance of product safety, AAEI recommends the
establishment of a trade advisory committee for the U.S. Consumer
Product Safety Commission (``CPSC''). The CPSC ITAC shall be comprised
of representatives from industry, including quality assurance
professionals, international trade compliance professionals,
certification companies and laboratories, and other commercial
stakeholders affected by the laws and regulations of CPSC.
The CPSC ITAC should also be permitted to interact with COAC to
provide additional commercial operations expertise where appropriate.
Again, we recommend that CPSC ITAC members be chosen through a
selection committee comprised of both government and industry
representatives to ensure that the membership as a whole is balanced
among the broad spectrum of interests of the international trade
community with a financial stake in product safety regulations and
programs.
The Committee's desire to add more diverse representation to the
ITACs is may not produce better results since trade policy is rarely
decided at the Tier 3 ITAC level. Rather, the ITACs are designed to
include the commercial stakeholders impacted by and responsible for
implementing established trade policy.
Stakeholders representing broader segments of the public should be
limited to Tier 2 advisory committees rather than be involved at the
Tier 3 level ITAC. ITACs generally require technical and function
knowledge of commercial operations in order to advise agencies on
implementation of the trade policy established by Tier 1 and Tier 2
advisory committees.
The U.S. regulatory regime, like the World Trade Organization
framework, regulates trade based on physical products with certain
exceptions under U.S. law (e.g., deemed export rule) and certain U.S.
export controls on information technology (e.g., release of
information). Only recently has ``trade in services'' become part of
the trading regime, but it does not generally involve the work of Tier
3 ITACs. Other non-commercial interests should be handled by the U.S.
Congress and the President in establishing U.S. trade policy. The
health and safety impact resulting from global trade cannot be
adequately addressed at the Tier 3 ITAC level since it requires a
broader political consensus at a higher level of government.
4. Conclusion
In conclusion, AAEI believes that Congress should exercise more
oversight over federal agencies' interaction with Trade Advisory
Committees to ensure that the system is functioning the way Congress
intended it to. AAEI thanks the House Ways and Means Committee
Subcommittee on Trade for holding this timely hearing
Testimony By Michael J. Stanton, Statement
Statement of Michael J. Stanton
The Association of International Automobile Manufacturers (AIAM)
appreciates this opportunity to comment on the advisory committee
system and ways to increase transparency and participation in the
development of U.S. trade policy. For reasons summarized below, we
believe the time has come to open the federal advisory committee
process to individuals associated with U.S. subsidiaries of
international companies, particularly with respect to the automobile
industry.
We take this position for three principal reasons:
1. Neither the Federal Advisory Committee Act (FACA) nor the
Trade Act of 1974 explicitly or implicitly requires that
federal advisory committee members be employees of U.S.-owned
corporations.
2. The U.S. auto industry has changed dramatically. Aside from
the large and growing level of U.S automotive production by
U.S. subsidiaries of foreign-owned corporations, there may
shortly be only two U.S.-owned major motor vehicle
manufacturers, with the ``new'' Chrysler now under the
operational control of Fiat SpA, Italy's largest automaker.\1\
We do not believe U.S. government trade negotiators can secure
the best possible advice on trade negotiating positions from
only two of the eleven (soon to be thirteen with the addition
of Kia and VW) U.S vehicle manufacturers.
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\1\ Although Chrysler is not yet ``owned'' by Fiat, it is
effectively controlled by Fiat management and thus raises the question
of whether it is a foreign-owned corporation in the spirit of the
Commerce Department's rules.
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3. The confidentiality requirements of the FACA prevent the
disclosure of advice sought or given as part of the advisory
committee process to those without the requisite security
clearance. Accordingly, the issue of corporate ownership is
moot.
* * *
AIAM is a trade association representing the interests of the U.S.
subsidiaries of international automobile manufacturers, including many
of the largest automotive companies in America \2\ Collectively, AIAM
companies are responsible for billions of dollars annually in cross-
border trade, involving all aspects of manufacturing and distribution
of passenger cars, light trucks and multipurpose vehicles.
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\2\ AIAM members include American Honda Motor Co. Inc., American
Suzuki Motor Corporation., Aston Martin Lagonda of North America, Inc.,
Ferrari North America, Inc., Hyundai Motor America, Isuzu Motors
America, LLP, Inc., Kia Motors America, Maserati North America, Inc.,
Mitsubishi Motors North America, Inc., Nissan North America, Inc.,
Peugeot Motors of America, Inc., Subaru of America, Inc., and Toyota
Motor North America, Inc. The Association also represents original
equipment suppliers, other automotive-related trade associations, and
motor vehicle manufacturers not currently engaged in the sale of motor
vehicles in the United States.
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Both individually and as a group, AIAM companies have a substantial
interest in trade policy matters and, we believe, much useful
information and guidance to offer through the federal advisory
committee process. As detailed in these comments, at the end of 2008,
AIAM-member companies accounted for about one-third of all
manufacturing plant employment in the U.S. automobile and light truck
manufacturing industry.\3\ We are increasingly being recognized as the
positive side of the ``globalization'' coin for many Americans employed
in manufacturing. In the automotive sector, U.S. subsidiaries have
invested more than $40 billion in new production and distribution
capacity over the last 25 years, creating more than 90,000 high-skill,
high-wage jobs across the country.
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\3\ AIAM 2009 Member Economic Impact Survey and the Bureau of Labor
Statistics.
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Despite the substantial and growing role of AIAM companies in the
U.S. economy and the contributions such companies could make to the
federal international trade policy development process, under current
agency practice no one associated with AIAM--or any other U.S.
subsidiary--may sit on a federal advisory committee for trade policy
matters. While no formal rule has ever been promulgated, the Office of
the U.S. Trade Representative (USTR) and the Commerce Department have
for many years applied a blanket prohibition on advisory committee
membership to individuals employed by U.S. subsidiaries or otherwise
representing their interests.
This policy was most recently reaffirmed and restated in April 2006
when the Commerce Department published a Notice on the Charter Renewal
of the Industry Trade Advisory Committees (ITACs); Request for
Nominations. \4\ As stated in the Notice, current policy requires that
an advisory committee member ``must represent a U.S. entity'' which is
defined as ``an organization incorporated in the United States (or if
unincorporated, having its principal place of business in the United
States) that is controlled by U.S. citizens or by another U.S.
entity.'' The policy further states that ``[a]n entity is not a U.S.
entity if 50 percent plus one share of its stock (if a corporation, or
a similar ownership interest of an unincorporated entity) is
controlled, directly or indirectly, by non-U.S. citizens or non-U.S.
entities.'' In addition, a nominee to advisory committee membership who
represents an entity or corporation with ten percent or more non-U.S.
ownership ``must demonstrate at the time of nomination that this
ownership interest does not constitute control and will not adversely
affect his or her ability to serve as a trade advisor to the United
States.'' \5\
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\4\ U.S. Dep't of Commerce, Internat'l Trade Admin., Notice of
Renewal of the Charters and Request for Nominations, 71 Fed. Reg. 18720
(Apr. 12, 2006).
\5\ Id. at 18721. These criteria are also published at the
International Trade Administration's ITAC website at http://
www.ita.doc.gov/itac/become_an_advisor/index.asp. This policy was
relied upon in the past to reject on eligibility grounds an application
for membership on ISACs (the acronym for an element of the pre-2003
trade advisory committee structure that was replaced by ITACs) by then-
AIAM President Philip Hutchison. We also understand that it was applied
to applicants associated with Volkswagen of America and to Chrysler
when it was affiliated with DaimlerBenz.
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We do not believe this policy is consistent with the Federal
Advisory Committee Act (FACA) requirement that membership on advisory
committees be ``fairly balanced.'' Nor do we believe this
discriminatory rule can be justified on public policy grounds. In fact,
the real question is ``can, or even should, the Commerce Department
determine the nationality of the stockholders of major international
corporations?'' Whatever restrictions may have been warranted in the
past, U.S. subsidiaries and their American employees unquestionably
have a stake and interest in U.S. trade policy matters and important
information and guidance to contribute to the policymaking process.
The Subcommittee's hearing offers a timely opportunity to reassess
the rules governing U.S. subsidiary participation in the federal
advisory committee process and, through more rigorous application of
FACA's ``fair balance'' requirement, better ensure that U.S.
policymakers receive ``timely, relevant trade policy advice'' on a
representative basis. The automotive sector provides a particularly
good window on the changes taking place in the national and global
economy, but the issue raised by the blanket U.S. subsidiary
prohibition is much broader. The ultimate question for USTR and the
Commerce Department is whether trade policy can or should be driven
solely by narrow questions of capital affiliation (i.e., nationality of
ownership) or also, as we believe, must take into account the interests
and issues of U.S.-based workers and manufacturing. The U.S. subsidiary
prohibition puts front and center the question of what is meant, or
should be meant when we refer to ``American'' companies in the context
of the emerging global economy.
* * *
U.S. Subsidiary Prohibition Contravenes Statutory ``Fair Balance''
Requirement
Neither FACA nor the Trade Act of 1974 authorizes the U.S.
subsidiary prohibition. To the contrary, they appear to mandate
participation where U.S. subsidiaries represent a significant part of
the domestic industry.
The Federal Advisory Committee Act
The starting point for analyzing agency authority and
responsibilities on matters involving federal advisory committees is
the Federal Advisory Committee Act (FACA), 5 U.S.C. app. 2. Its
provisions apply to all federal advisory committees, including those
established by USTR and the Commerce Department to advise on trade
policy matters. See, e.g., Northwest Ecosystem Alliance v. USTR, C99-
1165R at 7 (W.D. Wash. Nov. 9, 1999) (rejecting a blanket prohibition
on ISAC participation by non-business interests).
Congress' paramount objective when it passed FACA in 1972 was to
reform an out-of-control advisory committee system. The numerous
committees in existence at the time had no clearly-defined role or
responsibilities and, in the absence of enforceable membership
guidelines, too often functioned as closed conduits for special
interests. Reform was to be accomplished by making the process more
transparent and representative. To this end, Congress reclaimed sole
authority to authorize advisory committees and prescribed operational
guidelines to ensure that advisory committees have ``a clearly defined
mission, balanced representation, assurance of autonomy, legislation
authorization for funds [and] a time certain for termination.'' H.R.
Rep. 92-1017 at 6 (1972).
The ``balanced representation'' requirement at the heart of this
reform was codified in a provision of FACA mandating that membership on
advisory committees be ``fairly balanced in terms of point of view
represented and the functions to be performed by the advisory
committee.'' 5 U.S.C. app. 2 Sec. 5(b)(2). Its purpose was not simply
fairness, but to prevent ``special interests'' from capturing the
process. As the House Committee on Government Operations explained in
accompanying report language,
Particularly important among the guidelines are [1] the requirement
. . . that `the membership of an advisory committee be fairly balanced
in terms of point of view represented and the functions to be
performed' and [2] the requirement . . . that in creating an advisory
committee the creating authority should include `appropriate provisions
to ensure that the advice and recommendations of the advisory committee
will not be inappropriately influenced by the appointing authority or
any special interests.'
One of the great dangers in the unregulated use of advisory
committees is that special interest groups may use their membership on
such bodies to promote their private concerns. Testimony received at
hearings . . . pointed out the danger of allowing special interest
groups to exercise undue influence upon the Government through the
dominance of advisory committees which deal with matters in which they
have vested interests.
H.R. Rep. 92-1017 at 6 (emphasis added).
After describing a specific instance where outside interests had
not been reflected on an advisory committee, the Committee went on to
observe that ``[t]his lack of balanced representation of different
points of view and the heavy representation of parties whose private
interests could influence their recommendations would be prohibited by
the provisions contained in [FACA].'' Id. \6\
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\6\ The companion Senate report likewise notes that FACA would
``require that membership of the advisory committee shall be
representative of those who have a direct interest in the purpose of
such committee.'' S. Rep. No. 92-1098 at 9 (1972).
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As the court in the Northwest Ecosystem Alliance case observed,
``[t]he `fairly balanced' requirement was designed to ensure that
persons or groups directly affected by the work of a particular
advisory committee would have some representation on the committee.''
C99-1165R at 7.\7\ This applies with full force to U.S. subsidiaries,
whose interests and perspectives on some trade-related policy matters
can differ significantly from other U.S. companies.
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\7\ In a subsequent case, the Northwest Ecosystem Alliance court
enforced a Settlement Agreement between the USTR and a coalition of
environmental groups that had filed a lawsuit challenging the lack of a
health or environmental representative on a particular ISAC. The
Agreement obligated the USTR to appoint a ``properly qualified
environmental representative'' to the ISAC. See Washington Toxics
Coalition v. USTR, 2003 U.S. Dist. Lexis 25869 (W.D. Wash. Jan. 15,
2003). See also Public Citizen v. National Advisory Committee on
Microbiology Criteria for Foods, 886 F.2d 419, 433 (D.C. Cir. 1989)
(concurring opinion, Edwards J.), noting that a primary purpose of the
``fair balance'' requirement is ``to constrain executive discretion and
to establish a measurable standard against which to judge executive
action.''
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Nowhere in FACA is there any suggestion that the ``fair balance''
requirement does not apply to U.S. subsidiaries and their American
workers or that they (or any other discrete interest) can be excluded
from the committee process. While federal agencies have wide latitude
to weigh individual membership applications, FACA does not permit
blanket exclusion of persons associated with a particular interest or
point of view.
Trade Act of 1974
Two years after passing FACA, Congress included provisions in the
Trade Act of 1974 authorizing creation of advisory committees on trade
matters. 19 U.S.C. Sec. 2155. With certain limited exceptions
(unrelated to committee membership), these trade committees were to be
administered in full compliance with FACA provisions, including the
``fair balance'' requirement. Id. Sec. 2155(f).
Section 135 of the Trade Act directs the President to ``seek
information and advice from representative elements of the private
sector and the non-Federal Governmental sector'' with respect to a
broad range of trade policy matters. 19 U.S.C. Sec. 2155(a)(1). These
expressly include ``(A) negotiating objectives and bargaining positions
. . . ; (B) the operation of any trade agreement once entered into . .
. ; and (C) other matters arising in connection with the development,
implementation and administration of [U.S. trade policy].'' Id. A
second provision further requires that the President ``consult with
representative elements of the private sector and non-Federal
Governmental sector on overall current trade policy of the United
States.'' Id. Sec. 2155(a)(2).
To facilitate this information-gathering function, the 1974 Trade
Act required creation of an Advisory Committee for Trade Policy and
Negotiations (ACTPN) to provide ``overall policy advice'' and
authorized the President to establish two additional types of
committees--individual general policy advisory committees to obtain
advice from particular interest groups and ``such sectoral or
functional advisory committees as may be appropriate.'' Id.
Sec. 2155(b), (c). One set of these committees is now organized as
Industry Trade Advisory Committees (ITACs).\8\
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\8\ A reorganization in 2003 resulted in 16 new Industry Trade
Advisory Committees (ITACs) that replaced the previous structure of
``sectoral or functional advisory committees.'' See the joint
Department of Commerce and USTR press release, U.S. Department of
Commerce and the U.S. Trade Representatives Announce New Industry Trade
Advisory Committee Structure,'' (Nov. 25, 2003) available at http://
www.commerce.gov/opa/press/Secretary_Evans/2003_Releases/November/
25_evans_itac_release.htm.
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For all three types of advisory committees, the importance of
balanced representation was reiterated. For ACTPN, the President was
directed to seek information and advice from ``representative elements
of the private sector.'' Id. Sec. 2155(a)(1). Balanced representation
was similarly required for general policy committees, while the Trade
Act mandated that sectoral and functional committees (now the ITACs),
``insofar as is practicable, be representative of all industry, labor,
agriculture and service interests . . . in the sector or functional
interests concerned.'' Id. Sec. 2155(c)(2) (emphasis added).
Further guidance on this point was provided in report language
accompanying the House version of the bill, in which the House Ways and
Means Committee observed that with multilateral trade negotiations on
the horizon ``the need for the Government to seek information and
advice from the private sector [was] more important than ever before''
and that ``[t]he broad range of interests to be represented on this
committee [was] intended to provide U.S. negotiators with a balanced
view of what objectives U.S. negotiators should pursue in the
multilateral trade negotiations.'' H.R. Rep. No. 93-571 at 38 (1973)
(emphasis added).
As with FACA, nothing in the statute itself or accompanying
legislative history would appear to suggest or otherwise support
excluding ``U.S. subsidiary'' interests from the advisory committee
process.\9\
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\9\ Nor can such authority be found elsewhere. The 1994 Executive
Order establishing a trade and environment policy committee, for
example, states only with respect to membership that ``[t]he Committee
should be broadly representative of the key sectors and groups of the
economy with an interest in trade and environmental policy issues.''
Exec. Ord. No. 12905 (Mar. 25, 1994).
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Non-Statutory Justifications
Over the years, several ``justifications'' for the blanket U.S.
subsidiary prohibition have been alluded to, informally, but none hold
up under scrutiny.
The most common argument made is that the advisory committees
established by USTR and the Commerce Department are narrowly focused
and do not implicate U.S. subsidiary interests. We contend that this
view is wrong on two counts. First, as has been noted, the 1974 Trade
Act mandates advisory committee involvement not only on export-related
issues but a wide spectrum of matters involving U.S. trade policy.
Advisory committees provide agency officials with information and
recommendations on matters ranging from trade and investment policy to
services, intellectual property rights and import rules, not just
exports.
Whether focused on exports or a wider range of trade matters, U.S.
subsidiaries can make a valuable contribution to the advisory committee
process by, among other things, helping to identify and rank agenda
priorities and advising on the implications of particular events or
proposals for U.S.-based manufacturing. AIAM members invested in U.S.
production facilities for a variety of reasons and can provide unique
advice on how U.S. trade policy can be improved to increase the
attractiveness of the United States to automotive investors. U.S.
subsidiaries also have a unique contribution to make on international
trade issues involving environmental technologies, customs clearance,
technical standards and other product design issues with trade policy
implications.
A central argument made by those opposing ITAC membership for U.S.
subsidiaries is that individuals employed by these U.S. companies
cannot be trusted with classified information. This is simply not
defensible. Everyone who serves on an advisory committee must have a
confidential security clearance and commit in writing to non-disclosure
conditions. Eliminating the U.S. subsidiary prohibition would in no way
affect these requirements. Trade advisory committee members cannot
legally disclose advice sought and given as part of the advisory
process. This requirement holds regardless of the employer. There is no
reason to expect lesser compliance from U.S. citizens associated with
U.S. subsidiaries.
In fact, were there evidence to suggest a more serious security
concern for committee members with ties to U.S. subsidiaries (and we do
not believe there is any), this presumably would also be an issue for
advisory committee members employed by ``U.S. entities'' whose
professional responsibilities extend to other entities. This would
include, for example, committee members working for trade associations
that have U.S. subsidiary as well as ``U.S. entity'' members (i.e.,
most Washington-based business groups), as well as members employed by
accounting and other consulting firms that provide service (and may
have fiduciary responsibilities) to U.S. subsidiary clients. The
security of confidential information also presumably would be an issue
for U.S.-owned companies with foreign subsidiaries, affiliates or joint
ventures.
In a 2002 report on international trade advisory committees, the
Government Accountability Office (GAO) described the policy of
excluding representatives of U.S. subsidiaries from the committees as a
``gap in industry representation on committees.'' \10\ GAO reported the
Commerce Department's ``rationale for this long-standing policy . . .
[as] the sensitivity of the subject matter considered by the committees
and possible conflicts that might be experienced by U.S. firms that
have foreign owners.'' \11\ Yet GAO went on to observe that ``[t]hese
gaps in industry representation have encouraged negotiators to seek
advice outside the advisory committee system, including from foreign-
owned firms or trade associations that include such firms.'' \12\ It
seems clear that FACA's purposes would be better served if such advice
were rendered in the established advisory committee forum, rather than
in off-the-record meetings.
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\10\ U.S. Gov't Accountability Office, International Trade:
Advisory Committee System Should Be Updated to Better Serve U.S. Policy
Needs, GAO-02-876, at 34 (Sept. 2002).
\11\Id. at 35.
\12\ Id.
Whether intended or otherwise, the practical effect of the blanket
prohibition on U.S. subsidiary advisory committee membership in many
areas has been to foster the very ``danger'' FACA was designed to
prevent--``that special interest groups may use their membership on
such bodies to promote their private concerns.'' H.R. Rep. No. 92-1017
---------------------------------------------------------------------------
at 6.
ITAC 2, the Industry Trade Advisory Committee on Automotive
Equipment and Capital Goods, is a case in point. Under current rules,
only three automakers (General Motors, Ford, and Chrysler) are
currently eligible to participate. While the ITAC 2 charter
contemplates a membership of ``not more than 50 members,'' the
committee currently has only 27. Only three are from auto
manufacturing, one each from General Motors, Ford, and Chrysler. There
is no representation, direct or otherwise, of any of the eight other
companies manufacturing automobiles in this country.\13\
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\13\ The following companies currently operate vehicle
manufacturing facilities in the United States: BMW, Honda, Hyundai,
Mercedes, Mitsubishi, Nissan, Subaru, and Toyota. In addition, Mazda
and Ford have a joint-venture operation and additional vehicle plants
are under construction by Kia and Volkswagen.
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It is difficult to imagine a clearer contravention of the FACA
``balanced representation'' requirement. Three multinational companies,
General Motors, Ford, and Chrysler have been given a monopoly on
access--in effect, a proprietary forum for advancing their private
corporate perspectives and agendas.
Beyond locking out the rest of the companies that make up the U.S.
automotive industry, information and advice from so limited a source
has other policy-distorting implications. Like AIAM members, GM, Ford,
and Chrysler are international companies with mixed global interests.
Even as international automakers have been expanding in the United
States, these ``U.S.'' multinationals--despite their current
difficulties--have been shifting production offshore and taking
ownership of or controlling interests in offshore automakers. There
certainly is nothing wrong with this as a business strategy, but these
companies can no longer claim to be the sole repositories of
``domestic'' interests. On many issues--for example, rules affecting
imports--their strategic interests are as likely to reflect foreign-
based manufacturing as they are the interests of their U.S. workforce.
In such circumstances, U.S. subsidiaries can more fully represent
American workforce and manufacturing base interests.
Globalization has made it much harder for policymakers to discern
the national interest in any given matter. In true American fashion,
FACA rests on the notion that such interests are best divined through
full and open debate--in an advisory committee context, by requiring
policymakers to seek out information and advice from affected interests
on a broadly representative basis.
U.S. Subsidiaries Are ``American'' Companies
The U.S. subsidiary prohibition rests on a fundamentally flawed
premise--that U.S. subsidiaries are foreign rather than American. As
former Labor Secretary Reich, among others, has observed, in today's
global economy ``domestic'' and ``foreign'' labels are no longer
meaningful.
1. Overall U.S. Subsidiary Contributions
U.S. subsidiaries are American companies in every sense of the
word, especially in the contribution they make to the U.S. economy and
their local communities. According to a recent Congressional Research
Service study (which is based on the Commerce Department's own data
quantifying U.S. subsidiary contributions to the U.S. economy),\14\ by
the end of 2005, all U.S. subsidiaries of international corporations:
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\14\ The Congressional Research Service, ``Foreign Direct
Investment in the United States: An Economic Analysis,'' August 15,
2008.
Employed 5.5 million people--about 4% of the U.S.
workforce;
Owned over 30,000 U.S. business establishments and
with a direct presence in every state; and
Maintained forty percent of their employment in the
hard hit U.S. manufacturing sector, ``more than twice the share
of manufacturing employment in the U.S. economy as a whole,
with average annual compensation (wages and benefits) per
worker of about $63,000.
In addition, the study said that ``foreign-owned establishments, on
average, are far outperforming their U.S.-owned counterparts. Although
foreign-owned firms account for less than 4% of all U.S. manufacturing
establishments, they have 14% more value-added on average and 15%
higher value of shipments than other manufacturers.'' Further, ``. . .
foreign-owned firms paid wages on average that were 14% higher than all
U.S. manufacturing firms, had 40% higher productivity per worker, and
50% greater output per worker than the average of comparable U.S.-owned
manufacturing plants.''
2. Automotive Sector Contributions
The contribution to the U.S. economy made by U.S. subsidiaries of
international motor vehicle corporations in the automotive sector is
even more dramatic.
Changing Nature of the U.S. Auto Industry. At the time the ISAC
process was formally established in 1974, there were no automobiles and
light trucks produced in the United States by U.S. subsidiaries of
international companies. According to Automotive News data, in 2008,
AIAM member companies produced 3.1 million vehicles or 36% of all U.S.
light duty vehicle production. All international companies
manufacturing in the United States produced 3.5 million vehicles or 40%
of all U.S. production. These percentages have grown dramatically this
year with all international companies producing 51% of all U.S.
production and AIAM members producing 48%. These numbers will grow even
larger when the Fiat acquisition of Chrysler is completed and the new
Kia and Volkswagen plants begin production.
According to a 2009 AIAM Member Economic Impact Survey, in 2008
AIAM members:
Employed 90,100 Americans
Supported a total payroll of $6.62 billion
Purchased $65.59 billion from U.S. suppliers
Purchased $54.5 billion in U.S. parts and materials
from U.S. suppliers; and
Invested $41 billion in 325 U.S. facilities,
including 109 high value U.S. manufacturing and R&D facilities,
15 vehicle manufacturing facilities and 54 component
manufacturing plants. International vehicle manufacturing
plants are the only such plants located in California,
Mississippi, Alabama, and South Carolina.
Innovation and Competitiveness. Substantial as these figures are,
the overall U.S. subsidiary contribution in the auto sector has been
even greater. U.S. subsidiaries consistently earn the industry's top
marks for manufacturing efficiency, setting a standard that has helped
to make Detroit-based production better and more efficient. Advanced
technologies developed by U.S. subsidiaries at their U.S.-based
research and design facilities have resulted in greater fuel
efficiency, improved safety, and better overall vehicle performance.
AIAM members are the leaders in putting the most advanced and fuel
efficient vehicles on America's roads.
AIAM appreciates the opportunity to comment on this important
issue. We believe the time has come to open the advisory committee
process to all affected U.S. industry and look forward to working with
you to this end.
Testimony By Coalition for a Prosperous America, Letter
Coalition for a Prosperous America's Letter
Thank you Chairman Levin, and members of the House Subcommittee on
Trade, for allowing the Coalition for a Prosperous America (CPA) to
submit this written testimony for the record. CPA works for trade
policy reform that benefits U.S. farmers, ranchers, workers and
manufacturers. We are a unique coalition of agriculture, manufacturing
and organized labor representing the interests of over 2.6 million
people through our association and company members.
We submit this testimony to encourage the ITAC inclusion of more
domestic producers, i.e. those who produce primarily for the domestic
market and are sensitive to unfair imports through foreign government
mercantilism.
America's trade policy has been too focused upon opening export
markets and innovation without sufficient consideration of either
reciprocity, or trading partner protectionism and mercantilism. The
past ``open-export-markets'' and ``innovate-our-way-to-prosperity''
approaches to trade have proven insufficient and often harmful. We do
not oppose those approaches, but oppose relying upon them exclusively.
Our massive trade deficit subtracts directly from gross domestic
product. The deficit is disruptive, provides massive economic harm, and
handicaps our ability to recover from a recession. Jobs, investment,
companies and agricultural production have moved offshore as a result.
Fixing America's economy requires a changed trade policy. More balanced
membership in, and input from, the Trade Advisory Committee System is
necessary to help the U.S. Trade Representative receive better input
and advice than in the past.
The Role of the ITACs
The USTR website states specifically how ITACs are used as
resources.
U.S. Government policy makers rely on our trade advisors to
identify barriers and to provide advice on key objectives and
bargaining positions for multilateral, bilateral, and regional trade
negotiations, as well as other trade-related policy matters. As a
result of these efforts, the United States is able to display a united
front when it negotiates trade agreements with other nations. The
United States' negotiating position is strengthened because its
objectives are developed with bipartisan, private-sector input
throughout the negotiations.
. . . The sixteen ITACs were created to reflect the manufacturing
and services sectors of the U.S. economy, as well as issue-oriented
matters that cut across all sectors. . . . \1\
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\1\ Http://www.ustr.gov/about-us/advisory-committees/industry-
trade-advisory-committees-itac
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This is a worthy use of the ITACs. However, the membership of the
ITACs, with the exceptions of Textiles and Steel ITACs, has been skewed
towards offshoring interests. The lack of balance and diversity has
harmed trade policy efforts.
The ITAC Problem--Insufficient Domestic Producer Representation
The sixteen Trade Advisory Committees largely, though not
exclusively, represent multinationals. Insufficiently represented are
companies producing primarily for the domestic market. The advice
currently given to USTR from the ITACs tends to promote offshoring,
ease of importation and selective market access.
Exports and innovation have been the mantra of the last two
administrations. Those are worthy, but insufficient, goals that fail to
respond to current problems. Import volume resulting from unanswered
foreign interference in our market and in world markets has given rise
to crippling deficits and offshoring. Foreign reciprocity has been
absent. National security and food safety have been ignored or
criticized as ``protectionist.'' The ITACs thus fail to represent the
diversity of the economy, but rather narrow special interests.
The ITAC Solution: More Domestic Producer Representation
CPA requests that domestic producers be given increased
representation in the ITACs to provide balance and additional insight
on the modern trade problems. By ``domestic producers,'' we
specifically mean those that produce primarily for the domestic U.S.
market.
Because the current ITAC representation is skewed towards
multinational corporations, a disproportionate amount of time and
effort is spent opening relatively small markets which are of keen
interest to a few, and not enough time opening larger markets that
would be of interest to a larger set of potential exporters.
Unfair import competition/foreign mercantilism is another topic
that has been neglected. Some ITACs and USTR have given too little
attention to trade strategies ensuring that competitive American
producers are not placed at a crippling disadvantage by mercantilist
foreign government policies. Many trading partners misalign their
currencies to enable massive sales to the U.S.
Virtually all trading partners rebate value added taxes (VAT) when
their companies export to us, a massive global export subsidy. China,
for example, adjusts their VAT rebates monthly depending upon market
conditions to support a trade strategy that is not based upon their
domestic tax policy. Massive and fundamentally trade distorting foreign
subsidies which result in artificially cheap imports at the same time
as those same countries place our exporters at a disadvantage in all
world markets. State owned government enterprises in Asia and elsewhere
are ignored as substantial sources of unfair and subsidized
international competition.
The multinationals represented within most ITACs have no interest
in curtailing these trade distorting policies. Due to their offshoring,
many are interested in continuing those foreign policies and programs
for their own benefit, which conflicts with the interests of U.S.
workers, farmers and manufacturers.
Additionally, the unbalanced ITACs tend to offer advice to limit
the effect of U.S. trade laws, rather than strengthen the effect. U.S.
trade laws are a vital tool to prevent foreign government cheating, but
are not used.
Furthermore, the lack of balance results in too much focus upon
trade facilitation and not enough action on product safety; too much
discussion of future trade agreements in tiny markets and not enough
enforcement of the agreements we have; and too much discussion on
opening new markets and not enough on reciprocal and real market
access.
Domestic producers are fundamentally reliant on the good
performance of the U.S. economy. Multinational companies spread their
risk across the globe and are thus not reliant on the U.S. economy.
Conclusion
A country cannot prosper with a persistent trade deficit. The U.S.
cannot recover from the recession without trade balance improvement.
More domestic producer input into trade policy is necessary, via the
ITACs, to bring new insights into problems long ignored.
We hope your Subcommittee shows support for more domestic producer
balance on the ITACs as you consider how to make the Trade Advisory
Committee System work better. This diversity will help address the
specific shortcomings that persist in U.S. trade policy.
Testimony By V.M. (Jim) DeLisi, Letter
V.M. (Jim) DeLisi's Letter
Dear Chairman Levin & Ranking Member Brady:
I am the President of Fanwood Chemical, Inc., a small chemical
sales, marketing and consulting company located in Fanwood, NJ. I have
personally been involved in the Advisory Committee process for more
than 20 years as a member of ITAC 3 the Industry Trade Advisory
Committee for Chemicals, Pharmaceuticals, Health/Science Products and
Services, as well as its predecessor ISAC 3, the Industry Sector
Advisory Committee for Chemicals and Allied Products. I currently serve
as the Chairman of ITAC 3, and am proud to be the first small company
Chair of this group in its 35-year history. I also have attended WTO
Ministerial Meetings as an Advisor in Seattle, Cancun, and Hong Kong. I
can personally attest to how important the existing system is to
creating jobs and investment in the USA. Records would show that our
Committee has met regularly for 35 years. We are also very proud of the
fact that members of ITAC 3 always represent the largest contingent of
any sector at the various WTO Ministerials that have occurred in this
time period, including four of our members who accompanied you, Mr.
Chairman, to Doha. Our sector accounts for approximately $500 billion
in trade during 2008.
First, a point of clarification, I am submitting comments as an
individual, not as a representative of ITAC 3, the Department of
Commerce (DOC) or the Office of the United States Trade Representative
(USTR).
Everyone that I've ever met in the Advisory process believes as I
do that every interested citizen of the U.S. deserves to have input
into U.S. trade policy. We are very fortunate to have an enormously
talented group of individuals, both career and appointed, in both the
Office of the USTR and the Department of Commerce, dedicated to
expanded trade in goods and services. It has been shown that this is
the way towards prosperity. Perhaps the only place where we differ with
many in the NGO community is that we also believe that USTR and DOC
officials are capable of gathering input from a variety of sources and
then distilling from this input the proper trade policy for our nation.
Such advice does not need to be contained in a single document, nor
does it need to come from a single committee. In fact, we strongly
advocate that the best advice is gleaned from committees that can
function in a clear and open manner with the ability to reach
consensus. This can only be accomplished when there is mutual trust
among committee participants. The necessary level of trust is very
difficult to achieve if all views are required to be heard and
discussed in the same forum.
The existing ITAC system has served the U.S. very well, being
especially beneficial to small business. Large companies will always be
able to get the ear of government officials. This is a natural
outgrowth of their importance to our overall economic well-being.
However, the ITAC process allows small companies, such as mine, to also
have input into the decision-making process.
As you know, the Advisory System administered by USTR and DOC was
specifically created to ensure that our negotiators had as much
knowledge of what's happening in the real world sectors of industry as
possible so that they could best represent our real needs, not our
perceived needs.
At its core are a group of highly motivated industry experts that
must undergo a rigorous security clearance. This allows the USG to have
confidence that negotiating positions can be discussed without fear of
leaks. In fact, during my 20-year tenor only a couple individuals have
been removed from the system for breaching this trust. We all take this
responsibility very seriously!
I truly believe that the Advisory System has played an important
role, not in setting U.S. trade policy, but in helping mold the policy,
once it has been set by our political leaders, into a form that assures
us that the policy goals, once achieved, will truly be beneficial for
our economy as a whole.
As a ``Tier 3'' committee, we are charged to advise the USTR and
DOC on highly technical issues impacting our industry, such as rules of
origin, tariffs, and non-tariff barriers to improved global market
access for U.S. goods and services.
We have had a great deal of experience with environmental NGO's on
ITAC 3 and ISAC 3. Frankly, this experience shows that we ``bore them
to death'' discussing in detail the technical aspects of trade and they
rarely show up. When we occasionally do discuss an issue of interest,
NGO participation in an ITAC's activities can be highly disruptive and
counterproductive. Moreover, most of their expressed concerns have not
been sectoral in nature, but more cross cutting (global warming,
investment, IPR, labor, environmental, etc.), and therefore do not
belong in the ``sectoral setting''.
ISAC 3 learned first hand what could happen when the Advisory
System is not allowed to function. We where shut down by court decree
for about 18 months specifically during the time that both the
Singapore and Chile Free Trade Agreements were under negotiation. The
case was settled just in time for ISAC 3 to meet our statuary deadline
to present to Congress our report on these two agreements. While we
supported both deals in principle, some of the details that are
important to our sector, specifically regarding rules of origin, were
not properly reflected in the agreements. This would not have occurred
had ISAC 3 been allowed to meet during the period that these agreements
were being drafted.
I'd like to address two pieces of legislation that are currently in
this Congress, HR 1320 and HR 2293.
A few ITAC members have carefully reviewed both of these bills
after consultation with your staffs.
We enthusiastically support HR 2293 which creates a Public Health
Advisory committee at the ``Tier 2'' level at USTR. One of the reasons
we support this legislation is that it agrees with our contention that
USTR is capable of receiving advice from a multitude of sources in
different venues. It specifically bans the inclusion of representatives
of ``commercial interests'' on the new committee being proposed.
We could also support HR 1320, except for Section 11 which
radically alters the existing practices for disclosing information. All
of our members have to undergo a government security clearance prior to
joining the committee, which includes the signing of a confidentiality
agreement. This is then re-enforced with routine ethics briefings.
Therefore, our meetings can be closed to the public, allowing
representatives from DOC, USTR and other agencies to discuss
negotiating positions and tactics. Section 11 of HR 1320 requires that
a transcript, audio or video recording of each meeting be posted on a
pubic website within 30 days of a meeting. This requirement will kill
the system since neither USTR, nor DOC would be able to discuss
anything of substance in confidence with ITAC-3, as well as every other
Advisory Committee, including the Health Care NGO Committee to be
established by HR 1320, if they knew it would be made public within 30
days.
I recently had an interesting experience whereby I reviewed my
notes of ISAC 3 meetings from the mid 90's. Some of the information in
these notes would still be considered trade sensitive today. This is
especially true for negotiations that drag on for years, such as has
been the case with the Doha Round, but also in cases where negotiations
are suspended for several years such as the Free Trade Area of the
Americas (FTAA) and the Free Trade negotiations that where begun with
the South Africa Customs Union.
If the provisions of Section 11 were removed, we would then also be
able to enthusiastically support the passage of HR 1320.
In conclusion, the existing system works well. Mend it--don't end
it--by adding appropriately targeted committees to the existing system.
Frankly, it is likely that many of the agencies involved already have
sufficient authority to make many of these changes themselves, so all
that may be needed is a slight ``nudge'' from Congress.
Thank you for taking the time to review this important subject.
Respectfully submitted,
V.M. (Jim) DeLisi, President
Fanwood Chemical, Inc.
Testimony By Humane Society International, Statement
Statement of Humane Society International
On behalf of Humane Society International (HSI), we hereby submit
the following written comments for the hearing record in connection
with the July 21, 2009 Hearing on the Trade Advisory Committee System
before the Trade Subcommittee of the U.S. House of Representative's
Committee on Ways and Means. Our organization appreciates the
opportunity to submit our views and share our experiences on this
topic.
HSI is the international arm of The Humane Society of the United
States (HSUS). Together, HSUS and HSI represent one of the largest
animal protection organizations in the world with a constituency of
over 11 million people and a significant global presence. HSI actively
participates in discussions of international trade policy at the World
Trade Organization (WTO) addressing such issues as equitable
development, humane and sustainable agriculture, environmental
conservation, and wildlife and habitat protection. HSI also implements
a number of trade capacity building and technical assistance programs
in developing WTO Member countries to support sustainable economic
development, including humane agricultural practices and habitat and
wildlife protection policies.
HSI is also a long-standing Member of the Trade and Environment
Policy Advisory Committee (TEPAC). HSI has been a Member of TEPAC since
1998, and is one of the most active participants on the committee,
attending meetings, providing comments, and participating in TEPAC
subcommittees. Over the years, HSI has found membership on TEPAC to be
a valuable way of assisting the Office of the United States Trade
Representative (USTR) and the United States Environmental Protection
Agency (EPA) with formulation and implementation of trade policies that
impact environmental and animal protection at home and abroad. As with
any system, there are positive aspects and areas for improvement. This
is explained in further detail below.
Overall, in HSI's experience,\1\ USTR has been transparent and
collaborative on trade and environment issues. Although TEPAC Members
only meet several times a year, there are regular liaisons meetings and
conference calls, with the opportunity for Members and/or liaisons to
raise questions or concerns on trade and environment issues, even if
they are not on the agenda. During certain meetings, such as the World
Trade Organization Doha Round negotiations, USTR set up times to
discuss developments with TEPAC while U.S. negotiators were in Geneva
so as to provide real-time updates. USTR also invites TEPAC Members/
liaisons to assist U.S. trading partners with establishment of their
own advisory committees, which allows TEPAC Members to encourage strong
levels of public participation outside of the U.S.
---------------------------------------------------------------------------
\1\ These comments solely reflect the views of HSI, not TEPAC as a
whole.
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One example of HSI's experience in particular involves the U.S.-
Peru Trade Promotion Agreement (TPA). HSI has been actively working
with USTR through TEPAC and its individual capacity on negotiation and
implementation of the U.S.-Peru TPA for the last several years. USTR
has regularly updated TEPAC about developments in Peru, and has held
numerous meetings to gather input that have included TEPAC plus
additional interested civil society stakeholders, Congressional staff,
and inter-agency representatives. USTR has also invited TEPAC (and
additional groups) to Peru for civil society outreach meetings. HSI
recently traveled to Lima for one such meeting and was grateful for the
opportunity to talk about issues associated with implementation of the
trade agreement, including public participation, with Peruvian
government officials and non-government organization (NGOs). HSI looks
forward to continuing this constructive relationship.
While as a general matter, we have a voice on trade and environment
issues through TEPAC, as well as our individual role as HSI, we believe
there are ways the trade advisory system can be strengthened. Areas for
improvement that complement culture of transparency embraced by Obama
Administration include:
First, one of our main concerns serving on TEPAC over
the years involves insufficient time to provide comments on
negotiating texts and other issues. It is important to our
organization to play a proactive role to the extent possible in
influencing trade policy. When negotiating texts (or other
issues that arise) are presented to advisors with short
turnaround time for comments, the value of our role as advisors
is diminished. We recognize that negotiations can be fluid, and
developments can arise in short timeframes that do not always
allow for robust consultation with advisors. However, we
believe institution of a mandatory comment timeframe for
advisors would be helpful in this regard. We would be glad to
discuss this further with TEPAC and USTR.
Second, in a similar regard, HSI believes that the 30
day timeframe for TEPAC Members to thoroughly review, analyze
and provide opinions of Free Trade Agreements is insufficient.
HSI believes Congress should increase this review period to at
least 45 days.
Third, we support creation of a formal policy that
would allow for the exchange of information between advisory
committees on issues of mutual interest.
HSI looks forward to continuing to work with USTR and EPA through
the advisory system, and to continuously finding ways to strengthen the
system.
Testimony By Maine Citizens' Trade Policy Commission, New Hampshire
Citizens' Trade Policy Commission, and Vermont Commission on
International Trade and State Sovereignty, Statement
Statement of Maine Citizens' Trade Policy Commission, New Hampshire
Citizens' Trade Policy Commission, and Vermont Commission on
International Trade and State Sovereignty
Thank you for the opportunity to submit testimony to the
Subcommittee on Trade on how to increase transparency and public
participation in the development of U.S trade policy. The trade policy
oversight commissions of Maine, New Hampshire, and Vermont have been
working cooperatively for several years to communicate shared concerns
about federal-state consultation, transparency, and the federalism
implications to the U.S. Trade Representative, the U.S. Secretary of
Commerce, and our congressional delegations.
Through annual regional meetings and frequent conference calls, the
trade policy commissions and other interested parties from neighboring
states have discussed how to more effectively communicate issues and
concerns to the United States Trade Representative (USTR), implications
of new trade developments for states, and principles necessary for
ensuring that essential trade promotion activities reflect state
priorities.
We all agree that states have a common interest in improved
transparency and in a more accessible and vigorous federal-state
consultation mechanism with USTR. Increasing information available will
allow states to better assess the impact of trade agreements on state
export promotion and state regulation. Creating an improved process for
communication of state issues and concerns will provide both states and
USTR with the opportunity to share information to assist USTR in
creating new vibrant trade relationships and create opportunities for
U.S. businesses.
We look forward to building a more collaborative relationship
between the Federal Government and the states on trade to preserve our
federal system and reach out for new trade relationships around the
world.
Testimony By Maine Citizen Trade Policy Commission, Statement
Statement of the Maine Citizen Trade Policy Commission
We, the members of the Maine Citizen Trade Policy Commission,
appreciate this opportunity to submit our comments regarding the system
of trade advisory committees and how to increase transparency and
public participation in the development of U.S. trade policy. We
believe in the power of trade as a tool for promoting economic growth
and enhancing relationships between the United States and its trading
partners.
The Citizen Trade Policy Commission was established by the Maine
Legislature in 2004 to monitor the impact of international trade policy
on our state. We have members representing the House of
Representatives, the State Senate, the Maine International Trade
Center, various state agencies, and members affiliated with citizen
constituencies including small businesses, manufacturers, labor,
environmental organizations, and small farmers.
States and local governments are important partners with private
business in the design and implementation of our nation's economic
development strategies. States and cities have traditionally acted as
the `laboratories of democracy' where different economic policies can
be pioneered. Because trade is a critical part of any successful
economic development strategy, and because different states, cities and
towns have needs related to trade and trade policy that are as
different from one another as are the mix of products and services that
we export, we seek to add our voices and expertise to this policy
arena.
Since the conclusion of NAFTA and the WTO Uruguay Round, states
have been allowed to play only a limited role in the policy-making
process. The United States Trade Representative (USTR) has expected our
support in all matters pertaining to trade but too often has been
unwilling to engage in dialogue with state actors on critical issues of
trade and investment. With your assistance, we intend to build a more
collaborative relationship between the Federal Government and the
states on trade to preserve our federal system and reach out for new
trade relationships around the world.
In meetings convened with the support of national associations such
as the National Governors Association, the National Association of
Attorneys General, and the National Conference of State Legislatures,
officials from the different branches of state and local governments
have been meeting in order to articulate a set of approaches that could
assist in the development of a better federal-state consultative
process on trade. As a result of these discussions, in which Maine has
played an essential part, we request your consideration of the
following:
The establishment of a Federal-State International Trade Policy
Commission, and/or the creation of a Center on Trade & Federalism,
supported by both the Federal Government and the states, with adequate
personnel and resources to ensure that the major provisions of trade
agreements and disputes that impact on states can be analyzed, and
their findings communicated to and discussed with key state actors on
trade.
Changes in the structure and role of USTR trade advisory
committees. All state and local government input has been limited to a
single committee, the InterGovernmental Policy Advisory Committee
(IGPAC); the membership of that committee was determined exclusively by
USTR and not by the states themselves. IGPAC was designated few
resources and a time line for input that resulted in no meaningful
consultation for states. More than half of all states lack any
representation on IGPAC.
We look forward to discussing with you opportunities for building a
collaborative approach to trade that will strengthen the system of
federalism that was part of the genius of our nation's founders.
Testimony By Susan Kohn Ross, Letter
Susan Kohn Ross' Letter
Dear Mr. Chairman,
This submission is made on behalf of Mitchell Silberberg & Knupp
LLP (MS&K), a 100+ year old full service business law firm
headquartered in Los Angeles, with offices in New York and Washington,
D.C. MS&K's Homeland Security Regulatory Practice features extensive
expertise with security, immigration and international trade issues. In
addition to our International Trade, Corporate & Business Transactions
and Immigration Practices, MS&K also practices in other areas of law
including Labor & Employment, Real Estate, Tax and Litigation, as well
as Intellectual Property, Entertainment & New Media and Bankruptcy &
Reorganization. As such, our attorneys have broad experience and a
wealth of knowledge about the issues companies must deal with daily in
seeking to be compliant, good corporate citizens while engaging in the
movement of legitimate goods and people across our borders.
In response to the Committee's invitation for comments about the
current trade advisory committee structure, we take the liberty of
making the following comments and recommendations. There is no question
that providing a structure whereby the private sector is empowered to
give organized input to Congress and government officials, especially
those negotiating on behalf of American businesses, is an invaluable
resource for all sides. At the same time, we think the process can be
further enhanced to the benefit of all parties.
Our comments will be limited to the Tier Three: Technical and
Sectoral Committees. The current structure for the United States Trade
Representative's Tier Three advisory committees is division by
industry. There is little doubt this is the proper structure to rely on
in many instances. For example, the challenges faced in gaining market
access while broadly similar across industries, are generally
distinguishable for different industries. However, the issues now
facing the American trading community have become less industry
functional. They are significantly more broad-based. Put another way,
concerns such as product and food safety, security, government
procurement, export licensing and anti-bribery have become much more
complex and so, we conclude they are best addressed across industry
sectors.
A recent example in the legislative context is the Food Safety
Enhancement Act of 2009 (the Act). Well before Congress took its recent
vote, the Produce Marketing Association joined the United Fresh Produce
Association to partner with their affiliate the Canadian Produce
Marketing Association and develop the trend setting Produce
Traceability Initiative (PTI). PTI relies on broad general standards
which, when implemented, greatly assist companies to deal with
traceability for a variety of reasons, including damage, loss, outbreak
and recall. Those broad principles were blended into the Act when it
was presented to the House for the recent floor vote. Similarly, the
toy industry (among others) has worked actively with the Consumer
Product Safety Commission to quickly and fully implement the Consumer
Product Safety Improvement Act. The toy lead safety standard, ASTM
F963-07, is now being reviewed to determine whether it needs to be
further enhanced following its recent improvement.
In both cases, industry was at the forefront in recognizing the
need to enhance consumer confidence, and protect brands, products and
company reputations, and so took prompt and meaningful action. This
enabled the U.S. to take a leadership role in enacting and implementing
standards on crucial questions of international trade. It is timely to
institutionalize the key role of the private sector through recognition
of formal issue-focused advisory committees. Moreover, in an
increasingly globalized economy, chartering such committees will help
to reduce the risk of unilateral actions that may be disruptive of
international trade, as we have recently seen with the REACH standards
enacted in the European Union for chemical and similar products with
the registration and labeling requirements. Instead, industry leaders
should be encouraged to collaborate to create those cross-industry
standards which can then be adopted by countries and companies as are
best suited to their local needs.
In seeking to arrive at any broad standards to propose for
international adoption, we contend the model of the Investment Working
Group is more likely to succeed than the current industry specific
committees. As such, we urge the Committee to consider changing the
current advisory committee structure to include issue focused
committees which address product safety (including food safety),
security and anti-bribery/corporate governance.
We recognize that some of the consolidation work could be and
currently is performed at the Committee of Chairs. However, from
experience, it appears to us the structure should invite as much input
as possible so that by the time a proposal reaches the recommended for
approval stage, it is as complete as possible. Therefore, the cross-
industry structure seems preferable. As you know, H.R. 2293 is
currently pending and could be a likely vehicle to accomplish such a
goal. H.R. 2293, of course, addresses the creation of a Public Health
Advisory Committee on Trade. We propose it be amended it include the
creation of one or more of the issue specific committees we have
proposed.
We look forward to being of further assistance to the Committee and
so are prepared to answer any questions or provide further
clarification or additional information regarding these recommendations
in person or through other means at the convenience of the Members and
staff. In the interim, we remain,
Very truly yours,
Susan Kohn Ross
International Trade Counsel for
Mitchell Silberberg & Knupp LLP
SKR/vlp
Testimony By Raymond C. Offenheiser, Statement
Statement of Raymond C. Offenheiser
Oxfam believes that trade can be an engine for development and
poverty reduction as long as the rules of trade work to benefit poor
people and developing countries. Well-managed trade has the potential
to lift millions of people out of poverty. To achieve such a goal,
trade agreements, which set the rules for ongoing trade relations, need
to work to improve livelihoods and reduce poverty in developing
countries. To that end, it is important that the U.S. take into account
economic disparities with our trading partners in the formulation and
implementation of trade policy.
We have one fundamental message: sustainable economic development
must be a core objective of U.S. trade policy. That has not been the
case in practice. It is vital that this change. We will discuss here
why development should be at the core of U.S. trade policy, and how
Congress and the administration can work more effectively toward that
end.
In particular, we recommend establishment of a separate Tier 2
trade advisory committee on development and appointment of development
experts to the existing Tier 1 and relevant Tier 3 committees.
Furthermore, we support H.R. 2293, introduced by Mr. Van Hollen and Mr.
Doggett, which would similarly establish a public health advisory
committee and public health representation on existing advisory
committees. And we suggest ways to improve the effectiveness of the
process of consultation on U.S. trade policy so as to improve
accountability in outcomes.
Why development matters
Poverty, disease and lack of economic opportunity in developing
countries are a human tragedy that is now being magnified by the global
economic crisis. Yet these conditions also have implications for the
long-term security and prosperity of the United States. In fact, the
Director of National Intelligence testified earlier this year that the
global economic crisis is now the top threat to our national security.
However, our trade policy has often worked at cross purposes with other
policies to address these conditions.
The global economy is more interconnected than ever, and the
economic welfare of U.S. citizens is inextricably linked with the well-
being of people across the globe. In President Obama's own words, ``the
world depends on us to have a strong economy, just as our economy
depends on the strength of the world's.'' In order to expand markets
abroad for U.S. goods and services there must be healthy economies and
growing middle classes, particularly in developing countries where the
majority of the world's population lives.
If trade is to be an engine for growth and poverty reduction in the
developing world as well as an avenue for our own export growth, U.S.
trade policy would do best to take into account existing disparities in
development with our trading partners. It should be one of our own core
objectives to ensure developing country needs and interests are
addressed in the formulation and implementation of U.S. trade policy.
With greater flexibility to foster the development of their industries,
poor countries can build up their middle class and provide new
consumers for our products. In this way, U.S. trade policy can
facilitate economic recovery and promote more just and equitable
economic development worldwide.
It's generally accepted that more open trade creates winners and
losers, both at home and in our trading partners. The distribution of
the benefits from trade can be quite skewed demographically and
geographically within a country. To address the problems of those who
stand to lose, governments need policies that enable some form of
support or compensation to help losers re-adjust and to take advantage
of new opportunities from trade. Here in the U.S., new trade adjustment
assistance legislation passed this year is key in this regard.
But in developing countries with high levels of poverty and
inequality, benefits from more open trade tend to be very concentrated
among those who already have economic and social advantages. It is
therefore essential that developing countries maintain adequate policy
space in trade agreements to foster their domestic agriculture and
manufacturing industries in ways that can reduce poverty and inequality
and strengthen their middle class. Furthermore, the timing and pace of
market openings is critically important and should be matched to
specific conditions in each country. Reducing rather than exacerbating
economic and social exclusion in developing countries is vital from the
perspective of foreign policy and national security; it should also be
a priority for trade policy. From a development perspective, fair trade
does not mean equal treatment for all, but rather greater advantages
for those left behind in order to help them get a leg up the
development ladder.
Assessment of U.S. trade policy looks different when using as a
lens the promotion of sustainable economic development rather than just
the promotion of U.S. exports. The need for a development lens is
warranted for moral reasons, as well as for the purposes of our own
longer-term economic prosperity and national security. U.S. foreign
policy and development policy acknowledge this reality. More effective
coordination and coherence between our trade and aid policies are
essential.
Trade policy should be an integrated part of a national strategy for
global development
US efforts to promote sustainable economic growth and poverty
reduction abroad often face a key obstacle--our own U.S. government.
The way our government is organized, both in the Executive Branch and
on Capitol Hill, means that trade policy and development policy are
segregated. Coordinating the two effectively can be exceptionally
difficult.
In practice, this divide means we often shoot ourselves in the
foot. For example:
We collect more in tariffs from MCC countries than we
give them in assistance;
Bangladesh and Cambodia are two of the poorest
countries in the world, yet we collect about six times as much
in tariffs than we give them in foreign assistance;
Indonesia is the world's largest Muslim country, a
place that is critical to us in fighting Al Qaeda, yet we take
in more than five times as much in tariffs than we give in aid.
Our major aid program to treat HIV and AIDS
worldwide, PEPFAR, relies on the use of generic medicines, yet
intellectual property protections in our trade policy can choke
off supply or curtail production of much needed generics.
The environmental impact assessment for the MCC
compact that is providing nearly half a billion dollars in aid
to El Salvador warned of significant harmful impacts of mining
in the affected region, yet Salvadoran government action to
prevent such mining activities is being challenged in an
investor-state suit filed by a US-based Canadian company under
CAFTA.
In order to be most effective in combating global poverty--which is
in our economic and national security interest--more needs to be done
to make sure all elements of our Federal Government work together
effectively. To this end, one key reform that Oxfam supports is a
National Strategy for Global Development. This strategy would define
the mission of the U.S. government as a whole in fighting global
poverty and clarify how various agencies would work together. It would
provide a more effective inter-agency mechanism for preventing USTR and
USAID from working at cross purposes. It would help ensure that our
trade policy is effectively complementing our aid policy, and vice
versa.
Formulation and implementation of U.S. trade policy currently lacks a
development lens
The Office of the U.S. Trade Representative (USTR) was wisely
situated under the Executive Office of the President in order to take
into account the broadest interests of the United States and achieve an
effective balance among competing interests. Yet in practice the USTR
has tended to respond foremost to the export interests of U.S.
businesses and to facilitate foreign investment without considering
effects on sustainable development or public health.
Trade negotiations have expanded in ways not considered just a
couple of decades ago when tariffs were the primary concern. Today,
trade negotiations have entered a range of areas that can force changes
in a country's economic policy framework, with serious implications for
public health and poverty reduction in developing countries. In today's
increasingly globalized economy, only when U.S. trade policy also meets
the development needs of poorer countries will it be of greatest
benefit to our own economy and well-being. It is therefore essential
that the Office of the USTR take steps to effectively ensure that
development concerns are adequately addressed in the formulation and
implementation of U.S. trade policy.
The structure and functioning of the trade advisory committees and
the USTR's public hearing process have not adequately addressed these
concerns, as noted by several GAO reports over the last few years (GAO-
02-876, GAO-07-1198, GAO-08-59). Representation of development
proponents and public health interests on advisory committees still
remains insignificant. Where there is or has been participation on
committees, those involved have felt marginalized. Similarly, the
public hearing process has not led to non-business concerns being taken
into account in trade policymaking. In essence, input to USTR from
public interest groups, which often represent alternative views to
export interests, has not resulted in substantive changes in U.S. trade
policy to address concerns raised.
Until recently there was no public health representation on trade
advisory committees. Now, after more than four years of public requests
and extensive efforts by the public health community, led by the Center
for Policy Analysis on Trade and Health (CPATH) and others, only three
public health representatives have been named to Tier 3 committees. In
addition, two representatives of the generic pharmaceuticals industry
have finally been named to one Tier 3 committee (ITAC-3), only one-
tenth the representation of the brand-name pharmaceutical industry on
trade advisory committees. Yet it's worth noting that nearly two-thirds
of all prescriptions filled in the U.S. are now generic medicines.
Limitations of public participation in trade policy making are not
confined to the Trade Advisory Committee system. By its very nature,
this system cannot be a full mechanism for participation as members are
sworn to secrecy and even if expanded will not represent the full range
of views and interests affected by trade policy. In important areas
where USTR makes policy or adjudicates interests, it follows the most
restrictive possible participation mechanisms.
For example, in the ``Special 301'' review USTR adjudicates
complaints against other countries to determine listing on punitive
``watch lists'' that can lead to investigations and sanctions for
intellectual property policies that do not violate any trade agreement.
The most full and fair process for such an adjudication of rights under
general administrative law norms would be to hold an open hearing on
the record before any decision is made, with full rights to reply to
complaints in writing and orally. Instead, USTR adjudicates these
matters through a notice and comment process. Other policy issues are
determined without public consultation, or after meetings where the
public can present their views but have no rights to a decision based
on an evidentiary record, as is the norm for other agencies. Such
consultation processes have been structured so that they are easily
captured by industry interests. While the new USTR has undertaken
important outreach efforts to public interest groups, the underlying
structural problem remains.
We do not question the importance of enabling U.S. business and
industry interests to contribute to trade policy. However, the USTR was
established to balance competing interests, and Congress mandated that
advisory committees include a ``fair balance'' of perspectives.
Instead, particular industry interests dominate, such as the brand-name
pharmaceutical industry, at the expense of vital public interests. It
is quite clear that the public health community and proponents of
sustainable economic development have been excluded from effective
engagement in the formulation and implementation of trade policy. This
does not best serve the overall interests of the United States.
It's important to recognize that consultation cannot be an end in
itself, but should be understood as a means towards improving decision-
making and affecting an outcome. Without clear mechanisms of
accountability and transparency, consultations may not be meaningful.
This has generally been the case with USTR and the trade advisory
committee system from the perspective of those of us in the non-
business and public interest community, particularly public health and
development advocates.
Without a development lens, trade policies can undermine sustainable
development goals in poorer countries
Trade negotiations at the multilateral, regional and bilateral
levels should take into account disparities in development and poverty
levels with our trading partners. They should seek to expand
opportunities for working people to gain a greater share in the
benefits of trade.
Instead, negotiations led by the USTR over the past decade have
locked in rules and policy prescriptions that facilitate further
concentration of wealth and limit the policy options governments need
to address poverty and inequality and to foment broad-based sustainable
development. Following are three examples of this concern, involving
the areas of intellectual property, investment and agriculture. We will
suggest how greater representation and effective engagement of public
health groups and development advocates could lead to a trade policy
that better serves the broadest interests of the United States.
Intellectual property and access to affordable medicines
Ensuring access to affordable medicines is a core element of the
human right to health. Yet over two billion people still lack regular
access to affordable medicines, due in part to the high price of
existing medicines and the lack of new medicines needed to treat
diseases that disproportionately affect poor people in developing
countries.
Strict intellectual property (IP) protection strengthens monopolies
and restricts generic competition, which leads to higher medicine
prices that are unaffordable for most people in developing countries.
Although justified in the name of innovation, strict IP rules fail to
stimulate medical innovation to address diseases that
disproportionately affect people living in poverty.
All World Trade Organization member countries have adopted IP
protections in line with the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS), although least-developed
countries have until 2016 to comply with TRIPS provisions. These
protections are considered by independent analysts to be more than
adequate to balance the need to provide incentives for innovation with
the obligation to the public of ensuring access to the benefits of the
invention (in this case, medicines).
In 2001, all WTO members adopted the Doha Declaration on TRIPS and
Public Health, which reaffirmed the primacy of public health over the
protection of intellectual property for medicines. This Declaration
rested upon global acknowledgement that high medicine prices charged by
brand-name pharmaceutical companies through IP-based monopolies exact a
serious and unacceptable toll upon the world's poor. As such, the Doha
Declaration empowers developing countries to employ public health
safeguards and flexibilities to foster generic competition as a means
to ensure affordable medicine prices.
Yet with the strong influence of the pharmaceutical industry, U.S.
trade policy has instead been used to extend monopolies for brand name
medicines and disable the right of developing countries to use public
health safeguards, thereby limiting generic competition and worsening
the developing world's public health crisis. A succession of free trade
agreements (FTAs) has imposed increasingly strict levels of IP
protection in developing countries. When the ink was barely dry on the
Doha Declaration, the U.S. entered an FTA with Jordan that introduced
stricter IP rules than required by TRIPS.
These rules have had real public health consequences in Jordan and
subsequently in other countries that have concluded similar agreements.
An Oxfam study conducted in Jordan and published in 2007 concluded that
stricter IP rules led to dramatic increases in the price of key
medicines to treat cancer and heart disease, which are the main causes
of death in the country. Higher medicine prices, due in part to these
stricter IP rules, are now undermining Jordan's public health system.
Effects are similar in other countries, but are only manifested over
time because it takes several years for newer medicines to go through
the pipeline.
USTR has pursued stricter IP rules as a cornerstone of U.S. trade
policy through other means too. The Special 301 report, issued annually
to review the IP policies of other countries, labels countries as
violators of U.S. intellectual property rights for using legitimate
measures to protect public health. Placement on the Special 301 List
puts enormous pressure on developing countries that take steps to
provide affordable health care. Thailand, which has used a key public
health safeguard--compulsory licensing--to extend medical treatment to
thousands of poor people suffering from HIV and AIDS, cancer and heart
disease, has been repeatedly castigated under the Special 301 report,
including by the new USTR, for its laudable actions.
These policies are incoherent with U.S. foreign policy objectives.
The United States sponsors one of the world's pre-eminent programs to
treat HIV and AIDS--over two million people are on treatment due in
part to the generosity of the U.S. government and taxpayers. To treat
HIV and AIDS, this program relies almost entirely on the use of generic
medicines produced by manufacturers in India--the same manufacturers
that export over 70 percent of all generic medicines used in developing
countries. Yet U.S. trade policy has sought to choke off the supply of
these generic medicines to many developing countries and even to
curtail their production in India, although to do so would directly
undermine U.S. foreign assistance programs to treat HIV and AIDS.
Such formulation and implementation of U.S. trade policy is enabled
by the entire lack of balance in the trade advisory committees, which
facilitates the domination of influence by the brand-name
pharmaceutical industry on trade policy. The GAO (Report 07-1198) came
to the same conclusion and added that the Office of the USTR made
little or no effort to advance the goals of the Doha Declaration to
promote public health. This imbalance and the undue influence of the
pharmaceutical industry translate into trade policies that undermine
public health and broader U.S. policy objectives in developing
countries.
This must change, and we have seen that it can. Under the
leadership of Chairmen Rangel and Levin, IP rules included in FTAs
already signed but yet to be considered by Congress were modified in
order to address public health concerns as part of the May 10th (2007)
Agreement. Their staff engaged a broad range of public interest groups
and representatives of the pharmaceutical industry and worked to take
into account public health and development concerns. The Agreement
achieved an unprecedented reversal in the decade-long trend of
increasingly stricter IP provisions. Oxfam applauded this important
initiative, even if it fell short of addressing all our concerns, as it
clearly illustrates how trade policymaking can be improved.
The key point here is that Congress should not need to intervene to
create balance in the day-to-day process of trade policymaking. That
should be the role of the USTR working with its advisory committees.
Inclusion of public health representatives and development advocates on
trade advisory committees and improvements in their functioning will
help to make the formulation and implementation of trade policy more
accountable to broader U.S. interests.
Improved public health representation can also improve transparency
in U.S. trade policy making. The USTR recently re-started negotiations
of an Anti-Counterfeiting Trade Agreement. Despite numerous concerned
expressions by public health advocates that such an agreement could
undermine access to medicines, the text remains a secret even as
various industry representatives have full access through the trade
advisory committees. Adequate public health representation on advisory
committees as proposed in H.R. 2293 would ensure that at least some
public health input can warn, and hopefully forestall, any negative
consequences of this Agreement on public health and access to
affordable medicines in developing countries.
Investment provisions from a development perspective
This subcommittee held a hearing in May on investment protections
in U.S. trade and investment agreements. The testimonies provided by
Thea Lee of the AFL-CIO and Robert Stumberg of Georgetown University
Law Center raise important points that echo key concerns Oxfam has
raised for a number of years with regard to investment provisions in
trade agreements. These concerns are illustrated by a very recent
example that could have serious implications for sustainable
development in El Salvador.
Pacific Rim, a Canadian mining company, has filed a case against
the Salvadoran government that will go to international arbitration
under CAFTA's investor-state dispute settlement provision because the
company has a subsidiary in Nevada. The company claims it has incurred
hundreds of millions of dollars in damages for which it must be
compensated because it has been unable to obtain a permit for
extraction of gold found through initial exploration. The Salvadoran
government determined it could not issue such a permit based on results
of environmental impact studies that show significant harmful effects
would occur from extraction, particularly on the country's already
scarce water resources.
At the same time, the Millennium Challenge Corporation's compact in
El Salvador, signed in 2006, is providing nearly half a billion dollars
for a sustainable development program in the same region where Pacific
Rim wants to extract gold. An environmental impact assessment required
by the MCC similarly warned against the anticipated adverse effects
that mining activities would have in the region, which already suffers
from highly vulnerable water resources, soil problems and environmental
degradation. It is clear that if mining activities were to proceed,
they would undermine the sustainable development initiative supported
by the MCC. And if Pacific Rim wins its case, the Salvadoran government
could be forced to pay the company an amount similar to what it is
receiving from MCC.
This is a `no win' situation for both El Salvador and the United
States. If the Salvadoran government feels forced to cede to the
company's pressure to issue a mining permit despite the harmful effects
on the environment as well as on the health of the local population, or
ultimately loses the case and has to pay hundreds of millions in
compensation to the company, the result would not only be a blow to El
Salvador's efforts at development and poverty reduction. It would also
undermine U.S. foreign and development policy.
The investor-state dispute settlement mechanism, which has been a
part of U.S. trade policy, elevates investor rights in ways that can
threaten legitimate environmental protections and undermine sustainable
development efforts. Even if the government were to win the case, it
does not mean there would be no costs, as legal fees alone can go into
the millions. And many developing countries that can hardly afford such
fees, much less a potential settlement payment, may be more likely to
sacrifice protections of the environment and other public interests
rather than risk a challenge from a U.S.-based company. With no check
to avoid frivolous lawsuits, investors can use the threat of filing a
case to force governments to forgo measures that protect the public
interest.
In general, developing country governments need the policy space to
regulate investment so that it furthers their national development
goals. Yet the investment provisions included in U.S. trade agreements
seek to deregulate investment in developing companies, thereby limiting
the use of policy tools, such as performance requirements and capital
controls, that can help ensure investment will spur sustainable
development and help reduce poverty and inequality.
As discussed in the hearing of this subcommittee last month, the
State Department has recently created a panel to conduct a formal
review of investment provisions in FTAs and the U.S. model bilateral
investment treaty, whose recommendations are to feed into an
interagency review of investment issues. This is an important
initiative that we understand will include development experts. We hope
the recommendations of this panel will address the concerns raised
here.
However, it will also be important to have development experts on
trade advisory committees in order for USTR to receive ongoing advice
on investment provisions from a development perspective. There is no
advisory committee on investment, but the recent GAO report (08-59)
mentions an Investment Working Group that draws from across the ITAC
committees. This indicates the importance of development experts and
public health representatives being included in these Tier 3
committees.
Agriculture from a development perspective
Some 70 percent of the world's poor depend on agriculture for their
livelihoods. Half of the world's undernourished people and those living
in absolute poverty reside on small farms. Sales and exports from
agriculture constitute the main source of revenue for many poor
countries, in some cases upwards of 40 percent of GDP. Here in the
United States, agriculture accounts for barely more than 1 percent of
output and its share of exports is only about twice that amount.
From a development perspective, it seems obvious that it is
indispensable to ensure that trade rules in agriculture work to promote
development and poverty reduction. Yet agriculture has no competitors
for the title of most distorted sector of the global economy. And the
U.S. continues to maintain, and in last year's Farm Bill even expand
the scope for, trade-distorting agricultural subsidies. Negotiations on
agriculture have been the Gordian Knot of the WTO Doha negotiations, as
one of developing countries' greatest needs in the global trading
system is to right the wrongs of decades of rigged rules in
agriculture.
At the same time, our bilateral and regional FTAs do not take into
consideration this reality and instead limit the ability of our
developing country trading partners to foster their own agricultural
production. This is one of Oxfam's principal concerns with regard to
the FTA with Colombia, where rural poverty is a cause of and further
fuels the armed conflict and the illegal economy.
The agricultural provisions in the FTA would undermine small
farmers in Colombia, who produce 40 percent of the country's basic food
basket but would be unable to compete with subsidized U.S. exports.
Colombia's rural population is the most vulnerable to being recruited
to supply manpower for illicit crops and armed groups. If more
agricultural imports from the U.S. threaten small farmer livelihoods,
the FTA would increase the pressure on rural populations to engage in
the cultivation of illegal crops and to take part in the dynamics of
the war.
This is one more example where U.S. trade policy is working at
cross purposes with U.S. foreign and development policy. Since 2000,
the U.S. has provided $5 billion in military aid to the Colombian
government's war effort and to reduce coca cultivation. It is not in
the best interests of the U.S. or Colombia for a trade agreement to
undermine the livelihoods of Colombia's small farmers. From a
development perspective, this problem should have been understood and
taken into account when the USTR first considered negotiating an FTA
with Colombia.
Recommendations for improvement in the trade advisory committee system
Having made a case for including development and public health
interests in the formulation and implementation of U.S. trade policy,
we make the following concrete recommendations to improve the trade
advisory committee system in that regard.
1. Congress should pass H.R. 2293, which would establish a
Tier 2 public health advisory committee, include public health
organizations on the Tier 1 committee, and improve the process
of consultation and reporting on all advisory committees.
2. A separate Tier 2 trade advisory committee on development
should be established, in a similar way to the public health
advisory committee that would be established under H.R. 2293,
and development organizations and experts should be included on
the Tier 1 committee. In order for this to be most effective,
we also recommend that a position of Assistant U.S. Trade
Representative for Development be created to enable development
interests and concerns to be effectively coordinated in all
aspects of the formulation and implementation of U.S. trade
policy undertaken by the Office of the USTR.
3. Congress should clarify, through legislative action, the
intent of the `fair balance' requirement that applies to each
advisory committee so as to ensure a clear mandate for adequate
representation of non-business interests, including public
health and development organizations, on all relevant Tier 2
and Tier 3 committees. It should neither be considered fair nor
legitimate to limit Tier 3 committee membership to industry
representatives when the focus of the committee is of broader
public interest. Diversity of stakeholder representation to
include a wide range of interests at all levels of the advisory
committee system should be clearly established as a norm. To
date, the only non-business representatives on Tier 3
committees have been named following lawsuits brought against
the government.
4. Measures should be taken to improve and make more
consistent the process of consultation and functioning of the
trade advisory committee system in order to increase
accountability to stakeholders in the formulation and
implementation of trade policy. The following suggestions would
contribute toward that end, and some of them are addressed in
H.R. 2293:
a. There should be a requirement for advisory committees to
meet regularly, with a minimum number of annual meetings--
possibly quarterly.
b. Advisory committees should be consulted before entering
into negotiations, throughout the negotiating process and prior
to final agreement--including seeing and commenting on text
before it is tabled or finalized.
c. Advisory committees should regularly submit written reports
on their advice provided, including any divergence of opinion
in the committee. All efforts should be made to respect
diversity of opinions on committees by clearly presenting
minority as well as majority advice.
d. The Office of the USTR and relevant agencies that co-
administer advisory committees should provide written responses
to committee advice received through these reports.
e. USTR should increase the staff resources allocated to
advisory committees, which may require Congress appropriating
additional funds for this purpose. Effective consultation costs
staff time and resources, but it will result in better
outcomes. Without adequate staff resources for USTR to
adequately administer, engage, use input from and respond to
advisory committees, the system will not be fully effective.
5. The process of consultation with the public on trade policy
should be improved and the USTR should be held more accountable
to input received. To this end, we recommend the following:
a. Consultations with the public should follow the most
participatory models available under the Administrative
Procedures Act, including rulemaking after a public hearing on
the record with written decisions responding to submissions, as
is the norm for rulemaking in other agencies.
i. All public comments solicited by USTR should be organized
as `open hearings on the record' and, as such, follow
procedures established by the Administrative Procedure Act
(Title 5 of the U.S. Code, Chapter 5, section 556). This
involves having an open comment period, providing an
opportunity for others to respond to comments, and then holding
an open public hearing.
ii. Upon completion of the particular consultation process,
the USTR should provide a written response explaining whether
the input received was used or not and why.
iii. Where data is being used by USTR (such as when it relies
on industry estimations of the costs of IP policies in other
countries), the methodologies for its generation should
themselves be subject to notice and comment, as is required
under the currently binding case law under the Administrative
Procedures Act.
b. Adjudications of interests, such as development of the
Special 301 watch lists, should take place after an
administrative process with the full range of protective
procedural rights, including an opportunity to reply to
industry charges, an open hearing with a written record and
opportunity to appeal findings and interpretations of law. To
this end:
i. Reform the notice and comment process to permit countries
and civil society groups adequate time to reply to
pharmaceutical industry Special 301 submissions;
ii. Allow public notice and comment on any data derived from
submissions in the comment process that is used as the basis
for policy or decision making;
iii. Provide, upon completion of the particular consultation
process, a written response explaining whether the input
received was used or not and why; and
iv. Regarding the Special 301 Report, publish objective
standards for listing decisions, require listing decisions to
be preceded by a public (in-person) hearing on the record, and
offer opportunities to appeal adverse decisions.
6. There should be greater transparency in the formulation and
implementation of U.S. trade policy. Non-business and public
interest organizations are often at a disadvantage in providing
input to influence policy because negotiating text is generally
classified. Even as participants on advisory committees, non-
profit organizations may have difficulty in providing timely
quality input on the range of technical issues they care about
if they are unable to consult with external experts because
they cannot share information with anyone who lacks security
clearance. A better solution should be found to allow for more
effective consultation of the wide range of stakeholders in
U.S. trade policy.
Conclusion
Getting U.S. trade policy right means helping to
foster sustainable development in our trading partners while
also strengthening our own economy. If we are only looking at
one side of that equation, we may be going down the wrong path.
To put us on the correct path, Congress and the administration
should work to ensure:
Effective coordination and coherence of our trade
policy, foreign policy and aid policy;
Effective engagement of stakeholders that bring a
development perspective and a public health perspective into
trade advisory committees and the overall USTR public
consultation process;
Improvement in the functioning of the trade advisory
committee system to increase accountability to the broad range
of stakeholders in the formulation and implementation of trade
policy.
Testimony By Susanna Rankin Bohme, Letter
Susanna Rankin Bohme, letter
Dear Members of Congress:
I am writing to ask you to vote in support of the Public Health
Trade Advisory Committee Act (HR2293) introduced by Reps. Chris Van
Hollen (D-MD) and Lloyd Doggett (D-TX). Although the Federal Advisory
Committee Act requires that federal advisory committees be fairly
balanced in terms of points of view represented and committee functions
performed, public health advocates are underrepresented at all levels
of the USTR advisory committees. The creation of a Tier 2 Public Health
Advisory Committee on Trade as well as the inclusion of knowledgeable
public health advisors in other parts of the advisory system are
essential to establishing a fair balance of public representation at
the USTR.
As an American Studies scholar whose work focuses on trade and
health, and as a member and chair of the American Public Health
Association's Forum on Trade and Health, I know that U.S. trade
practices and policies often harm rather than improve the health of
people worldwide--especially people in poorer nations. The Public
Health Trade Advisory Committee Act offers an opportunity to reverse
that trend and allow the United States to take global leadership in
establishing healthy and truly fair trade policy.
To date, trade agreements negotiated by the USTR have disregarded
several important public health priorities. Trade agreements that
prioritize health have the potential to improve the daily lives and
health of people worldwide in a number of ways.
Affordable Medicines
Public health representation can help ensure the availability of
safe, effective medicines in poor nations facing extreme public health
emergencies.
Environmental, Occupational, and Consumer Regulation
Public health representation can help ensure that nations worldwide
are empowered to regulate environmental and occupational health risks
in a democratic, transparent, and pro-health manner.
Basic Human Services
Public health representation can help ensure that health care,
water, sanitation, energy, education, and other basic services are
managed and distributed in a manner that maximizes human health and
well being.
Impact on traditional means of livelihood
Public health representation can help ensure that trade agreements
are implemented in such a way as to maximize stability rather than
dramatically reshaping a nation's industrial and agricultural
production, causing unemployment and instability that impact mortality
and morbidity.
To improve global health in these areas and more, I urge you to
support the passage of Public Health Trade Advisory Committee Act
(HR2293). Thank you for your leadership and your consideration.
Sincerely,
Susanna Rankin Bohme, PhD
Chair, American Public Health Association Forum on Trade and Health
Testimony By Edward J. Black, Letter
Edward J. Black, Letter
Dear Chairman Levin and Ranking Member Brady:
The Computer & Communications Industry Association (CCIA)
appreciates the opportunity to submit comments for the record for the
Trade Subcommittee's hearing on the trade advisory committee system.
CCIA wholeheartedly supports the Subcommittee's efforts to examine
whether ``administrative or statutory changes, building on revisions
implemented in recent years, might broaden the range of views
represented and permit the advisory committees to provide more timely
and useful recommendations.'' The hearing on July 21st focusing on
environmental, labor, public health, development, and civil society
perspectives was an excellent start. However, these are not the only
perspectives that deserve to be reflected in the trade advisory
committee system.
In its testimony before the Subcommittee at last week's hearing,
the Government Accountability Office stated ``that representation of
stakeholders is a key component of the trade advisory committee system
that warrants consideration in any review of the system. In particular,
as the U.S. economy and trade policy have shifted, the trade advisory
committee system has needed adjustments to remain in alignment with
them, including both a revision of committee coverage as well as
committee composition.'' One of the most significant advances in the
U.S. and global economy in the past decade has been the development of
the Internet as a tool and stage for commerce in products and services.
The Internet has enabled truly global access to products, services and
information in a way previously unimagined. This has in turn led to
conflicts and issues that are equally new, and for which the
traditional trade advisory committee system is not well equipped.
For example, foreign legal regimes contribute to a hostile business
environment for U.S. Internet companies. Foreign courts are
increasingly imposing sweeping civil--and sometimes criminal--liability
on U.S. companies simply for providing innovative online services
entirely consistent with U.S. law. Indeed, in some countries, this
anti-Internet bias may be viewed as a form of de facto protectionism
due to the Internet being identified as a predominantly American
phenomenon. Please see the attached analysis on Internet Protectionism
for further information and examples.
The advent of a new, networked world has given rise to innovative
types of trade barriers. There must be a framework to address this
changed landscape, and rules of the road for this new world need to be
established. In order for our government to represent our industry's
interests, and those of the consumers and users of the Internet, in
this process, CCIA strongly urges the creation of an Industry Trade
Advisory Committee (ITAC) on Internet issues. The issues that confront
our industry are substantially unique from those facing other industry
sectors, and cleared advisers with expertise in the Internet industry
would be able to provide USTR with information and a perspective that
it is not presently receiving.
We greatly appreciate your attention to the issue of trade advisory
committee system reform, and your consideration of our views. We would
be pleased to discuss these issues with you and your staff, and to
assist in any way we can.
Sincerely,
Edward J. Black
President & CEO
Testimony By The Council of State Governments Eastern Regional
Conference, Statement
Statement of The Council of State Governments Eastern Regional
Conference
Whereas, The economic prosperity of the United States is best
served by embracing free and fair trade in global markets, investing in
innovative research and technologies, and providing assistance to
workers impacted by technology and trade trends; and
Whereas, Expanding trade opportunities for American workers and
businesses depends on cooperation between the Federal Government and
the states; and
Whereas, The trade liberalization efforts of the early 1990s and
trade agreements such as the North American Free Trade Agreement and
the World Trade Organization (WTO) Uruguay Round agreements have
increased the role of state policymakers in international trade
decisions; and
Whereas, WTO, FTA and other recent trade and investment agreements
have proceeded beyond discussion of basic tariffs and quotas and now
address government regulation, taxation, procurement, services,
investment, subsidies, not-tariff trade barriers, and economic
development policies that are implemented at state and local levels;
Whereas, Recent trade agreements that proceed beyond tariffs and
quotas also intersect with traditional areas of state authority under
the 10th Amendment, such as regulating the environment, health, and
safety and, thus, may impact the states' continuing authority to
effectively legislate and regulate in these areas; and
Whereas, Trade liberalization has transformed both global markets
and the historical state-federal division of power, thereby offering
new economic development horizons for state programs, presenting market
opportunities to some firms, creating significant competitive
challenges for other firms, increasing the need for training and
assistance to firms and works having to adjust, and imposing a burden
on state agency resources having to determine the impact of new trade
agreement provisions on state laws, practices and regulations; and
Whereas, States should be supported by the Federal Government in
trade development activities and trade policy analysis; and
Whereas, States often lack a clearly defined institutional trade
policy structure and resources, making it difficult to handle requests
from trading partners and federal agencies and to articulate an
informed state stance on trade issues; and
Whereas, International lawsuits may be brought against the U.S.
that challenge state-level laws, practices or regulations alleged to be
in violation of trade agreements and, therefore, the U.S. government
should ensure that international trade agreements covering the U.S.
would accord presumptive validity and not preempt or undercut those
non-discriminatory state laws, practices and regulations adopted for a
public purpose and with due process; and
Whereas, There is a need for a stronger federal-state trade policy
consultation mechanism so that states are more comprehensively
consulted during the negotiation, implementation and dispute resolution
of international trade agreements and; and
Whereas, the Intergovernmental Policy Advisory Committee, an
advisory committee of the United States Trade Representative, plays an
important role in providing state and local government perspectives and
input to the United States Trade Representative, but is limited in
scope by statute, including prohibitions on sharing classified
information with relevant state officials and members of the public,
membership determination by the USTR, lack of sufficient resources,
etc.; and
Whereas, In August 2004 the Intergovernmental Policy Advisory
Committee recommended that a Federal-State International Trade Policy
Commission would be an ideal structure for objective trade policy
analysis and would foster communication among federal and state trade
policy officials; and
Whereas, The creation of a federal-state trade policy
infrastructure would assist states in understanding the scope of
federal trade efforts, would assist federal agencies in understanding
the various state trade processes, and would give states meaningful
input in the United States Trade Representative's activities; and
Whereas, Federal-state consultation should include the timely and
comprehensive sharing of information on the substance of trade and
investment agreement provisions and federal trade and investment
programs, including analysis on their potential impacts, benefits and
costs related to state laws, practices, programs, and regulations;
appropriate use of the state single points of contact (SPOCs); improved
trade data to assess the impact of proposed and existing agreements;
and a reasonable opportunity for meaningful input by the states; and
Whereas, the Eastern Trade Council has fostered regional
cooperation among states and business by jointly promoting trade shows,
organizing joint trade missions, sharing trade research data and other
resources, and increasing access to business programs through the U.S.
Department of Commerce; and
Whereas, the Eastern Trade Council has facilitated regional
cooperation to advocate for improving trade data in order to provide
sufficient and detailed information to support sub-federal trade
development and international investment attraction strategies, and to
measure the economic impacts of trade agreements at the state level;
and
Whereas, the Eastern Trade Council has participated in regional
meetings and calls with states in developing an improved federal-state
consultation mechanism;
NOW, THEREFORE, BE IT RESOLVED that the Council of State
Governments' Eastern Regional Conference urge Congress to create
dedicated capacity to improve federal-state consultation on
international trade and investment policy and programs, including
improving data available to states and increasing transparency of
documents necessary to analyze the impacts of trade and investment
agreements on states; and
BE IT FURTHER RESOLVED, that the Council of State Governments'
Eastern Regional Conference, including the Eastern Trade Council, renew
its efforts to educate and engage states on the importance of
international trade development and policy and to understand impacts on
states, and create a recommendation on improving federal-state
consultation.
Testimony By The Society of Chemical Manufacturers and Affiliates,
Letter
The Society of Chemical Manufacturers and Affiliates, letter
Dear Chairman Levin & Ranking Member Brady:
The Society of Chemical Manufacturers and Affiliates (SOCMA) is a
trade association comprised of custom, batch, and specialty chemical
manufacturers. Founded in 1921, SOCMA has over 300 members, the
majority of which are small and medium sized businesses. Currently a
SOCMA member, V.M. ``Jim'' DeLisi of Fanwood Chemical serves as the
Chairman of ITAC 3, the Advisory Committee for Chemicals,
Pharmaceuticals, Health/Science Products and Services. As a ``Tier 3''
committee, ITAC-3 is charged to advise the USTR and DOC on highly
technical issues impacting the chemical manufacturing industry, such as
rules of origin and tariffs. Our sector generated about 500 billion
dollars in trade during 2008. Fanwood Chemical is the first small
company Chair of this group in its 45-year history. Mr. DeLisi has
attended WTO Ministerial Meetings as an Advisor in Seattle, Cancun, and
Hong Kong. Records would show that his Committee has met regularly for
45 years. The Committee is also very proud of the fact that members of
ITAC 3 always represent the largest contingent of any sector at the
various WTO Ministerials that have occurred in this time period,
including four ITAC 3 members who accompanied you, Mr. Chairman, to
Doha.
SOCMA believes that every interested citizen of the U.S. deserves
to have input into U.S. trade policy. We are very fortunate to have an
enormously talented group of individuals, both career and appointed, in
both the Office of the USTR and the Department of Commerce, dedicated
to expanded trade in goods and services. It has been repeatedly shown
that increased trade is vital to increasing the prosperity of the
United States.
We also believe that these officials are capable of gathering input
from a variety of sources and then distilling from this input the
proper trade policy for our nation. Such advice does not need to be
contained in a single document, nor does it need to come from a single
committee. In fact, we strongly advocate that the best advice is
gleaned from committees that can function in a clear and open manner.
This can only be accomplished when mutual trust exists among committee
members. This trust is very difficult to achieve if all views need to
be expressed in the same forum. Therefore, committees that support
manufacturing and services in the USA, such as the existing ITACs,
should remain ``pure'' and not be saddled with members that have
different agendas.
The ITAC is a place where various companies and representatives
from the same or similar sectors can come together, discuss common
challenges, and dialogue with government officials. The relationship
established between government and industry has been mutually
beneficial. Government and industry both benefit from educating each
other on issues and exchanging ideas and information. The experienced
professionals sitting on the ITACs are a valuable resource to
government and their expertise should be utilized.
The existing ITAC system has served the country well, being
especially beneficial to small business. Most large companies have
sufficient resources to present their trade issue interests effectively
before government entities. There is nothing wrong with this fact; it
is a natural result of their importance to our overall economic well-
being. However, the ITAC process is neither exclusive to size nor
inherently drawn to only one size of company. Therefore, it
appropriately allows smaller companies to also have input into our
officials.
The Advisory System at USTR and DOC was specifically created to
ensure that U.S. negotiators had as much knowledge as possible of real
world situations, so that they could best represent the real needs of
American manufacturers, not just their perceived needs. In fact, the
advisory system was created in the mid-1970's as U.S. Government
officials tried to understand why the USA did not prevail in the Tokyo
Round of the GATT negotiations. At the time, it was determined that the
significant difference between perception and reality could only be
remedied by constructing a system that would allow U.S. negotiators
direct access to the best experts in industry, those who truly
understood what was required to gain access to foreign markets, based
on their real world experience. The only way for this interchange to
work was to be sure that the ``industry advisors'' were granted a level
of security clearance sufficient for discussions to be held free from
fear of disclosure to the public or to our trading partners. This was
the genesis of the existing trade advisory system which has served both
Government and Industry very well for over 40 years.
In addition to attendance at the Ministerials described above,
SOCMA has specifically partnered with USTR to support efforts in
identifying technical barriers to trade within the Asia-Pacific
Economic Cooperation Forum.
The U.S. advisory system is unique in the world. Our foreign
competitors recognize it as one of our strengths as they have witnessed
the outstanding results of this partnership.
The Advisory System has played an important role, not in setting
U.S. trade policy, but in helping to mold the policy, once it has been
set by our political leaders. In this manner, political leaders can be
assured that the policy goals, once achieved, will truly be beneficial
for our economy.
In conclusion, the existing ITAC system works well. It serves a
noble purpose--to help the government protect the interests of American
industry--and is inclusive of those within industry who are permitted
to participate.
Respectfully submitted,
Bill Allmond, Vice President of Government Relations and
ChemStewards
Justine Freisleben, Assistant Manager, Government Relations
Testimony by Vermont Commission on International Trade and State
Sovereignty, letter
Dear Chairman Levin:
We are writing in response to the request by the Subcommittee on
Trade for input on how to increase transparency and public
participation in the development of U.S trade policy. The Vermont
Commission on International Trade and State Sovereignty (Vermont
Commission) was established by the Vermont General Assembly in 2006 to
assess the legal and economic impacts of international trade agreements
on state and local laws, state sovereignty, and the business
environment. As part of this charge, the Vermont Commission closely
examined the transparency offered and public participation process
utilized by the U.S. Trade Representative (USTR) in the negotiation of
trade agreements.
Over the past three years, the Vermont Commission held multiple
meetings on the need to increase transparency and public participation
in the development of U.S. trade policy. The Commission solicited and
received testimony from members of USTR, members of the business
community, members of the intergovernmental policy advisory committee
(IGPAC), trade officials from Canada, representatives of national trade
organizations, and other interested parties. The Vermont Commission,
its members, and its staff also met with other state trade commissions
and representatives to discuss and develop a regional policy regarding
transparency and public participation. In addition, due to the work of
Deputy Assistant U.S. Trade Representative Myesha Ward, the Vermont
Commission spoke with USTR representatives about the steps taken or
considered by the current administration to increase transparency and
public participation.
The extraordinary amount of information and input gathered by the
Vermont Commission led in January of 2009 to the Vermont Commission
approving a Statement of Principles on International Trade which noted
recommended changes to USTR trade policy. A copy of the Statement of
Principles is attached for your review. As part of these principles,
the Vermont Commission asserted that the USTR should improve
transparency in its trade negotiations and sharing of data and that the
process for consultation with states should be improved. Specifically,
the Vermont Commission noted that:
States should be consulted during the negotiation of
international trade agreements. Federal-state consultation
should include the timely and comprehensive sharing of
information on the substance and likely impact of trade
agreements on state laws and regulations; appropriate use of
the state single points of contact (SPOCs); and a reasonable
opportunity for meaningful input by the states; and
State legislatures and governors should be consulted
or have a voice in determining whether their state procurement
policies are covered by international trade agreements, and
they should be afforded notice and an opportunity to comment
and the authority to decline or limit state participation.
In May of 2009, the Vermont Commission met to review and discuss
potential methods for improving USTR transparency and consultation.
Generally, the Commission members agreed that if changes are made to
the USTR consultation process, the new process should be simple in
format and structure, acknowledge and respect principles of state
sovereignty, and allow additional state access to trade data and texts.
In preliminary discussion on how to achieve this goal, the Vermont
Commission focused on the need for a new consultative body and two
possible models for such a body as a starting point for wider
discussion and consideration.
The first model would be a new, federally funded organization or
structure established at the national level to allow for consultation
between the USTR and the states. This new national consultation
organization would replace the existing IGPAC and would be designed to
inform states of trade policy and ongoing trade negotiations and their
potential impacts on states. The new consultation organization would
serve as the mechanism by which state and local representatives would
provide comment or requests to USTR. It also could aid USTR in the
distribution of trade data and other materials. Membership of the
organization would include representatives of all states, but
membership could be expanded to include representatives of local
governments. In addition, this new organization would need to stand
apart from and independent of the USTR and the administration in
general in order to ensure non-partisanship.
A second model considered by the Vermont Commission would be the
creation of several new regional trade commissions that would represent
the varied geographic and economic interests of the states. Regional
trade commissions would provide input to IGPAC or a national
consultation organization and its members. The regional trade
commissions could also serve as interfaces with the states by providing
state and local government information and data regarding trade and
trade agreements. Federal funding would be necessary to fully staff and
successfully implement regional trade commissions.
Establishing and appropriately funding and staffing a new national
consultation organization or several regional commissions will
significantly increase transparency if USTR cooperates with such a
national organization or regional commissions by providing relevant and
timely information regarding trade policy, ongoing trade negotiations,
the impact on states, and trade information and data. Such information
sharing will help states analyze the impact of trade and agreements
while also optimizing trade promotion in order to afford businesses
increased trade opportunities. Moreover, a national consultation
organization or a regional commission will provide USTR with valuable
input regarding the impact of trade agreements on state sovereignty and
state legislation.
Thank you for requesting input on how to increase transparency and
public participation in the development of U.S. trade policy. The
Vermont Commission is dedicated to working with Congress and the USTR
to develop a trade policy that improves transparency and consultation
with the states while continuing to further the trade interests of the
United States and its individual states. If you need additional
information, please contact the commission staff, Robin Lunge or
Michael O'Grady.
Sincerely,
Ginny Lyons
Co-Chair
Kathleen Keenan
Co-Chair
Testimony By William A. Gillon, Statement
Statement of William A. Gillon
I appreciate the opportunity to provide written testimony to the
Trade Subcommittee of the House Committee on Ways and Means. My name is
William Gillon. I am an attorney from the Memphis, Tennessee, area. The
Trade Policy Advisory Committee system has been a valuable tool for
agriculture to convey its concerns and needs regarding trade
negotiations. I am happy to present this testimony in support of that
system.
My work experience includes the Office of the General Counsel at
the U.S. Department of Agriculture, Senior Counsel to the Senate
Committee on Agriculture, Nutrition and Forestry, General Counsel and
Director of International Trade Policy for the National Cotton Council,
and the private practice of law since 2005. My practice focuses mainly
on agriculture and international trade policy. My professional
responsibilities at each position I have held since graduating from law
school have involved a mix of domestic and international agricultural
policy.
I have watched trade negotiations from within USDA, from Congress,
from a large commodity trade association, and now as a private attorney
for interested parties. The only thing I have not done is directly
negotiate for the United States. I have served within the Agricultural
Trade Advisory Committee (ATAC) system for a number of years, under
several different Presidents. Before becoming a member myself, I worked
with industry representatives who served as Members of the Committees.
As I stated above, I believe the ATAC system helps create a
dialogue between an Administration's agricultural trade negotiators and
the private sector. The system as it has evolved is one that has
enabled industry representatives to become familiar with the trade
policy positions of the United States and our trading partners. It has
enabled private sector participants to become somewhat familiar with
the ever-evolving ``language of trade,'' that special dialogue that
occurs within international trade negotiations that has brought words
like ``modalities'' into our standard nomenclature.
Mr. Chairman, it is my hope that the basic structure and
representation on the advisory committees be maintained in the future.
It should not be the case that individuals are automatically
disqualified from membership on a trade advisory committee because they
are registered as a lobbyist.
I am a registered lobbyist. When Congress expanded the definition
of lobbyist in the Lobby Disclosure Act, I immediately registered and
began an extensive review of my clients to ensure that everyone who
should register under the Act did so. I have taken a cautious approach
to the Act and a broad approach to registration. If an individual or a
company comes close under the lobbyist definitions, I encourage them to
register and I help them comply with the statute. I reject, however,
the notion that because I am registered and because my activities are
reported and public I am nonetheless automatically disqualified from
providing sound advice through the ATAC system.
The experience that qualifies me to be a member of an ATAC is the
same experience that led some persons to hire me to represent their
interests to elected officials or to help them understand the position
of elected officials. When an Administration automatically disqualifies
persons with significant experience from positions of advice or
counsel, it deprives itself of the high level of professional advice
and insight they can render and it deprives private citizens of their
right to monitor the Administration's activities. This is particularly
the case in the area of international trade negotiations where it takes
many years of experience just to understand the lingo. Individuals who
do not follow trade negotiations every day may know that a certain
outcome will or will not be beneficial, but they may not be able to
discern whether the language in front of them or the speech just
delivered to them contains that detrimental outcome.
Congress may often find itself having to jump the same hurdles.
Trade negotiations tend to continue from one Administration to the next
with points of reference often shifting significantly from January to
December. It is difficult even for Congressional staff to consistently
be aware of those shifts and the ultimate impact they may have on
citizens in the United States.
The ATAC system itself has been developed to ensure that an
Administration hears from affected parties. The commodity
representatives on the Tobacco, Cotton, Peanuts and Planting Seeds ATAC
are supposed to provide their opinion regarding trade affecting their
specific commodity. It is wholly necessary to that role that the
individuals on the ATAC be interested in that commodity and, indeed,
have a stake in it and deep knowledge of it. For the purposes of
representing the interests of a specific commodity, it shouldn't matter
whether an individual is a registered lobbyist. First, with respect to
the lobbyist, the public is notified as to the lobbyist's clients and
political activity, but they are not so well-informed with respect to
private citizens.
Second, Mr. Chairman, farmers farm. If they are not putting all of
their focus and effort into their farming operations, they increase
their already ridiculously high chances of failure. Most farmers I know
are not fully aware there is a difference between ``special'' products
and ``sensitive'' products within the Doha negotiations, nor can they
be expected to stop and research the exact scope and impact of those
differences. Generally, those farmers associate together and hire
experienced professionals to help them understand these and similarly
involved policy issues. The ban on lobbyists should not be extended to
representation on the ATACs as it would deprive these farmers of voices
they consider to be valuable and necessary to help them protect their
interests.
Third, trade negotiations are directed by the Administration that
is in office. It is generally understood that all other interested
parties, farmers and Congress alike, must find a way to understand what
is going on within those negotiations. If ATACs are reformed in such a
way as to ban lobbyists from participating, those ATACs will be far
less prepared to take on the task of ombudsman. They will not be able
to provide the kind of advice that comes from experience and daily
immersion. Such a step will not improve the system, it will make it
superfluous.
Mr. Chairman, I would like to make one point about diversity on
committees. Representation on the committees I have been involved with
has been minimally diverse, but knowledgeable. Because of the knowledge
and because of even the minimal diversity, ATAC meetings have tended to
enhance our understanding of the negotiations and the members of the
various ATACs have, by and large, been able to convey to the
Administration their needs and concerns with trade discussions.
However, as these are committees designed to advise the Administration
on agricultural trade policy, they have been committees with membership
from the agricultural trade community--individuals who generally have a
mindset and a position that trade is good and beneficial. Membership
has evolved and different points of view have populated the committee I
have participated in.
While it welcomes diversity, the Tobacco, Cotton, Peanuts and
Planting Seeds committee I have been a member of for several years has
struggled to reconcile the positions of Members of the Committee who
are opposed to the export of specific products. As the Committee was
asked to review free trade agreements and render its advice, it was
difficult to obtain consensus when a committee member is opposed to
trade in a product. Advisory Committee members generally do not address
the larger questions of whether trade is or is not good or advisable.
Instead, the Committee reviews the technical terms of proposals, the
draft negotiating documents, to determine if they are fair and
reasonable. Diversity of opinion is helpful, but I question whether
members of agricultural trade advisory committees shouldn't, at the
least, be committed to agricultural trade.
Mr. Chairman, thank you again for holding this hearing and for
allowing me to submit testimony.
Testimony By Maralyn Chase, Peggy Pierce, Jill Cohenour, Steven
D'Amico, and Susi Nord, Statement
Statement of Maralyn Chase, Peggy Pierce, Jill Cohenour, Steven
D'Amico, and Susi Nord
Thank you very much for convening a hearing on the future of the
U.S. Trade Advisory Committee system, and for taking written comments
from interested parties. As state legislators concerned with how
international trade rules affects our states, we are grateful for the
opportunity to provide our perspectives.
In the last several years states have observed first-hand some of
the impacts of international trade agreements, and aggressive actions
by trading partners:
NAFTA Chapter 11 claims brought against California's
regulatory ability to protect public health and the
environment. We appreciate the vigorous defense mounted by the
U.S. State Department in arguing against those claims. But we
also note that despite a favorable outcome in the Methanex and
Glamis cases, the California Department of Justice was not
compensated for the considerable time and expense that they had
to devote to defending themselves. We view this as an unfunded
mandate--something states can ill afford in the present budget
climate.
Threatening letters sent by the People's Republic of
China to state legislators in Vermont and Maryland regarding
bills introduced in those states dealing with lead content in
toys, and electronic waste. China claimed that the bills would
violate the World Trade Organization's Technical Barriers to
Trade agreement. We dispute the validity of the claim; but
equally important, we think it's totally inappropriate that the
Department of Commerce would notify China about pending state
legislation.
The WTO case brought by Antigua against the United
States on internet gambling. The WTO found that the U.S. had
made such a commitment binding gambling under the services
agreement. We appreciate that the U.S. withdrew its WTO
commitment, largely as a result of pressure from states that
ban all forms of gambling (Utah and Hawaii), but the case has
led to a messy and still-unresolved dispute with a number of
countries regarding the withdrawal of the commitment that could
negatively affect businesses through the U.S. Legislators from
coastal states are concerned that USTR has offered to commit
services pertaining to liquefied natural gas under WTO rules as
compensation for withdrawing `other recreational services-
gambling.'
Threatened challenges to California's Low Carbon Fuel
Standard and to greenhouse gas reduction strategies in the 10
Regional Greenhouse Gas Initiative states in the northeast. The
Federal Government of Canada and the Province of Alberta are
trying to block the leadership of the states in grappling with
these urgent climate change issues by citing WTO and NAFTA
rules.
Retaliatory tariffs taken by Mexico as a result of a
NAFTA trucking case is causing severe hardship to many of our
agricultural producers and manufacturers.
We support efforts made by the Office of the United States Trade
Representative to open up new markets for American goods and services.
We believe that this can be done in a way that safeguards U.S.
federalism, and doesn't put state laws or regulatory authority at risk,
or that causes unexpected shocks to our businesses because of
retaliatory actions.
To avoid such shocks, and to safeguard U.S. federalism, there needs
to be better communication between U.S. trade negotiators and state
leaders. There should be regular and open communication between the
Office of the United States Trade Representative (USTR) and ALL the
states.
Right now, fewer than half the states are represented on
InterGovernmental Policy Advisory Committee (IGPAC). It is hard to feel
that USTR takes IGPAC seriously when there have been so few face-to-
face meetings between state leaders and our trade negotiators, and also
when USTR posts on its new website a roster of IGPAC members that is
several years out of date.
It cannot be expected that states will support existing trade
policy when there is so little consultation. States will seek to opt
out of agreements about which they are not consulted.
We urge Congress to mandate a regular schedule of face-to-face
meetings between the states and USTR, and a review of transparency
policies regarding trade so that the states can have a clearer idea of
what trade and investment issues are on the table and for negotiators
to understand states' positions prior to the start of negotiations.
This can be done as part of the formal trade advisory committee system,
but the commitment to consultation should go beyond that. We also urge
Congress to develop a process that allows states to decide whether to
opt in to certain non-tariff aspects of trade agreements like
procurement, services and investment provisions.
We note that several state trade commissions, as well as IGPAC,
have put forward concrete proposals for how to reform some aspects of
federal-state consultation on trade. We urge you to give serious
consideration to these ideas.
To summarize:
State legislators supporting this letter appreciate
the Trade Subcommittee's consideration of this important issue
of the formal trade advisory committee system.
IGPAC and state commissions have made specific
recommendations for improving USTR's consultation with states
that have implications for the future of the trade advisory
committee system.
Consultation with the states must go beyond the
formal advisory system and include a regular schedule of
meetings with state leaders and with the national associations
such as NCSL that support our interests.
Congress should include an ``opt-in'' mechanism to
allow U.S. states to decide whether to be bound to trade pacts'
non-tariff regulatory constraints regarding services,
procurement and investment in future trade negotiations.
If states are to be supportive of U.S. trade policy,
they must be consulted regarding the content of that policy.
Thank you very much for the opportunity to comment.