[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



                 JOB CREATION MADE EASY: THE COLOMBIA,
             PANAMA, AND SOUTH KOREA FREE TRADE AGREEMENTS

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 23, 2011

                               __________

                           Serial No. 112-69

                               __________

        Printed for the use of the Committee on Foreign Affairs





 Available via the World Wide Web: http://www.foreignaffairs.house.gov/

                                _____

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                      COMMITTEE ON FOREIGN AFFAIRS

                 ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey     HOWARD L. BERMAN, California
DAN BURTON, Indiana                  GARY L. ACKERMAN, New York
ELTON GALLEGLY, California           ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
DONALD A. MANZULLO, Illinois         DONALD M. PAYNE, New Jersey
EDWARD R. ROYCE, California          BRAD SHERMAN, California
STEVE CHABOT, Ohio                   ELIOT L. ENGEL, New York
RON PAUL, Texas                      GREGORY W. MEEKS, New York
MIKE PENCE, Indiana                  RUSS CARNAHAN, Missouri
JOE WILSON, South Carolina           ALBIO SIRES, New Jersey
CONNIE MACK, Florida                 GERALD E. CONNOLLY, Virginia
JEFF FORTENBERRY, Nebraska           THEODORE E. DEUTCH, Florida
MICHAEL T. McCAUL, Texas             DENNIS CARDOZA, California
TED POE, Texas                       BEN CHANDLER, Kentucky
GUS M. BILIRAKIS, Florida            BRIAN HIGGINS, New York
JEAN SCHMIDT, Ohio                   ALLYSON SCHWARTZ, Pennsylvania
BILL JOHNSON, Ohio                   CHRISTOPHER S. MURPHY, Connecticut
DAVID RIVERA, Florida                FREDERICA WILSON, Florida
MIKE KELLY, Pennsylvania             KAREN BASS, California
TIM GRIFFIN, Arkansas                WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
VACANT
                   Yleem D.S. Poblete, Staff Director
             Richard J. Kessler, Democratic Staff Director







                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Mr. Myron Brilliant, Senior Vice President for International 
  Affairs, U.S. Chamber of Commerce..............................    10
Mr. Luis Arguello, Sr., CEO & president, DemeTech................    24
Mr. Drew Greenblatt, president, Marlin Steel Wire Products.......    29
Ms. Thea Lee, deputy chief of staff, AFL-CIO.....................    40

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Mr. Myron Brilliant: Prepared statement..........................    12
Mr. Luis Arguello, Sr.: Prepared statement.......................    26
Mr. Drew Greenblatt: Prepared statement..........................    31
Ms. Thea Lee: Prepared statement.................................    42

                                APPENDIX

Hearing notice...................................................    66
Hearing minutes..................................................    67

 
  JOB CREATION MADE EASY: THE COLOMBIA, PANAMA, AND SOUTH KOREA FREE 
                            TRADE AGREEMENTS

                              ----------                              


                       FRIDAY, SEPTEMBER 23, 2011

                  House of Representatives,
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 a.m., in 
room 2172, Rayburn House Office Building, Hon. Ileana Ros-
Lehtinen (chairman of the committee) presiding.
    Chairman Ros-Lehtinen. The committee will come to order. 
After recognizing myself and my good friend, the ranking member 
Mr. Berman, for 7 minutes each for our opening statements, I 
will recognize the chairman and ranking member on the 
Terrorism, Nonproliferation, and Trade Subcommittee, if they 
are here, for 3 minutes each for their statements. I will then 
recognize members for 1-minute opening statements. We will then 
hear from our witnesses, thank you ladies and gentlemen. And I 
would ask that you summarize your prepared statements in 5 
minutes each before we move to the question and answers from 
the members under the 5-minute rule.
    Without objection, the witnesses' prepared statements will 
be made a part of the record and members may have 5 days to 
insert statements and questions for the record subject to the 
length limitations in the rules. The Chair now recognizes 
herself for 7 minutes.
    I am pleased to hold this timely hearing on the pending 
Colombia, Panama and South Korea free trade agreements, 
especially in light of the President's recent emphasis on job 
creation. We would have loved to have hosted administration 
witnesses, but they were not available to this committee. Our 
offer still stands.
    In his September 8th speech to the Congress, the President 
once again noted the importance of these free trade agreements 
saying, and I quote,

        ``Now is the time to clear the way for a series of 
        trade agreements that would make it easier for American 
        companies to sell their products in Panama, Colombia 
        and South Korea.''

I could not agree more, but unfortunately, after almost 3 years 
of delay, we are still waiting for the President to send them 
to Congress. At a time when millions of American families are 
struggling and so many people are looking for work passage of 
the free trade agreements with Colombia, Panama and South Korea 
should be a top priority for all of us. Merely by putting these 
agreements in the mail to Congress, the administration would 
set in motion the creation of tens of thousands of new jobs, a 
major expansion of U.S. exports and broad economic growth. And 
we can do so without hundreds of billions in new spending or 
higher deficits. The increase of exports will spur economic 
growth throughout the U.S., including in my district in south 
Florida.
    Colombia is already south Florida's second largest trading 
partner accounting for more than $5 billion a year and 
supporting thousands of jobs. And Panama is among Miami-Dade 
County's top 25 trading partners with Florida as a whole 
ranking first in exports to that country. In fact, Panama's 
trade with south Florida has grown nearly 30 percent in recent 
years. These figures will expand further once these two FTAs 
are approved. However, the repeated delays over the past 3 
years have already hurt many companies. For example, 96 percent 
of the flowers that are imported to the U.S. from Colombia pass 
through my congressional district of south Florida, but the 
small- and medium-sized businesses in this sector have been hit 
hard from the higher tariffs resulting from the expiration of 
the Andean Trade Promotion Act earlier this year, a problem 
that can be easily fixed by passage of the Colombia FTA.
    Free trade agreements with South Korea will produce even 
greater benefits. The U.S. International Trade Commission 
estimates that it will increase our export of goods by at least 
$10 billion a year. That is not even counting the high value 
services in which our country leads the world which are now 
shut out of the large areas of South Korea's economy. The 
President's own administration estimates that at least 70,000 
jobs will result from free trade agreement with South Korea 
alone. It is time to grant American businesses and exporters 
barrier-free access to the world's 13th largest economy. While 
we have sat here, the EU and countries such as Canada and China 
have moved aggressively to undermine U.S. businesses.
    Earlier this year, the EU trade agreement with South Korea 
came into effect putting U.S. businesses at a severe 
disadvantage in that country, resulting in lost sales for 
American companies and lost jobs here in the United States. 
There is more than just economic benefits at stake, however. 
Each of these countries is a key ally in an unstable area of 
the world where U.S. interests are increasingly under threat 
from China and other countries. At a time when much of the 
world is expecting the U.S. to retreat from its 
responsibilities and abandon its allies, these agreements will 
serve as a clear demonstration of our enduring commitment to 
our democratic partners. Each has carried out their promise to 
us, including all of the many changes we have insisted upon. 
And now it is time for us to carry out ours.
    Finally, I think it is important to address a fundamental 
misconception regarding not only these free trade agreements, 
but others as well, the effects and purposes of which opponents 
seem not to understand. Because the U.S. economy is a very 
open, one free trade agreements are primarily about removing 
the barriers in other countries to U.S. exports. For example, 
free trade agreement with Colombia will eliminate duties on 80 
percent of U.S. exports to Colombia with almost all of the 
remaining duties and tariffs removed in 10 years.
    In contrast, 93 percent of Colombia's exports already enter 
the U.S. duty free. Colombia will benefit, but we will benefit 
much more. The same is true with Panama and South Korea. It 
appears that the process for allowing Congress to consider 
these agreements is finally underway, however, with the Senate 
approving just last night a key piece of legislation. The 
Senate passed something? For the first time it looks likely 
that the three FTAs will soon be sent to Capitol Hill to be 
voted on. Passage of the South Korea FTA before President Lee 
arrives in Washington in October would be a tremendous 
reaffirmation of our alliance with that key country. And as we 
vote let us remember that we are voting to knock down the 
barriers to U.S. businesses and to create the jobs that so many 
Americans and their families are desperately in need of. I am 
now pleased to turn slowly to the ranking member Berman for his 
opening remarks. And there he is.
    Mr. Berman. Thank you much, Madam Chairman, and thank you 
for calling this important hearing. The Foreign Affairs 
Committee does not have legislative jurisdiction over free 
trade agreements, but there is precedent for this committee 
reviewing pending trade agreements. We held hearings on both 
the North America free trade agreement and the Uruguay Round 
Talks that resulted in establishment of the World Trade 
Organization.
    Now that the Senate has passed trade adjustment assistance 
legislation the President is likely to send Congress the Korea, 
Columbia and Panama agreements. This may be the last hearing on 
those agreements before they come up for a vote in the House.
    Today the conventional wisdom about trade agreements is 
much different than it was when the Uruguay Round and NAFTA 
were considered. The optimism of the 1990s about the benefits 
to America of reducing trade barriers has been replaced by 
widespread skepticism, not just about trade, but also about the 
future of our economy and our workforce. We have seen 
persistent trade deficits which have compounded our fiscal 
problems, we have seen U.S. companies move manufacturing 
overseas eliminating jobs for American workers in the process 
and affecting America's competitive edge by sending some of our 
best technology abroad, we have seen household incomes fall 
behind price increases, and we have seen a once secure private 
pension system erode.
    A number of factors has called this sea change. 
Productivity increases have reduced the labor component of both 
manufacturing and services. The Internet has profoundly 
affected manufacturing financial services by fostering a much 
more difficult competitive environment for the United States. 
The entry of China, India and other low cost competitors into 
world markets has transformed trade patterns with consequent 
effects on the U.S. economy and workforce.
    While the dollar value of U.S. exports has continued to 
rise almost every year the U.S. share of global trade flows has 
gone down. From 2003 to 2009, the U.S. share of world exports 
dropped from 9.8 percent to 8.7 percent. Over the same period, 
the U.S. slipped from first place in world exports to third 
behind both Germany and China. Today, exports account for just 
over 13 percent of the total U.S. economic output, far less 
than virtually every major economic power. Trade agreements per 
se are by no means the cause of all of our economic problems, 
nor are they a panacea for our current woes. They are a 
critical tool for the protection of American intellectual 
property rights, but they can also contribute to the 
dislocation of American workers.
    No matter what one thinks about the merits of any 
particular free trade agreement, we should all be able to agree 
that increasing U.S. exports will lead to the creation of more 
jobs here at home. And one important step we can take to 
increase exports is to improve the effectiveness of the Federal 
Government's export promotion programs. A series of Government 
Accountability Office studies has found that existing U.S. 
programs are uncoordinated, unfocused and, therefore, less 
effective than those of our competitors. This past Monday, a 
report by the Council on Foreign Relations issued the same 
finding, urged a more robust U.S. effort.
    Specifically the Council noted, and I quote,

        ``The U.S. has been a laggard in export promotion 
        efforts, the government needs to play a more active 
        role in assessing foreign market opportunities, 
        identifying priorities among products and services, and 
        carrying out a long-term plan to bolster U.S. 
        performance in world markets.''

In other words, making in the area of export promotion the 
government as irrelevant as possible to the lives of American 
people is a real stupid policy. For more than a year, I have 
been working on legislation to address this problem. On 
Wednesday I introduced two bills to help ensure better 
coordination of the 18 existing programs and their combined 
$1.3 billion budget. Madam Chairman, I believe that these bills 
will garner bipartisan support. And I thank Mr. Manzullo for 
co-sponsoring one of them. Unlike the pending free trade 
agreements they are within the jurisdiction of this committee 
and hope we can consider them as we examine ways to create new 
jobs for American workers. With that, Madam Chairman, I yield 
back my time.
    Chairman Ros-Lehtinen. Thank you so much, Mr. Berman. I 
would like to yield to Mr. Duncan if he has got a 1-minute 
opening statement.
    Mr. Duncan. Thank you, Madam Chairman. Free trade equals 
jobs. Free trade agreements open up markets for U.S. products, 
but FTAs must be fair for U.S. manufacturers. And since these 
FTAs are negotiated by the executive branch, we as a Congress 
must remain diligent in our review and oversight to ensure that 
these and future free trade agreements are in the best interest 
of American job creators. Thank you for having this hearing. As 
a freshman congressman, this is very educational to me on the 
impact of FTAs and I look forward to the testimony. Thank you. 
I yield back.
    Chairman Ros-Lehtinen. Thank you, Mr. Duncan. I now would 
like to yield 3 minutes to the ranking member of the 
appropriate Subcommittee on Trade and Nonproliferation, Mr. 
Sherman.
    Mr. Sherman. Our trade policy has created huge profits on 
Wall Street and the destruction of the American middle class. 
Doing more of the same will create more of the same result. 
Even the U.S. Government International Trade Commission admits 
that this agreement will increase our global trade deficit. But 
they say it will be only a little bit. When I say this 
agreement, I mean the Korea free trade agreement. This is the 
same organization that said permanent NFN for China would 
increase our trade deficit by only $1 billion.
    But this agreement, all the economic studies are based on 
the idea that goods are going to be made in South Korea and 
come into the United States. Look at the fine print. The rules 
of origin. Goods that are 65 percent made in China, 35 percent 
finished in South Korea come into our country duty free. If 
that 35 percent of the work done in South Korea is done by 
Chinese workers living in barracks, duty free. Now, we are told 
that that 35 percent of the work will at least be done by 
Chinese workers getting the Korean minimum wage. But after they 
pay for the glorious barracks living those workers may receive 
nothing more than they make in China. Sixty-five percent or 100 
percent Chinese labor, free entry into the United States and 
not one cent of U.S. increased exports to China. Likewise, 
rules of origin. North Korean goods, 65 percent made in North 
Korea, 35 percent made in South Korea have a right to come into 
the United States duty free under this agreement.
    Now, but their importation would violate executive orders 
under AIPA. So when the South Koreans try to bring those goods 
in here and we block them, they can legally threaten us with 
sanctions. At that point, the executive branch can repeal the 
executive orders and back down. And I know that the chairwoman 
has a bill designed to prevent that. The administration will 
certainly not let us pass that bill, which I have co-sponsored. 
So the administration will have the right to back down and let 
65 percent North Korean-made goods into the United States or 
face sanctions. Either way, we lose.
    Finally, the agreement carefully does not define what South 
Korea is. The South Koreans wanted to include the labor camps 
located north of the DMZ. This is to be resolved under appendix 
22 by future negotiations. So I have made a big point, will 
Congress get a chance to play a role. The response has been 
simple. The Obama administration issued a press release saying, 
well, of course we will let Congress vote on this. That is 
legally binding on no one.
    The fact is the South Koreans will not allow a change to 
this agreement which gives Congress the right to decide whether 
the case on labor agreements, some would call it labor camp, 
some would call it a slave labor camp, will have free access 
into the U.S. market. Sixty-five percent made in China, 100 
percent made by Chinese workers, 65 percent made in North Korea 
or 100 percent made in camps located north of the DMZ, none of 
the economic studies show the tens of billions of jobs that we 
will lose when American workers have to compete against some 
workers in North Korea who are paid $8 a month.
    We cannot simply swallow the idea that this agreement means 
what it says in the summaries prepared by its proponents. And 
those proponents will say that I have misconstrued the 
agreement, but they will make sure that we don't have binding 
language in the implementing provisions, the legislation. Why 
no legally binding clarification? Because everything I say 
about the agreement is critical to the South Koreans, and my 
interpretation of this agreement is being used to sell this 
agreement in South Korea. Sixty-five percent made in China, 100 
percent made by Chinese labor, free access to the United 
States, they shouldn't call it a Korea free trade agreement.
    Chairman Ros-Lehtinen. Thank you. And I am so pleased now 
to yield to the chairman of the appropriate subcommittee, Mr. 
Royce of California.
    Mr. Royce. I thank the gentlelady. Let me make a couple of 
observations. One is that any inclusion of Kaesong produced 
goods would require congressional approval. A number of us 
wrote to the administration not to include Kaesong. When the 
agreement was being negotiated it was excluded despite pressure 
from Korea. That is also the finding of the Congressional 
Research Service. Let me also make the point that this 
agreement was worked on 4 years ago. It has been 4 years that 
we have been waiting. And in the meantime, a South Korean-
European Union free trade agreement has entered force. It is 
based upon this agreement. As a consequence of that agreement, 
this has been a 36 percent increase in goods going out of 
Europe into Korea since July 1st.
    Frankly, we are losing market share because the agreement 
with Europe has gone into force. And our delay here, the 
administration's delay, frankly, has meant lost American jobs. 
You can't give up market share in Korea. If this does not come 
into play, we are going to lose 345,000 jobs here in the United 
States. That is what studies show. This agreement would 
increase by $10 billion exports. Now, those are job creating 
exports. And that is 70,000 jobs. That is the administration's 
figure. That is the Obama administration's figure.
    This delay is all the more troubling given that it is 
happening with such a close ally, South Korea. And that is 
another point I want to make in this argument here. This is a 
country we have had a defense partnership with for 60 years, 
and I am not sure that the administration grasps the importance 
of traditional allies, whether it is South Korea or Japan or 
the UK or Israel. At times like this, I wonder if they 
understand that.
    Now, we sit here and we wait for Colombia, Panama, and the 
Korean for trade agreements, and I am just hopeful that the 
administration has seen the light, and I am hopeful that they 
understand that of all these trade agreements, we are a party 
to only two in Asia. There are hundreds of trade agreements 
being cut right now by Latin America and by Europe in Asia. And 
this particular agreement--you know let me just quote from the 
Congressional Research Service by the way: ``A close analysis 
of KORUS and the nature of trade flows reveals that unless the 
Kaesong Industrial Complex is brought into the KORUS FTA--and 
that would require congressional approval''--the FTA, frankly, 
does not include components.
    Chairman Ros-Lehtinen. The gentleman is given an additional 
1 minute and 10 seconds because I inadvertently gave that time 
to Mr. Sherman. He had me wrapped up in his argument, so I 
wasn't paying too close attention.
    Mr. Royce. Well, if anything, let me add one other element 
here. We have enhanced customs provisions in KORUS. We have 
kept any North Korean goods out of this agreement. It will 
require congressional approval to allow anything more in here. 
And with the enhanced customs provisions that ensures all the 
more that we shut out illicit North Korean goods and 
components. It is a red-herring argument. I yield back Madam 
Chair.
    Chairman Ros-Lehtinen. Thank you very much. My good friend 
from New Jersey is recognized for a minute, Mr. Sires.
    Mr. Sires. Thank you, Madam Chairperson, for holding this 
hearing. I have some reservations about the South Korean free 
trade agreement, especially when it comes to intellectual 
properties. But I really don't have too many reservations with 
Panama and Colombia. I represent a large district of Colombian 
Americans, and I have been to Colombia many times, I have 
spoken to the President even before and I was at the swearing 
of the new President. And I always raise the issue obviously of 
labor. And they have made some very good strides to try to deal 
with the labor. Is it perfect? No. But as I see what is 
happening, you have China moving in, you have Canada--just 
signed an agreement with Canada about $1.7 billion. They signed 
an agreement with Europe.
    We are losing out on some of the markets that we can bring 
some of our goods and create some jobs here. The Chinese, the 
second most studied language today in Colombia in the 
universities is Mandarin, and it is increasing. This is a 
conversation that I had with one of the presidents of the 
college. So let's move forward with this. I do have 
reservations about South Korea. But Panama, both of these 
countries have been allies of this country for many, many 
years, and I think it is time though we move forward on these. 
Thank you very much.
    Chairman Ros-Lehtinen. Thank you Mr. Sires. I would like to 
recognize for a 1-minute opening statement the chairman of the 
Subcommittee on Oversight and Investigations, Mr. Rohrabacher 
of California.
    Mr. Rohrabacher. Thank you very much, Madam Chairman--
Chairwoman. And let me just thank you for your leadership on 
this, because I will be paying attention to the testimony and 
to the evidence to make up my mind about whether I will be 
supportive of these free trade agreements or not. My motto is 
free trade between free people, and in this case, Colombia, 
Panama and South Korea are relatively free countries, so I 
would be inclined, but not only on top of that free trade 
agreements between our countries' free people need to be 
mutually beneficial, and at least they need to be beneficial to 
the people of the United States or we should not be supporting 
it. We have had a trade status quo foisted onto us with China 
that has cost us almost 3 million jobs, since we gave them 
permanent most-favored-nation status or whatever that is, WTO 
access, and that is intolerable.
    We need to be dealing with that. And I will say the 
difference between Mr. Royce and Mr. Sherman, I will be looking 
to see which one can, the evidence indicates which one is 
right. And that is a very important point.
    Chairman Ros-Lehtinen. Thank you. Mr. Connolly is 
recognized from Virginia.
    Mr. Connolly. Thank you, Madam Chairwoman. And welcome to 
the panel. I think free trade as an abstract concept is very 
important to the future of the American economy and generally 
serves the economy well, but it is not without problems. And 
that is why I favor the trade adjustments assistance 
reauthorization. I think that is going to be critical frankly 
if we are going to move forward and build a consensus. I also 
think this hearing, along with other avenues of investigation, 
is going to be important. There are issues that must be dealt 
with. In the case of Korea, we have to be looking at 
intellectual property; we have to also be looking at nontariff 
barriers that have frankly kept that market from being 
accessible to U.S. goods and products in the past. In Colombia, 
there are human rights issues especially evolving labor 
organizers that remain to be addressed as far as I am 
concerned. Those were issues I presented to the Colombian 
Government when I was there a year ago. In Panama, most of the 
issues have been addressed. There were some offshore banking 
issues that Panama was asked to address, and I want to hear in 
the testimony today how well they have done that. So I think we 
have a long way--we have come a long way, but I think there are 
still some unanswered questions.
    Chairman Ros-Lehtinen. Thank you so much. Mr. Rivera, my 
friend from Florida.
    Mr. Rivera. Thank you Madam Chair. We need to move forward 
with these free trade agreements. Colombia and Panama are two 
of the United States largest trading partners. The Department 
of Commerce estimates that 9,000 American companies trade with 
Colombia, most of which are small businesses, and many of which 
employ many of the constituents in my district in south 
Florida. While 90 percent of Colombian goods enter the U.S. 
duty free, American companies still pay tariffs for U.S. goods 
to enter Colombia. The Colombia FTA would eliminate obstacles 
and immediately boost U.S. exports to Colombia. By passing this 
trade agreement U.S. GDP would increase by roughly $2.5 billion 
and exports by over $1 billion creating thousands of jobs in 
the United States.
    So while the Obama administration continues to delay free 
trade efforts the European Union and Canada have both finalized 
trade deals with Colombia and Panama. The Chinese are also 
close to a trade agreement with Colombia. And over the last 5 
years, China has tripled their business with Colombia while we 
have lost 20 percent market share. It is time to end the 
rhetoric about free trade and time to pass these agreements 
with Colombia and Panama right away.
    Chairman Ros-Lehtinen. Thank you, Mr. Rivera. The gentleman 
from Rhode Island, Mr. Cicilline is recognized.
    Mr. Cicilline. Thank you, Madam Chairman. And I thank you 
for convening this hearing. And welcome to our witnesses. I am 
particularly interested in hearing the testimony of the 
witnesses today because I think one of the challenges we face 
in terms of thinking about trade policy more broadly is to 
ensure that the trade policy not only provides for free trade, 
but that it is fair and that it is enforced and that we are not 
putting American workers and American businesses at a 
competitive disadvantage.
    I think one of those key issues is about the sort of 
ability of our trading partners to comply with our trade 
agreements. And ranking member Mr. Berman has legislation 
specifically on the Chinese to enforce the requirements of 
trade and to address the issue of currency manipulation when 
they are not playing fairly.
    I think we can't talk about trade agreements unless we also 
talk about our ability to enforce and the fairness of the 
agreements as well as the free trade. So I welcome the 
witnesses and look forward to your testimony.
    Chairman Ros-Lehtinen. Thank you, sir. And now would like 
to yield to the chair of the Subcommittee on the Western 
Hemisphere, Mr. Mack of Florida.
    Mr. Mack. Thank you, Madam Chair. And I want to thank you 
for this hearing as well to give everyone an opportunity to ask 
questions or vent or whatever they have to do. But we all know 
that in our desire to create jobs in the United States these 
free trade agreements, especially Colombia and Panama, are job 
creators for the United States. That is not disputed. In fact, 
when you talk to the Presidents of Colombia and Panama, they 
will tell you too, hey, this is more of a win for the United 
States for creating jobs. And really, Madam Chair, the only 
thing holding up the free trade agreements, the only thing, is 
the President's unwillingness to send them to the Congress. And 
with that, I yield back.
    Chairman Ros-Lehtinen. Thank you, sir. Ms. Buerkle, the 
vice chair of the Subcommittee on Terrorism, Nonproliferation, 
and Trade.
    Ms. Buerkle. Thank you, Madam Chair. And thank you for 
calling this very important meeting. And thank you to our 
witnesses today for being here. Many of us came to Congress 
because of jobs in the economy and the need to get this economy 
back on track and create jobs for the American people. And I 
think the free trade agreements are very much the effort to 
accomplish that. However, having said that, I think it is very 
important that these agreements are fair to our businesses. So 
I look forward to hearing the testimony today and I yield back 
my time.
    Chairman Ros-Lehtinen. Thank you, ma'am. And I thank all 
the members for being here, especially because of our late 
votes last night. And now the Chair is pleased to welcome 
today's panel of witnesses. Mr. Myron Brilliant serves as the 
Senior Vice President for International Affairs at the U.S. 
Chamber of Commerce, where he is responsible for the Chamber's 
global business strategy. He previously served as the Chamber's 
Vice President for Asia focusing on the promotion of free trade 
agreements with Singapore, Australia and South Korea. In the 
International Affairs Division Mr. Brilliant pioneered the 
Chamber's country specific business initiative, which includes 
recently launched programs with Mexico and Israel. Thank you 
for being with us today.
    Mr. Luis Arguello is the chairman and CEO of DemeTech 
Corporation. Did I say that right?
    Mr. Arguello. DemeTech.
    Chairman Ros-Lehtinen. DemeTech Corporation, which is based 
in Miami, Florida and which exports medical devices and 
surgical sutures to over 80 countries. Mr. Arguello is the 
recipient of several prestigious awards, most recently 
including the 2011 Small Business Exporter of the Year Award 
for south Florida. Welcome and thank you for being with us 
today, sir.
    Mr. Drew Greenblatt is the president of Marlin Steel Wire 
Products, a manufacturer of steel wire baskets, wire forming 
and shield metal fabrication which exports to 35 countries. He 
also serves as an executive board member of the National 
Association of Manufacturers and is chairman of the Board of 
Regional Manufacturing Institute.
    Mr. Greenblatt has testified numerous times to Congress 
regarding business regulation and global competition. Thank 
you, sir, for being with us today.
    And next we will hear from Ms. Thea Lee, who is the deputy 
chief of staff at the AFL-CIO. She has previously served as the 
Policy Director and Chief International Economist at the AFL-
CIO and as an international trade economist at the Economic 
Policy Institute, as well as an editor at Dollars and Cents 
Magazine. Very clever.
    She is a frequent witness on Capitol Hill having testified 
before the House and the Senate. Thank you for being with us 
today as well. We welcome all the testimony. Your prepared 
remarks will be made a part of the record. Please feel free to 
summarize. Thank you.
    We will begin with Mr. Brilliant.

  STATEMENT OF MR. MYRON BRILLIANT, SENIOR VICE PRESIDENT FOR 
        INTERNATIONAL AFFAIRS, U.S. CHAMBER OF COMMERCE

    Mr. Brilliant. Good morning. I would like to extend my 
thanks at the outset for the opportunity to testify here today. 
Madam Chairwoman Ros-Lehtinen and Ranking Member Berman and 
other members of the Foreign Affairs Committee, it is a real 
pleasure to be here. The U.S. Chamber of Commerce the world's 
largest business federation, and as members of this committee 
understand, there is no higher priority facing our Nation today 
than creating jobs and putting Americans back to work, which is 
why the U.S. Chamber of Commerce strongly supports the passage 
and implementation of the free trade agreements with South 
Korea, Panama and Colombia. With more than 9 percent of the 
workforce unemployed the biggest policy challenge we face is to 
create 20 million jobs over the next decade to replace jobs 
lost in the recession and to meet demands needed in a workforce 
that has to grow.
    World trade and expanding U.S. access to global markets 
will play a vital role in reaching this goal. After all, 
outside our borders are markets that represent 73 percent of 
the purchasing power, 87 percent of its economic growth and 95 
percent of its customers, and already 50 million Americans are 
employed by firms that engage in international trade. One in 
three manufacturing jobs depends on exports and one in three 
acres on American farms is planted for hungry consumers 
overseas. A further note, I would say more than 97 percent of 
the quarter-million U.S. companies that export are small and 
medium-size firms.
    For companies large and small, the chief obstacle to 
reaching the goal of doubling U.S. exports by 2014, a goal set 
by President Obama and endorsed by the U.S. Chamber of 
Commerce, is the complex array of foreign barriers to American 
exports. Those barriers are alive and well. For example, 
Colombia's average tariff on imports to the United States is 15 
percent for manufactured goods, and even higher for 
agricultural products. By contrast the average U.S. tariff 
imposed on imports from Colombia is just 0.1 percent. And I 
have similar data on South Korea in my written testimony and 
Panama. The only way our Government, the U.S. Government, can 
entice a foreign government to open its market to American 
exports is really by negotiating free trade agreements to 
eliminate tariffs on a reciprocal basis. This is just what has 
been achieved in the three FTAs we are talking about today. All 
three are pro growth agreements that will create good American 
jobs, bolster foreign allies and confirm American's leadership 
on trade.
    FTAs have a proven record of boosting U.S. exports. On 
average, the record shows that U.S. exports to new FTA 
partners, and we have 17 partner countries, have grown four 
times as rapidly in the 3- to 5-year period following the FTA's 
entry into force as U.S. exports the world over the past 
decade. I want to underscore for the committee that the world 
isn't waiting for us to pass these three FTAs. For instance, in 
the first month after the entry into force with the European 
Union Korea free trade agreement on July 1st, EU exports to 
Korea had risen 36 percent from their level a year earlier. 
U.S. farmers have already lost $1 billion in sales to Colombia 
in the 2 years since that country implemented a trade deal with 
Argentina and Brazil. Overall at precisely the time we must 
work together to create American jobs, according to a study by 
the Chamber that has been widely circulated and widely adopted 
by the administration and.
    Members of the Congress, the United States risks losing 
more than 380,000 jobs and $40 billion in export sales if the 
United States continues to delay approval of our pending FTAs.
    In conclusion, the United States needs a laser-like focus 
on opening foreign markets. This fall, the Congress will have 
an opportunity to do that with the pending FTAs with Colombia, 
Panama and South Korea. Beyond these three FTAs, the Chamber 
has also supported the bipartisan trade adjustment advance 
assistance legislation negotiated by House Ways and Means 
Chairman Dave Camp, Senate Finance Committee Chairman Max 
Baucus and the White House. And we are pleased to see 
yesterday's vote in the U.S. Senate supporting TAA legislation. 
The Chamber believes the resulting bill in the Senate reflects 
a thoughtful compromise that preserves the more effective 
elements of the five-decade old TAA program and eliminates 
aspects that have proven less effective and significantly 
reduces its cost.
    Madam Chairwoman, at stake is sustaining the United States 
as the world's leading power. Our ability to exert positive 
influence around the world, our reputation and brand overseas 
and our best hopes for escaping high unemployment, massive 
deficit and exploiting entitlements require us to look at a 
more aggressive and forward looking trade policy. As we look to 
meet these demands, you can count on the U.S. Chamber of 
Commerce to stand tall. We are ready to work with members of 
this committee and with the Congress as a whole to strengthen 
our support for economic prosperity for job creation, and of 
course, for securing swift approval and implementation of the 
three outstanding pending FTAs. I look forward to your 
questions.
    Chairman Ros-Lehtinen. Thank you very much.
    [The prepared statement of Mr. Brilliant follows:]
    
    
    
                              ----------                              

    Chairman Ros-Lehtinen. Mr. Arguello.

 STATEMENT OF MR. LUIS ARGUELLO, SR., CEO & PRESIDENT, DEMETECH

    Mr. Arguello. Good morning. Thank you, Madam Chairman and 
all the members of the committee for the opportunity to testify 
before you. I am Luis Arguello. I am President and CEO of the 
DemeTech Corporation. DemeTech is a medical device manufacturer 
located in Miami-Dade. I am here because 90 percent of my 
revenues are generated through exports. Although we currently 
do not export to Panama and Korea, I ask myself, why? It is 
certainly not due to the lack of determination or sluggish 
performance of my company, as this is something I am always 
trying to increase. We are currently exporting to over 80 
countries such as Egypt, Saudi Arabia and Libya. We all know 
what is going on there. This is a field that we are trying to 
raise. And our Vice President last week went on a mission to 
Botswana and to Johannesburg. The reason why we do not export 
to this country is due to the extremely difficulty involved in 
exporting to these markets. The tariffs currently in place are 
extremely too high and they limit our competitiveness. In a 
global economy, the United States faces increasing competition 
for the jobs and the industries of the future. For example, 10 
years ago, the U.S. was the top exporter to Korea, but we fell 
from that position because of the stifling tariffs imposed on 
our products.
    The solution lies in passing the U.S.-Korea trade 
agreements, KORUS. Currently, Korea is the world's 11th largest 
economy and the United States seventh largest trading partner. 
Most important to DemeTech, Korea is the fourth largest market 
in the United States medical equipment exports. We strive to 
enter this market, but we are not possible to do so with 
tariffs of 5.4 percent all the way up to 50 percent. These 
tariffs undermine our competitiveness preventing a relationship 
with Korea that will greatly benefit my country.
    The free trade agreement will provide us with preferential 
market access to this fast-growing economy. It is extremely 
significant that we need to implement this immediately. Within 
5 years of implementation of the Korean KORUS, more than 90 
percent of tariffs on medical equipment exports will be 
eliminated. This will allow DemeTech to create more jobs in 
south Florida, jobs that Floridians desperately need. The 
United States Trade Commission estimated that the reduction of 
the Korean tariff and tariff quotas alone will add $12 billion 
to U.S. GDP and more than 70,000 jobs in America.
    We cannot afford to wait any longer because an FTP between 
Korea and the European Union took effect July 1st. This will 
give them preferential access and undermine our country's 
competitiveness. Korea is also negotiating agreements with 
Peru, Australia and New Zealand. Reclaiming this preferential 
access with Korea is crucial to the economy.
    Colombia is the second largest market for U.S. exports in 
Central and South America. I would like to give an example of a 
company in south Florida. This company is called Lindeco 
International. Lindeco is selling auto parts to Colombia. In 
Colombia, they are receiving an increase of 5 to 15 percent 
sales tariff. They estimate that if the Korean trade agreement 
is approved, then they will be able to reduce their prices 20 
percent. This will give them the opportunity to level the 
playing field with China with low quality equipment. They 
believe that by lowering the prices, then the Colombian 
consumers will purchase made-in-U.S.A. instead of purchasing 
made in China.
    Please, members of this committee, remember that we need to 
push made-in-U.S.A. This company is also very important because 
it is an example with Chile. They used to be a good leader 
supplier in Chile. When Chile passed a trade agreement with 
Japan, it took them 3 years to remove themselves from the 
Chilean market. Thanks that we passed it again a few years ago 
now, Lindeco is back into the market with Chile.
    Panama. Panama is the United States' 7th largest 
manufacturing export market in Central and South America. 
Strengthening relationship with Panama is an integral move on 
our part because of the Panama Canal extension, a $5.2 billion 
project that will double its shipping capacity. Panama has 
signed a trade agreement with Canada and association agreement 
with the European Union. Without the U.S.-Panama Trade 
Promotion Act, Canadian and European exports of machinery and 
transportation equipment for the canal will have a serious 
advantage over United States suppliers. The TPA will guarantee 
U.S. firms the opportunity to participate on a competitive 
basis, and this is a prospect we cannot risk to lose. In 2009 
the U.S. Medical Equipment Center----
    Chairman Ros-Lehtinen. Thank you. If you could just wrap 
up, Mr. Arguello.
    Mr. Arguello. Okay. Medical Equipment employed over 274,000 
workers. We are proud to be part of that. We request that you 
pass this agreement so we can hire more people.
    Chairman Ros-Lehtinen. Thank you so much.
    [The prepared statement of Mr. Arguello follows:]
    
    
    
                              ----------                              

    Chairman Ros-Lehtinen. Mr. Greenblatt is recognized for 5 
minutes.

STATEMENT OF MR. DREW GREENBLATT, PRESIDENT, MARLIN STEEL WIRE 
                            PRODUCTS

    Mr. Greenblatt. Good morning, Chairman Ros-Lehtinen, 
Ranking Member Berman and members of the committee. I am Drew 
Greenblatt, President and Owner of Marlin Steel Wire. I am 
particularly pleased to testify today as a member of the 
Executive Board of the National Association of Manufacturers. 
Marlin is a leading manufacturer of custom wire brackets, wire 
forms and precision sheet metal fabrications, all produced 
entirely in the United States in our factory in Baltimore City, 
Maryland. Our customers come from the pharmaceutical, medical, 
industrial, aerospace and automotive industries. We export to 
35 countries. Twenty-five percent of Marlin Steel employees are 
mechanical engineers or designers. They come up with innovative 
ideas and that is what propels our success at Marlin, that is 
our secret sauce.
    Like so many manufacturers, my company succeeds through 
innovation, investment and the hard work of its dedicated 
employees. When I bought the company in 1998, we did 800 grand 
in sales with only 18 workers. Last year was our most 
successful year yet. We did $13.9 million in sales. Today 
Marlin Steel employs 34 people, and we are up 39 percent year 
to date, largely because of exports. Manufacturing means jobs. 
We pay well. The average factory in America pays $73,000 a 
year. Each of our employees has great health insurance and we 
pay for 100 percent of their college education. We have gone 
over 1,000 days without a safety incident. Manufacturing 
creates solid middle class jobs. American manufacturers of all 
sizes need an international trade policy that opens global 
markets.
    Congress must enact the pending trade agreements with 
Colombia, Korea and Panama as soon as possible, and the 
administration must negotiate additional agreements in the Asia 
Pacific area and elsewhere. We need more prospects so we can 
grow. Tariff and market access barriers in overseas markets 
continue to present challenges to us and other American 
exporters. For small businesses to export more foreign trade 
barriers must come down. That can only happen if we get more 
trade agreements that will help level the playing field, and we 
have got to get rid of these barriers. Opening markets increase 
my business. One of Marlin Steel's core niches is selling 
custom stainless steel wire material handling baskets to 
automakers. And I want to sell these custom wire baskets to 
Korean automakers.
    The U.S. Korea free trade agreement will let us compete on 
a level playing field with wire basket suppliers in Korea. But 
now that EU Korea FTA is in place, I am up against a 
significant disadvantage with one of my direct competitors in 
Germany. He can sell his products with no tariff to Korean 
clients, but I still have a prohibitive 8 percent tariff when I 
sell my baskets into this market. That means jobs in Baltimore 
City. Pass the U.S. Korea free trade agreement and I can 
compete. And I will win in Korea. And that means I can hire 
more out-of-work employees and create more jobs in Baltimore.
    President Obama wants to double trade in 5 years. That is a 
great idea. This is a way we can make it happen. U.S. trade 
representative Ron Kirk visited my factory and saw our robots 
and met our people. He believes in Korean free trade agreement. 
With the passage of these three pending trade agreements, our 
company and many thousands of other small and medium-size 
companies will grow because we will have more opportunities. 
Removing these trade barriers with Colombia, Korea and Panama 
will level the playing field for American workers, businesses, 
farmers and service providers.
    I want our company and our employees to grow and prosper. 
To achieve that I have to sell into foreign markets. That is 
where the growth is. Ninety-five percent of the world's clients 
are overseas. I am here to ask you help me achieve my goals. 
Our free trade agreements have a proven track record. American 
manufacturers are already running a trade surplus with these 
countries in excess of $20 billion a year. With more 
agreements, we can run that surplus even higher and we can grow 
more jobs. Thank you, Chairman Ros-Lehtinen.
    Chairman Ros-Lehtinen. Thank you Mr. Greenblatt, a 
manufacturer. Go figure. Incredible. In the U.S. and still 
growing. Wow.
    [The prepared statement of Mr. Greenblatt follows:]
    
    
    
                              ----------                              

    Chairman Ros-Lehtinen. Ms. Lee, thank you so much for being 
here. We look forward to your testimony. You are recognized.

   STATEMENT OF MS. THEA LEE, DEPUTY CHIEF OF STAFF, AFL-CIO

    Ms. Lee. Thank you so much, Madam Chairwoman, Ranking 
Member Berman, members of the Foreign Affairs Committee. It is 
a pleasure for me to be here this morning, and I appreciate the 
opportunity to testify on behalf of the 12.5 million working 
men and women of the AFL-CIO on this very important issue. As 
Myron Brilliant said, job creation is the number one priority 
for the AFL-CIO. It is something the Chamber of Commerce and 
the AFL-CIO share, the goal of creating jobs and addressing the 
very high unemployment and underemployment that we have. We 
also support and we are delighted to hear about successful 
manufacturers in the United States and successful exporters in 
the United States.
    However, we do have a difference of opinion about how 
exactly we are going to get there and what role the free trade 
agreements that are before the Congress will play in terms of 
job creation. We would be delighted if it were as easy as 
signing free trade agreements to get the tens or hundreds of 
thousands of jobs that have been promised by the proponents on 
both sides of the aisle. But we do not share the optimism 
expressed here, that these trade agreements will generate or 
support the promised jobs. And we base that on three separate 
facts. First is our experience with past free trade agreements, 
including NAFTA, CAFTA and the big debate, while not a free 
trade agreement precisely, but when China entered the World 
Trade Organization. The same kinds of arguments, the same kind 
of economic models that were made at that time.
    Second, it is our view that the economic models that are 
being cited today and in this debate have an extremely poor 
predictive record. We should not be citing those numbers as 
though they are some sort of factual basis for moving forward 
because they rest on a very, very shaky foundation indeed.
    Third, our analysis of the three particular agreements that 
are in front of us leads us to a very different conclusion 
about what the likely job impact will be on the United States. 
One of the key things that we found in the debate over trade 
agreements has been a conflation of the difference between 
trade flows and trade barriers and investment strategy. And 
that is one of the reasons that so many of the economic models 
have completely failed to meet the mark, is that they look only 
at the reduction in tariffs, which is important. Reduction in 
tariffs and the opening of markets for U.S. products is 
important, but it is by far not the only factor that will 
determine what the ultimate outcome is in terms of trade flows, 
investment location decisions and ultimately, the job impact on 
the United States.
    We certainly do believe that the United States should 
engage vigorously in the global economy, but we have a 
fundamental disagreement over what kinds of trade policy we 
need to achieve that. And our view is that our current trade 
policy is falling very far short. If you look at the records in 
terms of growing trade deficits, growing wage inequality, 
growing poverty and stagnant wages here in the United States 
and the destruction, to a large extent, the loss of many, many 
manufacturing jobs and the middle class of the United States, 
our view is that our trade policy overall has undermined and 
not supported the creation of good jobs here in the United 
States.
    The ITC models, I think, are very important because those 
numbers are the ones that are cited most often in support of 
the three pending free trade agreements. And the ITC has an 
absolutely atrocious record in terms of predicting the outcome 
of past trade agreements. They have never actually been right, 
and often they are wrong in so many orders of magnitude and in 
terms of the sign as well that I really believe that we need to 
look more closely. The ITC has missed the investment shift. And 
I gave one example in my written testimony about NAFTA. The two 
sectors that the ITC predicted would be the biggest employment 
winners from NAFTA were apparel and consumer electronics. And 
that was based on the fact that the U.S. tariffs were lower 
than Mexican tariffs. And so the same argument that we have 
heard here today that if you take all those tariffs down it is 
a no-brainer that the United States must, of course, come out 
ahead. But that wasn't the case, because of course the United 
States corporations didn't have an intention of exporting a lot 
of apparel and electronics to Mexico from the United States. 
Instead, they moved their factories and those ended up being 
two areas of the largest job loss.
    In the case of South Korea, it is our judgment that the 
proposed FTA puts at risk tens of thousands of U.S. jobs, 
mainly in the manufacturing sector. The trade agreement lowers 
barriers in both countries, which is an improvement. But in our 
view, Korean companies and the Korean Government are more 
likely to take advantage of lower tariffs to increase Korean 
market share in the United States than are U.S. companies to do 
the same in Korea.
    Our negotiators have never been able to successfully 
address the myriad of nontariff barriers blocking U.S. access 
to the Korean domestic market, and it is not clear that this 
agreement changes that basic reality.
    Furthermore, our negotiators did not build in any 
safeguards with respect to currency manipulation, even though 
this has been a problem in U.S.-Korean trade in the past. It 
was certainly a problem in the case of NAFTA.
    The agreement contains unacceptably weak rule of origin 
provisions, as Congressman Sherman said, and does too little to 
protect core workers rights in both countries. And we 
appreciate the improvements in auto market access the Obama 
administration was able to secure, but there are many other 
sectors that are also at risk.
    So looking forward, let me just say quickly, in conclusion, 
that if you look at the trade challenges that we face we do 
agree with Congressman Berman that we need to promote exports 
much more vigorously than we have in the past and we support 
the idea of an export promotion policy. We also support and we 
think that in terms of the potential job impact, we support 
China currency action by both the House and the Senate. And if 
you look at the $272 billion trade deficit with China this 
issue is much more important to American jobs and to exports 
and to domestic----
    Chairman Ros-Lehtinen. Thank you, Ms. Lee.
    [The prepared statement of Ms. Lee follows:]
    
    
    
                              ----------                              

    Chairman Ros-Lehtinen. Thank you to all of our witnesses 
for excellent testimony. We will now start the question-and-
answer period for 5 minutes each per member. Our failure to 
move forward on these free trade agreements has already had a 
negative real world impact. To take only one example that 
really hits close to home, the higher duties on imported 
flowers from Colombia have put great financial pressure on 
small businesses, such as florists. How much do you estimate 
that U.S. businesses have already lost during this unnecessary 
delay? And also, if I could ask a question related to China.
    We know how aggressive the EU has been, we know how 
aggressive China has been, all of our trading partners have 
been eroding our U.S. market share. In Colombia China has, 
since 1993, Colombia was China's 22nd largest trading partner, 
now they are second. That is quite a jump. And how important is 
this agreement to preventing further damage to U.S. interest in 
Colombia? And I would start with Mr. Brilliant.
    Mr. Brilliant. Well, first of all, thank you for the chance 
to respond to those questions. I have already said that in the 
case of Colombia we have seen a loss of about $1 billion in 
sales for our farmers since Colombia initiated their trade 
agreements with Argentina and Brazil. So I think it has had a 
direct impact already. How much we have lost in manufacturing 
in other areas is unclear, but no question.
    And then, of course, the stats have also been cited with 
respect to the European agreement with South Korea. I noted the 
36 percent figure where Europe has exported 36 percent more in 
July than they did the previous July. Our increase is only 3 
percent, so we are losing market share in South Korea at this 
time. I would also say that every month that goes by, we are 
going to lose sales, and once those sales are lost, it is hard 
to get them back. And so the quicker we move to ratify these 
FTAs, the better off we are. The data demonstrates that we are 
going to find ways to export increasingly when you lower 
tariffs and when you eliminate nontariff barriers.
    With respect to China, look, I share the concern of many in 
this room, including Thea Lee, that we have an unfair trading 
relationship with China, which is why we believe we have to 
tackle the issues with China. But sitting on the sideline on 
free trade agreements is not the answer. If we fear China's 
rise around the world, economic rise, then we need to address 
that, one, in our relationship with China, but two, by 
expanding trading opportunities for our companies.
    Chairman Ros-Lehtinen. Thank you. Mr. Greenblatt, and then 
we will go Mr. Arguello.
    Mr. Greenblatt. The way to grow jobs is to sell more, the 
way you sell more is if you have more clients, more prospects. 
If you give me 100 million more people to sell to, and that is 
the population of these three countries, 90 million, I am going 
to sell more baskets, I am going to hire more people that are 
unemployed in Baltimore City. Regarding China, they are 
manipulating their currency. It is out of control. It is wrong. 
We shouldn't tolerate it. The Mexican peso floats, the Canadian 
dollar floats. These are fair trading arrangements, these are 
good things. The Chinese currency should not be manipulated 
like that, and I think we want trading partners that let their 
currency flow.
    Chairman Ros-Lehtinen. Thank you, sir. Mr. Arguello.
    Mr. Arguello. Madam Chair, I compete with China all over 
the world. All over the world, the Chinese situation is 
something that we have to face. As a representative of the 
medical device industry, we strive in made-in-U.S.A. product 
with a certain quality that China cannot deliver to the rest of 
the world.
    Nevertheless, having said that, price is an incentive in 
purchasing and in competition. In many markets throughout the 
world, we are constantly being requested a 10 or 15 percent 
discount on our rates on our prices in order to get the tender 
or to get the job, to get the contract. In the medical device 
industry, 10 to 15 percent is not a margin that we can freely 
give. If the tariff imposed on that country is on that same 
rate between 5 and 15 percent I have a winner right there 
because that is the discount that I am being asked, especially 
with a market like Korea and a market like Colombia. So once 
again, when we go out on the medical device industry we go 
made-in-U.S.A., we can guarantee a life, we can guarantee we 
have a first-class product. That is what the world wants. So 
the elimination of these 5, 10, 15 percent will give us a 
winner. For this reason I am not all that concerned with China.
    Chairman Ros-Lehtinen. Thank you very much. And I hope that 
Mr. Berman is right that this will be the last congressional 
hearing ever. And because we will be----
    Mr. Berman. Ever?
    Chairman Ros-Lehtinen. On this issue before we go to markup 
and before we pass these bills. Mr. Berman is recognized for 
his questions.
    Mr. Berman. Well, thank you very much, Madam Chairman. If, 
in fact, the KORUS agreement allowed South Korea to claim that 
products or components for products manufactured in the Kaesong 
industrial complex could be deemed as South Korean, and 
therefore come into this country notwithstanding our trade 
sanctions policies, I would, on that basis alone, without 
regard to any other issue, think this was a fundamentally 
flawed agreement. But the fact is that is not the truth; that 
is a bogus argument.
    Mr. Royce is right. Unless the executive branch and the 
Congress decide that notwithstanding our trade sanctions, 
notwithstanding North Korea's nuclear weapons program, 
notwithstanding its proliferation policy, notwithstanding its 
slave labor policies, the executive branch was going to go 
along with a South Korea decision and allow this to be 
considered a South Korean project they would have to change the 
law. Congress would have the final word. Arguments to the 
contrary are bogus. Whatever one's views on these agreements or 
on the foreign policy implications of the agreements, we should 
not hang on a bogus argument to justify our positions. There is 
no need to. There are good cases to be made on both sides of 
this issue.
    Ms. Lee, I would like to just turn in my remaining time to 
your interesting distinction between trade flows and investment 
flows. I think you made it quite clear. You didn't say, but 
implied, that generally other countries' tariffs on our 
products are, for the most case, higher than our tariffs on 
their products, and therefore agreements which simply reduce 
tariffs would promote more exports and be in our interest. But 
then you said something I thought is the real point here: Look 
at what they do in the context of investment flows. The 
disadvantages to America from the enhanced ability to invest in 
manufacturing by American companies and American investments in 
these countries end up quite offsetting the economic benefits 
of the lower tariffs. Is that a fair synthesis of your much 
more detailed and elaborate explanation?
    Ms. Lee. Yes, Congressman, that was the point I was trying 
to make, which is that we focus a lot on the trade barriers, 
the tariff barriers coming down. But, in fact, a lot of the 
motivation for some of these trade agreements is in the 
investment chapter and some of the other chapters that make 
U.S. investment overseas much more secure, give extraordinary 
protections and rights to investors, including the right to sue 
governments over regulations they don't like or that impinge on 
their profits or their expected profits. And so that change in 
reducing the riskiness of investment overseas is a key piece. 
We tend to have, and I would argue in this country a somewhat 
dishonest conversation about trade agreements because the whole 
discussion focuses on opening markets, and there is nothing 
wrong with opening markets.
    The labor movement is completely in favor of opening 
markets and selling more products overseas. But we have 
conflated this discussion by also putting into play issues that 
are important to multi-national corporations that they lobby 
hard to include these extraordinary investment protections. A 
lot of small domestic businesses and some small farmers are 
actually on the same side as the labor movement on these 
issues.
    Mr. Berman. Let me just interject here to ask, Mr. 
Brilliant, what is your response to this, because we certainly 
observe that following these agreements, there is a great deal 
of investment in foreign manufacturing by Americans to produce 
products to come into the United States.
    Mr. Brilliant. Well, it is a complex question, but let me 
try to----
    Mr. Berman. You've got 45 seconds.
    Mr. Brilliant. First, manufacturing output in the United 
States has grown 70 percent since 1990. We have had a decline 
in employment in the manufacturing sector, but not an output. 
That is an efficiency issue as much as it is anything else. The 
second point I would make is we want to encourage foreign 
investment as well as investment by U.S. companies in our 
economy. That creates jobs, it is good for our country, but 
there are tax and regulatory challenges to that front, not 
trade challenges.
    And the third point I would make is that, look, when we 
produce overseas, only about 10 percent of what we are 
producing overseas comes back to the United States, so it is 
for selling into these markets which are growth markets for our 
companies. So we could talk to you at length that investment is 
not the challenge that she is trying to describe in the context 
of these FTA agreements, it is an opportunity.
    Chairman Ros-Lehtinen. Thank you very much. Thank you, Mr. 
Berman. I would like to recognize Mr. Duncan, who will then 
recognize another one of our colleagues.
    Mr. Duncan. Thank you, Madam Chairman. I would like to 
yield my complete 5 minutes to the chairman of the Trade 
Subcommittee, Mr. Royce.
    Chairman Ros-Lehtinen. Mr. Royce is recognized.
    Mr. Royce. I thank you, Mr. Duncan. I wanted to make a 
couple of points. And the one I started with is one that I 
don't know that we have really focused on as we go back to the 
Kaesong issue. And that is, the United States has a sanctions 
regime in place against North Korea, so any imports from North 
Korea require U.S. Government approval. And according to CRS, 
``this restriction includes finished goods originating in North 
Korea as well as goods that contain North Korean-made 
components.'' That sanctions regime is in place here in the 
United States. Second, any inclusion of Kaesong-produced goods 
would require congressional approval. I just don't see many 
votes for that here in the House; I don't see any. I don't 
support that. Third, when this bill came up originally, we went 
the extra mile because for those of us that are trying to close 
Kaesong. We wrote the administration not to include Kaesong 
when the agreement was being negotiated and it was excluded 
from the agreement.
    So on every front there are those barriers. But I did want 
to make the point that we recently had an amendment that I 
authored on the whole issue of North Korea. This passed the 
House unanimously as part of the agricultural appropriations 
bill that would call for the administration not to deliver food 
aid to North Korea.
    Now, that pull for food aid does help North Korea. This 
argument is a red-herring argument. But the food aid that's 
delivered into North Korea does get into the hands of the 
regime. I would hope that those that are worried about 
bolstering North Korea focus on a reality, and that is, we are 
in danger of helping North Korea, but it is through that food 
aid program.
    Another point I wanted to make, and I would just ask Mr. 
Brilliant to comment on this, is the fact that the tariffs that 
are going to be lowered are primarily tariffs that advantage 
the U.S. market, but is going to bring more, make it possible 
for us to ship more goods and services into the Korean market.
    Can you discuss how KORUS lowers tariffs more for U.S. 
goods than Korean goods? Could you walk us through that?
    Mr. Brilliant. Well, that is an absolutely correct point. 
On average, our agricultural imports into South Korea face 
about a 54 percent applied tariff. Certainly our tariff rates 
in the United States are much lower than that. Secondly, the 
average tariff rate on manufactured goods going into South 
Korea is about 6.2 percent. Again, we are much lower than that 
here in the United States. So where we see a reduction or 
elimination, which is what is going to happen from the 
implementation of the free trade agreement, we are going to see 
an increase in trade there. And we have already seen 
unfortunately a displacement with Europeans coming in and 
selling there. South Korea is already our fourth largest beef 
market.
    Let's extend that further and let's find a way to continue 
to grow trade. I want to make one point on Kaesong because it 
has been said the President of the United States issued an 
executive order saying we are not going to import anything 
illegally. The Congress has jurisdiction over this issue as 
well. But let's not forget the South Koreans don't want to do 
that either. The South Koreans have had two attacks by North 
Korea in the last 18 months. It is not in their interest to 
encourage it, and it is not in the interest of the U.S. 
business community either. So let me put that on the record.
    Mr. Royce. I appreciate that. I want to go to another 
point. Asia accounts for half of the world's economy. The U.S. 
has underwritten security in that region while Asia has pursued 
economic integration. As they say in Asia, ``The business of 
Asia is business.'' The U.S. Chamber looks at this and they see 
168 trade agreements in force in Asia and we are a party to 
only two of those, as I mentioned earlier. We are a party to 
Singapore and Australia. What does that mean for our economic 
competitiveness? What does that mean for our economic future? 
As you have laid out, what could be adjusted by this Korean 
trade agreement?
    Mr. Brilliant. Congressman, as you know well, we can't 
stand still, global trade is not standing still, so we have got 
to expand beyond these three FTAs. That is why the TransPacific 
partnership is important, that is why the U.S. Chamber has 
introduced ambition in the EU-U.S. partnership, and that is why 
we do need to hold accountable partners to play by the fair 
games of international trade. We need free and fair trade and 
we need to expand to the markets.
    Chairman Ros-Lehtinen. Thank you so much. Thank you Mr. 
Duncan and Mr. Royce. Mr. Sherman, the ranking member on the 
Subcommittee on Trade is recognized.
    Mr. Sherman. The first time I had a hearing on trade U.S. 
Trade Representative Barshefsky came in and testified that if 
we could find a deal that increased our exports by $1 billion 
and increased our imports by $2 billion, that would be a $3 
billion win. Those who constantly bleat exports mean jobs 
should at least follow up with imports cost jobs. Now, my 
colleague from Virginia who has left talks about trade 
adjustment assistance. Let's find a single Republican Member of 
this House that will say that we can appropriate money for 
trade adjustment assistance without cutting money on health 
care, education and other domestic priorities. We will have to 
divert the money that we are spending to meet the challenges 
our families face now in order to deal with the additional 
challenges that the Korea and other free trade agreements would 
bring.
    The old days of trade adjustment assistance coming from 
magic money, that is gone. And any Democrat that talks about 
trade adjustment assistance needs to find a Republican that 
says it won't mean cuts in health and education. Now, some 20 
minutes has been spent in this room criticizing my opening 
statement. Let me respond. I said goods that are 65 percent 
made in China come into this country duty free under the 
agreement. None of my critics disagree at all. I say that the 
35 percent finishing work done in South Korea doesn't have to 
be done by South Korean workers, it can be done by Chinese 
guest workers living in barracks. Nobody disagrees. Let the 
record show.
    And finally, I say that while those Chinese guest workers 
have to be paid the South Korean minimum wage, the employer can 
deduct for barracks living and bring that wage down to 
virtually nothing. None of the critics have a response. Then I 
talk about goods 65 percent made in North Korea. Leave Kaesong 
aside. Any part of North Korea. And we are told, well, American 
executive orders prevent us from allowing those goods into our 
country. True. The rest of my argument was ignored. Once we bar 
those goods at our ports we are in violation of the agreement. 
What happens when America is found or is threatened with 
successful sanctions because we are in violation of our trade 
agreements? The executive branch backs down. That is what 
happened with the Iran Sanctions Act. The European oil 
companies were in violation, the Europeans threatened us with 
WTO, and even to this day, not a single European oil company 
has faced the slightest sanction under the Iran trade 
agreement.
    We have seen this movie before. We know that the executive 
branch will back down. But let's say they don't. Let's say they 
have backbone. Let's say the bill that I have co-sponsored with 
the chairwoman's bill actually passes and becomes law. Then we 
will have the backbone to violate this agreement, the Koreans 
can then impose sanctions and take away all the benefits. They 
may even target Mr. Greenblatt's firm and say his wires are 
among those sanctions.
    So any concession the South Koreans made in the agreement 
can then be taken back. No disagreement with any of that. It is 
not whether the goods come in. That would have to be decided by 
the executive branch or if we pass the bill by Congress. It is 
whether we face sanctions when we bar those North Korean goods. 
Under the rules of origin, the South Korean seller has a right 
to bring in the goods, 65 made in North Korea, 35 made in South 
Korea.
    Now let's talk about these special labor camps. What does 
annex 22(b) say? None of my critics actually quote the language 
or cite the provision. Legislative approval is required. Now, 
what does that mean? Well, for the Libya action legislative 
approval meant talking to key congressional leaders. Sometimes 
congressional approval means asking Congress whether they want 
to pass a resolution of disapproval once a regulation is 
adopted. So I asked the administration and the proponents, why 
not have clarifying language on this. The answer was we will 
give you clarifying language in a press release but nothing 
legally binding. Why? Because in Korea, they are telling their 
legislature that this will be handled and Kaesong goods will 
come in and South Korean companies will make billions of 
dollars paying $8 a month to workers and selling into the U.S. 
market.
    So I think that most of what I said in my opening statement 
was not even criticized at all in the 20 minutes taken by my 
critics. Sixty-five percent China, 35 percent Chinese workers.
    Chairman Ros-Lehtinen. Thank you, Mr. Sherman. Mr. 
Rohrabacher is recognized, the chairman of the Subcommittee on 
Oversight and Investigations.
    Mr. Rohrabacher. As I said in my opening statement I will 
be very interested in finding out who is correct in their 
assessment, and let me just note that Mr. Sherman over the 
years, I have found that he is very diligent and very 
responsible, so I pay attention to him when he says something 
like this, and I want to know who is right, whether Mr. Sherman 
is right or Mr. Royce is right. Maybe our friend from the 
Chamber can tell us, and then I will ask our friend from Labor 
to tell us. Is Mr. Sherman right that if you have items that 
are coming to us from South Korea, that are made 65 percent in 
North Korea, that they are not barred from entry into our 
market.
    Mr. Brilliant. Again, I am going to rely on what the 
administration says, which is that they have no intention of 
allowing any importation of goods----
    Mr. Rohrabacher. I don't care about the intention. 
Intention is the biggest weasel word.
    Mr. Brilliant. I am not responsible obviously for it.
    Mr. Rohrabacher. No. In your reading of the agreement----
    Mr. Brilliant. My reading of the agreement is that there 
will be no importation of goods or services or technology from 
North Korea.
    Mr. Rohrabacher. Permitted.
    Mr. Brilliant. Permitted.
    Mr. Sherman. Will the gentleman yield.
    Mr. Rohrabacher. I certainly will.
    Mr. Sherman. My point is that if we stick to our guns the 
way the administration intends then we will be subject to 
sanctions by the South Koreans and we will lose much of the 
benefit of the agreement.
    Mr. Rohrabacher. Is that correct?
    Mr. Brilliant. His point is do we have an enforcement 
mechanism, not whether or not the agreement itself allows for 
the importation.
    Mr. Rohrabacher. No. If we stop those goods will we then be 
in violation of our understanding of our current status quo 
agreement with Korea?
    Mr. Brilliant. I am going to let the U.S. Government 
respond to this. I think that is a good question for the U.S. 
Government, not for the U.S. Chamber of Commerce.
    Mr. Rohrabacher. I think that when we are asking how policy 
is going to affect our economy I think you are shirking your 
responsibility, just like the Chamber shirks its responsibility 
in trying to deal with the Chinese when they manipulate the 
currency so we have a flow of wealth into a Communist 
dictatorship like China. So listen, I like the Chamber a lot 
for a lot of what you do, but sometimes on these trade issues 
we end up seeing certain business interests not the American 
people being represented by what you are saying. As far as I am 
concerned what is happening with China has been a disaster for 
the American worker. Three million of them are out of jobs 
because of this. What about Labor, do you agree with what Mr. 
Sherman is saying?
    Ms. Lee. I think there is a lot of troubling uncertainty in 
the agreement about the treatment of goods from Kaesong and 
that some of that is deliberate on the part of the South Korean 
Government. The agreement does not actually mention products 
from North Korea. It doesn't say they can or can't come in. I 
think that creates a problem. This is a problem that 
Congressman Sherman talked about. It is certainly the U.S. 
Government's intention not to allow products from North Korea 
to come in, and we have sanctions policy, that would, as was 
quoted by Mr. Royce----
    Mr. Rohrabacher. Well, intention. But intention----
    Mr. Berman. Will the gentleman yield.
    Mr. Rohrabacher. Excuse me, but I am trying to get to the 
bottom of it. Intention is not as important as what the outcome 
will be. Mr. Sherman will certainly agree that intention, you 
know, intention, what is the actual outcome? Is it that we are 
going to be put into a position that we will have to act 
because we are then in violation of another agreement with 
South Korea?
    Mr. Sherman. Will the gentleman yield.
    Mr. Berman. Will the gentleman yield.
    Mr. Rohrabacher. I will yield to Mr. Sherman.
    Mr. Sherman. Under an agreement a product that is 65 
percent made in North Korea but 35 percent made in South Korea 
is a South Korean good.
    Mr. Rohrabacher. Correct.
    Mr. Sherman. And has a right to come into the United 
States.
    Mr. Rohrabacher. Is that your reading of this agreement?
    Mr. Brilliant. That is not my reading, but it is not my 
call. It is the administration to defend or describe the terms 
of the rules of origin.
    Mr. Berman. Will the gentleman yield.
    Mr. Rohrabacher. Yes I will.
    Mr. Berman. Part of the agreement is an annex that both 
parties have agreed to. To deem the Kaesong industrial complex 
a South Korean outward processing zone on the Korean peninsula, 
that is what this annex 22(b) addresses, it sets a process out 
where both sides have to agree. And you are right, the 
intentions are not the answer, it is what is the law and the 
rules. And for the U.S. to agree to that, Congress would have 
to sign off. It is in our power to stop that from happening.
    Chairman Ros-Lehtinen. Mr. Rohrabacher is reclaiming his 
time.
    Mr. Rohrabacher. Let me just suggest I am listening very 
closely, and in principle I would like to support the free 
trade agreement. I believe in free trade between free people, 
but if Mr. Sherman is correct this isn't going to work to the 
benefit of us and it may work to the benefit of North Korea, a 
vicious dictatorship.
    Chairman Ros-Lehtinen. Thank you very much. Thank you, Mr. 
Rohrabacher, whose time has expired. And I am pleased to yield 
5 minutes to the gentleman from New Jersey, Mr. Sires.
    Mr. Sherman. Mr. Sires, could I have 15 seconds of your 
time?
    Mr. Sires. Absolutely.
    Mr. Sherman. Mr. Berman was talking about the Kaesong 
Industrial plan. We were earlier talking about all of North 
Korea, any good made anywhere in North Korea whether we do 
anything special with Kaesong or not, if it is 65 percent made 
in North Korea, 35 percent made in South Korea it counts as a 
South Korean product under this agreement. I yield to the 
gentleman from New Jersey.
    Mr. Sires. Well, I will be much simpler than that. Are you 
comfortable with the reforms that Panama has made in its 
financial institutions for America to deal with Panama?
    Mr. Brilliant. The banking tax issues have been addressed 
to the satisfaction of the administration and to the 
satisfaction of the business community.
    Mr. Sires. And I was just wondering, here, you know I know 
there have been a lot of changes in Colombia, because I have 
been going there for many, many years, and obviously the labor 
issue is still very pronounced. Can you tell me what other 
changes they could possibly make to continue so we can support 
this?
    Ms. Lee. Thank you so much for the question, Mr. Sires. 
There have been some improvements in Colombia, there is no 
question about it. The new administration has been really 
forthright about putting in place more protections, more 
inspectors and some more provisions. The Labor Action Plan that 
was negotiated several months ago contain some really important 
provisions. Our issue is that the timing is still problematic. 
It is too soon to say whether the action plan is working. We 
would like to give it more time.
    Right now, actually the first couple of months have not 
been that encouraging. We are in constant contact with our 
trade union counterparts in Colombia. And first of all, the 
number of murders since the action plan was put in place has 
actually increased. There have been 22 murders so far this year 
of trade unionists that were active. And of those, 15 since the 
action plan was put in place. We have also understood that 
there are some real implementation problems with the action 
plan, that some of the proposed meetings and legislative 
changes have not been fully implemented, that the protection 
schemes are not fully in place, that there have been death 
threats that have been not acted upon. So we still remain very 
concerned about the situation for trade unionists in Colombia 
at this date.
    Mr. Sires. But progress has been made. And my concern is 
here we have a country that has been a friend of the United 
States, they are signing all different agreements throughout 
the world, including places like Canada who we certainly 
respect their labor laws, and certainly Europe, and I think 
just the longer we wait, the worse it becomes for us. Like I 
said, I haven't heard anything yet for me to support the Korean 
trade agreement, but I have seen the changes that Colombia has 
made.
    There are about 200,000 Americans, I think, living in 
Panama today. I don't know if anybody can agree with me with 
that. Somebody told me that figure. I haven't really checked 
it. But these countries are our partners. And the longer we 
wait, the less jobs we create here. I mean, Mr. Arguello wants 
to compete, we want to create jobs here. At least the intent of 
Colombia has been good in terms of trying to deal with the 
issues that are concerning labor. Even the Vice President is a 
labor leader.
    Ms. Lee. Well, 22 assassinations so far this year do not 
give us the confidence that this is a place that is safe for 
workers to exercise their basic human rights at this time.
    Mr. Sires. I agree with you 100 percent, but they have 
come, I think, a long way from where they were.
    Ms. Lee. Can I just state, the argument that we would make 
is that once the agreement is passed we lose a certain amount 
of leverage in this discussion. And that has been something we 
have heard from the Colombian Government officials privately.
    Mr. Sires. Why would we lose leverage? Wouldn't we have 
more leverage if we have a partner?
    Ms. Lee. Once the vote takes place by the Congress, then a 
lot of the pressure is taken off. And that is something we saw 
certainly in Central America and Guatemala where the murders of 
trade unionists increased after CAFTA.
    Mr. Brilliant. If I could just briefly comment. First of 
all, the President of the United States has said that there has 
been progress on the action plan that the President and 
President Santos agreed to. But not just the President of the 
United States, the International Labor Organization has said 
that. And some of the leading organizations in Colombia, 
including Colombia's national labor school, have endorsed it. 
So let's take their word at it as much as anyone else.
    The second thing is the murder rate in the District of 
Columbia is seven times that of the murder rate that we are 
talking about in Colombia. And so let's be in perspective here 
that things have improved significantly in Colombia. And I 
would just say that there is more, as Thea Lee knows, labor 
unions have grown significantly.
    Chairman Ros-Lehtinen. Thank you very much. Thank you, Mr. 
Sires. And Mr. Rivera of Florida is recognized for 5 minutes.
    Mr. Rivera. Thank you, Madam Chair. My first question is 
for Ms. Lee regarding the same issue of the labor leaders in 
Colombia. Have you talked, or your organization, any 
representatives from your organization, spoken with or met with 
Colombian labor leaders on this issue?
    Ms. Lee. Thank you so much for the question, Mr. Rivera. In 
fact, we talk to Colombian labor leaders probably every day or 
every week about this issue. And they are not monolithic, just 
like the labor movement in the United States is not monolithic.
    Mr. Rivera. Who have you spoken to recently?
    Ms. Lee. I personally am not having the conversations. We 
have a Solidarity Center, the AFL-CIO has a sister organization 
Solidarity Center office in Bogota.
    Mr. Rivera. Who has your solidarity center spoken to 
recently?
    Ms. Lee. Rhett Doumitt is our solidarity center staff that 
heads that office. He speaks to the head of the three Colombia 
labor federations and to rank and file workers. I personally 
was in Bogota a couple of years ago.
    Mr. Rivera. Hold on. Slow down for a moment. Who has the 
solidarity center spoken to recently?
    Ms. Lee. They speak to ENS, the Escuela Nacional Sindical. 
As I said, the heads of all the labor federations, as well as 
rank and file workers in Colombia.
    Mr. Rivera. Hold on 1 second.
    Ms. Lee. I don't have the names with me, but I could send 
them to you. I can send a long list of names.
    Mr. Rivera. I would like to know the names.
    Ms. Lee. I would be happy to provide that. I don't have 
them right here.
    Mr. Rivera. Thank you. I would like all the names of who 
your organization in terms of labor leaders in Colombia who 
they have spoken to. And in particular, want to give you two 
names, Luis Fernando Cadavid, who is the president of the 
garment, Organized Labor for Garment, the production sector in 
Colombia, and the leader of the manufacturer and services 
confederation. Those two labor leaders in particular, which are 
two of the largest labor unions in Colombia, I would like to 
know if your solidarity center has spoken with them and when 
was the last time they spoke with them. Because when I was in 
Colombia earlier this year, as part of a congressional 
delegation, we met with them in Colombia, and they expressed 
support for the Colombian free trade agreement.
    So my question is you may not have the names, but the ones 
that you have spoken to, have you received any expressions of 
support from labor leaders in Colombia for the Colombia FTA?
    Ms. Lee. Yes. We occasionally do speak to labor leaders in 
Colombia who support the agreement. But the vast majority of 
the federations and the unions and the workers that we have 
spoken to are still in strong opposition to the agreement. They 
are working with the action plan and they are working with the 
government to put it in place but they still have some 
significant doubts. We had a delegation of Colombian labor 
leaders here a couple of months ago who were very articulate.
    Mr. Rivera. If the vast majority of the labor organizations 
that you spoke, the leaders that you have spoken to are 
opposed, I would like to know the names.
    Ms. Lee. I would be happy to provide them with you. I will 
get back with your staff and provide you a list.
    Mr. Rivera. So the names of who you have met with, who you 
have spoken to.
    Ms. Lee. Absolutely.
    Mr. Rivera. And those that you say are the vast majority 
that are opposed, the leadership, the leadership.
    Ms. Lee. The leadership represents the federations of the 
three large Colombian----
    Mr. Rivera. Yes, right. So we have three large Colombian 
names, so I am assuming two out of those three you have spoken 
to and oppose it. I would like to know the names of those 
individuals who you say are the majority that oppose this 
agreement. Because my understanding directly hearing from the 
leaders of those organizations is that they support the trade 
agreement with Colombia. Will you just get me that information 
because I would very much like to reconcile that discrepancy?
    Let me ask you one last question. I have got a news report 
here from June where it says President Barack Obama faces 
waning enthusiasm from unions as he prepares for his 2012 
reelection bid according to Richard Trumka. Is that the 
president of your organization?
    Ms. Lee. That is.
    Mr. Rivera. It says,

        ``Trumka said union members are frustrated by Obama's 
        support for free trade agreements. Labor leaders said 
        they would withhold financial support in next year's 
        election from candidates who haven't sided with labor 
        leaders.''

And he is quoted here as saying, during the campaign Obama made 
significant promises to do an inventory of the trade agreement. 
He has obviously forgotten that promise. Is it a common 
practice to threaten to withhold support from the President of 
the United States if he doesn't side on your issues?
    Ms. Lee. We have a respectful disagreement with the 
President, and it is important for us to express the reasons 
for that disagreement. We have expressed it in person and in 
other ways as well.
    Mr. Rivera. So withholding, threatening to withhold 
political support on this issue of trade agreements, that you 
consider to be part of your persuasive tactics.
    Ms. Lee. I would not call it a threat. What I would say is 
that the labor movement has staked out a more independent 
political position in recent months. And that is an important 
one where every candidate, whether it is the President of the 
United States or a Member of Congress. We are asking them to 
earn our support, to stand with us on issues that are important 
to us. I don't think there is anything unusual in that.
    Chairman Ros-Lehtinen. Thank you very much, Mr. Rivera. Mr. 
Connolly of Virginia is recognized. 
    Mr. Connolly. Thank you, Madam Chairwoman. And I must say 
to my friend from Florida, Mr. Rivera, I find it remarkable 
that you would ask that question of the representative of the 
AFL-CIO and not the same question of the representative of the 
Chamber of Commerce. Maybe my friend isn't aware of the fact 
that the Chamber of Commerce used itself, allowed itself to be 
used and actively used itself to spend millions of dollars 
against Members of Congress and candidates for Congress because 
they didn't agree with the Chamber's agenda.
    So I commend my friend for asking the question and surely 
hope that he will make sure in the future it is balanced, 
because it is a common practice not only with labor but with 
the business community as well. Having said that, let me ask 
the panel, and perhaps Mr. Brilliant, in the past there have 
been real serious concerns about the efficacy of trade 
understandings with Korea, ostensibly a free market but lots of 
nontariff barriers.
    It just so happens that the guy who inspects U.S. imported 
automobiles has the flu and can only do a few cars a week and 
golly gosh darn, that is why they can't get in the market. It 
is not a formal tariff by law, but the practice had prevented 
clearly some U.S. goods, especially automotive.
    Now, I am informed by Korean officials, by U.S. officials, 
those are days in the past, we have worked that out, and as a 
matter of fact there is much freer access to the Korean market. 
From the Chamber's point of view, how would you assess U.S. 
access to the Korean market?
    Mr. Brilliant. Well, currently Korea has been one of the 
more closed markets to U.S. products and services. We have a 
good healthy trade relationship, but it should be much stronger 
given the size of the market and potential for us to sell 
there. So the fact that there have been trade barriers has been 
an inhibiting factor in the economic relationship, which is why 
when I was president of U.S. Korea Business Council, I then 
tracked down Rob Portman outside the State Department when he 
was Ambassador of USTR and said we should be pursuing a free 
trade agreement with South Korea. We have got all kinds of 
barriers, including in the auto area, services, and, of course, 
high tariffs that we could eliminate through a free trade 
agreement, which is why we are here today, to endorse it and 
support it. There is no question we will expand our sales to 
that market.
    Mr. Connolly. And you are satisfied from the business point 
of view that those impediments of the past have, in fact, been 
addressed in the pending agreement and with other 
understandings with the Korean Government.
    Mr. Brilliant. Like most trade agreements you make 
compromises. But the overwhelming pieces of this FTA will 
produce not only a reduction in tariffs, because we will see an 
elimination of most tariffs, but we will address a lot of the 
nontariff barriers, including the issues of intellectual 
property which are very important to our membership.
    Mr. Connolly. Thank you. And can I ask you just one more 
question. In the back and forth between Ms. Lee and my 
colleague, Mr. Sires, on Colombia, clearly, and I know you did 
not mean to imply, that given the fact that, say here in the 
District of Columbia, the homicide rate compares unfavorably, 
if you will, with Colombia, you did not mean to imply that 
somehow we should therefore minimize or be unconcerned about 
the apparent targeting of people in Colombia in the past, is 
that not correct?
    Mr. Brilliant. Look, any time someone dies, it is a sad 
thing, so there is no question about that. What I am trying to 
give you is a scale of reference. It is not as significant as 
is often stated.
    Mr. Connolly. Right. I was trying to give you an 
opportunity, however, to clarify that one should not interpret 
from what you said any lack of concern nonetheless.
    Mr. Brilliant. Absolutely.
    Mr. Connolly. Yes. And would we not agree that if there 
were evidence of deliberate targeting, let's say of, for 
example, labor organizers, that would be a concern as we 
undertake consideration of this treaty--of this agreement.
    Mr. Brilliant. It is always a concern when employees of any 
company are targeted or when labor union activists are 
targeted.
    Mr. Connolly. Ms. Lee, when I was in Colombia last year, I 
met with the then-President of the country and with the 
Attorney General. I presented a list of names of disappeared 
and murdered, some of which go back a number of years, but some 
of which were fairly recent. Is it the impression of your 
organization that progress has been made but they are still 
struggling, or do you think that frankly past practices have 
not changed? And I know my time is running out.
    Ms. Lee. Progress has certainly been made since the late 
1990s and early 2000s when there were around 200 trade 
unionists murdered a year. But the number of murders increased 
in 2010 over 2009. And as I said, there have been a disturbing 
number of murders this year.
    Chairman Ros-Lehtinen. Thank you, Mr. Connolly. Mr. Mack, 
the chairman of the Subcommittee on the Western Hemisphere is 
recognized, and he has some videos to show us. Mr. Mack.
    Mr. Mack. Thank you, Madam Chair. And before we start the 
video, I want to say this again. The only thing stopping the 
passage of the free trade agreements is the unwillingness of 
the President to send them to the Congress. The support for the 
free trade agreements is here in the Congress in a bipartisan 
way. So the only thing keeping us is the President of the 
United States. Play the clip.
    [The video was played.]
    Mr. Sherman. Madam Chair----
    Mr. Mack. I am sorry. So we are still waiting? So the 
President for over--well, for at least 2 years has been saying 
we got to do it, we got to do it. And you just heard him 
talking about the importance of the free trade agreements, yet 
all he has to do is send them to the Congress, all he has to do 
is send them to us. The story here is this: We continue to turn 
our back, backs, on our friends and our allies.
    And this is just another example where you have Panama and 
Colombia who have stood with the United States, who have been 
partners with the United States, who have been allies to the 
United States. You know, when we took--we went on a codel, and 
one of the meetings we had was the President of Panama and we 
talked about this issue. Do you know what he said? He goes, at 
this point, I mean, it is really more to benefit the United 
States than Panama. Panama is looking at it because they are 
tired of hearing from the Hugo Chavezes of the world, what has 
being a friend of the United States gotten with you lately. I 
think what is really concerning to me is that the President 
over and over and over and over again says, we got to pass this 
now, we got to pass that now, we got to do this, we got to do 
that, talks about this, talks about that, but then there is no 
action.
    And the frustration is, not only here in the Congress, but 
with our friends around the world, is they continue to hear the 
President say that he wants to strengthen the relationships 
with our allies, but the President continues to sit on his 
hands and does not do what is right. It is long time overdue 
that these free trade agreements haven't been brought to this 
Congress. The President knows it, Secretary Clinton knows it, 
and it is time that they act. Send us the agreements, they will 
pass. Thank you.
    Chairman Ros-Lehtinen. Thank you, Mr. Mack. Mr. Cardoza is 
recognized from California.
    Mr. Cardoza. Thank you, Madam Chair. Madam Chair, in my 
congressional district we have unemployment rates of upwards of 
20 percent. I have been here almost 10 years now. There has 
been a number of these agreements that have come through 
Congress. Everyone promises that they will create jobs in 
agricultural regions like mine. Every time there has been, 
well, we have taken care of the different problems in the 
issues that you have raised, Mr. Cardoza, and things will be 
better this time, and every time it has not worked out that 
way.
    I will just use one example of where in the last free trade 
agreement that was put through with Peru, there was a 
provision, or I guess it was the Andean free trade agreement, 
there was a provision in the bill that protected asparagus or 
was going to--Senator Stabenow and I, the two areas of the 
country that grow the most asparagus were very concerned about 
it. Now they oftentimes import asparagus to have the festival 
in Stockton. The reality is those kinds of things have not 
worked to protect agriculture.
    And so I come to these agreements open but skeptical on 
almost every front. And I am going to ask a question in just a 
second to have you respond. I am going to say one more 
statement, and this is to Ms. Lee. I have had a, probably a 90-
percent record or higher in support of labor since I have been 
in Congress. I traveled to Colombia and I met with labor 
leaders there. And I have to say that the argument about how 
they are persecuted currently I found as questionable as the 
help that we get on the other side. The witnesses that we saw 
the day that we traveled to Colombia were not credible to me. 
And I have said that to my friends in Labor several times. And 
so I have skepticism on both sides of this issue. I think that 
there is oftentimes overselling on both sides. And I just raise 
that frankly and I would like to have answers. The question I 
have to my friends from businesses, we have heard a lot today 
about the benefits of these agreements and what they will 
bring. Can you describe any potential negative repercussions to 
agricultural products? Because I will tell you, they told us 
that the North American free trade agreement wasn't going to 
affect food processors in my district, now half of which have 
left the country.
    Mr. Brilliant. Well, I just comment, first of all, the 
agricultural community stands behind all three free trade 
agreements.
    Mr. Cardoza. They always do and they always go right to 
slaughter.
    Mr. Brilliant. They stand behind it because they are going 
to export more to these markets. They are also seeing, as I 
told the committee earlier, we have already seen a loss of 
sales to Colombia of $1 billion since 2009. That is a direct 
impact on our economy. I don't have the figures for your 
district, but I can tell you that certainly when you lower 
tariffs in the agricultural area, you are going to find ways to 
expand your sales, your export sales. And that we have a 54 
percent tariff rate on agricultural products sold into South 
Korea, which will be eliminated through the free trade 
agreement.
    Mr. Cardoza. I understand, sir, but let me just follow up. 
Every time we do these things they tell us how we are going to 
export more and then there is phytosanitary or customs 
barriers. Every time we have gotten the short end of the stick. 
I mean, I just have to say that I understand the arguments and 
all my guys buy into it all the time. And then they don't get 
their products in and they come complaining to me that it 
didn't work out like to they had planned.
    Mr. Brilliant. Well, let me just add this piece, which we 
have not talked about today. First of all, I agree about 
phytosanitary standards and other kinds of barriers at the 
border, which is why this agreement does try to address that. 
And it also tries to provide a more vigorous trade enforcement 
mechanism, a dispute resolution process which is really frankly 
new in this FTA, which I think can add some muster to ensuring 
we get enforcement of the deal. Because you are right, it is 
not just about tariff cuts. But we didn't just get tariff cuts 
in this deal, we did get improvement in terms of standard 
rulemaking as well.
    Mr. Cardoza. Anybody else?
    Ms. Lee. In terms of your criticism of the Colombian labor 
leaders that you met with, it is a big country, it is a 
complicated country, it is a violent country with a terrible 
history. And I would certainly put in one counterargument to 
what Mr. Brilliant said about DC is a violent place and a lot 
of people get murdered. The murders of trade unionists are 
people who have been targeted for their trade union activity.
    Mr. Cardoza. Well, I asked those questions while I was 
there and they couldn't justify those in most of the cases.
    Chairman Ros-Lehtinen. Thank you, Mr. Cardoza and Ms. Lee. 
We will be voting 14 votes and a 10-minute motion to recommit 
in just a few minutes, so I will try to get through the folks. 
Ms. Buerkle, the vice chair of Subcommittee on Terrorism, 
Nonproliferation, and Trade will be recognized.
    Ms. Buerkle. Thank you, Madam Chair. I am going to yield my 
5 minutes to the gentleman from California, Mr. Rohrabacher.
    Mr. Rohrabacher. Thank you very much. And perhaps I yield 
to Mr. Rivera the first 30 seconds of that.
    Mr. Rivera. Thank you, Chair Rohrabacher. I just want to 
respond to my friend, Mr. Connolly, who stated earlier 
regarding organizations making threats against those that don't 
support their agenda. Of course, every organization supports 
those who support their issues. Much less frequent are 
organizations that make a blatant threat stating that if 
someone does not do X on an issue be prepared to face Y 
consequences. I would suggest it is a much more persuasive 
tactic to focus on the merits of an issue rather than just 
issuing threats. And that was the point of my question, I 
think, going forward. Hopefully we will focus on the merits of 
this issue. Thank you, Mr. Rohrabacher.
    Mr. Rohrabacher. Yes. And reclaiming my time that has been 
yielded to me, which I appreciate very much. From the hearing, 
I have been paying attention to what everybody has been saying, 
and let me just thank you for making that last point about 
Colombia, because in the last 100 years Colombia has gone 
through incredible violence, and people may or may not be in 
the labor movement or may or may not own a plantation, but they 
are caught up in a cycle of violence that is beyond labor 
management agreements and understandings there.
    I have bought on to what our friends at the Chamber, at 
least on this issue, our friends at the Chamber are saying in 
terms of the Colombia and Panama free trade agreement, that in 
fact we are talking about lowering tariffs on American 
products, which will be the--the ultimate result will be that. 
In fact, madam, you verified that when you told me that the 
labor leaders in Colombia were opposed to it, which must mean 
that it was going to be beneficial to our workers in the United 
States rather than necessarily the Colombian workers. I am here 
to represent the interest of the American workers, not whether 
or not it benefits the Colombian workers or not. In this case, 
it is probably going to be a win-win. But certainly lowering 
the tariffs on our products for Colombia and Panama is a very 
laudable goal.
    However, with that said, let me reaffirm that I believe in 
free trade between free people, and our record in China, 
including the Chamber's record, has been horrible. We have seen 
the greatest transfer of wealth from our country to a Communist 
dictatorship and over the last 10 years a voluntary transfer of 
wealth to that country at the expense of the people of the 
United States of America. Three million jobs have been lost 
here due to people setting up their plants and investing in 
China.
    Free trade doesn't work with countries that are run by 
cliques, by a dictatorship. That is why I am so concerned about 
the South Korean free trade agreement. I want to know whether 
Mr. Brad Sherman's observations are accurate or not. If they 
are, I will oppose it, because what it indicates is that people 
are manipulating this free trade agreement to the point that 
things can be made essentially in North Korea 65 percent and 
can end up in our marketplace. Now, let me tell you there are 
very few countries that I consider to be lower on my scale of 
admiring their governments than China, but North Korea is one 
of those.
    North Korea is worse than Communist China. And this is 
something we have got to get to the bottom of. It is not in the 
interest of the American people to have an agreement, that in 
some way after all the avenues are taken for all the agreements 
and how you decide what is coming into the United States, where 
you have a product in which 65 percent of what that product is 
all about is slave labor and bolstering the economy of a 
vicious dictatorship, which is bad for our own workers, bad for 
our economy and a horrible statement about what we believe in 
as Americans. Please go right ahead.
    Mr. Brilliant. Let me make two quick points: First of all, 
this agreement does not allow for imports from Kaesong, we know 
that. That is clear. The second is it doesn't allow for content 
rules. And I need the U.S. Government to verify that. But the 
reality is what he is saying about 65-35 percent is not in the 
agreement. The second point I would make is on China. I 
remember coming up to see you in the 1990s on this issue, so I 
know where you stand. We may have some differences, but I think 
that we have more in common now than you might----
    Chairman Ros-Lehtinen. Thank you very much. The time for 
the gentlelady is done. Mr. Meeks of New York is recognized, 
the ranking member on the Subcommittee on Europe.
    Mr. Meeks. Thank you, Madam Chairman. Let me just say 
quickly, first of all, where as I basically have agreed with 
Mr. Mack on the trade agreements, but where he says he was 
waiting on the President to send them up, I must say that I was 
waiting on President Bush to send them up also, and they never 
came up. And we--and I think that President Obama has done some 
things. We are waiting on TAA, and hopefully it will be here 
and we will get these agreements up soon. I am a proponent of 
it.
    Secondly, let me though, at the same token, to Mr. Rivera's 
statement, that the threats by AFL-CIO president, I was just 
looking at what President Trumka said following the President's 
statement. I just read through it thoroughly. I don't see where 
he has threatened the President at all. In fact he is 
supporting the President talking about putting people back to 
work. So there is no threat when the President included the 
trade agreements in his speech. I am looking at his statement. 
I don't see where he says I am not going support the President 
or anything else. And I can tell you, as a Member of the House 
who is a strong supporter of Colombia and the free trade 
agreements, that I have never been threatened by the AFL-CIO.
    We have had a disagreement on this. We have sat down and 
tried to talk out and hash out our disagreements. I know that 
they don't see it on the way we do. But threatened? No, I can't 
say that I have been threatened on this agreement by the AFL-
CIO, so I think that charge has absolutely no bases, in fact, 
in that regard. That being said, we do have differences of 
viewpoints in regards, especially to Colombia. When I look at 
the fact that Colombia labor unions have rose from 850,000 in 
2002 to 1.5 million in 2009, an increase of about 75 percent, 
when I look at the fact that the International Labor 
Organization agrees that Colombia has made huge progress, and I 
know Ms. Lee has acknowledged that also, and so much so that it 
dropped Colombia from its list of countries subject to labor 
rights monitoring in June 2010.
    And I have been back and forth to Colombia probably as much 
as anybody in Congress and am very happy to talk to, when I 
talked to labor leaders in Colombia, especially with regard to 
the Labor Action Plan, how they were waiting for a long time 
for this kind of plan to come and they were praising President 
Obama for its inclusion.
    But that being said, what I wanted to change and just ask 
the question about briefly, because we are here in the Foreign 
Affairs Committee and I would like to talk about the Foreign 
Affairs implications of the trade agreements given this 
committee's jurisdiction. And trade is never about economics, 
it is also about our relationships with other nations and 
allies, it is about strengthening rule of law, it is about 
deepening ties. In fact, a recent report from the Council of 
Foreign Relations said it well, Trade has been and remains a 
strategic instrument of American foreign policy. It binds 
together countries in a broad and deep economic network that 
constitutes a bulwark against conflict. And all three of these 
pending agreements are with nations that are key allies in 
critical areas of the world.
    So, my question to all of our panelists is how does the 
trade agreements, as you see them, how do they fall in on our 
foreign affairs with our foreign affairs agenda? And does it 
further those goals? I know that the expertise is in the 
economic realm, but this is the Foreign Affairs Committee. So I 
throw that out to all of our panelists.
    Mr. Brilliant. I will be brief here. I am going to have the 
honor to have President Lee come over to the U.S. Chamber on 
the week of the 13th when he is here for a State visit. And I 
can tell you that we will weaken his presidency, we will weaken 
South Korean relationship if we don't advance our free trade 
agreement with that country. So it is much more than just an 
economic relationship. It is buttressing an already existing 
ally and making it a stronger relationship. That is critical 
given what is going on in East Asia, not just the economic 
world, but all the changes that are taking place, the 
transformational changes. So I agree 100 percent with the 
Congressman that these FTAs are much more than just trade 
agreements. They are very much an instrument of our foreign 
policy.
    Mr. Meeks. Ms. Lee?
    Ms. Lee. If I could say, I think it is more complicated 
than whether we just support the current leader of a country 
whether we do an FTA. I think Mr. Rohrabacher mentioned before 
the fact that the labor unions, many of the labor unions in 
Colombia are opposed to the agreement. That is also true of 
many of the trade unionists in Korea as well. And one of the 
reasons is that some of these agreements are controversial, 
that the perception on the ground in mixed. There have been big 
demonstrations on the ground in both Colombia and Korea against 
the free trade agreements because the perception is that it is 
the United States and multinational corporations coming in. I 
know in Colombia there are some concerns about--this comes from 
the Colombian Department of Agriculture itself--about whether 
the agreement will displace a lot of agricultural production 
because, as people have said many times, Colombia is lowering 
its own tariffs, and the U.S. is not changing its market access 
very much.
    Chairman Ros-Lehtinen. Thank you. I am sorry. The time is 
up, and the bells have rung for 14 votes. And before adjourning 
this hearing, I would like to take a moment to highlight the 
contributions of one of our staffers, Robyn Wapner, who is a 
member of our committee majority staff. She has been working 
hard promoting the passage of the Colombia and Panama FTAs, and 
promoting U.S. interests in the Western Hemisphere. Robin is 
leaving us to return to her home State of California. And while 
I know that her family is very glad to have her back home soon, 
we will surely miss her. She is a wonderful professional and a 
terrific person. So Robyn, Godspeed on your journey home, and 
don't forget us. And with that, thank you, panelists, thank 
you, audience. The committee is adjourned.
    [Whereupon, at 11:34 a.m., the committee was adjourned.]
                                     

                                     

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