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


 
                  SECOND IN A SERIES OF THREE HEARINGS 
                      ON THE PENDING, JOB-CREATING 
           TRADE AGREEMENTS: PANAMA TRADE PROMOTION AGREEMENT 

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

                                HEARING

                               before the

                         SUBCOMMITTEE ON TRADE

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 30, 2011

                               __________

                           Serial No. 112-TR2

                               __________

         Printed for the use of the Committee on Ways and Means

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                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman

GEOFF DAVIS, Kentucky                JIM MCDERMOTT, Washington
DAVID G. REICHERT, Washington        RICHARD E. NEAL, Massachusetts
WALLY HERGER, California             LLOYD DOGGETT, Texas
DEVIN NUNES, California              JOSEPH CROWLEY, New York
VERN BUCHANAN, Florida               JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska
AARON SCHOCK, Illinois
LYNN JENKINS, Kansas

                       Jon Traub, Staff Director

                  Janice Mays, Minority Staff Director














                            C O N T E N T S

                               __________
                                                                   Page

Advisory of March 30, 2011 announcing the hearing................     2

                               WITNESSES

PANEL 1:

    Ambassador Miriam Sapiro, Deputy U.S. Trade Representative, 
      Office of the United States Trade Representative...........     7

PANEL 2:

    Doug Oberhelman, Chairman and Chief Executive Officer, 
      Caterpillar Inc., on behalf of Caterpillar Inc., the U.S. 
      Chamber of Commerce, the National Association of 
      Manufacturers, the Business Roundtable and the Latin 
      America Trade Coalition....................................    28
    Gary LaGrange, President and Chief Executive Officer, Port of 
      New Orleans................................................    40
    Doug Wolf, President, National Pork Producers Council........    44
    Jasper Sanfilippo, President and Chief Operating Officer, 
      John B. Sanfilippo & Son, Inc..............................    52
    Hal S. Shapiro Partner, Akin Gump Strauss Hauer & Feld LLP, 
      Testifying in an individual capacity.......................    60

                       SUBMISSIONS FOR THE RECORD

Port of New Orleans..............................................    72
International Trademark Association..............................    75
National Pork Producers Council..................................    76
Public Citizen's Global Trade Watch..............................    83
Akin Gump Strauss Hauer & Feld...................................    87


                  SECOND IN A SERIES OF THREE HEARINGS
                      ON THE PENDING, JOB-CREATING
                     TRADE AGREEMENTS: PANAMA TRADE
                          PROMOTION AGREEMENT

                              ----------                              


                       WEDNESDAY, MARCH 30, 2011

                     U.S. House of Representatives,
                               Committee on Ways and Means,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:10 p.m., in 
Room 1100, Longworth House Office Building, the Honorable Kevin 
Brady [chairman of the subcommittee] presiding.
    [The advisory of the hearing follows:]

HEARING ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                 Brady Announces Second in a Series of

                     Three Hearings on the Pending,

                 Job-Creating Trade Agreements: Panama

                       Trade Promotion Agreement

March 23, 2011

    Congressman Kevin Brady (R-TX), Chairman, Subcommittee on Trade of 
the Committee on Ways and Means, today announced that the Subcommittee 
will hold a hearing on the pending trade agreement with Panama. This 
hearing is the second in a series of hearings on the pending trade 
agreements with Colombia, Panama, and South Korea. The hearing will 
take place on Wednesday, March 30, 2011, in the main Committee hearing 
room, 1100 Longworth House Office Building, beginning at 1:30 P.M.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee and for 
inclusion in the printed record of the hearing. A list of invited 
witnesses will follow.
      

BACKGROUND:

      
    In 2007, the United States signed a trade agreement with Panama, 
which still awaits Congressional consideration. On January 25, 2011, 
the Ways and Means Committee held its first hearing on this agreement, 
along with the pending Colombia and South Korea trade agreements.
      
    The Panama trade agreement was also discussed at the Ways and Means 
Committee hearing with the United States Trade Representative, 
Ambassador Ron Kirk, on February 9, 2011. At that hearing, Ambassador 
Kirk noted Panama's important steps in addressing certain labor and tax 
issues considered outstanding. In his testimony, as well as in response 
to Chairman Camp's request that Ambassador Kirk set forth a concrete 
timeline for Congressional consideration of the Panama trade agreement 
within the first six months of the year, Ambassador Kirk said that the 
President directed him to immediately intensify engagement with Panama, 
like Colombia, to resolve outstanding issues as soon as possible. 
Ambassador Kirk soon after held consultations with the Panamanian 
government.
      
    The U.S.-Panama Trade Promotion Agreement would open new markets to 
U.S. exports and, in turn, benefit American businesses, farmers, 
workers, and consumers. The independent U.S. International Trade 
Commission (ITC) estimates that implementing the agreement would 
increase U.S. exports of key products to Panama by up to 145 percent. 
Under the agreement, over 88 percent of U.S. exports of consumer and 
industrial goods and over 50 percent of U.S. agriculture exports would 
immediately become duty-free. Such benefits will be long-lasting. 
Indeed, since 2000, U.S. exports to the 13 countries with which we have 
implemented trade agreements have grown nearly twice as fast as our 
worldwide exports.
      
    The agreement also increases access to the Panamanian services 
market. Services already account for 76 percent of Panama's GDP and 
promise further growth as Panama increases its role as a Latin American 
and global trade and logistics hub, creating new opportunities for U.S. 
businesses and workers.
      
    Concerns have been raised about Panama's refusal to provide the 
United States with certain information needed to enforce U.S. tax laws. 
In November 2010, the United States and Panama signed a Tax Information 
Exchange Agreement to address those concerns. In announcing the 
agreement, Treasury Secretary Timothy Geithner said that it ``usher[ed] 
in a new era of openness and transparency for tax information between 
the United States and Panama.'' Panama has also made several changes to 
its labor laws.
      
    Panama has already concluded trade agreements with major trading 
partners and U.S. export competitors, such as Canada and the European 
Union, which remove barriers to exports from those countries. Failure 
to implement our own trade agreement with Panama could thus severely 
disadvantage U.S. exporters and in turn jeopardize U.S. job creation.
      
    In announcing this hearing, Chairman Brady said, ``Opening up 
dynamic new markets like Panama for American goods and services must be 
a priority for robust U.S. long-term growth. That is why we need to 
move forward with the U.S.-Panama trade agreement to create good U.S. 
jobs and increase the competitiveness of U.S. exporters, as well as to 
preserve U.S. influence and leadership in our hemisphere. We will lose 
this opportunity if the United States sits on the sidelines while 
Panama continues to grow and implements trade agreements with our major 
competitors. American workers, farmers, ranchers, manufacturers, 
service providers, and other exporters will simply be left behind. We 
need a concrete plan now from the Administration for moving forward 
with the Panama agreement to allow Congressional consideration of all 
three pending trade agreements by July 1.''
      

FOCUS OF THE HEARING:

      
    The focus of the hearing is on Congressional consideration of the 
pending trade agreement with Panama. The hearing will address the 
economic benefits this agreement will bring to American businesses, 
farmers, workers, consumers, and the U.S. economy. In addition, the 
hearing will examine the national security and geopolitical 
implications of the agreement, as well as Panama's tax transparency.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``Hearings.'' Select the hearing for which you would like to submit, 
and click on the link entitled, ``Click here to provide a submission 
for the record.'' Once you have followed the online instructions, 
submit all requested information. ATTACH your submission as a Word or 
WordPerfect document, in compliance with the formatting requirements 
listed below, by the close of business on Wednesday, April 13, 2011. 
Finally, please note that due to the change in House mail policy, the 
U.S. Capitol Police will refuse sealed-package deliveries to all House 
Office Buildings. For questions, or if you encounter technical 
problems, please call (202) 225-6649.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
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written comments must conform to the guidelines listed below. Any 
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guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
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    3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental 
sheet must accompany each submission listing the name, company, 
address, telephone, and fax numbers of each witness.
      
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with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
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accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
    Note: All Committee advisories and news releases are available at 
http://www.waysandmeans.house.gov/.

                                 

    Chairman BRADY. Good afternoon.
    I would like to welcome you all here, including the 
Panamanian Ambassador.
    This is the second in a series of three hearings: Panama, 
Colombia, and South Korea. It is no secret that I strongly 
believe we should consider all three pending agreements by July 
1st. There are bipartisan calls in Congress to do that. And we 
are hopeful the President moves forward with all three.
    He has already talked about and made the case why we should 
move the Panama and Colombia agreements now. As you know, on 
his recent trip to Latin America, the President noted that we 
export three times more to Latin America than to China because 
of our trade agreements across the region. He also stated, 
``Our exports to the region will soon support more than 2 
million U.S. jobs.''
    And yet, even though the President explained why we need to 
move forward with the agreements, we wait. In the case of 
Panama, it has been almost 4 years.
    Not only has the delay caused American companies, workers, 
farmers, and ranchers to miss opportunities to sell more to 
Panama, we also run the risk of falling behind. Panama has 
concluded trade agreements with our major competitors, such as 
Canada and the European Union, and more are in the pipeline. If 
these agreements go into effect before ours, we will face even 
greater competitive challenges.
    And the opportunities lost to these competitors could be 
gone for a very long time. Panama is experiencing an 
infrastructure building boom due to $5.25 billion investment in 
the expansion of the Panama Canal and Panama's growing role as 
a logistics hub for Latin America. If U.S. companies lose out 
on those infrastructure contracts, they cannot hope to bid 
again later. These contract opportunities will be lost for 
good.
    Panama's expansion as a logistics hub also offers unique 
opportunities for American service providers in addition to our 
manufacturers. Services already make up over 75 percent of 
Panama's economy. This sector will swell as Panama develops 
greater capabilities in information technology, finance, and 
insurance. U.S. service providers are well-positioned to meet 
this growing demand, but their market access depends on having 
our agreement in place.
    The economic reasons for the Panama agreement are, by 
themselves, significant, but the need to strengthen our 
relationship with Panama and engagement in the region is just 
as compelling. I was heartened by the President's trip to Latin 
America and his words about the importance of Latin America to 
the United States, but we need to provide tangible evidence of 
our commitment.
    Panama is obviously a vital ally in terms of port and 
maritime security. It is also an important partner in 
combatting drug trafficking and terrorism. And, of course, 
there is the Panama Canal. The United States is the largest 
user of the Canal, and Canal security is paramount to our 
national security and broadly to open sea routes. Panama's 
cooperation in maintaining security of the canal has been vital 
to our security in the region.
    The significance of our relationship with Panama is 
obvious. Now is the time for action and for the President to 
send the Panama agreement to Congress.
    Ambassador, I was encouraged by your positive remarks 
regarding the status of the Panama agreement in our last 
hearing, but we have yet to hear from the Administration a 
defined timetable for bringing this agreement into force.
    But, in the meantime, Panama has made extraordinary strides 
in meeting U.S. demands. First of all, the Panamanian 
legislature approved the agreement to include the provisions of 
the bipartisan May 10th, 2007, deal back in July of 2007. Then 
there were concerns raised regarding Panama's tax transparency, 
and, in response, Panama signed a TIEA with us in November and 
passed all implementing legislation. Concerns have been raised 
about Panama's labor law, and Panama has implemented 
substantial labor protections and is undertaking even more just 
this week in its legislature.
    In my opinion, the substantive action by Panama is more 
than enough to allow congressional consideration of the 
agreement.
    Ambassador Sapiro, I want to ask you again, just as I did 2 
weeks ago at our previous hearing, to present us a specific 
timetable as to how the administration plans to proceed. In 
addition, I would call again on the administration to begin the 
technical drafting with us on the Panama and Colombia 
agreements, just as we have begun with the South Korea 
agreement.
    I would like to welcome all of our witnesses today and 
thank them for being with us. I look forward to the testimony.
    At this time, I will yield to Ranking Member McDermott for 
the purposes of an opening statement.
    Mr. MCDERMOTT. Thank you very much, Mr. Chairman.
    At our last hearing on the Colombia Free Trade Agreement, I 
expressed my disappointment that we were not holding a mock 
markup on the Korean Free Trade Agreement. I am even more 
disappointed today that 2 weeks have gone by and the Republican 
leadership is still blocking the Korean FTA. This Korean FTA is 
done. It has the support of business, labor, Democrats, 
Republicans, and the administration.
    We should have had a mock markup of the Korean Free Trade 
Agreement weeks ago. Every week that the Republicans wait costs 
Americans jobs and jeopardizes our global competitiveness. 
Every week the Republicans wait is more pain on American 
families and hurts our geo-strategic interests with Korea and 
across Asia.
    While we are here to talk about Panama, the Republicans are 
silent on helping middle-class Americans with renewing trade 
adjustment assistance programs, the Andean preference programs, 
and the general system of preferences. The Republicans are also 
doing nothing on the miscellaneous tariff bill or on currency 
legislation. They have decided that we can't do anything on 
trade until Colombia FTA is ready. That makes them really 
important.
    And if stopping the entire legislative agenda on trade is 
not enough, the Senate Republicans have announced they intend 
to block the appointment of trade-related officials, even 
Cabinet secretaries, until the Colombia Free Trade Agreement is 
passed.
    While I wish we were moving the Korean Free Trade Agreement 
and a real job agenda forward, we are here talking about 
Panama's FTA today. The administration's work on the Panama 
FTA, like its work on the Korean FTA, is an example of how to 
do a trade agreement right.
    There were legitimate and serious concerns with Panama's 
status as a tax haven and with the fact that Panama's labor 
laws fell short of international standards. Rather than 
ignoring those concerns, the Obama administration addressed 
them. For example, the United States and Panama finally signed 
a tax information exchange agreement last November after 8 
years of negotiation. And Panama has made a number of changes 
to its labor laws already.
    Still, Panama needs to ratify that tax agreement and make a 
few important changes in labor laws. Panama is our partner and 
understands what it needs to do. It is willing to make the 
necessary changes to the laws, and it is expected to do so very 
soon.
    Congress would undermine the administration's effort to 
resolve the outstanding issues if it were to consider the FTA 
before Panama takes action. On the flip side, once Panama takes 
action, the Panama FTA should be submitted to Congress without 
delay, not held hostage to unrelated issues that are outside 
Panama's control.
    Panama and Korea FTAs provide a clear roadmap for the 
Colombia FTA. Rather than setting artificial deadlines and 
ignoring serious breaches, such as labor-related violence and 
impunity, those issues should be resolved before the agreement 
moves forward.
    Many Republicans criticize the administration for taking 
the time to get the substance right on all three of these trade 
agreements. They want to just get them done with quickly, 
rather than get them done right. They wanted to pass the Korea 
deal before the auto provisions were fixed. They wanted to 
ignore the fact that Panama was a tax haven. And they want to 
ignore the fact that murdering union organizers and human 
rights activists in Colombia goes unpunished. I don't 
understand that, and I really don't think the American people 
do either.
    The American people expect us to work to lift the labor 
standards of our trading partners, to insist that our trading 
partners not operate as tax havens, and to ensure that our 
trade agreements do all they can to ensure two-way trade, as 
the administration did with the Korean auto deal.
    In my view, this is the best way to rebuild strong and 
lasting support for trade agreements, and I hope my Republican 
colleagues will support that effort.
    The rules require a week's notice for a hearing, so I just 
want to encourage the Republicans to schedule this mock markup 
for the Korean Free Trade Agreement for next Wednesday.
    I yield back the balance of my time.
    Chairman BRADY. Today, we will have two panels of 
witnesses. The first panel is compromised of our witness from 
the administration, Ambassador Miriam Sapiro, Deputy U.S. Trade 
Representative from the Office of the U.S. Trade 
Representative.
    Ambassador Sapiro, welcome again. And we look forward to 
your testimony. As always, I am going to ask you to keep your 
testimony to 5 minutes. And your written statement--that goes 
for all the witnesses--will be made part of the record. And you 
are recognized for 5 minutes.
    Ambassador.

   STATEMENT OF AMBASSADOR MIRIAM SAPIRO, DEPUTY U.S. TRADE 
       REPRESENTATIVE, OFFICE OF THE UNITED STATES TRADE 
                         REPRESENTATIVE

    Ms. SAPIRO. Thank you. And good afternoon, Chairman Brady, 
Ranking Member McDermott, Members of the Committee. It is a 
great pleasure to be back here and to testify today about the 
U.S.-Panama Trade Promotion Agreement.
    Two weeks ago, I highlighted the importance of a robust 
trade policy that creates jobs for America's workers and 
advances the President's goal of doubling exports by the end of 
2014. We would like to see all three pending agreements, once 
their outstanding issues have been addressed, approved by 
Congress as early as possible this year.
    Earlier this month, we notified the full committee that we 
are ready to begin work on the text of the implementing bill 
for the Korea FTA as soon as you are able to schedule those 
sessions. We are working to advance the Panama agreement, too, 
within the broadest possible bipartisan and stakeholder support 
so that its true importance to the United States will be 
apparent to all.
    Panama is one of the fastest-growing economies in Latin 
America, expanding by over 6 percent in 2010. Its strategic 
location as a major shipping route is clear. Approximately two-
thirds of the 14,000 annual transits through the Panama Canal 
are bound to or from U.S. ports.
    Currently, the U.S. market is already largely open to 
imports from Panama. This agreement will level the playing 
field by giving American workers, farmers, ranchers, and 
businesses greater reciprocal access to Panama's growing 
market, including nearly $10 billion in new infrastructure 
projects and an $18 billion services market.
    As important as these benefits are, President Obama has 
made it clear that any trade agreement we present to Congress 
must be consistent with our key values and in the clear 
interests of Americans. The administration has therefore been 
working very hard with Congress and with stakeholders since 
they came into office to identify specific steps that Panama 
could take to improve its protection of internationally 
recognized labor rights.
    As a result of this work, Panama has taken several steps to 
address our concerns. With respect to enforcement of its labor 
laws, Panama has issued executive decrees to address the misuse 
of subcontracting and temporary work contracts, to strengthen 
collective bargaining and the right to strike, and to prevent 
employer interference in union activities. In addition, 
Panama's Labor Ministry has issued a resolution to increase 
labor inspections in the maritime sector and to ensure that 
maritime workers are aware of their rights and the means to 
address any problems.
    As Panama has strived to improve its tax transparency 
practices, we have worked with its government to address 
impediments in its domestic law that have prevented the 
conclusion of a tax information exchange agreement, known as a 
TIEA, with the United States. Such an agreement was signed in 
November and is consistent with internationally agreed 
standards as established by the OECD. We expect that Panama 
will ratify the TIEA in the near future.
    On February 9th, Ambassador Kirk announced that we would 
intensify our efforts and our discussions with Panama to 
complete remaining work. And we have done so. I am pleased to 
announce that Panama is now in the process of completing work 
on the last few steps.
    The government introduced legislation this week to ensure 
that companies in the Baru Special Economic Zone will no longer 
be exempt from key labor rights provisions. Also pending before 
Panama's National Assembly is legislation to ensure labor 
rights are respected in export-processing zones and to 
eliminate restrictions on collective bargaining in companies 
less than 2 years old. Last evening, both pieces of legislation 
passed their second reading.
    Once all of the outstanding issues are addressed, the 
administration will be ready to prepare the agreement for 
congressional consideration. Together, we will ensure that 
American workers enjoy a level playing field with a trading 
partner that has adopted strong worker protections and sound 
tax transparency policies.
    I also want to update you briefly on our efforts to 
intensify our work with Colombia to address outstanding 
concerns regarding the protection of internationally recognized 
labor rights, the prevention of violence against labor leaders, 
and impunity from prosecution. I am pleased to say that this 
afternoon I will resume high-level discussions with senior 
advisors from President Santos' administration on how best to 
advance these goals.
    In the meantime, I ask you to keep faith with America's 
workers by renewing trade adjustment assistance as soon as 
possible. I urge you also to renew the GSP and the ATPA 
programs for as long as possible.
    We look forward to working with all of you on the aspects 
of our trade agenda in a manner that builds bipartisan support 
and that creates new opportunities for the Americans that we 
serve.
    Thank you.
    [The prepared statement of Ms. Sapiro follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman BRADY. Ambassador, thank you.
    For planning purposes for the lawmakers, witnesses, and the 
audience, we will be recessing now so that Members can attend 
the bipartisan classified briefing on Libya conducted by the 
Administration's Cabinet.
    We will reconvene promptly at 3:30. And, Ambassador, thank 
you for your willingness to hang tight with us. And then we 
will go to questions. And then, at 4:15, we will bring the 
second panel forward. Again, Ambassador, thank you for your 
flexibility today.
    So we will recess until 3:30.
    [Recess.]
    Chairman BRADY. Thank you. The hearing will convene. Thank 
you again for your patience.
    The chair recognizes Ranking Member McDermott.
    Mr. MCDERMOTT. Madam Ambassador, I have a practical 
question. We are trying to ramp up exports in this country. And 
there is a certain feeling that public employees are of no use 
to the people of America, that we really could get rid of the 
government and we would still have a system that functioned.
    And I would like you to explain what goes on when somebody 
wants to export something from the United States of America to 
any country. Can they just walk down to a boat and throw it up 
on the boat and away it goes? Or do they have to get documents 
from public officials?
    I am thinking in terms of the government shutdown that we 
are moving toward here shortly. Some people are acting as 
though that doesn't mean anything. And I remember a call I got 
in 1995 from a guy who was trying to export grass seed to Saudi 
Arabia and was going to lose a $500,000 line of credit because 
he couldn't get one simple export document from the Department 
of State.
    I would like to hear what actually goes into exporting 
things and what role government employees play in that.
    Ms. SAPIRO. Thank you, Congressman.
    We are also keeping an eye on the possibility of a shutdown 
with some concern, as we are working intensively to be able to 
resolve the outstanding issues with respect to both Panama and 
also Colombia and hopefully be in a position to present these 
agreements to the Congress for their consideration.
    So we hope very much, for a variety of reasons--and this, 
obviously, is just one small part of the government, but it is 
an important priority right now at USTR. So we certainly are 
keeping an eye on the budget talks and hope that they will be 
successful so that we will be able to keep working on these 
FTAs at an intensive pace.
    You are quite right, Congressman, that exporting a 
commodity, for example, from the United States is not as simple 
as putting it on a boat headed toward Panama or any other 
country. One of the many benefits of a free-trade agreement is 
the ability to streamline that process and to make it easier 
for our exporters, whether they be farmers or ranchers or 
businesses, to be able to take advantage of the tremendous 
opportunities that we see in markets in Latin America and 
elsewhere.
    So we, like you, are keeping an eye on the budget talks and 
hope very much that there will be a resolution soon.
    Mr. MCDERMOTT. What do you mean, to streamline the process? 
What are you thinking? I mean, now we have a free-trade 
agreement, so if I want to ship something to Oman or Israel or 
someplace, I just take it down and put it on the ship, right? 
It is a free-trade agreement; I can send it anywhere I want 
anytime I want, right?
    Ms. SAPIRO. Well, there are customs rules and forms. And 
what we do through our free-trade agreements is try to 
standardize those so that it is easier to have convergence 
between our systems and the system of the foreign trade 
partner. So we do a variety of things to make sure that, 
actually, at the border the process is facilitated; we call it 
customs facilitation.
    We also want to make sure that, for example, with respect 
to an agricultural commodity, that this is something that the 
other country has already agreed to accept, that it meets 
certain SPS--sanitary and phytosanitary standards.
    And so, as you know, a tremendous amount of effort goes 
into making sure that the process works as smoothly as 
possible. But it is complex, and these free-trade agreements do 
play a role in simplifying the procedures and ensuring common 
standards in both countries so that we can boost our exports 
and we can meet the target that the President has set for us.
    Mr. MCDERMOTT. What does it mean to the country if the 
government shuts down, if the ports shut down their ability to 
move goods for a week or a month?
    Ms. SAPIRO. It could certainly be challenging, quite 
challenging.
    Mr. MCDERMOTT. Is that all you think, is just challenging? 
There would be no economic consequences of that?
    Ms. SAPIRO. I believe that there would be. And, as I 
mentioned, I am concerned about it with respect to the specific 
issue of the work we are trying to accomplish at USTR but, 
also, obviously, the broader implications for our economy.
    Mr. MCDERMOTT. Thank you.
    Chairman BRADY. The chair recognizes Mr. Doggett.
    Mr. DOGGETT. Thank you, Mr. Chairman.
    And thank you, Ambassador.
    Is it correct that we have been attempting to get a tax 
exchange agreement with Panama since 2002?
    Ms. SAPIRO. That is correct, Congressman.
    Mr. DOGGETT. And as of today, we don't have an agreement 
that is ratified.
    Ms. SAPIRO. We signed--the Department of Treasury----
    Mr. DOGGETT. Right.
    Ms. SAPIRO [continuing]. Secretary Geithner, did sign the 
TIEA----
    Mr. DOGGETT. Yes, I read his announcement about it. But the 
Panamanians have not ratified it.
    Ms. SAPIRO. The Panamanians have informed us that they are 
taking steps to ratify that, and----
    Mr. DOGGETT. Well, they have had it----
    Ms. SAPIRO [continuing]. They expect to--if I may finish, 
sir----
    Mr. DOGGETT. Surely.
    Ms. SAPIRO [continuing]. They expect to do that soon.
    Mr. DOGGETT. Well, they have had it there since November. 
When you say ``soon,'' they will be completing their current 
session in April. Will they have it ratified in April?
    Ms. SAPIRO. I have every reason to believe that Panama will 
ratify the TIEA as part of its broader efforts to remove itself 
from the OECD list of gray zones, and that they will do it 
promptly.
    Mr. DOGGETT. All right. And so, are you expecting them to 
complete it before they recess at the end of April?
    Ms. SAPIRO. I have every reason to believe that they will 
do it before they recess.
    Mr. DOGGETT. Great. Because if we were to seek information 
from them today, we would be in no better position than we were 
in 2002, would we, without the ratification of that agreement?
    Ms. SAPIRO. That is an interesting question, Congressman. 
They have taken steps to enact laws with respect to bearer 
shares. And, also, they have enacted a law that they call 
``Know Your Client,'' which enables them to exchange 
information with other governments that they had not previously 
been able to.
    So I would have to look a little bit further into that to 
give you a more precise answer to your question.
    Mr. DOGGETT. Okay, I welcome you doing that, because I 
don't believe, without an information exchange agreement, that 
unless we wanted to go into Panamanian courts and attempt to 
enforce our rights there, that we would be in any different 
position than 7 years through which the Panamanians have drug 
this thing out.
    And you mentioned their desire to get out of the gray zone 
with OECD. They do not have a tax information exchange 
agreement with any country other than ours, do they?
    Ms. SAPIRO. My understanding, Congressman, is that they 
have negotiated almost a dozen treaties already. Most of them 
are called double-taxation treaties----
    Mr. DOGGETT. Right, those are tax treaties. But they 
don't--and they incorporate a tax exchange provision similar to 
this, but we chose not to go that route since they apparently 
have little, if any, taxes on foreign entities in Panama, 
correct?
    Ms. SAPIRO. I would have to refer that question, 
Congressman, to the Department of the Treasury because of its 
relationship to our Tax Code and tax policies.
    Mr. DOGGETT. You don't know what the status is, then, with 
reference to OECD that you referenced earlier.
    Ms. SAPIRO. What I was suggesting we respectfully ask the 
Department of Treasury to address is the decision to pursue a 
TIEA rather than a double-taxation treaty.
    With respect to the OECD list, my understanding is that, 
when a country negotiates and signs a total of 12 tax 
transparency agreements, which I believe can be defined either 
as double taxation or as a TIEA as long as they deal with the 
transparency question, then such a country is removed from the 
list. My understanding, in addition, is that Panama has come 
very close because it has already signed a total of 11 
agreements and has already negotiated an additional 4 
agreements that await signature. So I would anticipate that 
they may well be off the list in the near future.
    Mr. DOGGETT. Do those agreements require ratification?
    Ms. SAPIRO. I can't speak to the nature of those agreements 
with other countries. I do know that, in the case of the TIEA, 
the Department of Treasury concluded it as an executive 
agreement. Panama does need to go through a ratification 
process, which it has, I am pleased to say, already started.
    Mr. DOGGETT. Okay. And one last question in a different 
area: From your experience there at USTR, are you aware of any 
experience that would suggest that public interest 
representatives, to the modest extent that they have been 
involved in industry trade advisory committees, have ever 
caused a problem for USTR or any of its goals?
    Ms. SAPIRO. We share, Congressman, your goal of ensuring 
that there is broad representation across the ITACs, the 
advisory committees. And we have been working closely with your 
staff on some concrete recommendations in order to achieve that 
goal. We already have an unprecedented formal and informal way 
of ensuring that we include a broad range of voices in our 
policies----
    Mr. DOGGETT. That wasn't my question, though. I just wanted 
to know if you have experienced any problem----
    Chairman BRADY. If I may, since time has expired, perhaps, 
Ambassador, if you could complete your response in writing to 
Mr. Doggett.
    Ms. SAPIRO. I would be happy to do that.
    Chairman BRADY. Thank you.
    Ms. JENKINS. is recognized.
    Ms. JENKINS. Thank you, Mr. Chairman.
    And thank you, Ambassador, for being back to join us again.
    As you know, when the U.S.-Panama agreement goes into 
effect, more than half of current U.S. farm exports will become 
duty-free immediately. The American Farm Bureau estimates that 
U.S. farm exports to Panama will then exceed $195 million, 
doubling our U.S. exports. And as you well know, many of the 
items that will benefit are processed or semi-processed 
products, such as high-quality beef, chicken, pork, soybeans, 
and wheat.
    Now, in Kansas, we raise a lot of high-quality beef, 
chicken, pork, soybeans, and wheat. In fact, we pride ourselves 
on feeding the world. So I am anxious to see these agreements, 
as well as the agreements with Colombia and South Korea, 
approved as soon as possible.
    But my question is, how does reducing tariffs on these 
products prevent U.S. agriculture exports from losing market 
share to exporters from other countries like Canada, Brazil, 
and Argentina, as they have done in the case of Colombia? And 
how will this agreement ensure U.S. competitiveness in years to 
come?
    Ms. SAPIRO. Thank you very much, Congresswoman, for that 
question. I am very glad that you didn't ask me to compare beef 
from Kansas to beef from Texas. I was very----
    Chairman BRADY. And you know the answer to that.
    Ms. JENKINS. Yeah, we tried that the last time.
    Ms. SAPIRO. I remember. And, fortunately, none of you asked 
me for my opinion, so I am going to stay neutral. I enjoy beef 
from all States in our country that produce it.
    But, no, you are quite right to point out the benefits to 
our agriculture sector from this agreement. It is not currently 
a two-way street, because much of what Panama exports to us 
comes in duty-free because it is a CBI beneficiary, whereas our 
farmers and ranchers face tariffs on their exports to Panama.
    So when this agreement is in force, they will benefit 
greatly, especially in the beef area. The high cuts of beef are 
going to be duty-free immediately, and additional beef exports 
will become duty-free over time. So this is an important 
agreement for your State, in particular.
    Ms. JENKINS. Okay. Thank you for that.
    As we have seen with Colombia, it is clear that U.S. 
agriculture producers and exporters will lose valuable markets 
if these trade agreements are not passed, which will most 
certainly hurt farmers, ranchers, and other workers in the 
agriculture sector.
    And while the agriculture industry has been one of the few 
bright spots in our economy, a further delay in implementing 
these pending agreements will impact not only that industry but 
also rural America as a whole. In places like my little 
hometown of Holton, Kansas, a strong agriculture industry is 
the basis of our economy. And that includes businesses ranging 
from those that sell and repair equipment, to the Holton 
Country Mart, Ron's IGA, and Barbara's Beauty Bar.
    Can you explain to us what the effect is likely to be on 
all of those businesses and small communities like my little 
hometown if we don't pass these agreements?
    Ms. SAPIRO. This agreement will benefit U.S. exporters, 
whether they are large, established companies or small and 
medium enterprises struggling to get a foothold.
    One of the things that the President feels very strongly 
about is making sure that we have a national export initiative 
that cuts across all sectors of the economy as well as embraces 
the SMEs that sometimes can otherwise get left out. So USTR, 
for example, works closely with SBA and also with Ex-Im and 
other parts of our government, especially the Department of 
Commerce, to make sure that we are not overlooking the smaller 
companies and that, whether they are small farms or they are 
service providers, if they want to establish a market overseas, 
that we have the ability to help them do that.
    And we would very much like to see the small and medium 
enterprises across our country reach out to more markets. And 
for those companies that already are in a market, they 
typically have only one customer. We would very much like to 
work with them and see if we can't double, triple, or quadruple 
the number of customers they have as well as the number of 
countries that they are exporting to.
    Ms. JENKINS. Well, thank you. And I just hope you will be 
mindful of the effect that these trade agreements have on rural 
America. We all struggle with the whole issue of rural economic 
development, and these free-trade agreements will have such a 
compounding effect in many small, rural communities all across 
this Nation. They are critical.
    So, with that, I would yield back. Thank you.
    Chairman BRADY. Thank you.
    The chair recognizes Mr. Smith.
    Mr. SMITH. Thank you. And I appreciate the opportunity to 
have a dialogue here.
    I would like to begin by associating my concerns with my 
colleague from Kansas, knowing that we probably have a good 
partnership in producing high-quality beef, among other 
products--I guess we will leave it at that.
    Now, in technical respects, what would you say are the 
major differences between the South Korea Trade Agreement and 
the Panama Trade Agreement?
    Ms. SAPIRO. I would say that both agreements embrace high 
standards across the board. The Panama agreement, in 
particular, I think, will benefit the relationship because of 
the infrastructure projects that Panama is already beginning 
with respect to the Canal and the additional infrastructure 
projects that we see coming down the road.
    There is also a growing market for service providers. And, 
frankly, Panama has a growth rate that I am envious of. It is 
one of the fastest-growing economies in Latin America and 
Central America today.
    So I think there is great potential for our exporters from 
Nebraska, from Kansas, from Texas, from other States to really 
make the most of this agreement once it----
    Mr. SMITH. Right. I mean, you suggested that there are high 
standards in both agreements. Are there not high enough 
standards, then, to buy in here so that we can get this passed?
    Ms. SAPIRO. We are working very hard, as I mentioned, to be 
able to present these agreements to Congress for your 
consideration.
    With respect to the labor chapter of the Panama agreement, 
there were some concerns, which are now being addressed, with 
regard to their enforcement in certain sectors, such as 
maritime, construction, and a few other sectors as well. I am 
pleased to say that Panama has been addressing those concerns 
and is even now taking legislative action that, once completed, 
will put it in a very good position to be able to easily 
implement the labor chapter.
    Mr. SMITH. Is it conceivable that we could get this passed 
by July 1st?
    Ms. SAPIRO. We are working very hard, and so is Panama. The 
ball is really in their court right now. And I am very 
encouraged by the actions that they took as late as last 
evening. So I think they are working at a quick clip. And we 
are doing everything possible that we can to support them doing 
that, because this is an agreement that is important to many 
exporters in this country.
    Mr. SMITH. And, finally, do you feel that there might be 
some downside to delaying?
    Ms. SAPIRO. Our market share in Panama has been remarkably 
stable over the last few years. Our closest competitors are 
Canada and Europe, and their share is currently a lot lower 
than ours.
    But we are not sitting back, I assure you, Congressman, we 
are not sitting back and celebrating those statistics. We are 
working very hard because we share your sense of urgency. This 
agreement and the other agreements are important to Americans 
who export.
    So we are doing everything possible to work with Congress, 
to work with our stakeholders, to address the issues that had 
been identified earlier and that we believe the Panamanian 
Government is now taking steps to address, and believe that 
they will do so fairly soon.
    Mr. SMITH. Okay. All right.
    Thank you, Mr. Chairman. I yield back.
    Chairman BRADY. Thank you.
    Mr. Buchanan.
    Mr. BUCHANAN. Yes, thank you, Mr. Chairman, for holding 
this.
    And, Ambassador, I appreciate your coming.
    I represent part of Florida, but being the only Ways and 
Means member in Florida, we have 14 ports; exports are a huge 
part of our business there. I know, in my port, it is the 
closest port to the Panama Canal. We think we can create 20,000 
more jobs just out of our port in Manatee County.
    I have been down there; we have met with the Ambassador at 
the port. I have been down to Panama. I met with the President 
down in Panama. But it just seems like it has gone on for 4 
years, not just this administration but the last 2 years before 
that.
    They seem like they have jumped through a lot of hoops. 
They love America. They want to do business. They have done a 
full-court press in terms of this trade agreement. And it seems 
like it is just some special interests, you know, on our side 
that are driving the agenda.
    And we keep moving the goal post. I mean, you talk about 
human rights, and I know that is important to everybody, but, 
at the same token, you could throw that out anyplace, anytime, 
anywhere. And, obviously, the unions are concerned.
    But I can tell you, for States like Florida and Texas, we 
need to have Panama on line in a bigger way. And we are really 
losing our credibility, frankly, down there. I have been in 
business 30 years; I am not a career politician. But if it 
takes 4 years to get something done, there has to be a question 
of good faith on our part. And it is really more of a political 
agenda than it is about doing what is right.
    So I don't want to ramble on, but I want to get your 
comments on that.
    Ms. SAPIRO. Thank you, Congressman, for your question.
    We share your sense of urgency, and we do want to see this 
done as quickly as possible. Since we took office in 2009, we 
have been working with the Panamanian Government to identify 
the issues of concern. And some of it was with respect to 
enforcement in the subcontracting area, with respect to 
temporary workers, and I mentioned maritime workers.
    They have been working diligently to address the issues 
that they could through administrative decrees. There are a few 
issues that they needed to address through legislation, and 
they are now in a position where they can move that legislation 
forward. And I believe they will be able to do so fairly 
quickly.
    One of the laws refers to Baru, which is the special 
economic development zone where they had had certain exemptions 
from core labor provisions. And they are now taking steps to 
remedy that.
    Mr. BUCHANAN. What timeframe do you feel like, 
realistically, we are talking about given where we are with 
Korea? Korea looks like that is going to get done, we are going 
to get something here to the Congress. But in terms of Panama, 
you know, can we get that done before June. Will you get it 
back to us? I mean, what timeframe are we on?
    Because I am concerned, if it gets past this summer and 
August recess, this thing is going to get much more political 
and it is not going to get done. Then we drag it on another 
year and a half. And I just think it is the wrong direction.
    Do you have a sense, what would be your commitment or your 
sense of when we can get this done?
    Ms. SAPIRO. Congressman, we would like to see Panama take 
these final steps as soon as possible, and I have every reason 
to believe that they are doing so. I believe we are pushing on 
an open door, as the saying goes, and that they are working 
rapidly.
    The fact that the Baru legislation and the other piece of 
legislation dealing with export-processing zones and some 
restrictions in place on companies that are less than 2 years 
old, these two pieces of legislation are now moving very 
quickly through their national assembly. So I am hopeful that 
they will be able to----
    Mr. BUCHANAN. Well, I came here in 2007, and we have been 
talking about Panama ever since I have been here. And I think 
it is really a shame that we are not finding a way to, you 
know, put this thing together. And I would be very, very 
disappointed if this thing ran on, because it would affect a 
lot of jobs. Florida has 12 percent unemployment; the country 
has 9 percent. We need those good-paying jobs. We need to get 
this deal wrapped up with Panama. We needed it yesterday.
    It would be great if we could do it with Korea. I think the 
mindset is, for one reason or another, you are not going to do 
it that way. But we need to get this done. It means a lot of 
jobs to Florida. Export opportunities for Florida companies, 
small and large, are huge. And I hear that from so many people 
all over the State. I can't tell you the level of frustration 
among the business community in Florida at our lack of ability 
to get this thing wrapped up.
    Ms. SAPIRO. We share your concern and fully appreciate how 
important this agreement is, in particular, to Florida.
    Mr. BUCHANAN. Okay. Are you going to give me a timeframe? 
Are you going to tell me when we are going to get it done?
    Ms. SAPIRO. We are working quickly. The ball right now is 
in Panama's court.
    Mr. BUCHANAN. How about May?
    Ms. SAPIRO. I don't want to give you a date and be wrong. 
Let me just assure you that we share your sense of urgency and 
we are working, sometimes around the clock, to encourage Panama 
to take these final steps. And we believe they will do so.
    Mr. BUCHANAN. We really need it for jobs.
    I appreciate the opportunity. Thank you, Mr. Chairman. I 
yield back.
    Chairman BRADY. Thank you.
    She is dying to say it will be here by July 1st for 
consideration, so we will just assume that that is the answer.
    And, obviously, the reason you get bipartisan support for 
moving all three is, together, they represent $13 billion in 
new sales for American companies and farmers and workers. And, 
you know, in this economy, every customer counts, every sale 
counts, every job counts. And so the goal of continuing to move 
all three is because, together, all three are very important to 
our economy.
    Let me ask you, on labor issues, you made reference to 
Panama having laws made more than a dozen changes to its 
labor--first, it reopened the agreement, signed and included 
the bipartisan May 10th agreement on labor, environment, and 
there were other issues. It has made more than a dozen changes 
to its labor code; is in the process of moving legislation, as 
you said, to address other issues. So, clearly, Panama is 
making additional commitments, and impressive commitments, on 
labor.
    But on tax information and transparency issues, my 
understanding is that, since 2002, Panama has been a committed 
jurisdiction, according to OECD, which means they are 
cooperative regarding tax information. We have had a 
longstanding mutual legal assistance treaty that covers the 
exchange of tax information if the question is effectively tied 
to illegal activities.
    Panama has signed a TIEA, has begun to implement it, is in 
the process of creating a new international tax unit, a unit 
for international exchange of tax information. It is enhancing 
its cooperation with double-taxation agreements with 15 
countries, sharing tax information. Secretary Geithner recently 
remarked, with the signing of the TIEA, ``this ushers in a new 
era of openness and transparency for tax information between 
the United States and Panama.''
    So, in your view, is Panama taking impressive strides to 
improve tax transparency?
    Ms. SAPIRO. Panama has taken very important steps in the 
right direction. And I believe that they will follow through on 
what they have promised to do with respect to the TIEA and with 
respect to completing the other taxation treaties that will 
then enable them to be off of the gray list.
    We are truly encouraged by their progress, no doubt in part 
not just because of the FTA but because of the emphasis that 
the G-20, with U.S. leadership, has put on the need to fight 
tax havens around the world.
    So Panama, for its own reasons, is taking very important 
steps. And we do welcome what they have done. And we do believe 
that they will quickly be able to finish their work, both with 
respect to tax transparency issues and also with respect to the 
labor code changes that are important to see done.
    Chairman BRADY. Thank you, Ambassador. Panama really is a 
key trading ally, and the improvements they have made and 
commitments they have made are impressive. And, again, our goal 
is to accelerate the passage and implementation of all three 
agreements, and look forward to working with you to do so this 
summer.
    So thank you again for being with us today.
    Ms. SAPIRO. Thank you, Mr. Chairman.
    Chairman BRADY. At this point, since votes have been called 
and it is a fairly long series of votes, we will recess this 
hearing until immediately after the last vote and proceed with 
the second panel.
    Thank you.
    Chairman BRADY. The subcommittee will reconvene.
    I would like to welcome our second panel. And thank you for 
your patience today. We don't always control our voting 
schedule nor the classified briefings, but thank you. We know 
how busy--Mr. McDermott and I know how busy your lives are, so 
thank you for sharing time with us today.
    Our first witness will be Doug Oberhelman, chairman and 
chief executive officer of Caterpillar, Inc. He is also 
testifying on behalf of the U.S. Chamber of Commerce, the 
National Association of Manufacturers, the Business Roundtable, 
and the Latin American Trade Coalition.
    After him, we will hear from Mr. Gary LaGrange, president 
and chief executive officer of the Port of New Orleans.
    Our third witness will be Mr. Doug Wolf, President of the 
National Pork Producers Council and also owner and operator of 
Wolf L&G Farms.
    Fourth, we will hear from Mr. Jasper Sanfilippo, president 
and chief operating officer of John B. Sanfilippo & Son, 
Incorporated.
    And, last, we will hear from Mr. Hal Shapiro, who is a 
partner at Akin Gump Strauss Hauer & Feld.
    Before we begin, I understand that our colleague Mr. 
Schock, who has been a tremendous advocate in the trade area, 
would like to give further introduction to Mr. Oberhelman, who 
is from his district.
    Mr. Schock.
    Mr. SCHOCK. Thank you, Chairman Brady.
    I have the great pleasure this afternoon to introduce to 
the committee a great friend of my hometown from Peoria, the 
chairman and CEO of Catepillar, Doug Oberhelman.
    Doug joined Caterpillar fresh out of college as a financial 
analyst. And, over his 35-year career, he has held a variety of 
positions, including senior finance representative based in 
South America, district manager for the company's North 
American Commercial Division, and managing director and vice 
general manager for strategic planning at Caterpillar Japan, 
Limited, in Tokyo, Japan.
    He was elected as vice president and chief financial 
officer in 1995. In 1998, he became vice president with 
responsibility for Caterpillar's engine business. He became a 
group president and member of Caterpillar's executive office in 
2002. And, as group president, he had responsibility for a vast 
number of functions, from financial products to HR to 
remanufacturing, just to name a few.
    In October 2009, he was named vice chairman and CEO-elect. 
During this time, he led a team that developed the future 
strategic plan for the company. And, in 2010, Doug was elected 
chairman and chief executive officer.
    In addition to his work at Caterpillar, he serves as a 
director for the boards of Eli Lilly and Company, World 
Resources Institute, Wetlands America Trust, and The Nature 
Conservancy's Illinois chapter. He is also a member of the 
board of directors of the Association of Equipment 
Manufacturers and the Manufacturing Institute. In addition, he 
is vice chairman and a member of the executive committee of the 
National Association of Manufacturers.
    On a personal note, Doug and Caterpillar have been great 
citizens of Peoria and the State of Illinois. They take their 
corporate citizenship responsibility seriously and have 
provided a foundation for employment in Peoria, Illinois, and 
our country for decades. In fact, Caterpillar employs 23,000 of 
its 104,000 employees worldwide in Illinois, with many living 
and working in the Peoria area. And if you have ever traveled 
to Peoria--I would encourage to you do so, if you haven't--
there is no doubt that their positive presence is felt and seen 
all over our community.
    The truth is, Caterpillar has been an integral part of our 
country since the company's founding. Cat is the world's 
largest manufacturer of construction and mining equipment, 
diesel and natural gas engines, industrial gas turbines, and 
diesel electric locomotives. Cat products touch every 
continent, serving 180 countries. So there may not be a better 
representative to have before us today to attest to the success 
of open markets and free trade than Caterpillar.
    Once against, Mr. Oberhelman, I appreciate your willingness 
to testify before our committee. And I look forward to the 
conversation this committee will have you with about the 
significance of the U.S.-Panama Free Trade Agreement.
    Thank you, Mr. Chairman.
    Chairman BRADY. Thank you, Mr. Schock.
    We also have another key leader of the House Ways and Means 
Committee, Dr. Boustany, whom I have asked to say a few words 
to introduce his home State witness, Mr. LaGrange.
    Doctor?
    Mr. BOUSTANY. Well, Chairman Brady, thank you. It is a 
great privilege to introduce a real leader in the State of 
Louisiana.
    Gary LaGrange has served as president and CEO of the Port 
of New Orleans since 2001. And, under his direction, we have 
seen a tremendous expansion of the port activities, despite a 
number of adversities, including something called Hurricane 
Katrina. In fact, Gary, with his leadership on the ground, got 
that port back up and operational within 2 weeks of the 
hurricane coming through, which was vital to getting New 
Orleans relief and moving the city forward in a recovery 
effort.
    Gary has overseen a number of many expansions since taking 
his lead position at the Port of New Orleans, but he has also 
held a number of leadership positions at the State and national 
level, as well, including chairman of the National Waterways 
Conference; he serves on the board of the Waterways Council, as 
well. He is past chairman of the American Association of the 
Port Authorities, which is an alliance of 350 ports in the 
Western Hemisphere; serves on the board of Gulf Ports 
Association of the Americas and is past chairman and past 
president of the Gulf Intracoastal Canal Association.
    He also was named to the Federal Reserve Bank of Atlanta's 
Advisory Council on Trade and Transportation. And Gary has also 
received international recognition, in that he was named to the 
Hall of Fame by the International Maritime Association at the 
United Nations.
    Gary has been a great leader on maritime issues and 
international trade.
    And it is a real privilege, Gary, to have you here today. 
Thank you.
    Chairman BRADY. Thank you, Dr. Boustany.
    And, welcome, Mr. LaGrange.
    We welcome all of you, look forward to your testimony. I 
would also ask our witnesses to keep their testimony to 5 
minutes.
    Mr. Oberhelman, your written statement, like all those of 
the witnesses, will be made part of the record. And you are 
recognized for 5 minutes.

    STATEMENT OF DOUGLAS R. OLBERHELMAN, CHAIRMAN AND CHIEF 
EXECUTIVE OFFICER, CATERPILLAR, INC., ON BEHALF OF CATERPILLAR, 
INC., THE U.S. CHAMBER OF COMMERCE, THE NATIONAL ASSOCIATION OF 
 MANUFACTURERS, THE BUSINESS ROUNDTABLE, AND THE LATIN AMERICA 
                        TRADE COALITION

    Mr. OBERHELMAN. Thank you, Chairman Brady and Ranking 
Member McDermott, Congressman Schock, for that very warm 
welcome and support of our initiatives, including trade and 
beyond trade, for Caterpillar. We really appreciate that from 
all of you.
    In recent months, Caterpillar has been identified in the 
press as the company leading the charge to ensure that the 
Obama administration and Congress enact all three--I repeat all 
three--pending free-trade agreements, not just Korea but also 
Colombia and Panama. I would like to begin by saying, that is a 
fair characterization and one we are quite proud to accept. In 
fact, our support for expanding trade goes beyond the pending 
free-trade agreements. We also strongly support completing the 
WTO Doha round, finishing the Trans-Pacific Partnership, and 
bringing Russia into the WTO as well.
    But for today's purposes, I want to focus on the pending 
Latin American agreements, with special emphasis on Panama.
    You may have seen Politico.com today. We ran an ad; it 
features four of our machines. All four were made in the State 
of Illinois. It appears there is a generator set off to the 
side, which was made in the State of Indiana. And, with any 
luck at all, the ocean freighter passing through the canal 
would have auxiliary power from Caterpillar made in Indiana, as 
well. So, just a reminder of how important this really is, and 
I would like to add this to the record, if I could.
    Caterpillar and the organizations I represent strongly 
support the U.S.-Panama Free Trade Agreement, as well as 
Colombia and Korea, because they promote sustainable economic 
growth, both at home and abroad.
    In Latin America, we now have agreements with Mexico, 
Chile, Central America, the Dominican Republic, and Peru. I am 
pleased to report that Caterpillar exports have dramatically 
increased following the approval of these free-trade 
agreements. Since the agreements have gone into effect, 
Caterpillar exports last year are up fivefold to Mexico, 
threefold to Chile, and up by more than 60 percent to Peru.
    Others have benefited, as well, and not just from the Latin 
agreements, but from all of them. Allow me to explain: It is no 
secret that the United States consistently runs a trade surplus 
in services and agriculture. But what the public and many 
policymakers don't realize is that the U.S. also runs a trade 
surplus in manufactured goods, but only with the 17 countries, 
as a group, that have implemented free-trade agreements with 
the United States.
    The important fact is that free-trade surplus gets lost in 
the discussion because there is a large trade imbalance for 
manufactured goods from non-free-trade-agreement partners, but 
the message about the success of free-trade agreement is--
excuse me--is too important to get lost.
    It is proof that American manufacturers can compete with 
anyone, provided they have open markets and a level playing 
field. That is exactly what trade agreements like the ones with 
Panama, Colombia, and Korea will provide.
    In addition to helping U.S. manufacturers of industrial 
goods, the Panama Free Trade Agreement will substantially 
improve market access for American farm products, including 
pork, consumer goods, and services. It will bolster the rule of 
law, investor protections, internationally recognized workers' 
rights, transparency, and intellectual property protections.
    Some dismiss Panama as a small country that should not be a 
U.S. trade priority. Others take trade with Latin America for 
granted. We think that is incredibly shortsighted. Last year, 
Caterpillar exported more products to Panama than Korea. We 
exported more products to Colombia than India or Germany. And, 
as a region, last year, Caterpillar exports to Latin America 
increased 58 percent, which is more than any other region of 
the world. Today, 6 of our 10, at Caterpillar, largest export 
markets are in Latin America. They are great friends of the 
United States, as well.
    We are pleased that Congress and many in the administration 
now recognize the importance of trade with Latin America. To 
demonstrate that commitment, we hope the first order of 
business will be passing the agreements with Colombia and 
Panama as well as the agreement with Korea.
    I would be remiss if I didn't also emphasize the other 
reasons to support the Panama trade agreement. Most 
importantly, Panama, like Colombia and Korea, is an ally and 
friend to the United States. It has major ports to both the 
Atlantic and Pacific, and the Canal is a major transit point 
for world trade.
    Panama is a good place to invest. One-third of its 
population speaks English, it is a fully dollarized economy, 
and it is strategically located, which makes it a good place to 
locate logistics and customer support operations, which we have 
done. At Cat, we are pleased with the success of our 
investments in Panama and with the high quality of our 
Panamanian workforce.
    For Caterpillar, the Canal expansion is particularly 
exciting. The expansion is one of the biggest public works 
projects in the world in years. We are doing our best to earn 
business associated with the Canal and all other infrastructure 
projects being built in Panama.
    If we can sell our U.S.-produced products to Panama duty-
free, it will help our customers provide us with a competitive 
edge over products made elsewhere, like China and Japan. In 
practical terms, the agreement means that Panama's 10 percent 
duty on off-highway trucks built in Decatur, Illinois, motor 
graders built in Arkansas, scrapers built in Decatur, and 
diesel engines in Indiana would be eliminated.
    What does the U.S. have to do in return, as it relates to 
mining and construction equipment? The answer is----
    Chairman BRADY. Mr. Oberhelman, I apologize----
    Mr. OBERHELMAN. That is okay.
    Chairman BRADY [continuing]. Since you have waited and been 
patient all day. I would like to give you some time during my 
questioning to be able to----
    Mr. OBERHELMAN. I understand fully.
    Chairman BRADY. No, thank you. You all are so very kind.
    [The prepared statement of Mr. Oberhelman follows:]

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    Chairman BRADY. Mr. LaGrange.

 STATEMENT OF GARY P. LAGRANGE, PRESIDENT AND CHIEF EXECUTIVE 
                  OFFICER, PORT OF NEW ORLEANS

    Mr. LAGRANGE. Thank you, Mr. Chairman. We certainly 
appreciate the opportunity to be here and speaking on behalf of 
all of the ports in the United States, some 160 strong, not 
just New Orleans.
    In recent studies completed by Parsons Brinckerhoff, Booz 
Allen Hamilton, the AT Carney Group, and the Marbridge Group--
four different studies--all studies pointed out that, with the 
expansion of the Panama Canal by 2014, we can expect 
incremental increases in containers coming through the Canal at 
a rate of about 25 million new TEUs by the year 2028.
    The Port of New Orleans firmly and publicly supports the 
U.S.-Panama agreement to enhance trade and investment 
activities with Panama. Panama has been a longstanding 
strategic partner of the United States, and, as a strong ally 
of our country, the U.S.-Panama agreement will further 
strengthen our economic relationship with an important regional 
partner and protect our critical strategic interests associated 
with the Canal.
    Through its direct facilitation of trade and commerce, the 
Port of New Orleans is one of the primary economic engines of 
the gulf coast, along with Houston and the Port of Houston, of 
course, and serves as a key gateway to the mouth of the 
Mississippi River system for international and domestic trade. 
Three hundred and eighty thousand jobs are accountable because 
of the Port of New Orleans alone. That is direct employment, by 
the way.
    Approximately $37 billion in national economic benefits 
comes from the transportation and the manufacturing of goods 
that flow through the port. As a container and general cargo 
port, the Port of New Orleans serves approximately 30 States in 
mid-America, the Midwest, and up the Ohio River Valley on a 
navigable waterway that consists of 14,500 miles. The port is 
also the home of six Class I railroads, which came in the early 
part of last year when they realized the connectivity due to 
the waterway.
    Mr. Chairman, the continuing development of the American 
export market would be enhanced through the implementation of 
the U.S.-Panama agreement. International agreements that help 
facilitate trade are a significant benefit to our Nation's 
ports. According to the American Association of Port 
Authorities, United States ports are responsible for moving 99 
percent of all of our overseas cargo in America. And more than 
13 million Americans are working in port-related jobs. The 
completion of the pending agreement with Panama will increase 
the cargo movement through these ports and improve employment 
opportunities for American workers.
    With respect to Panama, American ports play an integral 
trade role, which would be expanded even more under the pending 
agreement. The United States is a dominant trading partner for 
Panama. In 2009, the United States exports to Panama were 
valued at $4.3 billion, and almost 30 percent of Panama's 
imports came from the United States. As exports increased from 
the United States to Panama, the Port of New Orleans and other 
U.S. ports will be called upon to help meet the increase 
transportation needs.
    A review of the agricultural product trade provides--and I 
am going to yield to my colleagues up here some insight as to 
how the U.S.-Panama agreement would contribute to domestic 
economic growth. For example, the U.S. Farm Bureau estimates 
that U.S. agricultural exports alone could be increased by more 
than $195 million annually with the implementation of the pact.
    Such exports, the United States International Trade 
Commission has predicted that the largest growth will accrue in 
U.S. exports for rice to Panama, which are expected to increase 
by approximately 145 percent. Other U.S. export gains could be 
expected in the oil, machinery, and other key market areas that 
already contribute to a robust trade with Panama. In fact, 
estimates show that, when the U.S.-Panama agreement is fully 
implemented, U.S. exports to Panama of passenger vehicles would 
increase by 43 percent; U.S. exports of beef and pork, 94 and 
96 percent, respectively.
    Significantly, when discussions concern Panama, they must 
necessarily address the impact of the expansion of the Panama 
Canal, as mentioned earlier, on international trade. A 
significant amount of commercial vessel traffic passing through 
the Canal is engaged in trading activities with the United 
States.
    Furthermore, the Port of New Orleans, in collaboration with 
other river ports, ocean-going, and inland waterway vessel 
operators, manufacturers, agricultural interests, and other 
groups have been working strenuously to ensure that product 
dimensions in the lower Mississippi River navigation channel 
are properly maintained by the Army Corps of Engineers to meet 
the commercial vessel transportation needs of the United States 
in the future.
    Currently, over 500 million tons of cargo moves from the 
inland waterways of America through New Orleans, and that is 
why we have to keep that plug open in the bathtub.
    I want to thank you for your time on behalf of all of 
American and United States ports, Mr. Chairman. It has been a 
pleasure to be here. And I really appreciate all of you taking 
this matter so seriously as you are. It is a huge shot in the 
arm at a time that we all need it.
    Thank you.
    [The prepared statement of Mr. LaGrange follows:]

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    Chairman BRADY. Thank you for joining us.
    Mr. Wolf.

  STATEMENT OF DOUG WOLF, PRESIDENT, NATIONAL PORK PRODUCERS 
                            COUNCIL

    Mr. WOLF. Good afternoon, Chairman Brady, Ranking Member 
McDermott, and distinguished Members of the Subcommittee on 
Trade. I am Doug Wolf, president of the National Pork Producers 
Council and a pork producer from Lancaster, Wisconsin. I 
appreciate the opportunity to appear before the committee 
today.
    The future of the U.S. pork industry and the future of 
America's family hog farms like mine depend on continued 
expansion of exports. I am highly dependent on exports as a 
revenue source. Without industry wide exports, the price I 
would receive for my hogs would not allow me to remain in 
business. In fact, for every hog marketed in 2010, 
approximately $56 was due to export revenue.
    The U.S. is now the low-cost producer of the safest, most 
nutritious pork in the world, which has established us as the 
number-one global exporter. Last year, nearly 20 percent of the 
pork produced in the United States was exported, compared with 
only 6 percent in 2000. In 2010, the United States exported 
more than 1.9 million metric tons of pork, valued at $4.8 
billion.
    There is no disputing that trade agreements have been a 
major factor in the rapid growth in U.S. pork exports over the 
last two decades. For example, since the year before NAFTA was 
implemented in 1994, U.S. pork exports to Mexico have increased 
780 percent, now valued at $986 million. Similar growth has 
been seen with Australia, CAFTA, and Peru trade partners.
    Increasing pork exports is important to many more Americans 
than just pork producers. The U.S. pork industry supports an 
estimated 550,000 domestic jobs; 110,000 of these result from 
U.S. pork exports. Just last year, U.S. pork exports grew by 
almost $500 million.
    The USDA estimates that each $1 billion in additional 
agricultural exports generates approximately 8,400 new U.S. 
jobs. For the meat sector, however, USDA puts the job-creating 
number at more than 12,000. So the increase in pork exports 
last year created an additional 6,000 new jobs.
    According to Iowa State University economist Dermot Hayes, 
the Panama trade promotion agreement, when fully implemented, 
will increase U.S. live hog prices by 20 cents per animal and 
create approximately 213 full-time positions in the pork 
industry. We market over 100 million hogs annually in the 
United States. That means that this agreement will generate 
over 20 million additional dollars in the U.S. pork industry.
    I think it would be in the interest of the committee to 
also know that Dermot Hayes, Dr. Hayes, found that both the 
Colombia and Korean FTA, combined, would increase live hog 
prices by $11.15 per animal and create over 10,000 direct pork-
industry jobs.
    If we fail to implement the FTA with Panama, and Canada 
implements an FTA with Panama, Dr. Hayes says the U.S. will be 
out of the Panama market in 10 years. Likely, we will be out of 
the Korean market in 10 years and the Colombian market in 10 
years if the U.S. fails to implement these agreements because 
of FTAs that those nations have concluded with the EU and 
Canada respectively.
    The Panama trade promotion agreement will create important 
new opportunities for U.S. pork producers by providing 
immediate duty-free treatment of certain pork products while 
other pork products will receive immediate expanded market 
access through tariff-rate quotas. In addition to favorable 
market access provisions, significant sanitary and technical 
issues have been resolved that ensure that U.S. pork exports 
will not be blocked by unnecessary sanitary barriers.
    Pork producers are joined by virtually all U.S. food and 
agriculture producers in supporting the Panama FTA. By a letter 
dated February 14th, 2011, which is included in our submitted 
statement, 50 agricultural trade associations expressed strong 
support for the Panama agreement. Plain and simple, the Panama 
FTA is good for pork producers, good for U.S. Agriculture, and 
good for the United States.
    At this time of very tight budgets, America's pork 
producers are not asking for U.S. tax dollars. We are simply 
asking for the opportunity to compete. The National Pork 
Producers Council calls on the Obama administration to send up 
the implementing legislation soon, and urges Congress to 
approve the Panama trade promotion agreement and other pending 
FTAs before the end of the summer.
    Thank you.
    [The prepared statement of Mr. Wolf follows:]

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    Chairman BRADY. Thank you, sir.
    Mr. Sanfilippo.

   STATEMENT OF JASPER SANFILIPPO, JR., PRESIDENT AND CHIEF 
       OPERATING OFFICER, JOHN B. SANFILIPPO & SON, INC.

    Mr. SANFILIPPO. Good afternoon, Chairman Brady, Ranking 
Member McDermott, Members of the Subcommittee. I am Jasper 
Sanfilippo, president and chief operating officer of John B. 
Sanfilippo & Son. And I am honored to testify before the 
Subcommittee on Trade regarding the benefits of the pending 
free-trade agreement with Panama.
    My company strongly supports passage of the agreement, 
which we believe will allow us to reach new customers by 
removing barriers to trade and investment.
    In 1922, John B. Sanfilippo & Son began as a pecan-shelling 
company in Chicago, Illinois. Over the last 85 years, our 
company has diversified production to include a wide variety of 
nuts and other snack products, both through private label and 
brands like our Fisher Nuts and Orchard Valley Harvest. 
Headquartered in Elgin, Illinois, we employ over 1,500 people. 
With facilities located in Gustine, California; Selma, Texas; 
Bainbridge, Georgia; and Garysburg, North Carolina, JBS is a 
public company with annual sales of over $600 million.
    Our company plays an important role between growers and 
consumers as we handle nuts throughout the supply chain, from 
shelling, blanching, roasting, canning, packaging, and 
distribution. We purchase raw walnuts, almonds, pecans, and 
peanuts from over a thousand growers from suppliers in 
California and throughout the lower southern United States, 
including Florida, Texas, and Kansas.
    Our company began as a small storefront operation, but we 
are now selling to over 50 countries worldwide. Like many 
American companies, JBS sees exports as one of our greatest 
opportunities for growth. Today, exports represent about 10 
percent of our total sales. Our long-term corporate objective 
is to diversify globally and increase our sales to about 25 
percent. We believe our brand, innovation, and our reputation 
for quality will help us accomplish this goal.
    In addition, we have also implemented a strategy to grow 
with our domestic partners as they enter new international 
markets. For example, Walmart, one of our largest retail 
customers, has a retail presence in 14 international markets, 
offering a global platform for market penetration that 
otherwise does not exist in our industry.
    Twelve years ago, we began selling to Walmart in Mexico, 
and today we are exporting to its stores in Central America, 
Japan, China, and Brazil. In addition to Walmart, we are now 
selling to Comercial Mexicana and Chedraui, local Mexican 
retail chains that may not have considered our products if they 
had not seen them on a Walmart shelf.
    International growth has been positive, increasing demand 
for our 1,000 growers and suppliers. Over the last 15 years, we 
have increased our staff by 700 people and we have modernized 
four facilities.
    Despite this success, we continue to face barriers to 
exports. Tariff and non-tariff barriers often affect our 
ability to compete globally. Tariffs range from 15 percent in 
Panama to 14 percent in Brazil and to over 50 percent for some 
products in China. These duties translate to a significant 
price premium on the retail shelf, often making our products 
considered a luxury.
    We are pleased, therefore, that the United States has 
negotiated a comprehensive free-trade agreement with Panama. 
Panama is currently one of our best markets in Central America 
due largely to the purchasing power of the customers in the 
country, the lack of currency fluctuations, and the relatively 
strong recognition of our Fisher brand. We have been in the 
market for 11 years and currently export between $500,000 to 
$750,000 annually.
    Under the agreement, duties on our products will be 
eliminated within 10 years of implementation. Several 
categories, such as almonds and walnuts, will receive immediate 
duty-free treatment. This will allow us to price our products 
competitively in the market and enable us to reach a new class 
of customers at that lower price. Our experience in the 
Dominican Republic proves that; since the CAFTA-DR went into 
effect, our sales have grown around 20 percent annually.
    The Panama agreement will also allow us to compete more 
effectively with our Asian competitors, who often enjoy a price 
advantage due to currency fluctuations or the cost of labor or 
other inputs. Likewise, we face increased competition from the 
EU as it negotiates its own agreements with Panama and 
Colombia.
    The Panama agreement will also eliminate restrictions on 
foreign investment on multi-brand retailers. Currently, foreign 
retailers are prohibited from investing in the grocery retail 
sector. We are hopeful that removing this restriction will 
allow some of our business partners to open stores in Panama so 
that we can grow and follow them with their business.
    Thank you for the opportunity to present our views before 
this committee. We strongly believe that free-trade agreements 
will help our company to compete in global markets. We hope the 
committee will have the opportunity to consider and pass this 
agreement this summer.
    [The prepared statement of Mr. Sanfilippo follows:]

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    Chairman BRADY. Thank you, sir.
    Mr. Shapiro.

STATEMENT OF HAL S. SHAPIRO, PARTNER, AKIN GUMP STRAUSS HAUER & 
                           FELD, LLP

    Mr. SHAPIRO. Thank you, Mr. Chairman.
    Chairman Brady, Ranking Member McDermott, Members of the 
Committee, it is an honor to appear before you today. My name 
is Hal Shapiro, and I am a partner at the law firm of Akin Gump 
in Washington, D.C. I formerly served as associate general 
counsel in the Office of the U.S. Trade Representative and as 
senior advisor for international economic affairs at the 
National Economic Council.
    I think, but I am not sure, the reason I am here today is 
because I wrote a book on fast-track and U.S. trade agreements 
that skyrocketed into the top 4 million of the Amazon.com best-
seller list. And, Mr. Chairman, for the record, my wife didn't 
even make it through the first chapter, so you can imagine how 
excited I am that someone would actually hear my views on this 
subject.
    Mr. Chairman, when we gather here today at the most 
promising moment in years to advance the U.S. international 
trade agenda, our economy is emerging from a deep and painful 
recession, restoring the confidence needed for the United 
States to lead market-opening initiatives. President Obama has 
mobilized his administration through the National Export 
Initiative in order to double U.S. exports by 2014. At the end 
of 2010, U.S. exports had grown by 17 percent, and 
administration officials believe the country is on track to 
meet the President's challenge.
    As this committee well knows, three pending bilateral free-
trade agreements--those with Korea, Colombia, and the one we 
are here today to discuss, Panama--are central elements in the 
U.S. trade agenda.
    The Korea agreement would be the United States' most 
commercially significant free-trade agreement since NAFTA. The 
ITC has estimated that the reduction of Korean tariffs and TRQs 
on goods would annually add $10 billion to $12 billion to U.S. 
GDP and roughly $10 billion to our exports to Korea. Under the 
agreement, 95 percent of bilateral trade would become duty-free 
within 3 years. Thus, swift action on that agreement would be 
one of the most effective ways to help our economy grow more 
rapidly.
    As Ambassador Sapiro testified earlier today, the 
administration is also continuing to work with the Governments 
of Colombia and Panama to resolve all outstanding issues. 
Ambassador Sapiro explained that U.S. and Panamanian 
negotiators met in February and agreed upon actions that, when 
taken by Panama, will ready the agreement for congressional 
consideration.
    Before turning to the specifics of the Panama agreement, 
allow me, as a former U.S. trade official who has written and 
taught on the subject, to say that I believe U.S. international 
trade agreements should serve three aims: They should enhance 
our national security, they should strengthen our economy, and 
they should promote our values. And these three aims are best 
achieved when our agreements have bipartisan input and support. 
In my view, when work on the Panama agreement is completed, it 
will satisfy all of these points.
    First, in terms of our national security, Panama is an 
important and dependable ally of the United States in a 
critical part of the world. The United States and Panama have 
shared a geopolitical and economic interest dating back to the 
1800s and to the opening of the Panama Canal in 1914. Panama 
has proved to be a steadfast friend to the United States at a 
time when relations with some countries in Latin America have 
been uneven. The agreement would serve to make our ties to 
Panama stronger and more enduring.
    Second, in terms of economics, the United States has much 
to gain from the agreement. Panama has a rapidly growing 
economy and is one of the few Latin American countries with 
which the United States has a merchandise trade surplus, the 
largest in the region. When the Panama agreement enters into 
force, 88 percent of U.S. merchandise exports will enter Panama 
duty-free, with remaining tariffs phased out over 5 to 10 
years. The ITC has found that the agreement's main effect would 
be to increase U.S. exports, while causing little growth in 
U.S. imports from Panama.
    Third, the negotiations appear to address elements that 
should allow the Panama agreement to garner bipartisan support 
and reflect a wide range of values Members on both sides of the 
aisle represent. For example, concerns have been raised here 
and in the past about the transparency of tax information and 
labor laws in Panama.
    On taxes, as we have discussed today, Panama and the United 
States have entered into a tax information exchange agreement. 
Panama has not yet ratified that agreement, but I hope it will 
do so very soon. And Ambassador Sapiro indicated that may 
occur.
    On labor and environment, the Panama agreement does not 
just seek to lock in existing standards, as some past U.S. 
agreements have done. Rather, it calls for enhanced standards, 
subject to strong enforcement mechanisms. Panama has worked 
hard to make progress in the labor area, and I trust it will 
continue to do that rapidly.
    Panama deserves credit for working diligently with the 
administration to address these issues. It is my hope that the 
remaining steps outlined by the administration are taken 
swiftly and the agreement will forge even closer bonds between 
the United States and this important strategic partner.
    Thank you.
    [The prepared statement of Mr. Shapiro follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman BRADY. Thank you very much.
    Great testimony all around.
    Mr. Shapiro, you outlined the importance of the 
relationship with Panama. They are working diligently with us 
and the White House to address labor concerns. The protections, 
the enhanced labor and environmental standards are subject to 
strong enforcement mechanisms. In fact, Panama--this agreement 
has the same enforceable labor and environmental standards as 
Peru, which passed Congress with very strong bipartisan 
support, and the Korea agreement and the Colombia agreement. 
So, thank you for your comments.
    Mr. Sanfilippo, Mr. Wolf, you made great points about the 
importance to small businesses, agriculture, farmers, food and 
processors in this agreement and the cost of delay and the 
damage from competitive disadvantage.
    Mr. LaGrange, you pointed out the importance of the 
agreement not just to the Port of New Orleans but to many U.S. 
Ports.
    And, Mr. Oberhelman, thank you for outlining the benefits 
of all three agreements, both to Caterpillar and broadly to our 
economy.
    I want to give you a chance to make your final point, Mr. 
Oberhelman, about manufacturing and mining, but let me ask you 
this. You know, Panama is undergoing an infrastructure boom. 
Caterpillar isn't selling copy paper that you reorder every 
quarter. You are selling major pieces of equipment, with, my 
guess is, service contracts and supply contracts that last for 
years and years and years.
    So, when you miss the opportunity to bid and win contracts 
on a bridge, on a canal, on a road, on any major project what 
is the damage? How long does it take you--when you miss that 
opportunity, how long does it take you to rebid and catch up?
    Mr. OBERHELMAN. Yeah, thank you, Mr. Chairman. It is a 
great point, because, in our case, we will sell a machine, 
which may live 10 years and actually generate about triple its 
initial value in parts and service volume, which would be 
exports from the U.S. over its lifetime in that 10-year period.
    We are there in Panama today. Every single day, we see a 
foreign competitor trying to compete for those trucks, those 
tractors, whatever it is we sell. If we miss it today, we may 
not get another round for 3 or 4 years. Obviously, the Canal is 
kind of a one-time-only, but there is a subway system, there is 
lots of development going on in Panama, that if we miss this, 
we may not get another opportunity in Panama. I go back to 
Peoria or Decatur or Aurora, Illinois, where these plants are 
located, and I tell our hourly workers, ``Sorry, we missed the 
order. We don't make that tractor today to ship.''
    Final point: About 90 percent of our heavy volume machines 
today from Illinois are exported. So those machines----
    Chairman BRADY. Run that by me again?
    Mr. OBERHELMAN. The machines that run down our assembly 
lines in Aurora, Decatur, and Peoria, Illinois, between 80 and 
90 percent right now are exported. And we put a flag on each 
side of those machines with the destination they are going, and 
it is something to be very proud of.
    But we talk to our people about that all the time. If we 
didn't have that order and we lost it to a Chinese or Japanese 
competitor, we wouldn't make that machine today. So it is 
important to us, important to our hourly workers, our 23,000 
people in Illinois and elsewhere, 47,000 in the United States.
    Chairman BRADY. Right. Thank you.
    I would note, when I was in Panama City, from my hotel 
window, I stopped counting at 20 cranes in construction of 
various buildings, both residential, commercial, looked like 
civic municipal buildings as well. So it is a tremendous, 
dynamic market there.
    Mr. OBERHELMAN. Yeah. A lot of those cranes are built in 
Wisconsin. We don't own that company; we know them. Same story 
would apply. Fairly massive pieces of equipment that generate 
lots of parts and service for Wisconsin employees, in this 
case, for those companies.
    Thank you.
    Chairman BRADY. Is there anything you are not manufacturing 
in Wisconsin? It sounds like you have the bases covered.
    Mr. Schock, do you have a question?
    Mr. SCHOCK. Well, I think, for my hometown's sake, Mr. 
Oberhelman, you did a fine job of clearly articulating why 
these agreements are so important. I was going to ask you about 
how significant Latin America is to Caterpillar, but I jotted 
down some of your statistics. A 58 percent increase in Latin 
America alone last year--that is huge. And 6 of your 10 largest 
markets are in Latin America.
    I guess, to follow up on your earlier remarks that Chairman 
Brady asked about, missing the sale, or the potential for that, 
what are your concerns about the penetration of some of your 
competitors? For example, China, I know, is pretty aggressive. 
But I know, when I talk to the ag community, it is Canada's 
trade agreement right now with Colombia, for example, that is 
going to risk our wheat market. But I know inaction means that 
you are put at a competitive disadvantage with some of your 
world competitors.
    Maybe you could speak a little bit about the competitive 
threats in Latin America with some of your competitors.
    Mr. OBERHELMAN. Thank you, Congressman Schock, and I will.
    The interesting thing is that, where we have free-trade 
agreements, we can be the favored price leader among those 
other competitors that don't have free-trade agreements. It 
works the other way, as well.
    For our mining equipment going to Panama and Columbia, 
which are huge markets for us, all Illinois-built machines for 
the most part, if we don't have the free-trade agreement and 
Japan would, which houses our number-one competitor, the famous 
Komatsu, we would be price disadvantaged from 5 to 15 percent 
on every product going in if they sign an agreement with Japan, 
which we know they are negotiating. And I am very worried about 
that, because, once we are out of those mines in Colombia and 
Panama, it is hard to get back in, because we like our 
customers to standardize on our engines, our parts supply, our 
technicians and mechanics.
    So there is only one way to go in Latin America for us, and 
that is down, if we don't do free-trade agreements like we have 
in Peru and Chile and elsewhere that have served us so well 
over time. We can be the leader and continue to be for a long 
time in the future, especially that generates jobs for our 
hourly workers in Illinois.
    Mr. SCHOCK. Uh-huh. Very well said.
    The only other question I would have--I know how much work 
you do educating the employees of Caterpillar, which I think is 
so important as we muster the political support out here in 
Washington, D.C., in favor of trade agreements.
    I am curious, to the other panelists here, if you might 
speak to, whether it is Mr. LaGrange or whether it is the pork 
or ag witness, what do you do to help educate your employees or 
your members on the significance of these trade agreements to 
their livelihoods?
    Mr. LAGRANGE. Well, we work in concert with a number of 
other entities: our board of trade, the World Trade Center in 
New Orleans. We also work with a number of entities here at the 
Washington level through the American Association of Port 
Authorities, which consists of 164 ports in the United States. 
It is through those organizations we have educational 
committees that meet on a routine basis throughout the United 
States. And we use that as a vehicle or as a mechanism to 
indicate what the benefits are from a free-trade agreement in 
terms of what that equates to in total tonnage, in total dollar 
amounts, and total volume coming in and out of your port.
    We know for a fact that the increase, as I alluded to four 
studies earlier, the increase in cargo incrementally from the 
Panama Canal alone--there was another subpart to that. With the 
passage of Colombia and Panama free-trade agreements, that 
subpart also included an incremental amount of 38 percent in 
the way of exports being increased from the east coast and gulf 
coast ports.
    So it is a good number and it is one that we seize every 
opportunity we possibly can to get out and mix with the guy on 
the street, the businesspeople, through all the other 
organizations, from the Chamber of Commerce, World Trade 
Center, Board of Trade, and then again across the country 
through our other sister ports.
    Mr. SCHOCK. That is great.
    Mr. WOLF. If I can, in the pork industry, we have always 
tried to explain the value of our export markets by the 
increased value to each producer. And it was a little bit hard 
to get everybody to understand it, until 2008 when H1N1 hit and 
our export markets were stopped and our prices dropped about 30 
to 40 percent. We lost a fair number of producers due to that 
economic falldown. So it put things in reality of how important 
these export markets are, so we keep pushing that and use that 
as our example.
    Mr. SANFILIPPO. With us, when we talk to our staff, we 
really drive home the fact that we need to remain competitive, 
both domestically and globally. And when we look at our 
operations and trying to reduce expenses, you know, we will 
communicate to them the fact that, through our exports, you 
know, we do have things like tariffs that represent a much 
higher percent of what we could ever drive out of our 
manufacturing operations. So they are educated on that.
    But they recognize, like we do, that, you know, these 
things are important and they need to be handled in a different 
level other than the facility. But, clearly, the more volume 
that we run through our facilities, the better off they are and 
the more people we hire.
    Mr. SCHOCK. Okay.
    Thank you, Mr. Chairman.
    Chairman BRADY. Thank you, Mr. Schock.
    We just received word that the Colombian Constitutional 
Court has given its approval to the Colombia-Canada trade 
agreement. That ruling marked the last procedural step to clear 
the way for implementation of that agreement on July 1st. This 
development highlights the urgency that we face.
    Colombia--this agreement is a good, solid agreement that 
levels the playing field for our workers and exporters and 
respects the rights of workers and cements relationships with a 
loyal ally and drives home, I think, the point the witnesses 
made today that the pending trade agreement with Panama offers 
significant benefits, as well as the pending South Korea and 
Colombia agreements. Continued delay will only hurt American 
interests in the region and the ability of American workers, 
businesses, and farmers to compete in these markets as our 
competitors move ahead.
    I hope the Administration will lay out a clear action plan 
and timetable for considering the Panama agreement. I strongly 
believe we should consider all three by July 1st. I hope we can 
all work together to make that happen.
    I want to thank the witnesses today, the Members for their 
thoughtful questions.
    I would note that Members of Congress may submit questions 
to you for the record. I would encourage you to respond 
promptly.
    Chairman BRADY. Again, thank you so much for your patience 
today and insight that you provided in this agreement.
    But, for now, the committee is adjourned.
    [Whereupon, at 6:02 p.m., the subcommittee was adjourned.]
    [Submissions for the Record follow:]

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