[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE PENDING TRADE AGREEMENT WITH COLOMBIA
=======================================================================
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 17, 2011
__________
Serial No. 112-TR03
__________
Printed for the use of the Committee on Ways and Means
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70-876 WASHINGTON : 2011
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COMMITTEE ON WAYS AND MEANS
KEVIN BRADY, Texas,Chairman
GEOFF DAVIS, Kentucky JIM MCDERMOTT, Washington
DAVE 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
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C O N T E N T S
__________
Page
Advisory of March 17, 2011 announcing the hearing................ 2
WITNESSES
Ambassador Miriam Sapiro, Deputy U.S. Trade Representative,
Office of the United States Trade Representative............... 7
The Honorable Robert D. Hormats, Under Secretary for Economic,
Energy & Agricultural Affairs, U.S. Department of State........ 15
The Honorable Thomas C. Dorr, President & Chief Executive
Officer, U.S. Grains Council, Former Under Secretary for Rural
Development, U.S. Department of Agriculture.................... 40
William D. Marsh, Vice President Legal, Western Hemisphere, Baker
Hughes, Inc., on behalf of Baker Hughes, Inc. and the National
Association of Manufacturers................................... 48
Ambassador Peter F. Romero, President and Chief Executive
Officer, Experior Advisory LLC, Former Assistant Secretary for
Western Hemisphere Affairs, U.S. Department of State, Former
U.S. Ambassador to Ecuador..................................... 52
Adam Isaacson, Director, Regional Security Policy Program,
Washington Office on Latin America............................. 57
General Barry R. McCaffrey, USA (Retired), President, BR
McCaffrey Associates, LLC, Former Director of the Office of
National Drug Control Policy Former Commander of the U.S.
Southern Command............................................... 68
THE PENDING TRADE AGREEMENT WITH COLOMBIA
----------
THURSDAY, MARCH 17, 2011
U.S. House of Representatives,
Committee on Ways and Means,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:02 a.m., in
Room B-318, Rayburn House Office Building, the Honorable Kevin
Brady [chairman of the subcommittee] presiding.
[The advisory of the hearing follows:]
HEARING ADVISORY
Brady Announces First in a Series of
Three Hearings on the Pending,
Job-Creating Trade Agreements
Thursday, March 10, 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 series of hearings on the pending trade agreements with
Colombia, Panama, and South Korea. According to the President's own
statements, these agreements have the ability to create over 250,000
American jobs. The first hearing will address the agreement with
Colombia. The hearing will take place on Thursday, March 17, 2011, in
the main Committee hearing room, 1100 Longworth House Office Building,
beginning at 10 a.m. The Subcommittee will soon advise regarding
hearings on the trade agreements with Panama and South Korea.
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 concluded a trade agreement with
Colombia, which is still awaiting Congressional consideration. On
January 25, 2011, the Ways and Means Committee held its first hearing
on this agreement, along with the pending trade agreements with Panama
and South Korea.
The Colombia trade agreement was also discussed at the Ways and
Means Committee hearing with Ambassador Kirk, on February 9, 2011. At
that hearing, in response to Chairman Camp's request that Ambassador
Kirk set forth a concrete timeline for Congressional consideration of
the Colombia trade agreement within the first six months of the year,
Ambassador Kirk said that he would be sending a delegation to Colombia
and would then develop ``a workable plan'' for moving the Colombia
agreement forward. Ambassador Kirk stated that, prior to the submission
of the FTA, ``it will be imperative to resolve issues regarding laws
and practices impacting the protection of internationally-recognized
labor rights, as well as issues concerning violence against labor
leaders and the prosecution of the perpetrators.'' He further noted
that the President had ``directed us to intensify our engagement with
Colombia so that we can resolve these outstanding issues this year.''
The delegation sent by Ambassador Kirk was in Colombia the week of
February 15.
The U.S.-Colombia 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) has estimated that implementing the agreement would
increase U.S. exports by $1.1 billion and add $2.5 billion per year to
U.S. GDP. The benefits of trade agreements are also long-lasting. Since
2000, U.S. exports to the 13 countries with which the United States has
implemented trade agreements have grown almost twice as fast as our
worldwide exports.
Colombia has concluded trade agreements with major trading partners
and export competitors of the United States, so U.S. failure to
implement our own trade agreement with Colombia could severely
disadvantage U.S. exporters and jeopardize U.S. job creation. The
Canada-Colombia trade agreement is expected to enter into force around
July 1 of this year, removing significant Colombian tariffs for
Canadian agriculture exporters while similar tariffs remain in place
against U.S. agriculture exports. In 2008, Colombia implemented a trade
agreement with the MERCOSUR countries, including Argentina and Brazil.
Subsequent to implementation of that agreement, key U.S. agricultural
exports to Colombia have decreased significantly.
Over the years, several objections have been raised to our trade
agreement with Colombia. Some have argued that sustained progress to
address concerns about Colombian labor law and violence against workers
in Colombia must occur before it is appropriate to consider the
agreement. However, supporters of the agreement argue that passing the
agreement will improve labor protections and express frustration the
Administration has not identified concrete steps for Colombia to take
to address concerns.
In announcing this hearing, Chairman Brady said, ``Failure to move
forward with the U.S.-Colombia trade agreement is undermining U.S.
influence and leadership in our own hemisphere and putting at risk both
good U.S. jobs and the competitiveness of U.S. exporters. The United
States cannot afford to sit on the sidelines while Colombia implements
trade agreements with other major countries, putting American workers,
farmers, ranchers, manufacturers, service providers, and other
exporters at a competitive disadvantage. We need a concrete plan now
from the Administration for moving forward with the Colombia 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 Colombia. 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 and will explore developments within
Colombia that have occurred since the trade agreement was concluded.
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Chairman BRADY. Well, good morning. I would like to welcome
all of you, especially Colombian Ambassador Silva, to our first
Trade Subcommittee hearing of the 112th Congress. Today's
hearing is the first in a series of three hearings we will hold
on the pending trade agreements with Colombia, Panama, and
South Korea. This continues the examination the full committee
began in its hearings on January 25th and February 9th.
In this first of our hearings, we examine the U.S.-Colombia
trade promotion agreement. It is important to understand
today's hearing in the context of the full series of hearings
we will be holding. I strongly believe that we should consider
all three agreements by July 1st. I hope that the President has
heard the repeated bipartisan calls from Congress to move
forward promptly with all three of these agreements, rather
than leaving one or another to lag behind. These are all good
agreements. The time to move forward with all three is now.
Why the sense of urgency? The answer is simple. America is
being left behind. Take the case of Colombia. We concluded our
trade agreement with Colombia in June 2007, going on 4 years
ago. Other countries have taken advantage of our delay. They
have moved aggressively to sign trade agreements with Colombia.
And, as a result, many U.S. exporters now operate at a
competitive disadvantage. They are forced to pay higher tariffs
on exports to Colombia, and the exporters from some of our key
competitors.
The U.S. share of Colombia's ag imports plummeted from 71
percent to 27 percent in just the 2 years since the
agricultural provisions of the Colombia Mercosur trade
agreement went into effect. Direct cause of that dramatic
decline is our failure to implement our trade agreement.
It will only get worse if we delay further. The Canada
Colombia trade agreement is expected to enter into force by
July 1st. Colombia's agreement with the EU is also expected to
enter into force this year. Colombia is rapidly concluding its
negotiations with South Korea. Implementation of agreements by
these other countries, and continued inaction on our agreement,
will result in further missed opportunities to create U.S.
jobs. In fact, it will result in a decline in existing U.S.
jobs. We either move forward or we move backward; the choice is
ours. Staying still is just not an option.
I have stressed repeatedly how troubled I am by the failure
to advance a Latin trade agenda. I am holding out hope that the
President's departure this Saturday for Brazil, Chile, and El
Salvador, his first trip to South and Central America as
President, will mark the beginning of re-engagement with the
region.
But the key is, where is Colombia on this agenda, and where
is Panama? We cannot afford foot-dragging on these agreements,
nor shabby treatment of these two important friends and trading
partners. It is noticed by all our neighbors, threatens to
undermine U.S. leadership in our hemisphere. And in the face of
our inattention, our neighbors are forced to look elsewhere for
dependable economic and geopolitical alliances.
The consequences of such a plunge in our influence would
extend not only the economic losses, but also the national
security. Colombia is a strategic ally in the war on drugs.
It's a steadfast democratic friend and a reason to include
several increasingly undemocratic and anti-American leaders,
like Venezuela and President Hugo Chavez. We need to stand with
our friends, and we should start by moving forward with the
Colombia trade agreement and our other two pending trade
agreements by July 1st.
I respect the views of our ranking member and the
Administration about labor violence and labor rights, although
I believe that Colombia's dramatic improvements justify
congressional consideration. However, to the extent that some
believe that more progress is necessary, it's only fair that
they identify specifically what they would like to see, an
action plan for achieving that goal, and a time table for
completing it promptly. We need to do this to keep the--rather
than keep the agreement in limbo forever.
I would like to welcome all of our witnesses today, who--I
appreciate their leadership and their advice and efforts in
this effort. I want to thank them for being with us. I look
forward to hearing the testimony of both panels. And at this
time I would like to yield to Ranking Member McDermott for the
purpose of an opening statement.
Mr. MCDERMOTT. Thank you, Mr. Chairman. And I am pleased to
see the witnesses here today.
I have to admit I was a little disappointed when I heard
about this hearing. I hoped this would be the mark-up for the
Korean free trade agreement. That agreement is done. The Korean
free trade agreement creates incredible new export
opportunities for American goods. It has the support of
business, it has the support of labor. It has the support of
Democrats, Republicans. The Administration says it is ready to
submit the implementing legislation. Really, no obstacles
remain. We should be moving on the Korea FTA now.
But, for whatever reason, House and Senate Republicans have
decided they can't do anything on trade until the Colombia FTA
is ready. I simply don't get that. For years, Republicans have
cried that passing the Korea free trade agreement puts American
workers in businesses at risk of falling behind their European
counterparts. In a September 2009 letter, Republican leadership
argued that unless we approve the U.S.-Korea free trade
agreement before the EU-Korean pact goes into effect, ``U.S.
workers will lose $1.1 billion in exports to Korea, injuring
industries vital to the U.S. economy, including machinery, auto
parts, chemicals, plastic, food, meat, and the dairy sectors.''
Well, the Obama Administration fixed the Korea free trade
agreement and the EU free trade agreement is going into effect
on July 1st. So why are we not dealing with Korea? Why aren't
we working on the implementing legislation, is really my
question today.
No one is saying we should forget about Colombia. Just the
opposite. Colombia has been a strong and critical ally. This
agreement will strengthen the U.S.-Colombia relationship even
further. But it makes no sense to hold up Korea while the
concerns of the Colombian FTA are being addressed--badly needed
fixes that the Administration is working on very actively now.
We have a partner in this process, President Santos, who,
unlike his predecessor, wants to work with us. In terms of what
needs to be done in Colombia, here are some specifics that I
believe we ought to be considering.
Basic human rights are a big problem. Workers and labor
rights are killed every day by the dozen. The rampage goes on
year after year, and there is no justice. Between 2005 and
2009, there were more union workers murdered in Colombia than
in the rest of the world combined. And the workers who are not
killed are intimidated to prevent them from exercising the
basic human right to organize.
Let me give you a real world example taken from the
Colombian flower sector. This is an export sector. Seventy-nine
percent of Colombian flowers come to the United States. Mothers
Day is just around the corner and the flowers are coming. And
almost all the flower workers are women. They are single moms.
When flower section unions have attempted to assert their
rights, they have been met with threats and violence.
For instance, last year, workers at the Guacari plantation
struck over unpaid wages and benefits. The company brought in
thugs who beat the workers and intimidated them into resigning.
Then the company replaced them with temporary workers. Not one
perpetrator was arrested.
The Republicans are obsessed with the Colombia FTA, but
none of them would volunteer their wives or daughters to go to
work for a Colombian flower company.
And even if workers survive the violence, they can't
exercise the basic right to organize, because of loopholes in
Colombian labor law. One example is the use of cooperatives,
which are shell entities employers use to hire workers
precisely so that workers cannot form a union. And the use of
cooperatives is rampant in export sectors like the ports, sugar
cane industry, and the flower sector. For workers that can form
a union, employers use another loophole, known as collective
pacts, to effectively break the union.
If there is the political will, Colombia can address these
issues in months, not years. They can change their laws to
prevent union busting. They could implement a work plan to
significantly increase the size of its labor inspection force,
train the inspectors, and improve enforcement. Colombia can
make concrete, measurable progress on investigating and
prosecuting violence against union workers. Until Colombia
makes concrete progress, the rest of the trade agenda that will
get Americans the jobs they desperately need should move
forward.
So, let's move the Korea FTA. It is ten times more valuable
to the American economy than the Colombian FTA. Let's move the
MTB. It's worth two-and-a-half Colombian FTAs. Let's move China
currency. Fixing that would be worth about 100 Colombian FTAs.
And we can extend our expired preference program in GSP and
ATP. There are a lot of things we should be doing.
There was broad bipartisan support for all these
initiatives in the last congress. The question is, what
happened? My fear is that it really isn't about trade. My fear
is that a decision has been taken that the whole trade agenda
will be held hostage, and that millions of jobs that come with
it, for purely political reasons, will be held up. They want
the Administration to fail, no matter what the cost to the
American people.
On Monday, the Senate Republicans announced they were
blocking the nomination of the new Commerce Secretary and any
other trade-related nominees until Colombia FTA is passed.
That's throwing down the gauntlet. This is absurd at a time
when we need jobs in this country. It is time for the
Republicans to end their Colombia obsession, and for the first
time since they took over the House 11 weeks ago, get to work
creating jobs for the American people, starting with the Korean
free trade agreement.
My friend, Mr. Brady, and I have discussed this already in
private. And I think everybody knows it is ready to be sent up.
What is necessary is for the House to say, ``We are ready to
have the mock-up.'' They will send it up, and they will start.
And I hope that happens rather soon. Thank you.
Chairman BRADY. Thank you. For the Members in the audience,
we expect to have votes called around 10:15. So right now we
will move ahead with our witnesses. And then, if the votes are
called, we will recess for a brief period.
And today we will have two panels of witnesses. The first
is composed of two witnesses from the Administration whom we
hope succeed in moving an aggressive trade agenda forward.
Our first witness will be Ambassador Miriam Sapiro, deputy
U.S. trade representative from the Office of the U.S. Trade
Representative. We will also hear from the Honorable Robert
Hormats, under secretary for economic, energy, and agricultural
affairs at the U.S. Department of State. And we welcome both of
you, and we look forward to your testimony. I would also ask
our witnesses to keep their testimony to five minutes.
Ambassador Sapiro, your written statement, like those of
all the witnesses, will be made part of the record, and you are
recognized for five minutes.
STATEMENT OF AMBASSADOR MIRIAM SAPIRO, DEPUTY U.S. TRADE
REPRESENTATIVE, OFFICE OF THE UNITED STATES TRADE
REPRESENTATIVE
Ambassador SAPIRO. Thank you. Thank you very much, Chairman
Brady, Ranking Member McDermott, Members of the Committee. It
is an honor and a pleasure to testify today about the U.S.-
Colombia trade promotion agreement.
The Obama Administration is committed to a comprehensive
trade agenda that opens global markets, dismantles barriers,
and vigorously enforces America's trade rights. Central to
these efforts are the three pending free trade agreements. Our
goal is to have all three agreements, with their outstanding
issues addressed, approved by Congress as soon as possible.
Last week we notified the Ways and Means Committee that we
are ready to begin collaborative work on the text of the
implementing bill for Korea. We are working hard so that we can
also move the Panama and Colombia agreements forward with the
broadest possible support.
With respect to Panama, our governments have agreed upon
steps needed to resolve outstanding issues relating to labor
laws and tax transparency that, when taken by Panama, will
ready that agreement for congressional consideration.
Today I want to discuss the Colombia FTA and its importance
to the United States. Colombia is a key trading partner. It has
a dynamic and growing economy, which is the third largest in
South America. Colombia is also a vital partner of the United
States more broadly, both in the region and globally.
The Colombia FTA holds the prospect of substantial trade
benefits for U.S. workers, businesses, farmers, and ranchers by
eliminating tariffs on U.S. exports, in my cases, upon entry
into force. The International Trade Commission has estimated
that the FTA would expand exports of U.S. goods to Colombia by
more than $1.1 billion, and increase U.S. GDP by $2.5 billion.
The agreement's benefits go beyond elimination of tariffs
on goods. It will also provide significant new access to
Colombia's services market, improve standards for intellectual
property rights protection, open government procurement
opportunities, and safeguard U.S. companies operating in
Colombia against discriminatory or unlawful treatment.
This agreement will also help U.S. products remain
competitive as Colombia forges new relationships with the EU,
Canada, and other trading partners.
Finally, it will help strengthen the Colombian economy,
bolstering a steadfast partner in the hemisphere.
As important as these benefits are, President Obama has
made it clear that any trade agreement we send to Congress must
be in the interest of Americans, and also be consistent with
our values. The Administration has heard from a broad range of
stakeholders, and has subsequently made clear to Colombia that
three areas of concern must be addressed: first, the protection
of internationally recognized labor rights; second, prevention
of violence against labor leaders; and third, the prosecution
of the perpetrators of such violence.
We understand these concerns are shared by the Santos
Administration, and we are encouraged by their recent actions.
But more needs to be done. We now have a window of opportunity
to work on securing important improvements, and we are not
losing a moment to do so. I am pleased to announce that shortly
after my testimony today, I will meet with senior officials
from the Colombian Government who have flown in to continue our
discussions.
As you know, on February 9th, Ambassador Kirk announced
that the President had directed him to intensify our engagement
with Colombia to resolve the outstanding issues as quickly as
possible this year, and submit the Colombia FTA to Congress
immediately thereafter. Less than a week later, I met with
Colombia Ambassador Silva. Shortly thereafter, during the week
of February 14th, USTR led an interagency team composed of
State Department, Labor Department, and White House officials
to Bogota to obtain up-to-date information.
Last week, I met in Washington with a high-level delegation
from the Santos Administration to discuss how best to promote
our shared goals of protecting worker rights and addressing
violence and impunity.
We are also intensifying consultations with key
stakeholders and Members of Congress, including House and
Senate leadership. We are working quickly, but thoughtfully.
The Obama Administration shares both the sense of urgency and
the concern for worker rights that we have heard from many
Members of Congress, as we seek to advance the Colombia FTA.
In the meantime, Congress can immediately support the
United States' economic and strategic partnership with Colombia
by renewing the Andean Trade Preference Act for as long as
possible. We also call on you to keep faith with America's
workers by renewing trade adjustment assistance as soon as
possible.
We look forward to working with you on both the Colombia
FTA and our broader trade agenda in a manner that builds
bipartisan support. Thank you.
[The statement of Ambassador Sapiro follows:]
Under Secretary Hormats, thank you for joining us today. And you
are recognized.
STATEMENT OF THE HONORABLE ROBERT HORMATS, UNDER SECRETARY FOR
ECONOMIC, ENERGY, AND AGRICULTURAL AFFAIRS, U.S. DEPARTMENT OF STATE
Mr. HORMATS. Thank you, Mr. Chairman, Ranking Member McDermott--and
Happy Saint Patrick's Day--and member of the committee. It's a great
honor for me to testify before you today. I have testified before this
committee numerous times in the past, and always look forward to doing
that. I do so today with particular enthusiasm, because of the
importance of this topic for the American people, and for our strategic
relations with Colombia and the hemisphere.
With your permission, I will briefly summarize my remarks and
submit a full statement for the record. Ambassador Sapiro has noted our
concerns related to the protection of internationally recognized labor
rights, violence against labor leaders, and the prosecution of
perpetrators.
Congressional approval of our trade agreement with Colombia, once
our concerns have been met, will be important for both the economic and
the national security interests of the United States for several
reasons.
Colombia has been a steadfast partner. This agreement, in addition
to providing considerable economic benefits here at home, will
strengthen our relationship with this key friend, and increase our
influence in the entire region. This agreement will also enhance
Colombia's gains over the past decade in key areas, such as human
rights and the rule of law. It will help consolidate and strengthen the
Santos Administration's labor rights reforms, and allow Colombia to
make progress on the social inclusion issues that President Santos has
identified as his principal challenge.
Finally, the agreement is key to regaining our competitive edge in
an important market where we are increasingly losing market share, as
you have indicated in your opening statement, Mr. Chairman. We believe
strong bipartisan U.S. support has helped Colombia to make historic
progress, improving security for its citizens, and stemming the flow of
drugs to the United States.
Since 2002, homicides are down 45 percent, kidnapping is down 92
percent, and terrorist attacks down 71 percent. Since 2001, cocaine
production potential has fallen 46 percent, and the area under
cultivation has decreased by roughly 20 percent.
Since 2002, Colombia has extradited over 1,149 criminals, including
major drug traffickers, to face justice in the United States. Columbia
is a valued partner, sharing its expertise and confronting
transnational crime throughout the hemisphere and beyond.
Since 2007, Colombia has trained approximately 6,000 Mexican police
and judicial officials, and provided security assistance to Mexico,
Haiti, Central America, Afghanistan, among others.
Colombia is also an emerging global leader. It sits on the UN
Security Council and chairs the Iran and the Sudan sanctions
committees. It participates in peacekeeping operations in many other
parts of the world.
This is a decisive moment in our hemisphere. Moving ahead with the
Colombia agreement is key to restoring our regional leadership and
credibility. The agreement will help Colombia consolidate its success
in putting its democracy and economy on a sound footing by adopting
additional market reforms and strengthening effective social policies.
It will silence critics who claim we are ceding leadership in the
region and unable to deliver for our closest partners.
The Santos Administration has denounced threats to labor and human
rights leaders, increased penalties for violence against human rights
defenders, made it clear it respects the role of labor and human rights
groups, and increased funding for its protection program, which now
cover over 11,000 at-risk individuals. Colombia's prosecutor general's
office reports that it is investigating more than 1,300 labor-related
cases, and has obtained 344 convictions.
There is, of course, more to be done, and we are working with the
Santos Administration to build on these achievements.
This winter Colombia also suffered major flooding. As a close
friend and partner, Colombia deserves our assistance in that respect,
as well.
I also join Ambassador Sapiro in urging Congress to re-authorize
the Andean Trade Preference Act, as well as GSP and TAA at the earliest
opportunity and for the longest possible period. These programs will
support U.S. jobs and promote economic development overseas and provide
greater certainty for American businesses and investors.
Colombia is a growing market of 46 million customers. In 2010
Colombia bought $12 billion in U.S. goods, more than Russia, Spain, or
Turkey. It plans to invest over $15 billion in infrastructure projects
over the next 5 years. Without an agreement, U.S. exporters could miss
out on these promising commercial possibilities, and that would cost us
jobs at home. And therefore, that export element is particularly
important to a lot of American workers in a lot of industries.
Colombia is currently pursuing FTAs with our toughest competitors,
including the EU, Japan, and South Korea. China is now Colombia's
second-largest trading partner, and we are losing market share to
Brazil, Canada, and the EU. We are no longer Colombia's leading
agricultural supplier, either. The Colombia-Canada FTA enters into
force in July, further jeopardizing our wheat exports.
In closing, I would just like to emphasize that securing approval
of a high-standard agreement with Colombia is paramount for both our
bilateral partnership and for our regional influence.
Thank you very much, Mr. Chairman and Members of the Committee.
[The statement of Mr. Hormats follows:]
Ambassador Sapiro, first, please let Ambassador Kirk know I
appreciate the work, very good work, that was done to close out
Korea. I understand technical discussions are underway on that
agreement. And since Colombia and Panama will not have changes
in text, I see no reason we shouldn't move forward with those
technical discussions on those two, either. And I appreciate
Ambassador Kirk's engagement in the Asia-Pacific region,
through the Trans-Pacific partnership. I think that's
important, as well.
Part of the goal of moving these three pending agreements
is not just new sales for U.S. businesses and workers, but also
to clear the way for further trade engagement throughout the
world.
Ambassador Sapiro, when Ambassador Kirk appeared here
before the committee and before the Senate committee, he talked
about the intensifying efforts on closing out these pending
trade agreements. And he heard at the time a lot of frustration
on both sides of the aisle about how long the agreement has
taken place.
So, at this point, have you now given the Colombians a
workable, concrete action plan, and schedule for resolving any
outstanding concerns?
Ambassador SAPIRO. Thank you, Mr. Chairman, for that
question, and also for your kind words that I will certainly
relay to Ambassador Kirk. He is fully engaged, as we all are,
in moving ahead on multiple fronts, including TPP and other
important trade issues that we believe have market opening
opportunities for American workers, farmers, and ranchers.
Just as we took the time to get a good Korea agreement, we
are taking our time, although moving fairly rapidly, as I
indicated, to ensure that we are in a position to advance the
Colombia agreement to you. To do that, we have sat down
intensively with the Colombian Government to discuss our
concerns and develop what are clearly shared goals.
The Colombian Government is now considering what
initiatives they can take in order to show clearly that we are
advancing towards our shared goals. We have an opportunity, a
terrific opportunity, working closely with the Santos
Government, to achieve these goals. As Ambassador Kirk has
said, we are pushing on an open door. The government is
dedicated and ready to work with us, and we are working
intensively. We are working quickly, and we are working
thoughtfully.
Chairman BRADY. Thank you. Let me reiterate the need for
that concrete, workable plan. Colombia has responded positively
to every request we have made. Now, we promised a working team
and benchmarks 18 months ago, and didn't provide it. It's
critical that they understand what is expected of them, so that
they can respond accordingly.
So, again, reiterate the need to tell them what is expected
of them, to work together with them to create those benchmarks
now, in days--in your meeting this afternoon, for example--in
order to be in the close-out stage of this agreement.
And, Under Secretary Hormats, a couple of weeks ago, 11
former assistant secretaries of state who served both
Democratic and Republican presidents, strongly endorse this
trade agreement and our other two pending agreements, calling
on the present congress to work together to ensure passage by
July 1st of this year. In this letter they express serious
concerns about the harm caused by our delay, both economically
and with regard to our influence in the hemisphere. And I very
much share that concern, and would like to ask you about
whether you do, too.
And, specifically, I would appreciate your views on China's
rising influence in Latin America. I am concerned that China
may step in and assert its own leadership in our own
hemisphere, because of the vacuum created by the inability to
lead on trade and other issues in Latin America. Would you
comment?
Mr. Hormats. Sure. First, just let me underscore what
Ambassador Sapiro said. That is, they are working very hard to
put together a good agreement. And I can tell you she has been
working, and Ambassador Kirk, and their colleagues have been
working very hard, and with as much speed as they possibly can
to move forward. This is a very high priority for them, for
USTR, and for everyone in the government associated with this.
With respect to the China issue, I'm very glad you
underscored this. It does illustrate a point that I mentioned
in my testimony, and that is we are in a more competitive world
than we were 5 or 10 years ago. And the competition is coming
from places not just within our hemisphere, and not just
Europe, but we are getting competition from countries in Asia--
like China, as you have mentioned, Mr. Chairman.
And, therefore, one of the reasons that USTR is working so
hard on this is to put together a really good agreement that
does defend America's trading interests, that advances
America's trading interests, so that we will be able to be more
competitive, and we will not lose competitive share to
countries such as China.
China is making a move throughout the hemisphere. They're a
big trading partner with Brazil. They are big trading partners
with other countries in the region. And one of the reasons we
consider progress on this agreement, and coming up with a
really good agreement to be so important to strengthen our
ability to compete vis a vis the Chinese in Colombia. And we
aim to do that in as many ways as we possibly can.
As I also pointed out, it's not just from China. An
agreement like this will help us to compete on wheat sales with
Canada, for instance. So we are very cognizant of the fact that
there is competition. President Obama said that this was a
Sputnik moment. We are seeing Sputniks coming from all over the
world, which means we are seeing more competitive pressures
from all over the world, which is why we regard progress on
this as so important, and why so much work is being done to
make progress as quickly as possible.
Chairman BRADY. Thank you, sir. Appreciate it. Ranking
Member McDermott is recognized.
Mr. MCDERMOTT. Thank you. To both of you I have a question.
And I understand that you are in negotiation----
Chairman BRADY. If I may, we have about two minutes left in
the vote. I would like Mr. McDermott to lead off the
questioning when we return. We will recess until just
immediately after the last vote is taken. Thanks.
[Recess.]
Chairman BRADY. The subcommittee will reconvene. Again, I
apologize to Mr. McDermott for the interruption of votes, and
yield to lead off questioning.
Mr. MCDERMOTT. Thank you, Mr. Chairman. I realize,
Ambassador, that you do not want to negotiate in public, or
talk about the specifics of what is on the table with the
Colombians at this point, but I would appreciate anything you
can do to help us understand a time line. I know the Chairman
has asked for a time line, and you do not want to give a time
line, because with negotiations, it is over when it is over.
But I would like to hear from you if there are any issues that
you think are particularly problematic in the process.
I hear the question about whether we get it done or we are
going to fall behind. And I notice from your testimony that,
actually, exports have increased by 27 percent to Colombia in
the last year. So I would like to understand what we are
falling behind on. Explain to me how that develops, or why
people say that. They can say it but I want to know if there is
any basis for it.
Ambassador SAPIRO. Thank you, Congressman. I am pleased to
be able to report to you that exports are increasing. Our
concern about competitiveness is that our share of the market
in many key sectors is shrinking. And, as both I mentioned and
Under Secretary Hormats, Colombia is understandably forging
ahead to develop new trading partnerships with the European
Union, with Canada, with Japan, with Korea, and with other
partners.
So, we do not want to be in the position of ceding market
share, if we can help it. And so, for that reason, we would
like to advance this agreement, provided that the core concerns
that we have identified are addressed. And we believe that the
Santos Government shares the goals that we have set forth on
labor rights and on violence and on impunity. And, together, we
are working as quickly and thoughtfully as possible to finish
this process and to be able to submit the agreement immediately
thereafter to the congress for its consideration.
Mr. MCDERMOTT. Could you give us a little bit of details
about how quickly it's worked? Because I understand that you
went down there and they came back and there has been almost a
continuous flow of people between here and Bogota around this
agreement. So it sounds like you are working a little bit
faster than bureaucracies sometimes move on things.
Ambassador SAPIRO. We are working faster than intensively,
perhaps. We are being responsive to those that have asked us to
work more quickly, and we're also being responsive to those who
have asked us to be sure to identify concrete steps that the
Colombian Government can take to address the serious concerns
that we have identified.
Mr. MCDERMOTT. Do you see anything that cannot be resolved?
Ambassador SAPIRO. I am optimistic that we will be able to
reach a good resolution fairly quickly. And that is why we have
worked so intensively over the past several weeks, both in
Washington and in Bogota, to try and achieve such a result.
Mr. MCDERMOTT. One of the things that is a question for me
in thinking about these agreements is that trade is good. I
mean, okay, we will accept that. Then we get to the question of
why people are working for $1 an hour, and why poverty still
exists and has not changed in these countries. It seems to me
that that is the seed bed for the Hugo Chavezes and others to
spring up, if there is no advancement for the ordinary citizen.
And I would like to hear either of you. It seems to me that
it is counterproductive just to have trade if you, in fact, are
continuing the repression of workers and so forth.
Ambassador SAPIRO. We believe that trade is one way that we
can help develop a growing middle class in our trading
partners.
I had the good fortune of representing the United States at
the CAFTA-DR ministerial in San Salvador last month. And that
agreement, for example, is one where we have seen tremendous
growth in our partner countries, and we continue to see such
growth, which serves both their economies, as well as ours, and
stability in the region.
Mr. MCDERMOTT. Thank you, Mr. Chairman.
Mr. HORMATS. May I just comment very briefly on that, just
to underscore what Ambassador Sapiro has said. And that is your
point about trade and its link to development is a very
important one. One of the things we find when we look around
the world is that trade does open up new opportunities for what
one might call inclusive growth. And the more opportunities
there are for trade, the more opportunities there are for
growth in these countries.
And one of the things that the Santos Administration has
been focusing on very directly, and is a very high priority of
the president and his vice president, who, as you know, is a
former labor union leader, is to expand opportunities in
Colombia for more and more people to participate productively
in the economy, for just the reasons you've mentioned. Because,
as you know, the country has a history of difficulties with
FARC and other groups.
They are not focusing entirely on trade, but they're using
a lot of internal measures, as well, to strengthen their
development programs, and to give more people opportunities to
participate in productive sectors of the economy. And we think
that this agreement can complement and reinforce and help them
to consolidate some of those broader efforts that they are
making to give more people more opportunity. So, it's a very
important element of this overall equation.
Chairman BRADY. Thank you, Under Secretary. Mr. Davis is
recognized.
Mr. DAVIS. Thank you, Mr. Chairman. I find it ironic that
Ambassador Sapiro is citing the Central America free trade
agreement as an example of lifting people up, economically,
when, in fact, the same opponents of the Colombia free trade
agreement were using the exact same false arguments during the
CAFTA negotiations, and moving to pass that through the House,
which--Mr. Brady and I were actively working behind the scenes
to move that bill.
What we see is economic opportunity opening up if this
agreement which the Colombians desperately want to see pass
passed, and it has languished for four years now. This is not a
question of getting more information, it is a question of
domestic politics, and one party intruding upon what is not
only good for the country economically, but more importantly,
from a security standpoint, which leads to my question.
Under Secretary Hormats, our economic relationship with
Colombia is, in fact, very important in its own right in so
many ways. We gain a dramatic amount of benefit by that
agreement passing. However, it is also a key ally in South
America.
You mentioned FARC. Hugo Chavez is actively helping them.
He is helping them to destabilize this democracy. More than
that, he is working with narcoterrorists. He has ties all over
the world with, frankly, evil groups that stand against every
value that we have when we talk about propagating American
values. Colombia has been a light in its movement towards
liberty down there.
And I see our interests being sorely hurt, not only by this
four-year delay over domestic politics that, really, are going
to hurt the very workers that say they want this in the long
run, but it is also a key link in the inter-American drug
trade, north and south. If we do not implement the agreement, I
think we are allowing people in Latin America to question our
commitment to the region. We have lagged. The EU, China, other
areas are moving in. We are seeing a drop off in our exports
significantly, a drop off in our trade, a drop off in our
influence. And the security concern is growing.
I am not alone in this belief. In fact, in May of 2008, 5
former commanders in chief of the U.S. Southern Command,
Generals James Hill, Peter Pace, George Wilhelm, George Jowan,
and Barry McCaffrey, who we are going to hear from later, who
is here today, he wrote an open letter to Congress, urging the
support for the Colombia free trade agreement.
We will be hearing General McCaffrey's testimony a little
later. But in light of the significant U.S. strategic interest
in this area, what is the importance of this agreement in
avoiding a setback in U.S. influence?
As we have been dallying through the years with the back-
and-forth same-old political arguments that were used against
the Central America free trade agreement, I know there is a
great concern in the military that if Chavez can completely
destabilize the region, as I have heard from other chiefs of
staff in Latin American countries--CAFTA country military
chiefs of staff have asked me very candidly, ``What have you
not gotten this agreement ratified?'' It is so important to us
in dealing with our security threats?'' Could you comment on
that?
Mr. HORMATS. Yes, I would be glad to. As I mentioned in my
testimony in a very short sentence--but I think it makes the
point--one of the reasons we want to have a good agreement, one
of the reasons that Ambassador Sapiro and her colleagues are
working so hard to get one----
Mr. DAVIS. Why does it take four years to get a good
agreement?
Mr. HORMATS. Well, I cannot comment on the past, but all I
can tell you is that they are working very hard at the moment
to get a good agreement as soon as they possibly can.
And one of the reasons is the fact that we think it will
help promote jobs and growth in the United States. But another
reason is exactly the reason that you have mentioned, and that
is as I said in my statement, that we want to demonstrate in
the region that we can deliver for our closest partners. And
Colombia is a very close partner in dealing with issues that
you have mentioned. While others in the region who are intent
on destabilizing, rather than stabilizing the region.
Mr. DAVIS. Wouldn't it be in our compelling interest to
expedite this agreement, rather than a game going on for years?
Mr. HORMATS. I think that is what the USTR is trying to do.
They are trying to make as much progress as they can to get a
good agreement, and--as soon as they can. And one of the
reasons is we recognize fully your point on the security
element.
They are a very important security partner for the United
States, both in terms of dealing with their neighbors, and they
have been very helpful in a lot of UN peacekeeping operations.
And as a provider of assistance, technical assistance, they are
helping other countries--including Mexico--to deal with drug
issues----
Mr. DAVIS. If I could reclaim my time, sir.
Mr. HORMATS. Sure.
Mr. DAVIS. I appreciate that. I served with the Colombian
military in the Middle East, running flight operations in an
international peacekeeping force. As a soldier, I have an
intimate interest in seeing the changes that have taken in
place from when we were providing direct technical military
assistance just to maintain law and order.
Mr. HORMATS. Right.
Mr. DAVIS. When I see where we are now, and the dallying
over--yes, we are expediting. Expedite means to move quickly.
Again, it is four years. The Speaker of the House dropped this
down. Then, when the new Administration came in, the ambassador
said that this issue was in our court here. We are continuing
to delay. It needs to move. And frankly, I believe we are
rubbing the Colombian Government in the mud if we do not move
this agreement in an expedited fashion.
Chairman BRADY. Thank you. Mr. Reichert is recognized.
Mr. REICHERT. Thank you, Mr. Chairman. Welcome to both of
you. And I want to add to the chairman's comments, earlier
comments. I appreciate all the hard work that you both have
done, and Ambassador Kirk included, and the President, on the
Korean agreement. And it is a privilege to serve with you both
on the economic council, as we look for ways to double our
exports.
And I think all of us in the room recognize that one of the
ways that we do that is to pass trade agreements. And one of
the figures that keeps being repeated, especially by myself
lately, is the fact that the last time we did double exports
was from 1995 to 2007, when we passed 9 trade agreements.
So, I think all of us recognize how critical this is, and
that we are all working for the same purpose, and that is
really to create jobs here in the United States and turn this
economy around.
So, you are right to push for a swift movement on Korea.
But the questions remain, certainly, around Colombia. It has
been sitting here since 2007, as has been mentioned. So we are
looking at July 1st? At least that has been the date that has
been given to us, as a possible arrival date of a Korean
agreement for consideration by the House. But there are some
similarities, I think, in these agreements as we look at Korea
and Colombia. And so I think some of us get a little confused
as to the delay, the reasons for the delay.
So, I really like yes or no answers, it speeds the process
up a little bit. So, Mr. Secretary, like Korea, doesn't the
same argument hold true for Colombia, when you look at the loss
of market share? That is a true statement. We are losing market
share--I think you just mentioned that in your testimony--in
both Korea and Colombia, correct?
Mr. HORMATS. Yes, we are losing market share.
Mr. REICHERT. Especially concerned about Canada, because
they are moving forward with a July 1st date also.
Mr. HORMATS. Yes, and that will cause us to lose market
share in wheat, in particular.
Mr. REICHERT. Especially important to the eastern side of
Washington State.
Also, like Korea, doesn't the Colombian agreement contain
some of the same strong language surrounding labor protections?
Mr. HORMATS. I will leave the details of the agreement to
Ambassador Sapiro.
Mr. REICHERT. But essentially it is the same language, is
it not, Ambassador?
Ambassador SAPIRO. Thank you, Congressman. We do have a
strong labor chapter in our FTA with Colombia. We want to make
sure that the provisions in that agreement with respect to
internationally recognized labor rights----
Mr. REICHERT. Could I interrupt, just for a second? I am
sorry.
Ambassador SAPIRO. Certainly.
Mr. REICHERT. But isn't the language in the Korean
agreement and the Colombian agreement essentially the same? We
are looking at passing Korea. It is essentially the same
language, right? So the Korean agreement must meet the same
standard, internationally, as the Colombian language does. Yes
or no?
Ambassador SAPIRO. Congressman, our goal is to present to
you high-standard agreements----
Mr. REICHERT. Yes, ma'am. No, I understand that. But
isn't--and my question is, isn't the language the same in the--
--
Ambassador SAPIRO. There are strong----
Mr. REICHERT. In the Korean agreement and the Colombian
agreement, when it comes to labor? And, matter of fact, we can
throw in the environmental language also. Is that not the same
as the Korean agreement?
Ambassador SAPIRO. There are strong----
Mr. REICHERT. Yes or no, ma'am, please. I hate to--you
know, I know you are trying to answer in a politically correct
way, but we all have--we know what the language says. So is it
the same language, or not?
Ambassador SAPIRO. There are strong provisions in the
Colombia agreement and there are strong provisions in the
Korean agreement----
Mr. REICHERT. Does the Korean agreement meet the
international standards on labor and the environment?
Ambassador SAPIRO. The Korean agreement? Yes.
Mr. REICHERT. Yes. So, if the same language exists in the
Colombian agreement, then does that not also meet the
international standards?
Ambassador SAPIRO. I have not had an opportunity to do a
side-by-side comparison. So what I can say is that we have high
standards in both agreements. There are, however, serious
concerns with respect to the situation on the ground in
Colombia that does not exist with respect to Korea. We did----
Mr. REICHERT. Okay. I would like to just say that my time
is about to expire--excuse me for interrupting again--but we
know that the arguments are the same. We have got to bring the
Colombian agreement, along with the Panama agreement and the
Korean agreement. Hopefully, looking for that July 1st. And
there is no reason, really, to delay any further. I yield back.
Chairman BRADY. Thank you. Mr. Herger is recognized.
Mr. HERGER. Thank you, Mr. Chairman. Ambassador Sapiro, you
stated in your testimony that the Obama Administration shares
our sense of urgency to advance the Colombia free trade
agreement and that ``it is this sense of urgency that we are
bringing to our intensified efforts to resolve outstanding
issues.''
I must say that I am, frankly, disappointed that it took
the Administration over two years to develop this newfound
sense of urgency, since the Administration has been saying all
along, starting with the President's first trade agenda in
2009, that it was in the process of developing a plan of action
and establishing benchmarks for progress on Colombia.
Yet all this time we have been waiting for this leadership
from the Administration. We have seen our agricultural exports
to Colombia plummet as the Mercosur agreement went into effect,
and watched Argentina's share of the Colombian market climb
from 7 percent to 30 percent, taking away exports from American
farmers and ranchers.
The Administration has made clear that it wants to see the
agreement passed by Congress by July 1, demonstrating a sense
of urgency because that is the date of implementation of the
EU-Korea free trade agreement, which the Administration
recognizes as a threat to U.S. exports.
Yet there has been no sense of urgency demonstrated by the
Administration to Colombia, despite the fact that we are
already facing the competitive disadvantage in that market,
which will only worsen as Canada, one of our strong
competitors, will implement a new free trade agreement with
Colombia on the exact same date, July 1st. This will further
decimate our agricultural exports to what has traditionally
been our number one agricultural market in Latin America.
Ambassador SAPIRO, I hope that this new sense of urgency
you are expressing turns out to be more than the rhetoric
coming out of the Administration in the last two years, because
Americans deserve better. They deserve action on this important
agreement, and all the benefits to our economy that comes with
it.
Now, Secretary Hormats, in your testimony, you state that
the agreement with Colombia will consolidate and strengthen
Colombia's gains in such areas as human rights, the rule of
law, and labor rights reforms. Would you expand on how the
implementation of the Colombia FTA will help the U.S. further
engage Colombia in these areas, and build on the progress that
has been made thus far, Mr. Hormats?
Mr. HORMATS. Well, yes. Very briefly, I think that the kind
of points that Ambassador Sapiro was making in her testimony
and in her comments to the committee underscore the fact that
we are asking for a number of measures in the areas that you
have just described that will be included in the agreement. And
we cannot go into detail at this point, because it is under
negotiation. But the fact is that, by including particularly
important areas in the agreement that she is working on, it
will help to consolidate the progress that is already made.
Moreover, to the extent that we can strengthen ties between
our two countries, it will strengthen the dialogue between
Washington and Bogota. And we have a number of ongoing
discussions with the Colombians on a variety of issues, human
rights being one of them, and a number of the others, as well.
So, to the extent a good agreement can be reached, it will,
within the agreement, contain areas that will help them to
consolidate their gains. But it will also strengthen the
relationship which will broaden the dialogue about the kind of
issues that you and others are concerned about.
So, it is a double benefit within the agreement and also
strengthening the dialogue in a broader sense.
Mr. HERGER. Well, Mr. Ambassador [sic] and Mr. Secretary,
let me express to you the overwhelming frustration that the
constituents I represent--which is one of the largest
agricultural areas in the world, the northern Sacramento
Valley--have with--that we have fallen from number one exporter
to number two, because this agreement has not gone through. And
I yield back.
Chairman BRADY. Thank you, Gentleman. Mr. Smith is
recognized.
Mr. SMITH. Thank you, Mr. Chairman, and thank you to our
witnesses today. You may already know that this week is
National Agriculture Week. And a lot of my constituents in
rural Nebraska are very anxious to see this trade agreement
passed.
Ambassador SAPIRO, I understand that Colombia maintains
what is known as a price band system, which imposes additional
duties on top of the regular tariffs on U.S. ag imports, based
on price. Could you tell us if the Colombia agreement addresses
this barrier?
Ambassador SAPIRO. I can tell you, Congressman, that the
agreement would reduce a great deal of both tariff and non-
tariff barriers. I am happy to look into that specific
question. I know that the agreement, once in force, will
provide great relief to our farmers, our ranchers, as well as
our manufacturers and our service providers.
I would also like to say that it is--we do share the sense
of urgency behind your question, and that is precisely why we
are working so intensively and so thoughtfully to address the
serious concerns that we have identified in the right way, and
to be able to move ahead as soon as we have done so.
Mr. SMITH. Okay, thank you. And I appreciate your getting
back to me. If you could perhaps advise what I should tell
constituents when they inquire what a time line is, can you
give us any sort of a time line?
Ambassador SAPIRO. Let me go back to last summer, when we
started working intensively on the Korea agreement, and we were
able, through hard work, close consultation with Congress and
our stakeholders, particularly those with a vested interest in
that agreement, to improve the agreement, and to be able to
advance it in a way that is very consistent with American
interests and American values.
We are working very, very hard with that same template in
mind to approach this issue, so that the serious concerns that
we have on the labor code, to be able to ensure that the labor
laws and their enforcement protect and promote worker rights,
so that they are not undermined, and they are not denied, that
we can reach those goals together, so we are working quickly
and.
And, as I mentioned, we are going to be fortunate to resume
our high-level discussions with senior officials from the
Santos Government when we conclude our testimony here today. To
show you just how concerned we are, and that we do share the
sense of urgency, we are working rapidly in a thoughtful way in
the right direction.
Given the fact that we share common goals--it is clear to
me that we do share common goals with the Santos
Administration. Under Secretary Hormats indicated they are
already doing a lot on their own initiative to address the
labor concerns, as well as broader human rights concerns. So I
am confident that we will be able to report back to you in the
near future on progress.
Mr. SMITH. Okay. Would you agree that perhaps our ag
producers, among other producers here in our country, remain at
a competitive disadvantage, as long as the agreement
languishes?
Ambassador SAPIRO. We do not want to see any export
opportunity or any job left on the table.
Mr. SMITH. Yes.
Ambassador SAPIRO. So we will work very hard to ensure that
that does not happen.
Mr. SMITH. Thank you very much. I yield back the balance of
my time.
Chairman BRADY. Thank you. The chair recognizes Ms.
Jenkins.
Ms. JENKINS. Thank you, Mr. Chair, and thank you all for
joining us.
Ambassador SAPIRO, with near six-and-a-half million cattle
on ranches and in feed yards in my home state of Kansas, we
rank second in the nation in beef production. At home, the
cattle outnumber the people by more than two-to-one. And the
beef industry generated more than $5.5 billion in cash receipts
in 2009. And with all due respect to the chairman, I think in
Kansas we have the best beef in the world, we just cannot eat
it all ourselves.
There is no doubt that lowering Colombian tariffs on U.S.
agriculture products will greatly help our farmers and
ranchers. However, the Colombian agreement would also address
sanitary and phytosanitary barriers to agriculture trade. So it
appears that this will make it easier to sell Kansas beef to
our friends in Colombia.
But could you please explain for us, first, how the
agreement addresses these barriers, and second, how resolving
these barriers in other agreements have helped America's
farmers and ranchers? And then, finally, do you expect similar
results in this case?
Ambassador SAPIRO. Thank you, Congresswoman. The simple
answer is yes. We are confident that this agreement will be of
great value to our farmers and our ranchers. It does address
SPS issues. It does address the tariff question.
And just as our other trade agreements have benefitted U.S.
exporters across the board, including agricultural commodities,
and especially beef, we do believe that this agreement, once it
is in force--in other words, once we have been able to address
the issues that I outlined earlier, and--we will be able to
present it to you immediately thereafter, and look forward to
your positive consideration of it.
Ms. JENKINS. Okay. Thank you, Mr. Chairman. I would yield
back.
Chairman BRADY. Thank you. The Chair recognizes Mr.
Crowley.
Mr. CROWLEY. Thank you, Mr. Chairman, and Happy Saint
Patrick's Day to you, my friend from Texas. No Saint Patrick's
Day back to me?
Chairman BRADY. Absolutely.
Mr. CROWLEY. Thank you very much. I was, like, a little
concerned here.
Chairman BRADY. Singing out of my heart, Mr. Crowley.
Mr. CROWLEY. What has happened to comedy around here?
[Laughter.]
Mr. CROWLEY. Let me thank you, the witnesses, for being
here today.
Let me just go back to what my friend and colleague, Mr.
Reichert, was alluding to. Ambassador Sapiro, is it--the
language is virtually the same, in terms of the agreement
between the U.S. and Colombia and the U.S. and Korea as it
pertains to labor, human rights, and the environment. Correct?
Ambassador SAPIRO. I----
Mr. CROWLEY. The language.
Ambassador SAPIRO. I have not done a side comparison.
Mr. CROWLEY. Virtually.
Ambassador SAPIRO. But I believe that they are similar.
Mr. CROWLEY. But the real question here is whether or not
the parties have met the standards of the agreement, in terms
of labor.
I point that out because the ILO has indicated on a recent
mission to Colombia the need for the Colombians to still
address the issue of reforms, as it pertains to the abuse of
cooperatives, as well as the use of collective pacts to
prevent, in essence, the ability of workers to organize within
Colombia.
Is that correct, in terms of what the ILO is saying? Not
what you are saying, what the ILO is saying. Is that correct?
Ambassador SAPIRO. I know that there are concerns regarding
the situation in Colombia, in terms of the enforcement and the
full protection of worker rights. And those concerns include
ways to avoid creating a direct employment relationship. Those
are concerns that we have, and that I know the Colombian
Government shares. And they are looking at different ways to
address them in a concrete way----
Mr. CROWLEY. So would you agree that there is a difference
between the standards that are set within the agreement and
maybe the country's having fulfilled those standards?
Ambassador SAPIRO. There are certainly different situations
on the ground in both countries. With respect to Colombia, we
do have serious concerns about the question of worker rights
and their full enforcement, the question of violence against
workers for exercising those rights, and the question of
impunity, and the importance to punish those perpetrators of
such violence. We did not have those concerns with respect to--
--
Mr. CROWLEY. Korea.
Ambassador SAPIRO.--Korea.
Mr. CROWLEY. I thank you for your comments on that, just to
clarify that point of my friend, Mr. Reichert.
Given that the Korean agreement is completed, and there is
some level of concern that we are waiting too long to move,
could this disadvantage--for either one of you--could this
disadvantage our service industries?
And I am interested to hear, because I hear a lot from my
friends on the other side of the aisle about the need for speed
on two deals which we are still working on which have not yet
fully been completed by this Administration, make the argument
that the former Administration had finished the deal. The new
president and our new Administration are still working on these
deals. And while I do have some sympathy, and I do have--Kevin,
you know this sympathy that I have about these concerns--I
think we have also lost the sense of urgency about Korea.
And I just want to point out on beef and cattle, my in-laws
are from Montana. And I would only question whether or not the
beef in Montana may be a little bit better than the beef from
Kansas. But having said that, under this provision with Korea,
775 million, compared to 12.5 million with Colombia, the
difference is in terms of the scale of these agreements.
I mean it has been compared that the Korean deal is 10
times the Colombia deal. Is there some concern here, in terms
of--I mean you talk about the impact of waiting. Are you
concerned that Korea is being held hostage by Colombia at this
point? Is there any concern here by either one of you?
Ambassador SAPIRO. We notified the full committee earlier
this week that we are ready to proceed to discuss the
implementing legislation for Korea. We worked very hard last
year to improve the Korea agreement, to make sure that it met
U.S. interests. And it does. And so we are indeed ready,
Congressman, to move on that agreement as soon as the committee
can schedule a session.
Mr. CROWLEY. Well, I thank you very much, and I yield back
the balance of my time.
Chairman BRADY. Thanks to my Irish friend. And let me weigh
in that Texas beef, indeed, is the greatest in the world.
Mr. CROWLEY. I have a beef with that.
Chairman BRADY. It actually makes you smarter and better
looking.
[Laughter.]
Chairman BRADY. Let me just say that for the record.
Mr. CROWLEY. And since I am looking more and more like you,
I tend to agree with you.
[Laughter.]
Chairman BRADY. I may need to eat more.
Mr. Buchanan is recognized.
Mr. BUCHANAN. Thank you, Mr. Chairman. Ambassador, I wanted
just to--being a Member here for four years, and many of my
colleagues have been here four years or less--but being here
for four years--and the gentleman said the need for speed--this
has been an issue that we have been dealing with for four
years. Where is the good faith negotiation?
I represent Florida, happen to be the only member of Ways
and Means in Florida. This is a big issue to Florida. And it is
just--it just seems like a complete lack of good faith, in
terms of its negotiation. It is one hoop after another, moving
the goal post constantly. I have been in business for 30-some
years. At some point, just--if you are not going to do it, tell
me you are not going to do it, and we will give the business to
China.
But the bottom line, enough is enough. It has just gone on
way too long. And I think the gentleman mentioned--the
Secretary mentioned $15 billion in exports. Is that right,
Secretary, is that what you mentioned, the U.S. exports into
Colombia?
Mr. HORMATS. Something like that, yes.
Mr. BUCHANAN. Yes. So I am looking at what has been the
lost opportunities, the lost jobs in the U.S., and what is the
lost opportunities going forward if we do not deal with this?
Because you have other countries--you mentioned you are
losing market share--but after four years, if we do not get
this done, in my opinion, in the next three or four months, you
end up in the political season after the summer. It is not
going to get done. And there is always issues for not doing a
deal.
I mean, again, if we do not want to do the deal, the
Administration or someone else, then we should just tell our
friends in Colombia that we do not want to do the deal.
So I guess I bring that up to you in my frustration, what I
hear from constituents all over Florida. Enough is enough. That
is why we are trying to get a time line on this. I am excited
about Korea, but we would like to see these other trade
agreements get done.
And I will say just the same thing about Panama. It has
just gone on and on and on.
So, I guess I would like to ask the Secretary, was that
your number, the $15 billion? I think that was what you quoted,
that exports--we export into Colombia. Is that your figure?
Mr. HORMATS. I will check----
Mr. BUCHANAN. I think that was in your opening statement.
Mr. HORMATS. $12 billion.
Mr. BUCHANAN. $12 billion.
Mr. HORMATS. Colombia bought $12 billion in U.S. goods.
Mr. BUCHANAN. Do you have any estimate of what, in the last
four years we have been negotiating this and not having an
agreement, what does that cost us in exports? Or maybe, going
forward, what is this going to cost us as China and other folks
are coming in there and----
Mr. HORMATS. I do not have a precise estimate on that. It
would be hard to make an estimate----
Mr. BUCHANAN. Do you have some thoughts on it?
Mr. HORMATS [continuing]. that would be credible. Well, let
me just make one broad point in answer to the point you have
made on this, and that is I have worked for Republican
administrations and Democratic administrations. And I am a
strong believer--as I mentioned in my testimony--in the
strategic importance of our relationship with Colombia for a
variety of reasons that I have indicated.
And I just want to say that I have had a chance to work
very closely with Ambassador Sapiro, Ambassador Kirk, and the
people who are working on this. And I can assure you they are
working very hard, as expeditiously as possible, to make real
progress on this, because they regard it as important, as well.
And I understand the points that have been made about the
past. But if we are talking about the present, and we are
talking about the level of commitment, and we are talking about
the level of expedition that is going in to fulfilling this
commitment, they are working very, very hard to come up with
something that serves the interests of the American people,
that is a good agreement, and that can be done as quickly as
possible, bearing in mind the kind of results that Ambassador
Sapiro and Ambassador Kirk have indicated.
And I can assure you this is given enormously high priority
at all levels of the Administration, and they are working very
expeditiously. When she gets out of this meeting she is going
to meet with Colombians right away. These are senior, credible
Colombians. There will be a very senior----
Mr. BUCHANAN. Mr. Secretary, let me just--I want to--
because we got a limited time--what--how long, best to your
knowledge, have we been working on this agreement?
Mr. HORMATS. We have been working----
Mr. BUCHANAN. I mean when did this agreement--and it is not
just this Administration. A couple of years, but--I mean, how
many years--because I remember in the last two years of the
Bush administration, there must have been 50 Members of
Congress that went down to Colombia in a good faith effort to
try to get something done. Have we been working on this for six
years? I have been here four, and I know it has been front and
center for four years. I mean how long does something like this
take? I think they are good partners. There is a lot of issues.
We need to do something about it.
Ambassador SAPIRO. Congressman.
Chairman BRADY. All time has expired in this witness, and I
would encourage you to answer in writing, if you would.
Mr. HORMATS. Thank you.
Chairman BRADY. Thank you. The Chair recognizes Mr. Kind.
Mr. KIND. Thank you, Mr. Chairman. And I want to thank you
for holding this hearing today. I think it is very important
that we, as a committee, explore what remaining obstacles
remain to move these three bilaterals forward. But, obviously,
the focus is on Colombia today.
Madam Ambassador and Mr. Secretary, I want to thank you for
the intense focus that you have placed on this issue.
Obviously, if we are going to meet the President's goal of
doubling exports in the next five years, these bilaterals are
going to be an important step to achieving that. And they are
important in their own right for geopolitical considerations,
for economic considerations. I mean we are celebrating National
Agriculture Week back home in Wisconsin this week.
And I am just looking at some of the analysis done with
South Korea: 6.5 billion in additional ag exports to the South
Korean market, when we can finalize that agreement. And we are
looking at roughly 2.2 billion, just in the Colombia market
alone. That is nothing to sneeze at.
But, having said that, there are some legitimate concerns
that are ongoing with Colombia. I commend the Obama
Administration for hitting the pause button when it related to
South Korea, because I thought there was a better deal to be
had. And, quite frankly, given the additional time that they
went and negotiated some of the remaining items dealing with
auto, making progress on beef, we were able to achieve a better
deal with South Korea, one that I think will garner greater
bipartisan support now in congress, once it is submitted for
our consideration.
But in Colombia specifically, there are still some
lingering concerns about worker rights and the violence against
labor in that country. The previous Administration, either they
chose to ignore it or didn't press this issue, but I am glad to
see that this Administration has renewed focus on that.
And the question I have for you now--and to help us analyze
whether progress is being made on that--are the obstacles in
Colombia that many people are raising in regards to the ILO,
worker rights, the violence against labor, in particular, is it
a question of will in the country, or is it a question of
institutional capacity or capability of doing something
significant to crack down on some of these measures? Maybe we
can start with you, Madam Ambassador.
Ambassador SAPIRO. Thank you, Congressman. I think those
questions are related. We have a terrific opportunity here.
Since the Santos Administration came in last August, they have
been clear about their own commitment to making progress.
In our discussions with them over the last couple of months
more publicly, and I would say before that more privately, they
have made clear that they want to address these concerns. They
share our goals. And so, we are now in the process of
determining what specific concrete initiatives could be clear
indication that these issues are being and will be addressed.
Just as we took the time last year to get the Korea right,
with a lot of support from Chairman Camp, Ranking Member Levin,
and many others, we are taking the time to get this right. But
we share the sense of urgency that we have heard from all of
you. And so we are doing it expeditiously, we are doing it
intensively, we are doing it thoughtfully. We want to be in a
position where we can advance this agreement; I am optimistic
that we will get there, and we will get there in the near
future with your continued support from all of you.
Mr. KIND. Let me ask you--and to get back to my friend from
Florida's concern in regards to moving the goal post sense that
some folks have around here--is there a way that we can proceed
with the agreement with Colombia by establishing some metrics
that will not end just at the signing of the agreement, but
will require or call for a remaining engagement on our part to
help them with the institution-building or the capacity in
order to make progress, especially in the area of the ILO
provisions and worker rights in that country?
Ambassador SAPIRO. I would add that it is good indication
of the Santos Administration's commitment to these questions
that it has invited the ILO back into Colombia. I think that is
a very positive step--again, one of many that they are taking,
and one of many reasons why we see eye to eye, and it is truly
a joint partnership, in terms of addressing these serious
problems, so that we can immediately thereafter advance this
agreement to you for your consideration.
We do share the sense of urgency that has been expressed
here today.
Mr. KIND. Mr. Secretary, let me ask you. Has there been a
sense of moving of the goal posts in our negotiations with
Colombia, or have we been up front with them from the
beginning, as far as what we are hoping to see in any final
agreement?
Mr. HORMATS. I think the Administration and USTR have
clearly laid out a number of very specific points. I think the
Colombians are very clear on those points, and the points that
we have laid out are under discussion as we speak. And I think
there is a lot of clarity in this current environment that
enables us and the Colombians to focus on the same issues, and
to make progress on those issues.
A lot of work went into making sure that there was clarity.
There were interagency meetings to discuss this, to be sure
that we were giving clear signals to them, and that we were
getting clear signals from them. And I think that has proved to
be the basis for the kind of potential for progress that
Ambassador Sapiro has laid out.
And let me also address, while I am speaking, the
agricultural issue. You know, the people of Chico and the
people of Nebraska, and many other parts of the country, I
think do have a very strong interest in the agricultural
aspects of this agreement. And those are one of the very
important elements that USTR is pursuing. And that will, to the
extent that they can make progress in the areas that they are
now working on, will be very beneficial to the kinds of
constituencies that you represent.
So, we look at this as a broad agreement that has a lot of
things in it. And we have met--I have met, Ambassador Sapiro
has met, Ambassador Kirk has met--with representatives of the
farm community----
Chairman BRADY. Thank you, Mr. Secretary.
Mr. HORMATS [continuing]. And we understand these points
very well, and the interest----
Chairman BRADY. Thank you, Under Secretary. Appreciate it.
Mr. Schock is recognized.
Mr. SCHOCK. Thank you, Mr. Chairman. Well, there seems to
be some confusion over the amount of clarity. So let me review
some history.
Last June at the G-20 summit in Toronto, the President
announced his intention to resolve the outstanding issues with
the South Korea trade agreement by the time the G-20 met in
Seoul less than 6 months later. The Administration promptly
identified a finite set of issues that were made public:
improved market access for U.S. exports of autos and beef, and
a clear and achievable time frame.
In setting the deadline, the Administration did not say
that it would conclude the deal on that date, no matter what.
Instead, the Administration took an extra couple of weeks to,
in their words, ``cut the right deal.''
I think that was the right approach. And I commend them for
being open and transparent about it. We should not be afraid of
deadlines. In fact, they are action-forcing events. And they do
not give away our leverage, as evidenced by the South Korean
agreement. The Administration used a deadline and an action
plan successfully in the Korea deal. I believe we need this
type of leadership now for the Colombia agreement.
Yet, despite committing, as was evidenced by the remarks by
my colleagues to ``established benchmarks for progress,'' as
the Administration has said more than two years ago, the
Administration still has not identified clear and definite
issues, and also identified an achievable time line for
resolution.
It is clear, however, we must recognize that the President
can lead on trade when he wants to.
So, my first question would be: When will the President lay
out a specific time table, specific action steps, as he did
successfully to achieve an agreement with South Korea, but this
time with Colombia? Ambassador.
Ambassador SAPIRO. Thank you, Congressman, for that
question. We have laid out very clear concerns that we have.
With respect to the labor code, we want to ensure that those
labor laws are fully protecting worker rights and implementing
those rights. With respect to violence, we want to ensure that
the government is taking adequate steps to prevent violence
against those Colombians seeking to exercise their worker
rights. And on the question of impunity from justice, we want
to ensure that sufficient efforts are being made to prosecute
perpetrators of such violence.
These are very clear goals. We are happy that the Colombian
Government shares them and understands the seriousness of them.
We are not moving any goal posts. These have been our
consistent goals.
We now have, I think, a unique opportunity, because the
Santos Administration is so dedicated to working with us to
achieve these goals, to lay down more specific actions. We are
working with them intensively, possibly around the clock over
the next few days, to be able to reach that kind of consensus
on initiatives that they are either already taking, but may not
be publicizing as they are working on them, or----
Mr. SCHOCK. Ambassador, forgive me for interrupting.
Ambassador SAPIRO. Certainly.
Mr. SCHOCK. I appreciate what you are saying, and I
genuinely trust what you are saying to be true. The problem for
us is that when we hear, ``in the matter of a couple of days,
reaching consensus,'' I don't know whether that means
conclusion. Is consensus resolution to those issues? And, more
importantly, what is the date? What is the time frame?
I mean the Administration did not dodge the question, was
not shy about laying out a time frame and a date certain by
which they were going to reach the deal with South Korea. What
is the apprehension with Colombia?
Ambassador SAPIRO. There is no apprehension. We are
engaged----
Mr. SCHOCK. But why don't we have a date certain? Why don't
we say, ``By the end of April, our goal is to bring--is to have
resolution on this agreement?''
Ambassador SAPIRO. What I can say, with definiteness, is
that we are working very hard, we have been, intensively,
rapidly, and thoughtfully, to address these concerns with the
Colombian Government. These are sensitive issues. These are
complex issues. These are not the kind of issues that lend
themselves, in my view, to a deadline.
I share your sense of urgency. We all do. That is why we
are working so intensively.
Chairman BRADY. Thank you, Ambassador.
Ambassador SAPIRO. But I cannot say if it would be a few
days or longer. I can promise to work very hard to report back
to you soon.
Chairman BRADY. Thank you. Time has expired. I want to
thank the witnesses for their excellent testimony and thank the
Members for their thoughtful questions.
Clearly, closing out the remaining issues on Colombia and
Panama, presenting them for congressional consideration by July
1st is crucial. And I still see no reason, since the texts on
all three are done, that we cannot start technical discussions
on them to continue this pace, moving forward.
I want to thank you both very much for being here today.
Mr. HORMATS. Thank you, Mr. Chairman.
Chairman BRADY. Thank you.
Ambassador SAPIRO. Thank you, and Happy Saint Patrick's
Day.
Chairman BRADY. Same to you. And I did notice the green on
you, Ambassador Sapiro.
Ambassador SAPIRO. Subtle.
Chairman BRADY. There is a hint of it.
I would like to welcome our second panel to step forward at
this time. Today we are joined by five witnesses. Our first
witness will be the Honorable Thomas Dorr, president and chief
executive officer of the U.S. Grains Council, formerly the
under secretary for rural development at the U.S. Department of
Agriculture.
We will then hear from William Marsh, who is vice president
of legal for the western hemisphere, Baker Hughes. He is also
testifying on behalf of the National Association of
Manufacturers.
Our third witness will be Ambassador Peter Romero,
currently president and CEO of Experior Advisory LLC, and
formerly our ambassador to Ecuador and assistant secretary for
western hemisphere affairs at the Department of State.
Fourth, we will hear from Adam Isaacson, director of the
regional security policy program at the Washington office on
Latin America.
And we will conclude with General Barry McCaffrey, who is
currently president of BR McCaffrey Associates, and formerly
director of the office of national drug control policy and
commander of the U.S. Southern Command.
We welcome all of you, and look forward to your testimony.
I would also ask that their witnesses keep their testimony to
five minutes.
Mr. DORR, good to see you.
STATEMENT OF THOMAS C. DORR, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, U.S. GRAINS COUNCIL, FORMER UNDER SECRETARY FOR RURAL
DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE
Mr. DORR. Thank you, Chairman Brady, Ranking Member
McDermott, and distinguished Members of the Subcommittee on
Trade. My name is Thomas Dorr. I am president and CEO of the
U.S. Grains Council. The U.S. Grains Council appreciates the
efforts of the subcommittee in holding hearings regarding the
importance of ratifying the pending free trade agreements with
Colombia, Panama, and South Korea. I will confine my remarks to
the significant challenges we face in Colombia.
Colombia is a strategic market with economic growth
projected to exceed four percent annually over the next five
years. Colombia's per capita income is projected to increase
from $9,000 to nearly $12,000 by 2015, and this income growth
will result in substantive increased consumption of animal
proteins.
While Colombia is a net exporter of agricultural
commodities, it imports over 80 percent of the corn it uses
domestically. It imports over 95 percent of the wheat and
soybean products it consumes. In 2008, total U.S. agriculture
exports to Colombia reached 50 percent market share, and
exceeded $1.6 billion.
Since 2008, U.S. market share has declined rapidly to only
21 percent, or approximately 800 million. For U.S. coarse
grains, the decline has been more dramatic. In 2008, U.S.
agricultural exports of coarse grains approached $635 million,
and accounted for 83 percent of the total Colombian coarse
grains import. By 2010, U.S. coarse grain exports had declined
to $118 million, and market share fell to 18 percent.
Conversely, in 2008, Argentina held just an 11 percent
share of coarse grain imports, primarily corn. By 2010,
Argentina's market share was 66 percent. Over the same time
period, Brazil's market share of coarse grain imports to
Colombia increased from 5 to 16 percent.
Colombia protects its local production with common external
duty of 15 percent. This includes corn and other agricultural
commodities. Colombia is also member to the Mercosur Andean
community agreement. This agreement includes a price band
mechanism that levies additional duties. Colombia's trade
agreement with Mercosur allows member countries to receive a
preferential duty.
Argentina and Brazil receive an annual duty reduction on
corn imports to Colombia, which completely phases out the basic
duty by 2018. Beginning in 2006, the duty preference granted
Brazil and Argentinian corn provided a nearly 5 percent
advantage over corn imports from the U.S. In 2011, the duty
preference of 6 percent will give a 9 percent advantage over
U.S. corn imports. And this approximates a $20-a-ton advantage.
Even with these duty preferences, the U.S. remained
competitive until 2008, due in large part to our close
proximity to Colombia. However, the increased duty preference
to corn imports for Mercosur has virtually eliminated this
advantage.
Equally disconcerting as the grain flow to Colombia shifts
from the U.S. to Brazil and Argentina, their shipments to
Colombia now include tonnages of corn over and above those
required for their Colombian contracts. These added quantities
are shipped in split shipments to Colombia, and then on to
Latin American countries such as Panama and the Dominican
Republic. This has further eroded U.S. market share, despite
our clear freight advantage.
Once trade flows become established and relationships are
formed with other trading partners, it is very difficult to win
back these markets. The Council has established a strong
partnership with the Colombian feed, livestock, and poultry
industries, to build capacity and increase sufficiency
utilizing U.S. coarse grain products. As a result of these
ongoing efforts, we have gained their trust as a consistent,
reliable supplier of quality products. Without ratification of
the FTA, we will lose this relationship.
The Colombian feed and livestock industries wish to retain
and build on this relationship. Representatives of the
Colombian feed milling, swine, and wheat industries were in
Washington earlier this year. They provided briefings to this
committee, the Senate Finance Committee, and both the House and
Senate Agriculture Committee. Their message was clear. Although
the U.S. has been a reliable, preferred supplier, Colombia has
no choice but to import corn and other commodities from
Argentina and Brazil because of the lower duties. They stated
that the U.S.-Colombia FTA would allow them the opportunity to
acquire more U.S. commodities. However, price is paramount, and
the competition is fierce.
[The statement of Mr. Dorr follows:]
Mr. Marsh, you are recognized.
STATEMENT OF WILLIAM D. MARSH, VICE PRESIDENT LEGAL, WESTERN
HEMISPHERE, BAKER HUGHES, INC. ON BEHALF OF BAKER HUGHES, INC. AND THE
NATIONAL ASSOCIATION OF MANUFACTURERS
Mr. MARSH. Thank you. Good morning, Chairman Brady, Ranking Member
McDermott, members of this subcommittee. I am William Marsh, vice
president legal, western hemisphere, for Baker Hughes Incorporated. I
am pleased to testify today as a member of the National Association of
Manufacturers. I have been practicing law for 22 years, with 13 years
exclusively in the oil and gas industry, and substantial experience
working in Latin America, including Colombia.
Hughes Baker is a top-tier oil field service company with a
century-long track record. We deliver technology solutions that help
oil and gas operators maximize their reservoirs through high-
performance drilling and evaluation, completions and productions,
fluids and chemicals, and reservoir analysis. We work side by side with
our customers to engineer reliable, application-specific products and
services.
While we operate globally, Baker Hughes is headquartered in
Houston, Texas, and is a United States employer and manufacturer. We
have a diverse workforce of more than 21,000 highly skilled
professionals in science, engineering, manufacturing, and operations
support in the United States, and we are located in 28 states.
In addition to providing services globally, Baker Hughes
manufactures products in the United States, like pumps, motors, and
valves, and exports them to countries worldwide, including Colombia.
Roughly 75 percent of Baker Hughes Colombia's total global imports are
from Baker Hughes facilities in the United States. We employ 450
workers in our Colombian operations, and Baker Hughes offers a
multitude of products and services in Colombia, ranging from reservoir
development services, to intelligent production systems, to integrated
operations.
As you have heard today, the U.S.-Colombia trade promotion
agreement will replace a one-way preferential agreement with one that
is mutually beneficial and reciprocal. Because of trade preferences,
Colombia's exports have been entering the United States duty free,
though that has been temporarily.
By contrast, Colombia's average duty on our imports from the United
States averages 5 percent, with some tariff peaks at 10 to 20 percent.
Eliminating that duty would allow Baker Hughes to more effectively
compete in Colombia, increase our exports to serve Colombia's expanded
plans for oil and gas projects, and create more highly-skilled jobs
here at home.
Colombia is a significant market for the United States, second only
to Brazil and South America. The United States exports to Colombia
exceeded $12 billion in 2010, and over 90 percent of that total was in
manufactured goods. According to the United States Department of
Commerce, those exports supported nearly 90,000 United States jobs and
10,000 U.S. small and medium-sized businesses.
More specifically, Colombia is a major prospect for new oil and gas
development. According to media reports, the Colombian Government plans
to increase oil production up to one million barrels per day by the end
of 2012, and activity is likely to remain high for the next decade. As
a market leader in oil-field services, Baker Hughes intends to be a
substantial part of that market. The United States trade policy should
facilitate our participation in that responsible development.
From a security perspective, there are advantages to developing
western hemisphere energy sources like those in Colombia. Colombia is
considered a U.S. ally with a relatively stable government and economy.
Oil and gas from Colombia could displace oil from less secure foreign
sources of supply.
Helping Colombia maintain a strong economy is also in our national
interest. Therefore, adopting this reciprocal treaty is a win for both
countries. Thank you.
[The statement of Mr. Marsh follows:]
Under Secretary Romero?
STATEMENT OF AMBASSADOR PETER F. ROMERO, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, EXPERIOR ADVISORY LLC, FORMER ASSISTANT SECRETARY FOR WESTERN
HEMISPHERE AFFAIRS, U.S. DEPARTMENT OF STATE, FORMER U.S. AMBASSADOR TO
ECUADOR
Mr. ROMERO. Thank you, Mr. Chairman, and thank you for the
promotion. I was assistant secretary and retired a couple years ago,
but----
Chairman BRADY. It is Saint Patrick's Day, we are doing----
[Laughter.]
Mr. ROMERO. Thank you. Mr. Chairman, thank you for the invitation,
ranking senior Member and others, thank you for the invitation.
I think I would like to start out with some good news. And the good
news is that, through almost 10 years of U.S. investment in Colombia,
that investment, through Plan Colombia and other support, is paying
off. Colombia is more democratic, it is safer, it has got a
strengthened rule of law, it is more prosperous. And, according to most
of your surveys, is the second most business-friendly country, after
Chile, in the hemisphere.
The bad news is that, after having spent this taxpayer money, and
having results that were probably beyond our expectations early on,
literally the Chinese, the Koreans, the Canadians, and the European
Unions are the ones that are cashing in on this. This, at a moment when
the Chinese--and there has been a lot of discussion about the Chinese
and their investment in Latin America--but it has gone up tenfold over
the last couple of years. Their FDI over the period has increased to 17
percent of all Chinese FDI. And, at the same time, the U.S. share of
all exports to the region fell from 48 percent to 37 percent. We are
losing ground, Mr. Chairman.
If these numbers are not bad enough, the other downside is that
when the Chinese cut deals in Latin America, they do not particularly
care about the rule of law. They do not particularly care about human
rights, labor rights, and foreign corrupt practices, or the
environment. And that is basically what is happening, in terms of the
reality of Latin America. Certainly the sanctity of their contracts is
important to them. But the rest of it really is of little or no
importance when it comes to political or ethical practices.
I think it is useful to just take a minute to go back to where we
were in the year 2000, when we started Plan Colombia. Colombia was on
the verge of ceding swatches of its country to bad guys:
paramilitaries, gangs, narcos, guerillas, you name it. You could not
travel from one city to the other without taking an airplane. The line
around the consulate to leave, to get visas to come to the United
States to leave, went around the block. You could not get a visa
interview for six months.
This has changed dramatically. President Uribe first turned it
around. President Santos is continuing it through his process of
democratic security, which is empowerment at the local level. This has
worked, this whole of government approach has worked so well, that we
have versions of it going on in Afghanistan and Iraq today. We have put
a lot of stock behind using it, okay? So it has worked. Colombia is not
perfect. It is not Sweden. It will not be, for some time to come.
I have spent 35 years, both in the public sector and the private
sector, railing against the double standard towards Latin America.
Latin America has a different set of standards that we apply, with
respect to foreign policy, than we do the rest of the world. There is
not one person in this room that has talked about our negotiations with
Vietnam, that has a history of repression against labor and organized
labor in that country, and yet that is not even a discussion. And in
Colombia, Colombia has to wait for five years, even to get a response.
I would also argue with the Administration that was here. Colombia
has not gotten clear guidelines, in terms of what would satisfy the
U.S. Government, in terms of whatever change to the laws and reform,
that the Administration appeared to suggest when they were here.
Just a few words on labor. Mr. Chairman, I belong to four labor
unions in my professional life. I joined them gladly. I was a teacher
for a number of years. A lot of the labor issues that are of concern to
this committee are, indeed, legitimate issues. But there has been a
significant improvement across the board, whether it be assassinations
of labor leaders or organizers or even members out in the field, there
has been labor reform. There is a robust dialogue at the national and
local level labor reform which puts management and labor continually
together.
There have been increasing reforms and efforts to address this
issue, including special prosecutors and $13 million spent last year to
protect labor leaders and labor organizers and labor members in the
field. Colombians have done their part.
[The statement of Mr. Romero follows:]
Mr. ROMERO. Thank you.
Chairman BRADY. Mr. Isaacson.
STATEMENT OF ADAM ISAACSON, DIRECTOR, REGIONAL SECURITY POLICY PROGRAM,
WASHINGTON OFFICE ON LATIN AMERICA
Mr. ISAACSON. Chairman Brady, Ranking Member McDermott, thank you
for inviting me to participate in this hearing.
I have a very deep affection for Colombia. I spend most of my adult
life visiting it. I have been there about 50 times. I have met some of
the bravest people in the world there, labor leaders high among them.
And, after all these years, to be honest, I still do not always get it.
I cannot fathom how you can carry on, day to day, knowing that, at any
time, you could be murdered because you want to improve your workplace
or you want to find out who killed your spouse, or you want to recover
land that was stolen from you. And you know that your killer has no
reason to fear being sent to prison, and could go on to victimize
someone else.
It takes a special person to keep believing in her country, or to
keep defending his fellow citizens. But Colombia has an amazing number
of these people. When I ask them how they keep going, it is also
amazing how often they just sort of shrug their shoulders, as though
the answer should just be obvious.
I want my country to be on these people's side. I also want
Colombia to take off economically, and put its conflict behind it. I
want the United States to contribute to that through its aid and trade
policies. That is why my colleagues at the Washington Office on Latin
America and I believe that, instead of jumping in, we need to work with
the Colombian Government on some clear, achievable benchmarks for
progress, and see meaningful results before considering the FTA.
Over the four-and-a-half years since the FTA was signed, there are
four areas where this progress has not been sufficient. They are labor
law, protection, impunity, and land. On labor law, we hope to see
Colombia align its laws with ILO core labor rights. The FTA itself
requires this. This means doing away with cooperative trade
associations, collective pacts, an expansive definition of ``essential
workers,'' and other obstacles to the right to bargain collectively.
These labor laws should have to be enforced, too. So Colombia would
need to increase funding and political backing for the parts of the
government that are supposed to be doing that.
Second is protection. It's crucial that there be a sharp drop,
ideally to zero, in homicides, attacks, and threats against trade
unionists, human rights defenders, victims' advocates, and Afro-
Colombian and indigenous leaders. Colombia is different from the United
States' other free trade debates. This time we have signed an agreement
with a country that is in conflict. Elsewhere, the discussion focused
on labor laws, wages, and work conditions.
Those are important. But in Colombia, there is a more immediate
life-or-death issue. Trade unionists and other people fighting for
justice continue to be murdered in shockingly high numbers. These
killings have to stop. This stoppage should result from the
government's own rapid response to threats when they occur, its
dismantling of new paramilitary groups who are growing quite quickly
right now, its protection of the population from the leftist guerillas,
and its effective investigations and prosecutions of homicides. And
that last one is important.
Third, impunity. This is so critical that, in my view, it is the
chief reason for waiting a bit on the FTA. Colombia has got to get the
killers behind bars to dissuade future killings. This is where the
least progress has been made. After four-and-a-half years we have seen
the impunity rate for labor killers only move from 98 percent to 94
percent. That is a tragedy. Progress on impunity takes a while to
measure, but there is no substitute. If you do not address impunity you
have no guarantee that this will not flare up again.
So, Colombia needs to sharply increase its prosecutions,
investigations, and verdicts on labor killings. The same goes for other
recent abuses, like the 3,000 civilians that the armed forces are
alleged to have murdered in the past 10 years.
Finally, the fourth point, land and victims. Land is at the core of
Colombia's long conflict. The violence has forced more than 5 million--
mostly rural Colombians--from their homes and farms in a country of 45
million. The FTA must neither lock in this injustice nor knock
thousands of small farmers out of business. If it does, we could feel
the consequences right here, as more cocaine coming to the United
States.
On land, the government of President Juan Manuel Santos has a plan
that deserves our support. A land and victims law is nearing final
approval in Colombia's congress. This is a decent law, but its test
will be its implementation, not just its passage.
These four areas I lay out here are not a recipe for a perfect
society, or a Sweden. These are minimal standards to keep the FTA from
having unintended consequences that could undermine U.S. interests and
values. They are reasonable.
Although I am impressed by the Santos Administration's policy
proposals, we cannot settle just for promises. A new policy or
strategy, a new task force or working group or commission, a new
directive, order, even a new law, these are great. They are welcome.
But they are no substitute for measurable results. And as we measure
progress toward these minimal standards, my advice is, to quote Ronald
Reagan, ``Let us trust, but verify.'' And verifying will take some
time. That is why we advise engaging Colombia in a constructive
discussion of how to get this done right, and verifying that meaningful
progress happens.
I look forward to your questions, and to discussing this with you
at any time. Thank you.
[The statement of Mr. Isaacson follows:]
General McCaffrey?
STATEMENT OF BARRY R. MCCAFFREY, USA (RETIRED), PRESIDENT, BR MCCAFFREY
ASSOCIATES, LLC, FORMER DIRECTOR, OFFICE OF NATIONAL DRUG CONTROL
POLICY, FORMER COMMANDER, U.S. SOUTHERN COMMAND
General MCCAFFREY. Mr. Chairman, thank you and Congressman
McDermott for the opportunity to be here.
And, by the way, I share the remarks that Adam just made. He had a
tutorial for me yesterday. I think many of his conclusions are right,
although I am here to strongly urge passage of the FTA with Colombia
almost immediately, certainly by this summer.
I have spent much of my adult life working with the Colombians in
one aspect or another. I worked with Presidents Pastrana, Uribe, and
now Santos. I think these issues have been discussed at great length,
and I would offer a set of facts for you to consider.
Number one, let us remind ourselves that Colombia is one of the
most important allies we have, democratic regimes, law-based regimes,
on the face of the earth. In the 200-year history, much of it has been
democratically-elected governments.
Secondly, I would remind us that Colombian National Police,
arguably one of the best in the Americas, and the Colombian Army, have
had 5,500 killed in action, and 17,000 wounded since 2002. There was a
war going on in Colombia, which is largely entering its end phase.
Thanks to their courage and their determination, Colombia is still
free.
Third, drug production is down by 60 percent. It is phenomenal.
This is a commitment not just by the CNP and the armed forces and the
political leadership, but also by the Colombian people, who essentially
do not wish to be involved in criminal activity.
Fourth, the major security problem in Colombia for the last 25
years has been the FARC, ELN, and the AUC. They are badly wounded. The
AUC is largely dismantled, although, as Adam correctly says, many of
them have gone to criminal activity. The FARC are down about 8,000
people and 2,500 in ELN.
The war does go on. There may be as many as 6,000-plus hardened
criminals in so-called ``buckram'' organizations, and many of them are
in collusion with the FARC and the ELN. This is now becoming a law
enforcement issue, and it is also one based correctly, as one of the
congressmen previously said, on poverty. It is moving into a different
phase.
The Santos Administration, as I look at them, is--has enormous
focus on improving governance, reform of the judicial system, which is
going to be the hardest 20-year task they face, poverty action, drug
criminal gangs, and refugees. They have got maybe a million internal
refugees and maybe 400,000 pushed out into Ecuador or Venezuela. But I
think that is the commitment of the Administration we are looking at in
Colombia today.
Finally, I think we ought to take into account the enormous
reduction of violence in Colombia. It is simply unbelievable. I was
down there in 2001, just before I left office. There were 2,000 people
in my security detachment. When I went back again a couple of years
ago, I had a dozen CNP officers. There were no violent incidents in
Bogota the week I was there. It is astonishing.
And, by the way, the most trusted, respected institution in
Colombia today is the Colombian armed forces, with a 79 percent
approval rate in the latest poll numbers. Colombian people understood
their determination, their commitment, their courage, and their change,
rapid change--I have been listening to the Colombians brief me on
comprehensive human rights policies and training.
They are trying to understand how you deal with something that, on
one hand, was multi-battalion attacks by the FARC, using indirect fire
weapons systems, and now a war that is changing into one in which these
young soldiers have to carry two cards, one red, one white--blue,
excuse me--to understand what nature of violent incident they are now
confronting, and what the different rules of engagement are. It is a
magnificent change in the short period of time that I have observed
them.
Final one, and a point that I would offer--and a lot of others have
already addressed this--this is a huge economic problem in the United
States. We have lost massive amounts of market share in agricultural
products and other areas.
And, oh, by the way, the Colombians are now a major energy-
producing nation. Coal number one, oil up to--pushing a million barrels
a day. And I will bet you in two or three years they out-produce
Venezuela.
I personally consider the way we have dealt with Colombia an
embarrassment, a nation that is a democratic regime under the rule of
law coming out of an era of enormous violence. And I urge congressional
action in support of the FTA. Thank you, sir.
[The statement of General McCaffrey follows:]
Mr. Dorr, your testimony shows exactly how American agriculture is
being harmed and will be harmed further if we delay this pact.
Mr. Isaacson, I read your testimony at length last night. And, in
my view, Colombia is making extraordinary improvement. I agree with
you, the new Santos Administration is committed to continuing that
progress. And I agree with you, any violence and any impunity
associated with that is condemnable. That is why we push so hard to lay
out these points. We have pushed the Administration to step forward
with an action plan so that Colombia can address this. Now, the longer
we are stuck in limbo, unfortunately, I think the less we can lock in
both the progress and continued improvement.
Ambassador Romero and General McCaffrey, I am struck both by your
expertise, sense of experience in the region. Your points about the
loss of national security and the consequences of our failure to act, I
think that is an important part of this debate and of this agreement.
Finally, Mr. Marsh, you talk about the consequences of further
delay on a company like yours. You mentioned Colombia is a major
prospect for new oil and gas development, and may more than double its
oil production in two years. I know the infrastructure effort in
Colombia is impressive, as well, as they rebuild their ports and their
airports and roads.
And I want to ask you--in fact, I would like to ask unanimous
consent to introduce for the record a paper by the Ways and Means
Committee outlining the infrastructure opportunities in Colombia that
could create jobs here in the United States.
[No response.]
Chairman BRADY. Without objection.
[The information follows: Brady Insert]
So, can you talk about for us, so we understand exactly the
consequences of delaying this agreement further?
Mr. MARSH. Certainly you are correct, Chairman Brady. As we bid on
projects--and these are long-term projects--if we are not able to be
competitive and win those projects, we lose not only that project,
which may be a long-term project in and of itself, we lose the
opportunity to build the infrastructure that goes along with those
projects, which puts us at a further competitive disadvantage by not
having that infrastructure to support future projects.
At the same time, competitors from other countries are developing
infrastructure because they were successful in bids that we were
disadvantaged and not successful in obtaining. So it is not just the
life of the equipment, but it is also building that infrastructure
within the country that will impact our future work and our ability to
export from the United States into Colombia in the future, because we
do not have that infrastructure in-country to support the jobs in the
U.S.
Chairman BRADY. So these are longer-term consequences and losses.
Mr. MARSH. Absolutely. Not only are our contracts long-term
contracts, but along with those contracts come infrastructure that we
will build in-country that will support future contracts.
Chairman BRADY. Do you believe we should delay any further on this
agreement?
Mr. MARSH. Any further delay continues to put us at a competitive
disadvantage. So, no, we would not delay any further and we should
support immediate action with respect to the agreement.
Chairman BRADY. General McCaffrey, you finished your testimony very
strongly, saying that this was an embarrassment that we have not moved
forward on this four years later on a key ally. Do you feel Colombia
feels that same way, that an ally of that strength in that region--can
they even understand why their strongest partner would delay an
agreement for so many years?
General MCCAFFREY. Well, you know, I would remind all of us the
media and the political attention of all three of these nations--Korea,
Panama, and Colombia--is fixed on this hearing today. And so, tonight
on TV, the Colombian people are going to try to sort out in their mind
how they can be one of the predominant allies of the United States--
they are working with us now in Mexico, and training people in
Afghanistan, they are a democratically-elected regime, they produce
dramatic changes and results, and yet we are diddling them for over
four years on an economic trade deal.
I say that recognizing--and I really mean this--that Adam's
concerns are valid. And yet, in the same note, Pete Romero pointed out
you do not hear that kind of conversation about the outrages going on
in Bolivia and Venezuela, with Mr. Chavez. So it has been a selective
focus on Colombia that sometimes escapes me. They are a remarkable
group of sophisticated people who are mystified by our behavior.
Chairman BRADY. Thank you, General. Mr. McDermott is recognized.
Mr. MCDERMOTT. Thank you, Mr. Chairman. I ask unanimous consent to
introduce the recent ILO mission report regarding Colombia. It really
notes continuing problems with labor and violence.
Chairman BRADY. Without objection.
[The information follows: ILO High Level Mission]
So, to hold it up as an answer to this whole issue that is going to
stop the Chinese--I think we need a hearing on what is going on with
Chinese. That is a legitimate question. But I do not think that one
should portray this as being something that is going to deal with
China.
What I would like to ask Mr. Isaacson is the question, when General
McCaffrey says, ``Put this thing in right now,'' what does that do to
labor violence? What does that do to impunity? What does that do to
labor conditions? How would you spin out the effect of that?
Because what we are arguing here whether this glass is half full or
is it half empty. That is what we are arguing about. And some of us are
saying we want more in the pitcher, and others are saying there is
already enough, and that we should move forward. So I would like to
hear your suggestions about what you think would happen.
Mr. ISAACSON. Sure. If the agreement was to be approved right now,
the conversations--and there are some, actually, constructive
conversations going on, as we heard in the last panel, between the U.S.
and Colombian officials about benchmarks, about improvements, about
reducing killings, about punishing--those conversations would stop. Why
continue them? You have got an agreement now.
If those conversations stopped, sure, there are people in
Colombia's government who, out of their own good will and their belief
in what is right, would probably try to continue some of these
prosecutions, and would probably try to continue pushing funding into
some of the right categories to keep these going.
But, you know, these good people in the Colombian Government face
some very powerful opposition who do not exactly share their view of
the necessity of not circling the wagons and actually--and seeing these
things reformed. They could lose. I think we give them a lot of
leverage right now, as they try to push for these reforms. And we
could, in fact, in just a relatively short time, bring some major
historic institutional change that benefits both of our countries.
Mr. MCDERMOTT. I would like to characterize why it has taken four
years, because that is the issue. Why has it been here four years, and
have people not been paying attention? Is it fair to say that the Uribe
government talked a good game, but it was the implementation of the
game of what they talked that was minimal, at best? Is that a fair
characterization of why we are still hung up on this point?
Mr. ISAACSON. Sure. The Uribe government, on a lot of things, was
not even talking a good game. President Uribe, on many occasions in
public, often flanked by the high command of the armed forces, would
get up and call reformers, labor leaders, independent journalists,
``terrorists,'' or ``friends of the guerrillas,'' without producing any
evidence to that.
At the same time, in 2008, an enormous scandal, which I alluded to
in my testimony, exploded. And we suddenly learned that thousands of
civilians had been killed on his watch, and with impunity there. That
certainly, while not directly related to labor, cast a shadow over this
whole thing.
A further scandal where we found out that the Uribe government's
presidential intelligence agency was spying on judges, on reporters, on
opposition politicians, listening to their phone conversations,
following them around, and even issuing threats, cast a further shadow
over this.
So, you know, any time you had momentum, something would happen
that slowed it down.
Mr. MCDERMOTT. Let me just say one thing. I have also heard some
suggestions here that we are not paying any attention to what is going
on in Vietnam, and we are talking about the trans-Pacific partnership
and so forth.
The fact is that those are some of the sticking points about
whether or not the Vietnamese will be included in a TPP. I am
personally one of those people who thinks that is maybe more important
than Colombia. And I think that we will have to work hard to bring in
both Malaysia and Vietnam, because of these kinds of issues.
And I think--I yield back the balance of my time.
Chairman BRADY. Thank you, sir. Ms. Jenkins is recognized.
Ms. JENKINS. Thank you, Mr. Chair. Mr. Dorr, you talked extensively
about the horrific loss in U.S. ag exports to Colombia because of our
failure to pass this trade agreement. We have fallen from 71 percent to
27 percent in market share for Colombia imports of key ag products just
since 2008.
So, looking ahead, first of all, what happens to our market share
in wheat, for example, if we do not ratify this agreement, and Canada's
agreement goes into force on July 1st, as expected?
And secondly, what happens if we are able to implement the trade
agreement? Will the U.S. market share jump right back to where it was,
or how long would that be expected to take?
And then, finally, is there any difference between getting it past
by July 1st and, say, getting it past by the end of the year?
Mr. DORR. Well, certainly, I think the numbers on the Canadian FTA
versus the pending FTA with the U.S. are well known. And while the
Colombians clearly prefer the U.S.-quality wheat, markets dictate. And,
as a result of the price differentials, it is clear that we are losing
market share to Canada, and would continue. I would presume, unless
there was some other extraordinary events, to do so, as well.
However, if you look at time lines for successful conclusion of
these agreements, there are differing harvest periods in both
hemispheres. And, for example, in the case of corn, if an FTA were
concluded earlier than later, when there is a period of time in which
there are no supplies available from the southern hemisphere, it gives
U.S. producers an opportunity to get back into that market.
And, based on the relationships, the historical relationships that
we have had, it is clearly a large market, one that we anticipate could
be as much as two million tons of corn. And in today's environment,
that could be anywhere from $3.5 billion to $4 billion worth of
business, as opposed to what we are seeing this year, at about $118
million.
So, obviously, timing is of the essence. And when these things are
delayed, what you end up with is development of market relationships
with other suppliers that, once you are able to get back in the market,
you have to displace. And that is always more difficult.
Ms. JENKINS. So, how long does it take, if they were signed, for us
to regain our market share? Do you have any idea?
Mr. DORR. Well, I--in the case of corn, which is something--and
sorghum DDGs, which I am more familiar with, and wheat, we are fairly
comfortable that if there was a successful conclusion to the
agreements, we would be able to re-engage our customers and begin to
recapture those markets, because there are innate advantages,
logistical advantages, and the ability--and the quality systems and the
way in which we deal with our customers, we think, would make us a
preferred supplier. And we believe we could re-establish those
relationships.
The longer we go, because of price differentials, it will be more
difficult.
Ms. JENKINS. Okay. Well, there is some urgency among, I think,
Kansas producers that if we delay this beyond the summer, that we will
miss an entire year, based on the growing season. And the buying--would
you agree with that?
Mr. DORR. Absolutely. And that is what I was alluding to. Because
if you have a market coming--or if you have a crop coming on stream in
the next two to three months, and you are in a position to capture that
market, to delay it for a longer period of time gets you into the
following year, sets up your competitor to capture the market, and
clearly you have been displaced for at least another period of time
that will make it quite difficult to recapture.
Ms. JENKINS. If we want to begin to replace and recapture our
percentage of the market, we really need to get this ratified within
the next few weeks, as opposed to the next few months.
Mr. DORR. It is clear that, as a market developer--and I want to
make sure that this is clear, we are not lobbying this issue. But we
clearly understand what the timing issues are, relative to when crops
are produced and when markets are available. And the longer these sorts
of things are in an abeyant state, the more difficult it is to capture
those markets. And that is very obvious.
Ms. JENKINS. Okay. Thank you, Mr. Dorr. Mr. Chairman, I would yield
back.
Chairman BRADY. Thank you. Mr. Davis?
Mr. DAVIS. Thank you, Mr. Chairman. General McCaffrey, it is a
delight to have you here. My first battalion commander is your
classmate from the Military Academy, and my best friend at Fort Bragg
was your IG in the 24th Division in Desert Storm. So it is great to
have an opportunity to reconnect in a less formal environment than the
one you ran as a general officer. But I appreciate your insight very
much.
Energy security is a very important component of our national
security in so many ways. As gas prices are spiking, developments in
Libya, the Middle East, some of the bluster of Hugo Chavez, with his
rabid anti-Americanism is making it very clear to me that we are too
reliant on foreign energy sources and, in particular, creating a
dependency relationship on countries that are not necessarily our
friends, and seeing large amounts of our capital leaving the country.
I appreciated yours and Mr. Marsh's comments about Colombia as an
energy provider that is seeking to expand its capacity. And I was
wondering if you would elaborate some on your thoughts today on how
this trade agreement will contribute long-term to the United States
energy security.
General MCCAFFREY. Well, certainly it is not a central area of my
expertise, but you know, I spend a lot of time on TV, nonetheless,
talking about it.
Mr. DAVIS. Most of Congress has a tradition of speaking on things
that are not their expertise, too.
General MCCAFFREY. Right.
Mr. DAVIS. We will definitely consider you at a higher category----
General MCCAFFREY. I think there is some central facts. One is--the
biggest fact is the U.S. has no national energy strategy, which is
shameful, and particularly in terms of reducing use of energy.
The second reality is that, when we look at our imports,
thankfully, the majority of our external imports come out of Canada and
Mexico, thank God.
The next reality is Venezuela is our next supplier. And there has
been a continuing unbelievable confrontation with Mr. Chavez with the
Chinese in the wings, with their voracious appetite for energy and
mineral deposits in the global context, putting that at some risk.
Thankfully, Colombia is now becoming a major energy supplier, both
coal and oil--and natural gas, potentially, along with Ecuador. And I
think it is going to grow in the future. It would be hard pressed for
us to ignore the reality--and, by the way, to underscore, Bogota is a
three-hour flight from Miami. This is not the eastern Pacific. These
are our friends, our allies, and our next-door neighbors. And they are
an important potential source of energy for the United States, and we
ought to exploit that.
Mr. DAVIS. I remember back in the summer of 2001 you shared with a
group of us that Hugo Chavez was probably the greatest emerging threat
in the western hemisphere, particularly to American and democratic
interests.
Do you feel that moving towards a strategy of energy independence,
and particularly embracing the Colombian agreement, and working closely
with them as they develop their energy, will be--help to neutralize
that, or mitigate that threat?
General MCCAFFREY. Well, I think it is. You know, Chavez is a
different problem. This giant, beautiful country of Venezuela, it has
been traditionally an ally of the United States, has increasingly
slipped into what essentially is one-man rule, where Chavez is now--
clearly dominates all the institutions of the state: The armed forces,
the congress, the media. The Catholic Church has been intimidated, he
is wrecking his own oil industry. At some point we will have to develop
a notion on what are we supposed to do about Chavez, in conjunction
with our Latin American allies.
But in the short run, I think the argument on the FTA stands on its
own merits with Colombia. These people are a democratic regime, they
are implementing the rule of law, violence has decreased dramatically
since 2002--and, by the way, a lot of that through the Uribe
Administration. I am a little bit uneasy about the comments that imply
that only now that Santos is in office we can start moving forward. The
Colombian people think Uribe is a national hero. They will study him
for the next 100 years because of what he did to turn the situation
around.
But, nonetheless, the group we are dealing with now, the Santos
regime, as Adam correctly points out, he is focused on land reform, he
is focused on reducing violence against labor leaders, better
governance. These people are moving in the right direction.
Mr. DAVIS. All right. Thank you very much, General. I yield back,
Mr. Chairman.
Chairman BRADY. Mr. Reichert?
Mr. REICHERT. Thank you, Mr. Chairman. This is for anyone on the
panel. Colombia is promising--is a promising market for U.S. exports of
green technology. Colombia's traditional industries have increasingly
become committed to energy cogeneration in their plants, creating the
opportunity for U.S. firms to export engines, generators, spoilers, and
heat recovery systems across a lot of sectors.
Colombia is also very big for hydro-power, solar, thermal, and wind
markets. They are small, but they are all growing. And, unfortunately,
Colombia's tariffs on clean energy technology and other green tech
imports are very high, ranging from 5 to 15 percent. The World Bank has
identified these tariffs as tariff barriers to Colombia's adequate
development of clean technology. This is good news for the environment
and for U.S. exporters. And the Colombian trade agreement would
eliminate these tariffs for U.S. products that touch all of these
energy-efficient technologies.
So, I understand that several of you have experience with new
energy technology. I would like to ask anyone on the panel whether you
believe this trade agreement will help expand the markets for clean
energy technology, and thereby incentivizing American innovation and
global competitiveness of our American companies in this sector. So,
anyone wish to address that question?
Mr. ROMERO. In the vein of not being an expert on this, as Barry
alluded to with his question, let me just say that the Colombian
Government has set objectives for the use of clean technology in the
years ahead.
I do know that they have completed mapping of the country, in terms
of wind power, and where the best places to install wind power would
be. They are heavily involved already in the African palm oil industry.
And I think that there is all kinds of opportunities for solar there.
This would be a particularly good captive moment, if you will, to
pass the FTA, because our equipment, our expertise, our services, would
be able to enter into the country duty-free. And it is a particularly
good moment because President Santos has put a high priority on
alternative energy and green technology in his Administration. So it
would be a particularly good moment for U.S. exporters.
Mr. REICHERT. All right, thank you.
General MCCAFFREY. I wonder if I might add one comment.
Mr. REICHERT. Yes, sir.
General MCCAFFREY. Just the business platform in Colombia--I always
have to remind people 60,000 Americans live in Colombia; 250-plus
American businesses are on the ground in Colombia. They are the easiest
people in Latin America to do business with. They are smart, they are
tough, many of them are educated here. They are committed to the rule
of law. So this is another opportunity, I think, Mr. Congressman, you
have accurately pointed out.
Mr. REICHERT. Thank you, sir. Mr. Dorr?
Mr. DORR. I would just make one very quick comment, in that in a
collaborative manner, they make an excellent market for distiller's dry
grains that are an outgrowth of the ethanol industry in this country.
And it is a short market hop down there. It is a great feed product
that is very, very well priced. And it mitigates a lot of food cost
issues, particularly when you look at the number of very poor people in
Colombia that, right now, with the tariffs in place, are dependent upon
white corn, for example, with a high tariff level.
And so, these are opportunities to blend the use of green
technologies throughout the hemisphere. And this is one that I think
makes a lot of sense.
Mr. REICHERT. Thank you. One real quick question. General
McCaffrey, during Ambassador Kirk's testimony before the full committee
on February 9th, he said that he could not move forward with the
Colombian trade agreement because of ``labor-related concerns that go
to the core American values.''
I agree that the importance of our core values does--like keeping
drugs and drug violence off our streets and away from our children.
What do you think about that comment, that this goes right to the core
American values--and we all recognize keeping drugs and drug violence
off our streets--help a country raise their children with those values?
General MCCAFFREY. Well, I actually--you know, I strongly endorse
his remarks. I think these are core American values. And I say that as
someone whose family, you know, in the Depression era, was strongly
pro-union.
I think what we need to underscore, though, is the astonishing
commitment over the last--certainly since 2002, to making Colombia
safer, to lowering violence, to increasing the rule of law, to
transferring thousands of cases from military courts to civilian
courts, to include cases that are already in front of military justice,
to locking up rogue army or police officers--a general--for 40 years
behind bars.
So, there have been significant changes for the better in Colombia.
Chairman BRADY. General, thank you----
General MCCAFFREY. I personally believe the FTA will contribute to
that, and add leverage. A point of disagreement, though----
Chairman BRADY. General, if I may, thank you so much for your
testimony today. And I would encourage any written response--this is a
great dialogue--for all the witnesses, by the way.
Mr. Herger.
Mr. HERGER. Mr. Chairman, thank you very much for holding this
hearing on this incredibly important issue. Trade is so important,
certain important in my district, important to our nation, important to
growing jobs, establishing jobs in our country.
Mr. Isaacson, you testified that WOLA supports expanding trade, but
that WOLA does not support moving forward with this trade agreement
until concerns regarding Colombian labor and human rights have first
been resolved. I believe the opposite, that with the tremendous
progress that Colombia has already made in this area, that we should be
moving forward, and engage Colombia through this trade agreement which
will, in turn, be a benefit to the Colombian workers.
WOLA's position also appears to be inconsistent with the approach
espoused in this April 2008 WOLA special report, which is entitled,
``Opting for Engagement.'' One of the report's principal arguments is
that increased commercial engagement, increased trade, is a promising
way of exerting a positive influence on a country's policies and
practices with regard to human rights.
In fact, the report recommends that the United States take that
approach, but towards Cuba. It does not mention Colombia. Now, everyone
agrees that implementation of our agreement with Colombia would result
in increased trade with the United States. But in my view, increased
trade with the United States also helps us exert a positive influence
on another country's labor and human rights conditions.
Now, I would like to ask--and with my time, Mr. Isaacson, I think I
know what your opinions are--but I would like to ask of our other
panelists, please describe how they have seen labor conditions in
developing world impacted by expanded trade with the United States.
Mr.--yes, Mr. Romero?
Mr. ROMERO. Free trade does not resolve all outstanding conflicts
between labor and management. And it does not lift all boats in the way
that we would like to see those boats lifted. But it does force local
entrepreneurs and owners and managers to compete with U.S.
entrepreneurs and owners and managers that have best practices, that
practice the kind of respect for labor law that we have in this country
in their own countries.
I have seen this on the ground, in places like El Salvador, and
even in Guatemala, where the entrance of U.S. entrepreneurs into these
areas has lifted up not just wage scales, but also respect and benefits
for workers in that area. And I think it would do the same thing in
Colombia.
Just one thing to add to that, and that is that passing a free
trade agreement with Colombia now--which I strongly believe is long
overdue--would also provide us not only the mechanism of raising
standards, but it would also give us the opportunity to employ
mechanisms when the Colombians failed. There is all kinds of mechanisms
that--the special trade representative having to do with labor--that
you can register complaints. There are hearings, et cetera. It is not
like we have one bite at this apple, and then forever and ever we are
subject to whatever happens in Colombia. We have a lot of control after
we pass a free trade agreement.
Mr. MARSH. I would just add to what the ambassador said, that
within Colombia we hire a very highly-specialized workforce, and we
have a strong commitment and track record of treating employees fairly
in the United States and worldwide. We apply our labor standards
worldwide. We view the immediate passage of the agreement as essential
so that we can continue to create jobs not only in the U.S., but jobs
in Colombia, where we can hire those people and apply the same ethical
labor standards to our employees in Colombia.
Mr. HERGER. Thank you. General?
General MCCAFFREY. Well, I would add, having spent hours listening
to the two Castro brothers at close range, that I strongly endorse
engagement with Cuba, lifting the trade embargo, getting our people in
there, and trying to improve the miserable lot of the Cuban workforce,
as well as opening them to U.S. agricultural products, pharmaceuticals,
et cetera.
So I think that argument is correct, and it applies to Colombia in
a very different sense, since Colombia is at the top of the heap of
democracies in South and Central America.
Mr. HERGER. Thank you.
Chairman BRADY. I thank you.
Mr. HERGER. Thank you, Mr. Chairman.
Chairman BRADY. I want to thank the witnesses for their excellent
testimony, for the Members, for their thoughtful questions. And let me
note that Members may submit questions to our witnesses for the record.
And if they do, I hope you will respond promptly. I know you will.
And our witnesses today made clear that the pending trade agreement
with Colombia offers significant economic and geostrategic benefits. A
continued delay will only harm American interests in the region and the
ability of American workers, businesses, and farmers to compete in
these markets, as our competitors move ahead.
Witnesses have made clear moving forward to show--to allow
congressional consideration of this agreement by July 1st is in the
national security interests of the United States, and will help us re-
engage as leaders within our hemisphere.
I hope the Administration will lay out a clear strategy and action
plan for--and time table for considering the Colombia agreement. I
strongly believe that we should consider all these agreements by July
1st. I hope that we can work together to make that happen.
But for now, this committee is adjourned. Thank you.
[Whereupon, at 12:46 p.m., the subcommittee was adjourned.]