[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
TRANS-PACIFIC PARTNERSHIP
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HEARING
before the
SUBCOMMITTEE ON TRADE
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
DECEMBER 14, 2011
__________
Serial No. 112-TR4
__________
Printed for the use of the Committee on Ways and Means
COMMITTEE ON WAYS AND MEANS
U.S. GOVERNMENT PRINTING OFFICE
76-318 WASHINGTON : 2012
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20402-0001
SUBCOMMITTEE ON TRADE
KEVIN BRADY, Texas, Chairman
GEOFF DAVIS, Kentucky JIM MCDERMOTT, Washington
DAVID G. REICHERT, Washington RICHARD E. NEAL, Massachusetts
WALLY HERGER, California LLOYD DOGGETT, Texas
DEVIN NUNES, California JOSEPH CROWLEY, New York
VERN BUCHANAN, Florida JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska
AARON SCHOCK, Illinois
LYNN JENKINS, Kansas
Jon Traub, Staff Director
Janice Mays, Minority Staff Director
C O N T E N T S
__________
Page
Advisory of December 14, 2011 announcing the hearing............. 2
WITNESSES
PANEL 1:
Ambassador Demetrios Marantis, Deputy U.S. Trade Representative,
Office of the United States Trade Representative............... 7
Testimony.................................................... 9
PANEL 2:
Devry S. Boughner, Director, International Business Relations, on
behalf of Cargill, Inc. and the U.S. Business Coalition for TPP 33
Testimony.................................................... 35
Angela Marshall Hofmann, Vice President, Global Integrated
Sourcing and Trade, Wal-Mart Stores............................ 40
Testimony.................................................... 42
Michael Wessel, President, The Wessel Group...................... 48
Testimony.................................................... 50
MEMBER SUBMISSIONS FOR THE RECORD
Questions For The Record......................................... 69
Multiple Member Letter........................................... 72
PUBLIC SUBMISSIONS FOR THE RECORD
Computer and Communications Industry Association................. 75
Knowledge Ecology International.................................. 82
Public Health.................................................... 92
TRANS-PACIFIC PARTNERSHIP
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WEDNESDAY, DECEMBER 14, 2011
U.S. House of Representatives,
Committee on Ways and Means,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:03 a.m., in
Room 1100, Longworth House Office Building, the Honorable Kevin
Brady [chairman of the subcommittee] presiding.
[The advisory of the hearing follows:]
HEARING ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
Brady Announces Hearing on the
Trans-Pacific Partnership
December 14, 2011
Congressman Kevin Brady (R-TX), Chairman, Subcommittee on Trade of
the Committee on Ways and Means, today announced that the Subcommittee
will hold a hearing on the Trans-Pacific Partnership. The hearing will
take place on Wednesday, December 14, 2011, in 1100 Longworth House
Office Building, beginning at 10:00 A.M.
In view of the limited time available to hear the 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 September 2008, then-U.S. Trade Representative Susan Schwab
notified Congress of President Bush's intent to launch negotiations for
the United States to join the Trans-Pacific Partnership (TPP).
Subsequently, on Dec. 14, 2009, U.S. Trade Representative Ron Kirk
notified Congress of President Obama's intent to enter the TPP
negotiations. Along with the United States, there are eight other
countries engaged in these negotiations--Australia, Brunei, Chile,
Malaysia, New Zealand, Peru, Singapore, and Vietnam. The goal of the
negotiations is to achieve an ambitious and comprehensive 21st-century
agreement that will help create and retain U.S. jobs, including by
increasing trade and investment among the TPP partner countries,
promoting innovation and competitiveness, increasing the participation
of small and medium-sized enterprises in trade, supporting efficient
production and supply chains, improving trade facilitation, promoting
regulatory coherence and cooperation among the TPP members, furthering
transparency, and appropriately addressing trade-related aspects of
development, labor and environment issues of mutual concern.
Nine rounds of negotiations of the TPP agreement have been held so
far, and additional rounds are scheduled for 2012. Consolidated legal
text has been developed in almost all areas, with further work needed
to finalize text on specific issues. The areas of negotiations include:
tariffs and other barriers to trade in goods, services and investments;
competition; customs rules; capacity building; e-commerce; environment;
government procurement; intellectual property; labor; sanitary and
phytosanitary standards; technical barriers to trade; and
telecommunications. Based on the negotiating progress so far, the trade
ministers for the TPP partner countries released the broad outlines of
an agreement on November 12, 2011. In response to this outline, the
leaders of the TPP partner countries released a statement noting that
they are committed to completing the TPP negotiations as quickly as
possible and instructed the negotiators to continue work through 2012.
President Obama remarked, ``There are still plenty of details to work
out, but we are confident that we can do so. So we've directed our
teams to finalize this agreement in the coming year. It is an ambitious
goal, but we are optimistic that we can get it done.''
The TPP agreement will significantly increase the United States'
economic integration into the Asia-Pacific region. This region includes
some of the world's most robust economies and represents more than 40
percent of global trade. As a result, further opening up the huge and
expanding Asia-Pacific market will increase U.S. exports of goods,
services, and agricultural products. Combined, the current TPP partner
countries are already the fourth largest goods and services export
market for the United States.
The TPP is the most significant pathway toward broader Asia-Pacific
regional economic integration, and the benefits of TPP to the United
States would be even greater if other countries participate and provide
meaningful access to their markets. According to USTR, the consensus
among the nine TPP countries is that to join TPP, new members must be
willing to demonstrate their willingness to match the high level of
ambition established by the current TPP partner countries and not
hinder the momentum for completing the negotiations. Moreover, any
bilateral issues between a potential new partner country and each of
the current members must be adequately resolved. Japan, Canada, and
Mexico recently announced their interest in joining the TPP
negotiations. USTR is beginning to consult with Congress and
stakeholders to identify the bilateral issues pertaining to each of
these countries and next steps.
In announcing this hearing, Chairman Brady said, ``Opening up
markets in the Asia-Pacific region for American goods and services must
be a priority for robust U.S. long-term growth--to create good U.S.
jobs, increase the competitiveness of U.S. exporters, and to preserve
U.S. influence and leadership in the region. That is why it is vital
that we complete an ambitious and comprehensive 21st century agreement
as quickly as possible. We should also welcome new countries to the TPP
if they are willing to meet TPP's high ambitions and resolve
outstanding bilateral issues. I look forward to hearing about the
Administration's plans for completing an agreement that will garner
bipartisan support and hearing the private sector's views on how this
agreement could benefit American companies, workers, and farmers.''
FOCUS OF THE HEARING:
The hearing will focus on the status and future of the ongoing TPP
agreement negotiations as well as the potential benefits of the
agreement for U.S. companies, workers, and farmers. The hearing will
also explore how the TPP agreement will be a ``21st century agreement''
by addressing barriers to trade beyond tariffs and increasing trade
facilitation.
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FORMATTING REQUIREMENTS:
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The Committee seeks to make its facilities accessible to persons
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Note: All Committee advisories and news releases are available on
the World Wide Web at http://www.waysandmeans.house.gov/.
Chairman BRADY. Good morning, everyone. I would like to
welcome all of you to our hearing on the Trans-Pacific
Partnership, or TPP, as it is known. I would like particularly
to recognize Ambassador Beazley from Australia, Ambassador
Forsyth from Peru, and Ambassador Moore, from New Zealand, who
are joining us today. Welcome.
I am particularly excited about today's hearing, because we
can finally talk about a new trade initiative, one that will
create jobs and increase our competitiveness. The recent
passage of the Colombia, Panama, South Korea trade agreements
was a tremendous achievement, one that has given the United
States new momentum in the trade arena widely recognized around
the world. We must now make the most of this new momentum to
seek 21st century solutions, to streamline trade to end non-
tariff barriers, and inter-connect regulations across borders
to reduce foreign regulatory barriers to our exports.
Focusing just on tariffs, import quotas and other
traditional barriers to trade is no longer enough to fully open
markets. We need to make the processes for selling U.S.
products overseas cheaper, faster, and easier. Establishing
high-standard, market-based rules of trade through new
agreements will also create better leverage to get other
countries like China to adopt such rules. That is why I
strongly support the TPP negotiations.
Trans-Pacific Partnership is a sure-fire way to create U.S.
jobs and expand opportunities for American workers, businesses,
and farmers. It will allow American ingenuity to create jobs
instead of relying on costly government programs to do so.
Like past successful trade agreements, TPP will open
markets for U.S. goods, services, agriculture products and
investment by knocking down tariffs and other trade barriers.
It will also build on past work to eliminate differing
standards that disadvantage us, discriminatory government
procurement rules, non-science-based sanitary and phytosanitary
standards, and inadequate protection of intellectual property
rights. At the same time, where provisions and past agreements
reflect a bipartisan consensus, such as those relating to
labor, TPP should maintain that balanced approach to ensure
continued broad support.
What makes the Trans-Pacific Partnership a 21st century
agreement is that it also tackles cross-cutting and new
emerging trade issues to streamline trade, and will define
economic competition in the future. These issues include:
improving foreign regulatory practices, recognizing the
importance of efficient supply chains, increasing the role of
small and medium-sized businesses in international trade, and
addressing market distortions by state-owned enterprises.
The partnership will deepen our economic relations in the
fast-growing Asia-Pacific region. The world's most robust and
dynamic economies are found in that part of the world. Plus, as
a whole, the eight other countries currently in the Trans-
Pacific Partnership are already the fourth largest goods and
services export market for America. Our future economic growth
and prosperity depends upon our ability to trade and invest
more throughout the Pacific. TPP will make sure that American
workers, businesses, and farmers benefit from the Asia-Pacific
region's rapid economic growth.
And I particularly look forward to hearing from our
private-sector witnesses about how TPP will create new
opportunities for them, their workers, and everyone in their
supply and production chains. That is why I want to see the
talks finish quickly. Midyear would be my goal. I applaud the
TPP negotiators for the incredible amount of progress they have
already made, and their achievement in reaching the broad
outlines of an agreement.
I am also glad that TPP leaders instructed negotiators at
APEC last month to complete their work as quickly as possible.
Some tough issues certainly remain, but we can't slow down our
efforts toward achieving a robust agreement. We can't afford
any needless delay to expand American export and create
American jobs.
Another strength of TPP is that more Asia-Pacific countries
can join when they are ready to meet TPP's high standards.
Let's not forget the United States was not an original member
of the Trans-Pacific Partnership, but was welcomed in when the
Bush administration announced we were ready to join. We should
seek new entrants from Asia, and also from the Americas. As a
result, I welcome the announcements by Canada, Japan, and
Mexico that they are considering joining TPP.
New members must be committed to meet TPP's high standards
and not lower its ambition or delay its conclusion, and must be
willing to put all issues on the negotiating table. New members
must also be willing to adequately resolve outstanding
bilateral issues with the TPP countries. Some of these issues
may be difficult. But allowing them to remain unresolved is
contrary to the high standards and the high ambition of the
Trans-Pacific Partnership.
By the same token, we shouldn't let past difficulties in
resolving these issues keep us from seeking to resolve them
now. Otherwise, we will forever be frustrated by the problems
of the 20th century. The new TPP candidates have presented us
with a moment of opportunity.
I understand that USTR has started to engage with Congress
and stakeholders to identify the bilateral issues that need to
be raised with Canada, Japan, and Mexico. I look forward to
working closely with USTR as it seeks to resolve these issues.
I would like to welcome all of our witnesses today, and
thank them for being with us. I look forward to hearing the
testimony from both panels. At this time I will yield to the
ranking member of the Trade Subcommittee, Mr. McDermott, for
the purposes of an opening statement.
Mr. MCDERMOTT. Thank you, Mr. Chairman. A month ago, Mr.
Brady and Mr. Levin and I were in Honolulu, talking to TPP
country officials. In our meetings I was struck by the urgency
that so many representatives of other countries had for a
strong agreement. I think we all see the potential in this
agreement.
Asia-Pacific countries, as you have heard, account for 40
percent of the global population, and together generate 56
percent of the global GDP in 2010. Indeed, my home state,
Washington State, exports nearly 70 percent of its total
exports to markets in Asia.
We have to do things right if we are to unlock the
potential of TPP. We have to ensure that TPP lives up to its
billing as a 21st century agreement. This is all the more
important because, as President Obama said in Honolulu last
month, ``The TPP has the potential to be a model not only for
Asia-Pacific, but for future trade agreements.''
So, what does it mean to be a 21st century trade agreement?
To me it means an agreement that can help create American jobs
and promote American values. TPP must tackle the range of real-
world barriers to competition. This means not just tariffs and
non-tariff barriers, but also things like unfair competition
from state-owned enterprises.
In June, every Democratic Member of the Ways and Means
Committee signed a letter to President Obama identifying state-
owned enterprises as one of the greatest of the 21st century
challenges faced by U.S. businesses and workers, and urging
robust SOE disciplines in TPP. Ensuring that the SOEs, state-
owned enterprises, compete on an even playing field with
private actors has to be the critical component of any TPP
agreement.
This is all the more important when countries like Japan--
that are seeking to enter into this. Japan is notorious for its
range of methods it uses to close its markets to foreign
competition. This includes special benefits for SOEs, such as
the Japanese Post, as well as a host of tariff and non-tariff
measures in sectors ranging from agriculture to autos to
pharmaceuticals.
USTR has just initiated a comment period to help in
deciding whether Japan should be allowed at the negotiating
table. I personally am one who think they ought to be at the
table. I think we ought to have that opening. But that--we will
see what the comment period brings.
Some are skeptical that Japan will really open its markets.
Skeptics think Japan will continue to use creative methods to
keep out foreign goods and services, while taking advantage of
other countries' TPP trade concessions. This is clearly an
unacceptable result. We need to make sure we do not end up
there if we are to agree to Japan's participation.
We also need to look carefully at the rules of origin that
determine which products will get duty-free treatment and
create rules that help keep the maximum benefit of the FTA--and
thus, the greatest number of jobs--in the TPP region.
We also need to incorporate and, where appropriate, build
on the so-called May 10th Agreement. That congressional
executive agreement reflected state-of-the-art thinking on a
range of critical issues, including labor, environment, and
intellectual property. May 10th has to be the basis for TPP and
all other FTAs going forward.
Speaking as a physician with experience in LDCs, lesser-
developed countries, I think we got it pretty close to right in
the May 10th Agreement on IPR access to medicines. We grafted
language that ensured protection for innovation, but also
ensured that life-saving generics would be available in
developing countries at the exact same time they become
available in the United States. This is consistent with core
American values. Lives are at stake. Poor people in poor
countries shouldn't have to die because they don't have the
affordable medicines we have here. And I have been very
disappointed by the USTR's move away from that policy. I think
this reported change would be deeply flawed. Hopefully, USTR
can address this issue in its testimony today.
The expectations are high for this agreement, as are the
stakes. And I think we could overcome them, but we have a lot
of work ahead of us. I look forward to working with the
administration and our Republican colleagues to get there.
Thank you. I yield back the balance of my time.
Chairman BRADY. Thank you, Mr. McDermott. Today we have two
panels of witnesses. First panel is composed of our witness
from the Administration, Ambassador Demetrios Marantis, Deputy
U.S. trade representative from the Office of the U.S. Trade
Representative.
Ambassador Marantis, welcome. We look forward to your
testimony. I especially appreciate you are willing to work
with--closely with Members across the aisle to discuss the very
many complex issues in trade.
As always, I would ask you keep your testimony to five
minutes. Your written statement, like those of all the
witnesses, will be made part of the record. And you are
recognized for five minutes. Welcome.
STATEMENT OF DEMETRIOS MARANTIS, DEPUTY U.S. TRADE
REPRESENTATIVE, OFFICE OF THE UNITED STATES TRADE
REPRESENTATIVE
Ambassador MARANTIS. Thank you, Chairman Brady. Thank you,
Ranking Member McDermott, Members of the Subcommittee. It is a
great honor to testify here today. And I would also like to
acknowledge the presence of the TPP ambassadors here today who
we have forged a wonderful working relationship with.
Two years ago today the Obama Administration notified
Congress of our intention to enter into the Trans-Pacific
Partnership negotiations. Since then, we and our TPP partners,
Australia, Brunei-Darussalam, Chile, Malaysia, New Zealand,
Peru, Singapore, and Vietnam, have come far towards realizing
an ambitious, cutting-edge trade pact that promises to
transform the economies in the Asia-Pacific.
The TPP is a historic endeavor that embodies the Obama
Administration's vision for the American economy, the future of
trade, and the United States' central role in the Asia-Pacific.
The TPP holds the prospect of unlocking significant new
opportunities for increasing exports that support higher-paying
jobs here at home. That is because the Asia-Pacific includes
some of the world's most dynamic economies, representing more
than 40 percent of global trade. The region is a key
destination for U.S.-manufactured goods, agriculture products,
and services, last year accounting for over 60 percent of total
U.S. goods exports, and nearly 3/4 of our total agricultural
exports.
At the APEC meetings in Honolulu last month, the leaders of
the nine TPP countries announced the broad outlines of an
agreement. Without announcement, other countries publicly
expressed interest in participating in this high-standard
agreement, including Canada, Japan, and Mexico. In a short
time, the TPP has become the primary platform for regional
economic integration, securing the United States' role as a
leader in the 21st century economy.
Negotiation of the TPP is an enormous undertaking, not only
for the combined size of the countries participating, but also
for the scope and ambition of the agreement itself. TPP
partners are aiming to address a range of issues not covered in
past agreements, including opportunities for small and medium-
sized businesses, green growth, and trade and investment
distortions that can occur when governments provide special
treatment to state-owned enterprises.
The Obama Administration's goal is to conclude an agreement
that positions U.S. workers and businesses well to compete and
win in the Asia-Pacific, and we hope that advances made in the
TPP agreement will serve as models for future trade pacts.
Just last week, our negotiators traveled to Malaysia to
build on the substantial progress we have made to date, and to
press ahead towards conclusion of the agreement. The nine TPP
partners have already developed consolidated legal text for
virtually every chapter, covering nearly all key trade and
trade-related issues. In some areas, text is almost complete.
In others, further work is needed.
While many issues have yet to be resolved, our negotiations
have benefitted tremendously from unprecedented collaboration
between the administration and Congress. The administration has
closely consulted with Congress on each U.S. negotiating
proposal, and your guidance and input have played an integral
role as we have developed our negotiating positions.
In particular, I would like to thank Chairman Brady,
Ranking Member McDermott, and Ranking Member Levin for coming
to Honolulu during the November APEC meetings. Your presence
underscored to our TPP partners the seriousness and commitment
of the United States across all the government. In the coming
months, as we work to conclude the agreement, we will need your
support and continuing advice even more.
We know that our efforts to build the TPP today can help
drive the growth of our economy, and support jobs for Americans
far into the future. We look forward to working together
closely with you to achieve this goal.
Thanks again, and thank you for the opportunity to be
before you today.
[The prepared statement of Ambassador Marantis follows:]
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Chairman BRADY. Mr. Ambassador, thank you very much. Your
testimony demonstrates the enormous potential value of TPP,
both from an economic standpoint and an engagement standpoint.
In light of all those potential benefits, it is clear we
want to move this agreement forward as quickly as possible. My
goal would be midyear of next year. What is USTR doing to stay
on a steady time table? What can Congress do to help you stay
on a steady, brisk time table, going forward?
Ambassador MARANTIS. Thank you, Chairman Brady. I think the
reality is success breeds a lot more work. And the success that
we were able to achieve in Honolulu with the TPP leaders
announcing the broad outlines of an agreement and their
commitment to accelerate the pace of the negotiations has meant
that we are working very hard right now with our TPP partners
to schedule additional negotiating rounds, to schedule
additional bilateral and regional negotiations so that we can
meet the goals our leaders set for us.
We have a lot of the work done, in terms of U.S. proposals
on the table. But we are going to enter a very difficult period
now, where we try to bring these negotiations to closure. And
as we have over the past year, consulting very closely with you
on developing our proposals, we are going to need to work very
closely with you in honing them to make sure we bring these
negotiations to a conclusion as quickly as we can.
Chairman BRADY. Thank you. Second and final question--there
is an area of concern I want to highlight. While the TPP
provides important opportunities for a broad range of
industries and, again, beyond the border and state-owned
enterprises and regulatory coherence, trade facilitation, our
most recent trade agreements provide a proven means for
handling certain other critical issues.
For example, I would urge the Administration to follow the
approach in our recent agreements relating to labor, so as to
avoid increasing controversy. If the administration seeks to
expand the scope of commitments beyond the compromise embodied
in the recent trade agreements, it could seriously undermine
support for the TPP and jeopardize congressional approval of
the agreement.
Is the Administration planning to put forward a proposal on
labor that goes beyond the approach taken in our recent trade
agreements?
Ambassador MARANTIS. Chairman Brady, as with every element
of TPP, whether it is labor or intellectual property, services,
SPS measures, we are trying to ensure that the TPP addresses
the concerns that workers and businesses face in the 21st
century economy. So we have looked very closely at the
obligations of what we have done in the past. We have received
input from you, we have received input from stakeholders. And
our goal in all of our chapters is to move the ball forward,
and do so in a way that is consistent with U.S. law.
We have not yet tabled a proposal on labor. We are in
active consultation with this committee now, and hope to table
our labor proposal before the end of the year.
Chairman BRADY. The point I think I would like to drive
home is that we have just completed three very important trade
agreements, with very strong--not overwhelming--bipartisan
support. So we know where the consensus lies. My concern is
that should the labor text go beyond the May 10th Agreement it
would create, first, unnecessary controversy. Secondly, I think
it would undermine support among the TPP's strongest advocates.
And, in the end, I am afraid it could seriously jeopardize
congressional approval of a final deal.
And I appreciate you listening, as you do, to our serious
concerns about this area. With that, I would recognize Mr.
McDermott.
Mr. MCDERMOTT. Thank you, Mr. Chairman. Yesterday I picked
up a piece of paper and I was really pleased, because I see
USTR has ``enthusiastically''--this is a quote--``called for
supporting extension of AGOA.'' And you are going to the WTO
summit. I hope that that goes. We are working with the Senate
to try and get a bill through that they won't amend over in the
Senate. There is a little bit of paranoia on this side that if
we send a bill to the Senate, sometimes it comes back
differently than we had anticipated. So we are working to try
and make that possible.
I would like to take the rest of my time to explore with
you the whole Japanese question. I had a delegation of people--
the agriculture minister and other people--yesterday from
Japan. I had this morning the ambassador of the embassy came in
to talk about what is going on and all this. I would like to
hear how you think things will develop in our--if Japan is
brought in.
First of all, is it your position that you would like Japan
to be in the negotiation? And secondly, if they are, how do you
think it will proceed, dealing with the issues that are clearly
different than dealing with Brunei and Malaysia and Vietnam?
And there are some long-standing issues with Japan. I would
like to hear you talk a little bit about that for us.
Ambassador MARANTIS. Sure. Thanks, Mr. McDermott. And thank
you very much for your support of extending third-country
fabric in AGOA until 2015. You know, this is a big priority of
ours, and we look forward to working with you, with this
committee, and with the Senate in getting it done as quickly as
we can.
On Japan Canada, and Mexico announced that they were
interested in participating in the TPP. That means that we need
to begin a process here domestically with you and our
stakeholders so that we can determine whether or not Japan, in
this instance, is prepared to take on the high-standard
commitments that we expect in the TPP, and that we are
negotiating with our eight other counterparts.
Mr. MCDERMOTT. Could I clarify one thing?
Ambassador MARANTIS. Sure.
Mr. MCDERMOTT. Would it be your intention that there be an
agreement reached with the first nine countries, and then Japan
negotiations became a part of it? Or would it be Japan making
10 from the very start?
Ambassador MARANTIS. I think it is too soon to tell. The
way I sort of--I think we see this proceeding--there are two
parallel tracks. There is the track that we are on with our TPP
countries right now, accelerating, our negotiations with a view
to try to conclude this as quickly as possible.
And then, there is a track with the applicant countries,
like Japan, Canada, and Mexico, where we need to work with you
and stakeholders, again, to decide if they are, willing and
able to address our concerns and to meet the high-standard
commitments we expect.
At some point those tracks theoretically will merge. But
the question of when that will happen will largely be dictated
by the substance of the consultations that we have, you know,
both with you, as well as with the Japanese, the Canadians, and
the Mexicans.
Mr. MCDERMOTT. It would seem, just listening to the
chairman's suggestion that he would like to see it all done
perhaps by midyear, that it would not be possible to get
everybody in the umbrella by midyear. Is that a fair
assessment?
Ambassador MARANTIS. Again, Mr. McDermott, it is hard to
tell. We will get our submissions back from the public from our
Federal Register notice on Japan, Canada, and Mexico on January
13th. We have already begun our outreach to stakeholders. We
have already begun to begin our consultations with the
committee. And we will just--we will have to see where we are
as the months progress, and see how quickly our trading
partners are able to address the concerns that are identified
in the public submission process.
Mr. MCDERMOTT. And then, tell me--I raised the issue of IPR
and drugs. Tell me why you are--why you have different
language, or why you think we should have different language in
TPP, as opposed to what we put in Peru and some other
agreements.
Ambassador MARANTIS. Sure. I mean I just want to underscore
this administration's commitment to using trade policy to drive
access to medicine in a way that fosters innovation. That was
the goal of May 10th, and we very much uphold and affirm that
goal.
The approach that we are taking in TPP, though different
from--different in language from May 10th, is very much as
effective, we believe, in terms of driving access to medicines
in the developing world. What we have tried to do, Mr.
McDermott, is we have tried to create increased legal certainty
and predictability for generics, as well as for innovative
producers, so that they get into the market in a developing
world as quickly as possible. And the goal that we have is to
propel the TPP countries to the front of the line for important
innovative products, as well as the generic competition that
follows.
So, we think that the proposal we have made, both in the IP
chapter, but as well as in other areas of the agreement with
respect to tariffs, customs, you know, trading rights, and
distribution, provides, really, the best way to drive access to
medicines in the developing world as quickly as possible in a
way that achieves the balance that we sought to achieve in May
10th. That fosters innovation, as well.
Mr. MCDERMOTT. Thank you.
Chairman BRADY. Mr. Davis.
Mr. DAVIS. Thank you, Mr. Chairman. I request unanimous
consent to submit two documents for the hearing record.
First is a statement from the Burley Tobacco Growers
Cooperative Association, which includes the many tobacco
producers from Kentucky, requesting the administration defend
the economic interests of American farm families by ensuring
that tobacco and tobacco products are not excluded from the
TPP.
The second document is a copy of a letter the Kentucky
delegation sent to Ambassador Kirk with the same request.
Ambassador Marantis, I would like to ask you about the
second document that I submitted for the record. On October 7th
of this year, the Kentucky delegation sent a letter to
Ambassador Kirk opposing USTR's consideration of excluding
products from the TPP, specifically tobacco. I, along with
congressional delegations from seven other states who sent
similar trade letters, received a response that stated the
Office of the U.S. Trade Representative is ``still developing
our negotiating position for the TPP.''
The TPP is often described as an ambitious 21st century
trade agreement, but I want to ensure it is also a
comprehensive agreement. I was wondering if you could provide
any additional insight or updated information regarding USTR's
position on the potential exclusion of tobacco or any other
products from the TPP.
Ambassador MARANTIS. Sure, Mr. Davis. We--I don't have a
lot of new news for you. We have received an enormous amount of
input on this issue from all across the spectrum, and we
haven't made any decisions yet. But as we continue to review
the input and to determine how to best approach this issue, we
will definitely do so, in close consultation with this
committee.
Mr. DAVIS. Well, I would close by just sharing that the one
concern that I have on this matter is Kentucky produces over a
quarter of the nation's tobacco and a 9.5 percent unemployment
rate in our state. If there were to be an exclusion, it would
be devastating.
Could you give us some assurance that you would work with
us and--on the committee and the Congress, to be updated
appropriately as you develop this position, and include us in
the dialogue?
Ambassador MARANTIS. Yes, sir.
Mr. DAVIS. I appreciate that. I would like to move on to
another subject, briefly. With the expanding interesting in
joining the TPP, I think it is an important validation of a
broader goal of the agreement to create a free trade area for
the Asia-Pacific region. And this effort will have significant
commercial benefits, but it could also have an important effect
on China's expanding influence. TPP would help to deepen trade
ties with key allies in the Pacific and serve as a
counterweight to Chinese influence.
What role, in your opinion, does TPP play in our China
strategy, and China's growing influence, both in Asia and in
Latin America to our south?
Ambassador MARANTIS. We view TPP as a platform for regional
integration in the Asia-Pacific. And as we have started out
with this group of like-minded countries, we hope to expand it
to include other countries in the Asia-Pacific.
We have learned a lot from our trade relations in the
region over the past number of years, and that is why we have
included some new and innovative proposals in the TPP to
address concerns that have come up with the nine, but also more
broadly.
For instance, we have included state-of-the-art provisions
on state-owned enterprises in order to ensure that the
competitive distortions that state-owned enterprises could put
in the international trade and investment regime are accounted
for.
Similarly, we have also included provisions to address
issues that have arisen with respect to indigenous innovation,
in order to ensure that countries don't require standards, a
specific standard, as a condition for investing in that
country.
So, we have learned a lot in close consultation with you,
as well as just what our exporters have faced in the region.
And that is why we are trying to develop the TPP as a, you
know, innovative 21st century agreement that could grow and
expand and include other countries in the region.
Mr. DAVIS. Great. Thank you very much. We look forward to
working with you.
And I yield back, Chairman.
Chairman BRADY. Thank you. Mr. Reichert.
Mr. REICHERT. Thank you, Mr. Chairman. And welcome,
Ambassador. First of all, I want to just, again, say thank you.
The last time you were here we expressed our appreciation. I
don't think we can say this enough to you and your staff. Thank
you so much for all your hard work.
And I don't think we can repeat this enough, either, in the
success of the Korean agreement, Colombia, and Panama, the
250,000 jobs that are estimated to be created right here in the
United States, the improvement to environmental standards
across the world, the improvements to labor standards across
the world, and also the great concern we have and the benefits
that these trade agreements bring to our national security
interests. So a lot broader than just, you know, economic
partnerships here. I think most folks understand that. So I
appreciate your hard work.
I wanted to focus on a couple of things that have sort of
been touched on. One, the chairman mentioned. How can we help?
How can Congress help you move your time line?
And I just wanted to ask a question that relates to the
President's Export Council, which I happen to be a member of,
and whether or not you have had an opportunity to see the
letter they provided, giving their thoughts and ideas and input
into TPP.
Ambassador MARANTIS. Yes, sir. And you know, with that and
all of the outreach that we have done to stakeholders, it has
very much helped us shape where we are on TPP.
Mr. Reichert, thank you very much for your offer and your
consistent support of what we do. This committee has been
fantastic to work with at the Member level and the staff level.
And the unprecedented amount of collaboration that we have had
on the TPP has enabled us to get to a point where the President
was able, in Honolulu, to announce the broad outlines of the
agreement.
With the commitment that you all have, we are going to need
it over the course of the next 6, 8, 9, 12 months to get this
done. We have got a lot of hard work to do and a lot of really
tough decisions to make. But we have established a great track
record of congressional-executive collaboration, and I look
forward to continuing it.
Mr. REICHERT. Great, thank you. I wanted to touch on the
services market, again highlighting the fact that with the
Korean agreement we have opened up a $560 billion services
market for the United States to sell American. And my question
is: How will the TPP agreement create a level playing field for
our service providers in those countries that want to be
partners?
Ambassador MARANTIS. Services is a key market access
priority for us across the board. And there are a number of
services barriers in the region that we need to address head-
on. For instance, in the area of financial services, our
service providers face obstacles in terms of being able to get
licenses to offer their services. Or their limitations on the
amounts of branches that our service providers can have in
particular markets.
We also face high equity limitations, which inhibit our
ability to provide services through a commercial presence. So
that is just one example of the many issues that we hope to get
at in our services market access negotiations.
We are working also in the area of electronic commerce, to
enhance the electronic delivery of services, where we have some
really new, interesting, innovative proposals that help to
ensure access to data, and that also ensure that our trading
partners don't erect barriers or requirements that would
require a server to be located in a particular jurisdiction,
which in some way would inhibit the electronic delivery of
services.
So, there is a lot of work we are doing on both the market
access side and on the non-tariff barrier side to ensure that
we get greater access to the services market of that important
region.
Mr. REICHERT. And one last point: intellectual property
rights. Mr. McDermott touched on that briefly specific to
medicines. I want to stress the fact that I think the language
in the Korean agreement, Colombia, Panama were strong had
strong intellectual property right language. We don't want to
see weaker version of that language, as we look at TPP. I think
that would hurt our relationship, friendship, and partnership,
and the agreement that we have with the three previous
countries that I just mentioned.
And are you looking at, hopefully, the same language when
it comes to intellectual property rights?
Ambassador MARANTIS. On pharmaceuticals specifically, we
are, working to seek the balance between driving access to
medicines in the developing world in a way that fosters
innovation.
On the other provisions in IP we are doing some new
innovative things to protect IP protection. We, for instance in
the area of trade secrets, are requiring criminal penalties for
trade secret theft. We are trying to strengthen our approach to
trademarks and geographic indications to address concerns that
our agriculture industry has raised with us. We are trying to
do new things in the area of promoting criminal penalties for
counterfeiting and piracy offenses that threaten health and
safety.
So, there is a lot of new, good work that we are doing to
make sure that our IP chapter stands alongside the other IP
chapters that we have negotiated in the past.
Chairman BRADY. Thank you. Mr. Neal.
Mr. NEAL. Thank you, Mr. Chairman. Mr. Ambassador, 60 years
ago plus, if you were traveling through New England you would
have noted that it was the footwear capital of the United
States. Not necessarily real high-wage jobs, but it had a
steady ladder of opportunity for a generation of immigrants and
others who had come to New England. And, in many instances,
families by two or generations had worked in that respective
industry.
New Balance is still there. And it is certainly a name with
international reputation. And as we look at growing foreign
imports, particularly from Vietnam, how can we be assured that,
in your role, that you are going to continue to not only
monitor tariff issues, but what is the administration's
position on making sure that, if necessary, that those tariffs
remain in place to keep New Balance and what is left of that
industry competitive in a marketplace where it is much more
difficult to compete?
Ambassador MARANTIS. Thank you, Mr. Neal. We have been in
close touch with the industry on this issue. As we are seeking
comprehensive market access for TPP, we have very real
sensitivities, including in the area of rubber footwear. And
what we need to do, and are doing, is to work in very close
consultation with them and with you as we determine how to best
address issues of sensitivity as in the rubber footwear sector.
And so, we are committed to working with you and with the
industry to do so.
Mr. NEAL. And Mr. McDermott and Mr. Reichert both mentioned
biosciences. As you know, that is terribly important to
Massachusetts. And that whole notion of intellectual capital
and how it is protected is also a very important consideration,
as we go forward.
And I won't ask you to repeat the answers that you have
given previously, but--as much as to point out how important it
is to the millions of jobs across the country, many of those
jobs centered in Massachusetts.
Thank you, Mr. Chairman.
Chairman BRADY. Thank you, Mr. Neal. Mr. Herger.
Mr. HERGER. Thank you, Mr. Chairman. Again, I want to join,
Mr. Ambassador, in thanking you for the work that you and the
administration have been doing, particularly of late, on moving
these trade agreements further, and working with us. Incredibly
important to our nation in this economic downturn that we are
experiencing.
In his State of the Union Address earlier this year,
President Obama said, ``The first step in winning the future is
encouraging American innovation,'' and he noted that ``our free
enterprise system is what drives innovation.'' One of the
sectors that he went on to emphasize in his address was
biomedical research.
In fact, research and development in the U.S.
biopharmaceutical industry is critical to the future of our
economy. Biopharmaceutical firms in the United States invested
over $65 billion in R&D in 2009, and supported 4 million U.S.
jobs. Almost half-a-million of those jobs are in my home state
of California. These are very good, high-paying jobs, and they
depend on strong intellectual property rights for drugs that
our R&D workers develop.
It is strong IPR protections, including data protection,
that make it commercially sustainable for our biopharmaceutical
firms to invest so substantially in R&D ``five times more
relative to their sales than the average U.S. manufacturing
firm,'' according to the Congressional Budget Office.
If the President is right, that the first step in winning
the future is to encourage American innovation, I believe we
need to press for the same high standards in IPR protections in
TPP countries as we provide here at home to protect the hard
work and valuable production of our R&D workers, including
biopharmaceutical R&D workers.
Mr. Ambassador, would you agree with this?
Ambassador MARANTIS. Mr. Herger, without a doubt, biologics
are a vital area of innovation. In the TPP we have not yet made
a specific proposal with respect to data protection for
biologics. There are differing views on this issue. There are
differing views, in fact, on this committee about how to handle
that issue.
What we are doing is we want to engage in more discussion
with our TPP trading partners, as well as with Congress, to
determine what the best approach should be for this.
Mr. HERGER. Well, again, with this being so important, I
would encourage you to take a very strong stand in this area.
I would like to turn quickly to Japan. I believe Japan's
interest in joining the TPP creates an opportunity to address a
number of barriers to U.S. exports. I have heard from a number
of industries, including agriculture, autos, and insurance
about Japan's persistent barriers.
For example, rice, which is extremely important to my
congressional district in northern California, faces a tariff
that hovers around 700 percent. Could you describe what steps
the administration is taking to address the outstanding
concerns about Japan's discriminatory policies?
Ambassador MARANTIS. Sure, Mr. Herger. We are seeking, in
the context of the TPP, a comprehensive agreement, recognizing
that there are sensitivities. But with respect to the various
issues we face with Japan, we are in the process now, through
our public consultation process, getting feedback. And we will
have to work very closely with you and with our stakeholders to
determine how to best address the concerns that are raised.
I fully anticipate hearing concerns like those you just
raised from our agriculture industry. Our services industry has
longstanding concerns. Our manufacturing industry has
longstanding concerns. And the challenge that we are going to
face with Japan is how to determine how to best address those
in this context.
Mr. HERGER. Thank you very much. That is very helpful. I
look forward to working with you and Chairman Brady on these
efforts.
Ambassador MARANTIS. Thanks, Mr. Herger.
Chairman BRADY. Thank you, Mr. Herger. Mr. Buchanan.
Mr. BUCHANAN. Yes. I want to thank Chairman Brady for
holding this important hearing today. And also, thank you,
Ambassador, for being here. We are here today--I think one of
the biggest reasons is talk about jobs. In Florida, my home
state, we have over 10 percent unemployment. I believe trade is
a good way for Florida to increase jobs. And we are home to 14
ports in Florida, with about $68 billion in economic activity.
So we really think that is a great opportunity for us to grow,
in terms of exporting.
My question, Ambassador, is the TPP is described as a
pathway to broader Asia-Pacific regional economic integration.
How will this help create jobs, increase exports, and grow our
economy?
Ambassador MARANTIS. Mr. Buchanan, you hit it on the head.
I mean this agreement is all about jobs, and trying to create
the high-paying jobs that depend on export opportunities.
We are doing a lot of things that are new and different in
the TPP to try to ensure that we further enhance our export
opportunities in this very important region. We are doing,
traditional stuff like trying to reduce tariff barriers. But
what I think is very new and unique in the TPP is the work we
are doing on behind-the-border measures, specifically to
address non-tariff barriers.
For instance, in the area of SOEs, we are trying to
eliminate the competitive distortions that SOEs may put in the
international trading regime. We are negotiating sector-
specific annexes in the agreement to address non-tariff
measures in specific sectors like cosmetics and medical
devices.
We are negotiating new and innovative obligations in the
area of agriculture non-tariff measures to ensure that our
trading partners are more transparent when they regulate food
safety, as well as ensure that their risk analyses are more
grounded in science.
So, there is just a whole range of things we are doing
throughout this agreement to get at the behind-the-border
obstacles that have really proved most meddlesome to our
exporters.
Mr. BUCHANAN. Let me--I want to jump on another question
quickly. My time is running out.
Ambassador, China, as we all know, is an 800-pound gorilla
in the room. I just got back from Beijing. We have a lot of
issues with the Chinese that need to be addressed. How does the
TPP agreement help us in the Asian region, as it relates to our
relationship with China?
Ambassador MARANTIS. I think the TPP, as a platform for
regional integration, establishes the model of what the United
States and our fellow TPP countries would view as the best
approach towards conducting international trade. And that
includes through the range of obligations on tariff and non-
tariff measures that we are putting in place.
So, in a sense, it is really creating a model for how trade
should be conducted in such an important region.
Mr. BUCHANAN. Thank you, Mr. Chairman. I yield back.
Chairman BRADY. Thank you. Mr. Doggett.
Mr. DOGGETT. Thank you, Mr. Chairman. And thank you,
Ambassador, for your testimony.
On the issue of tobacco that was raised earlier, this
administration has been a leader in trying to prevent the
continued efforts of the tobacco industry to addict our
children at home. And I would hope, in terms of good public
policy, it would follow the same objective abroad.
But my question is a more narrow one. While I would never
object to your consulting with anyone, I assume that whether
the issue is flavoring of product in Canada or the excellent
efforts, in my opinion, of Australia to prevent addiction with
its packaging laws, that a first objective of USTR is to comply
with existing law, longstanding law, that prevents you from
being involved in the promoting, the sale, or export of
tobacco, tobacco products, or to seek the reduction or removal
by any foreign country of restrictions on the marketing of
tobacco or tobacco products.
And USTR does attempt to comply with that law, does it not?
Ambassador MARANTIS. Yes, sir.
Mr. DOGGETT. And with reference to the labor issue that Mr.
Brady asked at the opening of the hearing, I, of course, as you
know, take a different position, that the agreement to which he
refers sets the minimum established by the prior Bush-Cheney
Administration, and that this administration, both with
President Obama's comments and also by Ambassador Kirk's
comments, indicated an interest in assuring that labor rights,
the rights of workers, were protected, and working conditions.
I will look forward to what you put on the table about
labor rights. And the concern that I have to date is that it is
not clear that the international labor organization fundamental
or core standards are incorporated into TPP, nor is it clear
that there is an enforcement mechanism that has improved over
prior agreements.
This is, of course, the first major agreement that this
administration is negotiating on its own, rather than
inheriting from a prior Administration. And I would just urge
you to give meaning to the statements of the President and the
trade ambassador to have enforceable standards, and standards
that are meaningful and comprehensive.
And the same thing is true with reference to the
environment. As you know, a very big concern of mine, in TPP
you are dealing with a number of very environmentally sensitive
areas across Asia, that those standards be as enforceable as
any other provision of the agreement, and that they deal with
the tremendous challenges that exist across the Pacific, with
reference to the environment. And I hope you will give priority
to that.
You and I have discussed in your previous testimony before
the committee the whole question of investor state. And that
becomes relevant in these other areas since Philip Morris, for
example, has attempted to use bilateral investment agreements
to thwart legitimate public health efforts in some other
countries.
With reference to Australia, to date have any problems been
detected for U.S. investors in relying on the Australian court
system, as provided in the free trade agreement with Australia,
as distinguished from the investor state arbitration panels
that are used in a number of other agreements?
Ambassador MARANTIS. I am not aware of any, sir.
Mr. DOGGETT. Do you know of any reason, or do you have any
evidence to suggest that the mature court system of New Zealand
would not be just as effective as the Australian courts have
been in protecting the rights of American investors?
Ambassador MARANTIS. I am not aware of any.
Mr. DOGGETT. Well, I would hope you would look to the court
systems where there are mature systems, rather than always
opting for the investor state approach. Does--with reference to
investor state and, for that matter, with other issues, the
many other issues, doesn't the TPP contemplate the fact that
there are many different systems--Vietnam versus New Zealand--
and not necessarily apply exactly the same provision to all
countries within TPP on all issues?
Ambassador MARANTIS. We are trying to negotiate single
standards for everything across the board in TPP the idea of
this agreement is being a regional agreement that other
countries, both developed and developing, will join.
Mr. DOGGETT. So you would expect the same labor standard,
the same environmental standard for all the countries?
Ambassador MARANTIS. Yes, sir.
Mr. DOGGETT. And you don't expect to see any exceptions or
alternative approaches suggested for any individual countries?
Ambassador MARANTIS. No, sir.
Mr. DOGGETT. On any issues?
Ambassador MARANTIS. No, sir. We are trying to create a
single standard throughout.
Mr. DOGGETT. Thank you.
Ambassador MARANTIS. Thank you.
Chairman BRADY. Thank you, Mr. Doggett. Mr. Smith.
Mr. SMITH. Thank you, Mr. Chairman. And thank you,
Ambassador, for your presence here today, and certainly the
efforts of USTR to promote U.S. products.
Can you provide an update on Japan and beef access?
Ambassador MARANTIS. Sure. I mean this is obviously a
longstanding issue of all of ours. It is something that we
continue to work on, and continue to push the Japanese
Government on, at every opportunity.
Mr. SMITH. Okay. So have there been many changes, or any
progress made? And certainly perhaps maybe addressing how the
U.S. is actually assessing Japan's interest in joining the TPP,
certainly in the context of beef.
Ambassador MARANTIS. Sure. There is no new news on beef at
this point, but this is a priority issue for us, and continues
to be. And I would expect that we will hear from you and other
stakeholders as we move this process forward.
There are a lot of issues that I expect will come up with
respect to Japan throughout the economy, whether it is in the
manufacturing sector, or the services sector or the agriculture
sector, and we are going to have to determine how best to
address the concerns, once we have had an opportunity to go
through them as we work with Japan towards their TPP
aspirations.
Mr. SMITH. Yes. I mean we know that there are often times
non-science-based phytosanitary measures that are applied in--
certainly in a non-transparent manner to the U.S. products. And
so the WTO rules on sanitary and phytosanitary measures do help
solve this problem, but they often are not enough.
How would the TPP agreement ensure that these illegitimate
sanitary and phytosanitary measures do not keep out U.S. ag
products.
Ambassador MARANTIS. I am really excited about what we are
doing in the sanitary and phytosanitary provisions in the TPP
for exactly the reason that you just said.
We are trying to beef up the SPS provisions beyond what we
have in the WTO in a variety of ways. One is to increase
transparency, so our stakeholders can be more involved in the
rulemaking processes conducted by our trading partners. The
second is we are trying to ensure that the risk analyses that
are done in support of SPS measures are grounded in science.
Third, we are working to facilitate trade by harmonizing export
certification processes on specific commodities, based on
tough, science-based standards.
And so, through a combination of these things, we hope to
really buttress the SPS provisions in this agreement, so they
are, in fact, high-standard, 21st century, and deal with the
types of non-tariff agriculture measures that our exporters
face.
Mr. SMITH. So do you see this being consistent or
paralleling WTO rules, or would it go beyond?
Ambassador MARANTIS. I think it will go beyond.
Mr. SMITH. Okay, thank you.
Ambassador MARANTIS. Thanks.
Mr. SMITH. I yield back.
Chairman BRADY. Thank you. Ms. Jenkins.
Ms. JENKINS. Thank you, Ambassador, for being here. And
thank you, Chairman Brady, for holding this hearing. I love the
``beef up'' pun. Very appropriate for the beef producers in our
area.
The animal health industry develops groundbreaking
medicines, vaccines, and feed additives that enhance livestock
and pet health. The Kansas City animal health corridor is home
to many animal health companies, as well as grant universities,
which include Kansas State University, the Kansas State
University Veterinary College, the University of Kansas, and
the University of Kansas Medical Center.
The companies and universities invest heavily in research
and capital to develop new animal drugs and treatments. In
fact, it is estimated that, on average, it takes 7 to 10 years,
and up to $100 million to bring a new product to market. For
this reason, not only is access to new markets important to the
future success of this important industry, but strong data
protections are also critical to protect the integrity of the
products.
Therefore, first, I would like to know what measures the
administration will be taking to ensure that strong data
protections exist in the agreement. And second, is the standard
adopted in the Korean free trade agreement, which is a minimum
of five years for non-biologics once a new product is licensed
in a participating country, an option?
Ambassador MARANTIS. Thanks, Ms. Jenkins. On the data
protection issue, this is one of the components of our
pharmaceutical access window proposal. And the way it would
work would be if an innovative company launches its product
within a certain amount of time, they would benefit from
certain high-standard IP protections.
We haven't yet negotiated the amount of time with our
trading partners, nor have we negotiated what the specific
high-standard IP protections would be. But data protection is
among those that we are talking about, and the five-year term
in that regard.
So, the way it would work, again, it would be kind of a
carrot-and-a-stick approach. If an innovative company comes in
within a certain amount of time, they would benefit from high-
standard protections. But if they don't come in during that
particular access window, then they would be subject to
whatever provisions that country would provide. There would be
no guarantee.
Ms. JENKINS. Okay. I look forward to working with you. I
yield back, thanks.
Ambassador MARANTIS. Likewise.
Chairman BRADY. Thank you. Mr. Schock.
Mr. SCHOCK. Thank you, Mr. Chairman. Thank you, Ambassador,
for being here. I appreciate your comments earlier about the
need for strong intellectual property, and your desire to
position U.S. companies to compete among these Asia-Pacific
countries.
I am specifically interested in a letter that I led with
over 100 Members of Congress. Sixteen of those Members that
signed the letter were members of this committee, the Ways and
Means Committee that we wrote to the President this past summer
regarding the importance of ensuring a high standard of
intellectual property for the U.S. biopharmaceutical industry
in the TPP agreement. This is especially important for me in my
home state. The pharmaceutical industry supports over 4 million
jobs in the U.S., 167,000 jobs just in my home state of
Illinois.
As I mentioned, there is strong bipartisan support for the
U.S. law, which currently provides 12 years of regulatory data
protection for innovative biological medicines. I and my over-
100 colleagues firmly believe that it is critically important
that the administration continue to push U.S. law as the model
for the TPP.
My question to you is: What is the administration doing to
ensure that the U.S. position on intellectual property
protection for biologics with TPP is consistent with the
current 12-year regulation, U.S. law--or guarantee, I should
say?
Ambassador MARANTIS. We have not tabled a proposal on this
issue yet. And without a doubt, biologics, it is a vital area
of innovation----
Mr. SCHOCK. When you say you haven't ``tabled'' it, what
does that mean?
Ambassador MARANTIS. We don't have a proposal on data
protection for biologics at this point. What we are doing right
now is we are trying to discuss this issue with our TPP
partners before we decide how to approach it. There are
differences also amongst this committee on exactly how to
handle data protection for biologics. And so we are just--we
are trying to get more discussion and have more information
before we decide how to approach it in the context of TPP.
Mr. SCHOCK. Do you believe that it will be consistent with
current U.S. law, or is there any reason why it wouldn't be?
Ambassador MARANTIS. I think it is an open question, in
terms of how to handle it. The Affordable Care Act mandates 12
years of data protection for biologics. The administration's
budget assumes seven years of data protection for biologics.
There are differences in opinion between members of this
committee on how to handle it. Our trading partners have their
own views. So, we are still in the process of gathering
information before we decide how to best approach this.
Mr. SCHOCK. Well, I would like to be on the record, as well
as my over-100 colleagues, I think, in supporting current U.S.
law. And all I would say is that the President's budget did not
pass. To his credit, the Affordable Health Care Act did. And
that is why we have a 12-year guarantee. And I think it is
important that we continue to maintain that for jobs in our
country, as well as these companies' ability to compete
overseas.
So, I hope that we can--the administration and you,
Ambassador, decide to be consistent with the 12-year guarantee
for these pharmaceutical biologic IPs. Thank you.
Chairman BRADY. Mr. Crowley is recognized.
Mr. CROWLEY. Thank you, Ambassador Marantis. New York is
home, as you know, to much of the service industries in the
country today--insurance, legal services, technology, tourism,
et cetera. How do you see the services industries benefitting
or not benefitting from TPP? And how would that affect U.S. job
growth?
Ambassador MARANTIS. It is a huge potential market for U.S.
services. And there are lingering barriers in the region that
we need to address throughout the services sector, whether it
relates to lingering equity limitations, or branching
restrictions licensing restrictions in the areas of financial
services in the area of express delivery services or telecom
services. There is a lot that we hope to gain through our
market access negotiations in the services sector. And it will
be a big win for jobs, given that we are a net services
exporter, and have a net services surplus. And access to, you
know, new markets like Vietnam and Malaysia will be of great
benefit to our service providers.
Mr. CROWLEY. Like many of my colleagues, I am intrigued by
Japan now, and its interest. We are looking very closely at the
possibility of them entering into the TPP.
On the one hand, we are talking about a $5 trillion economy
that has yet to really even begin to reach its potential, in
terms of purchases within the United States. Japan is also a
very strong ally of the United States, one of our closest
allies in the world, and a country that I think is appreciated
by many Americans. A strong Japan helps create a strong U.S. is
the sense that we have.
On the other hand, it is undeniable that Japan has
historically used non-tariff barriers, as you have been hearing
from my colleagues, and other restrictions to limit U.S.
exports in many areas.
Do you have a sense as to why Japan is interested in
joining TPP now? And what are we looking for from Japan to
determine whether they are willing to address many of these
outstanding issues? Is there a sense that there is a real
willingness to address the closed markets in Japan? For
instance on autos, on insurance, using Japan Post as an
example? What is your sense?
And really, why do you think they are choosing now to
enter, when this has been discussed for a while?
Ambassador MARANTIS. I think Japan--and not just Japan, but
Canada, Mexico, and others--have noticed the unbelievable
promise of the TPP, in terms of growing jobs and creating new
market access and export opportunities in the world's most
dynamic region. And I think the success that the President had
at APEC in Honolulu in announcing the broad outlines of an
agreement really catalyzed Japan, Canada, Mexico, and others to
look at the TPP as being an essential part of their strategy
for creating economic growth in their economies.
And we welcome that interest. You know, two years ago, when
we started this process, we were very clear that we wanted to
begin this negotiation with this group of like-minded
countries, but to expand it to include other countries
throughout the Asia-Pacific region.
The question, though, Mr. Crowley, as you raise, going
forward is we are through our consultation process with you and
with our stakeholders going to have to best determine how we
will ensure that Japan, Canada, Mexico, and whoever else is
interested, is up to the task of meeting the high standards
that we expect and that we are setting in the TPP agreement.
Mr. CROWLEY. You mentioned Japan. Sorry, you mentioned
Canada and Mexico. I wasn't here for the NAFTA vote. I have
been on record saying I would have voted no for that agreement,
given the lack of inclusion of labor standards, as well as
environmental standards.
We have come a good distance since then, in particular the
May 10th Agreement. And that has been included in subsequent
agreements. If Mexico and Canada join in the TPP, am I correct
that they would be required to join the labor and environmental
provisions outlined in the May 10th Agreement, or even go
further?
Ambassador MARANTIS. I mean the intention would be with any
country with which we have FTAs Mexico, Canada, or Australia,
Singapore, et cetera--is that the provisions of the TPP, would
exist alongside provisions of the currently existing FTAs,
except in places where there is a conflict. And typically it is
the agreement that is concluded later in time that would
supersede the agreement that was concluded earlier in time,
unless you negotiate something other.
So, that would be our expectation.
Mr. CROWLEY. Thank you. And I yield back the balance. Thank
you, Ambassador.
Chairman BRADY. Thank you. Mr. Larson.
Mr. LARSON. Thank you, Chairman Brady. And thank you,
Ranking Member McDermott, for this hearing. Ambassador, thank
you for your service to the country.
Most of my colleagues have gone over a number of the
salient points I want to address in general terms, and--but if
you could for me, first with respect to biologics, which you
have already iterated are so important to this administration,
et cetera, I just would like to be assured that in the
negotiation process, especially as we look at the 12 years that
is involved in the issue of patent rights, et cetera, that the
administration is going to negotiate for that up front, and not
save that to the end. Is there any--do you have any sense of
that?
Ambassador MARANTIS. Mr. Larson, we haven't yet made a
decision on how to address the biologics issue. We need more, I
think, discussion with our TPP partners, as well as Congress,
in terms of how to figure out how to approach it in the context
of the negotiations.
Mr. LARSON. Well, I hope that the administration--I think,
as you listen to the Members here--get a strong sense of the
importance of--as you have underlined yourself, how important
and vital this issue is. And I hope that it is not left at the
tail end of negotiations, but used as important leverage as an
incredible manufacturing and growth sector for us here in the
country, as the President underscored as well in Hawaii.
And second, building upon Mr. Crowley's comments, I come
from a insurance capital of the world, and--we like to think--
and also--so it is vitally important here, with respect to
Japan and the whole Japan Post issue that has been so critical.
I know the administration is aware of this, but we would again
like to see the administration resolve these issues going in.
And can you give me any assurances as to where we stand
with creating that kind of level playing field that should be
there for everyone in a global economy, and certainly within
the TPP?
Ambassador MARANTIS. Sure, Mr. Larson. I mean this is a
very important issue. Creating a level playing field for our
providers of insurance, banking, and express delivery services
is critical. This has been a high-priority issue for us with
Japan for a number of years, and we continue to raise it with
our Japanese counterparts at every opportunity.
Mr. LARSON. I thank you, Ambassador. I thank you for your
service. And again, I thank Mr. Brady, Mr. McDermott, and yield
back my time.
Ambassador MARANTIS. Thanks.
Chairman BRADY. Thank you. Dr. Boustany.
Mr. BOUSTANY. Thank you, Mr. Chairman, for holding this
hearing. And Ambassador Marantis, thank you. And thank you to
all your team for the great work that is being done.
I co-chair the U.S.-China working group in the House, and I
was traveling in China back in April. And in meetings with
senior Chinese officials I always emphasized that the United
States of America is a Pacific nation, both geographically, but
Pacific in the meaning of the word itself: we want peace. And
my definition of all of that is free trade and unfettered
navigation on our sea channels, our sea lanes.
And this agreement is strategically important. I am very
pleased you are going forward with it. It gives the United
States leverage and credibility. And I think that is at the
heart of American competitiveness in the 21st century, job
creation.
And I have seen it in my own state of Louisiana, where we
have--you know, Louisiana is a maritime state. We are on the
Gulf of Mexico. We are a leader in trade. We are consistently
in the top 10 in exports. We are also an energy-producing
state. But we have seen 45 percent growth in this year, much--
in exports, much in the Asia-Pacific region for Louisiana with
our Gulf Coast location. Our number one export destination is
China. Our third most important export destination is Japan.
And so, opening these markets, having leverage in our
negotiations to create jobs--one out of five jobs in Louisiana
is related to trade--is critically important. Our 45 percent
growth in exports is on top of a previous year, where we saw 54
percent growth in exports.
And so, as we look at this, whether it is agriculture--and
my friend, Mr. Herger from California talked about rice; I have
rice growing in my district--these tariffs and non-tariff
barriers are of utmost importance. But as we engage in this,
and finalize this agreement, I want to talk a--I want to ask
you to describe a little bit more in depth about the dispute
mechanism and enforcement dealing--given that we are going to
be dealing with some very diverse legal systems.
You know, we--a global presence for U.S. firms is
critically important for the 21st century for job creation and
for our economic growth. But as part of that, we have to make
sure that, as we deal with state-owned enterprises and so
forth, we need good, solid enforcement mechanisms and dispute
settlement mechanisms.
And so if you could describe a little bit of that and the
work that you are doing, I would be grateful.
Ambassador MARANTIS. Sure, Mr. Boustany. You are absolutely
right. An agreement isn't worth very much if it isn't enforced.
And what we are working to do in the TPP is to ensure that the
provisions are all subject to very strong, robust, enforceable
dispute settlement provisions. And that includes the whole
spectrum of issues in TPP, including tariff commitments, labor
commitments, environmental commitments, IPR commitments,
services commitments, so that we have, you know, an agreement
that looks great on paper, and it also is great in reality.
Mr. BOUSTANY. When you mention the, you know, criminal
penalties for IP infractions and for piracy, counterfeiting,
can you go into a little more detail about how you see this
working when we get to the end game?
Ambassador MARANTIS. Sure. For instance, one of the
innovations in our IP chapter will be to require that each
country adopt criminal penalties to deter the theft of trade
secrets. So what that will mean we would be looking to our TPP
partners to make sure that they have measures on the books so
that if there is an instance of trade secret theft we would
have recourse or our industry would have recourse to criminal
penalties.
Should they not place those measures on the books, we, as
the United States, would have recourse to TPP dispute
settlement to ensure that those measures actually get adopted.
Mr. BOUSTANY. Thank you. I yield back.
Chairman BRADY. Thank you, Doctor. Mr. Paulsen.
Mr. PAULSEN. Thank you, Mr. Chairman. And also, thank you
for leading this hearing.
I want to compliment you, Ambassador, and the
administration, for working with Congress to move these trade
agenda items forward. I hope we are going to continue on that
path with TPP, which I am very excited about, hearing the time
line, which we want to hopefully try and stay connected to.
I was going to ask some questions on biologics, as well as
some of the health medicine issues, but I will ask a different
question, because U.S. market access on textiles and apparel is
also a key issue in the TPP. And opening markets for this
sector will support the millions of U.S. apparel and retail
workers whose jobs do rely on trade. And I have a state who has
many headquartered retail companies, as well as consumers
across the country that will benefit from a new approach on
textiles and apparel that, I think, recognizes the businesses
realities in the supply chain from production on down.
And I recently led a bipartisan letter to Ambassador Kirk
that shared the view that it is time to update U.S. policy on
textiles and apparel, and that letter was signed by 30 Members
of the House, 15 Republicans, 15 Democrats.
And can you talk a little bit about what USTR and the
administration has done to evolve our position and promote
policies that will facilitate trade and apparel so it is
flexible, easy to enforce, as well as simple to use? And what
is the administration's objective in the TPP apparel for--
position for--in terms of apparel for TPP?
Ambassador MARANTIS. Sure. We have a very interesting
opportunity in the TPP in the textile and apparel sector. You
know, we were negotiating with Vietnam, which is our second-
largest supplier right now. What we are trying to do in the TPP
is to maximize opportunities for us while we address the very
real sensitivities that we have in the textile sector.
And so, the way we are going about doing that is we have
put forward a package that we hope will best encourage trade,
investment, and production in the TPP region. And that package
includes four elements. There is the market access element,
where we will seek market access from our TPP countries, and
where we will be able to source, you know, goods, textile and
apparel products, from them.
We also have the yarn forward rule of origin that we have
put forward, that, you know, there has been, I think, debate
over. But we believe that the yarn forward rule of origin has a
demonstrated record of success in attracting an investment and
helping, again, ensure that we can encourage production and
trade within the region.
The third element we have put forward is a safeguard to
ensure that we have recourse to a safeguard, should there be--
increased imports cause serious damage to our industry.
And the fourth element, which is very important--and this
was something that we discussed in great detail in the Korea
process--was to ensure that we have strong customs procedures
to ensure that we combat transshipment, and that the benefits
of whatever we are doing in the textile and apparel sector go
to the TPP countries and not to third parties.
So, it is a package. And we think the package will best
encourage production and trade in the region.
Mr. PAULSEN. Well, I just want to compliment you, because I
think we need to absolutely focus on the trade and apparel
side, as well as achieving that state-of-the-art agreement that
really does have--become the gold standard, if you will,
among--agreements among a lot of these countries.
And I yield back, Mr. Chairman.
Chairman BRADY. Thank you, Mr. Paulsen. Ambassador, thank
you for your testimony today. I want to add my appreciation and
congratulations on the passage of the three agreements----
Ambassador MARANTIS. Thank you.
Chairman BRADY [continuing]. Recent agreements, the hard
work that you continue to put in on our trade agenda, along
with Ambassador Kirk and the entire USTR trade team.
We really look forward to working with you on a bipartisan
basis, both on TPP, which we see as a very strong agreement,
but as well as a very strong proactive strategic trade agenda
for the United States.
Again, thank you for being here today. As you know, Members
have some time, may submit questions for the record. If they
do, I hope you would respond promptly, as you always do. And
again, thank you.
Ambassador MARANTIS. Thanks, Chairman Brady.
Chairman BRADY. I would like to welcome our second panel to
step forward.
Today we are joined by three witnesses on our second panel.
Our first witness will be Ms. Devry Boughner, director of
international business relations, Cargill, Incorporated. She is
also testifying on behalf of the U.S. Business Coalition for
the Trans-Pacific Partnership.
After her we will hear from Ms. Angela Marshall Hofmann,
Vice President, Global Integrated Sourcing and Trade for Wal-
Mart Stores, Incorporated.
And our third witness will be Mr. Michael Wessel, President
of the Wessel Group.
We welcome all of you. We look forward to your testimony. I
would also like to ask our witnesses keep their testimony to
five minutes. Ms. Boughner, 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 DEVRY S. BOUGHNER, DIRECTOR, INTERNATIONAL
BUSINESS RELATIONS, ON BEHALF OF CARGILL, INC., AND THE U.S.
BUSINESS COALITION FOR TPP
Ms. BOUGHNER. Thank you very much, Chairman Brady and
Ranking Member McDermott, and members of the Trade
Subcommittee. Thank you for the opportunity to appear before
you on the importance of the Trans-Pacific Partnership to the
American economy. My name is Devry Boughner, and I am
testifying today on behalf of Cargill, and on behalf of the
U.S. Business Coalition for TPP, which is a multi-sector
coalition of U.S. businesses supporting the negotiation of and
ultimate passage of a comprehensive, high-quality,
commercially-meaningful agreement with key economies of the
Asia-Pacific region.
Cargill is in the international food business, and we are
invested in 63 countries, and trade with well over 130. And
Cargill is in full support of the TPP. TPP underpins Cargill's
business purpose of nourishing people. And the agreement, if
done right, will address regional food security concerns, and
trade barriers will be eliminated so that food can move
unencumbered from places of surplus to places of deficit. TPP
will feed hungry people.
U.S. food and agricultural exports to the Asia-Pacific
region totaled approximately 83 billion in 2010, and accounted
for 72 percent--I will repeat that again, 72 percent--of total
U.S. agricultural exports to the world; clearly a significant
region. And every $1 billion of agricultural exports supports
9,000 jobs, including transportation, workers, food processors,
packers, longshoremen, and I would also like to say women,
sales, and marketing representatives.
Cargill's U.S. businesses export a variety of agricultural
and food products to the growing Asia-Pacific region. Last
year, the total value of Cargill exports to Asia-Pacific
exceeded $11 billion. An example; Asia represents annual
revenue of $700 million to Cargill's U.S. meat businesses
today, supporting nearly 32,000 jobs, unionized jobs, in
communities in Texas, Illinois, Iowa, Kansas, Colorado, and
Nebraska. And we have many other examples.
Given the race that is going on between countries to lock
in trade agreements across Asia, it is critical that the United
States conclude a commercially-meaningful agreement as soon as
reasonably possible. And there are three key elements that we
believe would make TPP a commercially-meaningful agreement.
First, make the TPP a comprehensive undertaking. That means
that the agreement includes all products, all sectors, in all
TPP economies. This means, for example, that Australia must
agree to investor state dispute settlement. Malaysia must open
its government procurement market. Singapore and Vietnam must
open their financial markets. And the United States must not
exclude any agricultural products or seek to effectively
exclude textile and apparel.
Second, TPP must address and provide new solutions to
longstanding trade barriers. It must incorporate high standards
for intellectual property and investment protection,
transparency, competition policy, provisions to ensure that the
Internet works without interference for companies to take full
advantage of TPP, and science and risk-based sanitary and
phytosanitary--known as SPS--standards.
Third, TPP must include the right subset of Asia-Pacific
economies. The inclusion of Japan in TPP is critical in
defining this agreement as ``commercially significant''. On
December 5, 2011 [sic], 63 U.S. food and agricultural
organizations sent a letter to Secretary Vilsack and Ambassador
Kirk, urging the Obama Administration ``to work quickly and
closely with Japan to smooth the way for Japan's full
participation in TPP.''
In summary, Cargill supports the administration's efforts
to move forward with TPP negotiations with a goal of completion
no later than mid-2012. And we look forward to the long
tradition of bipartisan support required to pass significant
trade agreements of the past 50 years, including the most
recent 3--and congratulations and thank you on those.
We are counting on TPP that ensures availability and
reliable access to food in the region, and promotes U.S.
competitiveness and new economic opportunities for our industry
and for our country.
Thank you again for the opportunity to share Cargill's
views and the Coalition's views with you today. And I am
willing to answer any questions and respond to any inquiries
that you may have.
[The prepared statement of Ms. Boughner follows:]
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Chairman BRADY. Thank you, Ms. Boughner.
Ms. Marshall Hofmann is recognized.
STATEMENT OF ANGELA MARSHALL HOFMANN, VICE PRESIDENT, GLOBAL
INTEGRATED SOURCING AND TRADE, WAL-MART STORES
Ms. HOFMANN. Good morning, Chairman Brady, Ranking Member
McDermott, and Members of the Subcommittee. My name is Angela
Marshall Hofmann, and I am vice-president of Global Integrated
Sourcing and Trade at Wal-Mart. I am very honored to be here
today to discuss Wal-Mart's views on the Trans-Pacific
Partnership negotiations. As one of the chairs of the business
coalition for TPP, Wal-Mart strongly supports these
negotiations. And I am pleased to outline today our goals for
the negotiations, as well as our views on new applicants to the
trade pact.
By way of background, Wal-Mart serves customers and members
more than 200 million times per week at over 9,800 retail units
under 69 different banners in 28 countries in the Americas,
Asia, Europe, and Africa. With fiscal year sales of 419
billion, Wal-Mart currently employs over 2.1 million associates
worldwide.
Although Wal-Mart only has a retail presence in two of the
TPP countries--the United States and Chile--we source a
significant range of products from the majority of the TPP
partners. Moreover, the region represents an important platform
for retail growth in the future. Therefore, Wal-Mart supports a
high-standard, 21st century TPP agreement that will foster new
trade and investment, and create a potential platform for
economic integration across the Asia-Pacific region.
Today I would like to share with you our overall goals for
the TPP, which include a comprehensive agreement with no
product or sector exclusions, a common set of rules of origin
that allows for trade between and among all TPP partners, high-
standard service and investment agreements that provide market
access and protection for retail and distribution rights, and
finally, expansion of the TPP to include new partners in the
region. Specifically, we are enthusiastic about TPP as a
vehicle to address emerging trade challenges through new
disciplines on issues such as global supply chains and
regulatory convergence.
One of the areas where we see great promise is the new
horizontal focus on supply chains. Until recently, trade
agreements have not looked at supply chains in a holistic
manner. Rather, commitments have been made, sector by sector,
without full consideration how each sector--for example,
express delivery, maritime or trucking services--can impact the
operation of the entire supply chain, from the point of
production to distribution. We are, therefore, supportive of
the establishment of a commitment to review and address supply
chain issues in the TPP.
We also encourage negotiators to seek ambitious commitments
in this area that recognize the need for a comprehensive,
interdisciplinary approach, and an action-oriented work program
with clear benchmarks to track enhanced efficiency of TPP
supply chains.
As I have stated, we are very encouraged that USTR has
billed TPP as a 21st century agreement. For Wal-Mart, this
means ensuring that there are no product or policy exclusions,
and that the agreement truly fosters trade among all TPP
partners through workable rules of origin for all products.
Specifically in the areas of textile and apparel, we urge
TPP negotiators to consider rules of origin that reflect
today's modern dynamic global value chains that support apparel
production. As it sounds today, textile and apparel are treated
differently than other products, and negotiators have insisted
on restrictive rules of origin which require materials of
garment to originate and assemble in-country in TPP in order to
receive tariff-free treatment. Past FTAs with TPP countries
have shown that such all-or-nothing approach does not truly
spur new exports or new apparel trade. These rules are simply
not workable, and do not take into consideration the modern
realities of apparel production. We simply do not believe you
can have a 21st century agreement with 18th century rules of
origin.
Finally, we believe that the true potential of the TPP will
only be realized if membership can be expanded beyond the
current parties to create a comprehensive Trans-Pacific
agreement. Wal-Mart supports the proposed inclusion of Japan,
Mexico, and Canada, where we also have a strong retail presence
and sell a number of U.S. exports.
We agree with the administration and Congress that all new
members must adhere to a high-standards agreement and must not
slow down the momentum of the negotiations. However, we believe
that there should be a clear and efficient mechanism for new
countries to accede to the TPP.
Finally, thank you for the opportunity to present our views
before this committee. We strongly believe that TPP represents
an important opportunity to create a new dynamic trade
agreement in one of the most important regions in the world.
Thank you, and I am happy to answer any questions you may have.
[The prepared statement of Ms. Marshall Hofmann follows:]
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Chairman BRADY. Thank you, Ms. Marshall Hofmann.
Mr. Wessel, is recognized.
STATEMENT OF MICHAEL WESSEL, PRESIDENT,
THE WESSEL GROUP
Mr. WESSEL. Thank you, Mr. Chairman, Ranking Member
McDermott, and other Members of the Committee. It is a pleasure
to be here before you this morning. My name is Michael Wessel,
and I am president of the Wessel Group, a public affairs
consulting firm. I want to highlight the disclaimer that I am
speaking today in my own capacity, and not on others' behalf.
The TPP represents the first trade agreement initiated by
the Obama Administration. While much of the trade among the
current TPP participants is already covered by free trade
agreements, that does not minimize the scrutiny and attention
that these negotiations deserve. This is highlighted by the
recent announcements that Japan, Canada, and Mexico are
interested in joining the agreement.
The template that is being developed will affect not only
our trade and investment policies with the TPP countries, but
in many other policy areas, as well. Our goal must be to
maximize employment and opportunity, first for U.S. workers and
secondarily for workers in the TPP countries. If it results in
simply maximizing profits for companies, many of which are
increasingly globalizing their supply chains, it will sadly be
another trade agreement that fuels our trade deficit, promotes
overseas investment, contributes to joblessness, and widens the
income gap that exists in this country and in others.
An agreement, properly constructed, can be a force for
progress. But that requires updating and reforming the existing
approach, and much work remains to be done to achieve that
goal.
With the short amount of time I have today, let me focus on
a couple of key areas. The potential disciplines that will
cover state-owned enterprises, SOEs, represent perhaps the most
important area for new disciplines in the TPP. Vietnam's
economy is dominated by SOEs. But it is not only the
disciplines that will cover these markets that are important.
It is also the effect the disciplines will have on non-TPP
countries--most importantly, China.
SOEs, broadly defined, are of concern in three separate
areas: their activities in their home market, their activities
in third-country markets, and their activities in our market.
Let me focus on their potential activities here, in the U.S.
What are the goals of SOEs when they come to our market? Is
it to engage in activities that conform to our laws, goals, and
principles? Are they seeking to benefit from the skills,
quality, productivity, and creativity of our workforce and
operate as good corporate citizens? SOEs, by definition, are
interested in promoting the interests of their home country,
and are all too often guided by state interests, rather than
commercial interests.
Why does this matter? Let's consider a Chinese SOE. Chinese
SOEs benefit enormously from below-market-rate financing by
state-owned banks at rates well below what American companies
pay. Many of these loans may not have to be repaid at all. How
does a commercial entity here in the U.S. compete with the
U.S.-based operations of an SOE that sets up shop here?
If a Chinese SOE exports a product here that injures a
company and its workers, we have existing trade remedies to
address the impact. But if they invest in a greenfield
operation here, and as a result of having little or no cost of
capital can undermine the competitiveness of an existing U.S.
manufacturer, there is no existing remedy in U.S. law to
address that harmful activity.
On top of that, in certain circumstances, they might have
standing under our trade laws to challenge an action by a
domestic producer here against unfairly-traded products from
overseas. This is a real problem, and one that will grow over
time.
Yes, we want the jobs. But will those investments cost us
more jobs at existing facilities? Will they source the inputs
that they utilize from existing U.S. suppliers or from their
home market? Will SOEs establish token presences in the U.S.
market to benefit from the legal standing we give to domestic
manufacturers, while keeping almost all employment in their
protected home market?
There are many ways that disciplines on SOEs can be
developed as part of the TPP talks. The best approach would be
to ensure that all transactions are based on commercial
considerations. Where that is not the case, an effective remedy
should be made available to the private sector to fight for its
interest when an SOE is operating here in our market, not one
that depends on dispute resolution within the context of an
agreement and on the U.S. Government's willingness to act. Our
trade laws need to provide that SOE's right to block action by
injured parties here in the U.S. can be severely restricted.
Rules of origins, is another critical area of the
negotiations. The goal of any agreement must be to maximize
production and sourcing within the signatory countries, and to
limit the benefits of the agreement to third parties--what I
call leakage. We should not be entering into trade agreements
where substantial amounts of the benefits are available for
inputs or products sourced from non-signatory countries.
Mr. Chairman, there are many other issues, as you and the
other Members well know, that are important to the TPP
negotiations and which have been raised here this morning:
workers rights; the potential treatment of new entrants, such
as Japan, Mexico, and Canada; currency. The list goes on. Over
the coming months, I hope and expect that there will be a full
discussion of all these issues, as Congress works with the
administration on these negotiations. Thank you.
[The prepared statement of Mr. Wessel follows:]
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Chairman BRADY. Thank you to each of the witnesses for your
insight and your testimony. We will be conducting, with Mr.
McDermott's permission, a second round of three-minute
questions so that all the members of the panel have the
opportunity to ask our witnesses questions.
I want to talk--ask Ms. Boughner or Ms. Marshall Hofmann.
Two unique characteristics of this agreement. One, it is a
plug-and-play agreement where other markets, other countries,
after it is concluded, can plug into the agreement, should they
meet high standards and the ambition of the agreement. A second
unique characteristic is it really focuses on a 21st century
view of trade, where it is not simply enough to open the door,
to create market access, relax import quotas. But too often we
find beyond that door a series of hurdles, obstacles, and
fences that slow down trade, deny access, drive up the costs.
TPP focuses on streamlining that trade, facilitation of trade.
Could you both remark on the importance of that focus on
facilitation, and how American companies might benefit from
lowering those barriers beyond the door, and streamlining the
process, going forward? Ms. Boughner. Ms. Marshall Hofmann.
Ms. BOUGHNER. Well, thank you, Chairman Brady. You are
absolutely right about the plug-and-play component, and the
importance of getting this agreement--as we are using the
terminology--21st century, such that if additional economies in
Asia choose to join, they are joining a club with a very high
standard.
As it relates to trade facilitation, maybe I can give a
couple examples from the food and agriculture sector, and then
have Angela address it from their perspective.
In particular, what we are finding more and more is that
the 21st century trade barriers go beyond just tariffs, as you
are well aware. They go to the behind-the-border issues. And in
our case, it would be situations where each country is applying
their own food safety standards, or their own regulatory
applications or approvals for ingredients, et cetera.
What we see as a great facilitator for trade, and for
taking some of those pinch points out of the supply chain would
be to get a common agreement on food safety standards, and
sanitary and phytosanitary standards. As the ambassador
mentioned earlier, looking at ways to enhance the risk
assessment processes, increasing the transparency of the
processes, all of these would facilitate trade of food and
agriculture products in a way that it is not happening today.
And we would like to add a new one to the mix. In
particular, it is when there is a disagreement on a standard
being applied at the port or at the border--for example, a
vessel being stopped for some reason--that there is some sort
of oversight. And I don't like to use the word ``dispute
settlement mechanism,'' but there is some sort of TPP oversight
that can quickly, rapidly come in and assess the--assess
whether or not some of these standards are being based on sound
science, and quickly address the issue to make sure trade is
facilitated and gets on track within a matter of days, not a
matter of months or, as we have seen, years.
Chairman BRADY. Thank you. And I am running out of time.
Ms. Marshall Hofmann.
Ms. HOFMANN. I would similarly echo that what we are seeing
in the 21st century now is a movement away from your
traditional tariff barriers. We are seeing many more of the
non-tariff barriers, regulatory requirements, testing, and
other utilization that makes it very difficult for us to take,
say, an individual U.S. exporter and be able to serve all of
our retail markets.
So, we are keenly interested in simplifying several of the
rules of origin that would allow us to further help build some
of these export platforms into the retail markets.
Chairman BRADY. Thank you. And so, at the end of the day,
not only are there more open markets, the goal is to move those
goods and services without delay and at lower cost. Correct?
Ms. HOFMANN. That is correct.
Chairman BRADY. That is the goal. Thank you. Mr. McDermott.
Mr. MCDERMOTT. Thank you, Mr. Chairman. I thank the
witnesses for coming.
Mr. Wessel, I know your history enough to know that you
have been around a while. So you remember some of the things
that have gone on in the past. And in your testimony you said
almost nothing about Japan. Would you please talk about Japan
for three minutes?
[Laughter.]
Mr. WESSEL. I would be happy to. And thank you for that
question. Yes, I have been around maybe too long, and remember
the history of the 1980s, was recalling to somebody the other
day that at one point Japan blocked the export of U.S. skis to
their market, because they said their snow was different. And
so we have had a long 30-plus year history of intractable
problems in Japan.
When one looks at our auto trade deficit, the vast bulk of
it is with Japan. We welcome their cars here. And, in fact, the
Members here know, when we had the cash for clunkers bill, the
Japanese autos were allowed in. When Japan put their program
in, they refused to allow foreign cars access to the benefits
of their program.
Over many years, we have tried to address the Japan
problem. And they are a great friend and ally, but they have a
keiretsu system, they have a closed market that benefits their
people. It is not tariffs that are the major problem, usually.
It may be in rice and some other areas, but it is a system of
interlocking, homogenous attitude towards imports that, in the
past, had to be broken down with what was called the market-
oriented, sector-specific talks, where there were actually
targets.
We talked about earlier, you know, a plug and play
approach. The chairman mentioned that. I am all for plug and
play approach, if it works. But I don't know that a one-size-
fits-all agreement works with Japan. I think we need to have
them prove in advance that they are willing to accept the
responsibilities of an agreement, with all that that means,
meaning us and other TPP partners getting access before we give
them enhanced access to our own market.
Mr. MCDERMOTT. I yield back the balance of my time.
Chairman BRADY. Thank you, Mr. McDermott. Mr. Davis.
Mr. DAVIS. Thank you, Mr. Chairman. I appreciate the
witnesses coming, especially Cargill and Wal-Mart. I am much
more familiar with Wal-Mart's internal operations, information
technology and supply chain from my 20-plus years of business
experience in supply chain integration. And certainly your
company set a worldwide standard of innovation in this area.
But one thing that I would like to do, though, is go a
little bit deeper. I have no doubt that your two businesses
will do fine, whatever the final framework in this is, because
of the innovation and also scale. But when we come to small and
medium-sized enterprises, I think of my friend, Dan Janka, who
leads MAG Industrial Automation Systems in Hebron, Kentucky;
Dave Barnes, who leads Tv One in Erlanger, Kentucky; and Steve
Barnett, who leads Indy Honeycomb in Covington, Kentucky. All
three of those businesses work extensively across the TPP
region.
And what I would like you all to comment on is examples of
how this will benefit the small and medium-sized enterprises
that you work with in your supply chain, here in the United
States.
Ms. BOUGHNER. Thank you very much for the question. And
certainly appreciate the opportunity to dispel the myth that
just because we are large, that we will be okay. What I always
like to remind people of is that here in the United States
Cargill is a collection of 675 local facilities, where our
local production managers are duking it out every day to cover
their profit, to make sure that their P&L, their profit and
loss, turns out on the right side.
And one example that I can give to you that links our
investments and our exports to SMEs would be in Ottumwa, Iowa,
whereby we have a program, a special export program for pork,
where it involves about 4,000 head per day that we are
tailoring for the Asia-Pacific market. That plant, in
particular, is linked to local suppliers that are supplying our
facility with inputs, local distributors, and also our local
employees.
And so, when we think of ourselves as maybe large
organizations, we do need to break it down, because these have
community impacts. So I could submit several examples, if you
would like afterward, of our facilities throughout the United
States that are impacting SMEs, if that would be something you
would be interested in.
Mr. DAVIS. That would actually be very helpful.
Ms. BOUGHNER. Thank you very much.
Mr. DAVIS. Ms. Marshall Hofmann? We have about 30 seconds
left here on the clock.
Ms. HOFMANN. I will speak quickly. Just to give you one
example, actually, utilizing one of the TPP partners of Chile.
We have been actually able to work with our private brand on
diaper production to help them target a specific consumer
segment in Chile, and we are now exporting that product from a
Waco, Texas facility into Chile.
We have also worked with several other of the small
businesses to help them meet a specific market niche, or help
them better understand a specific consumer need in the market.
So there is ample room to grow with these partners in each of
the countries.
Mr. DAVIS. Great. Thank you very much. Yield back.
Chairman BRADY. Thank you, Mr. Davis. Mr. Reichert.
Mr. REICHERT. Thank you, Mr. Chairman. I want to focus a
little bit on the jobs issue, too, and the small businesses.
There is an educational process that needs to take place,
obviously, throughout this country as to the benefits of trade.
What are your companies doing, individually, to help spread the
word that trade is a good thing? For example, I meet with
longshoremen quite frequently. They are against trade
agreements, even though their paycheck is 100 percent related
to trade, right? If they weren't unloading ships and loading
ships, they wouldn't have a job.
So, how do we get past that, and what are you doing to
support the idea that trade is a good thing for America and--to
Mr. Wessel's point, and I think that both of you made--creating
jobs here in America? That is what we want to do. What are you
each doing?
Ms. BOUGHNER. I will give you a couple examples. It starts
with our employees, first. We have an internal trade education
program called ``Trade Works''--we actually have the trademark
on it--whereby we are educating our 55,000 U.S. employees on
the benefits of trade. Just as you cited the longshoremen,
often some of our employees are confused about the facts. And
so it starts at home.
In addition, we are bringing the facts forward,
Congressman. Sixty percent of our plant and maintenance workers
are union in our animal protein facilities. We were not letting
the myths stand in front of the facts. And so we are comparing
this to a national average of 7 percent among companies. So we
are unionized, and we support free trade. We don't believe
trade is about--is an ``or,'' trade or jobs. We believe it is
trade and jobs.
Mr. REICHERT. Yes.
Ms. HOFMANN. And yes. At our company, we--of our 2.1
million associates, the vast majority of those associates are
affiliated with the supply chain. So whether it is our
logistics division, our global distribution centers, or
certainly those in our operational units around the world, we
have a keen sense of how trade can benefit our organization.
I would also say we have been actively participating in a
number of the business coalitions here in Washington, and we
are starting to do that as well into the states where our key
suppliers are also benefitting from exports and the key product
categories that have seen growth in their jobs and
opportunities.
Mr. WESSEL. Congressman, much of my testimony was talking
about some of the risks. There are certainly great benefits
from trade. There are also a lot of risks that often go
understated.
One of the problems that we have had going into these
negotiations is the--working with many stakeholders,' is
actually the lack of data and the lack of analysis. When Mexico
began or looked at joining the NAFTA agreement, they
commissioned 99 sector surveys to look at what the challenges
and opportunities were for their producers and their workers.
Alcoholic beverages, farm products, you know, telecom, autos,
up and down the spectrum we haven't done any of that.
As you know, at the end of the process we get an ITC study
that looks at the macro benefits, but doesn't really allow this
committee and others to do a deep dive to understand the
challenges, the market opportunities, and how we best respond
to that. I think we need to have a better data dive, if you
will, at the front end.
Mr. REICHERT. Thank you.
Chairman BRADY. Thank you, sir. Mr. Herger.
Mr. HERGER. Thank you, Mr. Chairman. Ms. Boughner, could
you--why is it important for TPP rules on sanitary and
phytosanitary measures to go beyond WTO rules?
Ms. BOUGHNER. Well, first and foremost, the WTO rules do
set a very high standard and expectation that countries comply
with the agreement on sanitary and phytosanitary measures. And
that means that countries commit to what we call the three
sisters: international standards in the IPPC; the OIE, which is
the Organization of International Epizootics; and Codex.
So, we are still continuing to use international forums. It
would complement it. But where this agreement goes beyond it is
to actually get countries to commit to processes of--and agree
on those processes--around areas like regulatory coherence,
application of standards by industry.
And an example that I can give you is we are all well aware
of what has happened with the animal protein trade over the
years. Each country--I have been to our plant in Dodge City,
Kansas, where I see my facility managers have to stop the line
each time this one goes to Japan, this one goes to Korea, this
one goes to China. And what this agreement will do is it will
create an opportunity for--and every time we stop that plant,
it is $1,600 a minute. So what this agreement will do is it
will take out some of those inefficiencies, and countries will
agree on a set of standards.
And then, as Ambassador Marantis mentioned, they are going
to actually hold their--these countries' feet to the fire that
these risk assessments, these practical risk assessments, are
based on sound science. So I think, with this collective group
of countries, they are going to commit to not only upholding
the WTO, but going beyond with some of these practical
measures.
Mr. HERGER. I want to thank you very much. And I have to
emphasize what Mr. Congressman Reichert commented. I think we
have so much work to do with the businesses we work with, that
they--work as many of you are doing--that their employees are
aware of the jobs that are being created. Because we are really
taking a beating, as we know, in the public media. The American
public is not aware of how incredibly crucial trade is to us,
and that we work on and pursue these trade agreements for the
very reasons that you have just mentioned.
So thank you very much. And, Mr. Chairman, I yield back.
Chairman BRADY. Thank you, Mr. Herger. Mr. Buchanan.
Mr. BUCHANAN. Yes. Thank you, Mr. Chairman. I--you know, I
was reading the other day, or someone mentioned to me yesterday
that a lot of the growth is going to be in this part of the
world in the next 5, 10, 20 years. So, as it relates to trade
barriers, some of these countries are a little more open, some
have much more aggressive trade barriers.
How do you see, by moving this agreement forward as it
relates to these countries, the TPP countries, moving that
forward and reducing some of these barriers through trade
agreements will create jobs? Because, at the end of the day,
this is about creating jobs in America. We want something that
works for everybody that is not only free trade, but fair
trade.
But removing some of these barriers is--how do you see that
creating jobs?
Yes, you can start first. And take about 30 seconds. We----
Ms. BOUGHNER. Sorry, I tend to be long-winded.
Mr. BUCHANAN [continuing]. Don't have much time.
Ms. BOUGHNER. I love this topic. As I mentioned,
Congressman, every $1 billion of export is linked to about
9,000 jobs in the agriculture sector. So when you think about--
and I mentioned Japan--when you think about Japan, and just the
opportunity to tap into that market, and reduce some of these--
what we see as 100 percent tariffs and regulatory barriers, et
cetera, for every $1 billion, that means 9,000 jobs. I can't
think of a more compelling statistic for you.
Mr. BUCHANAN. That is a good point. Ms. Hofmann.
Ms. HOFMANN. And just quickly, we have seen this as we grow
into the retail space into new markets, whether it has been in
the CAFTA countries or several of our new trading partners. We
also were able to provide a better growth platform for exports.
So we are very optimistic about having a high-level standard
that also ensures a level playing field across the countries in
the Asia-Pacific----
Mr. BUCHANAN. Mr. Wessel, real quick.
Mr. WESSEL. I would say the flip side of the $1 billion of
exports creating 9,000 jobs is that every $1 billion of a trade
deficit displaces 9,000 jobs, as well. We can't just do this as
a referee calling one side's score.
Expanding exports is key. The President has said that is
part of his national export initiative. This committee works
hard on it. We need to do better to make sure that we can
balance the results, not only making sure that we have the
liberal trade that we have always had here, but get much
greater access with certain results in--among our trading
partners.
Mr. BUCHANAN. Again, I want to thank the witnesses today.
And I yield back, Mr. Chairman.
Chairman BRADY. Thank you. Mr. Smith.
Mr. SMITH. Thank you, Mr. Chairman. Very briefly, if the
panel could comment in terms of the comparison of opportunity
and potential in these small number of countries, certainly in
comparison to some other trade agreements that have already
passed, my concern is, you know, often times we hear about
trade agreements, you know, you take current policy in many
cases--you know, status quo, basically--which I find
unacceptable, and not just because I represent a lot of beef
producers in rural Nebraska, and how that product has been
tossed about in Asia, but because in the bigger picture, I
mean, I think it is important to note that for every country we
have a trade agreement already established, we have a trade
surplus. I learned that in the run-up during the debate to the
last three trade agreements.
And so, I think it is very compelling. But if you could,
speak to, you know, going beyond the status quo and how we can
improve our trade policies through trade agreements, and also
in terms of opportunity in comparison to other trade
agreements.
Ms. BOUGHNER. I will just--I will give you one statistic on
the comparison, and that is it is the access to the population.
At the moment, the current TPP economies account for about 500
million people. So that is--that goes well beyond any agreement
we have had. And then, if we start to add significant
economies--Japan, Canada, and Mexico--that will get us to 779
million.
So, when we think about the fact that nearly 80 percent of
the world's growth is outside of the United States, let's think
about the fact that we could get to nearly 800 million
consumers through this agreement, if it is done right.
Mr. SMITH. Very good. Mr. Wessel.
Mr. WESSEL. I think the agreement has the opportunity, as a
template, to set what our trade policies are, going forward.
Again, this is a--as they called it--a 21st century trade
agreement, and hopefully will upgrade the disciplines in a
number of areas, and make sure that there is an enforcement
regime to back that up.
In the past, unfortunately, we have negotiated agreements
that have not been well enforced. And, therefore, the benefits
have not been fully achieved. It is a template, going forward.
We need to get it right. Even though the number--the four
countries that we do not have TPP agreements with represent a
fairly small volume of trade in the scheme of things, it is a
template. So, you know, it is important.
Mr. SMITH. Ms. Marshall Hofmann.
Ms. HOFMANN. And I would just quickly add I think the one
unique opportunity here is that this would be an agreement
without product or sector exclusions. In some of the agreements
that we have seen recently, while very well-intended, we have
not been able to leverage the benefit of the agreement for
either the countries involved or the producers involved.
Mr. SMITH. Very good. Thank you. I yield back.
Chairman BRADY. Thank you, Mr. Smith. Ms. Jenkins.
Ms. JENKINS. Thank you, Mr. Chair, and thank you all for
joining us today. And thanks for the shout-out to Dodge City,
Kansas.
Ms. BOUGHNER. You are welcome.
Ms. JENKINS. I am from the great state of Kansas. Just a
couple of quick questions for Ms. Boughner and Marshall
Hofmann.
Could you just give us some examples of new and emerging
trade challenges that you face, and how the TPP can address
them?
Ms. BOUGHNER. Sure. One I will raise is on the technology
front. And I do believe that you referenced that earlier. What
the TPP will do and what we are supporting as part of the TPP
is to create an innovative technologies working group that
would establish a forum to address trade issues related to
technology and food and agriculture.
These are new--the technology will continue to evolve. And
so this agreement needs to continue to be able to be dynamic
enough to address the advances and the innovations that the
American industry is making. And so, technology would be one
area.
As I mentioned earlier, dispute settlement mechanism for
sanitary and phytosanitary measures, which would allow a rapid
response to some of these non-science-based application of
standards. And rules of origin, which Angela mentioned earlier,
as well, going well beyond to make sure that those rules of
origin are really about rules of origin, and not coded ways to
protect particular interests in particular countries.
Ms. JENKINS. Okay, thank you. Ms. Marshall Hofmann.
Ms. HOFMANN. And I would just touch briefly on, in addition
to the market access for goods, we also have the services side.
So we are seeing some markets where you will have performance
requirements, you will have hiring and management requirements,
or economic means tests that also could be addressed through
the TPP.
Ms. JENKINS. Okay, thank you. I yield back.
Chairman BRADY. Thank you. Mr. Schock.
Mr. SCHOCK. Thank you, Mr. Chairman. Ms. Boughner, I
appreciate your company's investment in my district. We have
one of the largest pork-producing facilities in the world. I
had the opportunity of recently visiting that facility. Quite
impressive.
And so, I want to speak to not only your investment in my
district, but also to hopefully your investments around the
world, and perhaps even more investments you and other
companies might make as a result of TPP in some of these Asia-
Pacific countries.
The International Trade Commission staff recently found
that investment abroad by U.S. service firms generate over
700,000 jobs in the United States, supporting those investments
overseas. In addition, we know that a global presence by U.S.
firms is essential in maintaining our number one status,
globally, as the most competitive economy to be a hub. A global
presence by U.S. firms helps them sell our exports around the
world. And the more we export, the more jobs we create here at
home.
Given the importance of U.S. firms having a global
presence, I would like to ask you whether Cargill and the U.S.
Business Council on TPP believe that the U.S. investors need
the protection of investor state dispute settlements in all
these TPP countries.
Ms. BOUGHNER. Thank you for the question, Congressman, and
for rightfully recognizing that U.S. investment actually drives
new opportunities such as trade. And, in fact, U.S. companies
overseas, our investment actually accounts for 45 percent of
all U.S. exports. So that should not go unstated.
And certainly one of our main priorities in this is to
receive investor state dispute settlement protection. Not just
dispute settlement, but investor state protections. And I can't
think of why we wouldn't want to do that. Why wouldn't we want
to protect our American investments overseas, if we know,
indeed, as Mr. Wessel mentioned, that there are other forces
out there like SOEs, and places and spaces where we may face
unfair competition or unfair action by governments.
So, we certainly believe--and we know it is a difficult
lift. We know that particular countries do not want the
investor state provision included. But I can't see how the
United States would accept an agreement without that provision.
Mr. SCHOCK. Mr. Wessel.
Mr. WESSEL. If I could just make a quick comment--and going
back to my earlier comment about needing to have a broad debate
about the data, the ITC study that is referred to was a staff
study and not open to critique. And looking at some data in
preparation for the hearing, I saw that multi-national
companies more than doubled their exports of services to their
foreign affiliates at the same time that they reduced their
U.S.-based employment by 1.9 million.
So, we have to really go deeper and understand, again, what
our competitive challenges and our opportunities are, and
understand where we need to go in the future.
Ms. BOUGHNER. Actually, we have increased our employment
year on year since the two largest trade agreements, NAFTA and
when WTO was implemented. We have actually increased our
employment 1,000 employees year on year.
And so, again, I think the facts state it for itself. It is
not trade or jobs, it is trade and jobs. And investment. Thank
you.
Mr. SCHOCK. Excellent points. Excellent points. Thank you,
I agree.
Chairman BRADY. Thank you. Mr. Paulsen, you have the final
question.
Mr. PAULSEN. Thank you, Mr. Chairman. And first of all, I
should mention that Cargill is headquartered in my district,
just a few miles from my home, actually. And I want to
compliment you for your leadership, not only in educating your
employees in the opportunities for trade and your participation
in trade around the world that grows jobs, but also for being
out front in hosting Ambassador Han this summer, actually, with
the South Korean agreement, as that was going forward. And I
think you have really laid out the case.
Everyone on the panel has laid out the case of why
southeast Asia is so important, why TPP is so important, Mr.
Chairman, because I think some of our colleagues don't
understand or appreciate that southeast Asia is going to be the
center of economic gravity in the near future for a lot of
future jobs.
And maybe you can just elaborate. Anyone on the panel. I
know that many of you face significant barriers in China. And
even though China is not a part of TPP, how does establishing
these strong rules in TP help us address China's barriers? On
the panel?
Mr. WESSEL. Let me just take that quickly, in that the U.S.
has always had a fairly consistent approach to trade and rules,
that we may upgrade the rules as we move forward trade
agreement to trade agreement, but there is a consistent
application.
What we do on SOEs, what we do on indigenous innovation,
IPR, and many other issues is going to set the enforcement
template, as well as the legal policies that we use, transfer
pricing, which is a subject under the jurisdiction of this
committee.
So, this is vital to addressing the China challenge, long
term, creating better rules than we currently have, more
automaticity to enforcement, and certainty and consistency, in
terms of the application of our law.
Ms. BOUGHNER. What I think, Congressman, it does is really
creates a system of peer pressure in the region. And I
absolutely agree that if we get the provisions right, and some
of these new additions that we are making, it is going to
create a system where other countries are going to want to be
in the club. And, as that happens, China will ask itself the
question. Everyone is already asking the question.
So it is critical we get this right, because I do think
that this TPP system of peer pressure will come to bear and
come to benefit the U.S.
Mr. PAULSEN. Ms. Hofmann, anything to add before we close?
Ms. HOFMANN. And just a final note, too. With both
operations that are--a growing retail presence and a sourcing
presence with China, we see this as an opportunity to simplify
the rules, to have better access, and to clarify the
expectations for a 21st century agreement.
Mr. PAULSEN. Thank you, Mr. Chairman.
Chairman BRADY. Thank you. I want to thank the Members for
their thoughtful questions. And let me note for our witnesses
that Members may submit questions for the record. If they do, I
hope you will respond promptly.
Our witnesses today made clear the Trans-Pacific
Partnership offers significant benefits. We need to move ahead
as quickly as possible. We should also welcome new members to
the TPP, as long as they will meet the Trans-Pacific
Partnership's high standards, and not delay the partnership's
progress, can adequately address outstanding bilateral issues.
With that, the committee is adjourned.
[Whereupon, at 12:05 p.m., the subcommittee was adjourned.]
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