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



 
                       TRANS-PACIFIC PARTNERSHIP

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



                                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
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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

                              ----------                              


                      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.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``Hearings.'' Select the hearing for which you would like to submit, 
and click on the link entitled, ``Click here to provide a submission 
for the record.'' Once you have followed the online instructions, 
submit all requested information. ATTACH your submission as a Word 
document, in compliance with the formatting requirements listed below, 
by the close of business on Wednesday, December 28, 2011. Finally, 
please note that due to the change in House mail policy, the U.S. 
Capitol Police will refuse sealed-package deliveries to all House 
Office Buildings. For questions, or if you encounter technical 
problems, please call (202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
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files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word format and MUST NOT exceed a total of 10 pages, including 
attachments. Witnesses and submitters are advised that the Committee 
relies on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
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these specifications will be maintained in the Committee files for 
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    3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental 
sheet must accompany each submission listing the name, company, 
address, telephone, and fax numbers of each witness.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
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materials in alternative formats) may be directed to the Committee as 
noted above.
      
    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.
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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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