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

           JUDGMENT EVADING FOREIGN STATES ACCOUNTABILITY ACT OF 2011

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

                                     MARKUP

                                   BEFORE THE

                                SUBCOMMITTEE ON
                             THE WESTERN HEMISPHERE

                                     OF THE

                          COMMITTEE ON FOREIGN AFFAIRS
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                       ON

                                   H.R. 1798

                                   __________

                               NOVEMBER 29, 2012

                                   __________

                               Serial No. 112-188

                                   __________

            Printed for the use of the Committee on Foreign Affairs

    Available via the World Wide Web: http://www.foreignaffairs.house.gov/
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                          COMMITTEE ON FOREIGN AFFAIRS

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

                     Subcommittee on the Western Hemisphere

                         CONNIE MACK, Florida, Chairman
    MICHAEL T. McCAUL, Texas             ELIOT L. ENGEL, New York
    JEAN SCHMIDT, Ohio                   ALBIO SIRES, New Jersey
    DAVID RIVERA, Florida                ENI F.H. FALEOMAVAEGA, American
    CHRISTOPHER H. SMITH, New Jersey         Samoa
    ELTON GALLEGLY, California           GREGORY W. MEEKS, New
                                             YorkAs of 6/19/
                                             12 deg.

                                C O N T E N T S

                                  ----------
                                                                       Page

                                   MARKUP OF

    H.R. 1798, To prevent foreign states that do business, issue
      securities, or borrow money in the United States, and then fail
      to satisfy United States court judgments totaling $100,000,000
      or more based on such activities, from inflicting further
      economic injuries in the United States, from undermining the
      integrity of United States courts, and from discouraging
      responsible lending to poor and developing nations by
      undermining the secondary and primary markets for sovereign
      debt...........................................................     2
      Amendment in the nature of a substitute to H.R. 1798 offered by
        the Honorable Connie Mack, a Representative in Congress from
        the State of Florida, and chairman, Subcommittee on the
        Western Hemisphere...........................................    21

                                    APPENDIX

    Markup notice....................................................    42
    Markup minutes...................................................    43
    The Honorable Connie Mack: Prepared statement....................    45

           JUDGMENT EVADING FOREIGN STATES ACCOUNTABILITY ACT OF 2011

                                  ----------

                          THURSDAY, NOVEMBER 29, 2012

                      House of Representatives,
                Subcommittee on the Western Hemisphere,
                                  Committee on Foreign Affairs,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 2:06 p.m., in
    room 2172, Rayburn House Office Building, Hon. Connie Mack
    (chairman of the subcommittee) presiding.
        Mr. Mack. The subcommittee will come to order.
        Pursuant to notice, for purposes of a markup I call up H.R.
    1798, the Judgment Evading Foreign States Accountability Act.
    Without objection, the measure is considered read and open for
    amendment at any point.
        [H.R. 1798 follows:]

        Mr. Mack. Before recognizing myself and other members for
    statements, I have an amendment in the nature of a substitute
    that was shared with your offices yesterday, which includes
    updates and a few minor edits.
        The clerk will report the amendment.
        Mr. Gately. Amendment in the nature of a substitute to H.R.
    1798, offered by Mr. Mack of Florida.
        Strike all after the enacting clause----
        Mr. Mack. Without objection, the amendment in the nature of
    a substitute is considered read.
        [The amendment in the nature of a substitute follows:]

        Mr. Mack. All members are given leave to insert remarks on
    this measure into the record should they choose to do so.
        I now recognize myself to speak on the bill and the
    amendment.
        The Judgment Evading Foreign States Accountability Act
    draws our attention to a serious problem that requires our
    immediate attention. The Republic of Argentina has incurred
    substantial debt in the United States and has subsequently
    defaulted on those debts. Going back more than a decade, in
    2001, Argentina defaulted on more than $81 billion in sovereign
    debt. In 2005, Argentina refused to negotiate with creditors
    and unilaterally offered creditors 27 cents on the dollar.
        Despite having agreed to submit to the jurisdictions of
    U.S. courts, specifically the State of New York, and waive
    claims of sovereign immunity, Argentina has contested at least
    151 lawsuits and has refused to honor 116 court judgments
    against it, totaling more than $6 billion.
        Additionally, Argentina has demonstrated a similar
    disregard for arbitral awards granted to the United States
    investors by the International Centre for Settlement of
    Investment Disputes, a tribunal of the World Bank. Currently,
    Argentina is the respondent in more of these cases than any
    other G-20 nation, accounting for more than 66 percent of such
    cases.
        Argentina's arguments for nonpayment have been outright
    rejected by both the World Bank and the U.S. State Department.
    Argentina's behavior undermines the viability of the World
    Bank's arbitration process, thereby harming the worldwide
    investments of U.S. businesses that rely upon this forum for
    adjudication purposes.
        The Obama administration has taken some action against
    Argentina, such as suspending Generalized System of Preferences
    benefits, as well as voting against new loans to Argentina
    through the World Bank and the Inter-American Development Bank.
    However, the Obama administration has not gone far enough to
    protect United States businesses and investors.
        Many people in the United States are unaware of Argentina's
    irresponsible behavior and blatant disregard for the rule of
    law. U.S. citizens continue to invest in, lend to, and do
    business with Argentina and are unfamiliar with the associated
    risks. Those who are injured as a result of this conduct often
    have little or no recourse.
        H.R. 1798, the Judgment Evading Foreign States
    Accountability Act, takes bold steps to protect U.S. businesses
    and investors. This bill denies Argentina and other foreign
    states that have been in default of U.S. court judgments
    exceeding $100 million for more than 2 years access to U.S.
    capital markets, as well as requires the U.S. Government to
    consider the default status of countries prior to granting them
    aid.
        I urge all of my colleagues to work with me to ensure the
    passage of the Judgment Evading Foreign States Accountability
    Act.
        I now recognize the ranking member for his remarks.
        Mr. Engel. Thank you very much, Mr. Chairman.
        Before I turn to today's markup, I want to tell you what a
    pleasure it has been to work with you on this subcommittee. We
    have had an excellent working relationship and, I would dare
    say, an excellent friendship.
        Regardless of whether it was when I chaired the
    subcommittee and you were the ranking member or when you
    chaired and I have been the ranking member, we worked very well
    together. I have appreciated your friendship, your good humor,
    your cooperation, and that of your wife, our colleague, as
    well. And I wish you and your wife the best of luck in the days
    ahead.
        Mr. Mack. Thank you. Thank you very much.
        Mr. Engel. Turning to today's markup, I think we must first
    note that Argentina is a very important country with which the
    United States has and will continue to have a multifaceted
    relationship. It is a member of the G-20 and a key nation in
    South America. It has vast resources and a large and educated
    population. I have enjoyed my visits to Argentina and continue
    to believe that it is a natural friend of the United States.
        However, today's markup deals with holders of several
    billion dollars worth of Argentine debt who have remained
    unpaid since Argentina defaulted on roughly $100 billion of
    sovereign debt. While the vast majority of these bondholders
    accepted a restructuring of the debt, substantially reducing
    what they were owed, a small minority have held out, rejecting
    those deals.
        Mr. Chairman, I understand your concern about this matter,
    as it is very serious. However, I think that today's markup is
    not the appropriate course of action at this sensitive time,
    and let me say why.
        First, we haven't had hearings about Argentina on the debt
    issue. We are not first in line in terms of jurisdiction; that
    falls to the Committee on Financial Services. I don't make
    light of this. As you have pointed out, this is a serious
    matter, but also a very complicated matter. And I don't believe
    that rushing into a markup of legislation which may have
    unforeseen implications, especially ahead of Financial Services
    Committee consideration, is the step we should be taking now.
        I understand that even if we report this bill favorably
    today, the full committee will not take it up, and even if,
    hypothetically, the full committee did approve the bill,
    neither the House nor the Senate would have time to consider
    it. Therefore, I don't think today's markup will achieve the
    intended goal.
        And, finally, this matter is in the Federal court system
    right now. Late last month, the U.S. Court of Appeals for the
    Second Circuit upheld a lower court ruling that Argentina had
    to pay $1.33 billion to the holdout investors. However, only
    yesterday, the U.S. Court of Appeals for the Second Circuit
    granted an emergency stay on its order, giving Argentina more
    time to respond to the ruling. Given the action in our courts,
    this is precisely, I think, the wrong time to be marking up
    H.R. 1798. It will be seen as interfering in the judicial
    process, something I think we should avoid at this moment.
        Therefore, I will respectfully vote no on H.R. 1798 today
    but will continue to monitor this issue closely in the days and
    weeks ahead. I certainly agree with you, Mr. Chairman, that
    this is an important issue and one that we need not take
    lightly and must not take lightly. I just don't think that
    today is the right time to do it.
        So let me just conclude again the way I started, Mr.
    Chairman. It has been a pleasure serving with you on this
    subcommittee. You are not only my colleague but you are my
    friend. And I hope that we will continue to work together in
    the future on many, many different things. And I wish you only
    the best in the future.
        I yield back the balance of my time.
        Mr. Mack. Thank you very much.
        I would like to thank the ranking member for your comments,
    and I feel the same way. We have had a wonderful relationship.
    We have worked together very well. We have not always agreed,
    but we have always worked together to do what was best, as we
    saw it, for the hemisphere. And I value your friendship, and I
    appreciate your kind words today. So thank you very much.
        Are there any other members who wish to strike the last
    word and speak briefly on the measure?
        Mr. McCaul. Mr. Chairman, I would like to strike the last
    word.
        Mr. Mack. The gentleman is recognized.
        Mr. McCaul. First, I think this bill is an important step
    toward holding countries accountable for their financial
    obligations under U.S. law.
        I recently went down to Argentina, among other countries,
    and we met with several officials down there. And I was struck
    by what I see as a growing anti-American trend down there. I
    certainly hope Argentina will go back to being a friendly
    country and not being the antagonist that it looks like it is
    appearing to go down that road.
        Having said that, I just, on a personal point of personal
    privilege, Mr. Chairman, it has been not only a great honor
    serving on this committee with you, we came into Congress
    together at the same time, and I considered you to be one of my
    dearest friends up here in the Congress, along with your lovely
    wife. And we are going to miss you a lot.
        And, with that, I yield back.
        Mr. Mack. I thank the gentleman.
        And, again, thank you for your kind words. And our days
    aren't over. We are going to continue to do a lot of great
    things together. And I appreciate those kind words.
        Do any other members wish to be recognized?
        Mr. Sires. Yes.
        Mr. Mack. The gentleman is recognized.
        Mr. Sires. Well, thank you for having this hearing today.
    And I also want to express my thanks to you for working
    together the last few years. It certainly has been my pleasure,
    and I certainly enjoyed our trip to Panama, although the timing
    wasn't--all the things that happened, but it was certainly an
    enjoyable trip.
        And I thank you for all your support on an issue that is
    very important to me and my community. You have been a strong
    supporter, and I thank you for that.
        And I will be supporting this bill today.
        Mr. Mack. Thank you.
        And thank you for always being willing to work with us and
    with me. You are a friend, and I look forward to continue to
    see your work done here on this committee. So thank you.
        Anyone else?
        The gentleman is recognized.
        Mr. Rivera. Thank you, Chairman. Thank you for having this
    important hearing and for always showing leadership on issues
    that sometimes are difficult to tackle, as I have noticed
    during my tenure on this committee.
        And I will be supporting the bill, as well. But as someone
    who has worked with you and with your family for many years--as
    you know, I started working with your father in Congress in
    1988 and 1989 and served with you in the Florida legislature.
    And it was an honor and privilege and a pleasure to always
    serve with you in the Florida House of Representatives and my
    time here in Congress with you, showing that leadership on so
    many issues that are important, particularly to promoting
    freedom, freedom around the world, to those that are not as
    fortunate, as many are here in the United States, to live in
    the greatest and freest country the world has ever known.
        So thank you for always being a standard bearer for
    freedom, whether it be in Cuba, Latin America, all over the
    world. You have been a staunch advocate, and you are to be
    commended for that. Thank you for your service.
        Mr. Mack. Thank you very much, David. Thank you.
        Hearing no further amendments, the question is on agreeing
    to the amendment in the nature of a substitute.
        All those in favor, say aye.
        All those opposed, say no.
        In the opinion of the Chair, the ayes have it, and the
    amendment in the nature of a substitute is agreed to.
        The question now occurs on adopting the bill as amended.
        All in favor, say aye.
        All those opposed, say no.
        In the opinion of the Chair, the ayes have it, and the
    amended bill is agreed to.
        Without objection, H.R. 1798, as amended, is reported
    favorably to the full Committee on Foreign Affairs. And staff
    are directed to make any technical and conforming changes.
        This concludes our business. And I would just like to say
    before we adjourn that it has been a privilege, an honor to
    serve with the members of this committee. And I think that we
    have done great work on this committee, whether it is when you
    were the chairman, and I think that we have done some great
    work, as well, over the last couple years.
        I see real opportunity for Latin America and the United
    States in how we work together and for the future of all of the
    people in all of our countries. And I will continue to watch
    and pay attention and be involved in issues that are related to
    Latin America and freedom. And I just want to thank my
    colleagues for everything that you have done for the people of
    the United States and people of Latin America.
        And, without objection, the subcommittee stands adjourned.
        [Whereupon, at 2:20 p.m., the subcommittee was adjourned.]

                                A P P E N D I X

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         Material Submitted for the Hearing RecordNotice deg.

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