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



 
       JUDGMENT EVADING FOREIGN STATES ACCOUNTABILITY ACT OF 2011

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                                 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


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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

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                                                                   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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