[Senate Hearing 112-727]
[From the U.S. Government Publishing Office]






                                                        S. Hrg. 112-727

                    U.S.-KOREA FREE TRADE AGREEMENT

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

                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 26, 2011

                               __________



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                          COMMITTEE ON FINANCE

                     MAX BAUCUS, Montana, Chairman

JOHN D. ROCKEFELLER IV, West         ORRIN G. HATCH, Utah
Virginia                             CHUCK GRASSLEY, Iowa
KENT CONRAD, North Dakota            OLYMPIA J. SNOWE, Maine
JEFF BINGAMAN, New Mexico            JON KYL, Arizona
JOHN F. KERRY, Massachusetts         MIKE CRAPO, Idaho
RON WYDEN, Oregon                    PAT ROBERTS, Kansas
CHARLES E. SCHUMER, New York         MICHAEL B. ENZI, Wyoming
DEBBIE STABENOW, Michigan            JOHN CORNYN, Texas
MARIA CANTWELL, Washington           TOM COBURN, Oklahoma
BILL NELSON, Florida                 JOHN THUNE, South Dakota
ROBERT MENENDEZ, New Jersey          RICHARD BURR, North Carolina
THOMAS R. CARPER, Delaware
BENJAMIN L. CARDIN, Maryland

                    Russell Sullivan, Staff Director

               Chris Campbell, Republican Staff Director

                                  (ii)



















                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Baucus, Hon. Max, a U.S. Senator from Montana, chairman, 
  Committee on Finance...........................................     1
Hatch, Hon. Orrin G., a U.S. Senator from Utah...................    10

                         ADMINISTRATION WITNESS

Marantis, Ambassador Demetrios, Deputy U.S. Trade Representative, 
  Executive Office of the President, Washington, DC..............     3

                            PUBLIC WITNESSES

Rice, Errol, executive vice president, Montana Stockgrowers 
  Association, Helena, MT........................................     5
Lee, Thea, deputy chief of staff, AFL-CIO, Washington, DC........     6
Guertin, Timothy, president and chief executive officer, Varian 
  Medical Systems, Palo Alto, CA.................................     8

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baucus, Hon. Max:
    Opening statement............................................     1
    Prepared statement...........................................    31
Guertin, Timothy:
    Testimony....................................................     8
    Prepared statement...........................................    33
Hatch, Hon. Orrin G.:
    Opening statement............................................    10
    Prepared statement...........................................    37
Lee, Thea:
    Testimony....................................................     6
    Prepared statement...........................................    39
Marantis, Ambassador Demetrios:
    Testimony....................................................     3
    Prepared statement...........................................    47
    Responses to questions from committee members................    51
Rice, Errol:
    Testimony....................................................     5
    Prepared statement...........................................    54
Wyden, Hon. Ron:
    Memorandum from Majority Staff of the Senate Committee on 
      Finance Subcommittee on Trade, dated January 25, 2011......    58

                             Communications

Accuray Incorporated.............................................    85
Advanced Medical Technology Association (AdvaMed)................    89
American Apparel and Footwear Association (AAFA).................    98
American Council of Life Insurers (ACLI).........................   103
American Manufacturing Trade Action Coalition (AMTAC)............   105
National Cattlemen's Beef Association............................   110
National Council of Textile Organizations, et al.................   117
U.S. Chamber of Commerce and U.S.-Korea Business Council.........   123

 
                    U.S.-KOREA FREE TRADE AGREEMENT

                              ----------                              


                         THURSDAY, MAY 26, 2011

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:13 
a.m., in room SD-215, Dirksen Senate Office Building, Hon. Max 
Baucus, (chairman of the committee) presiding.
    Present: Senators Kerry, Wyden, Carper, Cardin, Hatch, 
Grassley, Snowe, Thune, and Burr.
    Also present: Democratic Staff: Russ Sullivan, Staff 
Director; Gabriel Adler, Senior International Trade and 
Economic Advisor; Amber Cottle, Chief International Trade 
Counsel; Ayesha Khanna, International Trade Counsel; and 
Michael Smart, International Trade Counsel. Republican Staff: 
Everett Eissenstat, Chief International Trade Counsel; David 
Johanson, International Trade Counsel; and Maureen McLaughlin, 
Detailee.

   OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM 
            MONTANA, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The hearing will come to order.
    Confucius said, ``The journey of a thousand miles begins 
but with a single step.'' Today's hearing marks the beginning 
of the end of our long journey towards implementing the U.S.-
Korea Free Trade Agreement, or FTA. It is a journey that began 
with a single step more than a decade ago.
    In November 1999, I introduced a bill to authorize the 
negotiation of the U.S.-Korea FTA. At the time, Korea was 
emerging from the Asian financial crisis. It was fighting a 
faltering economy, high unemployment, falling wages. Yet I 
believed then--and I believe now--that it was essential for the 
United States to cement our alliance with this vital partner in 
the Asia-Pacific region. I believed a free trade agreement was 
the best way to do just that.
    We took another step on our journey when we formally 
launched the FTA negotiations in 2006. In that year, Korea was 
on its way to becoming one of the most highly developed 
countries in the world. Today, it has the world's 15th-largest 
economy. U.S. goods and services exported to Korea in 2010 
totaled over $55 billion. Last year, my home State of Montana 
exported more products to Korea than to any other country 
except Canada.
    Because of the potential the Korean market holds for U.S. 
jobs in our economy, I strongly supported taking the next step 
toward a free trade agreement. But, even when the negotiations 
began, we knew it would be difficult, and we stressed that 
Korea would need to abide by world scientific standards by 
opening its market to U.S. beef and allow U.S. autos to compete 
on a level playing field.
    Later that year, I welcomed the United States and Korea 
negotiating teams to my home State of Montana. Over a Montana 
T-bone steak in Big Sky, I reiterated my support for the 
agreement, but I conditioned that support on Korea's acceptance 
of safe and delicious Montana beef.
    The United States and Korea concluded our FTA negotiation 
in 2007, but the agreement fell short in important respects. It 
failed to provide additional market access for U.S. beef and it 
failed to secure better access and better protections for 
United States auto manufacturers.
    Many of my colleagues on both sides of the aisle and in 
both Houses of Congress joined me in expressing strong 
concerns. Unfortunately, our two countries were unable to make 
progress addressing these concerns at that time, so our journey 
faltered.
    But late last year, our two countries took an important 
step to put us back on the path to implementation. In December, 
the United States and Korea announced an agreement that will 
help U.S. auto manufacturers increase their auto sales to 
Korea. Thanks to the persistence of Ambassador Kirk and you, 
Ambassador Marantis, the administration recently agreed that it 
would do what it takes to secure better market access in Korea 
for U.S. beef, and we identified two concrete steps to ensure 
continued progress.
    First, the administration agreed to increase funding for 
U.S. beef promotion in Korea. It will provide an additional $1 
million this year for that purpose. The administration also 
welcomed the U.S. meat industry's request for an additional $10 
million in funding to promote U.S. beef sales to Korea over the 
next 5 years, and agreed to favorably consider that request 
when it makes its 2012 awards later this year.
    Second, the administration agreed to request consultations 
with Korea on fully opening the Korean market to U.S. beef. The 
administration will request these consultations as soon as the 
FTA enters into force, and, pursuant to the terms of our 2008 
protocol governing beef imports with Korea, those consultations 
will take place within 7 days of the request.
    We are still working towards breaking down all of Korea's 
barriers to U.S. beef, but the administration's commitments are 
important steps on this path. With these commitments and with 
this hearing, we are several steps closer to implementing the 
U.S.-Korea Free Trade Agreement. Once implemented, the FTA will 
increase U.S. exports to Korea by more than $10 billion 
annually and support at least 70,000 American jobs.
    As we move forward with the Korean FTA, as well as our FTAs 
with Colombia and Panama, we have a duty to help American 
workers meet the challenge of global competition. To do so, we 
must enact a robust, long-term extension of Trade Adjustment 
Assistance, or TAA, together with these FTAs.
    In the spirit of Confucius, let us work together to 
successfully conclude this journey. Let us reauthorize the 
Trade Adjustment Assistance program, and let us approve the 
U.S.-Korea Free Trade Agreement.
    [The prepared statement of Chairman Baucus appears in the 
appendix.]
    The Chairman. Senator Hatch will be here shortly to give an 
opening statement, but in the interim let me introduce our 
witnesses.
    First, we have Ambassador Demetrios Marantis, Deputy U.S. 
Trade Representative for Asia and Africa. Demetrios served as 
my Chief Trade Counsel for several years, and he has been a 
strong advocate for American ranchers, farmers, and workers. 
Welcome back, Demetrios. It is always a pleasure to see you. I 
think you are one of the best public servants in our whole 
country. You work hard, and you are very effective. You do a 
great job. If all of America knew of what you do, they would be 
very proud of you.
    Next, we have Errol Rice, the executive vice president of 
the Montana Stockgrowers. Errol, you have been a great advocate 
as well of Montana ranchers. Thank you for traveling all the 
way from our hometown of Helena and joining us here today.
    Next, we have Thea Lee, deputy chief of staff with the AFL-
CIO. Thea has testified before this committee several times--I 
would say many times--and we are happy to see you, Thea. 
Welcome back. You are very sharp, intelligent, and you have a 
great perspective.
    Finally, we have Timothy Guertin from Varian Medical 
Systems. Welcome, Timothy. I have been to your company several 
years ago and was very impressed with what I saw, all the 
products you manufacture.
    I would also like to give special welcome to Korea's 
ambassador, Han Duk-soo, who is with us in the audience. 
Welcome, Mr. Ambassador. We are glad you are here for these 
hearings.
    According to our usual practice, I will have each witness 
introduce his statement for the record and each speak about 5 
minutes.
    Ambassador Marantis?

 STATEMENT OF AMBASSADOR DEMETRIOS MARANTIS, DEPUTY U.S. TRADE 
REPRESENTATIVE, EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON, 
                               DC

    Ambassador Marantis. Thank you. Good morning, Senator 
Baucus and members of the committee. It is a real honor for me 
to be back here to testify today about the U.S.-Korea Trade 
Agreement.
    We are here at a unique moment. Our economy is recovering, 
and exports of goods and services are up 17 percent. This 
export growth has already supported hundreds of thousands of 
additional American jobs. Within our grasp is the most 
economically significant trade agreement the United States has 
negotiated in nearly 2 decades. This agreement will strengthen 
our trade and investment ties to Korea's $1 trillion economy, 
and it will bind a key strategic ally closer to us and help us 
keep our edge over international competition.
    Most importantly, the U.S.-Korea Trade Agreement will 
create substantial export opportunities, establish strong 
enforcement provisions, and support tens of thousands of 
additional goods and services export-related jobs.
    When President Obama took office, many in this Congress had 
serious concerns about this agreement, especially relating to 
autos and beef. This administration shared those concerns. We 
heard you, and we took action. We leveled the playing field by 
addressing nontariff barriers in Korea's automotive safety and 
environmental regulations. We encouraged green technologies by 
accelerating tariff reductions on electric cars. We negotiated 
a tariff structure that will give American auto companies and 
their workers a chance to build more business in Korea before 
U.S. tariffs come down, and we negotiated a new special motor 
vehicle safeguard.
    On beef, U.S. exports are steadily increasing to Korea, but 
we share your concern, Senator Baucus, and those of your 
colleagues and our ranchers, about science-based access to 
South Korea's beef market. That is why Ambassador Kirk sent a 
letter on May 4 stating the administration's intent to request 
consultations under the 2008 Beef Protocol, to discuss that 
protocol's full application once the U.S.-Korea Trade Agreement 
enters into force. Like you, we welcome the U.S. Meat 
Federation's plans to spend an additional $10 million in South 
Korea to promote U.S. exports to that market.
    With this important work behind us, today the 
administration and Congress are together poised to unlock the 
enormous economic potential and the enormous strategic benefits 
of that agreement. Under this agreement, South Korea, which is 
already our fifth-
largest agricultural market, will eliminate tariffs on two-
thirds of U.S. agricultural products immediately. Within 5 
years of entering into force, this agreement will remove 
tariffs on over 95 percent of U.S. industrial and consumer 
goods products.
    This agreement will strengthen the United States' role as 
an export powerhouse in services, guaranteeing access for our 
information and communications technology, express delivery, 
financial, and other services exports to South Korea's enormous 
$580 billion services market.
    Underpinning these new export opportunities are the Korea 
agreement's state-of-the-art provisions to protect and enforce 
intellectual property rights, reduce red tape, and eliminate 
regulatory barriers to U.S. exports. This agreement contains 
the highest standards for protecting labor rights, promoting 
the environment, and ensuring that key domestic labor and 
environmental laws are enforced.
    Taken together, these additional export opportunities mean 
more jobs for Americans. The tariff reductions on goods exports 
alone will lead to significant increases in U.S. exports to 
Korea that will support over 70,000 additional American jobs. 
More services exports will support tens of thousands of 
additional jobs, and fewer nontariff barriers and stronger 
rules will support even more.
    This administration is ready to move the U.S.-South Korea 
agreement forward as part of a comprehensive trade agenda that 
invests in our workers and invests in our economy. As we have 
stressed repeatedly, we must keep faith with our workers by 
renewing Trade Adjustment Assistance consistent with the 
objectives of the 2009 law.
    TAA is a key component of President Obama's trade policy 
and has been integral to Democratic and Republican trade 
agendas for nearly half a century. We look forward to working 
with this committee to renew TAA, as well as to reauthorize 
expired trade preference programs and to unlock the benefits of 
this historic trade agreement with South Korea.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Ambassador, very, very much. 
As I said, you have done a great job.
    [The prepared statement of Ambassador Marantis appears in 
the appendix.]
    The Chairman. Mr. Rice, thank you. I see you have brought 
your family back here.
    Mr. Rice. Absolutely. Thank you, Chairman Baucus.
    The Chairman. That is great.

  STATEMENT OF ERROL RICE, EXECUTIVE VICE PRESIDENT, MONTANA 
              STOCKGROWERS ASSOCIATION, HELENA, MT

    Mr. Rice. Good morning, Chairman Baucus and members of the 
committee. Thank you for the opportunity to speak to you on 
behalf of the members of the Montana Stockgrowers Association 
regarding the U.S.-Korea Free Trade Agreement. My name is Errol 
Rice, and I am a 5th-generation Montana rancher. I currently 
serve as the executive vice president of the Montana 
Stockgrowers Association, one of the Nation's oldest and 
historically significant cattle ranching organizations, 
established in 1884.
    Ranchers must have access to the additional demand for beef 
from consumers that live outside of the United States. Ninety-
six percent of the world's population lives outside the borders 
of the U.S. A global economic system is a fundamental reality 
that must be met with a rural American consensus in support of 
free trade, which we believe is a central pillar to this 
country's economic and geopolitical strength.
    Exports create jobs. According to Cattlefax, fed steers 
have been selling near $115 per 100-weight, or roughly $1,495 
per head. Of that, Cattlefax estimates that exports have added 
a minimum of $145 per head in value as opposed to not having 
exports. Our competitiveness depends on profitability and 
attracting the next generation of ranchers back into the 
business. Today, Korea is one of the largest export markets for 
Montana and American beef.
    In 2010, we exported nearly $518 million worth of our 
product, which is a 140-percent increase in sales over 2009. 
This added $25 in value to each of the 1.3 million head of 
steers and heifers grown and marketed from Montana in 2010. 
This agreement achieves a major breakthrough in phasing out 
Korea's 40-percent tariff on our wholesome beef cuts. In 2010, 
we were met with over $200 million in tariffs on our beef being 
exported to Korea.
    The Korea-U.S. Free Trade Agreement, upon implementation, 
would lend $15 million in tariff benefits to our product in the 
first year alone, and roughly $325 million in tariff reductions 
annually once fully implemented. According to the U.S. 
International Trade Commission, annual exports of U.S. beef 
could increase by as much as $1.8 billion once the agreement is 
fully implemented.
    While Korea is a strong export market for U.S. beef, we 
have also faced unscientific restrictions. Montana ranchers 
believe that our trading partners should abide by sound science 
and international standards. That is why we appreciate very 
much the efforts by you, Chairman Baucus, to move us toward 
that goal. Under the agreement that he negotiated with the 
administration, the U.S. Department of Agriculture will 
consider favorably a $10-million request from the U.S. Meat 
Export Federation to educate Korean consumers about the safety, 
quality, and value of U.S. beef. He secured a commitment from 
Ambassador Kirk to hold consultations with Korea on the full 
application of the 2008 U.S.-Korea Beef Protocol.
    Recognizing international science-based standards such as 
those set by the OIE is very important. It not only creates 
less market volatility, but it also encourages the safest and 
most prudent production practices.
    Montana is leading the way to provide technologically 
advanced traceability solutions for northern tier high-quality 
ranch-level certified calves. Two hundred and fifty thousand 
Montana calves were uniquely certified beneath our private 
Verified Beef Traceability Solutions in 2010. Nearly 50,000 
Montana calves were exported in the form of high-quality beef 
to Korea.
    China is the only major market still closed to U.S. beef 
and represents one of the largest potential growth markets for 
ranchers. We think a public and private sector approach to beef 
traceability can drive market expansion opportunities in China 
much faster.
    Last week, MSGA was fortunate to be able to participate in 
the 2011 Asia-Pacific Economic Cooperation Trade Ministers 
meeting in Big Sky, MT. This was a tremendous opportunity to 
offer thought leadership and to discuss our cutting-edge 
approaches to global beef innovation to meet demand. It spawned 
greater information sharing and interconnectedness as a 
definite outcome that will bond together more effective trade 
partners who are committed to a rules-based trading system.
    Our ranch families' livelihoods depend on exports, which 
are the most dynamic and vibrant opportunities for long-term 
sustainability.
    I appreciate the opportunity that we have been granted to 
present our testimony today, and we look forward to working 
with you throughout the course of this process to secure 
passage of this crucial agreement.
    The Chairman. Thank you, Mr. Rice, very much.
    [The prepared statement of Mr. Rice appears in the 
appendix.]
    The Chairman. Ms. Lee?

         STATEMENT OF THEA LEE, DEPUTY CHIEF OF STAFF, 
                    AFL-CIO, WASHINGTON, DC

    Ms. Lee. Good morning, Chairman Baucus, members of the 
Finance Committee. Thank you very much for the invitation to 
testify today on behalf of the 12.5 million working men and 
women of the AFL-CIO on the very important topic of the U.S.-
Korea Free Trade Agreement.
    I agree with Ambassador Marantis that the Korea Trade 
Agreement is potentially the most economically significant U.S. 
trade agreement negotiated since NAFTA, but I disagree somewhat 
on the exact kind of economic significance that it is likely to 
have.
    South Korea is a dynamic, industrial export powerhouse and 
a major trading partner for the United States, with a well-
developed industrial strategy and a domestic market that is 
highly protected from imports through a variety of measures, 
including both tariff and nontariff barriers.
    We run chronic and large trade deficits with Korea, mainly 
in autos and advanced technology products. Last year's deficit 
was about $10 billion, with our deficit in autos actually 
exceeding our overall deficit and the deficit in advanced 
technology products at $6.4 billion.
    The Korea FTA commits both countries to reducing their 
tariffs and some nontariff barriers over a period of several 
years, but it also contains major new protections for 
multinational corporate investors in the areas of investment 
policy and services.
    It is our view that the combination of increasing 
investment protections for multinational corporations, locking 
in lower tariffs while, despite the best efforts of our 
negotiators, leaving in place many nontariff barriers--or at 
least leaving open the possibility that new ones will be put in 
place and will be hard to address through the measures that are 
included in the trade agreement--those, taken together with a 
weak rule of origin that is included in the agreement, will 
likely lead to the loss of tens of thousands of good jobs in 
the United States, mainly in the manufacturing sector.
    The Economic Policy Institute has estimated that the loss 
of jobs could be on the order of 159,000 jobs, if in fact the 
post-FTA trade trends that we have had with past trade deals 
apply in the case of the South Korea trade agreement. We know 
that the ITC has a different view, has put forward different 
estimates, but we also have a lot of experience with ITC 
projections in the past, and in our view they have not been 
accurate. If you look back at NAFTA in particular and China's 
accession to the World Trade Organization, the ITC projections 
were wildly inaccurate and in the wrong direction.
    Given the precarious state of our economy and our labor 
market in particular, this seems to us like bad timing and a 
bad idea, and we call on Congress to oppose the Korea trade 
agreement. We appreciate and very much welcome the Obama 
administration's important initiative to renegotiate the auto 
market access provisions of the agreement to address the 
lopsided bilateral trade in assembled autos between the United 
States and South Korea.
    While the newly negotiated auto provisions certainly 
represent a significant improvement over the earlier version of 
the agreement, they do not by any means address all the 
concerns we had raised with respect to market access more 
broadly, or with other parts of the agreement, namely the 
investment provisions and the rule of origin.
    Passage of the Korea trade agreement is often urged as part 
of the Obama administration's plan to boost job creation 
through increasing exports. While the AFL-CIO strongly supports 
the goal of increasing net exports, we do not believe that 
passage of the Korea trade agreement is likely to serve this 
end. As Paul Krugman, Nobel laureate, and others have pointed 
out, bilateral trade agreements do not in general lead to 
large, 1-sided increases in outward net exports, but rather 
growth in 2-way trade. This deal, in our view, is even more 
likely to result in a growing bilateral trade deficit.
    There are additional concerns that are addressed in my 
written testimony in much more detail. The need for a labor 
action plan as was negotiated with Colombia to bring Korea's 
labor laws into compliance with ILO standards prior to 
implementation of the agreement--and, if you read my testimony, 
there are some very significant areas in which Korea's labor 
laws fall short of international standards. These are areas 
that are very important to our Korean counterparts, the unions 
there, and that we would like to see addressed prior to 
implementation of the agreement.
    The second piece, the weak rule of origin, allowing, in the 
case of autos--which is one of our most important bilateral 
trade sectors--up to 65 percent of autos exported from either 
Korea or the United States to be foreign content. In the case 
of Korea, that is likely to be, a large part of it, from China. 
We think that on principle, the benefits of free trade 
agreements should go to the parties of the agreement that have 
signed the commitments on labor rights, intellectual property 
rights, investment, market access, reciprocal market access, 
and not to third parties, so we object to the weak rule of 
origin.
    We are concerned about the Kaesong Industrial Complex, the 
processing zone which is on the border between North and South 
Korea. I know there are provisions in the agreement to prevent 
products from Kaesong entering into the United States, but in 
my testimony I outline some of the concerns, because this is of 
enormous significance to us because the working conditions in 
Kaesong are among the worst in the world.
    Fourth, there are concerns with investment services, and 
also timing. I think it was just in the paper today that it is 
possible that the Korean parliament is not going to act on the 
Korea FTA for quite some time, and we think that is important.
    So let me just say in closing that we are concerned about 
doing anything that would put at risk good jobs in the 
manufacturing sector after so many years of devastating losses. 
We do look forward to working with the Congress, with this 
committee, with the administration to put forward a new trade 
model that would address these issues, and we also urge you, as 
you said, Chairman Baucus, in your opening remarks, to act 
expeditiously to pass the Trade Adjustment Assistance before 
the FTAs are put into place.
    I thank you for your time. I look forward to your 
questions.
    The Chairman. Thank you, Ms. Lee, very much.
    [The prepared statement of Ms. Lee appears in the 
appendix.]
    The Chairman. Senator Hatch has arrived. Senator, would you 
want to give your statement now?
    Senator Hatch. I will be happy to wait until after Mr. 
Guertin.
    The Chairman. All right.
    Mr. Guertin, you are next. Then we will turn to Senator 
Hatch.

  STATEMENT OF TIMOTHY GUERTIN, PRESIDENT AND CHIEF EXECUTIVE 
         OFFICER, VARIAN MEDICAL SYSTEMS, PALO ALTO, CA

    Mr. Guertin. Well, let me begin by thanking you, Senator 
Baucus, Ranking Member Hatch, and the members of the Finance 
Committee, for holding this hearing today on the U.S.-Korea 
Free Trade Agreement. My name is Tim Guertin. I serve as 
president and CEO of Varian Medical Systems. We at Varian 
strongly support the efforts to expand market access for U.S. 
medical device products abroad through new trade agreements.
    I am happy to summarize my written testimony, which has 
already been submitted to the committee.
    Varian Medical Systems is the world's leading producer of 
medical technology and software for treating cancer with 
radiation therapy, radiosurgery, proton therapy, and 
brachiotherapy. Varian's technology provides hospitals and 
clinics around the world with the tools they need to treat tens 
of thousands of cancer patients each day. We focus on three 
main areas of production: oncology systems, X-ray products, and 
security and inspection products.
    Varian manufactures 90 percent of our products in the 
United States--specifically in Utah, California, and Nevada--
and invests significantly in research and development in these 
States. Varian employs more than 3,000 people here in the U.S. 
and more than 5,500 people globally. The jobs created here in 
the U.S. are high-paying, high-quality jobs that depend on 
access to foreign markets. Often our technology is developed in 
conjunction with leading cancer institutes, such as the 
Huntsman Cancer Institute of the University of Utah, to create 
breakthroughs in cancer treatment.
    The advances we have created in cancer treatment and the 
superiority of our technology have spurred the demand for our 
products internationally. As a net exporter, 53 percent of our 
$2.4-billion business is exported. In addition, Varian's X-ray 
products business, headquartered in Salt Lake City, UT, is the 
premier independent supplier of X-ray tubes and flat-panel 
image detectors in the world.
    Nearly 700 employees in Utah work to produce X-ray products 
for many major diagnostic equipment manufacturers to be used 
for mammography and CT scanning, as well as industrial security 
screening and inspection equipment that helps facilitate trade 
through our ports and our land borders.
    While on a recent trade mission to the Republic of Korea, 
Commerce Secretary Locke and several members of Congress 
devoted time to seeing Varian's technology, treating cancer 
patients at Seoul National University Hospital. SNUH, a long-
time partner of Varian, provides some of the most cutting-edge 
cancer treatments available to those stricken with this 
terrible disease. The Varian linear accelerators that perform 
radiotherapy treatments at SNUH were manufactured in California 
and Utah, and then installed and serviced by a team of 
technicians in Seoul, providing jobs on both sides of the 
Pacific.
    Korea is an extremely important market for Varian, as well 
as other United States medical technology exporters. In fact, 
last year Varian had more than $34 million in orders from 
Korea. We were able to place Varian technology in the hands of 
oncologists in Seoul thanks to the existing beneficial trade 
relationship between the United States and Korea. Varian is 
very supportive of KORUS and the potential for an increase in 
exports and the related U.S. jobs it could sustain and create 
by expanding our market in Korea.
    We applaud the agreement for being the first free trade 
agreement to specifically address issues related to the medical 
device industry in distinct provisions of the agreement. KORUS 
outlines processes and procedures related to transparency in 
both the regulatory approval process and pricing of medical 
devices.
    Varian and other U.S. medical device companies will also 
benefit from the elimination of the existing tariff barriers 
that are currently in place for our technology. KORUS, when 
implemented, will eliminate an 8-percent tariff on Varian's 
exports.
    Without the KORUS FTA, U.S. medical device manufacturers 
are at a distinct disadvantage with respect to our foreign 
competitors, as other nations establish free trade agreements 
with Korea. This agreement also recognizes the importance of 
U.S.-developed intellectual property. Varian supports KORUS's 
provisions that set forth high standards for intellectual 
property protection. We are often disadvantaged in countries 
where the patent enforcement rules do not reflect the standards 
of protection found under U.S. law.
    It is my hope that patients in Korea and all over the world 
will continue to benefit from the collaborative innovation that 
occurs due to our mutually beneficial trade relationship. KORUS 
helps us in this effort by further opening the Korean market to 
U.S. exports of innovative medical technologies such as ours.
    Thank you. I would be pleased to answer any questions you 
might have.
    The Chairman. Well, thank you, Mr. Guertin, very much.
    [The prepared statement of Mr. Guertin appears in the 
appendix.]
    The Chairman. Senator Hatch?

           OPENING STATEMENT OF HON. ORRIN G. HATCH, 
                    A U.S. SENATOR FROM UTAH

    Senator Hatch. Well, thank you, Mr. Chairman. I welcome all 
of the witnesses here today. Today is the last of three 
hearings on our pending trade agreements. I want to thank 
Senator Baucus and his staff for the steadfast leadership that 
helped to get these agreements to where they are today.
    With today's hearing, we are one step closer to seeing our 
trade agreements with Colombia, Panama, and Korea become a 
reality. In many ways, the Korea FTA is the gold standard for 
trade agreements. This agreement levels the playing field for 
American goods and services in an economy worth over $1 
trillion. The FTA incorporates state-of-the-art intellectual 
property rights protections, significantly expands service 
sector market access, opens the large agriculture market, and 
offers new market access for American manufacturers.
    Now, this FTA adopts the most advanced regulatory nontariff 
barrier and investment provisions of any FTA and champions the 
rule of law which is so critical to an effective and fair 
rules-based trading relationship. The Korea FTA provides an 
impressive foundation upon which to build our future FTAs, 
including the Trans-Pacific Partnership.
    The administration has set a goal of doubling exports in 5 
years. Quick approval of this agreement will help us reach that 
goal. For Utah, South Korea is already an impressive market, 
importing more than $294 million of goods from Utah in 2009. 
Implementation of the agreement will help boost Utah's exports 
even more, as over two-thirds of our exports to Korea will 
become duty-free immediately, and it will help all other States 
as well.
    The sectors that will immediately benefit from the 
agreement's tariff cuts reflect Utah's economy, including 
computers and electronics, metals and ores, machinery, 
agriculture, and services. But the benefits of this agreement 
for Utah go far beyond just reducing tariffs. By adopting the 
strongest intellectual property rights, regulatory reforms, 
investment protections, and transparency provisions, the Korea 
FTA will ensure that Utah's companies, farmers, and workers 
realize the full potential of the South Korean market, as will 
every other State in the United States,
    By protecting the ideas of Utah's and other entrepreneurs 
in our society and providing a level playing field, Utah will 
be in a good position to double our State's exports again over 
the next 5 years.
    Now, I am very pleased that Tim Guertin would join us this 
morning. Tim is the CEO of Varian Medical Systems, a world 
leader in manufacturing medical devices and software. By 
protecting Varian's intellectual property rights as well as 
reducing tariffs and other barriers that inhibit Varian from 
selling its products in Korea, this FTA will strengthen Varian 
and its workforce. Varian employs workers around the world, 
including almost 700 in my home State of Utah, so I am 
especially interested to hear about how this agreement has 
impacted your company. I have been very interested in your 
testimony here today.
    As I noted earlier, today is our last hearing on the three 
pending trade agreements. Although the Korea FTA is certainly 
the most economically significant, it is critically important 
that the President submit all three agreements. Achieving 
approval of all three agreements remains my number-one trade 
priority. Why that has not yet happened remains a mystery to 
me. I do not understand the President's excuses for further 
delay.
    Lack of support is not the issue. Once submitted to 
Congress, these agreements will gain strong bipartisan support. 
Economic concerns are not the issue. We all agree that these 
agreements will provide a sorely needed economic boost to the 
economy and that, if we do not act, other nations will take 
these markets away from us.
    Foreign policy is not the issue. We all agree that 
Colombia, Panama, and South Korea are key regional allies and 
that approving these agreements will help strengthen our 
alliances. Yet, the President will not submit these agreements 
to Congress. Now, let us be clear. Failure to submit the 
agreements cedes foreign markets to our competitors. Failure to 
submit these agreements sends a chilling signal around the 
world that the United States may not be a trusted ally on 
trade.
    Failure to submit these agreements is tantamount to a 
failure in leadership. Further delay imperils the recent gains 
made toward consideration of the pending trade agreements. If 
we do not have the opportunity to vote on these agreements this 
summer, I am afraid we never will.
    So, Mr. Chairman, please do not let the summer slip by--or 
Mr. President. And the chairman, too. But Mr. President in 
particular, do not let the summer slip by before sending these 
agreements to Congress. The American people and our allies, I 
do not think they can wait any longer. So, we need to do this.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator. We will do our best to 
make sure they do not slip by. That could be very unfortunate.
    Senator Hatch. I know you will.
    The Chairman. This is the opportunity that we are looking 
for.
    [The prepared statement of Senator Hatch appears in the 
appendix.]
    The Chairman. Ambassador Marantis, as you well know, I 
condition my support on the Korea FTA on our getting better 
access for American beef in Korea. I worked hard to get that. I 
thought it was very important, for several reasons. One is 
because, at an earlier date, Korea did agree to much greater 
access, but then backed off. Second, our beef is safe. It meets 
scientific standards. If Korea agrees to take more beef, then 
that means we might have more leverage on China, Japan, and 
other countries to also take American beef, which meets 
scientific standards.
    So could you tell us, please, the degree to which you think 
this agreement will help U.S. beef exporters in Korea?
    Ambassador Marantis. Thank you, Chairman Baucus. A lot of 
us here ate a lot of delicious Montana beef last week at Big 
Sky at the APEC conference. This agreement is terrific for U.S. 
beef in that it will reduce the 40-percent tariff progressively 
over a period of 15 years and will allow, as Errol said, our 
ranchers and our exporters to build on the impressive growth in 
sales to Korea of U.S. beef, which grew by 140 percent last 
year.
    But we share the concern, Senator Baucus, that you raised 
with respect to achieving full access, not just in Korea, but 
also throughout the region, including in China and Japan. That 
is why Ambassador Kirk sent you a letter committing to request 
consultations with Korea under the 2008 protocol to discuss its 
full application once the FTA enters into force. We thank you 
for all of the work that you have done and look forward to our 
continued cooperation together.
    The Chairman. Thank you.
    I want to also thank Mr. Rice and the Montana Stockgrowers, 
because not all organizations were as vigorous and as forward-
leaning as the Montana Stockgrowers in getting agreement by the 
administration to pursue greater access through both seeking 
the consultations once the agreement is admitted into force--
looking toward full access, all ages, all cuts--and also the 
roughly $11 million in beef promotion. So I would just be 
interested in your reaction of the degree to which you think 
this is going to help American beef producers. I am also 
interested in your point about traceability, perhaps marketing 
and getting a brand, of course of Montana beef, in Korea.
    Mr. Rice. Well, again, Chairman Baucus, I would echo the 
sentiments of Ambassador Marantis in thanking you for your 
tenacious insistence on getting a beef deal as we move this 
agreement forward. The importance of this beef deal really 
benefits me as a 5th-generation rancher. It benefits all the 
Montana ranchers that you are very well-acquainted with in 
investing in Korean consumers to showcase the healthfulness and 
the quality of our high-quality Montana and U.S. beef products.
    As the ambassador had articulated, the phasing out of the 
40-
percent tariffs on our products allows us to now take that $200 
million that we were paying in tariffs and allows us to 
reinvest that back into the Montana family farms and ranches to 
ensure long-term sustainability for meeting this global food 
security challenge, which was a very evident theme at the 
recent APEC conference in Big Sky, MT. As you are well-aware, 
Chairman Baucus, the average age of the rancher in Montana is 
57.8 years old, and we have to find opportunities to reinvest 
back into the next generation, into the fabric of rural 
Montana.
    With regards to the traceability comments, we believe that 
we have private sector solutions that can help us move this 
traceability discussion forward as we continue negotiations 
with China. We believe that this, in the form of a public/
private partnership, can really move us forward, and we would 
be eager to work with you and your staff on some ideas that we 
had in moving that forward.
    The Chairman. That sounds pretty interesting. As a matter 
of fact, it sounds exciting. When you mentioned that I thought, 
hey, this is something new, something great. I think it would 
really advance the ball. I want to work with you to help make 
that happen.
    Mr. Rice. Absolutely. Absolutely.
    The Chairman. Thank you very much.
    Ms. Lee, I know you are opposed to this agreement. Are 
there some good points to this? What about the labor 
provisions? Are they not a little stronger? Don't they have to 
be negotiated out before the agreement is fully entered into 
force? Does that help?
    Ms. Lee. Thank you, Chairman Baucus, for the question. We 
certainly did support the improvements in the labor and 
environment chapters that were incorporated into the Korea 
agreement, the May 10th deal, which did strengthen the 
commitments that both countries made to meeting the ILO 
standards, making sure that they are enforcing their labor laws 
effectively and that they are not weakening their labor laws in 
order to increase trade or attract investment.
    So those are important provisions. However, we also have 
said, and we said at the time that those were negotiated, that 
it is important that countries bring their labor laws into 
compliance by ILO standards prior. The labor chapter is not 
that powerful a mechanism; it is not going to completely change 
or overhaul a country's labor laws unless we want to be 
bringing challenges on day one of entering into the agreement.
    So we would like to see good faith on the part of the 
Korean government to address some of the concerns, particularly 
with respect to irregular workers and with the jailing of 
workers who exercise their right to demonstrate or to strike 
under obstruction of business penalties. So there are certain 
key issues that are problematic that we would also like to see 
our government build on and strengthen the May 10 provisions, 
particularly with respect to enforceability and dispute 
resolution.
    The Chairman. All right. But, as with Mr. Guertin--my time 
is up and I am not asking for a response--these FTAs do help, 
say with respect to Varian, enforcement of intellectual 
property provisions compared with no FTA, for example. I would 
assume the same is also true of the labor provisions. If we did 
not have these labor provisions compared with no FTA, workers' 
rights in Korea would be less protected than they are with the 
agreement. I assume that is correct?
    Ms. Lee. Yes. It is an improvement over the status quo.
    The Chairman. The status quo. Yes.
    Ms. Lee. But it comes in a package with market access and--
--
    The Chairman. And it could be better. All right. Thank you.
    Senator Hatch?
    Senator Hatch. Well, thank you, Mr. Chairman.
    I appreciate all of you and your testimony here today.
    Ambassador Marantis, I hope you would agree with me that 
the deficit and our Nation's debt pose a fundamental risk to 
American prosperity and our future. I hope you would also agree 
with me that our dire fiscal picture demands sacrifices across 
programs and across the government so that we as a country can 
again live within our means. I think you would agree with that.
    Ambassador Marantis. Yes.
    Senator Hatch. All right.
    I also hope you would agree with me that, unlike in 2009 
when a Democratic Congress and the Obama administration were 
focused on stimulus programs and increased spending, today the 
Congress and the administration recognize that we have a 
spending problem, although we may disagree on the solution.
    So, as we wrestle with getting our spending under control 
and approach the debt ceiling limit, all programs and all 
spending, it seems to me, have to be examined carefully to 
protect the taxpayers and to ensure that every program achieves 
its purpose in the most cost-effective manner or be considered 
for elimination.
    Now, should the TAA program be treated differently than the 
rest of the government spending programs? Should it not be 
subject to restraint of growth and cuts as well?
    Ambassador Marantis. Senator, the TAA program has been an 
incredibly cost-effective program for helping workers manage 
the transition to globalization and helping workers train to be 
able to take advantage of the opportunities presented in the 
new economy.
    Senator Hatch. Well, fine. But don't you think that that 
should be a subject of examination and restraint of growth and 
cuts if necessary, just like everything else has to be?
    Ambassador Marantis. The administration strongly supports 
renewal of the 2009 TAA program which, when it was negotiated, 
was designed to address many of the concerns that the GAO and 
others had raised about the 2002 program. So the administration 
is very comfortable working with Congress to seek renewal of 
the 2009 program.
    Senator Hatch. Well, Ambassador Kirk is fond of reminding 
us that extending a robust TAA program keeps faith with the 
American workers. Which American workers? Exactly which workers 
is Ambassador Kirk talking about, and how does piling on more 
debt keep faith with American workers, all of whom are going to 
be taxed more? And what about the workers who lose their jobs 
due to lost export opportunities caused by further delay in 
implementing the Korea agreement? Does such a delay keep the 
faith of those workers, farmers, and ranchers and others who 
will benefit from this free trade agreement?
    Ambassador Marantis. Sir, regardless of whether or not we 
pass or do not pass a trade agreement, globalization continues. 
Trade marches on, and employment patterns shift. That is why it 
is important that we have a robust TAA program in place, 
because it helps workers manage that transition should their 
jobs move or should they lose their jobs because of increased 
imports.
    It has been an integral part of the bipartisan trade 
consensus since 1963, over successive Republican and Democratic 
administrations and successive Republican and Democratic 
Congresses, and we are anxious to work with you and Chairman 
Baucus to ensure renewal of TAA consistent with the objectives 
of the 2009 program.
    Senator Hatch. Well, it seems to me that TAA has nothing to 
do with these free trade agreements. These three agreements are 
going to produce jobs in this country, and they are going to 
produce wealth in this country, and they are going to help us 
to do better in this country. People have opportunities because 
of them.
    Ambassador Marantis. Senator, these agreements are 
incredible job-creating and job-producing agreements.
    Senator Hatch. Right.
    Ambassador Marantis. But again, regardless of whether or 
not the FTAs go into force, the forces of globalization and the 
forces of job churn exist. That is why it is so important that 
we get TAA renewed to help workers manage the transition that 
happens.
    Senator Hatch. Well, I would appreciate it if we could get 
some exact figures of who is going to be hurt by these three 
trade agreements. I do not see anybody going to be hurt. I 
think we only benefit from these trade agreements. It seems to 
me, to hold them up because of TAA--now, it may be very 
important to pass TAA. It may be that you can make a tremendous 
case for that, and that labor can make a tremendous case for 
that. I do not know.
    But it does not appear to be a reason to stop these three 
trade agreements, other than you would use these three trade 
agreements as leverage. That is a heck of a way to treat our 
allies, these hemispheric partners of ours who are so 
important, especially when you consider there is as much as $13 
billion in positive trade through these three trade agreements.
    So it is hard for me to understand why the big fight over 
these three trade agreements. That does not mean that you could 
not make a case that we are losing jobs, but we are going to 
lose a heck of a lot of jobs if these agreements do not go 
through. I think the administration ought to take that into 
consideration.
    Ambassador Marantis. Senator, we are as anxious as you are 
to move these agreements as quickly as we can, given the great 
job----
    Senator Hatch. But you are holding them up because of the 
TAA, and TAA does not seem to apply in these three instances. 
Now, why would we not go after American jobs and worry about 
TAA, if it is legitimate, at a later date? Then I think you 
might be able to make a pretty good case. Why do we not work on 
that separately? I am not against that. I am certainly against 
it with regard to these three free trade agreements. Why would 
we not do that?
    Ambassador Marantis. Senator, we are anxious to move 
forward on a comprehensive trade agreement, a trade package, as 
quickly as possible, that includes the FTAs, TAA, and renewal 
of our expired trade preference programs as well, and we are 
anxious to work with you as quickly as possible to accomplish 
all of those goals which are fundamental to the President's 
trade agenda.
    Senator Hatch. But you cannot do it if we do not pass these 
free trade agreements. You cannot get there.
    Ambassador Marantis. I think we can work together and work 
on all of these issues, and do so in tandem. As we proceed on 
the trade agreements, we can proceed on TAA, and we can proceed 
on renewing our expired trade preference programs. We hope to 
work very closely with you and Senator Baucus, congressional 
leadership, and the Ways and Means Committee to accomplish 
those objectives.
    Senator Hatch. My time is up, Mr. Chairman.
    The Chairman. Thank you, Senator.
    And I might say, my view is that, either they all pass, or 
none of them passes. That is because we have Republicans and 
Democrats, we have the House and the Senate, and it is a 
compromise, I think, that is necessary. It is going to be all 
or nothing. I am not going to get into the sequence yet because 
that has to be worked out, but I do think generally, 
generically, they all have to pass this year.
    Senator Carper?
    Senator Carper. Thanks, Mr. Chairman.
    To our witnesses, welcome. You have all done an exceptional 
job in presenting your testimonies today. Thank you so much for 
those testimonies and for being here.
    I just want to say, in response to the comments raised by 
our ranking Republican, Senator Hatch, the reason why, Senator, 
I think it is important for us to more or less do these 
together is, there is a fair amount of job creation that is 
going to inure to us in this country from the adoption of an 
agreement like this. There are going to be some people who are 
going to be displaced, and there are going to be some people 
whose economic future will not be brightened.
    In the spirit of the Golden Rule, treating other people the 
way we want to be treated, I think we have an obligation to 
those people to say, we are not forgetting you. We are not 
going to throw you under the bus; we are going to take your 
interests and your families' interests in consideration to make 
sure we look out for you, too. So, I would just lay that at 
your feet.
    A friend of mine, a guy named Clyde Prestowitz, who is 
actually from Elsmere, DE, a trade economist--some of you know 
him--spoke to a group of us a couple of years ago about free 
trade agreements. He told us a story of talking to one of his 
counterparts in South Korea who was complaining about some of 
the provisions in the then-agreed to free trade agreement 
between the U.S. and South Korea. And Clyde Prestowitz, my 
friend, said to his South Korean friend, ``What are you 
complaining about? You will find a way to get around these 
provisions anyway.'' The guy from South Korea thought about 
this for a minute, and he said, ``Yes, you are right.'' That is 
what he said: ``Yes, you are right.'' How can we make sure he 
is not right?
    Mr. Ambassador, take it away.
    Ambassador Marantis. Senator Carper, he is not right. The 
trade agreement has extensive and robust provisions on dispute 
settlement that are designed to deal with any instance of non-
compliance. We negotiated--it was a difficult negotiation--with 
the Koreans, and they negotiated this agreement in good faith.
    I have every expectation that the Korean government will 
live up to the obligations that it committed to, and that, 
should there be a problem, we will enforce and we will use the 
provisions of the Korea-U.S. Trade Agreement's dispute 
settlement provisions to ensure that what we sign, those 
provisions are enforced and we get the benefit of the bargain.
    Senator Carper. All right. Thank you.
    Our chairman, Senator Baucus, focused a lot of his 
questions and comments on beef. Now, the old question, 
``Where's the beef?''--in Delaware and in Maryland and the 
Delmarva Peninsula, the beef is in poultry houses. The beef are 
in poultry houses. For every person who lives in Delaware, 
there are over 300 chickens. The same is true on the Maryland 
side of Delmarva.
    You mentioned in your testimony, Mr. Ambassador, 
immediately upon entry into force, the U.S.-South Korea Free 
Trade Agreement eliminates tariffs on two-thirds of American 
agricultural exports to South Korea. I am not going to ask 
about the beef, but I would certainly like to ask about the 
poultry.
    Ambassador Marantis. Sure, Senator Carper. The agreement is 
great for poultry. For, I think, our more important export to 
South Korea, frozen leg quarters, the agreement eliminates the 
20-
percent tariff in 10 annual increments over a period of 10 
years.
    Senator Carper. All right.
    How about the necks?
    Ambassador Marantis. Necks?
    Senator Carper. I am kidding. [Laughter.]
    It is the necks we are trying to sell. But people buy the 
claws, they buy the beaks, the feathers. We still have a hard 
time moving the necks. So, if you can find somebody around the 
world who wants that, we will say, God bless you. [Laughter.]
    I have a serious question. Not that poultry is not serious. 
A question on intellectual property. U.S. innovation is 
critical to keeping our business competitive and to creating 
jobs. In our global economy we face intellectual property 
challenges, as you know, which come at the expense of 
innovation and job creation.
    For this reason, many of us support high protection 
standards for intellectual property. I view the standards set 
forth in the U.S.-
Korea Free Trade Agreement and U.S. law as the foundation for 
intellectual property and trade agreements going forward. Many 
believe that the Trans-Pacific Partnership is a regional 
platform that could potentially expand to include China and 
India, making it critical that you continue to seek the highest 
intellectual property standards during the course of these 
negotiations.
    Just take a moment to explain for us what the U.S. Trade 
Representative is doing to ensure the negotiations for the 
Trans-Pacific Partnership agreement build off the intellectual 
property standards in the Korea-U.S. agreement.
    Ambassador Marantis. Thank you, Senator Carper, and thanks 
for pointing out the tremendous advances that the U.S.-Korea 
trade agreement makes in the area of intellectual property. It 
provides extraordinarily strong protections for all of our 
industries and should boost exports of our creative 
industries--agriculture, chemicals, pharmaceutical products, 
our famous brands--and there are a number of provisions in 
there that would do that.
    Going forward, with respect to the Trans-Pacific 
Partnership, we expect that whatever we negotiate in the TPP 
will be able to stand proudly alongside what we have done in 
the Korea agreement and in the Peru agreement, and in other of 
our trade agreements that have very high standard intellectual 
property protections.
    Senator Carper. All right. Well, stick with it.
    I want to say in closing, really, there was a time, I 
think, many years ago when, in all seriousness, the export of 
poultry was not a big deal. The poultry we raised on Delmarva 
was later exported around the country, later around the 
hemisphere. Now, one out of every five chickens that is raised 
in this country is exported, so it is a big deal for all of us. 
It is a lot of scratch, as we say in Delmarva.
    Thank you.
    The Chairman. Senator Kerry, your timing is perfect.
    Senator Kerry. Oh, Senator Cardin. All right. Senator 
Cardin, you are next.
    Senator Cardin. I thank Senator Kerry for allowing me to go 
so I can continue on the poultry industry in Delmarva.
    The Chairman. Why are you two down on the end like that? My 
gosh.
    Senator Cardin. Chickens of a feather flock together. 
[Laughter.]
    It is always wonderful to have my colleague promote 
Maryland poultry, so thank you very much. [Laughter.]
    I want to follow up. I want to talk a little bit about 
human rights, basic rights, and labor rights, because one of 
the only times that we can get the attention of our government 
officials on international labor issues is when we have an 
agreement before us. It seems like all of a sudden then there 
is a lot of interest.
    So let me follow up on the Kaesong Industrial Complex, 
because the labor practices there are horrible. As I understand 
it, money is paid to the North Korean government, and they pay 
a very small sum to the actual workers, and the conditions 
within the industrial complex are certainly not meeting any 
type of international standards.
    There is concern that products that are produced from the 
Kaesong Industrial Complex will end up coming into South Korea 
and then to the United States through this agreement. As part 
of the agreement, there is annex 22(b), I think it is, which 
allows a committee to establish these outward processing zones. 
What protection do we have in the agreement, and how do you see 
this being implemented, to prevent products made from the 
Kaesong Industrial Complex entering into the American market?
    Ambassador Marantis. Thank you, Senator Cardin, for that 
question. There has been, I think, a lot of confusion with 
respect to Kaesong. Let me be very clear: there is nothing, 
absolutely nothing, in this agreement that would allow products 
from Kaesong to enter into the United States. For that to 
change with respect to the annex that you talked about, 
Congress would have to pass a law, and the President would have 
to sign a law to change any tariff treatment that we would 
give.
    Senator Cardin. Why could the committee that is established 
under the annex not establish products coming in from this 
industrial zone as being part of the agreement?
    Ambassador Marantis. It can make a recommendation to both 
the United States and South Korean governments, and the two 
governments can make a recommendation, but, in order for that 
to be operationalized, Congress would have to pass a law. 
Congress has the final word here, and that is very clear.
    Senator Cardin. To make it clear, if we find any products 
that originate from the Kaesong Industrial Complex, it would 
violate the terms of this agreement, and you are prepared to 
take action under the agreement?
    Ambassador Marantis. Correct. It would not only violate the 
terms of this agreement, but it would violate the sanctions 
that we have against North Korea. We have very robust sanctions 
against North Korea that prohibit the direct or indirect 
importation of any good, technology, and service coming from 
North Korea unless there is a license granted by the Treasury 
Department.
    Senator Cardin. I know that agreement. I am familiar with 
that. You are saying, if we find any products that come in here 
from any zone with North Korea, it would violate the agreement 
and you are prepared to take action----
    Ambassador Marantis. Correct.
    Senator Cardin [continuing]. And that the annex does not 
change that at all?
    Ambassador Marantis. Correct.
    Senator Cardin. Fine. Thank you.
    Let me go to autos for one moment, because I looked at the 
numbers on autos today. The United States exports 6,100 cars 
and light trucks to Korea. They did that in 2009. Korea 
exported 475,000 cars to the United States. We are concerned 
with the point that Ms. Lee raised about content. Can you tell 
me, what do we anticipate the changes in the free trade 
agreement will mean for U.S. manufacturers in export access to 
the Korean market?
    Ambassador Marantis. Senator, we worked hard and concluded 
this agreement in December to address the key barriers that 
have obstructed the access of our auto makers into the Korean 
market, and we did so in a number of ways, including by 
addressing standards, by including provisions on safeguards, et 
cetera, and I am happy to go through that in detail.
    Senator Cardin. Have you been able to estimate what type of 
a market share you think the U.S. auto manufacturers would be 
able to export to?
    Ambassador Marantis. Yes, sir. The ITC, in response to a 
request from Chairman Camp of the Ways and Means Committee, has 
estimated that U.S. exports, as a result of what we did in the 
December 2010 agreement, would increase by 41 to 56 percent. I 
think what we did----
    Senator Cardin. Forty-one percent over the 6,100 cars?
    Ambassador Marantis. Correct.
    Senator Cardin. That is not very many cars.
    Ambassador Marantis. That is correct, sir. We have faced a 
number, a web, of tariff and nontariff barriers in the Korean 
market in the past. This agreement will open up that market, 
and we will be able to build our sales in that market. The Big 
Three are already planning their new sales and distribution 
networks in that market. What we did in the agreement, Senator, 
was so significant----
    Senator Cardin. Well, what period of time are we talking 
about, just so we have the time frame?
    Ambassador Marantis. What period of time?
    Senator Cardin. In what time are we going to get these 
increases in market share?
    Ambassador Marantis. We are going to start as soon as the 
agreement enters into force. It is not going to happen 
overnight. It is going to be a progressive increase in exports. 
I also want to make the point, Senator Cardin, that because of 
what we did in December, three unions--the United Auto 
Workers----
    Senator Cardin. I know they support it. But I am trying to 
figure out, if our expectation is that we are going to go from 
6,100 cars to about 9,000 cars and trucks, that is not very 
great.
    Mr. Chairman, with your indulgence, just for 30 seconds 
more, can Ms. Lee respond? Because I see she is anxious.
    Senator Hatch [presiding]. Go ahead.
    Senator Cardin. Thank you.
    Ms. Lee. I just wanted to say that, in terms of the 
increases, as you say, there is an increase in U.S. auto 
exports to Korea--about $194 million according to the ITC's 
study--but they also project that U.S. imports of autos from 
Korea will rise by $907 million. So, even with the improvements 
in the auto sector, there is a projection by the ITC--which is 
often overly optimistic and does not take into account the 
light trucks, which is where you could actually see some real 
job losses--of a $713-million increase in our net deficit in 
autos.
    Senator Hatch. Senator Kerry?
    Senator Kerry. Thanks very much, Mr. Chairman. I appreciate 
it.
    Ambassador Marantis, sort of picking up on the concern 
about the impact of this agreement and the potential impact on 
some of our workers, it is accurate, is it not, that if we did 
not proceed forward with this agreement, the Korea-E.U. 
agreement will take effect this summer, and won't the Korea-
E.U. agreement taking effect disadvantage American workers if 
we do not ratify this agreement?
    Ambassador Marantis. Absolutely, Senator Kerry. The Korea-
E.U. agreement takes effect on July 1. Once that agreement goes 
into effect, many of the advantages that would go to our 
manufacturing sector, our service providers, our farmers and 
ranchers, the E.U. will start to benefit from. The longer it 
takes for us to ratify this agreement, the longer our E.U. 
competitors will have a competitive access to Korea's market.
    Senator Kerry. So, bottom line, if we are going to try to 
help American workers, we want to help them to be able to 
export and to get into the market. If we do not, I think 
American workers are going to be disadvantaged.
    Ambassador Marantis. I agree, Senator Kerry.
    Senator Kerry. Now, let me get to a second point with 
respect to that. I think Senator Hatch and others--I am not 
sure about Senator Hatch, but I know that there are others on 
the other side of the aisle who have expressed concerns about 
the trade assistance money being linked to this agreement and 
others.
    Now, I have supported trade agreements, recognizing that 
the changes in the marketplace also do create dislocations. I 
think you have to be blind if you do not acknowledge that, 
whether it is a call center or some other kinds of 
manufacturing efforts. While we open up markets and while we 
are able to create more net jobs, you have to acknowledge that, 
whether it is textiles in some parts of the country or other 
things, some workers suffer a dislocation, which is why we 
created Trade Adjustment Assistance in the first place. Is that 
a fair statement? Ms. Lee, you would agree with that.
    That said, I would say to my colleagues, the reason that it 
is so important to do the Trade Adjustment Assistance, and the 
reason that 19 Republican Governors have joined with Governors 
in writing to say we should do it, is just an honest 
recognition that it is to our benefit as a country to help 
those people who are suffering from that dislocation to be able 
to move into retraining, reeducation, further education, 
whatever it is that allows them to manage that dislocation and 
enter the marketplace.
    The reason, I would say to Senator Hatch and other 
colleagues, that that is so important is that the consensus 
that has existed in this country for doing trade and having 
these agreements has frayed somewhat. It has frayed because of 
the dislocation, but accompanying the dislocation has been a 
growing inequity in the market in America in terms of income 
and opportunity.
    So, if we are going to keep the consensus that says, yes, 
we benefit net by creating more jobs and we will export more 
and we will adjust our balance of payments and we will get all 
those benefits, we have to address that broad consensus and 
hold it together. That, it seems to me, is part of why Trade 
Adjustment Assistance is so important. I would like both you 
and Ms. Lee to sort of address that.
    One thing. I heard some people try to suggest that it is a 
union boondoggle. The money does not go to unions. Unions are 
representing workers, people, Americans. The money goes to 
those Americans to help them go to a school, or get vocational 
training, or something that helps them to go back and get a 
job.
    So I would like to put this into its proper perspective, if 
we can.
    Ambassador Marantis. Yes. Thank you, Senator Kerry. 
Building on that, two-thirds of the workers who benefit from 
TAA are non-union workers as well. But we agree. The 
administration fundamentally agrees that TAA is an integral 
part of the trade consensus. It has been since the program was 
created in 1963. It has evolved over the years to take into 
account developments in the economy.
    That is why, in 2009, TAA was extended to cover service 
workers and to deal with offshoring not just to our FTA 
partners, but to countries like China and India. We are 
committed to moving forward with a comprehensive trade agenda 
this summer. That includes our trade agreements, that includes 
Trade Adjustment Assistance, renewal consistent with the 
objectives of the 2009 program, as well as renewing our trade 
preference programs. We look forward to working with you and 
the committee to do so.
    Senator Kerry. Ms. Lee?
    Ms. Lee. Thank you, Senator Kerry. I totally agree with you 
that the whole point of Trade Adjustment Assistance is to deal 
with the churning that happens in the labor market as a result 
of globalization, and that, even if you believe that these 
trade agreements will, on net, create jobs, most economists--
every economist, I think--would agree that there are some 
workers who will lose their jobs and will be disadvantaged and 
who need the new skills to succeed in the global economy.
    And so, failing to renew TAA is, in fact, both morally 
wrong, but it is also economically inefficient, because we 
would squander one of our most precious resources as a country, 
which is our human capital, that we want every worker to be at 
his or her potential to be able to have the skills to compete, 
to look for new jobs, possibly to move to new parts of the 
country. That is what TAA has been. It has always been a 
bipartisan program. It has always had the support of business 
and labor.
    In fact, I just think it is unconscionable that TAA was not 
renewed several months ago, and we would not have to have it 
tied to the discussion of the trade agreements. It is something 
that any industrialized country, any civilized society, should 
put in place as a way of making sure that workers have every 
opportunity to fulfill their potential. Thank you.
    Senator Kerry. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Hatch. Well, thank you. Thank you, Senator Kerry.
    Let me just say that one of the problems is, TAA, as I view 
it, is not going to pass in this Congress. What I am having 
trouble with is stopping these three trade agreements when you 
know that it is not going to pass, especially in the form that 
you want it to pass in--7.2 billion bucks over 10 years. With 
the problems that our country has, I think, yes, there are a 
lot of people who will support it, but there is a real question 
whether--because Blockbuster went broke because its business 
plan was not as good as Netflix's, should all those people who 
lost their jobs hold up this particular agreement, or should we 
just face that problem separately? It is a tough problem. I 
think, Ms. Lee, you know that we do not have the votes in this 
Congress to do this. So why would we still hold up these 
agreements that mean a lot of jobs in America? That is one of 
the problems.
    Senator Grassley?
    Senator Grassley. Yes. Senator Kerry's first question on 
the interaction between our passage and what Europe has already 
done was the basis for my question, but I could follow up and 
ask the Ambassador and Mr. Rice if you could explain 
particularly the impact that it would have on agriculture if 
Europe would get there first.
    Ambassador Marantis. I am happy to, Senator Grassley. This 
is an amazing agreement for agriculture. Two-thirds of our 
agricultural exports will go to zero tariffs upon entry into 
force of the agreement. We talked a little bit earlier about 
why it is a good agreement for beef. It will remove the 40-
percent tariff on beef over the course of 15 years. For pork, 
which I know is very important to your State, 90 percent of 
U.S. pork exports will go duty-free in 2016; soybean exports go 
duty-free immediately; cotton exports go duty-free right away; 
wheat exports go duty-free right away. I can go on and on 
through many of the agricultural commodities to show why it is 
important.
    One other thing, Senator Grassley, to note is this 
agreement in agriculture levels the playing field. We currently 
face an average 52-percent tariff in Korea, where Korean 
exporters in the agricultural sector face an average tariff of 
9 percent. Entry into force of this agreement will level that 
playing field and will allow our farmers and ranchers to 
compete on the same playing field as their Korean counterparts.
    Senator Grassley. Before you answer, and for both of you as 
well, that is what it is when we get there. But let us suppose 
we get there 6 months or a year later than Europe does. Do you 
have any supposition that if we do not get there first, we are 
going to lose market permanently, or do you think it is just a 
temporary loss?
    Ambassador Marantis. I think the longer we delay, the 
harder it becomes to regain a competitive advantage. The E.U. 
agreement enters into force on July 1. That is why it is 
imperative that we move quickly here to get this agreement done 
so we do not suffer any competitive dislocations in the Korean 
market.
    Senator Grassley. Mr. Rice?
    Mr. Rice. Thank you, Senator. I would echo the Ambassador's 
statements with regard to running the risk of the E.U. getting 
there before us.
    We are very proud in Montana that we are able to send our 
high-quality feeder cattle to the farmer feeders in Iowa, where 
we feed outstanding Iowa corn. As the ambassador had mentioned, 
we had been facing a 40-percent tariff on beef exports into 
this country. We really value that $200 million in savings on 
tariffs to reinvest back into the family farms and ranches in 
Iowa, as well as the multi-generational family farms and 
ranches in Montana, because we see bringing this next 
generation back to the ranch as being critical. Exports drive 
profitability, and so the timing is so critical to move this 
forward.
    Senator Grassley. I will yield back the rest of my time, 
Mr. Chairman.
    Senator Hatch. Well, thank you, Senator Grassley.
    Let me just say this. This has been a good panel. It seems 
to me that all U.S. workers should be offered the training 
needed to compete in a global economy. I do not have any 
problem with that, but I fail to understand why we pick some 
workers to help over others. It just seems fundamentally 
unfair. But to extend the expanded TAA benefits to all workers 
would be prohibitively expensive, just as expanding into a 
larger subset of workers would be costly as well to the 
taxpayers.
    My problem is not so much helping people, my problem is we 
cannot get TAA through this Congress. You have just made a 
terrific case why we have to go ahead with these treaties 
regardless, because it means jobs, it means competitiveness, it 
means a United States advantage. It means help to our economy 
at a time that we need help. If it is held up because of an 
insistence to have TAA as a precondition when we cannot pass 
it, it seems to me that it is penny-wise and pound-foolish, and 
I think it is for labor as well.
    Be that as it may, I notice Senator Wyden is here. I will 
yield to him.
    Senator Wyden. Thank you very much, Senator Hatch.
    Let me ask a question for you, Ambassador Marantis. Let me 
start there. It is good to see you. To better understand the 
impact of the agreement--and, as you know, I chair the 
Subcommittee on International Trade and Competitiveness--I 
sought the help of the staff of the International Trade 
Commission. In 2007, the International Trade Commission found 
the agreement would have a pretty limited impact on job 
creation because the economic landscape in 2010 is profoundly 
different than it was in 2007. The ITC staff helped to 
determine that the decree of a free trade agreement has the 
potential to create about 280,000 new American jobs and boost 
U.S. economic output by $27 billion each year.
    I would ask Senator Hatch that this work by the 
International Trade Commission be made a part of the record.
    Senator Hatch. Without objection, it will be.
    [The memorandum appears in the appendix on p. 58.]
    Senator Wyden. At the same time, Ambassador Marantis, the 
projection showed that thousands of Americans currently 
employed in the manufacturing sector could lose their jobs. 
Obviously, with the kind of heartache all across the country in 
terms of working-
class families and this economy, you certainly cannot ignore 
those projections. Just as you do not want to ignore the up-
side and what is positive, you certainly cannot look the other 
way when you see those kinds of concerns about folks who could 
be harmed.
    So, Mr. Ambassador, let me ask you whether you have had a 
chance to look at that International Trade Commission document 
which reflects the analysis of the staff, and particularly 
whether the administration would largely agree with that 
analysis.
    Ambassador Marantis. Thank you, Senator Wyden. And thanks 
for your work with the ITC on that report. I mean, it was very 
heartening that, even though it is not an official ITC report, 
for us to see that it is consistent with our own analysis that 
the Korea trade agreement is going to support jobs throughout 
the economic sector.
    What is, I think, most interesting about your report is 
what you just said, Senator Wyden, which is that the ITC's 
analysis is done in a way that more closely approximates the 
economic conditions that we face today, one of higher 
unemployment and one of under-used capacity, and in doing so 
makes the analysis that the agreement will support an 
additional 280,000 jobs. That makes what the administration has 
been saying sound conservative, but it is indeed consistent.
    But you also point out, Senator Wyden, that, even though in 
every sector in your report it shows the possibility of the 
agreement in terms of creating jobs and in the various States 
around the United States, there are sectors where there may be 
potential employment dislocation, which I think again 
emphasizes the point of why it is so important that we 
reauthorize TAA consistent with the 2009 law as quickly as 
possible.
    Senator Wyden. Let me ask you about some of the areas where 
certainly folks in my home State are going to be concerned, but 
I think folks nationally. As you know, we have a lot of 
agriculture in our State, and the numbers look pretty good 
there. I mean, they look pretty impressive. We also have a lot 
of electronics. It is something I feel very strongly about. I 
feel very strongly about medical technology. I have worked 
closely with folks in that sector.
    The analysis does show that the American electronics 
industry in particular could suffer under this agreement. Those 
are folks whom I represent, Senator Merkley represents, who 
work hard. There has been a lot of change in that sector. What 
would be the administration's position about trying to help 
folks in that particular sector?
    Ambassador Marantis. I think, Senator Wyden, a couple 
things. One, there are going to be new export opportunities in 
Korea as a result of the agreement. I believe that 96 percent 
of Korea's tariffs on electrical products go to zero upon entry 
into force. But there are also interesting provisions in this 
agreement with respect to ensuring technological neutrality so 
that it would forbid Korea from mandating a particular standard 
that our exporters would have to use to send their high-
technology products into the Korean market.
    So I am hopeful that the combination of removal of 
nontariff measures, as well as providing duty-free access to 96 
percent of all electrical equipment products upon entry into 
force, should help.
    Senator Wyden. I think those certainly sound like 
constructive steps. Let us spend some additional time talking 
about it, because that is a very big concern for folks I 
represent.
    I want to spend one last minute on the question of Trade 
Adjustment Assistance. I appreciate your indulgence, Senator 
Hatch. I have done everything I can to support trade, and 
particularly an economic philosophy that says what we ought to 
be doing in this country is growing things here, making things 
here, adding value to them here, and then shipping them 
somewhere. That, in a sentence, tries to kind of capture what I 
think we ought to be trying to do more of in the American 
economy.
    And as part of that kind of philosophy, Trade Adjustment 
Assistance, to me, is absolutely key. Absolutely key. Because 
when we have an economy like this with constant change, which 
is what market economies are all about, Trade Adjustment 
Assistance is absolutely key. That is why I want to see Trade 
Adjustment Assistance locked in on the President's desk so that 
nothing can be done, with the way Congress works, to make it 
something that is put off until another day, and you have a 
trade agreement and no help for workers.
    What is the administration's position on making sure this 
actually gets signed into law before the trade agreements come 
up so we have that in place? I would like your thoughts on 
that, Ambassador. Then, Ms. Lee, if we could. I know you all 
feel strongly about it, and rightly so.
    So let us start with you on that point, Mr. Ambassador.
    Ambassador Marantis. Sure, Senator Wyden. As Ambassador 
Kirk said about a week, a week and a half ago, the 
administration does not intend to submit the implementing bills 
until we have a deal with Congress on renewing TAA consistent 
with the goals of the 2009 law. This is an integral part of the 
President's comprehensive trade agenda. We hope that we are 
able to move quickly on the FTAs, the pending FTAs, on Trade 
Adjustment Assistance, and on renewal of our trade preference 
programs, and are eager to work with you and members of this 
committee to do so quickly.
    Senator Wyden. My time has expired. I would only say on 
that point, what I am concerned with, and I note that your 
statement is a good-faith one, is, if we have a deal and one 
chamber passes it and another chamber does not, then we are 
sitting there with the workers unprotected and everybody says, 
oh, we ought to pass the agreement. So I want to give the last 
word to Ms. Lee, but I just think we have to have this iron-
clad, and it has to be signed into law so we do not play 
Russian roulette with the well-being of those workers who 
deserve those protections.
    If Ms. Lee could just answer, then I yield back. I thank 
you, Senator Hatch, for the time.
    Senator Hatch. Thank you.
    Ms. Lee. Thank you, Senator Wyden. And I completely agree 
with you that it is essential, before moving forward on the 
FTAs, that we make sure that TAA is done and is passed.
    I understand the point that you are raising, Senator Hatch, 
that there is not a lot of support for it this time. There has 
always been support in the past, and I would hope that, with 
the strong leadership of both the Republican and Democratic 
party, there will be enough support for a really great program 
like TAA, one that has served millions of workers over the 
years, to pass before it goes through.
    Just one last point on the ITC. We have had a lot of 
experience over the years, and I have had a lot of experience 
with the projections that have been made by various economists 
about the trade agreements. There are often odd things that 
happen, that there are shifts between trade with different 
sectors and trade with different countries. Even the ITC 
reports, I think, have a lot of oddities in them, so we do not 
put a lot of faith in those projections overall. Thank you.
    Senator Hatch. Well, let me just say this. I am one of the 
authors originally of the Job Training Partnership Act, and a 
whole raft of other bills that are supposed to take care of 
workers who lose their jobs and need retraining. One of the big 
problems why I do not think it will pass is because they want 
$7.2 billion, at a time when this country is basically broke, 
for additional programs that may be duplicative.
    Let me just put it in real terms, then I will turn to 
Senator Thune. That is, if one worker loses his job because his 
factory burns down and another worker loses his job because a 
domestic rival company out-performs his company, and a third 
worker loses his job because of a relocation of a factory 
abroad to serve rising demand in a foreign market, which worker 
deserves more training, more income support, and more generous 
health care credits than the other two? If you had to pick, it 
would be pretty hard to do.
    The point I am making is, if we cannot get TAA through 
because it is too expensive under current circumstances, why 
hold up three agreements that are going to mean all kinds of 
jobs to America? I mean, it just does not make sense. You have 
made a tremendous case that these agreements are critical to 
jobs. It just does not make sense to me. But that does not mean 
we should not work to help those who are in need, those who 
need training and so forth. But we have programs already in 
existence. Now, some of them apply perfectly, others do not.
    But the fact is, some people think you are holding up--the 
administration is holding up--these trade agreements that could 
mean so much to workers in this country and to this country's 
economy at this time, to world affairs, just because the left 
wants you to do so. Well, that is a real problem to me because 
I think we ought to get these agreements through no matter what 
and then work on these other problems as we go along.
    Senator Thune, you are next.
    Senator Thune. Thank you, Mr. Chairman. I could not agree 
more with what you just said. I will associate myself with 
those comments. These trade agreements are critical to the 
economy, they are critical to jobs and export markets, which is 
something that is important--very important--to my State of 
South Dakota.
    South Dakota is the Nation's sixth-largest exporter of 
wheat and eighth-largest exporter of soybeans, and, under this 
agreement, an unlimited amount of U.S. wheat for milling can 
enter Korea duty-free immediately upon implementation. Korea 
also would immediately eliminate its 5-percent tariff on food-
use soybeans.
    The American Farm Bureau Federation estimates that U.S. 
agricultural exports are increased by as much as $1.8 billion 
every year due to this agreement. It has been almost 4 years 
since this U.S.-Korea agreement was signed, and we just cannot 
afford to wait any longer. So, I would echo what you have said, 
Mr. Chairman, in your comments and just urge the administration 
to work with us here to get this ball rolling.
    There was a letter recently signed by 25 Governors, a 
bipartisan letter to the President, in support of these pending 
trade agreements and TAA authorization, but it also included a 
call for TPA authority. I am wondering if, in a trade package, 
whether some of these other things should be included and 
accompanying these free trade agreements, with the 
administration's support, including Trade Promotion Authority.
    Ambassador Marantis. Hi, Senator. Thanks for that question. 
At this point the administration has been pretty clear that we 
support moving forward quickly with the pending trade 
agreements, with Trade Adjustment Assistance, and with renewal 
of several of our expired trade preference programs.
    Senator Thune. But not TPA.
    Ambassador Marantis. Not at this point.
    Senator Thune. Is TPA important to the administration's 
stated goal of doubling exports in 5 years?
    Ambassador Marantis. I am sorry. Can you repeat that?
    Senator Thune. Well, I just say, is Trade Promotion 
Authority important to the administration's stated goal of 
doubling exports over the next 5 years?
    Ambassador Marantis. At some point we are going to have to 
take a very close look at how we deal with Trade Promotion 
Authority as we advance our negotiations in the Trans-Pacific 
Partnership, but right now we are really focused on getting 
these three FTAs done, as well as Trade Adjustment Assistance 
and our expired trade preference programs.
    Senator Thune. I have a question that has to do with a 
company in my State. But South Korea has a $580-billion 
services sector, including financial services. I understand the 
one aspect of this agreement that is new and ground-breaking 
relates to cross-border data processing. For example, 
Citigroup, whose credit card operations are based in Sioux 
Falls, SD, has commented that these rules allow data processing 
support for Citigroup's operations in Korea to be based outside 
Korea, perhaps back in the United States. Can you comment on 
the importance of ensuring that our trade rules keep up with 
the ever-changing technology, and these data processing 
provisions in particular?
    Ambassador Marantis. Yes. I mean, the services commitments 
in this agreement are pretty incredible in that, as you said, 
they will really provide new market opening to Korea's $580-
billion services market in the financial services sector, in 
the express delivery sector, for information and computer 
services. As you have said, Senator Thune, we try to keep up 
with developments in the economy by ensuring that the 
commitments that we negotiate in our trade agreements do do 
things that are important to our businesses to be able to 
compete in the 21st-century economy.
    Senator Thune. All right.
    Mr. Rice, your testimony notes that Korea is already one of 
the largest export markets for American beef and that this 
agreement will result in $325 million in tariff reductions once 
the agreement is fully implemented. But of course, tariff 
reductions will not be of much use if our exports are kept out 
of the Korean marketplace due to regulations that are not based 
on sound science. I know that ensuring that Korea's beef 
regulations are based on sound science has been a high priority 
for Chairman Baucus. It is also something that is important to 
a lot of us who represent livestock-producing States.
    Could you expound upon your testimony regarding some of the 
innovative approaches that the U.S. beef industry has 
undertaken to deal with some of the requirements that are 
imposed by nations such as Korea?
    Mr. Rice. Yes. Absolutely. Thank you for your question, 
Senator Thune. And, among the other many high-quality 
commodities that come from your State of South Dakota, cattle 
is also one of them. The ranchers I represent in Montana enjoy 
a plentiful exchange in interstate commerce with South Dakota 
in feeder cattle and high-quality seed stock as well. So I 
appreciate your question. In my testimony, you are right, these 
exports have estimated adding $145 per head to South Dakota 
farmers and ranchers, as well as Montana farmers and ranchers.
    While we will see exceptionally good phasing out of the 40-
percent tariffs and the added value in dollars that we feel we 
can save in what we are paying in tariffs right now on beef, we 
can reinvest that back into South Dakota farmers and ranchers, 
as well as Montana farmers and ranchers, and the fabric of 
rural America. It also speaks to the sound science, which 
Chairman Baucus has been insistent on, putting forth a deal 
that will have consultations on the science involved that are 
based upon international standards so that we can get to a 
rules-based system.
    One of the things that I also mentioned in my testimony is 
the element of traceability. When we were locked out of a 
number of the Pacific Rim markets after BSE in 2003, 
traceability really emerged as a market force to qualify cattle 
under age and source conditions that would provide a steady 
flow of cattle to enter those expanding markets as we began to 
grow back into South Korea, back into Japan. Those technologies 
are still very real today. They are putting more premiums in 
producers' pockets, and we feel very strongly that those 
technological innovations can help to expand other market 
access opportunities like China, where traceability is a hang-
up right now for beef.
    Senator Thune. All right. Good. Thank you.
    Mr. Chairman, my time has expired. I want to thank our 
panel for their good comments.
    Senator Hatch. Well, thank you so much.
    I just have one last question for you, Mr. Guertin, and 
then we will close down the hearing.
    Now, it is clear to me that Varian's medical and security 
products are highly complex, they are scientific, technical, 
and of course very precise types of equipment. And you said, if 
we do not pass these free trade agreements--specifically Korea 
is the one you mentioned. Let us say that we do pass them. 
Would these types of jobs that you are talking about, would we 
increase the number of jobs at Varian?
    Mr. Guertin. Thank you for the question, Senator. Yes. Our 
hope is that these kinds of agreements will increase our 
ability to do business with countries like South Korea that 
will offer us protections, will enable us to compete with other 
nations. It has been mentioned, a number of our competitors are 
E.U.-based competitors, so we do not want to be disadvantaged 
versus those competitors. If we have a level playing field, we 
will be able to sell more to South Korea.
    Frankly, most of the world is very under-equipped with 
medical devices. These kinds of agreements are crucial to us in 
order to place our high-technology components in those 
locations.
    So I do not anticipate any reduction in U.S. jobs for our 
industry associated with this; I anticipate an increase in the 
number of jobs associated with this.
    Senator Hatch. Well, thank you. I think each of you has 
added a lot to this testimony today, and I appreciate it 
personally and wish we could solve these problems. I would do 
almost anything to get them solved. But I think the 
administration has to work to get these issues resolved, 
because we need to pass these three trade agreements. And this 
is just a preliminary step to a lot of others that mean a lot 
more jobs. I think each one of you at the table would benefit 
greatly if we can pass these three trade agreements. I am going 
to do everything I can to get them passed. But we want to thank 
you for taking the time to be with us today.
    With that, we will recess until further notice.
    [Whereupon, at 11:44 a.m., the hearing was concluded.]
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