[Senate Hearing 112-769]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-769
 
                     PRESIDENT'S 2012 TRADE AGENDA

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


                                HEARING

                               before the

                          COMMITTEE ON FINANCE

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 7, 2012

                               __________

                                     
                                     

            Printed for the use of the Committee on Finance




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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...................     3

                         ADMINISTRATION WITNESS

Kirk, Hon. Ronald, U.S. Trade Representative, Executive Office of 
  the President, Washington, DC..................................     5

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baucus, Hon. Max:
    Opening statement............................................     1
    Prepared statement...........................................    33
Grassley, Hon. Chuck:
    Prepared statement...........................................    35
Hatch, Hon. Orrin G.:
    Opening statement............................................     3
    Prepared statement...........................................    36
    Letter from Senator Hatch to Secretary Geithner and 
      Ambassador Kirk, dated September 28, 2011..................    39
    Letter from Senator Hatch to Secretary Geithner and 
      Ambassador Kirk, dated January 18, 2012....................    40
    Letter from Secretary Geithner and Ambassador Kirk to Senator 
      Hatch, undated.............................................    42
Kirk, Hon. Ronald:
    Testimony....................................................     5
    Prepared statement...........................................    44

                             Communications

American Apparel and Footwear Association (AAFA).................    49
Business Roundtable..............................................    54
Center for Fiscal Equity.........................................    61
Pharmaceutical Research and Manufacturers of America (PhRMA).....    66
U.S. Chamber of Commerce.........................................    74
U.S.-China Business Council (USCBC)..............................    86

                                 (iii)


                     PRESIDENT'S 2012 TRADE AGENDA

                              ----------                              


                        WEDNESDAY, MARCH 7, 2012

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:05 
a.m., in room SD-215, Dirksen Senate Office Building, Hon. Max 
Baucus (chairman of the committee) presiding.
    Present: Senators Wyden, Menendez, Carper, Cardin, Hatch, 
Grassley, Roberts, and Thune.
    Also present: Democratic Staff: Russ Sullivan, Staff 
Director; Amber Cottle, Chief International Trade Counsel; Hun 
Quach, International Trade Analyst; Gabriel Adler, Senior 
International Trade and Economic Advisor; and Chelsea Thomas, 
Professional Staff. Republican Staff: Chris Campbell, Staff 
Director; Everett Eissenstat, Chief International Trade 
Counsel; Paul DeLaney, 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 committee will come to order.
    Winston Churchill once said, ``Success is not final.'' Last 
year was a banner year for trade. We passed 3 free trade 
agreements to open new markets for U.S. exporters. We renewed 
Trade Adjustment Assistance to help U.S. workers retrain for a 
global economy. We renewed two important preference programs to 
lower costs for U.S. manufacturers and retailers.
    We achieved great success, but we cannot let this success 
be final. We must press for continued success in 2012. An 
aggressive trade agenda is key to creating good jobs, including 
agricultural jobs in my home State of Montana. Export-related 
jobs pay 13 to 18 percent more than the national average.
    Concrete goals will ensure continued success. We should set 
3 major trade goals for 2012: (1) approving permanent normal 
trade relations with Russia; (2) concluding the Trans-Pacific 
Partnership negotiations; and (3) addressing the challenges 
posed by China.
    First, we must seize the opportunity provided by Russia's 
entry into the World Trade Organization. Russia is now the 6th-
largest economy in the world and growing fast. Russia's GDP is 
expected to surpass Germany's by 2029, and Japan's by 2037.
    For U.S. companies to take advantage of this growing 
market, Congress must repeal the Jackson-Vanik Amendment and 
establish permanent normal trade relations with Russia, known 
as PNTR.
    PNTR is a 1-way street. Passing PNTR would double U.S. 
exports to Russia in 5 years, and we give up nothing in return. 
Not a single U.S. tariff will be reduced as part of this deal. 
If we do not pass PNTR by this summer, United States companies 
will lose out to competitors in China, Europe, and the 150 
other members of the WTO.
    As our economy continues to recover, we simply cannot let 
that happen. I traveled to Russia last month, and I saw a 
country with vast potential for U.S. business. I also saw a 
country with a troubled democracy and human rights record. I 
heard about the importance of PNTR from some unexpected 
sources, namely democracy, human rights, and transparency 
activists.
    The activists all have serious concerns about Russia, but 
they all support PNTR. They explain that PNTR is no gift to the 
Russian government; to the contrary, they explained, repealing 
Jackson-Vanik weakens the ability of the hard-liners in Russia 
to rally anti-American forces. Repealing Jackson-Vanik will 
open Russia to U.S. companies and promote competition, 
openness, and transparency. I look forward to working with you, 
Mr. Ambassador, and my colleagues to repeal Jackson-Vanik this 
summer.
    The second ambitious goal that we should meet this year is 
the conclusion of the Trans-Pacific Partnership, or TPP, 
negotiations. The TPP provides a tremendous opportunity to tie 
together and expand trade among some of the most dynamic 
economies in the world.
    Japan, Canada, and Mexico now want to join the 
negotiations. Adding these countries would increase the number 
of TPP consumers by 50 percent. With their inclusion, the TPP 
would account for a full 40 percent of the world's GDP.
    I know you are examining whether these countries are ready 
to quickly accept the high-standard commitments of the TPP. I 
look forward to consulting with you on that question. I hope 
that our new FTA partners--Colombia, Panama, and South Korea--
are added to the list of potential TPP entrants as well.
    Our third goal for 2012 must be meeting the challenge of 
China. China is the 2nd-largest economy in the world, and the 
3rd-largest destination for U.S. exports. It is a country 
exploding with potential for U.S. companies and their workers, 
but the challenges that China poses are also real.
    Senator Grassley and I requested a study that uncovered $50 
billion of U.S. intellectual property stolen in China each 
year. China's under-valued currency also continues to cost U.S. 
jobs. Too many Chinese imports to the United States are dumped 
or subsidized. It is past time to address these problems.
    A recent World Bank study outlined a series of dramatic 
steps that China should take to reform its own economy. They 
include shifting away from market-distorting policies that 
favor state-owned enterprises in China and harm U.S. exporters. 
I know you know all about this study, Mr. Ambassador, and I was 
briefed by Mr. Zoellick, the World Bank president, about it.
    What is important to me about this is that China requested 
the study. China knows that it has to be thinking ahead. China 
is a virtual partner in this study. There are five very 
significant recommendations, as you know, that the bank made to 
the government of China as to how to modernize its economy. I 
think it is a good framework for us to utilize as we are 
talking with China.
    China's new leaders, I think, should heed this advice. But 
we cannot simply wait for China to act, we must obviously take 
steps here at home. The Interagency Trade Enforcement Center 
that the administration recently announced is an important step 
in that direction, and I hope the Senate will further enhance 
USTR's effectiveness in dismantling trade barriers in China and 
around the world. This has been USTR's core mission from day 
one. No agency is better positioned to perform this role than 
the USTR.
    I look forward to working with you, Mr. Ambassador, and 
also with other government agencies to address these important 
challenges that China poses. So let us heed Mr. Churchill's 
advice and remember that ``success is never final.'' Let us 
build on the bipartisan trade successes of last year, and work 
together on even greater trade successes this year. By so 
doing, let us work together to create the jobs our economy 
needs right now.
    [The prepared statement of Chairman Baucus 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. Welcome, Mr. 
Ambassador. I appreciate the work you do. Mr. Chairman, I want 
to thank you for holding this hearing. Our economy demands a 
robust international trade policy, and my hope is that this 
hearing will contribute to the continued development of that 
agenda.
    To grow our economy and access new customers abroad, we 
need a trade policy that truly opens markets to U.S. goods and 
services. Trade already accounts for approximately 14 percent 
of our Nation's GDP, and we have yet to reach our full 
potential.
    In 2011, our Nation's exports totaled nearly $1.5 trillion. 
In 2010, companies from my home State of Utah exported over 
$13.8 billion in goods alone to countries around the world. 
Last year, President Obama finally sent to Congress our long-
stalled free trade agreements with Colombia, Panama, and South 
Korea. Congress readily approved them. As a result, the 
American worker can soon harvest the market access 
opportunities that they bring.
    These are positive developments, but the fact remains that 
President Obama delayed sending the agreements for years, while 
he pursued what we consider to be a misguided health care law, 
and other domestic spending programs.
    Now that the trade agreements are law, President Obama is 
eager to take the credit. Yet it is important to remember that 
it was President Bush's vision of an aggressive market-opening 
U.S. trade policy that made all 3 trade agreements possible to 
begin with.
    President Bush believed strongly in the power of trade, and 
matched his belief with action. He relentlessly pursued Trade 
Promotion Authority and, once achieved, quickly negotiated 12 
free trade agreements with 17 countries. Even U.S. 
participation in the Trans-Pacific Partnership, which some view 
as President Obama's signature trade initiative, was actually 
initiated by President Bush and his team in 2008.
    The United States needs that same level of commitment and 
leadership from our President today if we are going to create 
the framework for prosperity tomorrow. Our workers and job 
creators face significant and growing challenges in the world. 
There are over 300 trade agreements in force around the globe, 
but the U.S. is a party to only 14.
    China has been growing at an average rate of between 8 and 
10 percent for many years, and several studies project China 
will surpass the United States as the world's largest economy 
over the next decade. Meanwhile, the U.S. economy is projected 
to grow at around 2.3 percent this year, too low to have much 
impact on the persistently high unemployment rate we have 
suffered under this administration.
    Unfortunately, instead of the strong leadership and bold 
trade vision that America needs to grow the economy, our 
President is satisfied with just nibbling at the edges of a 
comprehensive and coherent trade agenda. I think it is time to 
move past the achievements made possible under Trade Promotion 
Authority of 2002 and move forward with a new trade agenda of 
substance to address the opportunities and challenges the world 
presents now.
    Mr. Ambassador, I believe you are willing to do that, and I 
have great respect for you in that regard. The President's new 
legislative trade priority, securing permanent normal trade 
relations with Russia, is, in my opinion, a poor substitute.
    The President would have the Congress pass PNTR and ignore 
Russia's rampant corruption, theft of U.S. intellectual 
property, poor human rights record, and adversarial foreign 
policies for a market that amounts to 0.05 percent of U.S. 
exports. Moreover, it is a market we will have access to 
anyway, on an MFN basis under the terms of our 1992 trade 
agreement, once Russia joins the WTO.
    I just wish the President and his administration were 
straight with us and the American people. We hear a lot of 
rhetoric about how the President will only pursue trade 
policies consistent with his values, especially when it comes 
to the labor policies of our democratically elected friends in 
Latin America. But somehow those values vanish in the context 
of trade with Russia, a corrupt and autocratic regime.
    A quick review of the Obama administration's other trade 
priorities reveals a similar lack of substance and vision. The 
President's most recent executive order, creating an 
Interagency Trade Enforcement Center, an event Ambassador Kirk 
called the most significant commitment of resources and 
expertise devoted to trade enforcement in 50 years, appears to 
do nothing more than detail personnel from one agency to 
another, while replicating the core statutory mission of the 
Office of the U.S. Trade Representative. At the same time, the 
President seeks to end USTR's special role in trade policy 
through a trade agency reorganization, ending 50 years of 
achievement by a talented, nimble, and effective agency.
    Now, we need less hyperbole and more concrete action. We 
can start with Trade Promotion Authority. I was quite disturbed 
to hear comments that the President will seek TPA when he 
decides that he needs it. TPA is not something the President 
asks for after an agreement is negotiated.
    TPA establishes the foundation upon which trade agreement 
negotiations and meaningful consultation take place. Article 1, 
section 8 of the Constitution vests Congress with the authority 
over tariffs. Absent congressional delegation of that 
authority, and consensus directives through TPA, the President 
has no authority or guidance from Congress upon which to 
negotiate.
    Federal Register notices and staff-level meetings are not a 
substitute for TPA. Moreover, many of the elements of the 
current Trans-Pacific Partnership negotiation do not reflect 
congressional directives.
    Finally, few countries will conclude a meaningful trade 
negotiation with the United States unless the President has the 
authority to negotiate through TPA. But TPA will not become law 
without sustained engagement by the President in a substantive 
and meaningful way.
    Now, I do appreciate the President's interest in concluding 
the Trans-Pacific Partnership agreement, but unless this 
administration engages with Congress on TPA, and soon, I fear 
that this important initiative will fail under the weight of 
empty rhetoric without action, and that the American people 
will be left with an Obama trade policy that is really nothing 
more than false hope.
    One final point. I did write you and Secretary Geithner 
about trade and currency policies on September 28, 2011 and 
January 18, 2012. I might mention, the administration has not 
responded to either letter. The American people have a right to 
know what the Obama administration position is on currency. 
Therefore, I would ask that both my letters be placed into the 
hearing record at this point, and that the administration 
response be included in the record when it is received, Mr. 
Chairman. I thank you for this time.
    The Chairman. Without objection.
    [The letters appear in the appendix on p. 39.]
    [The prepared statement of Senator Hatch appears in the 
appendix.]
    The Chairman. Ambassador Kirk, you know the drill. It is 
all yours. Welcome. We welcome you before the committee. I 
personally think you have done a great job. I know you work 
very hard on behalf of the United States with respect to other 
countries. You have a small, nimble agency which I think 
increases its effectiveness, and I appreciate all that you have 
done.

   STATEMENT OF HON. RONALD KIRK, U.S. TRADE REPRESENTATIVE, 
       EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON, DC

    Ambassador Kirk. Mr. Chairman, thank you for your kind 
words. It has been a privilege to work with you and the other 
members of this committee. I very much appreciate the 
opportunity to visit with you today about our 2012 trade 
agenda.
    As you referenced in your remarks, Mr. Chairman, it was a 
little over a year ago that we shared with you our commitment 
to advance the trade agreements with Korea, Colombia, and 
Panama, to work with you to renew Trade Adjustment Assistance, 
as well as extending our trade preference programs.
    At that time some, frankly, questioned whether our efforts 
were taking too long, or if we were seeking too much. But 
working with you and other members of Congress, all of this and 
more was accomplished last year. Together, we did the hard work 
necessary to pass these measures on one historic evening, and 
we built what I believe is a new bipartisan template for trade 
policy that opens markets and levels the playing field for 
American businesses, workers, farmers, ranchers, manufacturers, 
and service providers.
    This year, with your help, we will advance another 
ambitious trade agenda, and I would like to highlight just a 
few of our key initiatives from the President's trade policy 
agenda for 2012.
    First, as you noted, the recent U.S.-Korea trade agreement 
will enter into force on March 15th. At the same time, we 
continue to work diligently with the governments of Colombia 
and Panama to fulfill their commitments, so that those 
agreements can come into force as soon as possible, as well.
    We are also moving full speed ahead in our negotiations in 
the Trans-Pacific Partnership. Building on the broad outlines 
of the announcement last November at APEC by our leaders, we 
seek to conclude a landmark TPP agreement this year. It will 
address cross-cutting issues, such as promoting regulatory 
coherence among our partners, and participation of more small 
businesses in Asia-Pacific trade, as well as regional supply 
chains that promote U.S. jobs.
    As we consider the entry of additional countries, we will 
continue to coordinate closely with you to ensure that any new 
participants meet the TPP's high standards and address concerns 
raised by you and other stakeholders.
    As we move toward negotiating outcomes, the administration 
will explore issues regarding additional Trade Promotion 
Authority necessary to approve the TPP and future trade 
agreements. This year we will continue our efforts to have even 
tougher trade enforcement, which has been a priority for the 
Obama administration from day one.
    Our new Interagency Trade Enforcement Center will challenge 
even more aggressively the kinds of unfair trade practices that 
USTR fights fiercely every day, from China's improper 
restrictions on industrial raw materials to improper subsidies 
by the EU and other partners.
    As we consider enforcement, I want to especially thank this 
committee for working together to defend the rights of U.S. 
workers and businesses who face unfairly subsidized imports 
from countries like China, and you stood up for them by working 
to pass, in a bipartisan manner, legislation to address the GPX 
lawsuit.
    This year we are also ready to seize the benefits and 
enforcement tools available to the United States as Russia 
seeks and prepares to join the World Trade Organization. To do 
so, we must work together to terminate Russia's Jackson-Vanik 
status as soon as possible. Only then will American firms enjoy 
the same benefits of Russia's WTO membership as our 
international competitors.
    President Obama's pursuit of enhanced trade to support 
American jobs extends across all geographic regions and all 
major economic sectors. At the President's direction, we are 
engaged with the European Union to deepen our trans-Atlantic 
trade relationship, and we are also eager to work with Congress 
to make immediate progress with sub-Saharan Africa as well as 
CAFTA countries on issues like third-country fabric and 
textiles and apparel rules of origin.
    At the World Trade Organization, we will continue to look 
for fresh, credible approaches to market-opening trade 
negotiations in the Doha Development Round, and along with it 
plurilateral options such as services. Working together, we can 
stay on track to meet the President's goal to double U.S. 
exports and support more jobs for more Americans. I appreciate 
your thoughtful consideration of these critical issues and your 
continued support of a forward-leaning, job-creating trade 
agenda.
    Thank you.
    [The prepared statement of Ambassador Kirk appears in the 
appendix.]
    The Chairman. Thank you, Mr. Ambassador.
    I would like to talk a little bit about Russia PNTR. What 
benefits will U.S. companies receive when Russia joins WTO?
    Ambassador Kirk. First of all, I appreciate your comments 
in your opening remarks, Mr. Chairman. I would associate myself 
with all of them.
    Were we to not address the Jackson-Vanik application of 
Russia, we would be limited to those benefits per our bilateral 
agreement, but we would lose all of the ability to enforce them 
and hold Russia accountable to the commitments it is making as 
a member of the World Trade Organization.
    If we act as you have suggested, and we agree to lift the 
Jackson-Vanik restrictions and extend to Russia permanent 
normal trade relations, then our exporters, our farmers, and 
ranchers not only have the benefits of the tariff cuts, but 
more important, we have the ability to hold Russia accountable 
when they do not live up to those commitments.
    The Chairman. Now some people say, if the United States 
grants PNTR to Russia, the United States is giving something to 
Russia, when in fact the opposite is true. That is, if we 
repeal Jackson-Vanik and Russia joins the WTO, the Duma passes 
it, then frankly we will be getting something. That is, the 
United States' people will be getting the benefits of the WTO. 
Whereas, if Jackson-Vanik is not repealed, the United States is 
not getting the benefits of Russia's entrance into the WTO. Is 
that correct?
    Ambassador Kirk. That is absolutely correct. Mr. Chairman, 
your expression of it as a 1-way street is exactly correct. 
Russia is reducing their tariffs, bringing them down to the 
norms. The United States has to make not one single change in 
our laws, our tariffs, or duties. If Russia moves into the 
World Trade Organization and we do not act, then our exporters 
are going to be at a competitive disadvantage. This is 
decidedly in our interests to address this.
    The Chairman. Can you tell me, are Jewish groups in Russia 
in favor or not in favor of the repeal of Jackson-Vanik?
    Ambassador Kirk. Well, Mr. Chairman, you have the advantage 
of having been to Russia more recently than I have. I am a bit 
hesitant to try to speak on behalf of a group as broadly as all 
Jewish groups in Russia. I will say many of those who advocated 
for Jackson-Vanik at the time, both in Russia and here, feel 
that it served its purpose.
    Jackson-Vanik was about allowing Russian Jews to be able to 
emigrate more freely from that country. I am told some 2, 
almost 2.5 million Jews have now had that ability to do that, 
and they are living in Europe, the United States, many in 
Israel. So in some cases, Jackson-Vanik has served the purpose.
    The Chairman. It is my very strong impression that Jewish 
groups are in favor of repeal. I talked with a fellow, Rabbi 
Goldstein, who is one of the chief rabbis in Russia, and he 
told me he very strongly favors repeal of Jackson-Vanik. He 
even said to me, ``Senator, we will be your foot soldiers in 
the United States. I will organize in the United States, 
because it is just very important that Jackson-Vanik be 
repealed.''
    What about human rights groups? Human rights groups, for 
some time, have been using Jackson-Vanik as leverage. Is it 
your understanding that human rights groups in Russia favor or 
do not favor repeal of Jackson-Vanik?
    Ambassador Kirk. My sentiment is similar to what you 
expressed. While there are still very serious concerns about 
human rights and a more full seeding of democracy, they see the 
lifting of Jackson-Vanik--and frankly, Russia being a part of a 
rules-based system--as aiding that, as not being contrary to 
our broader concerns about human rights.
    The Chairman. All right. Now, I see Senator Cardin here. He 
and other Senators have raised various very important concerns 
about the Magnitsky case in Russia. That is, where a lawyer, 
Magnitsky, died while in prison. He could well have been 
murdered while he was in prison. My question is, when we 
address this issue of repealing Jackson-Vanik, there are some 
very serious issues the United States has with Russia. This is 
one. How do you suggest this be dealt with?
    Ambassador Kirk. Well, I believe we can do both. Senator 
Cardin has spoken out very strongly on this. I think, as you 
know, Senator, his concerns are shared by the administration. 
First of all, the administration has acted. The State 
Department's policy right now is to deny visas to those who 
were involved in the torture or abuse of other human beings.
    This administration--President Obama issued an executive 
order that accomplishes, for the most part, what Senator Cardin 
is seeking to do by his legislation. But, as you have noted, I 
think we have to move on parallel tracks. We will continue to 
engage and press Russia on issues of human rights, but when it 
comes to Russia's entry into the World Trade Organization, 
which they will do later this summer, it is equally important 
that we lift the Jackson-Vanik restrictions so that our 
farmers, ranchers, and businesses are not put at a competitive 
disadvantage.
    The Chairman. It is a very vexing question here, and that 
is Russia's providing arms to Syria. That is pretty serious. 
Should that get in the way of repeal of Jackson-Vanik?
    Ambassador Kirk. Senator, I do not want to sound 
insensitive. We are very concerned, and I know the 
administration has spoken very critically of Russia's actions 
with respect to Syria, but I believe this Congress can address 
all of those, and do them on parallel tracks. It is still the 
responsible thing to do, to move as you suggested and lift 
Jackson-Vanik and grant Russia permanent normal trade relations 
status.
    The Chairman. Senator Hatch?
    Senator Hatch. Well, thank you, Mr. Chairman.
    Welcome, Mr. Ambassador. We appreciate you being here 
today. USTR's fiscal year 2013 budget justification states, 
``In fiscal year 2013, USTR will be finalizing the legal text 
of, and seeking congressional approval for, the first tranche 
of the TPP agreement, the President's signature trade 
initiative, and is expected to begin integrating additional TPP 
members, including Japan, Canada, and Mexico, in what would be 
cumulatively the single-largest trade agreement initiative by 
trade volume in U.S. history.''
    Now, according to this statement, the administration 
intends to complete the TPP negotiation and get it approved by 
Congress before Japan, Canada, Mexico, or any other country, 
joins. Is that correct?
    Ambassador Kirk. Well, our first objective, Senator Hatch, 
is to complete work on the text--which was the directive our 
leaders gave us in APEC--and see if we cannot get that done 
this year. We welcome the expression of interest by Japan, 
Canada, and Mexico in particular. If you will recall, part of 
our rationale for moving forward with the TPP negotiations is, 
we see it as an open architecture.
    We believe this can be the vehicle by which we rationalize 
trade throughout the Asia-Pacific, but I want to be careful. I 
do not know that we have made a final decision that we have to 
conclude before we welcome others, but we want to make sure 
that any new partners understand the standards and objectives 
that we are attempting to achieve in the Trans-Pacific 
Partnership, and that they are willing to meet those standards 
before we bring them into the process.
    Senator Hatch. It also appears from this statement that 
President Obama has already decided to integrate Japan, Canada, 
and Mexico into the TPP. Now, that is correct, is it not?
    Ambassador Kirk. We have not predetermined anything. We 
very much welcomed their expression of interest, but as we have 
noted, and in working with this committee, we have a very 
defined process by which we work with you, and House Ways and 
Means and others, to make a determination for entering FTA 
negotiations with any partner. We have begun that process, but 
we want to work through that process before we make a final 
judgment.
    Senator Hatch. All right. Does the administration plan on 
concluding the TPP, the President's signature trade initiative, 
without TPA?
    Ambassador Kirk. Well, we are working diligently, as you 
have noted, to try to conclude work on the text of the 
agreement. We will also engage with Congress on the steps that 
we would need to implement a new Trade Promotion Authority, not 
only for TPP but for others.
    But we believe not having TPA right now does not hinder 
those negotiations. We are proceeding as if we have had it. As 
you have referenced, we have had, Senator, almost 350 
consultations with Congress, so there are no surprises here, 
but we believe we can move forward on a parallel track.
    Senator Hatch. My staff is ready to sit down with your team 
to start negotiating the terms of the TPA today. Can we get 
those negotiations started on that basis?
    Ambassador Kirk. Senator, we are pleased, and we welcome 
you and your staff's strong interest on this. At the 
appropriate time, we will be more than happy to sit down with 
you and other members to begin to develop the outlines of Trade 
Promotion Authority.
    Senator Hatch. All right. As you know, Mr. Ambassador, 
trade enforcement is a high priority for Senators on both sides 
of the aisle here in the Senate. This committee worked for 
years with USTR to ensure that American interests are defended 
and our agreements enforced.
    I am very troubled, however, that the pattern of the 
President's trade policy by press release continues unabated. 
The creation of the Interagency Trade Enforcement Center is, in 
my opinion, a perfect example.
    Now, the ITEC was touted in the State of the Union address 
and promoted in multiple press releases and press calls with 
senior officials. Such a high public profile makes one think 
that the creation of ITEC is an event of great significance. In 
fact, during one of these press briefings, you yourself called 
the ITEC ``the most significant commitment of resources and 
expertise devoted to trade enforcement in more than 50 years.''
    Now, despite deploying senior political officials to do 
press calls, no one from your office or the administration has 
offered to brief any Senator on this committee or our staff 
about this new initiative, not before, during, or after its 
creation. Now, is this what the President means by 
``unprecedented congressional consultations''?
    Ambassador Kirk. Senator, I very much respect and 
appreciate your support for our trade initiatives. But I would 
have to note that, from the very beginning of the first trade 
agenda that we presented to this committee in 2009, the Obama 
administration made it plain that we believed, in order to get 
the American public back on board with our trade strategy, we 
could not just focus on negotiating FTAs, we had to be more 
faithful to enforcement.
    I would submit, respectfully, that we have a stronger 
record on trade enforcement than any administration over the 
last 20 or 30 years. The President gave notice to the Congress 
that he wanted to address enforcement in his State of the Union 
address, that we were going to make this a priority.
    We have visited with a number of members of Congress and 
your staff on this, and we are moving forward with what I 
believe is an appropriate and a thoughtful approach to bringing 
all of our resources together so that our enforcement 
activities are not hindered, or at all slowed down, by a lack 
of resources.
    Senator Hatch. Well, my concern is, why no consultations on 
the ITEC? There have not been any consultations.
    Ambassador Kirk. Well, we have just created the ITEC, and 
we will be happy to continue to work with this Congress. But 
the President has made it known: we will not yield in our 
responsibility to stand up for the rights of American workers 
and manufacturers and farmers, and we will continue an 
aggressive trade enforcement policy to effectuate that.
    Senator Hatch. My time is up, Mr. Chairman.
    The Chairman. Senator Wyden?
    Senator Wyden. Thank you, Mr. Chairman.
    Ambassador Kirk, it is good to see you. Thank you for 
always being so accessible. As chairman of our subcommittee 
here, our Trade Subcommittee, it has always been easy to get in 
touch with you, and I appreciate that.
    I want to start my questioning with the Anti-Counterfeiting 
Trade Agreement matter that you and I have been discussing. 
This, of course, is an international accord that seeks to 
establish online intellectual property rights and disciplines 
in the intellectual property rights area.
    As we have talked about, many in our country believe that 
it raises many of the same issues that have been on the table 
in what is called the Protect IP Act, and also the SOPA 
legislation, the Stop Online Piracy Act.
    Now, right before the hearing, the Obama administration 
sent me a letter indicating that they believe the agreement is 
legally binding, and that, of course, is in line with the 
conversation that you and I had late yesterday. So, I 
appreciate that.
    Let me turn now to some of the implications, since the 
administration has now--and it has been a long time in coming; 
we have been talking about that--finally articulated a position 
that the administration considers the agreement legally 
binding.
    So my first question is, if I and my colleagues here in the 
Senate pass legislation to enhance competition and innovation 
on the Internet that runs contrary to the provisions of ACTA, 
could ACTA party nations retaliate against the United States or 
sue us in international court if we pass legislation like that?
    Ambassador Kirk. Well, Senator, first of all, thank you for 
your strong interest in making sure the United States has the 
strongest intellectual property rights protection for our 
industries, since I think we all understand a critical part of 
our competitiveness lies in our innovation, and we have to 
combat piracy and theft of that innovation around the world. 
That is singularly what ACTA was designed to address.
    It would be difficult for me to answer a complete 
hypothetical on what other countries would do, but I would say 
ACTA, as in any other FTA that we have entered, does nothing to 
constrain this Congress from continuing to pass legislation to 
regulate in the interest of the safety, the health, and 
protection of America's families and our economy.
    So, nothing in ACTA would constrain this Congress from 
acting in the future. If Congress were to address additional 
IPR protections, then at that time we would work with Congress 
to make sure that our international commitments are left in 
place, and advise what steps would be necessary to protect us 
then.
    Senator Wyden. Mr. Ambassador, respectfully, I differ on 
this point. It seems to me that this really boxes the Congress 
in on some very important questions with respect to promoting 
Internet freedom, and competition and innovation on the net, 
because the Congress is now going to have to sort of be looking 
over our shoulder with respect to whether or not we have done 
something that could cause an active party nation to sue us.
    So my question on this point is, all over the world you 
have parliaments and legislators having debates, the people's 
representatives, having debates on whether or not to pass ACTA. 
Why should the U.S. Senate not consider something like this? As 
you know, the traditional practice is, when something is 
considered a treaty, a binding agreement, it comes to the U.S. 
Senate. It comes to Chairman Baucus's committee. Why should the 
Senate not be debating and considering something like this?
    Ambassador Kirk. Well, Senator, we have had, I think, 
lengthy conversations with you and your staff, and I know you 
have written us, State, and others, and we have given you a 
written response to that. We believe it is a legally binding 
agreement, entered by the executive administration with the 
authority given by this Congress. It has been used by previous 
administrations to enter agreements where Congress has frankly 
asked us to act.
    You mentioned the 2008 pro-IP Act. In that legislation, 
Congress expressly directs the executive branch ``to work with 
other countries to establish international standards and 
policies for the effective protection and enforcement of 
intellectual property rights.'' So this agreement was entered 
into with the express direction of Congress to take these steps 
to make sure American innovation is protected around the world. 
I will draw----
    Senator Wyden. Just on that point, Mr. Ambassador. Millions 
of Americans e-mailed and called the Congress with respect to 
Protect IP, and it was withdrawn at this time.
    Mr. Chairman, I know I will have some additional questions, 
and I thank you for your courtesy.
    The Chairman. Thank you, Senator.
    Senator Carper?
    Senator Carper. Thanks. Thanks, Mr. Chairman.
    Mr. Ambassador, it is great to see you. The President has, 
I think, made a number of excellent appointments to his 
Cabinet, and I put you right at the top of the list. That is 
the good news. Unfortunately, I am the only one who feels that 
way. [Laughter.]
    Ambassador Kirk. I hope not, but thank you.
    Senator Carper. No. I think we all feel that way. Thank you 
for the good work that you and your team continue to do.
    Believe it or not, we make a whole lot of things in 
Delaware that are sold all over the world. You must think I am 
Johnny One-Note, because one of the issues I talk with you most 
about is poultry. I like to think our economy sort of stands on 
3 or 4 legs, including tourism, including agricultural, 
manufacturing, legal services. We have a lot of folks 
incorporated in our State. So, there is a lot of diversity to 
our economy.
    But our agricultural economy, which is pretty significant--
very significant, actually--is 80 percent poultry. So that is 
one of the reasons that I am always mindful in raising this 
issue with you, and your folks, and with Secretary Vilsack.
    You all have been great, very, very supportive, and we are 
grateful for the attention that the President and the Vice 
President paid to this. We are not the only State that raises 
chickens, but we have 300 of them for every person in Delaware, 
so it is a matter of special concern to us.
    I think until just a couple of years ago, Russia and China 
were the top two countries for U.S. poultry exports. For every 
five chickens that are raised in the U.S., we export one. If 
you go back 20 years ago, out of every 100, we exported three. 
So, there is a dramatic increase, I think almost a doubling of 
poultry exports just in the last 5 or 6 years. So this is a 
matter of interest to a bunch of States.
    But recently this has shifted as a result of factors 
including, as you know, Russia's ban on U.S. poultry a couple 
of years ago and China's imposition of unfair antidumping and 
countervailing duties. I really do appreciate the 
administration's work on both of these issues, most recently 
with regard to the dispute settlement process, and the matter 
with China.
    As you know, the poultry industry, as I said, is really 
important to us. We export not only out of the Delmarva 
Peninsula, but all over the country. One out of every five 
chickens that we raise, we send someplace else, we sell 
someplace else. So, it is really important to try to open new 
markets where we can.
    Many believe that one of the new markets that could be very 
promising is India, and I would welcome any thoughts that you 
have there. We are not allowed to sell much poultry into India, 
but it could be a huge market for us.
    But many believe that the Trans-Pacific Partnership 
agreement will set the standard for agreements going forward, 
making it of the utmost importance that we ensure poultry 
producers get a fair shot there.
    Last year, I believe Mexico was the 2nd-largest market for 
U.S. poultry exports. Number two. However, it has come to my 
attention that the Mexican government has brought an 
antidumping case against the U.S. poultry industry, which the 
industry asserts is frivolous. I would be concerned in 
supporting Mexico joining the TPP discussions, if they were to 
impose the established duties on U.S. poultry.
    I am just going to ask if you might provide us with an 
update as to any action we are taking to resolve this 
particular situation with Mexico, and also any thoughts you 
have on the export of poultry to India. Thank you.
    Ambassador Kirk. Senator, thank you for your comments about 
our work. I would say broadly, I think all of the members of 
this committee understand how extraordinarily important export 
markets are to all agriculture. It is the most export-dependent 
of any industry. The good news is, over the past 2 years, as we 
have sought to meet the President's goal of doubling exports, 
our agricultural exports are up dramatically.
    In fact, 2011 was a record year, just slightly under, I 
believe, $148 billion, and across the board. One of the reasons 
is that, as new consumers around the world have more money to 
spend, and they are moving from diets that may have consisted 
solely of rice and grains, they now have a need and a taste for 
protein. Typically they start with pork and poultry. So, this 
is significant to us.
    As you noted, we have challenged China's antidumping duties 
they placed on U.S. poultry in the WTO, and frankly just 
yesterday we requested consultations with India over actions 
they have taken to bar poultry in their market, for all the 
reasons that you articulated, and we continue to dialogue with 
Mexico over their actions.
    But I would note that still, as much as we are pursuing new 
markets, Canada and Mexico continue, in most cases, to be two 
of our best three trading markets around the world. But we will 
continue to aggressively work with our Secretary of Agriculture 
and others to make sure that we have access to these critical 
markets.
    Senator Carper. All right. Well, it is important to a lot 
of States, and especially to ours and to Delmarva as well. So, 
I would just say ``thank you'' for raising these issues with 
India, Mexico, China, and others. I would just urge you to, as 
we say in Delmarva, keep squawking.
    Ambassador Kirk. We will keep squawking. I would note 
though, again, this is another reason we believe getting Russia 
into the WTO would give us an advantage we do not have, because 
we would have the ability to challenge some of their 
agriculture policies we believe are not based on sound sanitary 
and phytosanitary practices.
    Senator Carper. Good. Good for you. Thanks so much. Keep up 
the good work.
    The Chairman. Thank you, Senator.
    Senator Roberts?
    Senator Roberts. Thank you, Mr. Chairman. Thank you for 
holding the hearing. Thank you, Mr. Ambassador, for taking the 
time out of your very valuable time. Thank you for emphasizing 
the increase in our exports. That is certainly good news, in 
keeping with world demand.
    I have a repeat question that Senator Hatch brought up. As 
usual, he was right on target. The administration having TPA 
before trying to initiate other trade negotiations, I think 
that would signal the administration's seriousness, not only to 
our TPP partners, but to the world, that the United States is 
ready to open markets for U.S. exporters regardless of where 
they are.
    Now, you said the administration will explore issues 
regarding additional Trade Promotion Authority necessary to 
approve the TPP and future trade agreements. What are we 
talking about? What issues do you expect to explore?
    Ambassador Kirk. Well, Senator, again, thank you for your 
strong support, particularly of our passing the trade 
agreements last year.
    One of the things we want to do is make sure that when we 
work with you, which we will to draft new Trade Promotion 
Authority, we are also addressing issues that are relevant in 
today's economy. For example, when we last had TPA, it did not 
envision, perhaps, some of the challenges that we are trying to 
address in the Trans-Pacific Partnership, of dealing with 
countries in which there is a predominance of state-owned 
enterprises or some of the issues that are imbedded in having a 
more digital economy and making sure that we have an open 
architecture for that.
    So we want to make sure that we engage with you on these 
next-generation issues so that it is broad enough that they can 
be addressed, not only in the Trans-Pacific Partnership, but in 
any future trade agreements we might see.
    Senator Roberts. Well, we look forward to working with you 
on that. I am sorry the Senator from Delaware has left, 
indicating he has 300 chickens for every American. I was going 
to ask him if they were free-range chickens, but that is 
another issue that probably we do not want to get into.
    At any rate, we have more cows than people in Kansas. They 
are in a better mood right now. You have the same thing in 
regards to Texas. Give me an update on China, Taiwan, and Japan 
in regards to beef exports. We have talked about poultry, and 
we have talked about pork. Let us move to beef. My cowboys want 
to know why we are not exporting to those three countries.
    Ambassador Kirk. Well, Senator, as you know, those are 
critical markets to us, and we have been struggling for almost 
10 years now to get back into that Asia-Pacific market. The 
good news is, our beef exports are up dramatically across the 
board, and particularly in Korea.
    We continue to work with this committee and others to get 
full normalization of our beef exports in all of those markets. 
So our objective for China, Taiwan, and Japan is no different 
than it is for other markets, and that is to have those 
countries allow our U.S. protein, which is some of the safest 
for consumers around the world, into those markets absent some 
sound scientific basis to keep it out of those markets.
    We have been pressing Taiwan and Japan in particular. I 
think you know we have pressed China. Secretary Vilsak and I 
have raised this at the highest levels. We are somewhat 
encouraged Japan is moving to a scientific study now to address 
some of the concerns we have raised, and hopefully we may be 
able to see some movement back into that market. We had what we 
thought was a common-sense agreement with Taiwan last year 
about this time, but as you know we retreated for them. But 
rest assured, this remains very high on our agenda.
    Senator Roberts. Well, I hope they can approach it with a 
sound science approach, as opposed to the political approach, 
which is very easy to do. I thank you for your cooperation with 
the Secretary.
    You have established--not you, but the administration has 
established--an Interagency Trade Enforcement Center. I thought 
that was brought up by Senator Hatch--and perhaps the 
chairman--and it was by executive order. If there is one thing 
I am a little fatigued about, it is basically that I am about 
executive ordered-out. This is a new enforcement unit. I do not 
know how many folks you have envisioned.
    I do not know if they have parking places, and if they are 
permanent, and everything else, but I always thought that 
basically you folks did that at USTR, and I do not know why 
establishing another layer by executive order, not even coming 
to this committee, will increase your ability to better 
coordinate with existing trade-related organizations. So what 
metrics support this conclusion, this demand for enforcement? 
Where is the reason for this, and how many folks are you 
talking about now?
    Ambassador Kirk. Well, currently USTR--thank you. I 
appreciate all of the members' comments about our work at 
USTR--the strength of it is, we are one of the smaller, more 
nimble agencies of government. But what I have heard from 
members on both sides of the aisle, and you have heard from the 
administration, is we all realize that just entering new trade 
agreements is only half the story. We have to make sure we get 
the full benefits of them.
    One of the things that this committee asked me to do, when 
I came before you for a confirmation, was to enforce our 
agreements. Now, we have done, I think, a more than commendable 
job in doing that at USTR. For example, we have doubled the 
number of cases we have brought against China. We have probably 
a 99-percent success rate on cases we bring at the WTO.
    But the President believes we should not be constrained 
from moving as aggressively as we can, not just against China, 
but any of our trading partners, to deal with subsidies, to 
deal with unfair competition. And so, as part of the outgrowth 
of this National Export Initiative, the President has directed 
all of us in the administration to work more closely together. 
That is what we are seeking to do through this Trade 
Enforcement Center, and it will make sure that we are not 
resource-constrained as we seek to deal with unfair trade 
barriers around the world.
    Senator Roberts. I appreciate your answer.
    Mr. Chairman, my time is up, but I would only say that, if 
Senator Coburn was here, he would point out that the GAO has 
identified 32 areas of duplication in your annual report, and 
it would seem to me that you could do the job at USTR. You have 
a great record going.
    I do not know why you have to add an additional marine 
grade, and then call them something else, and have them enforce 
it. You are doing it. If you need more people you ought to just 
do it under the USTR. Why, by executive order, are we doing 
this? You do not have to answer that. I think you have already 
tried.
    Thank you very much, Mr. Chairman.
    The Chairman. Thank you. Thank you, Senator.
    Senator Grassley?
    Senator Grassley. Mr. Chairman, I have a very short 
statement that I want to put in the record, then I will ask 
questions. Most of my statement is talking about the need for 
Trade Promotion Authority and that we need to be talking about 
that more.
    [The prepared statement of Senator Grassley appears in the 
appendix.]
    Senator Grassley. Ambassador Kirk, welcome. I have the same 
interest that Senator Roberts had about the coordinating 
committee, or whatever it is. But I would like to ask you in 
addition to what Senator Roberts did, do you have a recent 
example of where USTR, or another agency, has failed to 
properly coordinate the trade enforcement matter, that you have 
not had cooperation?
    Ambassador Kirk. It is not that we have not had 
cooperation, but I think it is a thoughtful, appropriate step 
by the President to make sure we are being as efficient as we 
can. I would say, in some of our cases in particular that 
involve countries in which we have to translate huge volumes of 
documents, and in particular where we have to gather a lot of 
information, given the size, the modest size of our legal staff 
at USTR, we have to be very discriminating in which cases we 
take.
    We have not in the past had translation services imbedded 
within our agency, so in many cases we are going to State and 
other agencies to get those. I think the President wisely 
brought all the agencies, whether it is the ITA at Commerce, 
elements of State, Agriculture, together to make sure we can 
work as cooperatively and efficiently as possible, and 
hopefully do it in a more cost-
efficient manner to the taxpayers.
    Senator Grassley. In regard to WTO and Russia, I will ask a 
question first, and then I want to say something about it. What 
assurances could you give me that the administration will 
succeed in getting an enforceable SPS agreement with the 
Russians on pork? You may recall that last year you and I 
exchanged issues on this. Quite frankly, I am surprised that 
this is still an issue.
    Unless I was misled, when Senator Leahy, I, and others were 
in Moscow last June, we discussed this with the Russian Foreign 
Minister. At that time there were meetings going on in Geneva 
over this issue, and of course Russia is very interested, at 
least it was under the previous administration, under Medvedev, 
to get into the WTO. So this is still an issue, evidently. So 
where are we on it?
    Ambassador Kirk. Well, as you know, because of the support 
of you and Chairman Baucus and many others and the leadership 
of our President, we are now in a position that Russia was 
formally invited to join the World Trade Organization at our 
8th ministerial meeting in Geneva in December. Russia will 
finalize their process of what they need to do, probably 
sometime this summer, they have told us.
    So specifically to address your concerns about SPS, unless 
the United States lifts the Jackson-Vanik restrictions and 
grants Russia permanent normal trade relations status, we will 
be in the unique position that we will have some access to the 
tariff reductions because of our previous bilateral treaty, but 
we will not have the benefits of any of the enforcement ranges.
    So, in order for us to address Russia's practices, for 
example, that you implied do not meet SPS standards, it is 
critical that we lift Jackson-Vanik and grant them PNTR so that 
we have full access to the range of enforcement tools that 
would be available through the World Trade Organization.
    Senator Grassley. So in other words, we are not going to 
get out of Russia agreements that they are going to abide by 
the normal SPS agreements? We are going to have to let them 
into the WTO and then take them to the WTO to get what we 
consider ought to be a level playing field, even for their 
entrance into the WTO?
    Ambassador Kirk. No. No, Senator. I want to make it plain: 
Russia is making those commitments as part of their accession 
to the WTO.
    Senator Grassley. All right. All right.
    Ambassador Kirk. Because we have Jackson-Vanik, we have had 
to invoke something called non-application, which means, if we 
do not lift Jackson-Vanik, then we do not have the benefits of 
those commitments that Russia has made. So, quite the contrary, 
they are making them, but for us to have the benefits of them, 
we need to grant them permanent normal trade relations status.
    Senator Grassley. My last question would be, is the USTR 
going to use the opportunity of high-level discussions with the 
EU to address some of the challenges that U.S. agriculture 
faces with the EU? And you are engaging in these high-level 
discussions right now with the EU.
    Ambassador Kirk. We absolutely will, Senator. Again, we 
appreciate your strong support of our efforts. We had a very 
good success as a result of these negotiations. I think 2 weeks 
ago we announced a reciprocal certification unit for organic 
products. We still have challenges because of Russia's 
renewable energy directive, and others.
    But, as part of this high-level working group, we are 
broadly having a discussion about all issues that would allow 
us to deepen our trade relationship, which by way of background 
is by far the strongest commercial relationship in the world.
    My directive to our team is that everything is on the 
table, but we should invoke the trade equivalent of the 
Hippocratic Oath and make sure we do no harm. But we are 
putting everything on the table.
    Senator Grassley. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Menendez? Oh, sorry. Senator Thune has returned. 
Thank you, Senator. You are next.
    Senator Thune. Thank you, Mr. Chairman. I want to thank you 
and the ranking member for having the hearing today. Ambassador 
Kirk, thank you for your willingness to testify.
    We all know how important trade is to our economy. Ninety-
five percent of the world's population lives outside the United 
States, yet we generate more than a fifth of the world's 
income.
    So the way to maintain that level of income is to continue 
to open up markets and expand the sale of American-made goods 
and services. I may not agree with every approach to trade 
advocated by the President, but I certainly believe that, 
working together, we can continue what I think is an incredible 
success story that is America's export economy.
    Just this week we saw--Chairman Baucus and I were able to 
work with our colleagues to get through the Senate something 
that--in a matter of days--is an important trade enforcement 
law, which around here, I might add, is warp speed. That does 
not happen very often. But I hope that the President will sign 
that into law, and I look forward to working cooperatively on a 
trade agenda moving forward.
    I wanted to highlight a couple of things quickly, if I 
might. The first is Japan's inclusion, and the potential 
importance of that inclusion, in the TPP from the perspective 
of American agricultural exports. Japan is the world's 3rd-
largest economy, and has historically been a very important 
market for our exports. Their interest in joining TPP leads me 
to believe that they are committed to adopting the high 
standards of the TPP.
    However, there remain a significant number of outstanding 
issues that need to be addressed concerning the persistent 
barriers that they put up to certain segments of American 
agriculture, as well as autos and services, for that matter, 
and including issues regarding Japan Post.
    Can you assure me that you will remain vigilant in 
addressing these concerns so that, if Japan does eventually 
join the TPP negotiations, we will be likely to see real 
benefits to our farmers, ranchers, manufacturers, and service 
providers?
    Ambassador Kirk. Senator, absolutely, I will give you that 
assurance. First of all, thank you, Chairman Baucus and other 
members of the committee, for the very important action that 
you took to protect American manufacturers and exporters 
against dumping, and the speed with which you addressed it.
    I do think that speaks well of how quickly we can work 
together, as a Congress, to do things that are in the interests 
of American businesses and workers. So, thank you for that. I 
think you know we have pressed, and are going to continue to 
press, Japan to fully open their market and meet their 
obligations with respect to opening their agriculture, and on 
insurance, whether they join TPP or not.
    I want to make it plain: we do not see any linkage of 
those. These are issues we have been pressing Japan for action 
on. Second, we welcome Japan's interest in joining the Trans-
Pacific Partnership as we do Canada's and Mexico's, but, as we 
have said to all of the members, this is something countries 
aspire to, and that means you have to be willing to meet the 
high standards we are seeking to achieve throughout the 
partnership and that everything has to be on the table.
    Now, we are encouraged with Prime Minister Noda's 
leadership on this, but one of the things about our Federal 
Register system is, Japan knows fully the concerns that you 
have expressed, and other stakeholders, and we are going to 
engage them very honestly on how we would address those 
concerns, particularly with respect to autos, and the insurance 
markets, and agriculture.
    Senator Thune. All right. Good. Thank you.
    As you probably know, my home State of South Dakota is a 
major ethanol producer. I would like to bring your attention to 
concerns I am hearing from ethanol producers regarding actions 
by Brazil, which consumes about a third of our ethanol exports 
and is America's largest ethanol export market.
    Our Nation has gone from a net importer of ethanol as 
recently as 2008 to exporting 1.2 billion gallons last year, 
which far exceeds the export volumes of any other nation. 
Recently, however, the U.S. ethanol industry has complained 
that, while the U.S. has removed our barriers to ethanol 
imports, Brazil has been erecting barriers to our ethanol 
exports.
    Specifically the State of Sao Paulo, which serves as the 
entry point for almost three-fourths of all exports from the 
U.S., recently announced a discriminatory tax scheme, whereby 
imported ethanol must pay the ICMS sales tax at the point of 
Customs entry, while at the same time deferring payment of the 
ICMS tax for domestic product.
    As a result of this policy, American ethanol exports 
through Sao Paulo are being disadvantaged by requiring them to 
pay a tax upon entry, but at the same time a domestic product 
is allowed to pay the tax at a later date, if at all. In light 
of that, I would be interested in knowing what efforts you 
might be engaging in, or are planning to engage in, to address 
claims that these recent efforts are erecting technical 
barriers to trade, or otherwise preventing free and fair trade 
with Brazil.
    Ambassador Kirk. Senator, we believe, as you do, this 
should be an open and unfettered market. I do think--and not to 
be repetitive--it is a very good-news story, how quickly we 
went from producing a limited amount of ethanol to being a net 
exporter. That is a tremendous export opportunity for us. We 
have heard from the same industries you have. We will use every 
bit of leverage we have, to be frank, including the forthcoming 
visit from President Rousseff, to raise these issues.
    When President Obama visited Brazil last year at this time, 
I think you know we created, through USTR, a trade agreement 
enhancement committee. We will be meeting next week, and we 
will raise all of these issues. We might, with your permission, 
like to reach out with you to get a little more background.
    Senator Thune. Yes. We would be happy to provide that, and 
I hope that you would be able to engage them on this issue when 
you meet with them. That would be very helpful.
    Ambassador Kirk. We would be happy to.
    Senator Thune. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Senator Snowe?
    Senator Snowe. Mr. Ambassador, welcome.
    Back in June, I sent a letter, along with some other 
colleagues, concerning the TPP with respect to the impact it 
would have on the rubber footwear industry. As you know, in our 
State, and actually in the country, we have the last rubber 
athletic footwear manufacturer, New Balance, that provides more 
than 2,000 jobs in this country and almost 900 jobs in the 
State of Maine.
    The concern is that the agreement will not exclude the 
reductions in duties on imported products from Vietnam, which 
is really the largest producer of rubber footwear, and would 
have a severe impact on an industry and jobs with respect to 
New Balance.
    So can you tell--I know we have had some conversations with 
your staff, and this is a very serious issue, because it would 
be to the detriment of this industry that is invaluable and 
manufactures shoes and footwear for our military as well. But 
it would provide a severe disadvantage to this industry, 
without question, since Vietnam pays on average 46 cents an 
hour, whereas New Balance pays $10 an hour.
    So can you tell us the status of those negotiations and 
discussions? Because I understand there will be a market access 
discussion with Vietnam with respect to the TPP.
    Ambassador Kirk. I am happy to try to provide further 
clarity on that. But again, thank you, Senator, for your 
extraordinary service to our country throughout your time in 
the Senate.
    Senator Snowe. Thank you.
    Ambassador Kirk. I appreciate your education of me on a 
number of issues, from softwood lumber to footwear.
    Senator Snowe. You have been very responsive, and I 
appreciate that.
    Ambassador Kirk. It has been a pleasure to work with you.
    Senator Snowe. Thank you.
    Ambassador Kirk. I hope you believe that this 
administration, if anything, is wedded to a principle that we 
have to convince the American public, if we want them to 
believe in the power of trade to improve our lives, that trade 
is a vehicle that not only gives us consumptive benefits, which 
is a great thing for all families, but trade is also a tool by 
which we create jobs.
    We have done everything we can, and are attempting in this 
TPP, whether it is in footwear or others areas, to make sure we 
have a proper balance, that we continue to give American 
families the consumptive benefits, but that we help Americans 
who are still making products, and doing what the President has 
simply said: we want to innovate, we want to make more 
products, and we want to sell them around the world.
    That is what we are attempting to achieve in our textile 
negotiations in the Trans-Pacific Partnership. I have visited a 
number of times with the textile industry. Good or bad, it 
would not surprise any of you, I think they feel, as an 
industry, they have perhaps been harmed more by our trade 
policy over the last 30, 40 years.
    But what is remaining of our textile industry is vibrant. 
It is fully integrated in many cases. We want to make sure that 
what we achieve is a proper balance in this Trans-Pacific 
Partnership, and does not operate to their disadvantage.
    We want the benefits of whatever we do in textiles to 
accrue to the members of the Trans-Pacific Partnership and not 
other countries. That is the balance that we are seeking to 
achieve, and that is what we sought to achieve with what we 
have put forth on the table in terms of the proposals on rules 
of origin and yarn forward provisions.
    Senator Snowe. Well, I just cannot underscore enough the 
severe impact it would have on a manufacturer like New Balance, 
which is the last rubber athletic footwear manufacturer in the 
United States, if those reduced duties are included, because it 
would be devastating.
    We have lost, basically disproportionately, that part of 
the industry with respect to shoe production in America. I know 
when I began in Congress, I think that perhaps foreign import 
penetration was about 45 percent. Obviously now it is up to 99 
percent. There is very little left in the United States, and 
New Balance happens to be an ideal example of how they can 
succeed. They have been innovative. They have a remarkable 
workforce. They are technology-driven. They do extraordinary 
work, and they should not be penalized.
    So, if this is allowed--I mean, the disparity between wages 
alone, I think, illustrates the problem, and the inequities 
that exist. So, if we enshrine that in this trade agreement, it 
absolutely would devastate thousands of jobs that this great 
company provides here in America. So, I hope that we can 
continue to work on that.
    Even a phase-out period would not work in this instance 
because of the significant difference between wages between 
these two countries alone. So I cannot underscore--in fact, I 
have sent you a letter to invite you to come and visit Maine 
and New Balance. We have several facilities in Maine, and I 
think it would be worth your while to see a rarity that now 
exists in America, with respect to manufacturing shoes, and in 
this case athletic footwear.
    Ambassador Kirk. Well, I appreciate that invitation. As you 
know, I have visited Maine before with Congressman Michaud and 
visited paper mills. I had some extraordinary blueberries. But 
I would welcome the opportunity to come back and learn more 
about footwear. But I would note--because L.L. Bean will call, 
and others--I know New Balance is the last tennis shoe maker, 
but we do have a handful of industries that make footwear.
    Senator Snowe. Right, they do. Like, literally a handful. I 
mean, we have lost 28,000 jobs in this industry since 1997. 
There is no reason to lose this invaluable industry. I cannot 
underscore that enough, and I hope that we can continue to have 
those conversations.
    Ambassador Kirk. We absolutely can.
    Senator Snowe. All right. Thank you.
    Ambassador Kirk. Thank you.
    The Chairman. Thank you, Senator.
    Senator Menendez? Well, I see Senator Cardin just arrived. 
Technically, he is ahead.
    Senator Cardin, are you ready, or do you want to wait?
    Senator Cardin. I am ready. I rarely have a chance to go 
before Senator Menendez.
    The Chairman. Here is your shot. Here is your chance.
    Senator Cardin. I love the way seniority works. I am going 
to take my time now. Thank you, Mr. Chairman.
    The Chairman. Go ahead.
    Senator Cardin. I am ready to go.
    The Chairman. This is the special seniority rule.
    Senator Cardin. I appreciate that.
    First, Mr. Ambassador, thank you very much. I listened to 
your exchange with the chairman as it related to the human 
rights dimension of Jackson-Vanik. I guess I want to make a 
couple of points, if I might, just to start off. The first is 
that we all understand that the primary reason why Jackson-
Vanik was enacted was to deal with the emigration issue from 
the former Soviet Union. That issue is nowhere near the 
dominant issue it was when it was first enacted.
    I might tell you, I am proud of what that provision did. 
There were naysayers back in those days who said, do not mix 
trade with human rights. The fact that we were able to put such 
a spotlight on the human rights issue has allowed thousands of 
people to be freed from the former Soviet Union. So, it served 
a very, very important purpose, as you pointed out.
    I might say, there were those who said, when we took up 
sanctions against the apartheid government of South Africa, why 
are we penalizing the people? Let us put that on a totally 
separate track. We did not. We first did it on our own, that 
is, the United States, and then other countries followed us. As 
a result of that action, and the international community coming 
together, we were able to bring down the apartheid government 
of South Africa with a minimal amount of violence.
    So, when we look at this as an opportunity, I see this as 
an opportunity to advance human rights, and I must tell you 
that, I could argue with you about whether it is still needed. 
We know that the government imposed new emigration restrictions 
on April 7, 2010, a new law that says the state may restrict 
people from leaving the country, or defendants in criminal 
cases.
    It is now routinely used by corrupt law enforcement 
officers in cases like the Sergei Magnitsky case. So, the 
government is still using this as an oppressive means to carry 
out their policies. We know, in the Magnitsky case, that you 
had a person who tried to bring corruption to the attention of 
the Russian government. He was arrested, tortured, and killed 
in prison, and has garnered a great deal of international 
support.
    I say that because, what we do here in this Congress will 
have a direct impact on what happens internationally. We know 
that in Europe they are considering laws similar to what we 
have done to deny visa privileges to those who are involved in 
gross human rights violations.
    I take issue with just a couple of your statements, just so 
we are on the record on it. The administration has taken good 
steps in this area to deny visas to those who are involved. But 
there is more that needs to be done, and with the Magnitsky 
legislation that I filed with many co-sponsors, we have a much 
more transparent process. We also deal with assets that are 
under American control.
    So I accept your offer to work together on this, and I 
would like to just put in the record of this committee the 
statement that was made by Secretary Clinton where she said, 
``I am not standing back waiting. I would like to very 
affirmatively offer to you the opportunity to work together 
because I think we can do both,'' talking about human rights 
and trade. I interpret your comments to be the same.
    But let me just point out, it is difficult to get action on 
this type of legislation. Russia PNTR is a bill that will get 
to the Senate floor, and we are going to do everything we can 
to make sure that the Magnitsky-type bill also gets to the 
Senate floor.
    I look forward to working with you on this issue--as I take 
your comments to the chairman, your willingness to work 
together--and hopefully finding a way that these bills can 
become law. I welcome any further comments that you may want to 
make for the record in the 50 seconds I have left.
    Ambassador Kirk. Senator, in case you have other questions, 
we appreciate your strong leadership on this, as you have shown 
in other areas of human rights, and we will work with you on 
it. I think Secretary Clinton's statement is one I fully 
associate with. I would just only echo, I think we can do both. 
We do look forward to working with you.
    Senator Cardin. Thank you.
    Mr. Chairman, thank you. I want to thank Senator Menendez 
for his courtesy.
    The Chairman. Thank you, Senator. Also, while we are 
passing thanks around here, thank you. I think you are very 
seriously and wisely addressing an extremely important issue 
with wisdom and effectiveness. I just thank you, how you are 
trying to solve this, as we all are together. Thank you very 
much.
    Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman.
    Ambassador, thank you very much for your service. I am 
always happy to yield to my colleague from Maryland, especially 
on such an important topic, which I share his view on.
    Ambassador, few industries have more significant, high-
paying, productive jobs than the bio-pharmaceutical sector. In 
my home State, that is nearly 195,000 jobs alone. So on the 
Trans-Pacific Partnership, I am trying to understand why the 
administration has not yet tabled in negotiations a time frame 
for the regulatory protection of data for biologics, and 
specifically a proposal for 12 years of regulatory data 
protection for biologics, consistent with U.S. law.
    This has strong bipartisan support in the Congress. So, 
does the administration recognize the importance of this 
innovative area for job creation and innovation? If so, will 
you table, in May's negotiating round in Dallas, a proposal for 
12 years of data protection for biologics?
    Ambassador Kirk. Well, let me first of all state, Senator, 
that the administration absolutely understands the importance 
of this issue. Again, the President has spoken time and time 
again to the link between our investment in innovation and R&D, 
not only in pharmaceuticals and manufacturing, to the health of 
our economy, and that is why we seek, across the board, the 
strongest protection for intellectual property rights, the 
strongest inducements to bring these new products to market.
    But as you know, and I will be very candid, there is a 
strong divergence of thought between the administration and 
Congress in terms of whether that should be 12 years or 7 
years. Because of that, we have been working diligently with 
both members of Congress and the administration to find the 
proper balance. That is why we have not yet tabled a specific 
proposal on that.
    But we have made very plain to our TPP partners that we 
need to have a chapter that addresses this, not only for the 
protection of intellectual property rights but also, frankly, 
to induce the companies to bring these important lifesaving 
drugs, in many cases, to market sooner rather than later.
    Senator Menendez. Well, if the administration's goal is to 
foster greater job growth at home by the greater export of U.S. 
products abroad, why is it that we would not seek to pursue in 
the TPP that which is U.S. law today, which is the 12-year time 
frame?
    Ambassador Kirk. Senator, I can only speak honestly, that 
the administration, in the President's budget request, tabled a 
7-year proposal. You know there is a difference of thought on 
this. But out of respect for the strong views of many of you in 
Congress, that is precisely the reason we have not yet tabled a 
specific time line within the TPP.
    Senator Menendez. All right. Do you have any sense of when 
we are going to get to that time frame?
    Ambassador Kirk. We are going to have to get to it before 
we conclude work on the text.
    Senator Menendez. Well, that is for sure.
    Let me ask you about something else that may not be in your 
particular trade agenda, but is in mine. That is something that 
I care about very deeply: the cotton trust fund. In New Jersey, 
we have--and there are other States. Some of my colleagues on 
this committee actually enjoy the reality that there are 
companies in our States. I have three shirt manufacturers that 
employ over 300 people. I know there are several others who 
have the same realities in their States.
    And yet, they find themselves in the situation which allows 
their foreign competitors to import a foreign-produced shirt to 
the United States duty-free, while a very steep tariff is 
charged on the materials an American company needs to produce 
the very same product in America, so that a shirt made abroad 
of cotton comes into the United States duty-free, but a United 
States manufacturer imports that cotton and then ultimately has 
to pay a very steep tariff to produce the very same shirt that 
came in duty-free from foreign competitors. That is not about 
creating American jobs at the end of the day.
    So we have been looking to reauthorize the program of duty 
refunds to domestic cotton shirt manufacturers--it existed at 
one time under the cotton trust fund, but it lapsed--who are 
faced with an unfair playing field, resulting from trade 
agreements with the Andean, Caribbean, and African countries. 
Those agreements allow finished shirts to enter duty-free, 
whereas imported fabrics face duties as high as 15.5 percent. 
So the cotton trust fund used to offset that.
    Does the administration support the reauthorization of the 
cotton trust fund to keep these jobs in the United States?
    Ambassador Kirk. Senator, you are correct in that I will 
have to make sure that I am up to speed on the trust fund. I 
would say generally the provisions that you reference with 
respect to Africa and CAFTA are part of our preference 
programs, which this Congress wisely renewed when you passed 
the trade agreements.
    We do think those are important to literally help the 
poorest farmers in the world have some ability to move out of 
poverty and move into a more reasonable lifestyle, and they are 
critically important to many of our manufacturers who source 
materials from many of those countries, whether they are 
finished or unfinished.
    For our textile industry in particular, many of them are 
fully integrated, producing the yarns, the fabrics, the cotton 
here, but then manufacturing them at plants they own in South 
America. But I would need to learn more about it.
    Senator Menendez. Well, we look forward to working with 
you, because all those countries that you mentioned would still 
be able to import to the United States. But the difference is--
the only difference here is between sending the shirt with the 
very same fabric that is imported to the United States for a 
domestic producer to create, and having that shirt already 
assembled and sold here in the U.S., and then saying to a U.S. 
company, oh, by the way, against that competition you are going 
to have to pay for the fabric that they did not have to pay for 
at all. That is fundamentally unfair. If we are talking about 
creating jobs in America, we can still have the competition 
from abroad, but have the jobs in America.
    Thank you, Mr. Chairman.
    Ambassador Kirk. Thank you.
    The Chairman. Thank you, Senator.
    Ambassador Kirk, two questions. First, where do you see 
getting, this year and the next couple of years, the biggest 
bang for your buck? What is the top priority to get the best 
results, most effective in terms of American jobs, American 
companies, American businesses just doing a lot better? There 
is a long list of programs, a long list of initiatives. But 
what is kind of at the top of your list if you were going to 
prioritize this? What is number one?
    Ambassador Kirk. Short-term, literally our 3-, 6-month 
strategy: get the FTAs that we passed with Panama, Colombia, 
and Korea into force, because that gives us immediate benefit.
    The Chairman. All right. What else?
    Ambassador Kirk. Near-term, do everything we can to see if 
we cannot get this Trans-Pacific Partnership, the text of that 
agreement, in a position that then we can quickly move with you 
to approve that.
    The Chairman. Have you quantified what increase in jobs 
that will mean for Americans----
    Ambassador Kirk. Senator, I know. I will get you----
    The Chairman [continuing]. Or increase in GDP? Some metric 
that makes some sense?
    Ambassador Kirk. Yes, we do. It would be our 3rd-largest 
market if you put those nine countries together now. They are 
already our 3rd-largest market. I think I want to say it would 
be 3 times the impact of Korea, which we put at about--for some 
reason I am thinking $40 billion. So you are talking hundreds 
of thousands of jobs, and that is just if we stay with those 
nine. Obviously we have ambitions beyond that.
    The Chairman. If we add the others, what is the increase in 
American jobs?
    Ambassador Kirk. If you applied the calculus that I think 
most of us agree with, every billion dollars in exports is 
5,000 jobs and upwards of $40 billion in goods, and not 
calculating services you easily get into 280,000-something 
jobs, which we think is on the conservative side.
    The Chairman. How much will it help you achieve your goals, 
this legislation that Senator Thune and I passed through the 
Senate--it passed the House and will soon be on the President's 
desk--addressing the market or non-market status of China, 
namely that you can proceed as if it is a market economy?
    Ambassador Kirk. We think it is critically important. As 
you know, there are hundreds of industries that believe they 
have been besieged with cheap products dumped on this market. 
We have to have the ability to protect them, and we have to 
have the ability to apply countervailing duties and antidumping 
penalties. This legislation is critical to maintaining that 
protection for our manufacturing base. I think that was----
    The Chairman. Is there any way you can quantify what 
difference it will make?
    Ambassador Kirk. Senator, let me try to get back to you 
with a number on that. We know there are 21 cases pending that 
involve literally hundreds of thousands of U.S. workers. This 
is decidedly more defensive. If I can get you better data than 
that, I will.
    The Chairman. I appreciate that. I hope you try.
    Ambassador Kirk. We will. And Senator, if I might, the 
other two, again, are enforcement and then, as you noted, our 
strategy with China. If China were to fully meet the 
commitments they made going into the WTO, you mentioned just 
the calculation of what we think we lose in the software 
industry. That could be a huge opportunity for us. So we have 
been making the case to China that the World Bank study now 
makes, for some time, that it is not just in the U.S.'s 
interests. We can help China----
    The Chairman. Have you any numbers that show what the 
increase in jobs would be in the United States if China 
``played fair''?
    Ambassador Kirk. If you believe just that one slice of the 
pie that you referenced, the $50-billion figure in the software 
industry, and we are looking at everything from investment to 
them opening up government procurement----
    The Chairman. Right.
    Ambassador Kirk [continuing]. When you are talking $50 to 
$100 billion, that is hundreds of thousands of jobs for 
American workers.
    The Chairman. I think obviously we must take advantage of 
every opportunity, and one is that Mexico, Japan, and Canada 
would like to join this. That is leverage for us on those 
countries.
    Ambassador Kirk. Yes.
    The Chairman. Japan and beef, for example. I think it is 
just outrageous that Japan does not allow beef in, claiming 
that our beef is not safe. It is setting up false health 
standards. At one time Japan did take a lot more American beef, 
and then there was the Mad Cow scare, but now that the OIE said 
it is fine, Japan should fully open up.
    The second is lumber with Canada. Since I have been in the 
U.S. Senate, Canadian lumber has always been a problem. We have 
softwood lumber agreements, et cetera. Then we have to go back 
and sue again because they are not living up to it. One time 
they bored holes in their lumber. There were all kinds of ways 
to get around it.
    I think there is an opportunity here to make sure that 
finally Canada, by standards of fair trade, does not subsidize 
and dump in the United States. Disputes are not in these 
binational courts, but rather disputes we might have with 
Canada would be in Federal courts and not these trade courts, 
which I think tend to diminish our efforts in this country. So 
I just urge you very strongly to take advantage of this 
opportunity to exercise a lot of leverage on Canada on lumber, 
and Japan on beef, among others.
    Ambassador Kirk. Yes.
    The Chairman. Senator Wyden?
    Senator Wyden. Thank you very much, Mr. Chairman.
    There are a couple of other areas I want to get into with 
you, Mr. Ambassador, and then return back to the intellectual 
property issue, particularly as it relates to TPP, where we 
have had some discussions as well.
    On the TPP negotiations on footwear and apparel, you 
recently said the choice is cheaper tennis shoes versus jobs. I 
know you had some discussion here with Senator Snowe, and I 
have heard you say that. I just think that is a false choice. I 
think we can have both.
    There are thousands and thousands of good-paying jobs in 
the design, R&D, and marketing of footwear. Just to make clear, 
I want to work closely with you on this issue, because I want 
those jobs and manufacturing jobs considered during the TPP 
negotiations.
    Now second, on a housekeeping matter, I just want to make 
sure that the record is clear on that. You were at Ways and 
Means last week, and you mentioned that, by one measure, the 
United States enjoyed a trade surplus in solar technology. I 
think you know, and we have shown it to your office, I have 
done a report on this question of green goods.
    My sense is what you were talking about were the 2010 trade 
figures, because the recent figures are out. No matter how you 
measure it, in 2011 the U.S. suffered a massive trade deficit 
in solar technology, particularly in cells and modules that 
make up the solar panels. This reversal, in my view, is due to 
China. This deficit concerns me. I know it concerns you. I just 
wanted to make that clear for the record as well.
    Let me turn and wrap up with some questions again about 
intellectual property, because the same issues that were on the 
table in the Protect IP Act, the Stop Online Piracy Act, the 
discussion we had with respect to ACTA, are now on the table in 
the negotiations about the Trans-Pacific Partnership agreement, 
the TPP discussions.
    I am getting a lot of questions and complaints and concerns 
from people who care passionately about Internet freedom, what 
is going to happen with respect to technology policy, about the 
fact that right now one is required to obtain a security 
clearance and permission by the administration to see documents 
relating to the TPP negotiations.
    The public, particularly those who feel so strongly about 
this issue, which has generated enormous interest across our 
country, the public just feels shut out with respect to this 
debate about Internet freedom and competition and innovation.
    I just want to get a sense of why the administration agreed 
to this process for these discussions. It does not seem to me 
to be in line with the President's commitment to transparency 
and open government. Give me your sense about how we got into 
this, and then what can we do to turn it around? Because I 
think millions of Americans, as we saw in the discussion with 
Protect IP and SOPA, they want to be part of these discussions, 
and they are feeling locked out in one proceeding after 
another.
    Ambassador Kirk. Well, Senator, if I might, if I can go 
back to one of my guiding principles when I was Mayor, and 
privileged to serve as Mayor of Dallas, and we were in a 
situation like this, I would always tell my staff, the truth is 
an option. So let us go back to one thing. One, you can be 
helpful. First, we do not help ourselves by trying to conflate 
the recent debate over PIPA and SOPA with what we are doing in 
TPP, because nothing could be further from the truth, first of 
all.
    So, one, you can help us in making sure people understand 
this is completely the opposite. None of the issues of which 
you had the most concern over, those provisions in SOPA or 
PIPA, is included in the TPP, first of all, so that concern is 
unfounded.
    I think we have some credibility on this because, when we 
were negotiating ACTA, many of the same voices that raised 
legitimate concerns on PIPA put out a tremendous amount of 
misinformation about ACTA, which was subsequently shown to be 
not true. What we are doing in our work in ACTA and TPP, 
frankly, is the opposite. We are trying to make sure that we 
promote the free flow of data and information.
    We have no provisions at all trying to restrict the flow of 
information, and we are following the same balanced approach in 
the TPP that Congress established when you passed the Digital 
Millennium Copyright Act. They are complemented by what we are 
trying to do on market access-opening provisions.
    So I think the first thing is to make sure we get the truth 
out: these are two different animals. Second, as I mentioned to 
Chairman Baucus and Ranking Member Hatch and others, we have 
engaged in more public consultations over this Trans-Pacific 
Partnership, probably by 10-fold, with Congress compared to all 
of our provisions that we have been negotiating.
    We have had just over 350 consultations with Congress 
alone, many more with our stakeholders. We have had 
stakeholders participate as observers in a number of our 
sessions, negotiating, including those who are concerned about 
these issues.
    We are proceeding with the same negotiating parameters in 
this Trans-Pacific Partnership that the United States has 
negotiated in every trade agreement over the last 20 to 30 
years. So, nothing that we are doing is different. We have 
moved to disclose more information sooner than any previous 
administration, as we did in the case of ACTA.
    But the reality is, because these are very complex 
negotiations, we are representing the United States and the 
President as your counsel, as are our other partners. You can 
understand there is a certain degree of discretion that has to 
occur in order to get these countries to sit down at the table 
and negotiate with us.
    But I would defend our record for transparency, for 
inclusion of all groups, against any other administration. I 
think we have gone further, and we are absolutely acting 
consistently with the President's commitments that he made in 
terms of having a more transparent administration.
    Senator Wyden. Mr. Ambassador, let us take your statement--
and that is why I wanted you to kind of expand on your 
thinking--and juxtapose it along the lines of what people who 
care about these issues are coming to me and telling me. They 
are saying right now there is currently a requirement for a 
security clearance to see TPP text and documents that can 
impact Internet freedom. That is what people tell me, that they 
have to have a security clearance to see the documents. So we 
put that alongside your statement.
    Let me ask you about something that might clear this up, 
and actually get this resolved. What is wrong with letting the 
public see the text in real time, of at least what your office 
is proposing, as it relates to Internet freedom? In other 
words, I have heard your views. I have tried to tell you what 
people are coming and telling me.
    I am saying to a public official who always looks to try to 
work with me, why do we not resolve this, and resolve it by 
putting out the text in real time of what the proposals are 
with respect to issues that can touch on Internet freedom, 
certainly what people feel will touch on Internet freedom?
    What would be wrong with putting that online, so we could 
dispose of this issue, show that once again the President, whom 
I know feels strongly about transparency and openness, is 
demonstrating that, and we put this issue to bed?
    Ambassador Kirk. Well, again, Senator, we have moved--if 
you look at our modus operandi on ACTA, as soon as we had 
enough of a convergence among our negotiating partners and we 
thought we had the text, we moved to do that. When we did, I 
would remind you, at least our office received a fairly stern 
message from the two committees who oversee my work that this 
not become the norm for USTR for the practical reason--and I 
understand the need; more of this is when we disclose.
    But the practical answer to, what is wrong with putting it 
all out now, nothing, unless you do not ever want to negotiate 
a trade agreement, because no one will sit at the table and 
negotiate with us if we put all the terms of every text out. It 
is an evolving process.
    Second, with respect to the security clearance required, as 
you know as chairman of the Trade Subcommittee, this Congress 
mandates that I have a number of trade advisory committees 
because of the complexity of trade deals. You want to make sure 
that we have, first of all, thoughtful intelligence from those 
affected by that. All of them operate as what we call, Senator, 
cleared advisors.
    That is because of congressional law. You give us the 
latitude, for those who serve on these advisory committees and 
have passed the security clearance, we do share the text with 
those, whether it relates to Internet or agriculture or 
pharmaceuticals or any of the multitude of trade advisory 
committees that we have.
    That is one way that we make sure that we have the 
interests of different communities voiced and taken into 
account in our trade policy. It is a very thoughtful policy. It 
serves us well. I believe it is the most appropriate way for us 
to go forward.
    Senator Wyden. Mr. Ambassador, just let us see if we can 
wrap up on this point. I also serve on the Intelligence 
Committee, so day after day I see just how you draw the bright 
lines with respect to security clearances and matters that can 
be classified and deserve special treatment because of the 
implications they can have for national security in particular.
    I just think--and you mentioned the norm. The norm changed, 
Mr. Ambassador, on January 18, 2012, where millions and 
millions of Americans said, we will not accept being locked out 
of debates about Internet freedom. They just said, we have to 
have a chance on something that is so important to innovation 
and competition, we have to have a chance to be heard. And I am 
not asking for everything to be published, and certainly I 
respect your judgment with respect to issues that affect 
national security and classified matters.
    But issues that pertain to freedom and innovation on the 
net are policy questions, and the American people want a chance 
to participate. I am going to give you the last word on it, but 
it relates a bit to what we wrapped up with on the ACTA 
discussion.
    That is one topic, and now we are having some of the same 
issues being raised on TPP. These questions are not 
hypothetical, Mr. Ambassador. They are not. The prospect of the 
Congress of the United States passing a piece of legislation, 
for example, that changes the Digital Millennium Copyright Act, 
and does it in a way that is inconsistent with ACTA, that is 
very real. These are not hypothetical, speculative questions.
    We are not going to resolve all of them today, and I 
understand that, but what I hope we will do, and what I want to 
take a few extra minutes for--and I appreciate your courtesy on 
this--is to make clear how important it is that you throw open 
the doors of your agency, so that the public can be heard with 
respect to their views on Internet freedom.
    Because I thought you made an excellent presentation in 
terms of describing how you are handling the process. When I 
walk out of this room, I am going to get more calls, and they 
are going to say, I still have to get a security clearance in 
order to have a chance to see something about Internet 
regulation. That does not make sense.
    So let's you and I see if we can work this out, take away 
from this my position that I feel very strongly with respect to 
TPP, about getting the proposals that you are looking at from a 
policy standpoint--not the classified matters--getting them 
online so that the public can have a chance to be heard on it.
    I do not think these are going to be speculative questions. 
We learned, on January 18th of this year, that these issues are 
not speculative anymore, something that just kind of, people 
are going to talk about in the abstract. They are very real. 
People want to be heard.
    Last word to you.
    Ambassador Kirk. Senator, I could not agree with you more. 
There is no form of government that is closer to the people 
than local government. There is no form of--and no disrespect 
to the Senate or the Congress. I am proud to serve here. But I 
understand the need for transparency in government as much as 
any other official. This President does. But, just as we have a 
representative form of government, that is why we have 
elections.
    It is why you sit here, because the people of your State 
collectively understand everybody in your State cannot come to 
Washington, so we have elected representatives whom we count on 
who will express the voice, and not just those you agree with 
but those you disagree with.
    Then this Congress further refines and understands that, 
while you retain the constitutional authority to enter 
commercial treaties, as a practical matter this Congress is not 
going to sit down and negotiate with other countries, so you 
have ceded that authority to the administration.
    In part of that, you have directed us to have a very 
balanced committee of advisors that represents a broad range of 
thought of those affected by trade policy, so all these voices, 
these concerns you have heard, have been expressed.
    Now, I would submit to you again--and I agree with you, you 
and I are going to the same place--and I will tell you, 
Senator, we have done so much to reach out to stakeholders 
across the board to hear their concerns, not just on issues of 
digital freedom but on every element of what we are tabling 
within the TPP.
    But as you understand, as an elected official, hearing from 
all of these voices, and everyone getting exactly what they 
want, are two different things. I think we have had the most 
open, transparent process ever. We have taken more steps to put 
more information before the public on our websites, on our TPP 
websites, than ever before.
    But we have to maintain that balance between making sure 
that we have the space we need to negotiate with nine very 
different countries that may have different thoughts on the 
issues of Internet freedom, of Internet protection, than we, 
and have that in a constructive way while at the same time 
making sure that our public is informed until we get to the 
point of making sure we keep our businesses and industries 
competitive. That is what we have tried to do, is strike that 
proper balance. I think we have done that.
    I know you care about it, and that is why we will always 
listen to your thoughts and guidance on this. But I would just 
take issue that I do believe we have absolutely met the 
President's commitment of having one of the most transparent 
administrations ever.
    Senator Wyden. I had promised you the last word, Mr. 
Ambassador, and I will just amend that pledge for 10 seconds or 
thereabouts. [Laughter.]
    There is no question that is the way it used to work. I 
think what the public is saying is, we have to do better, and 
particularly because the Internet is the engine of innovation 
and competition in so many of the new jobs. So take away that 
you got a specific request this afternoon for at least putting 
the portions of the text--not the classified matters--that 
relate to Internet freedom policy online. I think the American 
people want it.
    With that, Mr. Ambassador--it has been a long morning--the 
Senate Committee on Finance is adjourned.
    Ambassador Kirk. Senator, if I might make just one final--
--
    Senator Wyden. Of course.
    Ambassador Kirk. Not on this, but this committee has had a 
remarkable ability of scheduling these hearings on my wife's 
birthday, which the first three were. [Laughter.]
    This year we missed it by 2 days. But, notwithstanding, my 
wife will celebrate another milestone on Friday. I think she is 
watching, so I did want to take this opportunity to wish her a 
Happy Birthday. [Laughter.]
    Senator Wyden. I like that a lot. I am sure she knows, 
since your Dallas days, the sacrifices for public service. We 
appreciate what you do.
    The Committee on Finance is adjourned.
    [Whereupon, at 11:50 a.m., the hearing was concluded.]


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