[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
               THE U.S.-EU FREE-TRADE AGREEMENT: TIPPING
                      OVER THE REGULATORY BARRIERS

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

                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 24, 2013

                               __________

                           Serial No. 113-75
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]




      Printed for the use of the Committee on Energy and Commerce

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania             GENE GREEN, Texas
MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee          LOIS CAPPS, California
  Vice Chairman                      MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia                JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana                  Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
CORY GARDNER, Colorado               BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas                  PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
           Subcommittee on Commerce, Manufacturing, and Trade

                          LEE TERRY, Nebraska
                                 Chairman
                                     JANICE D. SCHAKOWSKY, Illinois
LEONARD LANCE, New Jersey              Ranking Member
  Vice Chairman                      G.K. BUTTERFIELD, North Carolina
MARSHA BLACKBURN, Tennessee          JOHN P. SARBANES, Maryland
GREGG HARPER, Mississippi            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    JOHN D. DINGELL, Michigan
DAVE B. McKINLEY, West Virginia      BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas                  JIM MATHESON, Utah
ADAM KINZINGER, Illinois             JOHN BARROW, Georgia
GUS M. BILIRAKIS, Florida            DONNA M. CHRISTENSEN, Virgin 
BILL JOHNSON, Missouri                   Islands
BILLY LONG, Missouri                 HENRY A. WAXMAN, California, ex 
JOE BARTON, Texas                        officio
FRED UPTON, Michigan, ex officio
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................     1
    Prepared statement...........................................     3
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     4
Hon. Leonard Lance, a Representative in Congress from the State 
  of New Jersey, opening statement...............................     5
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, prepared statement..............................     6
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   105

                               Witnesses

Matthew R. Blunt, President, American Automotive Policy Council..     7
    Prepared statement...........................................    11
    Answers to submitted questions...............................   172
John J. Castellani, President and CEO, Pharmaceutical Research 
  and Manufacturers of America...................................    18
    Prepared statement...........................................    20
    Answers to submitted questions...............................   179
Calvin M. Dooley, President and CEO, American Chemistry Council..    27
    Prepared statement...........................................    29
    Answers to submitted questions \1\...........................   184
Dean C. Garfield, President and CEO, Information Technology 
  Industry Council...............................................    37
    Prepared statement...........................................    39
    Answers to submitted questions \2\...........................   186
Jean M. Halloran, U.S. Liaison, Transatlantic Consumer Dialogue 
  Secretariat, Senior Advisor on International Affairs to the 
  President Of Consumer Reports, on behalf of the Consumers Union 
  and the Transatlantic Consumer Dialogue........................    48
    Prepared statement...........................................    50
    Answers to submitted questions \3\...........................   188
Carroll Muffett, President and CEO, Center for International 
  Environmental Law..............................................    58
    Prepared statement...........................................    60
    Answers to submitted questions...............................   191

                           Submitted material

Documents submitted by Mr. Terry
    Statement of American Apparel & Footwear Association.........   107
    Statement of the Alliance of Automobile Manufacturers........   111
    Statement of Global Automakers...............................   113
    Statement of Handmade Toy Alliance...........................   119
    Statement of Marketing Research Association..................   133
    Statement of the Society of Chemical Manufacturers and 
      Affiliates.................................................   135
    Statement of TechAmerica.....................................   139
    Statement of the Toy Industry Association Statement of 
      America....................................................   143
    Statement of the Biotechnology Industry Organization.........   153
Documents submitted by Ms. Schakowsky
    Statement of the Coalition for Sensible Safeguards...........   161
    Statement of the Transatlantic Consumer Dialogue.............   163
    Statement of Hon. Sharon Treat, a Representive from the State 
      of Maine...................................................   166

----------
\1\ Mr. Dooley did not respond to submitted questions for the 
  record.
\2\ Mr. Garfield did not respond to submitted questions for the 
  record.
\3\ Ms. Halloran did not respond to submitted questions for the 
  record.


 THE U.S.-EU FREE-TRADE AGREEMENT: TIPPING OVER THE REGULATORY BARRIERS

                              ----------                              


                        WEDNESDAY, JULY 24, 2013

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:45 a.m., in 
room 2123, Rayburn House Office Building, Hon. Lee Terry 
(chairman of the subcommittee) presiding.
    Present: Representatives Terry, Lance, Blackburn, Harper, 
Guthrie, Olson, Kinzinger, Bilirakis, Johnson, Long, 
Schakowsky, Sarbanes, McNerney, Dingell, Matheson, Barrow, 
Christensen, and Waxman (ex officio).
    Staff Present: Charlotte Baker, Press Secretary; Jerry 
Couri, Senior Environmental Policy Advisor; Kirby Howard, 
Legislative Clerk; Nick Magallanes, Policy Coordinator, CMT; 
Gib Mullan, Chief Counsel, CMT; Andrew Powaleny, Deputy Press 
Secretary; Shannon Weinberg Taylor, Counsel, CMT; Michelle Ash, 
Minority Chief Counsel; and Will Wallace, Minority Professional 
Staff Member.

   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. All right. I think we are all set now. And it 
looks like we will have a good morning, in the sense that the 
votes will not occur until 1:30. I am pretty confident that we 
are going to finish this panel before then.
    So let's start the hearing. And I recognize myself for 5 
minutes for the opening statement.
    Good morning, and welcome to today's hearing, where we will 
examine the regulatory issues that we expect will come up 
during the negotiation of the Transatlantic Trade and 
Investment Partnership, also known as TTIP.
    A trade agreement with the European Union should, in many 
ways, be a commonsense policy for the United States. Already, 
the bilateral trade relationship between the U.S. and the EU is 
the largest in the world, accounting for over $1 trillion in 
trade, of which U.S. exports account for $463 billion. 
According to the U.S. Trade Representative, this relationship 
supports over 13 million jobs in the United States and Europe, 
accounts for $3.7 trillion worth of direct investment in both 
economies.
    These are significant data points, and our subcommittee's 
legislative record thus far supports many of those figures. Our 
subcommittee's activity this Congress began by hosting an 
entire hearing series that focused on learning from our 
Nation's manufacturers. We heard time and time again from a 
variety of industries about the well-paid, middle-class jobs it 
could create if given the opportunity to expand their 
operations and the positive effects this type of growth has on 
various parts of our economy.
    As the numbers suggest, foreign direct investment is a key 
element of our trade relationship with the EU. We want this 
piece of our trade portfolio to grow and strengthen, and not 
just with the EU. So Ranking Member Schakowsky and I crafted 
legislation aiming to lower barriers in the U.S. to inbound 
foreign direct investment that the full committee unanimously 
approved last week. And I am hearing solid rumors that it will 
be on the floor next week. I believe that when foreign 
companies want to initiate or expand their manufacturing 
footprint in the U.S., it is good for our long-term economic 
success.
    Now we will turn our attention to TTIP, another potential 
job-creating addition for our economy. This trade agreement is 
unique for many reasons. Historically, tariffs on goods have 
been the single biggest barrier to trade, but because of how 
tariffs between the U.S. and the EU already exist, this isn't 
the case with this negotiation. Consequently, addressing non-
tariff barriers is a substantial portion of the negotiation.
    And, according to high-level working groups, as much as 80 
percent of the so-called potential gains in the TTIP lie in 
addressing these so-called behind-the-border issues. TTIP 
represents a historic opportunity for both sides to create 
greater openness, transparency, and convergence in regulatory 
approaches and standards, while reducing unnecessary and 
redundant requirements.
    It would seem to make sense that if the European Medicines 
Agency, EMA, just inspected a pharmaceutical manufacturer in 
Berlin for compliance with good manufacturing practices, that 
the U.S. FDA could rely on the findings of the European 
inspector instead of duplicating the effort by conducting its 
own inspection. But that is not the case.
    It might also seem to make sense that, givenour respective 
standards yield equivalent safety performance on vehicles, we 
should be able to find a certain level of uniformity or at 
least mutual recognition of the U.S. and European auto safety 
regulations. Remarkably, or maybe unremarkably, as the case may 
be, over the past 15 years only seven out of the hundreds of 
safety regulations have been harmonized.
    There are countless more examples of areas where U.S. 
companies, workers, and consumers stand to gain from this type 
of collaboration. And we should use every tool at our disposal 
in an effort to maximize the potential benefits for Americans 
when it comes to this agreement.
    I would like to thank our witnesses for appearing before us 
today. We have a broad cross-section of stakeholders before us 
that each have a unique perspective on what the TTIP could 
bring to their industries and, most importantly, into the 
United States.
    I look forward to hearing from each of you and now 
recognize the ranking member, Jan Schakowsky from Illinois.
    [The prepared statement of Mr. Terry follows:]

                  Prepared statement of Hon. Lee Terry

    Good Morning, and welcome to today's hearing, where we will 
examine the regulatory issues that we expect will come up 
during the negotiation of the Transatlantic Trade and 
Investment Partnership, also known as the U.S.-EU free-trade 
agreement, or T-TIP.
    A trade agreement with the European Union should in many 
ways be a common sense policy for the United States. Already, 
the bilateral trade relationship between the U.S. and the EU is 
the largest in the world-accounting for over $1 trillion in 
trade-of which U.S. exports account for $463 billion. According 
to the U.S. Trade Representative, this relationship supports 
over 13 million jobs in the United States and Europe and 
accounts for $3.7 trillion worth of direct investment in both 
economies.
    These are significant data points, and our subcommittee's 
legislative record thus far supports many of those figures. Our 
subcommittee's activity this Congress began by hosting an 
entire hearing series that focused on learning from our 
nation's manufacturers. We heard time and time again from a 
variety of industries about the well-paid middle class jobs 
they could create if given the opportunity to expand their 
operations and the positive effects this type of growth has on 
various parts of the economy.
    As the numbers suggest, foreign direct investment is key 
element of our trade relationship with the EU. We want this 
piece of our trade portfolio to grow and strengthen, and not 
just with the EU, so Ranking Member Schakowsky and I crafted 
legislation aiming to lower barriers in the U.S. to inbound 
foreign direct investment that the full committee unanimously 
voted to approve last week. I believe that when foreign 
companies want initiate or expand their manufacturing footprint 
in the U.S. it's good for our long term economic success.
    Now, we will turn our full attention to T-TIP, another 
potential job-creating addition to our economy. This trade 
agreement is unique for many reasons. Historically, tariffs on 
goods have been the single biggest barrier to trade. But 
because of how low tariffs between the U.S. and the EU, this 
isn't the case with T-TIP. Consequently, addressing non-tariff 
barriers is a substantial portion of the negotiation and, 
according to the High Level Working Group, as much as 80 
percent of the overall potential gains in the T-TIP lie in 
addressing these so-called ``behind the border'' issues.
    T-TIP represents a historic opportunity for both sides to 
create greater openness, transparency and convergence in 
regulatory approaches and standards while reducing 
unnecessarily redundant requirements.
    It would seem to make sense that if the European Medicines 
Agency (EMA) just inspected a pharmaceutical manufacturer in 
Berlin for compliance with Good Manufacturing Practices, the 
U.S. FDA could rely on the findings of the European inspector 
instead of duplicating the effort by conducting its own 
inspection. Unfortunately, this is not the case.
    It might also seem to make sense that given our respective 
standards yield equivalent safety performance of vehicles, we 
should be able to find a certain level of uniformity--or at 
least mutual recognition of--the U.S. and European auto safety 
regulations. Remarkably, or unremarkably as the case may be, 
over the past 15 years only seven out of the hundreds of safety 
regulations have been harmonized through participation in a 
United Nations working group.
    There are countless more examples of areas where U.S. 
companies, workers and consumers stand to gain from this type 
of collaboration, and we should use every tool at our disposal 
in an effort to maximize the potential benefits for Americans 
when it comes to this agreement.
    I would like to thank our witnesses for appearing before us 
today. We have a broad cross-section of stakeholders that each 
have a unique perspective on what the T-TIP could bring to the 
U.S. I look forward to hearing from each one of them.
    I now recognize the ranking member, Ms. Schakowsky.

       OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Thank you, Mr. Chairman. I appreciate the 
hearing that you are holding, that we are holding here today on 
the Transatlantic Trade and Investment Partnership 
negotiations.
    I look forward to hearing from all of our witnesses about 
this very important issue. I especially want to welcome Former 
Congressman Cal Dooley.
    It is good to see you, Cal. Glad you are here.
    American trade with Europe is vitally important to our 
economic outlook. One-fifth of all U.S. trade is conducted with 
Europe, accounting for $1 trillion in trade of goods and 
services just last year. Some economists maintain that an 
agreement would increase trade by as much as 15 percent.
    While I am committed to strengthening our economic ties to 
our European allies, I do have serious concerns that an 
agreement with inadequate safeguards could hurt American 
consumers, workers, public health, and the environment.
    The High-Level Working Group on Jobs and Growth, in its 
February report on this issue, identified three objectives for 
a trade agreement with the EU. Among the three main objectives 
identified is the goal, quote, ``to reduce unnecessary costs 
and administrative delays stemming from regulation,'' unquote.
    That objective, I have to tell you, raises many red flags 
for me. While we all agree that actual unnecessary trade 
barriers should be addressed, it is important to identify what 
qualifies as unnecessary.
    For example, I don't believe that the fuel economy 
standards that President Obama negotiated with auto 
manufacturers, which reduce greenhouse gas emissions by 6 
billion metric tons over 8 years, saving the average U.S. 
driver $8,000 over the life of her car, are unnecessary. I 
don't believe that standards that keep the toys our children 
and grandchildren play with and the food we eat safe are 
unnecessary. I don't believe that price limits for public 
programs like Medicare negotiation or Medicaid drug rebates are 
unnecessary, and, in fact, they save consumers billions of 
dollars and enable access to lifesaving medicine.
    On the issue of drug pricing and accessibility, we are 
going to hear from Mr. Castellani--and I appreciate our meeting 
yesterday--about pharmaceutical issues and trade agreements. I 
want to make very clear my view that access to essential 
medicines should be debated out in the open, not in secret 
trade discussions where the public and even Members of Congress 
are excluded.
    The pharmaceutical industry has put its significant weight 
behind efforts to protect the profits and intellectual property 
associated with its products. In many cases, those efforts fly 
directly in the face of efforts to expand access to lifesaving 
drugs for low-income individuals, both in the developing world 
and here at home. I am much more concerned about saving 
people's lives than adding to the already large profits of the 
pharmaceutical companies.
    We have made some progress to achieve more balance between 
the priorities of the pharmaceutical industry and those of the 
people in need of treatment through the Doha Declaration and 
the May 10th Agreement, and I am deeply concerned about efforts 
to undo those improvements. I have heard from healthcare 
advocates and doctors from around the world and experts here at 
home that proposed changes to our trade agreements would not 
only raise the cost of drugs overseas but tie the hands of 
those who want to make medications more affordable here at 
home.
    At the very least, I repeat, this issue should be 
considered in open, public forums, not closed-door trade 
negotiations.
    Again, I support efforts to expand trade with Europe, but 
not at the cost of undermining our own or our partners' efforts 
to promote the growth of good jobs or protect the public health 
and the environment.
    I look forward to hearing from all of our witnesses on 
these issues.
    And, Mr. Chairman, I yield back.
    Mr. Terry. Thank you.
    And now we recognize the vice chairman of the subcommittee, 
Mr. Lance, for 5 minutes.

 OPENING STATEMENT OF HON. LEONARD LANCE, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Lance. Thank you, Mr. Chairman.
    And I welcome our invited witnesses and everyone in the 
audience to this important hearing on the United States and 
European Union's negotiation of the Transatlantic Trade and 
Investment Partnership, also known as TTIP.
    I am pleased that the United States and the European Union 
have entered into negotiations over TTIP. The economic 
relationship between the United States and the European Union 
is the world's largest and most prosperous. These negotiations 
have wide, bipartisan support because of the recognition that, 
should this trade agreement be completed, it will have a 
dynamic effect on the economies of all nations concerned.
    In New Jersey's Seventh Congressional District, which I 
represent, the pharmaceutical and telecommunications industries 
stand to benefit from an agreement. On a broader scale, if 
successful, this agreement has the potential to serve as a 
template for which all future agreements between the United 
States, the European Union, and third parties could be 
negotiated.
    From my perspective, I hope that the negotiations address 
some of the regulatory barriers that stand in the way of an 
agreement being reached, the so-called beyond-the-border 
barriers of regulations.
    While tariffs between the United States and the European 
Union are lower compared to other standing trade agreements, 
the differences between the regulatory structure of the United 
States and the regulatory structure of the individual European 
states are, for the most part, different. And we must reconcile 
these differences in order to reach an agreement.
    The other issue that I hope is addressed is that of 
intellectual property rights. This subcommittee highlighted the 
issues of intellectual property rights in trade agreements with 
India in a previous hearing, and I hope that the United States 
and the European Union can agree to robust intellectual 
property-right protections in their trade agreement.
    It is my ultimate hope that the United States and the 
European Union, the two largest trading markets in the world, 
will be able to come to a mutually beneficial agreement that 
strengthens this already great trading relationship. I look 
forward to the discussion among members of the committee and 
stakeholders on how to achieve this objective.
    And, Mr. Chairman, I yield back the balance of my time.
    Mr. Terry. Is there anybody else on our side that wishes 2 
\1/2\ minutes?
    Seeing none, the time is yielded back.
    The chair recognizes the full committee ranking member, the 
gentleman from California.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you, Mr. Chairman.
    Today we are holding a hearing on an important subject with 
major ramifications for U.S. policies, the U.S.-EU free-trade 
agreement.
    The United States and the European Union, which together 
make up over 40 percent of global GDP, have entered into 
negotiations on what would be the largest free-trade agreement 
ever completed. Just for comparison, the EU market is more than 
five times larger than the combined markets of Canada and 
Mexico, our partners in NAFTA.
    We have much in common. EU member states are democracies 
with general high levels of economic development. And, despite 
recent economic turmoil, they remain dedicated to policies 
supporting an open international economy. We both have engaged 
in austerity economic policies, which have failed there and are 
failing here.
    In 2012, more than $1.5 trillion in trade flowed between 
the U.S. and member states of the EU, nearly double the value 
of such trade 10 years earlier. The Transatlantic Trade and 
Investment Partnership, or TTIP, proposes to further strengthen 
our economic ties. I believe this is a worthy goal, and I 
applaud the Obama administration for pursuing it.
    While traditional trade barriers between the U.S. and EU 
were already low, with average tariffs under 3 percent, they 
are still significant, particularly to small and medium-sized 
enterprises that want to become exporters. Lowering these 
tariffs will save these companies millions of dollars. We can 
also gain by cooperating on specific challenges, such as local 
content rules, state-owned enterprises, and customs policies.
    For most major industries, the major focus of negotiations 
are behind-the-border barriers, which usually refers to 
domestic regulatory measures. While we should always work to 
avoid duplication, we must ensure that the push for regulatory 
compatibility does not create a race to the bottom. I have 
consistently believed that trade agreements negotiated by the 
United States should not compromise sensible standards in the 
United States or abroad. The U.S. and EU member states should 
strengthen our competitiveness by raising the standards in our 
countries, not by weakening them.
    The pharmaceutical industry is a good example of the 
complex issues this trade agreement raises. This agreement 
should not be used as a vehicle to, one, drive up drug prices 
in other countries or undermine efforts to reduce prices here; 
or, two, delay or impede access to less expensive generic drugs 
in developing countries, where too few can afford needed 
medicines; or, three, disrupt the delicate balance of 
innovation and access to medicines that we achieved in Waxman-
Hatch. Yet this could be the result of some proposals that have 
been discussed.
    International trade has the potential to raise the standard 
of living and quality of life for people in the United States, 
the European Union, and around the world. To uphold that 
vision, we must ensure that our citizens continue to have 
essential regulatory protections. Regulations keep automobiles, 
children's toys, our food supply safe. They support public 
health, privacy rights, and secure financial markets. And they 
are crucial to the global effort to combat climate change.
    When TTIP negotiators reconvene, I encourage them to 
remember the importance of commonsense regulatory measures that 
enhance consumer wellbeing. Trade liberalization should not be 
just about reducing costs or enhancing efficiency. It is more 
fundamentally about improving people's quality of life, whether 
they live and work here in the United States or in the 
countries with which we trade.
    Unless any of my colleagues wish to have additional time, 
what is left, I yield back the balance of my time.
    Mr. Terry. Thank you, Mr. Waxman.
    The gentleman yields back. And I am going to introduce 
our----
    Mr. Waxman. Oh, Mr. Chairman, before you do----
    Mr. Terry. Yes?
    Mr. Waxman [continuing]. May I apologize to the members 
that are testifying. I know it is a very good group, an 
important group of witnesses. But we have other subcommittees 
meeting at the same time, so----
    Mr. Terry. Almost all of them, by the way, all the 
subcommittees at one time, it seems like.
    Mr. Waxman. Right.
    Mr. Terry. Thank you, Mr. Waxman.
    I am now introducing our panel, and I will introduce the 
whole panel, and then we will start with you, Mr. Blunt, 
Governor Blunt, and move from my left to right.
    So first on our panel, Governor Matt Blunt, president of 
the American Automotive Policy Council; then John Castellani, 
president and CEO of the Pharmaceutical Research and 
Manufacturers of America; one of our own, been on both sides of 
this table, honorable former Member Cal Dooley, president and 
CEO of the American Chemistry Council.
    Then we are honored to have Dean Garfield, president and 
CEO of Information Technology Industry Council; and then Jean 
Halloran, on behalf of the Consumers Union and the 
Transatlantic Consumer Dialogue, U.S. liaison, Transatlantic 
Consumer Dialogue Secretariat, Senior Advisor, International 
Affairs, to the president of Consumer Reports; and then last, 
Mr. Carroll Muffett, president and CEO of the Center for 
International Environmental Law.
    Thank you all for taking time to be here to help educate 
us. As most of you know, you have 5 minutes for your 
statements. There are lights there that will be green when you 
start. When you start seeing the yellow, sum up, please.
    So, at this time, I am honored to recognize Governor Blunt 
for your 5 minutes.

 STATEMENTS OF THE HON. MATTHEW R. BLUNT, PRESIDENT, AMERICAN 
 AUTOMOTIVE POLICY COUNCIL; JOHN J. CASTELLANI, PRESIDENT AND 
CEO, PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA; THE 
 HON. CALVIN M. DOOLEY, PRESIDENT AND CEO, AMERICAN CHEMISTRY 
   COUNCIL; DEAN C. GARFIELD, PRESIDENT AND CEO, INFORMATION 
 TECHNOLOGY INDUSTRY COUNCIL; JEAN M. HALLORAN, U.S. LIAISON, 
TRANSATLANTIC CONSUMER DIALOGUE SECRETARIAT, SENIOR ADVISOR ON 
INTERNATIONAL AFFAIRS TO THE PRESIDENT OF CONSUMER REPORTS, ON 
 BEHALF OF THE CONSUMERS UNION AND THE TRANSATLANTIC CONSUMER 
 DIALOGUE; AND CARROLL MUFFETT, PRESIDENT AND CEO, CENTER FOR 
                INTERNATIONAL ENVIRONMENTAL LAW

             STATEMENT OF THE HON. MATTHEW R. BLUNT

    Mr. Blunt. Thank you, Chairman Terry and Ranking Member 
Schakowsky and members of this committee.
    Mr. Terry. Is the microphone on?
    Mr. Blunt. It is now. And, again, thank you, Chairman.
    I am Matt Blunt, president of the American Automotive 
Policy Council, which represents the common public policy 
interests of our member companies: Chrysler, Ford, and General 
Motors.
    On May 10th, AAPC and our European counterpart, ACEA, 
jointly submitted a detailed auto regulatory convergence 
proposal in response to the USTR Federal Register notice. This 
statement is based on that submission, which would provide a 
more thorough treatment of our proposal.
    As the largest manufacturing and exporting sector in the 
United States, the auto industry has a major stake in the 
successful completion of a Transatlantic Trade and Investment 
Partnership, or TTIP. TTIP will represent the largest share of 
auto production and sales ever covered by a single free-trade 
agreement. And we believe that a well-negotiated TTIP that 
includes the elimination of tariffs and major non-tariff 
barriers in the auto sector has great potential to grow the 
transatlantic auto trade and investment relationship.
    The global landscape for auto production and sales is 
changing. Global auto sales are expected to increase more than 
50 percent by the end of the decade, equating to roughly a 
billion new automobiles on the road around the world. The 
concentration of this growth will be in emerging markets, with 
vehicle sales eventually surpassing the sales growth in mature 
markets such as the United States and Western Europe. It is 
essential to ensure that regulatory costs do not inhibit future 
growth in auto sales and exports and the critical role they 
play in economies on both sides of the Atlantic.
    The negotiation of the TTIP presents an opportunity to 
implement a regime that effectively breaks down regulatory 
barriers in the auto sector, recognizes regional integration of 
benefits both to the U.S. and the EU, reduces costs and 
increases commercial predictability, while respecting U.S. and 
EU sovereignty, and certainly without sacrificing vehicle 
safety or environmental performance.
    Past efforts to harmonize have been ineffective and slow, 
and we are proposing a new approach: mutual recognition for 
existing automotive regulations and for future regulations that 
are deemed necessary, the establishment of a joint regulatory 
harmonization process that facilitates the development and 
adoption of common future new regulations.
    Our proposal is guided by the following principles: We must 
have strong and sustained political support at the highest 
levels of government and the relevant regulatory authorities. 
There should be no net increase in U.S. or EU regulatory 
requirements as a result of this convergence; no new third 
regulations or additional certification requirements. And then, 
as I stated, mutual recognition shall permit an automaker to 
sell a vehicle built to either recognized standard in either 
market.
    Recognizing the significant advancements that the 
regulations have provided in environmental and safety 
technologies in both the U.S. and the EU, acceptance of an 
existing regulation should be presumed unless the analysis of 
the data conducted by the responsible regulatory agency 
demonstrates that the regulation is deficient from either a 
safety or environmental perspective.
    We recommend that the process begin immediately, in close 
cooperation with industry, in order to take advantage of the 
current increased existing political will and interest in 
regulatory convergence. Our May 10th submission provides a list 
of U.S. and EU safety and environmental regulations for mutual 
recognition consideration during the TTIP negotiations and a 
proposed data-driven process for purposes of completing the 
necessary assessment.
    When a new regulation is needed, a joint U.S. and EU 
regulatory harmonization process that takes into account the 
differences and regulatory development and implementation 
timelines needs to be developed that promotes and facilitates 
the development and adoption of common future new regulations. 
This process should also include a mechanism to foster the 
development of common voluntary standards in the pre-regulatory 
environment.
    Key elements of a U.S. and EU harmonized standards process 
must aim at strengthening the automotive industry in both 
regions with lower costs through reductions in regulatory 
complexity, reducing administrative burdens while maintaining 
flexibility and increased predictability, have strong and 
sustained political support at the highest levels of 
government, and engage industry to work together to develop the 
harmonized approach, and certainly should provide a timeline to 
complete the development of this harmonization process.
    TTIP presents an opportunity to break down tariffs and 
regulatory barriers in the auto sector, promote regional 
integration, reduce costs, and increase commercial 
predictability, while respecting U.S. and EU sovereignty, and, 
as I said earlier, without sacrificing vehicle safety and 
environmental performance.
    Again, thank you for the opportunity to present our views 
on the TTIP, and we look forward to working with the 
subcommittee on this important negotiation.
    Mr. Terry. Thank you.
    [The prepared statement of Mr. Blunt follows:]
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    Mr. Terry. Mr. Castellani, you are now recognized for your 
5 minutes.

                STATEMENT OF JOHN J. CASTELLANI

    Mr. Castellani. Thank you, Mr. Chairman, Ranking Member 
Schakowsky, and members of the committee. It is a pleasure to 
be here to talk about this very important proposed agreement.
    To put the relationship of our industry between ourselves 
and Europe in context, in 2011 about 80 percent of the 
medicines and development around the world were being 
researched and tested in the United States and in the European 
Union. And this figure is a testament to the fact that the U.S. 
and EU generally provide the strongest global support for 
biopharmaceutical research and development.
    Yet the continued strength of the innovative 
biopharmaceutical industry in both regions is far from 
guaranteed. The time and investment required to research and 
develop new medicines continues to increase, and the global 
ecosystem grows more hostile to that innovation.
    And it is in this context that PhRMA and its member 
companies strongly support a high-standard, trade-liberalizing 
agreement between the EU and the U.S. and one that eliminates 
unnecessary non-tariff barriers between these regions and 
establishes a model for all future trade agreements.
    PhRMA represents America's leading biopharmaceutical 
companies. Our members pioneer new ways to save lives, cure 
disease, and promote longer, healthier, and more productive 
lives.
    In 2012, our members invested more than $50 billion in 
research and development. And in 2011, the last year we have 
numbers, our sector employed more than 810,000 workers in the 
United States and supported 3.4 million jobs, in addition, 
across the country. That total activity contributed nearly $790 
billion in economic output, considering the direct, indirect, 
and induced effects of our industry.
    PhRMA welcomes the expansion of the world's most dynamic 
trading relationship that already contributes significantly to 
creating jobs on both sides of the Atlantic. To be meaningful 
and comprehensive, the U.S. and EU negotiations should address 
not only regulatory compatibility initiatives but intellectual 
property protections, market access provisions, and customs and 
public pronouncement measures, as well.
    Biopharmaceutical innovation does not happen in a vacuum. 
It requires significant intellect, time, resources, and an 
ecosystem that values and protects the resulting intellectual 
property that is created.
    For this reason, our industry is particularly concerned 
about aspects of the current European environment.
    First, shortsighted cost-containment measures, ostensibly 
proposed in response to financial crisis but too often 
implemented without predictable, transparent, and consultative 
processes, have significantly impacted our members' business in 
Europe. These measures raise serious concern regarding several 
EU member states' commitment to adequately reward innovation.
    Another issue of concern to the industry is the EMA's 
current and proposed data disclosure policies. The 
biopharmaceutical industry is firmly committed to enhancing the 
public health through responsible reporting and publication of 
clinical research and safety information. However, the 
disclosure of non-public data submitted in clinical and 
preclinical dossiers and patient-level data sets risks that 
damage both public health and patient welfare.
    PhRMA and its members urge the U.S. Government to engage 
with the EU in every available avenue to ensure responsible 
data-sharing.
    We also recommend that the biopharmaceutical market access 
commitments be included in the EU and the U.S. agreements, with 
the Korean form of the basis for similar commitments included 
in any EU-U.S. agreement.
    Key principles should be built into potential 
pharmaceutical chapters that we believe should include 
recognizing the value of biopharmaceuticals and the value they 
can play in reducing more costly medical interventions and 
improving the life of patients; respecting the right of 
physicians and other healthcare providers to prescribe 
appropriate medicines for their patients based on clinical 
need.
    Further, both the EU and the U.S. recognize that IP is the 
lifeblood of innovation, and providing IP rules within the 
legal and regulatory regimes. Any agreement between the U.S. 
and EU must not dilute those protections.
    Finally, on the already high level of cooperation between 
the FDA and EMA, PhRMA has proposed a number of regulatory 
compatibility initiatives to reduce the regulatory burden for 
both the sponsors and the agencies. These include reducing 
redundant testing, seeking mutual recognition of our general 
manufacturing principles and our good clinical principles, 
inspections, and establishing a procedure for the development 
of therapeutic area-specific regulatory guidelines.
    In summary, PhRMA and its members strongly support the 
proposed agreement and look forward to being an active 
stakeholder throughout the negotiations.
    Thank you very much.
    Mr. Terry. Well done. Thank you very much.
    [The prepared statement of Mr. Castellani follows:]
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    Mr. Terry. And, Mr. Dooley, thank you for being here once 
again. And you are now recognized for 5 minutes.

             STATEMENT OF THE HON. CALVIN M. DOOLEY

    Mr. Dooley. Thank you, Mr. Chairman. I want to thank all 
the members of the subcommittee for an opportunity to speak 
today.
    The American Chemistry Council represents the leading 
companies engaged in the business of chemistry. And the 
business of chemistry is a $770-billion enterprise which 
provides about 788,000 high-paying jobs in this country. A lot 
of folks don't also realize that the American chemistry 
industry produces 15 percent of the world's chemicals, which 
represent--and we also provide about 12 percent of all U.S. 
exports.
    ACC and its member companies are strong supporters of the 
Transatlantic Trade and Investment Partnership. Two-way trade 
in chemicals across the Atlantic totaled more than $51 billion 
in 2012, and Europe remains one of the U.S. industry's largest 
markets.
    The reduction and elimination of transatlantic tariffs and 
barriers to trade in chemicals would contribute to a 
significant expansion of U.S. chemical manufacturing and 
exports, allowing to us to capitalize on our enhanced 
competitiveness of the U.S. chemical industry due to increased 
supplies of natural gas, primarily from shale formations.
    Since 96 percent of all manufactured goods rely on the 
business of chemistry, this would provide a major boost to 
overall economic growth and job creation, enhance U.S. 
competitiveness, and expand consumer choice.
    The purpose of pursuing closer regulatory cooperation 
between the U.S. and EU should be to explore opportunities for 
creating efficiencies within and between regulatory systems 
while maintaining high levels of protection for human health 
and the environment. The goal is not to undermine or weaken 
existing regulatory mandates, but rather to ensure that those 
mandates do not result in unnecessary barriers to trade.
    The U.S. and the EU regulate chemicals in different ways. 
That is not going to change because of TTIP. In fact, recent 
congressional action affirms that the U.S. will continue to 
embrace a more risk-based approach to chemicals management than 
the more hazard-based approach embodied in the EU's REACH 
regulation.
    Where TTIP can add value is in ensuring that these 
different regulatory systems operate as coherently as possible, 
promoting efficient and effective regulatory approaches, and 
exploring opportunities for cost reduction and burden-sharing.
    Specific areas that might be addressed include efforts to 
promote the better sharing of sound science. The goal should be 
to minimize the potential for imposing additional regulatory 
barriers when revising or developing new regulations and to 
develop a common scientific basis for regulation. This could, 
in turn, promote enhanced data- and information-sharing, which 
would result in significant efficiencies for both government 
and industry, reducing the need for duplicative testing.
    Consistent with the comments of Congresswoman Schakowsky, 
TTIP should also focus on ensuring greater transparency and 
transatlantic cooperative activity between regulators. 
Stakeholders on both sides of the Atlantic are aware that 
regulator-to-regulator discussions are occurring, but 
information on when cooperative activity is taking place and 
what issues are being addressed is typically not made available 
to stakeholders in advance of those discussions. Stakeholder 
input and, where appropriate, participation in relevant 
cooperative activities would facilitate expert input and help 
enhance stakeholder confidence and support for the regulatory 
cooperation.
    ACC also calls on U.S. negotiators to explore opportunities 
for promoting enhanced coherence in chemical prioritization and 
assessment. The development of common principles for 
prioritization and a process for comparing lists of chemicals 
that are defined as priority could lead to greater 
efficiencies, primarily by sharing the burden of review. Final 
risk management decisions would remain sovereign, but a joint 
approach in this area could promote greater certain in chemical 
assessment process, significantly reduce costs for government 
and industry by avoiding duplication and unnecessary testing, 
and accelerate chemical reviews.
    ACC strongly supports the negotiation of a comprehensive 
and ambitious TTIP. In our view, the chemical industry is well-
placed to be a priority sector for enhanced regulatory 
cooperation under TTIP. For the chemical industry and for the 
broader U.S. economy, the TTIP has a potential to provide 
significant boosts to growth and job creation, which in turn 
would promote innovation and strengthen the international 
competitiveness of U.S. exporters.
    Thank you.
    Mr. Terry. Thank you.
    [The prepared statement of Mr. Dooley follows:]
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    Mr. Terry. Now, Mr. Garfield, you are recognized for your 5 
minutes.

                 STATEMENT OF DEAN C. GARFIELD

    Mr. Garfield. Great.
    Thank you, Chairman Terry, Ranking Member Schakowsky, 
members of this committee. On behalf of the world's most 
dynamic and innovative companies that make up the global tech 
sector, we thank you for the opportunity to talk to you about 
this issue today.
    As well, we thank you for your work in general on trade. 
The hearing you held last month on India has already had a 
significant impact in pushing back on the preferred market 
access regime that they tried to put in place there. In fact, 
our hope for today's hearing is that it will have a similar 
salutary impact as we move forward on TTIP.
    As you have noted, this agreement has the potentially 
precedent-setting impact, both economically and otherwise. And 
given the eloquence of the other colleagues who have been on 
this panel, rather than go through my entire written testimony, 
I thought I would simply share our three objectives for the 
potential partnership.
    One, and foremost for you, I know, as well, is economic 
growth and job creation. In order to ensure that this agreement 
lives up to the forecast and that that forecast, in fact, 
becomes fact, it is important that we include aspects of the 
economy that are critical to economic growth.
    The colleagues on the panel have highlighted a number of 
areas. I would also like to point to electronic goods in 
commerce. That e-commerce has the potential to be a significant 
force multiplier for the entire economy, both businesses large 
and small. So whether you are talking about AppleLink or an app 
developer or the Apple vendor in each of your communities, the 
potential impact is significant. And so we would suggest a 
focus there.
    As well, we would suggest focusing on the policy issues 
that would impact e-commerce. A number of people on this panel 
have already spoken about the importance of cross-border data 
flow and the rules that need to be put in place to ensure that 
that occurs, and we think that should be a priority.
    Our second objective for this agreement is to make sure 
that it is, in fact, a model for the rest of the world. A 
number of economies, in an effort to drive innovation and 
economic growth, have put in place forced localization 
requirements like those that we saw in India or have tried to 
fix things that are not broken--for example, creating new 
governance models for the Internet.
    Both the European Union and the United States have acted as 
a bulwark against those sorts of pernicious policies. And TTIP 
has the potential to align us in a more significant way in 
pushing back against those sorts of problematic policies on a 
global basis.
    Our third and final priority for this agreement, potential 
agreement, is something that the other folks on this panel have 
spoken of already, which is greater regulatory alignment where 
possible.
    The reason we have almost as many mobile phones as people 
in the world and the reason we have almost 3 billion people 
accessing the Internet is because it is an open, interoperable 
platform that is built on global consensus-based standards. 
That is a model that we think is apt for purposes of these 
discussions, as well.
    We recognize that we are not going to be able to align and 
harmonize all regulation, but where we can, we should. It will 
reduce costs and will continue to improve lives, as we have 
seen with the Internet generally and the availability of mobile 
technologies.
    Related to that, we think it is important, where it isn't 
possible to have alignment, that we have an alarm system so 
that there is greater transparency and certainty around where 
those disagreements are and the reasons for the disagreements.
    And so we look forward, as the tech sector, in working with 
this committee and with Congress generally in making sure that 
TTIP is not only completed but it is completed in a way that 
advances both U.S., European, and world economic interests.
    Thank you.
    Mr. Terry. Very well done. Thank you very much.
    [The prepared statement of Mr. Garfield follows:]
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    Mr. Terry. Now, Ms. O'Halloran--I am sorry, Halloran. I 
have a good friend, O'Halloran, so I apologize. You are not 
Terry. But you are now recognized for 5 minutes. Thank you.

                 STATEMENT OF JEAN M. HALLORAN

    Ms. Halloran. Thank you.
    Thank you for inviting me to testify today, and I am 
pleased to be able to give you the consumer viewpoints on the 
trade negotiations.
    I represent Consumers Union, the policy arm of Consumer 
Reports, which has 8 million subscribers to its print and Web 
editions. And I am also representing the views of the 
Transatlantic Consumer Dialogue, which includes all the major 
consumer organizations, some 60 groups, on both sides of the 
Atlantic.
    Trade between the EU and U.S. already has many obvious 
benefits for consumers, increasing choices in products and 
services ranging from automobiles to banking to wines. However, 
consumer groups are extremely concerned about the avowed focus 
of this negotiation, which is regulatory and non-tariff 
barriers. We are concerned this may erode safety, threaten 
privacy, and even increase prices by extending patent 
protections and other means.
    In citing the need for regulatory convergence and 
harmonization and mutual recognition, we think there are many 
hazards.
    The EU and U.S. are both advanced, highly civilized 
societies which have high standards of consumer protections for 
its citizens, so what could be wrong with this? The answer is, 
unfortunately, a lot. Theoretically, harmonization, if it is to 
the highest standard of consumer protection, could bring great 
benefits. However, that is not the history of trade agreements, 
and it doesn't appear to be the goal of the U.S. negotiators 
nor of a number of my colleagues here.
    Meanwhile, the scope of topics being tackled in this 
negotiation is breathtaking, including, potentially, auto 
safety, chemical safety, biotechnology, nanotechnology, 
pharmaceutical safety, patent protections, privacy on the 
Internet, banking regulations, food safety, medical device 
safety, and toy and consumer product safety. We find the 
potential for erosion of standards in these areas alarming.
    Let's look at a few examples of why consumer groups are 
extremely concerned.
    The concept of regulatory convergence implies some sort of 
movement to the middle where standards differ. In the area of 
toy safety, this committee and the U.S. Congress, with 
bipartisan support, addressed a sudden influx of hazardous 
toys, in most cases made in China, bypassing the CPSIA.
    A key provision of that law requires toy companies to 
obtain independent third-party certification from an accredited 
laboratory that says that U.S. standards for the lead in the 
paint on the toys and other safety standards are being met. 
Europe does not require third-party certification for toys. How 
do we converge that?
    The idea of mutual recognition is equally concerning here. 
Some might propose that we simply recognize that the self-
certification behind the CE mark in Europe is comparable to our 
provision. We feel, however, that this could potentially open 
the door for toys made in China by European companies, 
exclusively designed for sale in the United States, which could 
be less safe than toys made by U.S. companies and, therefore, 
subject to CPSIA. Consumers could be put at risk, and U.S. toy 
companies could be put at a disadvantage.
    Let's take another example, in the food area. When mad cow 
disease was discovered in the U.K. A number of years ago, the 
U.K. And other European regulators continued to allow European 
beef products to be sold and shipped across borders. The U.S., 
prudently, did not. We shut our doors to European beef quickly.
    We think the U.S. action was entirely correct and 
appropriate. The U.S. had a plentiful supply of beef here and 
did not need to take any risks with the European beef. But what 
if the EU and U.S. had a mutual recognition scheme in place at 
the time? The U.S. could have been forced to keep taking 
European beef for as long as Europeans deemed it safe enough to 
sell to Europeans.
    I would like to quickly bring up a couple of other topics.
    Investor-state dispute resolutions concern us greatly. They 
were originally developed in trade agreements to provide a 
means for U.S. corporations who invested in countries who had 
poor legal systems to obtain compensation if a government acted 
to, say, nationalize their oil wells. Such mechanisms are 
completely unnecessary, however, in the EU-U.S. context, where 
we both have well-developed court systems to deal with these 
kinds of difficulties.
    Finally, a few words about secrecy in this discussion. A 
critical area of concern is the secrecy with which the Obama 
administration's appointed negotiators will be conducting this. 
We certainly understand, as do Members of Congress, that not 
every conversation needs to be conducted or can be conducted in 
public. But Congress makes pending legislation public at 
numerous stages. By contrast, drafts and texts in this 
negotiation are being classified as Top Secret, unavailable to 
public and stakeholders at this table as well as to Members of 
Congress. This has not always been the case, and we urge you to 
demand that USTR periodically make public the texts that they 
are drafting.
    Thank you.
    Mr. Terry. Thank you.
    [The prepared statement of Ms. Halloran follows:]
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    Mr. Terry. And, Mr. Muffett, you are now recognized for 
your 5 minutes.

                  STATEMENT OF CARROLL MUFFETT

    Mr. Muffett. Thank you, Chairman Terry, Ranking Member 
Schakowsky, and members of the subcommittee, for the 
opportunity to appear before you today on a matter of profound 
importance for the people of the United States, Europe, and the 
world.
    I am Carroll Muffett, president of the Center for 
International----
    Mr. Terry. Mr. Muffett, would you pull your microphone a 
little bit closer to you?
    Mr. Muffett. I am Carroll Muffett, president of the Center 
for International Environmental Law, a nonprofit organization 
that uses the power of the law to protect the environment, 
promote human rights, and ensure that--ah, is that better?
    Mr. Terry. We will leave it to the IT guy.
    Mr. Garfield. If you have a problem back there, I can help 
you.
    Mr. Terry. Thank you for being here, Mr. Garfield.
    Mr. Muffett. For over 20 years, CIEL has worked with 
partners around the world to support a positive trade agenda, 
where increased market access does not undermine environmental 
protections or human rights.
    I offer this testimony on behalf of CIEL, Friends of the 
Earth, and the Sierra Club. I have submitted a full statement 
for the record and would like to briefly summarize my testimony 
here.
    The current system for regulation of chemicals in the 
United States is wholly inadequate to meet the challenge posed 
by the modern chemicals economy. The rate of cancer and other 
adverse effects continues to increase among Americans. The 
amounts of synthetic chemicals in our bodies have also 
increased and are among the highest in the world. Absent 
greater regulatory action, they will continue to increase.
    This is an international public health problem that remains 
unsolved. Public health is one of the core responsibilities of 
a government to its citizens, and this responsibility is not 
being met with regard to chemicals.
    The limited information on TTIP, particularly from the 
United States, makes assessments of its eventual impact 
inherently speculative. While TTIP could offer an opportunity 
to increase protections in the U.S. and the EU, experience with 
other trade agreements, industry submissions on TTIP, and the 
parties' express goal of reducing perceived regulatory barriers 
to trade make it far more likely that TTIP will hinder progress 
on chemical safety and potentially move us backward.
    Of particular concern is the risk that TTIP will be used to 
weaken the stronger chemical standards that already exist in 
the EU and in some U.S. States, rather than to raise U.S. 
standards to achieve higher levels of protection.
    To reduce this risk, TTIP must respect and protect the 
right of citizens in the United States and Europe, through 
their governments, to choose their own levels of environmental 
protection and to set the standards needed to achieve those 
levels.
    TTIP must avoid measures likely to delay or dilute the 
creation of new rules for the protection of human health or the 
environment, including stronger chemicals laws. TTIP should not 
include provisions for mutual recognition for the chemical 
sector and other sensitive sectors that reduce domestic 
regulatory control in crucial public health and safety matters.
    TTIP must not elevate the narrow interests of private 
corporations above the public good through provisions for 
investor-state dispute resolution. TTIP should not preempt or 
impede the rights of State and local governments or of 
governments outside the United States and EU to adopt new 
initiatives on toxic chemicals and other threats, including 
their rights to choose higher levels of protections for their 
citizens and to innovate new and better approaches to achieving 
that protection when the Federal Government is unwilling or 
unable to do so.
    TTIP should not impede regulatory efforts to address 
emerging threats such as nanotechnologies, endocrine-disrupting 
chemicals, or hydraulic fracturing, which have profound 
implications for our health and our environment.
    Finally, TTIP must be negotiated in an open, transparent, 
and participatory matter that safeguards the universal and 
fundamental public interest in the outcome of the negotiations. 
In recent years, the United States has conducted trade 
negotiations with a secrecy and a lack of transparency wholly 
inconsistent with basic principles of good governance in a 
constitutional democracy and inconsistent with the public's 
right to informed, meaningful participation in a public policy 
dialogue of profound national consequence on both sides of the 
Atlantic. Both parties should commit to broad public access to 
negotiating documents and positions to facilitate informed 
public debate regarding the negotiations and any resulting 
agreement.
    To protect the environment, health, and safety of 
consumers, workers, and children around the world, what is 
needed is not free-trade agreements but better trade 
agreements--agreements that see public protection not as a 
competing goal but the highest goal and leverage the power of 
markets to serve the global good; agreements that enhance trade 
by strengthening and advancing environmental health and safety 
standards, rather than viewing them as irritants to be reduced 
and eliminated. We look forward to an open, transparent, and 
inclusive dialogue on whether and how such an agreement can be 
achieved.
    Thank you again for the opportunity to testify.
    Mr. Terry. Thank you, Mr. Muffett.
    [The prepared statement of Mr. Muffett follows:]
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    Mr. Terry. Now, at this time, we will all ask the 
questions. So my first question--I recognize myself for 5 
minutes of questions.
    Mr. Blunt, Mr. Castellani, Dooley, and Garfield, I will ask 
you this question. You set out your goals for each one of your 
industries. Now, it seems like the easiest approach here would 
simply be, who has the most restrictive, and we will harmonize 
to that level. Is that an appropriate strategy for the USTR?
    Mr. Blunt, you can start.
    Mr. Blunt. We would argue that, since both economies have 
very sophisticated regulatory regimes today with very similar 
environmental and safety outcomes, that the real goal should be 
mutual recognition of vehicles built to either economy's 
standards, so that vehicles built to the EU standard would be 
acceptable for sale in the U.S. and vice versa.
    Mr. Terry. So you would disagree with just harmonize to the 
most restrictive standards?
    Mr. Blunt. We think you should look at the results of the 
standards that exist today and that the results would 
demonstrate that you have very high levels of environmental and 
safety performance in both economies and that you should just 
recognize that you are achieving the same thing through the two 
regulatory processes.
    Mr. Terry. All right.
    Mr. Castellani?
    Mr. Castellani. Mr. Chairman, in our industry, as you know, 
both the EU and the U.S. have very strict and very important 
regulatory regimes. What we are suggesting in this agreement is 
we take the best of the both but give the opportunity, from the 
patient perspective, to have harmonization that makes it more 
efficient for, for example, our FDA and the EMA.
    In our industry, we have very high standards on both sides 
of the Atlantic, obviously, for our manufacturing practices and 
for our clinical trial practices. We think if we could 
harmonize to that high standard, we could free up FDA resources 
and EMA resources to focus on countries that present more of a 
risk and manufacturing practices that present more of a risk 
for patients.
    So it is a not a simple ``yes'' or ``no.'' It is taking the 
best, from a patient perspective, and applying it equally on 
both sides of the Atlantic.
    Mr. Terry. OK.
    Mr. Dooley? And you may want to add some context for Mr. 
Muffett's comment.
    Mr. Dooley. Yes, I would say that, no, we have no interest 
in a harmonization to the most restrictive standard.
    And, you know, our companies, whether they are 
manufacturing and introducing chemicals and products in the 
United States or the EU or anyplace in the world, their first 
commitment is that they are safe for their intended use.
    But I would also just give a couple examples. You know, you 
can look at what we would assess as a non-science-based 
approach in the EU to the evaluation of the safety of GMO 
products in agriculture. It is not just an accident that BASF 
and Syngenta, both European-based companies, have moved all of 
their bio-ag research and development to North Carolina, and it 
is a direct response to the regulatory impact.
    On the issue of REACH, BASF, one of the largest chemical 
companies in the world, are now assessing that the regulatory 
costs to their company to comply with REACH is going to amount 
to about $650 million or $700 million. You know, we don't think 
that that is contributing to safer outcomes and safer products, 
because they are marketing the same products in the EU as they 
are in the U.S. But they are facing an additional cost of 
operation, which is siphoning dollars away from innovation.
    What we are suggesting, though, that a lot of that research 
and assessment and data that is being developed by BASF, what 
they are spending some of that $650 million on, is that there 
are opportunities for the sharing of that data between the U.S. 
and the EU that can achieve greater efficiencies for industry 
as well as for government.
    Mr. Terry. Mr. Garfield?
    Mr. Garfield. The answer is also ``no'' for us, but nor are 
we advocating for the adoption of the least restrictive either. 
I think that dichotomy is a false one.
    What we are encouraging is that we use greater, more 
objective standards that are science-based and, as well, that 
we look at the impact and also avoid redundancy. So oftentimes 
we, in fact, do have very similar standards, where you couldn't 
point to any great distinction, but we have redundancies 
anyway.
    Mr. Terry. All right. Very good.
    I will yield back my 15 seconds and recognize the 
gentlelady from Illinois, Jan Schakowsky.
    Ms. Schakowsky. Thank you very much, Mr. Chairman.
    Mr. Castellani, in your testimony, you talked about, quote, 
``issues of considerable concern to the industry,'' unquote, 
and among them you mentioned, quote, ``shortsighted cost-
containment measures,'' talking about the European environment.
    And, to me, it is a little ironic. You also said something 
about ``too often implemented without predictable, transparent, 
and consultative processes,'' which we are talking about, too, 
as a shortcoming, I think, of these trade negotiations, that it 
is not very transparent.
    But I wanted you to tell me, yes or no, is PhRMA opposed to 
the following cost-containment measures:
    One, Medicaid drug rebates, the current Medicaid drug 
rebates. Yes or no?
    Mr. Castellani. We are opposed.
    Ms. Schakowsky. You are opposed.
    The 340B program, which would allow reduced costs for 
certain safety net providers?
    Mr. Castellani. We favor the 340B program.
    Ms. Schakowsky. Favor.
    A ban on pay-for-delay that would prohibit drug companies 
from paying to keep generics off the market?
    Mr. Castellani. We oppose that.
    Ms. Schakowsky. State law limits on pharmaceutical company 
payments to doctors?
    Mr. Castellani. We oppose that.
    Ms. Schakowsky. Medicare negotiation for prescription 
drugs?
    Mr. Castellani. We already have Medicare negotiations.
    Ms. Schakowsky. OK, but allowing Medicare to fully 
negotiate, as the VA does, for lower drug prices?
    Mr. Castellani. Oh, the negotiations that occur now occur 
through the insurance companies that provide the drug benefit.
    Ms. Schakowsky. Right. But Medicare, itself, negotiating?
    Mr. Castellani. No. We think the current system works fine.
    Ms. Schakowsky. VA negotiations currently?
    Mr. Castellani. The current system is fine.
    Ms. Schakowsky. Negotiating authority for Federal Employees 
Health Benefits Program?
    Mr. Castellani. Well, again, the insurers do have that 
authority.
    Ms. Schakowsky. OK. And you wouldn't oppose that or want to 
change that in any way?
    Mr. Castellani. That is how prices are determined by 
insurance companies.
    Ms. Schakowsky. OK. And formularies?
    Mr. Castellani. That is how formularies are determined by 
insurance companies.
    Ms. Schakowsky. OK.
    The elimination of existing cost-containment measures and 
the restriction on possible future ones that we see could be 
coming up increases cost to States, taxpayers, and consumers. 
And, at the very least, I think all of these cost-containment 
changes that could possibly be in this agreement should be 
discussed publicly rather than just behind closed doors.
    Turning to another issue, auto safety. And, Ms. Halloran, I 
wanted to ask you and Governor Blunt if you wanted to comment.
    In meetings regarding this hearing, companies pointed to 
the auto industry as one space where they believe there can be 
substantial progress made toward their goal of regulatory 
harmonization.
    So, in your testimony, you mentioned child occupant 
protection standards. I have long supported efforts to 
strengthen U.S. requirements for car seats and boosters. It is 
only recently that the U.S. has added a child-sized crash dummy 
to its testing, which is the size of the typical 10-year-old, 
as well as a standard crash test for rear occupants.
    Can you describe the difference between the U.S. and EU 
standard for car seats and why you think the EU standard is 
safer?
    Ms. Halloran. I think it might be best if I get back to you 
on that.
    The EU does have a number of standards which are better 
than ours, we think, and ones which we would advocate for NHTSA 
to adopt. And this is a clear area where it would be good to 
harmonize up.
    But I think I should get back to you on the specifics after 
I talk to my colleagues.
    Ms. Schakowsky. OK.
    And let me ask you, Governor Blunt. I mean, there are many 
efforts right now where consumer groups are looking at those 
ways in which European standards are higher.
    My understanding of what you are saying is neither one 
should have to change and that each should be accepted in each 
country. Is that--that is your goal?
    Mr. Blunt. That is our goal, though if a new need emerged, 
we are not stating that we are opposed to new regulations in 
either economy if there is a new safety need that needs to be 
addressed. But our goal would be to recognize that today you 
achieve essentially the same environmental and safety outcomes 
and have mutual recognition of those standards.
    Ms. Schakowsky. OK.
    And with just a few seconds, I would love to meet with you 
about the regulation that would require rear visibility through 
cameras, which has been held up at the National Highway 
Transportation Safety Board. That would prevent two children, 
on average, a week being killed by back-overs. And if we could 
at some point meet about that, I would appreciate it.
    Mr. Blunt. Look forward to it.
    Ms. Schakowsky. Thank you.
    I yield back.
    Mr. Terry. Thank you.
    And I now recognize Mr. Lance for 5 minutes.
    Mr. Lance. Thank you, Mr. Chairman.
    To Mr. Castellani, the rapid deterioration of Indian 
intellectual property protections are direct evidence that 
India's industrial policies are designed to take American and 
European innovation for its own domestic industries, the 
industries affected by India's actions cover a broad range of 
innovative industries here and in Europe, including high tech, 
telecom, green technology, and your industry as well.
    In light of this threat, how can we use this trade 
agreement to set global standards that value strong IP 
protections?
    Mr. Castellani. Thank you, Mr. Lance.
    As I said in my testimony, we view and I think across 
industry we all had agreed that we view this as an opportunity 
to set a standard that should be applied around the world. In 
our industry, the ability to reward and protect innovation is 
key to the ability to meet patient needs, and particularly to 
develop medicines where none exist right now. We think the high 
standards that the Europeans have and the high standards the 
United States have present an opportunity to demonstrate to the 
rest of the world that you can have both the innovation that is 
necessary to serve patients and the affordability of medicines 
at the same time. And you can't have one without the other.
    I would quote what the vice president said in India this 
morning, where he said a young Indian physician who is a 
researcher is motivated by his or her ability to discover and 
to continue that discovery process because they can be rewarded 
and encouraged because of the protection of what they develop. 
And we think that should be the standard around the world.
    Mr. Lance. Thank you. Isn't it true that many of the 
innovations that occur in your industry occur based upon 
research and development here in the United States?
    Mr. Castellani. About 65 percent of all of the research 
that is done in biopharmaceuticals is done in the United 
States. It, as I said, represents--the National Science 
Foundation has told us that we do 20 percent of all the 
industry-funded research and development in the United States. 
It is also about 20 percent of our revenues, which I think is 
the highest of any sector in the economy. So it is absolutely 
vital to the United States and the United States as a leader.
    Mr. Lance. We will be having a major discussion on tax 
policy in this country out of Ways and Means, not E&C, but of 
course, we want as much research and development as possible. 
And I think the 20-percent figure is extraordinary in 
relationship to what it is across other sectors.
    Now, as I understand it, the cost of generic drugs is 
higher in developing parts of the world than perhaps many 
realize; is that accurate?
    Mr. Castellani. Generics are higher in price across the 
board in Europe than they are in the United States, yes.
    Mr. Lance. Thank you. Would others on the panel like to 
comment on intellectual property matters as they relate to your 
fine industries?
    Congressman Dooley, it is a pleasure to meet you, sir.
    Mr. Dooley. I would just say we are very much aligned and 
consistent with the policy that Mr. Castellani said. We are one 
of the leading innovation manufacturing sectors in the United 
States; about 20 percent of all patents are issued to our 
industry. So protection of that intellectual property is a high 
priority.
    Mr. Lance. And do you see challenges in that regard in 
other parts of the world for your industry?
    Mr. Dooley. There are challenges, you know, throughout the 
world. I would say with the EU, that is not where we are facing 
the greatest challenges.
    Mr. Lance. I am not suggesting the EU.
    Mr. Dooley. Significant concerns----
    Mr. Lance. This is a model for other parts of the world.
    Mr. Garfield.
    Mr. Garfield. Yes. I would add two things. One is, we do 
see challenges in other parts of the world, particularly around 
tech transfers as a part of a requirement for participating in 
a market. That was one of the challenges that we faced in that 
India that we are now seeing a bit of a reprieve on, but there 
is still a lot of work to be done there.
    The second is as we think about IP, I would ask that we 
also think about trade secrets, which there is a great 
opportunity for greater harmonization between here and Europe 
and for it be to a model for the rest of the world.
    Mr. Lance. Thank you.
    Ms. Halloran.
    Mr. Halloran. I think everyone needs to just think for a 
moment, though, about the recent Supreme Court decision in the 
Myriad case, where they decided that a breast cancer gene could 
not be patented. This is an example of how patenting may be 
going too far in a number of cases and getting in the way of 
actual innovation and unnecessarily raising healthcare costs 
for consumers.
    Mr. Lance. Thank you. My time has expired.
    Thank you, Mr. Chairman.
    Mr. Terry. At this time, I recognize the emeritus of the 
entire Congress, Mr. Dingell.
    Mr. Dingell. Thank you, Mr. Chairman. I thank you for your 
courtesy, and I commend you for holding this important hearing. 
I am delighted to see the subcommittee is exercising its long 
neglected jurisdiction over matters related to international 
trade.
    At the April 10 hearing of this subcommittee about domestic 
automobile manufacturing sectors, I tried to establish that 
some form of regulatory harmonization or mutual recognition of 
standards with the European Union would allow U.S. automakers 
and others to be more globally competitive. While it is 
arguable that regulatory harmonization or mutual recognition of 
standards would be helpful to industry, I also want to make 
sure that the health and safety of American consumers does not 
result from either.
    Now, to Messrs. Blunt, Castellani, Dooley, and Garfield, 
all of you posit in your written testimony that a U.S.-EU free-
trade agreement should include some form of regulatory 
harmonization or mutual recognitions of standards. I am asking 
that you and the other panelists submit to us a brief 
definition of these terms and how this would benefit the United 
States.
    Now, again, to Messrs. Blunt, Castellani, Dooley, and 
Garfield, this is a yes or no question. Do each of you believe 
that the regulatory harmonization or mutual recognition of 
standards will not result in any diminution of the health or 
safety of American consumers? Yes or no.
    Mr. Blunt. Yes.
    Mr. Castellani. Yes.
    Mr. Dooley. Yes.
    Mr. Garfield. Our experience is yes.
    Mr. Dingell. All right. Now, to Ms. Halloran and Mr. 
Muffett, do you agree with your fellow witnesses responses? Yes 
or no.
    Mr. Halloran. Absolutely not.
    Mr. Dingell. Sir?
    Mr. Muffett. No.
    Mr. Dingell. Now, I would like to hear what our witnesses 
have to say about regulatory transparency as it relates to 
transatlantic regulatory harmonization or mutual recognition in 
standards. As we all know, the Administrative Procedure Act 
provides for substantial stakeholder input in the U.S. 
regulatory process. And essentially, that is a manifestation of 
the requirements of the constitution.
    Now, to all witnesses, yes or no: Do you believe that the 
regulatory harmonization or mutual recognition of standards 
between the U.S. and the European Union would afford Americans 
the same level of stakeholder input in the regulatory process 
as they currently enjoy under the Administrative Procedure Act? 
Yes or no?
    Mr. Blunt. No.
    Mr. Dingell. Mr. Castellani?
    Mr. Castellani. I am not sure I can answer for both sides 
of the Atlantic.
    Mr. Dingell. Well, if you want to submit the answer later, 
that would be acceptable.
    Mr. Castellani. I would be happy to do that, but I think 
generally, yes, it should be the objective.
    Mr. Dooley. I will submit a written answer.
    Mr. Dingell. Next witness.
    Mr. Garfield. I hate to fall prey to peer pressure, but I 
will submit as well. I would say that it is something that we 
should insist upon in view of it about very important.
    Mr. Dingell. I am down to a minute, 38 seconds.
    Ma'am, if you please.
    Mr. Halloran. No.
    Mr. Muffett. Most emphatically no.
    Mr. Dingell. Now, to all witnesses, do you believe that 
regulatory harmonization or mutual recognition of standards 
would make it more difficult in general for the United States 
and the European Union to promulgate new regulations in the 
future? Yes or no. Starting on your--at this end of the table.
    Mr. Blunt. No.
    Mr. Castellani. No.
    Mr. Dooley. No.
    Mr. Garfield. No, as well.
    Mr. Halloran. Definitely yes.
    Mr. Muffett. Yes.
    Mr. Dingell. Now, to all witnesses, similar, do you believe 
that regulatory harmonization or mutual recognition of 
standards would constrain the ability of the United States and 
the European Union to promulgate regulations it deems uniquely 
appropriate for the specific threats to the health and safety 
of their respective citizens? In other words, do you believe 
that regulatory harmonization or mutual recognition of 
standards would diminish the regulatory sovereignty, so to 
speak, of the United States and the European Union? Yes or no.
    Mr. Blunt. No.
    Mr. Castellani. No, sir.
    Mr. Dooley. No.
    Mr. Garfield. No.
    Mr. Halloran. Yes.
    Mr. Muffett. Yes.
    Mr. Dingell. OK. Now, again to all witnesses, I would like 
that you would submit additional comments on these matters for 
the record.
    Now I would like to indicate my displeasure with the manner 
in which the TransPacific Partnership has been negotiated. 
Congress and the public have had far too little access to 
details in the draft agreement. I believe that a lot of 
sunshine is warranted.
    Now, to all witnesses, would you support legislation that 
improves the transparency in trade agreement negotiations, 
particularly by granting improved access by all stakeholders to 
negotiating texts on future trade agreements? Yes or no.
    Mr. Blunt. Yes.
    Mr. Castellani. With all due respect, Mr. Chairman, I think 
you have to ask the negotiators; that is really the 
government's business.
    Mr. Dingell. Mr. Dooley.
    Mr. Dooley. I concur with Mr. Castellani.
    Mr. Garfield. I do as well. I think the negotiators should 
be the ones who determines it.
    Mr. Dingell. Ma'am.
    Mr. Garfield. And it will be different in each instance.
    Mr. Dingell. Ma'am.
    Mr. Halloran. I concur with auto representative, yes.
    Mr. Dingell. And.
    Mr. Muffett. I will support it and march through the 
streets for it.
    Mr. Dingell. Now, one question--I know that I am exceeding 
my time, and I thank you for your courtesy to me, Mr. Chairman.
    On a more parochial matter, do you, each of you, support or 
oppose the inclusion of currency manipulation disciplines in 
future U.S. trade agreements? Yes or no, with starting this end 
of the table.
    Mr. Blunt. Yes. Absolutely.
    Mr. Castellani. It is not an issue on which we have taken a 
position.
    Mr. Dooley. It would vary with respective countries.
    Mr. Dingell. Sir.
    Mr. Garfield. We don't have a position on that issue.
    Mr. Dingell. Ma'am.
    Ms. Halloran. No position.
    Mr. Muffett. No position.
    Mr. Dingell. Mr. Chairman, you have been extraordinarily 
courteous to me. I thank you and yield back the balance of my 
time.
    Mr. Terry. Thank you.
    At this time, recognize the gentleman from the great state 
of Texas, Mr. Olson.
    Mr. Olson. I thank the chair. And want to thank our 
witnesses for coming here this morning. This is a very timely 
hearing. Given that just down the road the first round of 
negotiations of the Transatlantic Trade and Investment 
Partnership, or TTIP, were completed. Now, trade relationship 
with the EU is very significant, accounting for 40 percent of 
global output and nearly $1 trillion in trade.
    Of course, foreign trade gives me a chance to brag about my 
home State of Texas. The largest petrochemical complex in the 
world lines the 50-mile-long Port of Houston. The Port of 
Houston is the largest foreign tonnage port in America. Last 
week, the Department of Commerce's International Trade 
Administration announced that the greater Houston area is the 
top market for exports, with $110.3 billion in merchandise 
exports in 2012, $110.3 billion. And TTIP gives Houston a 
chance to get even bigger. Only one of the top five countries 
that Houston exports to are in the EU. That is The Netherlands. 
Recent study by the Paramount Group found that Texas could add 
$17 billion if tariffs on the barriers with the EU were 
eliminated. More foreign trade means more American jobs and a 
more safe and secure world.
    My former boss, United States Senator Phil Gramm, summed it 
up best when he said that American democracy and American free 
enterprise have given more hope and more freedom to more people 
than all the wars in history combined.
    Against that backdrop, my first question is for you, Mr. 
Dooley. Your testimony and in public, you stated that the 
American Chemical Industry is poised to capitalize on enhanced 
competitiveness due to increased supply from shale formations 
all across our country. As you know, most of the shale gas is 
being produced in Texas. The Barnett Shale played the first up 
there by Dallas-Fort Worth, Eagle Ford Shale played south of 
San Antonio, towards Laredo. Happening all over our country. 
Could you please go into detail about how the FTA and TTIP in 
particular could positively affect the petrochemical industry? 
Because, again, as I have told you in the past, sir, in the 
last 4 years, I have noticed a difference. Before chemical guys 
were talking about going to overseas. Now they are talking 
about coming back to America, keeping those jobs here. A lot of 
it is because of cheap energy. Details about that for 
petrochemicals.
    Mr. Dooley. There has been a dramatic shift in the 
international competitiveness of the U.S. chemical industry in 
just the last 5 years. We have gone from in that period of time 
from one of the highest cost producers of chemicals globally to 
now the lowest cost producer of chemicals globally. There is 
one reason for that, and that is the increased supplies of 
natural gas, which for the chemical industry, we use natural 
gas, not only as an energy source but as also a feedstock. It 
is like flour is to bakery, natural gas is to the chemical 
industry. So when we see this dramatic increase in supplies 
which is resulting in more competitively priced natural gas, 
that gives us a significant competitive advantage 
internationally.
    We keep a running total of new investments. We have now, 
looking by the year 2020, we will have 72 billion in new 
capital investments and chemical manufacturing in the United 
States. And important to note is over 50 percent of that is 
from direct foreign investment, companies located outside the 
U.S. We are in-shoring investment into the United States, which 
is a dramatic shift from over 10 years ago. And there has 
probably never been a point in time when you are seeing a 
dramatic--such a divergence in energy policies between the EU 
and the United States. In the United States, we are seeing the 
prospects of having domestic energy security, we see a 
commitment to develop our fossil fuel sources, primarily 
natural gas.
    And if you look at the EU, they are putting policies in 
place that are banning fracking, that are moving away from 
nuclear energy. Their energy costs and feedstock costs are 
projected to go up significantly over the next decade, ours are 
going to stay flat. So when we also capitalize on the 
opportunity to reduce tariff barriers and regulatory barriers, 
that gives us the opportunity to further capitalize on this 
competitive advantage, and that's why the U.S. chemical has a 
vested interest in seeing progress on a TTIP being finalized.
    Mr. Olson. I told you I have seen a dramatic shift in the 
chemical industry in the last 5 years. They were talking about 
not growing business here in America, not building new chemical 
plants, moving overseas. Now that has changed. Coming back home 
or staying here. That is a great problem to have or solution to 
have.
    One final question, in your testimony, you talked about the 
greater regulatory transparency. What are you concerned about? 
Is the process breaking down, and should we be concerned going 
forward with TTIP?
    Mr. Dooley. Well, what we are referring to here is there is 
an opportunity--and we're not--contrary to what was implied by 
an earlier question, we are not for regulatory harmonization or 
standardization between the U.S. and the EU. But we do think 
that there are opportunities for cooperation where we can 
through the U.S. and EU through TTIP identify, you know, 
scientific assessment protocols. You know, we ought to be 
developing the best way to identify what are the scientific 
studies and the way that you are preparing data that can 
provide information on a risk of a particular chemical. You 
might have different standards of risks that EU would take 
versus the U.S. And that should--we should respect that. But 
you are going to have industry as well as government investing 
significant dollars to develop this data. And we ought to be 
providing ways to share that. And there ought to be 
transparency in terms of how those studies are being identified 
and developed that would help inform the--you know, whether the 
U.S. or in the EU.
    So that is where we think that there is a lot of savings in 
terms of this regulatory cooperation as well as transparency to 
build a trust in confidence in the respective approaches to the 
safety of chemicals in coppers.
    Mr. Olson. Thank you, sir.
    I've got all my time. I want to take this interpretation, 
the chairman loves Texas.
    But thank you, sir. Appreciate it.
    Mr. Terry. Chair recognizes the gentleman from California, 
Mr. McNerney, for 5 minutes.
    Mr. McNerney. I thank the chairman for holding this 
important hearing.
    My first question goes to Mr. Muffett. You indicated that, 
in your opinion, U.S. chemical regulatory regime was not 
adequate in its current form. And I was wondering if you could, 
and a yes or no answer: Could our chemical regulatory regime 
benefit from harmonization with the EU? Could we benefit in our 
form? Yes or no.
    Mr. Muffett. No.
    Mr. McNerney. No?
    Mr. Muffett. It doesn't admit of a yes or no answer. If we 
were to harmonize up to the EU standard, yes, we could benefit.
    Mr. McNerney. So there is a potential for benefit. But my 
followup question is this: How could secrecy in the TTIP 
negotiations influence the outcome of the harmonized chemical 
regulatory regime and the need for sound science in general?
    Mr. Muffett. Your preceding question is a case in point of 
the risk. The U.S. system for addressing chemical risks is far 
weaker than the European system. In efforts to harmonize, in 
efforts to find some places for regulatory convergence, the 
tendency will be to push toward the middle. And without the 
public there to participate, to engage, to defend the public's 
interest in strongest possible regulations, that movement 
towards the middle is the biggest risk.
    Mr. McNerney. Ms. Halloran, I do appreciate your concerns 
with regards to the trade negotiations. As harmonization and 
regulatory convergence are discussed, how can we ensure the 
maintenance of U.S. consumer protections?
    Ms. Halloran. The first step has obviously got to be to 
have a more public process for this. The extent of the entire 
thing is just enormous. And then they have to set goals, I 
believe, that I think are in direct conflict, for example, with 
those of the auto industry, which says there should be no 
increases. I think the proper approach has to be to try to go 
for the best level, the highest level of consumer protection, 
which may be the EU standard in one case and maybe the U.S. in 
another. And convergence towards the middle won't get us there.
    Mr. McNerney. Thank you for that answer.
    Mr. Dooley, thank you for coming here today. I understand 
the potential benefits of the enhanced EU-U.S. cooperation when 
it comes to regulations within the chemical industry clearly. 
Can you suggest how to uphold the highest standards when 
sharing scientific assessments and test results that may differ 
between our two locations?
    Mr. Dooley. I'm not sure I understood the question.
    Mr. McNerney. Sure. Can you suggest how to uphold the 
standards that will protect consumers when we are talking about 
scientific assessments and test results that may differ between 
our two regimes?
    Mr. Dooley. I think that, it is clear that whether you are 
producing a chemical in the United States or the EU, and our 
companies are multinational, is that, the first commitment has 
to be to the certainty of the safety of the product for its 
intended use. We would contend that the REACH program has that 
similar objective that is differing outcomes. But those 
outcomes are not markedly different than what is being 
determined and assessed through the U.S. EPA's review of the 
safety of chemicals in commerce. I think it is also notable 
that we see in the Senate today, or in the last few months, a 
bipartisan bill was introduced that is supported by industry, 
ACC, as well as the Environmental Defense Fund, that develops a 
reform and modernization of TSCA that is taking a more risk-
based approach than what the EU under the REACH program. But 
there is a collective understanding that that will result in 
the EPA having authority to make a determination on the safety 
of chemicals in commerce that will be every bit as accurate and 
as effective as the REACH program, but at a far less cost. And 
that is what we are looking for. How do you have the most 
efficient and effective program of assessing the safety of 
chemicals for industry as well as the regulators, whether it is 
in the U.S. or the EU. And that is where we have differences 
and where we don't want to harmonize to the EU's REACH program.
    Mr. McNerney. Good answer there.
    Mr. Castellani, simple question. You folks thought IP--and 
I have IP myself, so I appreciate that. What location, do 
members of your industry prefer IP to reside, in the United 
States, in Europe, or in third countries?
    Mr. Castellani. It needs to be--it needs to reside where it 
is developed. And the nature of our industry is such that 
because of the unique both existence of the scientific 
ecosystem here in the United States, because of the strong 
intellectual property protection that U.S. Provides, because of 
the transparent and rigorous regulatory system that we have, 
and because of our valuation system for medicines, the 
preponderance of it lies here in the United States. It needs to 
reside where it is developed, but it needs all four of those 
elements to be able to be developed.
    Mr. McNerney. All right. Thank you.
    I yield back.
    Mr. Terry. Thank you, Mr. McNerney.
    Now the chair recognizes for 5 minutes the vice chairman of 
the full committee, gentlelady from Tennessee.
    Mrs. Blackburn. Thank you, Mr. Chairman. And I want to 
thank each of you for taking your time to be here today.
    Chairman Terry has done a great job in putting the focus on 
how we bring jobs back to the U.S. And some of you, we have had 
the opportunity to visit with previously, and I have tremendous 
respect for the way each of you have looked at intellectual 
property and the protection thereof.
    Mr. Blunt, I know you have engineers who are seeking to 
protect their IP that are very concerned with reverse 
engineering. Mr. Dooley, I know the same thing happens with 
some of your members. So I want to just stay with that for just 
a minute, with the IP issues.
    Mr. Garfield, we had someone from your organization at a 
hearing recently here. We talked about India and the PMA. And 
that is something that I understand now that India is going to 
review that policy. And we are pleased with that. So we know 
that it could be reinstated. So I want you to just discuss for 
a moment, as you look at this, as you are learning lessons from 
what has happened with India and the PMA, as we look at 
protecting IP and looking at some of these transfer rights, if 
you will, that are there through the Internet, and you spoke a 
little about that global platform, talk to me about what we 
could do here in Congress, from a policy point of view, that 
would help us to forestall, if you will, things like the 
situation in India with the PMA. And then what would be helpful 
for the administration to do, for USTR to do, and kind of where 
we stand. Take it from there.
    Mr. Garfield. It is a great question. Thank you for it. I 
will start, and I am sure some of my colleagues on the panel 
will jump in.
    I began the testimony by thanking the committee for its 
vigilance and oversight as it relates to India. But India is--
and we are pleased that we are seeing some reprieve, at least 
temporarily, on India. But India is not alone. In a number of 
markets that are looking to engender innovation and economic 
growth, I believe the way to do that is to have--is to take 
other countries' intellectual property or other companies' 
intellectual property or force the transfer of IP as a 
requirement for being in that market.
    The lesson learned from India, I think, is largely one of 
having high standards, which we do in the United States, 
certainly can be approved. But we do. Two, remaining vigilant 
in oversight and our resistance to succumbing to countries who 
suggest that we should compromise on those intellectual 
property rights. And then the third that I would point to, and 
it is still early days yet to fully assess, and we still have 
work to do with India, but the alignment of the messaging and 
consistency of the messaging between Congress and the 
administration was such that it was clear and has been clear to 
India that there was no space between the private sector, 
Congress, and the administration, which I think served us 
exceptionally well. This TTIP has the potential to do that on a 
much broader basis. And it is something that we are strongly 
supportive of.
    Mrs. Blackburn. Mr. Dooley, I saw you----
    Mr. Dooley. I am not familiar with the--the India, you 
know, reference that you made there. But I would just put it in 
the context of TTIP and make an argument for why we are not 
for, in some instances, regulatory harmonization. In the United 
States, we currently bring three times the number of new 
chemicals and innovations to the marketplace as they do in the 
EU. That is in large part because of the regulatory structure 
that is in place and the cost of compliance and whether or not 
you have an environment that is conducive to that. So that is 
where we have some concerns about whether or not it is in our 
interest to go down that path, which we concluded it is not. 
But there is an opportunity to ensure that there is a sharing 
of data and information that results in cost savings to 
industry as well as to the regulators and the agencies and the 
United States and the EU. And that is where we think that there 
is significant benefit through a TTIP in terms of trying to 
find ways in which we can share that information, which also 
has to be done in a way that it protects intellectual property 
rights. In the sharing of that information. And how do you 
control that, which all has to be part of the negotiations that 
are taking place.
    Mrs. Blackburn. OK. Mr. Castellani, did you have anything 
to add?
    Mr. Castellani. Yes, ma'am. I think that one of the things 
that you have to focus on is, I am not aware of any economy 
that has been able to develop sustained economic growth over a 
long period of time by stealing intellectual property. One of 
the reasons why the United States is as strong economically as 
it is in also the EU is that we have the infrastructure to 
develop the intellectual property here. And that benefits not 
only the customers for it, in our case, patients, but also 
obviously the economy where it is developed. So the challenge 
with India is that the actions that they have taken, at least 
in our sector, just to usurp and therefore confiscate property 
that was developed with substantial investment in other parts 
of the world, in the United States and in Europe, has turned 
out so that it doesn't help their economy in the long return 
and it certainly doesn't help their patients because they are 
precluding the Indian patient from the most innovative medicine 
in the world. So thank you.
    Mr. Terry. Chair would now recognize gentlelady from Virgin 
Islands for 5 minutes.
    Mrs. Christensen. Thank you, Mr. Chairman.
    And welcome to the panel. A growing body of scientific 
evidence demonstrates that many chronic illnesses on the rise 
in the industrialized world are linked to exposure to toxic 
chemicals, including many cancers, learning disabilities, 
asthma, Alzheimer's, and Parkinson's disease, as well as 
fertility problems. The most comprehensive review to date of 
environmental factors that may increase the risk of breast 
cancer found that 216 chemicals are associated with the 
disease, including 73 that have been present in consumer 
products or food.
    I would like to ask Mr. Muffett a series of questions. And 
so in light of the alarming health risks posed by some toxic 
chemicals, I can assume that you prefer the EU hazard-based 
approach to the U.S. risk-based approach?
    Mr. Muffett. That is correct.
    Mrs. Christensen. And do you find that TSCA limits the 
ability to control some of those risks? Is TSCA not strong 
enough?
    Mr. Muffett. I think it is clear there is a broad, there is 
a broad consensus or at least the overwhelming weight of 
perspectives on TSCA is that it is not strong enough to respond 
to those risks. It is important to recognize that TSCA was 
adopted in 1976, just 4 years after the very first book on 
toxicology, the very first textbook on toxicology was 
published. And TSCA was based on that very early, early 
understanding of toxicological risks and toxicological science. 
Our understanding has changed dramatically, profoundly over the 
ensuing 35 years, and TSCA hasn't changed with it. And this is 
one of the fundamental differences between TSCA and REACH, is 
that REACH is targeted to responding to the world as we 
increasingly understand it, rather than the world as we 
understood it in 1976.
    Mrs. Christensen. And, you know, I have heard Congressman 
Dooley's position and--which is on behalf of the council, 
really not in favor of trying to harmonize any more towards the 
REACH areas. But there are some chemical manufacturers and 
downstream users of chemicals that have called for the 
expansion of REACH-like systems around the world to help level 
the global playing field. Can you share your point of view of 
why some of the companies or the council might oppose the 
REACH-like initiatives in the U.S., especially since some of 
those companies are arguing for harmonization?
    Mr. Dooley. Absolutely. Because we think there is a better 
and more effective way to assess the safety of chemicals in 
commerce. I agree with Mr. Muffett that we need to modernize 
and reform TSCA, and that is exactly what has led to a 
bipartisan introduction of a TSCA reform bill, the Chemical 
Safety Improvement Act in the Senate. It is the first time 
continues TSCA was introduced in 1976 that there has been broad 
bipartisan support for the legislation to reform TSCA, which 
takes a risk-based approach, which gives EPA more authority in 
terms of requiring information and data from the industry. It 
is legislation that has the support of unions and the 
machinists, the ironworkers, sheet metal workers, as well as 
the transportation union, as a support of Environmental Defense 
Fund, a number of other NGOs, and has the broad support of the 
industry, large members, small members, throughout the value 
chain. And it is a risk-based approach that is viewed as being 
equally effective in the assessment of safety and chemicals as 
REACH but is done in a much more efficient and effective 
manner.
    Mrs. Christensen. Mr. Muffett, I was really directing the 
question to you on that issue. With regard to the new 
legislation that is being proposed, do you find that that would 
satisfy your idea of where we ought to go with the regulation 
of chemicals?
    I can see I'm not going to get my next question in.
    Mr. Muffett. Thank you for the question.
    The Chemical Safety Improvement Act, in our view, is not 
adequate without substantial amendments. And I think it is 
important to recognize that the EU in its position papers on 
chemical safety in the context of TTIP has acknowledged the 
same thing. So the bipartisan bill that was referred to is not 
sufficient, even from the EU's perspective, to bring the U.S. 
to the same level of protection that the EU is achieving.
    Mrs. Christensen. I think my time is up.
    Thank you, Mr. Chairman.
    Mr. Terry. Thank you.
    Chair now recognizes Mr. Long for 5 minutes.
    Mr. Long. Thank you, Mr. Chairman.
    And thank you all for your testimony.
    Here today--and, Mr. Castellani, I will start with you, if 
you don't mind. As you noted in your testimony, the U.S. and 
the EU already provide the strongest global support for 
pharmaceutical research and development. Pharmaceutical tariffs 
between the U.S. and the EU are zero under the WTO 
pharmaceutical agreement. And you obviously support a high 
standard, ambitious agreement. But what exactly do your 
members' companies hope to gain from such an agreement?
    Mr. Castellani. As I mentioned in my testimony, from a 
regulatory standpoint, we are starting, as you said, from a 
very, very hard standard. It is absolutely essential to our 
industry. And we are not asking that those standards be 
reduced. But, rather, there is in our process of discovery a 
rather expensive part of the process; cost us about a billion 
and a half dollars to develop one medicine, takes about 10 
years. Half of that cost, for example, is in clinical trials. 
It is very important that clinical trials adhere to the highest 
standards to both protect the patients and ensure a valuable 
outcome.
    We have clinical trial standards and inspection process in 
the United States to make sure that occurs and they have them 
in Europe. We believe those could be harmonized so that those 
inspectors could be freed up to cover other areas of the world 
where you perhaps don't have as high of standards. Same is true 
in our manufacturing practices. Both very high. And it seems to 
us that there is a better use of time and a better use of 
resources than to have an AMA inspector come into one of our 
facilities followed by a FDA inspector, both having the same 
standards. So it is an opportunity to make our processes more 
efficient and an opportunity for the government agencies to be 
able to focus where there is higher risk.
    Mr. Long. Did I understand earlier in your testimony that 
80 percent of R&D, research and development, is done between 
the U.S. and EU?
    Mr. Castellani. Yes, that is correct.
    Mr. Long. And then you had a figure in there later in your 
questioning; I think it was 65 percent.
    Mr. Castellani. Sixty-five percent----
    Mr. Long. U.S. 65 of the overall----
    Mr. Castellani. U.S. is 65 percent; Europe is about 15 
percent.
    Mr. Long. OK. That was my question.
    I have another question for you. How do the European 
Medicine Agency's current and proposed data disclosure policies 
present potential problems regarding the protection of a 
patient privacy and shielding confidential commercial 
information?
    Mr. Castellani. Thank you. The AMA has proposed some very 
extensive transparency requirements on our conduct of clinical 
trials that cause concern in one of the three areas, 
potentially two of the three areas that are essential for the 
trials to continue and the investment to continue.
    Here is no disagreement that we must protect patient-
specific data. It absolutely has to be so that people who 
participate in clinical trials do not run the risk of having 
their participation and their medical records being released.
    Secondly, we have to make sure that the clinical trial data 
as it is released is consistent with the regulatory process so 
that we are not creating two different standards, one at the 
regulatory agency and one within academic discussion.
    Third, where we have the biggest concern with the EMA's 
proposal is EMA is proposing to release what is called 
commercially confidential information, that is, the 
intellectual property into the whole environment. And, 
therefore, the companies who have invested the billions of 
dollars to develop it will lose that exclusivity because it 
will just go into the world and anybody can copy it.
    So our concern is that we protect patients; we enhance the 
transparency of the clinical trial process; we protect the 
regulatory process; but we also protect the ability the 
continue to invest.
    Mr. Long. OK. Thank you.
    And the next question goes to a gentleman that I would like 
to thank, Governor Blunt, number one, for your service to our 
country in the Navy, and your service in our area, my neck of 
the woods, as a State rep and a Secretary of State and then 
Governor. So thank you for all of the above.
    And a question for you. If mutual recognition of a 
regulation is achieved, is it your expectation that an 
automaker could then sell a vehicle built in either recognized 
standard or sell--to either recognized standard--would they be 
able to sell that in either market then with no further?
    Mr. Blunt. Yes. That is our aspirational goal.
    Mr. Long. I feel like with Chairman Dingell with a yes or 
no answer. You said yes.
    Mr. Blunt. We believe that that would increase trade and 
lower cost and create jobs and obviously improve the 
international competitiveness of the industry in the United 
States and Europe and also afford lots more choices for 
consumers in both markets. They would see a more rapid option 
of the newest and latest technology.
    Mr. Long. Thank you.
    And, for the record, I would note that in your 5-minute 
opening, you had 5 seconds remaining, and I have 1, so I got 
closer than you did.
    Mr. Terry. At this time, recognize the gentleman from 
Maryland for 5 minutes.
    Mr. Sarbanes. Thank you, Mr. Chairman.
    Ms. Halloran, do you think there is any chance that we can 
achieve mutual recognition or harmonization between your side 
of the table and this side of the table any time soon?
    You don't have to answer.
    I wanted to ask you about the--this whole transparency 
issue in terms of the negotiations. How does it compare to 
other negotiations? Is this one particularly opaque, would you 
say, in comparison? Or is it about standard? And so forth.
    Ms. Halloran. Negotiations like this with respect to always 
so secret. The Doha round, the drafts were periodically 
published. The Free Trade of the Americas agreement, draft 
texts were periodically published. Bob Zoellick, the former 
U.S. trade representative, just recently said in a speech that 
he doesn't know quite why things have gotten so closed down. 
And so it's--especially in a negotiation like this, which is on 
regulation, which is of such broad interest and importance to 
so many sectors, I think there has got to be a higher level of 
openness.
    Mr. Sarbanes. Do you have any theories, either you or Mr. 
Muffett, about what is going on?
    Mr. Halloran. Well, I think if you are a negotiator at 
USTR, it is obviously a much easier job if you are just talking 
to your European counterparts and you don't have to show 
anything to anybody until 2 years from now and you can hand it 
out on a take-it-or-leave-it basis. And I think they have 
actually said that they really don't want to be burdened by the 
public feedback. And you can sort of understand their position. 
But it is something that in a democracy, I mean, you as 
Congressmen are--deal with the burden of public feedback all 
the time, and it is sort of how we should work, I think, in a 
democracy.
    Mr. Sarbanes. What is the perspective on this on the 
European side, this issue of the transparency of it?
    Mr. Halloran. They are also in favor of the--behind-closed-
doors approach. Ironically, because they have to share 
everything with all of their member states, their control over 
their positions and so forth is not very tight. So we have been 
finding out the most about what is going on from European 
League documents which seem to be leaked very regularly, and 
they also don't have the stringent penalties we do under the 
Espionage Act for disclosures. But, on the other hand, Europe 
has much less of a history. They don't have an Administrative 
Procedures Act, they have much less of a history of public 
discussion and input than we do. So they are amenable to the 
idea of doing it behind closed door, but I think they could 
also be amenable to more disclosure.
    Mr. Sarbanes. Arguably, we have got a higher standard to 
meet based on our history in terms of this transparency, it 
sounds like.
    I wanted to ask you, all of the answers to Mr. Dingell's 
questions were predictable, except there was one question where 
I was surprised that the industry folks, at the answer there, 
and that was this notion that if you had harmonization for 
example or mutual recognition, it would not affect the ability 
to establish new standards in response to things that might 
happen, which to me seems--that is very hard for me to 
understand why you would not acknowledge that that would tie 
your hands certainly a little bit when you want to find new 
standards. And I wonder, either Mr. Muffett or Ms. Halloran, if 
you could speak to that issue.
    Mr. Muffett. I think the clearest example of how a TTIP 
agreement and these expectations of harmonization would affect 
the ability to develop new standards lies with the ability of 
the States to innovate and develop new standards. One of the 
things that the EU has identified as a major objective for it 
coming out of TTIP is harmonization to Federal levels, and that 
includes sub-national standards coming up to a relatively 
similar level so you don't have wide divergences between what 
is going on at the Federal level in the United States and what 
is going on at the State level.
    Unfortunately, in the U.S., it is at the State level where 
all the innovations in chemicals regulation and chemical policy 
have been going on. If States are required to undertake 
additional consultations and defend their decision-making 
processes not only to U.S. industry and the U.S. public but to 
the European industry and European public through these 
processes, the additional burdens on regulators, particularly 
local and State regulators, will be profound. And that itself 
will I think impede the development of new protections.
    Mr. Sarbanes. So if you are a good federalist, that might 
cause you some concern.
    I am going to yield back.
    Mr. Terry. Thank you, Mr. Sarbanes.
    At this time, recognize gentleman from Florida for 5 
minutes.
    Mr. Bilirakis. Thank you, Mr. Chairman.
    I appreciate it and thank the panel for their testimony. 
Most of my questions were already asked, but I do have a 
question for Governor Blunt.
    The United States and Europe differ quite a bit with 
regards to safety and vehicle emissions requirements. Has your 
association or members been in discussions with NTSA or the EPA 
about these issues with regard to TTIP?
    Mr. Blunt. Thus far, most of our discussions have been 
through the U.S. Trade Representative's Office, but we have 
presented our proposal to representatives of all of those--of 
agencies.
    Mr. Bilirakis. Have they been receptive to your industry?
    Mr. Blunt. I think they understand if we are going to 
maximize the benefits of TTIP, some convergence is necessary. 
We understand that we have set a high goal, both industry and 
the United States and Europe for the negotiations. But we are 
certainly willing to work with them as we evaluate data and 
methodologies that would allow us to come to what we think is 
the natural conclusion that both sets of regulatory standards 
achieve the same environmental and safety outcomes.
    Mr. Bilirakis. Very good.
    Thank you, Mr. Chairman. I yield back.
    Mr. Terry. All right. Well, that concludes all of the 
questions.
    I have a little bit of business to do before we adjourn.
    And I want to put nine statements into the record. Number 
one, American Apparel and Footwear Association; the Alliance of 
Automobile Manufacturers statement; Global Automakers 
statement; Handmade Toy Alliance statement; Marketing Research 
Association statement; Society of Chemical Manufacturers and 
Affiliates statement; Tech America statement; Toy Industry 
Association statement; and the Biotechnology Industry 
Association statement. There all being nine. And these have all 
been shared with the minority.
    [The information appears at the conclusion of the hearing.]
    Mr. Terry. Now without any objections, they will be in the 
record.
    Now yield for the same to Ms. Schakowsky.
    Ms. Schakowsky. Thank you.
    Let me just say that while I don't agree with a number of 
those statements that are going in for the record, we did 
approve them and agree to their submission.
    In addition, we would like to add the statement of the 
Coalition for Sensible Safeguards; the Transatlantic Consumer 
Dialogue; and the Maine State Representative Sharon Anglin 
Treat in a relevant testimony that she gave on a trade 
agreement.
    Mr. Terry. I am sure I have the same thoughts on those, 
that we probably don't necessarily agree. But all statements 
should be in the record. So, therefore, those are also in.
    Hearing no objections.
    [The information appears at the conclusion of the hearing.]
    Mr. Terry. I want to thank all of you.
    If there is one thing I think we can take away from this 
hearing today is that TTIP is not going to be easy. All of your 
statements have been good and insightful. And I thank you for 
being here.
    So, at this time, we are adjourned.
    [Whereupon, at 11:37 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    Earlier this month, the United States and the European 
Union held the first round of negotiations on what we all hope 
is the first step toward achieving an historic trade agreement: 
the Transatlantic Trade and Investment Partnership. This has 
the potential to be the most comprehensive bilateral agreement 
ever developed, addressing non-tariff impediments in ways never 
previously attempted.
    We have a long and valuable relationship with our European 
allies. These ties have created great cooperation on many 
fronts and led to a flourishing trade relationship. Together we 
account for almost half of world GDP and world trade. And as 
investment partners, there is no greater bilateral relationship 
than between the U.S. and the EU: we are the largest single 
recipient of EU foreign direct investment and we are the 
largest source of foreign investment in the EU.
    The benefits of this trade partnership cannot be 
overstated: additional jobs, income, and economic growth on an 
annual basis going forward--something both sides desperately 
need. U.S. job creators like the Big Three automakers in 
Michigan have the potential to make significant gains. And 
Congress doesn't have to appropriate a penny to reap the 
potential rewards.
    We are all hopeful of achieving the most ambitious trade 
agreement possible. The sheer size of our bilateral trade and 
investment with the EU means that any significant progress to 
cut regulatory costs and bureaucracy, reduce market access 
barriers, and eliminate tariffs will translate into positive 
economic growth for both sides of the agreement.
    To achieve our shared goal, we need to work together. Both 
sides agree we have different, but mature regulatory regimes, 
which, in most cases, attain equivalent outcomes. 
Unfortunately, the outright elimination of regulations is a lot 
more difficult than eliminating tariffs; however, we can and 
should reduce the costs of these dual regulations.
    In our federalist system, different (even incompatible) 
state regulations exist yet we do not allow them to impede 
interstate commerce. For example, states can and do regulate 
auto safety inspections for vehicles registered in their state 
in different ways and under different timelines, but it would 
be counterproductive if states were able to block residents of 
other states from traveling across sate borders unless they 
complied with the exact standards of the visiting state. We 
wouldn't stand for it. So if we allow recognition of different 
state standards, there is no reason we can't find a way to 
similarly work with the EU to harmonize or recognize each 
other's standards to avoid duplicative and costly regulations 
designed to achieve the same goals.
    We have a distinguished panel of witnesses today who can 
elaborate on the real costs of trade barriers.
    They also know how reducing those costs will benefit more 
than just the individual companies and industries. It will 
provide all of our citizens with a more prosperous future. It 
is our job to ensure they are not denied that opportunity.
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