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


         U.S.- EU TRADE AND INVESTMENT PARTNERSHIP NEGOTIATIONS

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

                                HEARING

                               BEFORE THE
                               
                         SUBCOMMITTEE ON TRADE

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 16, 2013

                               __________

                          Serial No. 113-TR02

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
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                      COMMITTEE ON WAYS AND MEANS

                     DAVE CAMP, Michigan, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas                   CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin                 JIM MCDERMOTT, Washington
DEVIN NUNES, California              JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio              RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington        XAVIER BECERRA, California
CHARLES W. BOUSTANY, JR., Louisiana  LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois            MIKE THOMPSON, California
JIM GERLACH, Pennsylvania            JOHN B. LARSON, Connecticut
TOM PRICE, Georgia                   EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida               RON KIND, Wisconsin
ADRIAN SMITH, Nebraska               BILL PASCRELL, JR., New Jersey
AARON SCHOCK, Illinois               JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas                 ALLYSON Y. SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota              DANNY K. DAVIS, Illinois
KENNY MARCHANT, Texas                LINDA T. SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD C. YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JAMES B. RENACCI, Ohio

        Jennifer M. Safavian, Staff Director and General Counsel

                   Janice Mays, Minority Chief Cousel

                                 ______

                         SUBCOMMITTEE ON TRADE

                   DEVIN NUNES, California, Chairman

KEVIN BRADY, Texas                   CHARLES B. RANGEL, New York
DAVID G. REICHERT, Washington        RICHARD E. NEAL, Massachusetts
VERN BUCHANAN, Florida               JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska               EARL BLUMENAUER, Oregon
AARON SCHOCK, Illinois               RON KIND, Wisconsin
LYNN JENKINS, Kansas
CHARLES W. BOUSTANY, JR., Louisiana
PETER J. ROSKAM, Illinois


                            C O N T E N T S

                               __________

                                                                   Page

Advisory of May 16, 2013 announcing the hearing..................     2

                               WITNESSES

Chairman Devin Nunes, Representative of the State of California..     5
Honorable Charles B. Rangel, Representative of the State of New 
  York...........................................................     8
Ambassador Stuart E. Eizenstat, Partner, Covington & Burling LLP, 
  on behalf of the Transatlantic Business Coalition, Testimony...    13
Ms. Inga Carus, President & CEO, Carus Corporation, Testimony....    25
Mr. James Grueff, Principal, Decision Leaders, Testimony.........    35
Mr. Greg Slater, Director, Global Trade and Competition Policy, 
  Intel Corporation, on behalf of the Business Coalition for 
  Transatlantic Trade and the Coalition of Services Industries, 
  Testimony......................................................    40

                       SUBMISSIONS FOR THE RECORD

The Honorable Erik Paulsen.......................................    76
Handmade Toy Alliance............................................    77
ACLI.............................................................    85
American Farm Bureau.............................................    89
GWU..............................................................    92
IPMI.............................................................    95
NAM..............................................................    97
Public Citizen...................................................    98
Shellfish Growers Association....................................   104
USIFI and IFAI...................................................   107

                   MATERIAL SUBMITTED FOR THE RECORD

Questions for the Record.........................................   112


 
         U.S.-EU TRADE AND INVESTMENT PARTNERSHIP NEGOTIATIONS

                              ----------                              


                         THURSDAY, MAY 16, 2013

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                                   Washington, D.C.

    The Subcommittee met, pursuant to call, at 2:55 p.m., in 
room 1100, Longworth House Office Building, the Honorable Devin 
Nunes [Chairman of the Subcommittee] presiding.
    [The advisory of the hearing follows:]

HEARING ADVISORY

   Chairman Nunes Announces Hearing on U.S.-EU Trade and Investment 
                        Partnership Negotiations

1105 Longworth House Office Building at 2:00 PM
Washington, May 9, 2013

    House Ways and Means Trade Subcommittee Chairman Devin Nunes (R-CA) 
today announced that the Subcommittee will hold a hearing on 
negotiations of a U.S.-EU trade and investment partnership agreement. 
The hearing will focus on the opportunities and challenges presented by 
the President's notification to Congress that he intends to negotiate 
such an agreement. The hearing will take place on Thursday, May 16, 
2013, in 1100 Longworth House Office Building, beginning at 2:00 P.M.
      
    In view of the limited time available to hear the witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee and for 
inclusion in the printed record of the hearing. A list of invited 
witnesses will follow.
      

BACKGROUND:

      
    The transatlantic economy is the largest and most integrated in the 
world, comprising 50 percent of global GDP and generating approximately 
$5 trillion in total commercial sales each year. The European Union and 
United States account for 30 percent of world trade. Each day, $2.7 
billion of goods and services are traded bilaterally, supporting 
millions of jobs in both economies. Five of the top ten export markets 
for U.S. services are in Europe. Direct investment by the United States 
and the EU into each other's markets totals more than $3.7 trillion. 
Europe is by far the largest destination for U.S. outbound investment, 
with Europe accounting for a roughly equal amount of U.S. outbound 
investment. In comparison, China ranks 12th as a U.S. investment 
destination, behind Belgium, France, Germany, Ireland, the Netherlands, 
Switzerland, and the UK, among others. This longstanding integration 
translates into significant U.S. jobs: approximately 15 million workers 
in the United States are employed as a result of transatlantic trade.
      
    On March 20, 2013, President Obama notified Congress of his intent 
to enter into formal trade agreement negotiations with the EU, thus 
beginning a 90-day consultation period with Congress that will expire 
on June 18, 2013. The President's notification emphasizes that a U.S.-
EU trade and investment agreement would address both traditional tariff 
barriers as well as important regulatory and other non-tariff barriers, 
including sanitary and phytosanitary barriers to U.S. agriculture 
exports. A U.S.-EU trade and investment agreement would also provide an 
opportunity to broaden and deepen cooperation on third-country issues.
      
    In announcing this hearing, Chairman Nunes said, ``A comprehensive 
and ambitious transatlantic agreement would promote economic growth, 
strengthen an already strong economic alliance, and serve as an 
influential model promoting free trade and open markets around the 
world. The agreement is also an opportunity for the United States to 
resolve long-standing regulatory barriers, and, in particular, 
regulatory barriers not based on sound science that block our 
agriculture exports. Furthermore, an ambitious agreement can help to 
set the rules of global trade and strengthen U.S.-EU cooperation in 
addressing barriers in third countries.''
      

FOCUS OF THE HEARING:

      
    The focus of the hearing is on the benefits of expanding U.S.-EU 
trade, including through the negotiation of a trade and investment 
agreement. The hearing focus will include: (1) tariff barriers to 
trade; (2) regulatory barriers, including sanitary and phytosanitary 
barriers to U.S. agriculture exports; (3) opportunities for regulatory 
cooperation and coherence; (4) services and investment barriers; and 
(5) ways to strengthen cooperation between the United States and the EU 
with regard to third-country issues.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://www.waysandmeans.house.gov/, select 
``Hearings.'' Select the hearing for which you would like to submit, 
and click on the link entitled, ``Click here to provide a submission 
for the record.'' Once you have followed the online instructions, 
submit all requested information. ATTACH your submission as a Word 
document, in compliance with the formatting requirements listed below, 
by the close of business on Friday, May 31, 2013. Finally, please note 
that due to the change in House mail policy, the U.S. Capitol Police 
will refuse sealed-package deliveries to all House Office Buildings. 
For questions, or if you encounter technical problems, please call 
(202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word format and MUST NOT exceed a total of 10 pages, including 
attachments. Witnesses and submitters are advised that the Committee 
relies on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental 
sheet must accompany each submission listing the name, company, 
address, telephone, and fax numbers of each witness.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://www.waysandmeans.house.gov/.

                                 

    Chairman NUNES. Good afternoon. I want to welcome everyone 
to our hearing on the U.S.-EU trade and investment partnership 
negotiations. Today's hearing focuses on the enormous potential 
that exists in a U.S.-EU trade and investment agreement. The 
U.S.-EU economic relationship is the largest and most 
integrated in the world, comprising 50 percent of global GDP, 
supporting millions of U.S. jobs.
    Although it is a deep and mature relationship, we can do 
more. The timing is exactly right to promote growth in both of 
our economies, and I strongly support negotiations for an 
ambitious and comprehensive trade and investment agreement.
    From a strategic perspective, the United States and Europe 
have long been close allies in the effort to open markets and 
to promote free trade. These negotiations are an opportunity to 
strengthen an already strong economic alliance and serve as an 
influential model to promote free trade and open markets around 
the world. However, we should also recognize that these 
negotiations will not be easy. They will require enormous 
creativity and flexibility on both sides of the Atlantic.
    Any agreement must be ambitious and comprehensive with all 
issues on the table. A critical area for me is agriculture and 
SPS. This area has been exceedingly, longstanding difficult and 
frustrating, which must be resolved. In particular, I would 
like to see sufficiently enforceable obligations that go beyond 
the WTO SPS chapter. I know many of my colleagues share this 
concern.
    This hearing provides an opportunity to hear from the 
private sector about the potential benefits and challenges of 
these negotiations, and particularly, I hope that we will learn 
more from our witnesses about the following issues. One, 
addressing traditional barriers to trade, including the 
elimination of tariffs and liberalizing tariff rate quotas.
    Two, resolving services and investment barriers, and 
establishing strong rules in these areas that can be jointly 
promoted in our engagement with other countries.
    Three, creating specific commitments and an ongoing agenda 
to identify and eliminate unnecessary regulatory barriers, 
including sanitary and phytosanitary barriers to U.S. ag 
exports. The EU regulatory process is often non-transparent and 
prevents U.S. stakeholders from participating, and is 
unpredictable. An agreement should address the EU's practices 
on a comprehensive, horizontal basis.
    Four, exploring opportunities for regulatory cooperation 
and coherence by eliminating redundancy and inefficiency 
without weakening our respective high standards.
    And five, finally, five, developing and strengthening 
cooperation regarding our shared concerns with trade and 
investment policies in third countries, such as anti-
competitive behavior from subsidized state-owned enterprises 
and policies that undermine intellectual property rights.
    Today's hearing also highlights the need to develop and 
pass bipartisan trade promotion authority to provide a clear 
framework for Congressional consideration and implementation of 
trade agreements, as well as to set out negotiating objectives 
for this negotiation. I welcome the Administration's interest 
in TPA, but call for further and intensified engagement from 
USTR and the White House.
    It is now my pleasure to yield to Ranking Member Rangel for 
the purpose of an opening statement.
    [The prepared statement of Chairman Nunes follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 

    Mr. RANGEL. Thank you, Mr. Chairman.
    Let me say, first off, I want to thank you and your staff 
for the very cooperative way in which you pulled together this 
most important hearing, and I want to thank you for having it. 
The timing is just right. We are in the midst of a 90-day 
layover period following the administration's notification that 
it intends to enter into these talks.
    This time gives us a chance to think about the 
opportunities that this kind of deal could provide. Any 
reduction in foreign trade barriers has the potential to 
strengthen our economy, and in that sense, this agreement is no 
different. Today one-third of all tariffs on U.S. exports 
through the world are paid to the EU. A successful TTIP would 
eliminate those tariffs, but the bigger issue is nontariff 
barriers. An agreement with the European Union gives us a 
chance to address issues, such as regulatory nontariff 
barriers. There are certainly cases where these nontariff 
barriers arise because of a desire to protect regulatory 
burdens can be shared perhaps through exchanging inspection 
results or other information concerning public health risks, 
but a successful TTIP negotiation will do more than simply 
improve our bilateral relationship.
    An agreement between these two global leaders together 
accounting for nearly half of the world's GDP and 30 percent of 
world trade gives us the chance to establish new rules and a 
new framework for global trade. These rules should address 
critical issues that are not adequately addressed under 
existing arrangements.
    Some of these issues include, first, ensuring that exchange 
rates are not manipulated to gain unfair advantage in trade. 
Europeans are not current manipulators, and neither are we, but 
we can work together to develop a standard to capture what is 
or isn't permissible in this area.
    Two, ensuring that state-owned enterprises are not granted 
unfair advantages over private enterprises. We and the 
Europeans share the view that state capitalism puts our 
companies at a competitive disadvantage.
    There is no guarantee that we will succeed in reaching a 
deal that works for both sides, as it must. The European 
negotiators will have to consult closely with the European 
parliament and also the 27 member states, and our negotiators 
will have to consult closely with the Congress and regulatory 
agency, and especially this subcommittee.
    At the same time, we should maintain our sense of the 
bigger picture. Our relationship with Europe is unlike any 
other. We share common objectives, common values, and this 
agreement has the potential to raise the bar for the next 
generation of trade agreements. We should capitalize on this 
opportunity.
    And I look forward and thank all of the witnesses for their 
presence and tolerance with our agenda, and especially to 
Ambassador Eizenstat for his long commitment to public service. 
Thank you, Mr. Chairman.
    [The prepared statement of Mr. Rangel follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    

    Chairman NUNES. Thank you, Mr. Rangel.
    And I want to thank Mr. Rangel and his staff, because we 
have set upon this Congress to make this committee as 
bipartisan as possible, and this is, I think, an extraordinary 
achievement, because all four witnesses were agreed upon by 
both Mr. Rangel and his team and our team on our side.
    Thank you, Mr. Rangel.
    Mr. RANGEL. Thank you, Mr. Chairman.
    Chairman NUNES. Our first witness will be Ambassador 
Eizenstat, former Ambassador to the EU, who also served in a 
number of other important roles, including deputy treasury 
secretary, undersecretary of state for economic, business and 
agricultural affairs, and Undersecretary of Commerce for 
International Trade. He now heads the international practice at 
the law firm of Covington & Burling, and is U.S. co-chair of 
the Transatlantic Business Council.
    After him, we will hear from Inga Carus, CEO of Carus 
Corporation, an SME chemical manufacturer based in Illinois.
    Our third witness will be Jim Grueff, who is currently 
Principal at Decision Leaders and formerly served as the lead 
U.S. negotiator for the WTO sanitary and phytosanitary 
agreement, among a number of other senior positions in the 
foreign agricultural service.
    And last, we will hear from Greg Slater, Director of Global 
Trade and Competition at Intel, who is also testifying on 
behalf of the Business Coalition for Transatlantic Trade and 
the Coalition of Services Industries.
    We welcome all of you, and we look forward to your 
testimony. Before recognizing our first witness, let me note 
that our time this afternoon is limited, so witnesses should 
keep their testimony to 5 minutes and members should keep their 
questioning to 5 minutes.
    Ambassador Eizenstat, your written statement, like all of 
the witnesses, will be made part of the record. And you are now 
recognized for 5 minutes.

STATEMENT OF STUART E. EIZENSTAT, PARTNER, COVINGTON & BURLING 
     LLP, ON BEHALF OF THE TRANSATLANTIC BUSINESS COALITION

    Mr. EIZENSTAT. Chairman Nunes, my long-time dear friend, 
Ranking Member Rangel and distinguished members of the Trade 
Subcommittee. The TTIP provides the opportunity to garner more 
bipartisan support than almost any other economic agreement, 
and that is because the EU has very high labor standards and 
environmental protections, making some traditional opponents of 
free trade agreements less likely to oppose TTIP on these 
grounds.
    TTIP would be the most comprehensive trade agreement the 
United States has ever entered into in history in terms of the 
dimensions and areas it covers. The significant economic 
benefits of the agreement are enormous. TTIP would provide a 
deficit-free way of creating jobs and growth. At a time when 
both sides of the Atlantic are suffering from subpar economic 
and job growth and high levels of unemployment, a successful 
TTIP can add anywhere between a half to one full percent of 
gains in GDP on both sides of the Atlantic.
    Together, the EU and U.S. account for almost half of the 
global output of goods and services and almost a third of 
global trade, but even more so, transatlantic investment dwarfs 
those huge trade numbers and is the backbone of our mutual 
economies. There is more than three and a half trillion dollars 
in two-way foreign direct investment between the EU and the 27 
EU countries and the U.S. American companies invest more in 
tiny Ireland than in China.
    Another unique dimension to transatlantic trade is the high 
degree of integration across the pond. Intra-firm trade between 
U.S. and EU parent companies and their subsidiaries account for 
almost 40 percent of the trade between us.
    Individual U.S. States will also benefit from a successful 
TTIP. For example, both California and New York rank first and 
second, respectively, as the top two States with jobs supported 
directly through European investment, and second and third 
after Texas by total goods exports to Europe by value.
    There is also a geopolitical importance to this agreement. 
It sends an important signal that we remain dedicated to 
Europe. European nations share our core values of democracy, 
free speech, respect for human rights and the rule of law, and 
they are our key allies as we face difficult global challenges.
    There are essentially two competing models of governance in 
this world: One is our free market democratic model, and the 
other is the autocratic state-controlled, state-dominated 
model. A successful TTIP can demonstrate that our model of 
governance can produce tangible gains for our people on both 
sides of the Atlantic and, more broadly, is the best model to 
meet the challenges of the 21st century.
    It is true that there are daunting challenges because of 
the comprehensive nature of the negotiations, but these are 
manageable. For example, we have agreed already that the EU and 
U.S. will make the foundation of TTIP the most comprehensive 
free trade agreements that each has entered, and fortunately, 
on both sides, that is with Korea. The EU-Korea and U.S.-Korea 
agreements, therefore, are a way of harmonizing as a forced 
order of business a workable framework agreement. This can be 
done in fairly short order, giving each other, in effect, what 
each of us gave to Korea.
    Eliminating tariffs alone would boost U.S. exports by 8 
percent and EU exports by 7 percent.
    I would like to focus the rest of my testimony on the top 
priority of the Transatlantic Business Council, and that is on 
regulations. And this is really critical. I want to take this 
from a micro to a macro perspective. If, Mr. Chairman, ranking 
member and Members of the Subcommittee, we can agree on common 
standards, these will become global standards for our products 
around the world rather than China's. This will give us an 
enormous competitive advantage. The biggest potential benefit 
of TTIP is, therefore, in the area of regulation.
    There are indeed many regulatory differences, and these 
have long acted as a break on transatlantic trade and growth. 
We do have different regulatory philosophies, and I certainly 
have the scars in negotiations to show that, but we have come 
to a point in the 21st century when we should have confidence 
that each other's regulatory standards are adequate to protect 
our publics and our companies. Our goals should be regulatory 
convergence and coherence to avoid impediments to trade.
    In new and emerging technologies like nanotechnology or 
internet technology, we should seek identical standards and 
make those the world's standards. We should strengthen the EU-
U.S. high level regulatory cooperation forum to get our 
regulators together, who often only think domestically and not 
internationally to develop common approaches. And we should 
adopt the concept of tested once, tested in both markets even 
if each other's standards are somewhat different.
    I would like to close by focusing on a few areas of prime 
importance to the TBC companies. One is services. The volume of 
EU-U.S. bilateral trade in services totals almost $350 billion, 
the highest in the world. It is essential that both governments 
ensure the importance of trade and investment in services, 
including an agreement which would allow enforceable 
obligations for the free flow of data across borders while 
taking into account protections of privacy.
    You mentioned, Mr. Chairman, and this is really important, 
state-owned enterprises. State-owned enterprises are eating our 
lunch on both sides of the Atlantic, and it is not acceptable. 
We need to have enforceable disciplines against countries like 
China that provide unfair subsidies and unfair advantages 
against our private sector companies, and TTIP is the place 
where we can develop disciplines to make sure that those 
companies, if they are state-controlled, don't get the kind of 
access that they otherwise would have.
    It is also essential that financial services be included in 
the agreement. TTIP offers a terrific opportunity to coordinate 
the extensive but often disparate array of financial 
regulations. And, again, if we can agree on these, these can 
become global standards and help us develop financial market 
regulations in third countries that will be important.
    Two last areas. Intellectual property. There is an 
unprecedented theft of intellectual property from cyber-
attacks--they are in effect state-sponsored IP theft--from 
forced technology transfers, and for the lack of protection of 
our intellectual property in emerging countries. This is our 
seed corn. This is our advantage in the world. We must have the 
highest levels of IP protection in this agreement and then 
propound those to the world, aligning U.S. and EU positions in 
multilateral dialogues and encouraging robust third country IP 
protections.
    And last is in life sciences. This is, again, an enormous 
area where European and American global companies still are 
highly competitive. We are leaders here, but if we are going to 
stay as leaders, TTIP must present an once-in-a-lifetime 
opportunity to address longstanding issues in intellectual 
property protection and regulatory and market access that they 
can improve efficiency, patient outcomes and overall business 
environment.
    TTIP should ensure responsible data sharing that protects 
patient privacy, maintains the integrity of the regulatory 
review process, and preserves incentives for biomedical 
research.
    In conclusion, I believe that we are embarking on an 
unprecedented bipartisan effort to demonstrate that free 
markets and free peoples can deliver, and I think we are going 
to succeed. Thank you.
    Chairman NUNES. Thank you, Ambassador.
    [The prepared statement of Mr. Eizenstat follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 

    Chairman NUNES. Ms. Carus, you are recognized for 5 
minutes.
    And if we can keep it as close to 5 minutes as possible. I 
don't want to be a time clock monitor here, but I know that we 
are going to have votes in probably another hour, hour and a 
half, so we want to make sure that we get all the testimony and 
allow all the members time to ask questions.
    Ms. Carus, you are recognized for 5 minutes.

  STATEMENT OF INGA CARUS, PRESIDENT & CEO, CARUS CORPORATION

    Ms. CARUS. Okay. Thank you. Chairman Nunes and 
distinguished members the subcommittee, my name is Inga Carus. 
I am president and CEO of Carus Corporation. Thank you for this 
opportunity to speak today.
    Carus Corporation of Peru, Illinois, is a family-owned 
company that was founded by my grandfather 98 years ago. Carus 
is an environmental products and services company. We 
manufacture products which are used by our customers both in 
the public utility sector as well as in private industry for 
the purification of water, air and ground water. We currently 
have about 400 employees.
    In recent years, Carus has expanded from a single location 
in LaSalle, Illinois, to become a global corporation with 
locations in the U.S., Europe and Asia. Carus plans to expand 
further as we look for new opportunities to develop new and 
unique products for environmental markets.
    In both the U.S. and EU, small and medium-sized SME 
manufacturers are key drivers of economic growth. I believe 
that advancing open trade policies with the EU could create new 
and dynamic commercial growth and export expansion 
opportunities for U.S. small, medium and large enterprises 
alike. While there are difficult hurdles to a successful TTIP 
negotiation, the potential benefits in terms of growth, 
productivity and job creation are huge.
    Current tariff barriers on transatlantic trade in chemicals 
are relatively low, averaging around 3 percent. However, due to 
the high volume of trade, the benefits of removing the 
remaining tariff barriers would be significant. The American 
Chemistry Council estimates that eliminating remaining duties 
on transatlantic trade just in chemicals could result in 
savings of around $1.5 billion a year. These savings would 
immediately reduce the costs of production for business, and 
the benefits would be reflected throughout the economy.
    As an example, Carus Corporation would save 5 and a half 
percent of the duties on our products of material that we ship 
from Illinois to Carus Europe. This would result in savings to 
my company of $5 million over 10 years, which we would use to 
create good jobs and grow exports.
    The potential cost savings for governments and industry 
alike from enhanced regulatory cooperation are even greater 
than this. The goal in pursuing closer regulatory cooperation 
between the U.S. and EU should be to explore opportunities for 
creating efficiencies between regulatory systems while 
maintaining high levels of protection for human health and the 
environment.
    An example of additional costs generated by regulatory 
barriers for Carus is the difference in standards for chemicals 
used for water treatment in the U.S. and the EU Some EU member 
states also request a separate registration for chemicals in 
water, further encumbering trade.
    While the U.S. and EU regulate chemicals in different ways, 
Carus Corporation sees the TTIP as an important opportunity to 
promote efficient and effective regulatory approaches and 
explore opportunities for cost reductions and burden sharing.
    Specific actions to enhance transatlantic regulatory 
cooperation include efforts to promote scientific cooperation. 
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 
regulations. In our view, the chemical industry is well placed 
to be a priority sector for enhanced regulatory cooperation 
under TTIP.
    TTIP should also focus on ensuring greater transparency in 
transatlantic cooperative activity between regulators. This 
would help enhance stakeholder confidence and support for 
regulatory cooperation. An example which has cost Carus a large 
amount of time and resources is obtaining approval for a 
drinking water chemical in the EU, a material which has been in 
common use and has been approved for drinking water treatment 
for decades in the U.S.
    The EU-U.S. drinking water standards are different. And 
although a product has been long approved by the EPA in the 
U.S., the approval process in the EU does not recognize this 
and can take years. We applied for EU approval for sodium 
permanganate in 2005, and it was in use in the United States 
for decades. And although we received approval 3 years later in 
2008, for those 3 years, we could not sell the product in 
Europe. And we are still waiting today, 8 years later, for some 
EU member companies' approval who have not approved it yet.
    Carus Corporation strongly supports the launch and timely 
completion of negotiations on a transatlantic trade and 
investment partnership. For the chemical industry and for 
thousands of small- and medium-sized manufacturers in the U.S., 
like Carus, it has the potential to provide a significant boost 
to growth and job creation, which in turn would promote 
innovation and strengthen the international competitiveness of 
U.S. exporters.
    Thank you, again, for inviting me here today. I look 
forward to your questions.
    Chairman NUNES. Thank you, Ms. Carus.
    [The prepared statement of Ms. Carus follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman NUNES. Mr. Grueff, you are recognized for 5 
minutes.

     STATEMENT OF JAMES GRUEFF, PRINCIPAL, DECISION LEADERS

    Mr. GRUEFF. Thank you, Mr. Chairman and Congressman Rangel, 
for the invitation to be here with you today.
    TTIP presents unique and extraordinary opportunities and 
challenges for U.S. agriculture and for those in the U.S. 
Government who will oversee or conduct the TTIP agriculture 
negotiations. There is a long and difficult history of 
agricultural trade policy conflicts between the U.S. and the 
EU, and that will be an important feature of this negotiation.
    The two sides also have shown very different approaches to 
negotiating their free trade agreements. The U.S. has pursued a 
strategy of including virtually all agricultural products in 
its FTAs, with few notable exceptions. The EU, on the other 
hand, has been much more selective in the inclusion of 
agricultural products in its bilateral trade agreements. 
Therefore, for example, just agreeing on the range of products 
for which tariffs will be reduced or eliminated will probably 
be a daunting challenge in itself.
    Looking at the scope of issues that can comprise the 
agriculture negotiations, it is clear that the most challenging 
area will be health-related import restrictions, known as 
sanitary and phytosanitary barriers, or SPS barriers as they 
are called.
    Much of the difficulty in the U.S.-EU agriculture 
relationship derives from fundamental differences in their 
approaches to food and food production and in the management of 
the health risks from food and agricultural products. The U.S. 
asserts that it applies the science-based approach to risk 
management and health-related import restrictions that is 
completely consistent with the SPS agreement of the World Trade 
Organization.
    The EU believes that the WTO provides the latitude to take 
a more risk-averse approach to risk management. This is 
embodied in the EU's so-called precautionary principle, which 
essentially states that health-related preventative measures 
can be applied, including import restrictions, when it is 
scientifically uncertain but possible that a risk exists.
    These policy differences have real trade consequences. U.S. 
agriculture has indicated that addressing SPS barriers, the 
health-related barriers that block access to the EU market, is 
its top priority in the TTIP negotiations. These issues 
include, among others, the EU approach to regulating the use of 
agricultural biotechnology, the EU ban on anti-microbial washes 
for poultry meat, the beef hormones case, the EU ban on the 
beef and pork feed additive ractopamine and the possibility of 
a new trade-blocking in EU policy on cloning.
    Many of these issues are complicated, longstanding and very 
politically sensitive, but this is what the TTIP can offer: the 
opportunity to bring unprecedented, high level attention to the 
SPS issues that are the most difficult agricultural disputes in 
the bilateral relationship.
    In addition to the existing disputes, U.S. agriculture is 
advocating the concepts of SPS-Plus and SPS enforceability. 
SPS-Plus means essentially that the TTIP would contain SPS 
rules and disciplines that go beyond what the WTO currently 
provides, and enforceability means that the TTIP would have its 
own self-contained SPS enforcement mechanisms that would be 
much quicker than the WTO dispute settlement process.
    These are both very worthwhile objectives, but here is a 
note of caution. The EU's history of SPS decision-making 
indicates that finding agreement on these new concepts will be 
very difficult. Also, based on recent experience in the context 
of the transpacific partnership negotiations, it may be 
questionable whether the U.S. Government's interagency process 
will agree to pursue these new concepts for the TTIP.
    But I believe there is a larger dilemma here regarding TTIP 
and the SPS issues. It will take time to make progress on the 
SPS issues. However, leaders at the top levels on both sides 
have said or implied that the TTIP is essentially an effort to 
provide much needed economic stimulus as quickly as possible.
    The EU Trade Commissioner stated that he wants these 
negotiations completed by the end of next year, which would 
indeed be a very quick outcome. This is not a time frame that 
would be conducive to resolving the SPS issues of concern to 
U.S. agriculture.
    I would suggest to you that decisions regarding the scope 
of the agriculture negotiations, especially decisions on the 
inclusion of the SPS issues, should be under serious 
consideration now and certainly should be made before the 
substantive negotiations begin.
    Thank you for your attention.
    Chairman NUNES. Thank you, Mr. Grueff.
    [The prepared statement of Mr. Grueff follows:]
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    Chairman NUNES. Mr. Slater, you are recognized for 5 
minutes.

     STATEMENT OF GREG SLATER, DIRECTOR, GLOBAL TRADE AND 
    COMPETITION POLICY, INTEL CORPORATION, ON BEHALF OF THE 
BUSINESS COALITION FOR TRANSATLANTIC TRADE AND THE COALITION OF 
                       SERVICE INDUSTRIES

    Mr. SLATER. Thank you, Mr. Chairman. And thank you, 
Congressman Rangel and----
    Chairman NUNES. Mr. Slater, if you could turn your mike on, 
please.
    Mr. SLATER. I apologize.
    Chairman NUNES. Okay.
    Mr. SLATER. Thank you, Mr. Chairman, members of the 
subcommittee.
    I work for Intel Corporation, but today I am appearing 
before you on behalf of the Coalition of Services Industries, 
or CSI, and the Business Coalition for Transatlantic Trade, or 
BCTT.
    CSI is the primary policy advocacy association for U.S.-
based global services, and BCTT was established last year to 
support the TTIP negotiations. Its steering committee is co-
chaired by multisectoral industry organizations and companies 
like Intel.
    Both CSI and BCTT support the negotiations of an ambitious, 
comprehensive and high standard agreement between the U.S. and 
EU. I would like to make some suggestions today on how to 
achieve that objective.
    First, a comprehensive agreement must take into account 
evolving business models as it seeks to fully liberalize trade 
in goods and services. U.S. manufacturing companies are 
increasingly using services both to manufacture and in their 
product distributions like never before, because of increased 
global competition, wiser use of global supply chains, and new 
opportunities provided by the information economy. This 
accelerated integration of goods and services has blurred the 
distinction between manufacturing and service companies. Trade 
policy needs to catch up to this trend, and negotiators should 
not look at goods and services as separate silos.
    Also, market access commitments should apply to the entire 
supply chain by taking into account interrelated services, or 
that is, services that are in different categories but 
complement each other. And trade barriers for any one link in 
the chain can undermine a service as a whole.
    Moreover, all basic ways of delivering services should be 
liberalized and for all types of companies. Manufacturing 
businesses regularly look at the services they are using and 
change their approach because their innovation capabilities are 
becoming increasingly collaborative and cross-border, involving 
multiple sites and parties. So, for example, stringent mobility 
rules for highly skilled employees can impair both the 
development of new goods and the delivery of additional 
services.
    In brief, market access commitments for services should be 
recorded on a negative list with only a minimum number of 
nonconforming measures subject to timetables for full 
liberalization.
    Second, negotiators need to creatively use all available 
mechanisms to reduce and remove nontariff barriers, or NTBs, in 
a transatlantic economy. These mechanisms can include 
regulatory simplification, interoperability, mutual 
recognition, convergence and even harmonization where 
appropriate. TTIP also needs to establish a framework for 
ongoing regulatory cooperation to reduce and remove future 
NTBs.
    In addition, TTIP needs to establish global principles, as 
Ambassador Eizenstat mentioned, that the U.S. and the EU should 
promote to minimize NTBs in emerging markets where they are 
used more frequently to build up local industries and national 
champions. For example, new localization barriers to trade in 
the BRIC countries can force U.S. and EU companies to either 
move businesses' operations overseas or to forego important 
market access opportunities.
    Similarly, TTIP should address technology mandates that 
require the use of domestic technologies, which are on the rise 
and can significantly undermine the competitiveness of U.S. IT 
companies.
    Third, we note that although removing NTBs will benefit 
many economic sectors, like finance and insurance, there is a 
major multiplier effect when information and communication 
technology, or ICT, goods and ICT-enabled services are 
liberalized because they enhance efficiency and innovation 
capabilities across sectors. The U.S. and EU should therefore 
maximize opportunities for suppliers to provide services over 
the Internet on a cross-border and technology-neutral basis.
    And TTIP should prohibit specific requirements to locate 
servers or data in country as a condition for allowing digital 
services. As with the TBC, we strongly support the 
administration's objectives to include provisions that 
facilitate cross-border data flows. The transfer of information 
is increasingly important to all industry sectors. There must 
be a clear obligation in the agreement that enables companies 
and their customers to electronically transfer information 
internally or across borders, store or access publicly 
available information and access their own information, 
wherever located.
    Restricting international data flows as a means of 
protecting access to data or ensuring security is both 
inefficient and ineffective. This will only slow down the 
expansion of trade by so many Internet-dependent companies at a 
time when innovation in digital services is benefiting such a 
variety of industries.
    The U.S. and the EU should use TTIP to bridge their 
differences in approaches to privacy and cyber security without 
undermining data flows.
    Fourth, and finally, along with promoting privacy and cyber 
security principles to ensure interoperability in a digital 
infrastructure, the agreement should enhance global protection 
of trade secrets, again, as mentioned by Ambassador Eizenstat. 
There is a strong correlation between cyber attacks and cyber 
theft. Although trade secrets are a critical form of IP, they 
are subject to some of the weakest IP protections.
    We appreciate the opportunity to provide input to the trade 
subcommittee on such a critical free trade agreement. Thank 
you.
    Chairman NUNES. Thank you, Mr. Slater.
    [The prepared statement of Mr. Slater follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman NUNES. My first question is for Mr. Grueff. You 
describe a little bit of the EU's regulatory system, and I was 
hoping that you could maybe go into some of the top barriers 
that you see to agricultural products. And I know you had some 
ideas and concepts that you mentioned on SPS and perhaps a way 
that we can move forward. Also I would kind of like your 
opinion on whether or not the EU is actually serious about 
removing these barriers and serious about agriculture.
    Mr. GRUEFF. Well, as you know, Mr. Chairman, this is a very 
challenging topic. I believe that they are--first of all, from 
the big picture perspective, that the European Union is very 
serious about the TTIP.
    I think that any negotiations in the SPS area are going to 
be very difficult for them. These are very politically 
sensitive issues for them, as I think you know. There are 
cultural differences that have very much had an impact on the 
policy process. This very much is demonstrated in the issues of 
agricultural biotechnology, in which the EU consumers 
apparently feel it is important to have the right to know how 
food was produced. American consumers, I believe, are more 
trusting in the U.S. regulatory agencies and don't have those 
kinds of concerns.
    There are a wide range of SPS issues, many of them that we 
could talk about. One that I would find, I mentioned it in the 
written testimony, is the issue of the, what are called 
antimicrobial washes, or pathogen-reduction treatments, because 
the science is basically the same on both sides. In other 
words, in the EU, the scientific advisors for the EU have said 
basically these are safe substances, and the political process 
did not allow the system to work with the information and for 
there to be approvals, and so we have a trade dispute right now 
that is lingering at the WTO on that particular issue.
    The issue of ractopamine is a very important issue, not 
just with the EU. This is the feed for pork and beef production 
widely used in the U.S. It is a very important issue, because 
there are also bans in Russia and China and other countries.
    Again, the U.S. perspective, and I would agree is that the 
science is clear on this. There is now an international 
standard at the Codex Alimentarius. The EU is not accepting the 
international standard. This has very broad implications that 
the EU is not accepting the international standard here.
    So my point in the oral testimony about this is going to 
take time is that it isn't just a matter of negotiating 
tariffs, as difficult as that will be. There is a lot more to 
these issues. It goes to their view of risk management, their 
view of their right to be more risk-averse than perhaps we are 
and many other countries.
    So it is going to take a very focused and in-depth 
approach. And it is going to take also, I might add, a real 
team effort on the part of the U.S. regulatory agencies. The 
U.S. side is very much going to need the expertise of the Food 
and Drug Administration and other regulatory agencies to take 
on these issues.
    Chairman NUNES. Thank you, Mr. Grueff.
    And as you know, our European friends, it is sometimes 
tough to decipher between, you know, what is a real issue and 
what is just a nontariff barrier to trade. And as our European 
friends and the ones who have come to visit me, agriculture is 
also a sensitive topic for us, as is food safety. So I 
appreciate your comments.
    Ambassador, I actually--would you like to comment on the 
agricultural issue?
    Mr. EIZENSTAT. Yes, if I may.
    Chairman NUNES. Sure.
    Mr. EIZENSTAT. When I was ambassador to the EU, we, after 
some difficulty, got the first genetically modified product 
approved, Roundup Ready soybeans and then later tomatoes. And 
interestingly, in the last, I would say, 6 months, there has 
been a fairly significant increase in European Union approval 
of GMO products, so that does indicate at least in this area 
that we are making some progress.
    Chairman NUNES. Well, as someone who used to hoe weeds, 
Roundup Ready crops were a big benefit for those of us who had 
to actually work in the fields.
    I had an additional question for you, Ambassador, as it 
relates to--you mentioned this in your testimony about 
financial services. And I know the President's nominee, Mr. 
Froman, has expressed that everything should be on the table, 
but we have read some reports, heard rumors about some in the 
administration who want to exclude financial services. Do you 
think this would be appropriate?
    Mr. EIZENSTAT. No. I think it would be disastrous, and the 
``some'' may be in one of my former departments. I think it is 
very important that financial services be included, because 
financial services are really the backbone of all the 
international trade we do. We have more than a dozen financial 
regulatory agencies, and I think it is important that Treasury, 
through the Financial Stability Oversight Council, coordinate 
their regulations so that we don't have disparate regulations 
coming out of each. We avoid extraterritoriality, and we get 
those agencies to think globally.
    There is also a market access issue, Mr. Chairman, and I 
know Mr. Neal is also interested in this issue as well. For 
example, our banks simply cannot get full access to many 
emerging markets. We can't get consumer banking in China, for 
example. So it would be very useful for the EU and the U.S. 
together to collaborate in third markets.
    And last, TTIP offers a really critically needed forum to 
establish a framework to coordinate the extensive but often 
disparate array of regulatory efforts on both sides of the 
Atlantic. It provides an enormous opportunity to create a 
process for discussion in an early stage, to help resolve or at 
least mitigate regulatory differences. The goal should be to 
promote greater financial compatibility and where possible, 
mutual recognition of equivalence.
    And the positive impact would also be that if we can agree 
between the U.S. and EU, then we can also promote those same 
high quality regulatory standards in global financial markets, 
particularly in faster growing developing markets. So I think 
it is tremendously important. This is not at the expense of 
what is happening at the G20. It would supplement it. It is a 
terrific forum. It would be an enormous missed opportunity if 
financial services aren't included.
    Chairman NUNES. Well, thank you, Ambassador.
    I would now like to recognize Ranking Member Rangel for his 
questions.
    Mr. RANGEL. Thank you.
    This sounds like a revolutionary advancement that we can 
make to improve the trading commerce with the EU and, 
therefore, around the globe. I guess it is accepted that an 
educated constituency, one that is able to have a job, actually 
contributes to commerce, being the consumer, and it could even 
give us a brighter economic picture, the same way poverty takes 
away from our opportunity to enjoy a higher quality of life for 
some.
    In these agreements, I notice that the question of visas 
and skills or lack of skills or job qualifications are given a 
consideration rather than just goods and services.
    Ambassador Eizenstat, you have served your government in so 
many different capacities, but it just seems to me--is there 
anything in the trade bill or could possibly be that deals with 
the question of poverty, healthcare, education or to be able to 
say that after this revolutionary trade bill passes, that 
countries that are in poverty can depend on the increase in 
advantages that we make, that somehow that they were on the 
agenda as we conclude these type of negotiations?
    Any member could answer, but I know what Ambassador 
Eizenstat----
    Mr. EIZENSTAT. Well, I--Mr. Member, I did an op-ed Article 
2 weeks ago in the Washington Post on the need for a public-
private apprenticeship program to provide skilled workers, 
because I believe with lower energy prices, we are going to get 
more and more companies coming back to the United States who 
have gone over, and other companies like Siemens who want to 
invest more here and don't have the skilled workers.
    This can be done very inexpensively. It is the German 
model. It is very much putting an employee, potential employee, 
who is at the community college, in a plant to learn a skill so 
he or she can actually get that job afterward. It is being done 
in States like South Carolina, where they are financing such a 
program.
    This is not in TTIP, but what there is a workforce 
provision to promote the skilled labor mobility between 
integrated companies. And this would be tremendously important 
to help our workforces have the free flow of commerce to 
promote more labor force mobility. So there is a large----
    Mr. RANGEL. But this is----
    Mr. EIZENSTAT [continuing]. Workforce----
    Mr. RANGEL. But this was my point, Ambassador. I am saying 
because you could provide a wedge in trade to get individuals 
with talents and skills to come in, what is in there to get 
people without talents, without skills and not the beneficiary 
of these agreements?
    You know, when world history is recorded, I think is going 
to be one of the biggest things that they have said that 
civilization has done in coming together, pulling together our 
resources and trying to level the quality of life for everyone, 
but somehow there are people all over the world, and indeed in 
the United States, that it would appear from the record that 
there was no consideration at all as to whether or not 
technology even allowed more of them to become unemployed and 
go into poverty.
    And if you can stretch trade into including such things as 
individual skills, why can't you stretch it to include lack of 
skills and lack of resources so that the record would be clear 
that this isn't just for Europe and America, it is for the 
quality of life for the world? I think this is the way we have 
got to sell this project to the world: It is for everybody.
    Mr. EIZENSTAT. Well, again, this is still a trade 
negotiation, and we would have to address skills training 
separately. But what we should address, and is to be addressed 
and it is part of the mandate, is to promote labor market 
mobility, provide an ease of people getting jobs across the 
Atlantic----
    Mr. RANGEL. How do you--how do you----
    Mr. EIZENSTAT [continuing]. Through joint research 
projects----
    Mr. RANGEL. Ambassador, you say this is trade, and I never 
would have raised this until I saw that skills are included in 
this now.
    Mr. EIZENSTAT. They are. That is correct.
    Mr. RANGEL. Well, poverty is included in this as well; 
education is included. And so when you say--when I was fighting 
international drug trafficking, that is all I heard, that this 
is a trade bill, and we have to deal with trade. So I have 
given up on trying to stretch what trade is, but I see that, 
and I don't know whether anyone disagrees with me, that you 
find yourselves very comfortable in talking about who should be 
allowed to come into our country based on the skills that they 
have. Is that correct?
    Mr. EIZENSTAT. That is correct.
    Mr. RANGEL. Well, if that is correct, it is a stretch, 
don't you think it is a stretch to include that in trade, our 
immigration programs?
    Mr. EIZENSTAT. Well, again, there is a workforce provision 
that will be negotiated, and perhaps that will provide the 
latitude for----
    Mr. RANGEL. But it has nothing to do with trade. I mean, it 
is not in the trade bill.
    Mr. EIZENSTAT. It does have to do with trade.
    Mr. RANGEL. Will it be in the bill?
    Mr. EIZENSTAT. It is in the bill, yes.
    Mr. RANGEL. Okay.
    Mr. EIZENSTAT. Workforce mobility is specifically mandated 
between the EU and the U.S. as a negotiating topic. There is an 
agreement that this should be one of the areas that should be 
covered.
    Mr. RANGEL. Is it your professional opinion that the 
question of educating everybody generally to have them to be 
more of a consumer around the world and especially in the 
United States is not the proper subject for a trade agreement?
    Mr. EIZENSTAT. No. I mean, I think that what we want to 
promote, and this is also part of it, is to allow, for example, 
certification from universities, so we accept each other's 
university degrees, having scientists and engineers and others 
be able to work on joint collaborative projects across the 
Atlantic. So this is going to be the first trade agreement, I 
believe and hope, that will actually have a workforce provision 
in it.
    Mr. RANGEL. Thank you, Ambassador. I didn't make my point 
as clear as I wanted. Thank you.
    Ms. CARUS. May I speak to that question?
    Chairman NUNES. Sure.
    Ms. CARUS. I just wanted to speak in support of Ambassador 
Eizenstat's statements about workforce mobility. One of the 
biggest challenges we face as a small- to medium-sized 
enterprise is talent and skilled labor, and this addition to 
the bill would be enormously advantageous to companies like 
Carus.
    Chairman NUNES. Thank you, Ms. Carus.
    Mr. Rangel, any more questions?
    Mr. RANGEL. No, thank you, Mr. Chairman.
    Chairman NUNES. Ms. Jenkins is recognized for 5 minutes.
    Ms. JENKINS. Thank you, Mr. Chair.
    And I thank you and the ranking member for hosting this 
very important hearing. Thank the panel members for 
participating.
    And first, I would like to echo the sentiments of Chairman 
Nunes and his concerns with the European Union's restrictive 
SPS barriers.
    But having covered that topic sufficiently, I would like to 
turn toward another issue, because improving regulatory 
cooperation and coherence would be a key benefit of any United 
States-EU trade agreement. And the EU regulatory process is 
often non-transparent, prevents U.S. stakeholders from 
participating, and it is unpredictable. And while Kansas 
livestock producers noticed this primarily when facing 
restrictions on our U.S. beef and pork, it is true that there 
would be sufficient gains from simply bringing the EU into 
compliance with the type of commitments that were included in 
chorus. And I think it is fair to say that those gains would 
not be exclusive to U.S. producers, but would also benefit 
producers in the EU.
    So really for any of you, how would addressing horizontal 
regulatory issues help to open up the EU market, and what are 
the relative merits of addressing these horizontal issues as 
compared to sector-specific harmonization? Sure.
    Mr. EIZENSTAT. One of the things that I have suggested, and 
my testimony actually suggested, for well over a decade is that 
we need to have certain sectoral agreements. Let me give you an 
example; then I will go to the horizontal. The Auto Industry on 
both sides of the Atlantic wants to enter into a sectoral 
agreement in which they basically accept each other's 
standards. It makes no sense that BMW produces a product in 
South Carolina that it then can't export to Europe, and that 
the BMW they make in Europe can't be exported to the U.S. There 
are different bumper standards, for example.
    This is an area where mutual recognition should exist; that 
is, we recognize that each other's safety standards in autos 
may not be identical, but they are adequate to protect each 
other. And that is the way the common market works within 
Europe. It is not that France and Germany or France and Sweden 
have identical regulations, but they accept each other's 
regulations as being equivalent.
    Second, your point, which is tremendously important, is 
horizontal. We can't get that kind of sectoral agreement in 
every area, so we should adopt certain horizontal standards. 
For example, have an accord that all regulations that have a 
transatlantic impact of more than, say, $500 million require 
notice to companies on both sides of the Atlantic and the 
opportunity to comment; that the least costly regulatory 
alternative should be taken; that the process should be 
transparent; that it should be science based, which is 
tremendously important for agriculture, but for pharmaceuticals 
and others. And those kinds of basic principles would be very 
important.
    Mr. Grueff is certainly correct, and I have suffered for 
this in many negotiations with the U.S. on the precautionary 
principle, it is a huge barrier, but if we could establish 
those kinds of horizontal principles, it would give us a real 
leg up so that we go beyond, in the agricultural area, the SPS 
area and exceptional.
    We establish the fact that we have to have sound science, 
least costly alternatives, transparency, notice. If we can 
agree on those, then that will at least give us a head start 
with our own dispute resolution process, as you probably agree. 
That would be a big start. Where we can get identical 
standards, like I hope we can get in the auto area, we should 
do it.
    And Mr. Neal and Mr. Rangel, I mention because of New York, 
we have been negotiating for years on common accounting 
standards. We use GAAP accounting; they use International 
Accounting Standards. I can assure you that both adequately 
protect investors. The costs of annual reconciliations by a 
European company doing business here and vice versa is, like, 
$2 billion. That should be simply accepted that they each, 
although they are different, they each adequately protect, they 
are equivalent, and we do away with reconciliation.
    Ms. JENKINS. Other thoughts?
    Mr. GRUEFF. Yes. I agree with the ambassador. If there 
could be a horizontal approach to regulatory convergence, I 
think that would be a very good development for U.S. 
agriculture. I guess looking at our very difficult, sad history 
with the European Union on agricultural trade issues over 
decades, I am somewhat skeptical. It is certainly worth an 
effort.
    I think in answer to the chairman's first question to me, 
even as our negotiators begin to try to deal with the issues 
that you have raised, for example, ractopamine, it is an access 
issue for beef and pork and the original beef hormones issue, I 
think really this takes negotiators immediately into very 
challenging questions like how was--was there a risk assessment 
done? How was the risk assessment done? Are you following 
international standards? If you are not following international 
standards, according to the WTO rules, there have to be very 
specific reasons why the member, a WTO member is not following 
international standards.
    I would think that the approach would need to be very 
specific and immediately very challenging in terms of why the 
European Union is implementing these specific SPS measures at 
the border that it is. If this somehow could be countered with 
a horizontal approach, I think that would be ideal. I guess I 
am skeptical that it could be done.
    Ms. JENKINS. Mr. Slater.
    Mr. SLATER. Thank you. Just to add to what has been said, I 
think you are going to--it is obvious to me that, at some 
point, the parties are going to sign off even though not 
everything has been done. We have achieved simplification in 
this other area, convergence in this area, maybe even 
harmonization in this area.
    No approach is going to work across the board, but with a 
horizontal regulatory hierarchy, or best practices, you can 
keep working on these issues beyond the signature of the 
agreement and keep making progress. I do think they have to be 
detailed. In addition to notice and comment and some 
description of what was done, you have to--it would be great if 
the Europeans would be forced to go through and explain what 
alternatives they considered and why they were rejected, and go 
through all of the feasible alternatives to be able to show 
them that there is a better way. I know this is going to be 
tough, but that exercise is critical to make progress going 
forward beyond when the agreement's concluded. Thank you.
    Ms. JENKINS. Thank you.
    Mr. EIZENSTAT. Let me say that this is not just an EU 
problem, it is a U.S. problem. Our regulatory agencies are 
independent oftentimes of the executive branch. They have 
domestic focus only. And I can remember meeting in the now 
called Eisenhower Executive Office Building with FDA when we 
were trying to get mutual recognition. We encouraged the FDA to 
at least allow testing in European labs to U.S. standards, not 
on identical standards, so they wouldn't have to test twice. 
And they said, well, we could accept tests in certain labs in 
Europe but not in other countries.
    I think we have now reached a stage where we ought to be 
able, at the very least, to test in each other's markets to 
each other's standards once, not duplicative testing. And you 
have a terrific role, because you oversee these independent 
agencies, to get them to think in a global fashion. And we have 
a regulatory forum between the U.S. and the EU to hopefully do 
that. But Congress can play a tremendous role here.
    Ms. JENKINS. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Chairman NUNES. Thank you.
    Mr. Neal is recognized for 5 minutes.
    Mr. NEAL. Thank you, Mr. Chairman.
    Mr. Ambassador, just to let you pursue this a bit. We are 
used to setting the table in some of these areas. What 
suggestions would you make to our negotiators so that we might 
avert the problem of being pulled to the table? And you 
mentioned financial services earlier. And we have heard from 
agricultural interests, and I am sure we are going to hear from 
other sectional interests across the country. But in terms of 
financial services, how might you approach harmonizing some of 
the issues that you have already described?
    Mr. EIZENSTAT. First of all, we really do have an 
exceptional nominee for United States Trade Representative. 
Mike Froman knows financial services, he has worked in that 
industry, he has worked globally, as the President's deputy for 
international economic advisor. And so I think we have got a 
good start there.
    Second is just getting financial services, Mr. Neal, in the 
negotiations. They are not in.
    Third, again, is getting the Treasury Department to take 
the role as the chair of the Financial Stability Oversight 
Council to coordinate our own regulatory actions--you have got 
agencies that are regulating extraterritorially, or proposing 
to do it--so when we come to the negotiating table with the EU 
on financial services, we have got a coordinated position taken 
by Treasury through the Financial Stability Oversight Council.
    Next is, again, working on these market access issues. If 
we work together with our financial institutions to try to get 
access for our banks and financial services to third countries 
that are keeping them out by having both the EU and the U.S. 
work together, that would be a huge advantage.
    And then last, to the extent, again, that we can develop 
common regulatory approaches, it can set a standard for the 
world. I think that the U.S. wants to do this. I hope the 
barrier that one of the agencies doesn't want to include it in 
TTIP can be overcome.
    Mr. NEAL. Thank you.
    And, Mr. Slater, your description through your testimony 
about emerging and expanding localization barriers to trade, I 
guess better known as LBTs, they apparently condition market 
access for goods and services on, one, requirements to invest 
and develop or use local R&D, intellectual property, 
manufacturing, and assembly capabilities; two, mandate transfer 
technology to another party involuntarily; and, three, request 
to disclose proprietary information that would not typically be 
needed for regulatory purposes. How do you explain these 
barriers and how might they impact Intel and your operations in 
Massachusetts?
    Mr. SLATER. Thank you, Congressman Neal. These are 
relatively new. Let me rephrase that. Some of the ones where 
they require local manufacturing content for government 
procurement preferences, those are old school. But what is new 
is they are going upstream to include intellectual property, to 
include R&D. And they are being linked, for example, buying 
spectrum. That is a Brazilian LBT. And they put companies in a 
tough situation. Do we expand at home--for example, in our 
case, at our facility in Massachusetts--or do we chose to 
expand in an emerging market where we may forgo a major market 
access opportunity.
    These are new. The TTIPs should push back strongly against 
them, set the gold standard, and prohibit them entirely, and 
then commit the parties to promoting the prohibition in other 
FTAs and in other forums, because they are a pernicious form of 
NTBs. Some of them violate WTO, some of them fall between the 
cracks of WTO provisions. But they are relatively new and 
untested at this point. They started showing up in India and 
now other countries are looking at copying them.
    Mr. NEAL. Thank you.
    Thank you, Mr. Chairman.
    Chairman NUNES. Thank you, Mr. Neal. Gentleman yields back.
    Mr. Boustany is recognized for 5 minutes.
    Mr. BOUSTANY. Thank you, Chairman Nunes.
    And, Ambassador Eizenstat, I was really enthusiastic about 
your comments in your written testimony about the geopolitical 
implications of getting this done, and the kind of leverage we 
will have in dealing with rising economic powers like India, 
China, Brazil, and so forth, to get back to a rules-based 
trading system.
    One of the most interesting aspects of these negotiations 
in my mind will be the effort to address a number of the 21st 
century issues that have not been traditionally covered in 
previous trade agreements. State-owned enterprises, you have 
talked about those. Competition, customs, trade facilitation, 
global supply chains, and cross-border data flows.
    And I believe it is critically important that Congress 
develop and pass strong bipartisan trade promotion authority to 
set out the negotiating objectives for this negotiation. TPA 
will establish the framework for congressional consideration 
and implementation of the agreements, and it empowers the 
administration to negotiate and conclude the agreements.
    So, just for the record, do you think these negotiations 
can be concluded and an agreement implemented without trade 
promotion authority?
    Mr. EIZENSTAT. No.
    Mr. BOUSTANY. Thank you.
    Mr. EIZENSTAT. They can be launched, but they can't be 
concluded, because the EU is not going to accept our final deal 
if they know it can be second-guessed when it comes to 
Congress. So Congress has a huge role here. There hasn't been 
fast track or TPA authority for a number of years, either for a 
Republican or Democratic President. It is absolutely essential. 
It will be essential for the Trans-Pacific Partnership 
agreement to be concluded. But this is your chance to put an 
imprint on the TPA as well. So I think it is tremendously 
important and it is absolutely impossible to have a concluded 
agreement, in my opinion, either in the TPP in the Pacific or 
the TTIP without this trade promotion authority.
    Mr. BOUSTANY. With regard to this agreement, could you 
discuss timing? Should we have trade promotion authority early 
in the process?
    Mr. EIZENSTAT. The earlier the better.
    Mr. BOUSTANY. Okay.
    Mr. EIZENSTAT. And if you are going to have it, you might 
as well get it for TPP, for the services agreement----
    Mr. BOUSTANY. Services agreement, yes.
    Mr. EIZENSTAT [continuing]. The plurilateral service 
agreements. So I would put it all together in one, rather than 
having separate votes at separate times.
    Mr. BOUSTANY. Thank you. Also, on a different subject, the 
U.S. and the EU have an existing regulatory dialogue called the 
Financial Market Regulatory Dialogue, or FMRD. And given the 
importance of this dialogue to ensuring the regulatory agendas 
of our country and the EU don't work at cross-purposes in 
global financial markets, doesn't this trade agreement present 
an opportunity to reinforce this type of dialogue?
    Mr. EIZENSTAT. Absolutely. It should be seen as enhancing 
that dialogue and giving more structure and more discipline to 
it.
    Mr. BOUSTANY. And if we are to include in the trade 
agreement newly expanded requirements of financial regulatory 
transparency principles for cooperation, impact assessment, and 
a mechanism for commenting and consulting on financial 
regulations that could lead to greater regulatory coherence, 
would this not advance the dialogue's hugely important task and 
benefit both financial services trade flows, not to mention 
manufacturing and agricultural trade flows that depend on 
efficient financial services?
    Mr. EIZENSTAT. Yes, sir, it would. And, again, I would like 
if I could to just return to this broader theme. To the extent 
that the EU and the U.S. can agree on common approaches, that 
can become the world standard. And that means that our 
companies, whether in agricultural or manufacturing or 
financial services, have a tremendous leg up when they want to 
do business in third markets because those third markets will 
be under a lot of duress to accept this common EU-U.S. 
approach.
    If, on the other hand, we fail, you can be sure that China 
or other developing countries will be trying to get their 
standards approved. And so it is not just improving trade flows 
between the U.S. and EU, as important as that is, it is setting 
a standard for global approaches.
    Mr. BOUSTANY. And that was what I referred to earlier in 
the geopolitical side of this in that as we have seen a 
stalling of Doha, how do we get back to a real rules-based 
trade system with good mechanisms for dispute resolution and so 
forth? And I see this as a strong vehicle to impress U.S. 
leadership in trade, and I am very excited about the prospects.
    Mr. EIZENSTAT. Absolutely.
    Mr. BOUSTANY. Thank you. I yield back.
    Chairman NUNES. Thank you, Mr. Boustany.
    Mr. Blumenauer is recognized for 5 minutes.
    Mr. BLUMENAUER. Thank you.
    Appreciate the opportunity for your easing us into some of 
these issues. There are certainly some, I think, significant 
opportunities. I appreciate notions of common accounting 
standards or, Mr. Eizenstat, your notion of bumpers, you know, 
might suffice if they meet the standards in either the EU or 
the United States.
    And I do think your point about this perhaps being an 
easier entry point than what we have seen, at least in the 17 
years I have watched these in Congress--some of them have been 
a little choppy--this could potentially be easier and perhaps 
serve as a template to do some other important things.
    But I am interested in your thoughts about what we do to 
make sure that we avoid unnecessary conflicts, areas, for 
example, dealing with finance. There is some apprehension in 
terms of how far we go in standardization, given the fact that 
the United States is imposing a little more significant 
regulatory protections to avoid some of the problems we have 
had in the past. And there is some pushback with some of our 
friends in the EU making sure that whatever we are doing in 
this arena is not somehow as a backdoor effort to undo hard-
fought efforts to prevent the next meltdown in the United 
States, or, for that matter, giving an undue advantage to some 
European institutions that wouldn't have to meet the same 
standards, although one has to note that some of these European 
institutions availed themselves to Fed facilities during the 
last meltdown. Do you have some thoughts on that?
    Mr. EIZENSTAT. Yes. I feel quite confident in saying that 
the financial services industry does not want to use this as a 
backdoor way of diluting the standards and regulations which 
are necessary for consumer protection. And also I would say 
that, here again, having been ambassador to the EU and spent a 
lot of time in Europe, I can assure you that European financial 
regulators are just as interested in protecting their investors 
and their consumers as we are. We are not dealing with a Third 
World country; we are dealing with an institution that has very 
high standards themselves. The question is trying to get as 
much convergence, of not weakening standards. But if we can get 
that convergence, we can save an enormous amount of money.
    Mr. BLUMENAUER. We are already seeing some apprehension in 
the United States. I am sure everybody has the same goal, but 
there is some concern that maybe there is some convergence into 
some areas that look a little riskier on the other side of the 
pond.
    Mr. EIZENSTAT. That is not a concern I share.
    Mr. BLUMENAUER. I am glad.
    One other area that is of interest to me that is likely to 
come up when we are talking about agriculture. There is, as I 
understand it, a little different philosophy between the EU and 
the United States just in allowing consumers to know what they 
are buying. Products are routinely comprehensively labeled in 
the EU. In the United States, people do not have access to the 
same labeling.
    Mr. Grueff, this would seem to be a pretty straightforward 
issue of transparency. Do you see this coming up, and thoughts 
about its resolution?
    Mr. GRUEFF. Yes, sir. It is a very important issue. And I 
hope it does come up. Usually where this issue is most 
discussed and apparently has the most economic consequence is 
in the area of agricultural biotechnology, the mandatory 
labeling issue. And as you just described it, really at its 
root there are real cultural differences, societal differences, 
in terms of the consumer's right to know, the consumer's desire 
to know. And in the EU, there is a very strong feeling, I would 
say, among--I was stationed in Germany for 4 years myself--I 
would say among consumers that they want to have this 
information as to how the product was developed, was genetic 
engineering employed or not. That is important.
    I would say generally, to American consumers that is not 
important. But we are all working under the rules of the WTO. 
So when it comes to mandatory labeling, I would say that the 
U.S. approach is that this is not a role where the government 
should be making this a trade barrier, that if consumers have 
an interest in knowing this information there will be a 
commercial response to that, companies will provide that 
information to them. And it really is not appropriate for WTO 
members to deal with each other in the way of making it 
mandatory.
    Mr. BLUMENAUER. Is there any problem with just allowing--
this is not an issue of scientific dispute, is it--knowing what 
it is that you are buying? This is not the same in terms of 
having some unusually artificial barrier to keep a product out, 
just allowing to know what it is.
    Mr. GRUEFF. You are right. It is not a food safety issue in 
that sense. I would say----
    Mr. BLUMENAUER. And it is not a pernicious thing, that 
somehow a barrier that can't be overcome or foreclosing a 
market.
    Mr. GRUEFF. Well, it is a difficult issue and there is a 
lot to it. Part of the U.S. perspective I think is that when 
you require, when the government on either side of the ocean 
requires labeling that a product was genetically produced and 
there is no food safety issue, then why----
    Mr. BLUMENAUER. Just letting people know what it is. Put 
aside whether it is genetically modified or not, that should 
not be a trade barrier, should it, just allowing people to know 
what they are buying?
    Mr. GRUEFF. I think the issue from the U.S. perspective is, 
is the government requiring that companies label this for 
consumers. And then if you are----
    Mr. BLUMENAUER. And you think that is an unnecessary trade 
barrier?
    Mr. GRUEFF. Yeah, I mean, I would agree with U.S. 
perspective on this, that if this is an import requirement, 
this is a requirement that would be imposed on U.S. exports, 
that this product be labeled, then, yes, I----
    Mr. BLUMENAUER. I think that, Mr. Chairman, just at some 
point I would be interested in exploring this a little bit. 
Because I think this puts us in a very weak position. I think 
it is 57 or 67 countries that allow consumers to know what they 
are buying, and that is part of what governments do. And I 
think if we fall on our sword over something like this, I think 
the public opinion is very much in flux over this, you have had 
a little experience in California, where there were tens of 
millions of dollars spent in an avalanche of kind of an 
exciting political campaign. We are not hearing the end of it. 
And I would just offer up that I think it would be interesting 
to explore it a little further. Because I think there are some 
real opportunities with this.
    But this is an example of something that I think is a side 
issue that could, in fact, complicate this unnecessarily. I 
think we have got real issues that we want to contend with, 
with our European friends. This, I think, is a stupid fight, to 
prevent consumers from just knowing what they are getting. 
Picking a fight with Europe over this instead of going along 
with what many countries--I think a majority of people around 
the world have the right to know what they are purchasing. I 
think that that gets in the way of other objectives in the 
trade arena, and I would like a chance to explore that a little 
further at some point.
    Mr. EIZENSTAT. If I can just add a perspective. I think it 
is a trade barrier. Certainly consumers should have the right 
to know what they are buying and what the components are. But 
when there is a non-scientific basis is for simply saying 
because something is genetically modified the implication is 
that it is dangerous and you don't approve it, that is wrong. 
That is a trade barrier. And I think now increasingly the EU is 
allowing more GMO products. It is fine to have consumers 
understand what has happened, what is in the component, but 
when you simply label something and then give the impression 
that that makes it dangerous, that can be----
    Mr. BLUMENAUER. Your position, where people think if they 
know what it is that they won't buy it or if they know what it 
is that that is an implication that it is not appropriate to 
buy or it might be dangerous, I think is creating a false 
battle. And I am not prepared at this point--I mean, we can 
talk about what happens when you have got Round-Up-resistant 
weeds, which 49 percent of American farmers are finding now, 
and they are using even more pesticides.
    But I think it is important for us to think about what it 
is worth going to the mat over when we are dealing with our 
friends in the EU with something that is probably going to be 
popping up in various States around the country. I think the 
first State that decides that consumers have the right to know, 
I think you are going to see a lot of businesses fall off the 
bandwagon in fighting against allowing people to know what it 
is, because I think that creates the expectation or feeds the 
fear that there is something they shouldn't be able to know if 
you are not labeling it.
    And I don't want to go into it further now, but I do want 
to explore it at some point, because I think it is going to 
create some unnecessary problems with this trade agreement, 
that we have got bigger fish to fry, like Intel people that I 
represent, where there are real battles on intellectual 
property, there are real battles on standards that matter and 
easing this forward. And this----
    Chairman NUNES. I would like to thank my good friend from 
Oregon. And his time has expired.
    Mr. Schock is recognized for 5 minutes.
    Mr. SCHOCK. Thank you, Mr. Chairman. Thank you for hosting 
this meeting. And thank you to the panel of interesting 
witnesses.
    First, I would like to start with Ambassador Eizenstat. You 
mentioned in your testimony the importance of TPA, not only to 
getting the agreement done, but actually in credibility with 
our negotiations. And so I thought I would just give you the 
opportunity to expand a little bit on that and talk to us about 
why TPA is important even just during the negotiating process.
    And then our Congress, you heard our chairman at the 
opening of this committee, has expressed support for TPA. We 
need greater commitment from the administration to build 
support for this effort. And so from a Member of Congress' 
point of view, there seems to be only upside for the 
administration to ask for TPA, since it seems to be important 
for them in the negotiating process when it comes to 
credibility. But you have served in administrations, multiple 
administrations. Are there things we could be doing to help 
build support for TPA and encourage the Administration to be 
more involved?
    Mr. EIZENSTAT. Well, Mr. Froman is going to be going 
through hearings on his appointment in the Senate. I would 
assume this would be some of the questions about TPA. I can't 
imagine the administration wouldn't want to have it. And if 
there is bipartisan support for it and if it can be indicated 
that there is bipartisan support, that this is not going to be 
a knockdown, drag-out, because the worst thing to happen, this 
really would throw a kink in the negotiations, is you launch in 
mid-July, which is what their hope is, these TTIP negotiations 
and then you end up having a bruising battle over fast track at 
the outset. So I think they may want to get some momentum in 
the negotiations.
    But to the extent that the Congress can indicate that there 
is bipartisan support at the outset and that there won't be 
such a bruising battle, it gives them really a tailwind rather 
than a headwind. So I suspect that they are going to want some 
assurance that this will, in fact, be a bipartisan program and 
not one that, you know, ends up throwing, again, a curveball in 
the negotiations before they start. But I think what you are 
saying certainly should be welcome to the ears of the 
administration.
    Mr. SCHOCK. Thank you. I wanted to address the intellectual 
property, not so much relative to the U.S.-EU agreement, but 
what the agreement between the U.S. and the EU's trade 
agreement will mean for intellectual property right fights that 
we have for more developing countries. Most of the companies 
that do business in my district that are worried about their 
intellectual property being stepped on or stolen are not 
worried about a European Union country doing it. I am aware of 
multiple cases where the U.S. and the EU have already filed 
jointly cases before the WTO. And I am just wondering, in any 
of the panelists' view, whether a U.S.-EU agreement gives any 
more weight or ability for us to protect our IP in both 
countries or either country. In other words, does this have any 
impact on our fights in China and some of the other emerging 
markets?
    Mr. EIZENSTAT. In my opinion--and I would like my colleague 
from Intel, I am sure this is a big issue--absolutely. If we 
can establish a really high level of intellectual property 
protection here and then work shoulder to shoulder against 
things like, you know, domestic innovation policies where they 
basically require forced technology transfers, compulsory 
licenses, a whole set of nontariff barriers in the IP area, 
this would be, I think, a big step forward in establishing the 
high standard of intellectual property protection around the 
world at a time when it is under enormous stress across the 
board.
    So I think it would be a very big step. We do have strong 
protections already. But coming in a trade agreement where we 
do it jointly I think would have a very big impact on Third 
World and emerging markets.
    Mr. SCHOCK. Any other panelists? Mr. Slater.
    Mr. SLATER. If I may, Congressman Schock. I agree with what 
Ambassador Eizenstat said. I think that setting global 
principles on IP protection where we have a commonality of 
interests, not trying to harmonize the systems, but where we 
are concerned about Third World markets, and we are, would be 
very beneficial. Every initiative that I know where we have 
succeeded in pushing back in China on one of their indigenous 
innovation policies, it was because we cooperated with the EU 
and usually Japan. And formalizing that cooperation, making it 
actually binding and more detailed, would be very, very useful.
    The other thing to keep in mind is the trade secret 
protection in the EU varies from member state to member state. 
The commission is looking at an EU-wide directive on trade 
secrets. TTIP could provide the momentum for them to go further 
down that road, and that would help. It is hard to argue to 
enhance trade secret protections if you, yourself, don't have 
the best standard in place.
    Mr. SCHOCK. Well, I have more questions, but my time has 
expired. So thank you again for being here.
    Thank you, Mr. Chairman, for having this meeting.
    Chairman NUNES. Thank you, Mr. Schock.
    Mr. Reichert is recognized for 5 minutes.
    Mr. REICHERT. Thank you, Mr. Chairman.
    I apologize for being late and missing some testimony, and 
I did get to catch part of the discussion, and I know that you 
have touched on this issue a little bit. But I just want to go 
back and maybe reemphasize your answers to a couple of 
questions.
    I am from the State of Washington, and I have just acquired 
a new part of my district of some apple growers and some other 
agricultural products. We are very excited about the 
opportunity of a trade agreement between the United States and 
the European Union. It offers critical opportunity for trade 
for that industry, and also for other businesses, of course, in 
Washington State. We are the most trade-dependent State in the 
Union, as probably all of you know.
    It also provides a way to tackle some of the challenges 
facing Washington tree fruit growers, and even our dairy 
producers as they try to access the European market. Each year, 
on average, Washington exports 35 percent of its apple crop, 
and some of our dairy producers export as much as 50 percent of 
their product, but only a small amount of those products go to 
Europe. I am hearing from growers and dairy producers in my 
State about how nonscience-based regulations and standards and 
other nontariff barriers are limiting their access to the 
European market. It is essential, I think all of us recognize, 
and as I said, I have heard some of the testimony, that these 
barriers be addressed in the negotiations.
    Mr. Grueff, what do you think can be accomplished through 
these trade negotiations in this area?
    Mr. GRUEFF. Well, I guess, bigger picture, in response to 
your question, our history with the EU, as I pointed out in my 
testimony, especially in the sanitary and phytosanitary area, 
the health-related area, has not been a good one. And, in fact, 
I would say that our way of trying to deal with these issues 
has been through WTO dispute settlement, which is really not a 
very good way to try to do this.
    So this will really be the first time that we are going to 
have a structure, a forum for the U.S. and the EU to really 
focus on these issues. And so I am hopeful. I know that this is 
going to be very difficult, but I am hopeful that the 
opportunity will be used very productively.
    As to your specific point about, for example, your 
district, for our, your district and the U.S. dairy industry, I 
think this is a very important opportunity for a number of 
reasons. One is the issue of geographical indications, which is 
generally viewed as an EU offensive issue. This is the issue of 
producers getting to keep the name of the original area where a 
product was produced, like Parma ham and so on. But our U.S. 
dairy industry says that they feel confident that they will 
have much better access to the EU market if there can be some 
agreement with the EU regarding some of the biggest issues 
regarding geographical indications in dairy, mozzarella and 
feta and so on, that if something could be worked out with the 
Europeans on this, our dairy industry is very optimistic about 
their opportunities in the EU market.
    So this is an issue that I certainly expect will be part of 
the negotiations. And, again, it would be a platform, a 
structure or forum that we just haven't had. So this can 
provide some real opportunities.
    Mr. REICHERT. I appreciate that. Thank you.
    For Mr. Slater, another issue of importance to the 
businesses in my State that operate globally is the protection 
of cross-border data flow. In both the European Union and the 
United States, data privacy is protected, but we have different 
systems for providing that protection. Respecting the 
difference of those privacy approaches, how can we ensure a 
robust protection of cross-border data flows?
    Mr. SLATER. Thank you. I am encouraged by an exercise that 
is going on right now, where there is a mapping exercise 
between the corporate binding rules in the EU and the cross-
border privacy rules that APEC has put together. And they are 
mapping out the similarities and differences to ensure 
interoperability as much as possible and then find a way to 
bridge the differences. I have talked to USTR about this, and I 
now want to encourage that approach and to, instead of trying 
to harmonize or trying to dilute the EU privacy regime that is 
to find a way to maximize interoperability and yet have a right 
to strong cross-border data flows. They are not inconsistent. 
And the EU, apparently, many of the officials in the EU want 
the freedom to have cross-border data flows because they 
recognize it is important to their own service industries.
    So it is almost like you have to treat the two issues 
separately. And even though they obviously touch, they are 
heavily dependent on one another to make progress, but I am 
encouraged by what they are looking at right now.
    Mr. REICHERT. I appreciate that. Thank you.
    I yield back, Mr. Chairman.
    Chairman NUNES. Thank you, Mr. Reichert.
    Well, that concludes our hearing. I do want to thank the 
gentleman from New York for his cooperation on and bipartisan 
support for agreeing to all the witnesses. I think it makes for 
a much more productive hearing like we had today. And I 
especially want to thank all of the witnesses for their time 
and their patience dealing with our schedule. I hope we didn't 
make you late for any appointments, but we do appreciate your 
time.
    And with that, the meeting is adjourned.
    [Whereupon, at 4:22 p.m., the subcommittee was adjourned.]
    
    
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