    [Senate Hearing 113-157]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 113-157

                         PRESIDENT'S 2013 TRADE AGENDA

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

                                    HEARING

                                   before the

                              COMMITTEE ON FINANCE

                              UNITED STATES SENATE

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 19, 2013

                                   __________

                Printed for the use of the Committee on Finance

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                              COMMITTEE ON FINANCE

                         MAX BAUCUS, Montana, Chairman

    JOHN D. ROCKEFELLER IV, West         ORRIN G. HATCH, Utah
    Virginia                             CHUCK GRASSLEY, Iowa
    RON WYDEN, Oregon                    MIKE CRAPO, Idaho
    CHARLES E. SCHUMER, New York         PAT ROBERTS, Kansas
    DEBBIE STABENOW, Michigan            MICHAEL B. ENZI, Wyoming
    MARIA CANTWELL, Washington           JOHN CORNYN, Texas
    BILL NELSON, Florida                 JOHN THUNE, South Dakota
    ROBERT MENENDEZ, New Jersey          RICHARD BURR, North Carolina
    THOMAS R. CARPER, Delaware           JOHNNY ISAKSON, Georgia
    BENJAMIN L. CARDIN, Maryland         ROB PORTMAN, Ohio
    SHERROD BROWN, Ohio                  PATRICK J. TOOMEY, Pennsylvania
    MICHAEL F. BENNET, Colorado
    ROBERT P. CASEY, Jr., Pennsylvania

                          Amber Cottle, Staff Director

                   Chris Campbell, Republican Staff Director

                                      (ii)

                                C O N T E N T S

                                   __________

                               OPENING STATEMENTS

                                                                       Page
    Baucus, Hon. Max, a U.S. Senator from Montana, chairman,
      Committee on Finance...........................................     1
    Hatch, Hon. Orrin G., a U.S. Senator from Utah...................     3

                             ADMINISTRATION WITNESS

    Marantis, Hon. Demetrios, Acting U.S. Trade Representative,
      Executive Office of the President, Washington, DC..............     6

                   ALPHABETICAL LISTING AND APPENDIX MATERIAL

    Baucus, Hon. Max:
        Opening statement............................................     1
        Prepared statement...........................................    35
    Hatch, Hon. Orrin G.:
        Opening statement............................................     3
        Prepared statement...........................................    38
    Marantis, Hon. Demetrios:
        Testimony....................................................     6
        Prepared statement...........................................    41
        Responses to questions from committee members................    50

                                 Communication

    Tennessee Department of Economic and Community Development.......    77

                                     (iii)

                         PRESIDENT'S 2013 TRADE AGENDA

                                  ----------

                            TUESDAY, MARCH 19, 2013

                                           U.S. Senate,
                                          Committee on Finance,
                                                        Washington, DC.
        The hearing was convened, pursuant to notice, at 10:33
    a.m., in room SD-215, Dirksen Senate Office Building, Hon. Max
    Baucus (chairman of the committee) presiding.
        Present: Senators Wyden, Stabenow, Menendez, Carper,
    Cardin, Brown, Hatch, Grassley, Roberts, Thune, Isakson, and
    Portman.
        Also present: Democratic Staff: Amber Cottle, Staff
    Director; Mac Campbell, General Counsel; Bruce Hirsh, Chief
    International Trade Counsel; Hun Quach, International Trade
    Analyst; and Chelsea Thomas, Professional Staff. Republican
    Staff: Chris Campbell, Staff Director; Everett Eissenstat,
    Chief International Trade Counsel; Paul Delaney, International
    Trade Counsel; Gregory Kalbaugh, International Trade Counsel;
    and Rebecca Nasca, Staff Assistant.

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

        The Chairman. The committee will come to order.
        The English philosopher Sir Francis Bacon once said, ``A
    wise man will make more opportunities than he finds.'' By that
    standard, the United States has been very wise in crafting a
    significant trade agenda that provides many new opportunities
    for our Nation. We must now be aggressive, seize these
    opportunities, and create more than we find.
        An aggressive trade agenda is key to boosting our Nation's
    economy and creating good-paying jobs in my home State of
    Montana, and all across America. Export-related jobs pay 13 to
    18 percent more than the national average. These are good-
    paying jobs in factories and farms all across America.
        By being aggressive, we can build on the success achieved
    in the 112th Congress. Working together, we passed three free
    trade agreements with Colombia, Panama, and South Korea; we
    extended the Trade Adjustment Assistance program; we renewed 3
    important preference programs; and we helped United States
    exporters take advantage of Russia joining the WTO.
        By working together, we can achieve similar successes now
    in the 113th Congress. We can ensure that U.S. businesses,
    workers, farmers, and ranchers reap the benefits of expanded
    trade through the many promising opportunities now under way.
        These opportunities include the Trans-Pacific Partnership
    in Asia and the Trans-Atlantic Trade and Investment Partnership
    in Europe. They also include a new services agreement and
    expansion of free trade in information technology.
        Given this ambitious agenda, the need for Trade Promotion
    Authority is clear. TPA is a key negotiating tool that will
    help bring these trade agreements to a successful conclusion.
    It has been more than a decade since we renewed TPA, and the
    world has changed in that time. Since 2002, U.S. exports of
    goods and services have more than doubled. America now faces a
    new set of economic priorities and challenges. The new TPA
    should reflect these realities.
        I am pleased that the administration has indicated its
    interest in working with Congress to get TPA done. Working
    together, we will pass this important trade legislation.
        While we are expanding markets abroad, a competitive
    American workforce must be ready to help U.S. companies seize
    these opportunities. Since 1974, Trade Adjustment Assistance,
    or TAA, has been the foundation for expanding trade.
        TAA has helped thousands of American workers, small
    businesses, farmers, and ranchers improve their competitiveness
    in the global market. Since 2009, approximately 800 workers at
    nearly 40 companies in Montana have been approved to receive
    TAA benefits; nationally, more than 400,000 American workers
    have been approved for benefits.
        These are not statistics. We are talking about mothers and
    fathers with families to support. TAA gives these folks the
    skills and support they need to get ahead in today's job
    market. TAA helps them land the good-paying jobs they deserve,
    and, when they land that job, they often excel and they
    succeed. In fact, 90 percent are still employed 6 months later.
        TPA and TAA are two sides of the same coin: making trade
    work. We need to renew and extend both of them this year.
    Looking at opportunities across the Atlantic, I see the
    European Union, our largest trading partner. Today, 21 percent
    of U.S. goods and services exports go to the E.U., supporting
    nearly 13 million American jobs. If we are aggressive, we can
    achieve much more. By simply eliminating tariffs, U.S. exports
    to the E.U. could increase by 17 percent, generating even
    greater economic growth and more jobs here at home.
        To tap into the opportunities of an E.U. agreement, we must
    first overcome some serious challenges. These include access
    for U.S. agricultural exports such as beef and pork, and
    elimination of non-science-based regulations. Unscientific and
    unfair barriers to U.S. agricultural products put U.S. jobs at
    risk.
        In Montana, 50 percent of our economy is tied to
    agriculture. One in five Montana jobs is connected to ranching
    and farming. I know America's ranchers and farmers produce the
    highest quality products in the world, and that is why I will
    only support a trade deal with the E.U. if it gives America's
    producers the opportunity to compete in the world's biggest
    market.
        Looking at opportunities across the Pacific, I see Asia's
    fast-
    growing economies. The Trans-Pacific Partnership, or TPP, will
    strengthen our ties with some of the world's most vibrant
    economies and burgeoning consumer markets.
        Over the past decade, U.S. exports to TPP countries nearly
    doubled, to almost $700 billion in the year 2011. Asia's share
    of world imports grew from more than 18 percent in 1983 to
    almost 31 percent in 2011. The TPP countries' average GDP
    growth was more than 2 percentage points higher than the U.S.
    in 2010. With Japan's recent announcement of its desire to join
    the negotiations, the TPP could soon account for nearly 40
    percent of the world's GDP.
        I was in Japan this past summer and met with former Prime
    Minister Noda and other leaders in an effort to strengthen
    trade ties. I am glad to see Japan is now interested in coming
    to the negotiating table on TPP. I look forward to working with
    the USTR to ensure Japan meets the high-level standards of this
    agreement.
        Japan's inclusion would enhance the remarkable opportunity
    presented by the TPP to open a huge market to our world-class
    exports. I am hopeful we can build on the progress we recently
    made when Japan began accepting more U.S. beef exports. Now we
    must make every effort to conclude the TPP this year.
        While China is not part of the TPP negotiations, trade with
    the world's second-largest economy also presents opportunities
    as well as challenges. I was encouraged to hear China's new
    Premier, Li Keqiang, recently say his government is committed
    to strong relations with the United States and sees a strong
    outlook for trade and investment between our two countries.
        The U.S.-China relationship should be mutually beneficial,
    but for this to happen China must play by the rules. I continue
    to be concerned that China's currency manipulation costs U.S.
    jobs, and so does China's failure to end the wholesale theft of
    U.S. patents, copyrights, trademarks, and trade secrets. China
    has pioneered a practice, now copied by India and others, of
    requiring U.S. companies to transfer technology to domestic
    companies in order to gain access to its market.
        We need to be on the offense and fight these unfair
    practices. We need to enforce existing agreements and develop
    novel approaches and new agreements. We need to work with like-
    minded countries to push back against the theft of intellectual
    property.
        At the end of the day, America's trade agenda is about one
    simple goal: jobs. At a time when job creation must be our
    number-one priority, a strong, aggressive trade agenda is one
    of the most powerful tools we have to put more Americans to
    work. The opportunities are laid out before us. America must
    now take action, seize the opportunities, and, as Sir Francis
    Bacon said, make more than we find.
        [The prepared statement of Chairman Baucus appears in the
    appendix.]
        The Chairman. Senator Hatch?

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

        Senator Hatch. Well, thank you, Mr. Chairman, for holding
    today's hearing. I am sure you will agree, congressional
    oversight is critical to ensuring transparency and, I might
    add, accountability in the executive branch, so I appreciate
    this opportunity to chat with the administration in a public
    forum about their trade agenda.
        Now, international trade is critical to our economy. Trade
    supports more than 38 million jobs in the United States, but we
    can do better. Ninety-five percent of the world's customers
    live outside the United States, and they account for 92 percent
    of global economic growth and 80 percent of the world's
    purchasing power.
        If we are going to access these customers, we need an
    aggressive trade policy and the tools to help put that policy
    in place. Our record of bipartisan cooperation on trade is
    strong. During the last Congress, we worked together to pass
    seven trade bills, including our long-stalled free trade
    agreements with Colombia, Panama, and South Korea.
        We also worked closely together to develop legislation to
    grant permanent normal trade relations for Russia while holding
    Russia accountable for its actions. I am hopeful that we will
    be able to look back on a similar record of success at the end
    of the 113th Congress.
        There certainly is reason for hope. The administration is
    forging ahead to complete negotiations for a Trans-Pacific
    Partnership agreement this year. They also recently announced
    their intention to launch negotiations with the European Union
    on a comprehensive trade agreement.
        Furthermore, expansion of the information technology
    agreement, which would lower taxes and tariffs on information
    technology projects to zero, and of course conclusion of an
    agreement on trade facilitation, also hold great promise.
    Conclusion of an international services agreement could also
    expand opportunities for U.S. workers and job creators. The
    United States is a dynamic service provider. Unfortunately, to
    date U.S. exports of services have not even come close to
    reaching their full potential. This agreement could increase
    trade and services by another $600 billion per year. These are
    all ambitious undertakings and, if successful, they will make a
    major contribution to U.S. economic growth.
        Our future does indeed look bright, but there are also a
    few significant storm clouds on the horizon. Many of the
    toughest parts of the Trans-Pacific Partnership negotiation
    have yet to be resolved, including market access for dairy,
    sugar, and textiles.
        The administration is still contemplating including
    product-
    specific carve-outs within the agreement, a dangerous proposal
    that could be used as a precedent to exclude other products
    from coverage in this and future agreements, thereby diluting
    their commercial benefits. Such an irresponsible proposal
    threatens to undermine decades of U.S. trade policy for no
    discernible purpose I can see. The administration's trade
    policies with regard to patent protection remain vague,
    particularly with respect to the term of protection for
    biologics. How these issues are resolved will go a long way
    towards determining whether I and my colleagues will be able to
    support the final TPP agreement.
        Additionally, while a potential E.U. agreement holds much
    promise, it must be comprehensive, result in real regulatory
    harmonization, and reflect the highest standards of
    intellectual property rights protection if it is to gain the
    strong support of Congress. Now, our past negotiations with the
    European Union have shown just how difficult this task can be.
    Let us hope that we can get it done this time. President Obama
    will make two key decisions in the near future which will help
    determine the success or failure of his trade agenda.
        First, the President must nominate someone to serve as the
    U.S. Trade Representative who has the trade expertise,
    political savvy, and leadership skills necessary to effectively
    lead the agency. Today, morale at USTR is at an all-time low.
    Ill-conceived proposals by this administration that have the
    agency subsumed into the Department of Commerce reveal a
    complete lack of understanding regarding both the structure and
    the purpose of the agency.
        Sadly, rumors persist that the President may nominate as
    his next trade representative the chief architect of this
    proposal to end USTR as we know it. I hope he does not do that,
    but we will deal with whatever happens. I certainly hope that
    is not the case.
        Following through with this proposal would send a very
    negative signal to both our career negotiators and our
    negotiating partners. If the United States is to be taken
    seriously on trade policy around the world, we need a real
    leader at USTR who understands the agency and is capable of
    navigating the difficult shores of international trade
    negotiations.
        Second, the President needs to work with Congress to renew
    Trade Promotion Authority. Almost 1 year ago to the day,
    Ambassador Kirk testified before this committee that USTR would
    engage with Congress on the steps needed to implement a new
    Trade Promotion Authority. Now, despite my offer to begin
    negotiations that very day, no steps have been taken by this
    administration to engage Congress on Trade Promotion Authority:
    no meetings, no discussions, no exchange of ideas, nothing.
        Now, the President's 2013 trade policy agenda says the
    President will work with Congress on Trade Promotion Authority.
    I take this promise as a sign of progress, but we have already
    wasted 4 years. TPA could have been done a long time ago, and
    we cannot afford to waste any more time.
        I cannot imagine any President not wanting that authority,
    because it makes it easier to do these agreements. TPA could
    have been done a long time ago. We cannot afford to waste any
    more time. There is much work to be done for this ambitious
    trade agenda to succeed. Launching negotiations is one thing;
    closing high-standard agreements that the Congress will support
    and pass is a completely different undertaking.
        I hope this President and this administration are up to the
    task. Ambassador Marantis, I look forward to your testimony
    today. I have high regard for you, and I think you have done a
    good job down there. I look forward to working with you and the
    next U.S. Trade Representative to advance our stated goals of
    opening foreign markets, enforcing our trade laws, and creating
    even greater economic opportunities for this and future
    generations.
        You would make a good U.S. Trade Representative yourself,
    because you are one of those people who has an open mind who is
    really trying to do the best job that you can. Frankly, I do
    not want to ruin your opportunities by saying nice things about
    you, but we all have respect for you, and you have worked well
    with this committee in the past and have worked well ever since
    you have been down there. So we are very grateful to have good
    people like you willing to give your time and serve our
    country, and to give service, especially service that all of us
    up here hopefully can support.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        [The prepared statement of Senator Hatch appears in the
    appendix.]
        The Chairman. In the interest of balancing things out, I
    will say nice things about Ambassador Marantis too. [Laughter.]
        Senator Hatch. Well, I am glad to hear that.
        The Chairman. I hope that neither of us complicates
    matters.
        I would now like to introduce our Acting U.S. Trade
    Representative, Demetrios Marantis. Ambassador Marantis,
    welcome back to the Finance Committee. You are no stranger here
    by any stretch of the imagination, serving as the committee's
    Chief Trade Counsel very, very admirably. We made a lot of
    things happen. You are very, very good.
        It is always a pleasure to have you before us, so we are
    looking very much forward to your testimony. You know the
    rules. Say what you want to say, do not pull any punches, and
    your statement will be automatically included in the record.
        Please proceed.
        Senator Hatch. With all these good comments, I hope you do
    not screw up now. [Laughter.]

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

        Ambassador Marantis. Thank you very much, Chairman Baucus
    and Senator Hatch, and thanks to this committee. It is great to
    be back.
        [Interruption by protestor.]
        Ambassador Marantis. We are now 3 years----
        [Interruption by protestor.]
        The Chairman. Ma'am? Ma'am? Ma'am? We are going to have to
    have an orderly hearing here now. If you do not----
        [Interruption by protestor.]
        The Chairman [continuing]. Desist, or we are going to have
    to take extraordinary actions.
        [Interruption by protestor.]
        The Chairman. The committee will be in order. Comments from
    the audience are inappropriate and out of order.
        [Interruption by protestor.]
        The Chairman. Any further disruption will cause the
    committee to recess until the police can restore order.
        [Interruption by protestor.]
        The Chairman. I am sorry, ma'am. The hearing is now in
    recess, and we will proceed when we are able to proceed without
    disruptions. The committee is in recess until we can proceed
    without disruptions.
        [Whereupon, at 10:51 a.m., the hearing was recessed,
    reconvening at 10:52 a.m.]
        The Chairman. The committee will come to order. Ambassador
    Marantis, will you proceed?
        Ambassador Marantis. Thank you again, Chairman Baucus.
        The Chairman. Why don't you proceed from the very
    beginning?
        Ambassador Marantis. All right. Thank you. Thank you to
    both of you and to this committee. It is a real honor for me to
    be back here.
        We are now 3 years into President Obama's National Export
    Initiative. Since 2009, increased U.S. exports have supported
    1.3 million additional American jobs. Last year, U.S. exports
    overcame slackening global demand and a devastating drought to
    reach record highs. Since 2009, manufacturing exports are up 47
    percent, agricultural exports are up 44 percent, and services
    exports are up 24 percent.
        President Obama's trade agenda for 2013 calls for continued
    progress and bold steps. It will support greater economic
    growth and jobs for more Americans, and bipartisan cooperation
    between Congress and this administration will remain critical
    to its success.
        Together, we can secure job-supporting opportunities for
    U.S. farmers, ranchers, businesses, workers, manufacturers, and
    service providers. So in 2013, the administration will continue
    to consult closely with you on U.S. trade negotiating
    objectives and on holding our trading partners accountable for
    their commitments.
        USTR's current work builds on many efforts that became
    successful with your guidance and with your help. We are
    intensifying Trans-Pacific Partnership negotiations to secure a
    next-generation high-standard trade agreement in the world's
    fastest-growing region.
        As President Obama announced in his State of the Union
    address, we are preparing to begin negotiations to further
    strengthen the world's largest trade relationship through a
    Trans-Atlantic Trade and Investment Partnership with the
    European Union.
        In Geneva, we will soon begin negotiations regarding global
    trade in services, a sector where U.S. providers are highly
    competitive. At the WTO, we are advancing promising pathways
    for trade liberalization. These include trade facilitation and
    the information technology agreement.
        In support of our market-opening efforts, we look forward
    to beginning work with you on Trade Promotion Authority. This
    year we will seek to improve the effectiveness of U.S. trade
    preference programs and to ensure that U.S. businesses and
    workers benefit fully from the commitments of new WTO partners.
    We will address the expiration of Trade Adjustment Assistance
    this year, keeping our own commitment to Americans in trade-
    impacted industries and connecting them and other displaced
    workers with employment services.
        Your support for President Obama's focus on trade
    enforcement is already ensuring that more Americans reap all of
    the benefits of U.S. trade agreements in the WTO and around the
    world. In conjunction with USTR's Office of the General
    Counsel, the Interagency Trade Enforcement Center will continue
    to play a critical role in trade enforcement efforts. Since its
    inception, the ITEC has already helped to advance multiple
    enforcement actions and investigations.
        As we continue our market-opening and enforcement efforts,
    USTR will uphold this administration's commitment to be
    responsive to American interests and American concerns. We will
    base trade policy on diverse American perspectives with a goal
    of supporting American jobs. In particular, we will continue to
    maintain open channels of communication and receive
    constructive public feedback on all trade negotiations.
        Working with you, this administration intends to seek high-
    standard trade and investment opportunities around the world.
    We intend to enforce our trade agreements to preserve and
    support additional U.S. jobs, and we intend to reflect and
    uphold American values in trade policy.
        However, it is important to note that continued budget cuts
    and resource constraints can significantly compromise USTR's
    capabilities. Already we face the possibility that the
    sequester alone will hamper our ability to conduct trade
    negotiations and other market-opening efforts, as well as new
    enforcement disputes.
        In the continuing resolution that is currently moving
    through Congress, USTR's budget would be cut by an additional
    $1 million on top of the $2.6 million sequester. A further $1-
    million hit could undermine USTR's ability to conduct multiple
    trade negotiations simultaneously, as well as severely
    compromise enforcement.
        I thank this committee for your thoughtful consideration of
    critical trade issues and your continued support for an
    ambitious agenda. Working together, we can ensure that our
    trade policy continues to support jobs and opportunities for
    all Americans.
        The Chairman. Thank you, Ambassador Marantis.
        [The prepared statement of Ambassador Marantis appears in
    the appendix.]
        The Chairman. I would like you to talk to us a little bit
    about Trade Promotion Authority. I mean, it has lapsed, as you
    know. If we are going to conclude meaningful trade agreements,
    whether it is the E.U. or TPP, we are going to have to renew
    Trade Promotion Authority. There is some concern that maybe the
    administration is a little lax, a little slow in engaging
    Congress on TPA.
        I wonder if you could tell us the degree to which the
    administration is engaged--I hope fully, totally engaged--and
    also if you can begin to address some of the issues that are
    going to come up in Trade Promotion Authority, like
    localization perhaps, or state-owned enterprises; there are a
    lot of factors. The world has changed a lot, even since 2007.
    So, if you could touch on those, I would surely appreciate it.
        Ambassador Marantis. Sure, Senator. We have heard the
    calls--the strong calls--of you, of Senator Hatch, this
    committee, and others in Congress, to move forward with Trade
    Promotion Authority. It is in our mutual interests to use TPA
    as a tool to support a job-focused trade agenda.
        I can tell you that we are ready to begin our work with you
    on TPA and to talk about the very issues, Senator, that you
    raised: what our trade negotiating objectives should look like,
    the extent to which we are addressing emerging challenges in
    the global economy like forced localization, and ensuring that
    private-sector companies compete on a level playing field with
    state-owned enterprises. So we are ready to begin our work with
    you.
        The Chairman. Do you have any thoughts, more precise
    thoughts? Several years ago we extended TPA, and we worked out
    an agreement with the House trade leadership, bipartisan, on
    labor standards, environmental standards, and investment
    provisions, I think, were in there, too. There are some who
    perhaps want to weaken, some who want to strengthen.
        As I said, the world has changed a lot since 2007. You gave
    a general answer, but, if you could just be a little more
    precise and give us a little more guidance as to what the
    administration is now thinking, that would help.
        Ambassador Marantis. Sure, Senator. There are a diversity
    of interests on this committee and elsewhere on what our trade
    negotiating objectives under TPA should look like. It is a
    conversation that we need to have together, and we are ready to
    begin having that conversation with you now.
        The Chairman. I was a little bit surprised, and I guess I
    should have known, when you said your budget was cut $1 million
    in addition to the sequester cuts. Why? What did we do? What
    are we doing to you? What account is being cut that results in
    that extra $1-million cut?
        Ambassador Marantis. Senator, as you know, USTR's budget is
    travel and people. We, over the past few years, have
    aggressively managed our budget. That, in part, has helped to
    blunt--in part--the effect of the sequester.
        As you and Senator Hatch pointed out in your opening
    statements, we have a lot of stuff going on right now. We have
    TPP; we are about to launch negotiations with Europe; we have
    negotiations on an international services agreement; we have a
    vigorous enforcement agenda.
        The sequester cuts, in addition to what is in the CR, the
    $1-
    million cut in the CR, can significantly hamper these and other
    efforts to support American jobs by opening global markets.
    Every dollar counts. One million dollars means a lot to USTR.
    We are a very lean agency. We are used to doing more with less,
    but there is no fat to cut. We are now at the bone.
        The Chairman. Could you give us a sense of the degree to
    which other countries support and have resources for their
    trade department, whatever it might be, on a proportionate
    basis? Is it about equal proportionately, or do other countries
    have a lot more firepower--although they are not any smarter,
    they have a lot more firepower than we?
        Ambassador Marantis. I mean, Senator, I could say
    anecdotally, whenever we travel, USTR is the lean and mean
    machine that has very few people who will go on negotiations.
    We are able to do more with less, I think particularly in
    comparison with our trading partners. That is why the sequester
    cuts and the contemplated cut in the CR are of real concern to
    us.
        The Chairman. I just recall back 30 years ago on this
    committee when Chairman Russell Long was noticing how we do
    not, as Americans, support our trade team as much as other
    countries support theirs.
        I think it is partly--let us take Canada, for example. On a
    proportionate basis back then, trade was much more important to
    Canada than it was the United States. Now that has changed a
    little bit, but not enough.
        It is my impression that many countries devote many more
    precise resources to trade and negotiating trade agreements
    than does the United States. We are kind of lax about it; we
    are a little casual about it. We work hard, but the country
    itself--I am not talking about the agency, but the country
    itself, our country--does not have the same intensity in
    getting good trade agreements as is the intensity in many other
    countries. I would just say to you, good luck with what you are
    doing, and we will try to help you out. You need help, frankly,
    on the resource level.
        Senator Hatch?
        Senator Hatch. I agree with the chairman on that last
    point.
        Ambassador Marantis, the 21st-century economy is
    increasingly knowledge-driven, as you know. The U.S. bio-
    pharmaceutical industry is the poster child for this 21st-
    century economy, and to maintain our Nation's competitiveness
    as a leading innovator of bio-pharmaceuticals, Congress
    approved legislation providing for a 12-year regulatory data
    protection for biologics. That was a hard-fought battle. It was
    a bipartisan decision by Congress. I would have preferred it to
    be a little bit longer, others thought it should be shorter,
    but it was a very, very hard-fought battle. President Obama
    signed this into law, and I am perplexed by the Obama
    administration's refusal to commit to seeking 12 years of
    regulatory data protection for biologics in the TPP
    negotiations.
        Now, the administration insists that USTR is proceeding
    with the TPP negotiations ``as if you had'' TPA. The most
    recent version of the TPA from the 2002 Trade Act included
    substantive trade negotiation objectives. In the case of
    intellectual property rights, the TPA objective is clearly
    spelled out: to obtain a standard of protection similar to that
    found in U.S. law.
        Current U.S. law regarding data protection for biologics is
    clear: the period of regulatory data protection is 12 years.
    Now, when will you instruct your trade negotiators to work
    towards attaining 12 years of regulatory data protection for
    biologics in the TPP, consistent with the law of our country?
        Ambassador Marantis. Thank you, Senator Hatch. We agree
    strongly with you that biologics is a vital area of
    pharmaceutical innovation. This is a tough issue in the context
    of the TPP, and we have not yet made a decision about how we
    are going to proceed. We have been discussing this with our
    trading partners, we have been discussing it with you and with
    members of this committee, and we have not yet made a decision.
    We know that there is a very strong view on your part and on
    others on 12 years, but we are still reflecting upon how to
    best proceed.
        Senator Hatch. I am the author of the Hatch-Waxman Act, and
    I take a tremendous interest in all of these very technical,
    but difficult issues. How is your decision, which appears to me
    to ignore U.S. law, consistent with negotiating ``as if''? You
    had the last iteration of TPA that requires you to pursue U.S.
    law with respect to IPR. Are you trying to change U.S. law in
    biologics through international trade negotiations? I hope that
    is not true.
        Ambassador Marantis. Senator, everything that we will do
    and that we do in any of our trade agreements is fully
    consistent with U.S. law. Again, the biologics issue is a
    challenge. We are trying to look and seek the appropriate
    balance between specificity and flexibility. I would appreciate
    your views and the views of this committee on how we can best
    strike that balance.
        Senator Hatch. Well, we want to keep that world leadership
    going, and this will help us to do it.
        Now, after Prime Minister Abe and President Obama met in
    February, they issued a joint leaders' statement regarding
    Japan's possible participation in the TPP. I was concerned in
    reading that statement that ``both countries have bilateral
    trade sensitivities, such as certain agricultural products for
    Japan and certain manufactured products for the United
    States.''
        Now, I do not recall a U.S. President ever declaring U.S.
    trade sensitivities in a leader's statement. Doing so seems to
    imply that there is some form of equivalence between Japan,
    which has wholly excluded agriculture from any of its trade
    agreements, and the United States, which negotiates the highest
    standard trade agreements with the broadest market access
    coverage.
        If this statement reflects the standards for Japan in the
    TPP, it threatens to dilute the benefits of the entire
    agreement as other countries seek to carve out as many
    sensitivities as they can.
        Now, did the administration intend to signal equivalence
    between Japan's sensitivities and our own? What specific
    manufacturing sensitivities was the President referring to in
    the statement, and are they in any way equivalent to Japan's
    agriculture sensitivities? How do you intend to maintain the
    highest level of ambition for the TPP should Japan join?
        Ambassador Marantis. Senator, let me assure you that we are
    100-percent committed to negotiating the highest standard 21st-
    century agreement in the context of TPP. In that joint
    statement that the President and Prime Minister Abe released,
    the statement made it very clear that, should Japan join the
    TPP, it will commit to this goal of seeking the highest-
    standard, comprehensive agreement, consistent with the goals
    that TPP leaders set out in November 2011.
        That includes putting all goods on the table, so we are
    currently working, as you know, with Japan to ensure that,
    should it join, it will be capable of meeting the highest
    standards possible. We have our own sensitivities, as we have
    set out, as that joint statement sets out, and we have issues
    of concern with Japan in the area of autos, insurance, and
    others that we are still working on.
        Senator Hatch. Mr. Chairman, I would just like to note that
    I was pleased with your testimony that you ``look forward to
    beginning our work with you on Trade Promotion Authority.'' I
    just want to know when that work is going to start. If you
    could let us know that, it would go a long way towards helping
    me to understand this.
        Ambassador Marantis. Senator, we stand ready to begin. I
    mean, this is a huge priority of yours. We have heard your
    calls on this issue loud and clear, and we are ready to begin
    our work.
        Senator Hatch. Thank you, sir.
        The Chairman. Thank you, Senator.
        Senator Stabenow?
        Senator Stabenow. Well, thank you very much, Mr. Chairman.
    First, I want to thank you for your words and your continued
    support of TAA as well, as part of the important balance for
    workers in this country. I want to follow up, Mr. Ambassador,
    as it relates to Japan, and I know you understand the concerns
    that I have and many other members of this committee have.
        There is a letter that has been sent to the administration,
    signed by Senator Brown and I, Senator Schumer, Senator Casey,
    that relates to Japan. Let me just start by saying that 30
    percent of the economic growth of our country last year in 2012
    was auto sales. It is a big deal for us, the American
    automobile industry.
        Today, I do not know if you are aware of the numbers, but
    there are 120 vehicles sold into the United States for every
    one that we can get into Japan. This has actually been going on
    since the 1930s. So, when we look at the history, I mean, in
    the 1930s Japan sought to build a protectionist auto industry
    that would drive their export-led growth agenda, which they
    did. It was impossible for us to get into their markets.
        Since then, even though they removed virtually all of their
    auto tariffs in the 1970s, we have gone on to see a non-
    existent market, to be unable to get into Japan. President
    Reagan tried to fix it in the 1980s; President Clinton tried to
    fix it in the 1990s. It is still there.
        It is still happening today with no confidence at all that
    it will end, given what they are doing on currency
    manipulation. In talking to one of our major CEOs yesterday, he
    indicated that it is as much as $2,500 added to the price of a
    vehicle, which is a big deal in terms of an unfair competitive
    advantage. So I would ask, as we look at Japan, why in the
    world would we believe at this point that this would be any
    different?
        Ambassador Marantis. Senator, thank you for raising this
    issue. We received your letter, and we share the concerns that
    you raised in the letter. We have a long history with Japan on
    automotive issues. It is of serious concern to the President,
    and we are working very hard to ensure that, should Japan join
    the TPP, we are able to address the long-standing issues that
    we have had in the auto sector. We have made progress with
    Japan, but our work continues.
        Senator Stabenow. But it has been 80 years. I appreciate
    very much the reasons, strategic reasons, for wanting to
    include Japan, but we cannot allow them to have more access to
    our market without also having access to their market in the
    major area in which they export to us, which is automobiles.
    This is very serious. It is the number-one issue that our
    American automobile industry is concerned about.
        Together with the administration, we have done very
    important work to make sure that tough decisions were made,
    sacrifices were made, to get them back on their feet. This
    could undermine all of that, so I cannot stress strongly enough
    the concerns that I have and that others have as well.
        Let me finally ask you, related to currency manipulation,
    we have recent reports that indicate Japan continues to be
    intent on further weakening the value of the yen in an attempt
    to boost its economic growth. As you go forward with TPP
    negotiations, do you believe there is a need for clear,
    enforceable objectives to address currency manipulation in the
    future? How is it that we recognize trade-distorting effects of
    currency manipulation and yet are doing nothing at this point
    to address what is a clear, unfair trade advantage?
        Ambassador Marantis. Thank you, Senator. On exchange rate
    issues, the Treasury Department has the lead, but we are giving
    careful consideration to the potential benefits and the
    potential risks of addressing currency as one of our trade
    negotiating objectives in ongoing negotiations. We know that
    this is an issue of deep concern to you and to others on this
    committee, and we will continue to consult closely with you.
        Senator Stabenow. Mr. Chairman, thank you. I just want to
    indicate for the record that, unless we see changes on currency
    manipulation and efforts and benchmarks to Japan opening their
    markets, I cannot imagine why we would want to proceed with a
    1-sided agreement as it relates to American manufacturing in
    the automobile industry. So, I look forward to working with the
    chairman on this.
        The Chairman. Thank you, Senator Stabenow.
        Senator Isakson?
        Senator Isakson. Thank you, Mr. Chairman.
        Ambassador Marantis, thank you for your call last week. I
    enjoyed discussing trade policy with you and appreciate the
    good job that you have done.
        In your prepared statement you addressed the African Growth
    and Opportunity Act (AGOA). Africa has been a great potential
    conduit for U.S. business and trade development over the years.
    Last year, we were late--in fact, we went to the last minute--
    on the third-party fabric agreement before we finally extended
    it at the end of the year. Because of supply chain issues, that
    disrupted a lot of business between Africa and the United
    States.
        A working group of members of the House and Senate has been
    formed to promote the extension of AGOA when it comes up for
    renewal before 2015. We need all the help we can get to not
    wait until the last minute like we did on the third-party
    fabric agreement. Can you discuss that for just one second?
        Ambassador Marantis. Yes, Senator. Thank you very much for
    your leadership on this issue, and thank you to this committee
    for acting to renew third-country fabric last summer. I agree
    with everything you said, Senator. AGOA expires in 2015, and we
    are strongly supportive of the seamless renewal of AGOA.
        That means we need to begin our work now so that we do not
    end up in a situation where there is a potential lapse in AGOA
    or where we go so far to the end before its expiration that
    orders dry up and trade is disrupted. We look forward to
    working very closely with you, with the new working group, and
    with this committee to do that, and we are beginning to
    formulate our ideas on AGOA and look forward to talking to you
    about them.
        Senator Isakson. I appreciate your attention to that. While
    we are on Africa, the East African Community Trade and
    Investment Partnership. Can you talk about the progress of that
    agreement?
        Ambassador Marantis. Sure, Senator. This is another very
    exciting new initiative that we are pursuing at USTR. The East
    African Community is a leader in Africa in terms of promoting
    regional integration among the five members: Rwanda, Burundi,
    Kenya, Tanzania, and Uganda.
        We have launched a trade and investment partnership
    designed to do a couple of things. One is to negotiate a
    regional investment treaty which will help to provide high-
    standard investment protections. Second, we want to negotiate a
    trade facilitation agreement to work through many of the
    bottlenecks that inhibit trade in the region. Third, we want to
    work with the EAC on helping to enhance technical capacity-
    building so that they are able to do the kinds of things that
    we are hopeful to do with them. Fourth, we have launched a
    commercial dialogue between the private sectors in the U.S. and
    the EAC. So it is an exciting new initiative that could
    potentially serve as a model for how we approach other regional
    economic communities in Africa.
        Senator Isakson. Thank you.
        In your release last week regarding negotiations with Japan
    in the Trans-Pacific Partnership, you specifically mentioned 2
    non-
    tariff issues: automotive and insurance. Can you tell me how
    you are planning to address the level playing field issue and
    concerns expressed by U.S. industry in this regard?
        Ambassador Marantis. Sure, Senator. This is another
    longstanding issue we have had with Japan, which is seeking a
    level playing field in the insurance sector. The Japanese
    government is well-aware that this is a concern of ours, and we
    are working with them, as we are working with them on autos, to
    address these issues before we are able to feel comfortable
    that Japan is ready to meet the high standards of the TPP
    agreement.
        Senator Isakson. Thank you very much for that.
        My last question. I had the occasion this weekend at a St.
    Patrick's Day celebration in Atlanta to end up having breakfast
    with Eamon Gilmore, who is the foreign minister of Ireland, who
    is also in his last 2 months as head of the European Union, so
    it was a propitious time to ask some questions regarding trade
    with the European Union.
        I brought up the issue of genetically modified organisms,
    which are used sometimes by some European countries as a
    negative towards agricultural products from the State of
    Montana, the chairman's State, and the State of Georgia, here,
    which is a big issue for our State.
        Do you have any indications of what kind of flexibility
    some of those countries that have used GMOs as a trade issue
    might have in making an agreement with the United States?
        Ambassador Marantis. Senator Isakson, we are well-aware of
    these issues. The issue we have had, I think, with some of the
    E.U. member states has to do with approval of bio-tech
    products. We are working with the E.U. Commission and the
    member states to help speed up approval so there is not a
    backlog.
        Senator Isakson. Thank you very much.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Senator Cardin?
        Senator Cardin. Thank you, Mr. Chairman.
        Ambassador Marantis, first of all, thank you for your
    service. We appreciate it very much. We know that you have some
    challenges.
        I want to talk a little bit about TPP. The initiative there
    involves countries that are substantially different trying to
    come together with a common agreement. I know also there is
    interest in that Japan may want to join, which would also, I
    think, make for challenges, some additional challenges, in
    bringing together an agreement.
        I want to get your assurances of reaching out to the
    stakeholders. I will just give you one example, and there are
    many, many more, in regards to the rule of origin and suit
    manufacturers in my State of Maryland and in the Nation. They
    are very concerned about rule of origin issues.
        I want to make sure that, as you go through the
    discussions, there is an effective way to get input from the
    industries here in the United States to avoid a problem that
    could very much make it more difficult to have a successful
    conclusion, either of TPA or as it relates to the TPP
    discussions.
        Can I get those assurances that you will be working very
    closely with those industries, particularly on the rule of
    origin issue?
        Ambassador Marantis. Senator, absolutely. Our whole goal in
    negotiating the TPP, as in all other trade agreements, is to
    create and support as many jobs as possible. We need, vitally,
    input from stakeholders in all sectors to ensure that we are
    doing just that, so I can commit to you 100 percent that we
    will do so.
        Senator Cardin. Thank you.
        Suit manufacturing is challenged in this country in a lot
    of different ways. We are trying to get the wool trust fund
    resolved. There are a lot of different issues, and the rule of
    origin in regards to the Asian countries is a critically
    important matter. I appreciate your willingness to work with
    us.
        I know the chairman has talked about TPA, Trade Promotion
    Authority. I just really want to at least put down a marker. I
    have always been surprised that there has been a reluctance to
    allow our negotiators to negotiate in areas where the United
    States' standards are much higher than in the international
    community.
        I understand the challenges of getting meaningful progress
    made in those areas, but why would we want to hamper your
    ability to negotiate in areas where the United States is a
    clear winner? The chairman mentioned environment and labor
    standards, where our standards are much higher than the
    countries that we are dealing with.
        So I would hope as we work, Mr. Chairman, through the Trade
    Promotion Authority, that we look at ways of giving additional
    leverage to our negotiators to be able to deal in areas where
    we think it is in our competitive advantage to have
    international standards. I would urge also--I know this is not
    even in the jurisdiction of this committee--addressing currency
    issues.
        We are finding more countries that are involved in currency
    manipulation. I do not know how that works into these
    discussions, but I would be very interested to know how we can
    make progress in that regard as we look at giving trade
    authority to the administration.
        The chairman at one time mentioned cyber-security issues
    and IT. These are all issues that are, I think, important. I
    know not everything can get done in one agreement. I am not
    suggesting that. But I would wonder how we can make progress in
    these areas as we look towards multinational trade agreements
    and giving the administration Trade Promotion Authority.
        So I would like your creative help as we consider TPA, for
    those of us who would be willing to support TPA under the right
    conditions. How can we satisfy Congress about giving up its
    specific authority, as we do in TPA, in areas where it makes
    sense for us to get progress, where the United States needs
    more competitive circumstances internationally?
        Ambassador Marantis. Thanks, Senator Cardin. Again,
    everything that we do is with the singular goal of using our
    trade agreements to create and support jobs and the trade
    negotiating objectives that we consult with you on, whether it
    is in the context of TPP, whether it is in the context of
    launching the agreement with the European Union, or in TPA.
    That conversation on the range of trade negotiating objectives
    is something that we take very seriously, and we want to make
    sure that we get it right.
        Senator Cardin. I just want you to be bolder in those trade
    objectives. Think about where the United States could use a
    level playing field; be more aggressive.
        Ambassador Marantis. And we will do so. I mean, you point
    out a very important area, Senator. You mentioned, and we
    talked about it the other day, with respect to cyber issues and
    the issue of the misappropriation of trade secrets, it is a new
    and emerging issue. And we are being very aggressive in how we
    are trying to handle this issue in the context of TPP, in the
    context of our annual Special 301 review, and in the context of
    our bilateral investment treaties.
        So I agree with you, we need to take every opportunity we
    can to tackle new challenges in ways that help to promote our
    competitiveness and address problems that we see with our
    trading partners.
        Senator Cardin. Thank you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Cardin. I might say, this
    committee also has jurisdiction over currency.
        Senator Cardin. We do?
        The Chairman. Yes. We just assert it. We also have had
    jurisdiction with respect to currency in past years.
        Senator Cardin. I appreciate that correction.
        The Chairman. In addition to another committee. There is
    co-
    jurisdiction. Thank you.
        Senator Brown?
        Senator Brown. Thank you, Mr. Chairman.
        Ambassador, thank you for your testimony. I appreciate the
    focus on exports. I have heard Presidents of both parties over
    the last 2 decades always talk about progress in exports, but
    sometimes we do not give enough focus to imports.
        It is a little bit like reporting on a baseball game where
    the Cleveland Indians scored 8 runs. Well, great, except the
    White Sox scored 11. So, it is good to really look at both of
    those, and the emphasis rarely is on the second of those.
        I raise that especially because, since NAFTA and especially
    since the year 2000, we have dug ourselves a trade deficit
    hole. We all talk around here about closing the budget deficit.
    We do not put nearly the focus and the attention on the deep
    trade deficit and how it is a drag on our growth and how it
    deserves attention.
        The best example is, last week marked the first anniversary
    of the Korea Free Trade Agreement. Exports are up, as you say,
    but imports are up even more. Imported cars are up almost $2
    billion from the year before the FTA with Korea. Hence the
    caution of Senator Stabenow and others in our letter from
    Congressman Levin that we wrote on Japan, not to refuse to talk
    to Japan or that they not enter into the Trans-Pacific
    Partnership, but that we pay special attention to what that can
    mean. Again, with Korea, the overall deficit with Korea grew in
    2012.
        I know the administration and several of my colleagues want
    fast track. I look at any new trade initiatives, from fast
    track, to TPP, to U.S.-E.U., to what happens with Russian PNTR,
    which I supported, with these two questions: (1) how do we
    rebalance trade in looking at our trade deficit; and (2) how
    does it ensure that the benefits of trade are shared more
    broadly than they have been in the past?
        We know trade creates wealth, we know trade has significant
    winners. We just need to make sure, whether it is Montana,
    Maryland, Kansas, or Utah, that these benefits be distributed a
    little bit more widely to working-class families.
        So my question is this: how will fast track address this
    trade imbalance? Not just exports, but how will it address our
    trade imbalance? Honestly, what will be different this time
    from every other time an administration has come in front of
    this committee and said we need fast track, because trade has
    so many winners and so often ignores who does not win?
        Ambassador Marantis. Senator, thanks for raising that
    issue. It is an interesting issue, and I agree with you that it
    is oftentimes overlooked. It is very easy to calibrate the
    amount of jobs we create through exports: 5,200 jobs are
    created with a billion dollars of goods exports. But the case
    with imports is a lot less clear. Over 50 percent of imports
    are used in the United States as intermediary products, and
    they are inputs that go into Made in America goods that are
    sold either here or are re-exported. But there are
    distortions----
        Senator Brown. Just a second. Let me interrupt, and I
    apologize. Is 5,200 jobs for $1 billion in exports a number the
    administration uses?
        Ambassador Marantis. Yes.
        Senator Brown. Do you use it the other way: if we have a
    trade imbalance, a trade deficit, that it is 5,200 times that
    many billion dollars of trade deficit?
        Ambassador Marantis. No, because the picture with imports
    is not as clear-cut, because over 50 percent of the imports
    that come in are used here domestically or are used in goods
    that we then re-export, so there is not that same one-to-one
    correlation with imports as there is with exports.
        But there are distortions in imports, Senator, and you are
    right to point that out. We are responding very aggressively to
    that,
    (1) by vigorously enforcing our trade remedy laws here, but
    also taking action against practices that skew the level
    playing field with respect to imports.
        For example, we have recently taken a WTO case against
    China for using prohibited export subsidies with respect to
    their auto and auto parts exports. We have challenged the use
    of prohibited subsidies in the green energy sector, and we are
    doing a lot on the import side too. So this is obviously an
    issue that we need to work closely with you and the rest of the
    committee on, but we take it very seriously.
        Senator Brown. If I could ask one quick follow-up. Thank
    you for that. I appreciate, of course, the auto parts trade
    action, your relative aggressiveness as a USTR--ITC, Department
    of Commerce--on trade enforcement, but you are not aggressive
    enough but moving in that direction.
        Let me follow up on that question, though. Are there
    particularly new negotiating objectives that the administration
    would seek so we do not repeat past fast track authorizations
    that failed to balance trade?
        You have typically come in front of this committee, and the
    administration says, give the power of trade to us, meaning
    change the Senate rules on trade agreements in terms of passing
    them and give us all this authority to negotiate. Fine. What we
    want in return is maybe Trade Adjustment Assistance. Is there
    anything you are thinking of, new negotiation objectives the
    administration wants, so that we do not repeat those fast track
    authorizations that moved us away from trade balance instead of
    towards trade balance?
        Ambassador Marantis. Senator, this is something that we are
    going to need to consult closely on with you and others on this
    committee as we determine what our trade negotiating objectives
    should be for Trade Promotion Authority. It is a conversation
    that we are ready to have and look forward to having with you
    and the rest of this committee.
        The Chairman. Thank you, Senator.
        Senator Roberts, you are next.
        Senator Roberts. Thank you, Mr. Chairman. Thank you for
    bringing order to the committee. Mr. Ambassador, thank you for
    coming. Thank you for taking time out of your schedule to come
    up.
        There is one area where this country leads the world in
    regards to exports. My question to you--and the answer, by the
    way, is ``yes.'' You can just nod your head.
        Where this country leads the world is in the manufacturing
    of general aviation, business aviation aircraft. Would you
    agree that the export of business aviation aircraft is a
    significant contributor to our balance of trade? Just nod your
    head.
        Ambassador Marantis. Senator, I am following your guidance
    and saying ``yes.''
        Senator Roberts. Thank you.
        Why then does the administration on one hand acknowledge
    and promote this uniquely American product--business aviation
    aircraft and the over 1 million American jobs that are tied to
    this industry, 40,000 of which come from Wichita, KS, which is
    one of the homes of our President, or at least his mother--then
    on the other hand vilify and demonize this great American
    industry?
        I am talking about the gatling gun approach during the
    campaign and now, referring to this industry as ``fat cat
    corporate jets.'' Boy, am I tired of hearing that.
        We are not talking about Beyonce coming back to lip-synch
    the Star Spangled Banner. We are not talking about Tiger Woods;
    we are not talking about somebody in a pin-striped suit from
    Wall Street going to Paris. We are talking about several
    farmers and ranchers going together and getting a business
    aircraft so they can fly anywhere they want to fly to with
    regards to agriculture and what they are about, or some
    manufacturer in Kansas, or any State, doing the same thing,
    sharing the aircraft. I just think that we could do better
    rather than keeping up with the reference to ``fat cat
    corporate jets.''
        Can you at least assure me that you could--well, you are
    just about half a block away there from the White House. I know
    you meet with the President. You could just slip over and tell
    him to put Kansas in the bracket for the NCAA March Madness and
    also say, will you please quit using the name ``fat cat
    corporate jets''? Would you do that for me?
        Ambassador Marantis. Go Jayhawks! [Laughter.]
        Senator Roberts. Well, actually it is Kansas State, but go
    ahead. [Laughter.]
        Ambassador Marantis. Senator, we strongly support aerospace
    exports, our aerospace workers. We have done a lot, from
    negotiating tariff reductions in this area as part of our trade
    agreements, to the largest trade enforcement case we ever
    brought against the E.U. on airbus subsidies. We take this very
    seriously and want to ensure that what we are doing for the
    aerospace industry helps to----
        Senator Roberts. I know you are doing a good job. I just
    want the President to knock it off.
        Ambassador Marantis. I will carry that message back.
        Senator Roberts. Thank you.
        Agriculture. It is always the engine or the caboose.
    Chairman Baucus and our distinguished ranking member both
    understand the value of agriculture. We are either the caboose
    or--I do not want a picking and choosing situation in regards
    to USTR negotiations with the E.U., and that is always so
    terribly tough with regards to agriculture.
        Senator Isakson got into the GMO business, and that is
    always very difficult. We have a real problem with Japan. I am
    going to skip through here really quickly. They have signaled
    they want to protect their country's agricultural sector when
    they join the TPP negotiations, and they are going to exclude
    our beef, our pork, our rice, our wheat, barley, sugar, and
    dairy from tariff reduction or elimination. What does this mean
    for U.S. agriculture exports?
        Now, I am skipping from the E.U. to Japan, but it is the
    same kind of issue in regards to agriculture. How do you plan
    to address this multitude of problems? I do not want a
    situation where we are picking and choosing in regards to the--
    well, all of the trade negotiations. I would point out to you
    that, in each and every case, agriculture has been a real
    problem. It can be a real opportunity, but it has always been a
    big problem. Would you care to comment?
        Ambassador Marantis. Sure, Senator. I agree with both. We
    have significant export success in agriculture. We have record
    agriculture exports this year of $145 billion. That is up 44
    percent since 2009. But we face real challenges with both the
    E.U. and Japan on agriculture--historic issues.
        With the E.U., we have an opportunity for the first time to
    address these challenges in the context of the Trans-Atlantic
    Trade agreement. It is something that we have been very clear
    about with the E.U., both from a tariff perspective but as well
    as from a non-tariff perspective.
        With respect to Japan, they understand. The Japanese
    government understands that the whole goal of the TPP agreement
    is to negotiate a high-standard, 21st-century agreement that
    has the goal of eliminating all tariffs. We take this very
    seriously and will continue to work with you to fight for U.S.
    agricultural interests.
        Senator Roberts. I truly appreciate that comment.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Senator Portman?
        Senator Portman. Thank you, Mr. Chairman.
        Ambassador Marantis, thank you for joining us today. You
    know this committee pretty well, and that is one reason we like
    having you down there, because you understand the fact that
    members of the Senate, particularly this committee, like to
    play a significant role in trade. Some of us have been very
    concerned, as you know, about the lack of an aggressive trade
    agenda, particularly on the bilaterals, because of the lack of
    Trade Promotion Authority and negotiating authority.
        So I was delighted to see that the trade agenda says that
    the administration will work with Congress on TPA. I wish it
    had happened 4 years ago, or 3 years ago, or 2 years ago, but I
    think this is good. I know you have talked a little about it in
    response to the chairman's question, and I applaud him for
    promoting this as well.
        But maybe you could lay out for us a little bit what you
    see as being part of TPA, as compared to the TPA that is not
    currently in effect but that has expired, and what the
    administration's negotiating objectives are. I will say that
    the same commitment to move forward was made by your
    predecessor, and my understanding is that the committee reached
    out to begin negotiations, and nothing happened. So, I am
    assuring all of my staff that this time you are sincere and,
    again, just want to get a sense of what you see as some of the
    negotiating objectives.
        Ambassador Marantis. Sure, Senator. As I said earlier, we
    have heard your calls loud and clear on TPA. It is in our
    mutual interest to use TPA as a tool as part of our jobs-
    focused trade agenda. There is a lot that we are going to have
    to talk about with respect to trade negotiating objectives, and
    it is a conversation that we are ready to begin to have with
    you. I do not have any preconceived notions. We do not have any
    preconceived notions. It is a discussion that we want to have
    with you.
        Senator Portman. We look forward to that discussion, and I
    hope you will be aggressive in reaching out, just as we will,
    because time's a'wasting. I do not think you are going to get
    the last best offer on things like TPP to really get the
    barriers down, deal with intellectual property, and other
    issues which I hope you will be a champion for, without having
    the ability to let other countries know that we have the
    ability to take those through the process without being amended
    to death.
        So on WTO, for a second: Doha has been disappointing, of
    course, because it was a great opportunity to give workers and
    farmers in Ohio access to new markets. It sounds like there is
    going to be, in Bali, an opportunity to make some progress on
    trade facilitation and a Customs agreement, and maybe even a
    government procurement agreement.
        Can you give us a little update on that as you prepare for
    that ministerial? Do you feel as though you are making
    progress? I have heard from some that the negotiations are not
    going great, that some of the issues at the border in some of
    these countries make it more difficult to trade, both for them
    and for us, and are not being resolved. Can you give us some
    assurance that you guys are on top of that?
        Ambassador Marantis. Yes, Senator. I mean, you know better
    than all of us the importance of the WTO and how it is the
    mainstay of multilateral liberalization. We are in the process
    right now of working to craft a practical and realistic package
    for Bali that includes, as you mentioned, trade facilitation.
        We are working on certain aspects of agriculture and
    development as well. At the same time, we are also accelerating
    our negotiations on the ITA, on the information technology
    agreement, and I am hopeful that we will be able to move that
    forward before Bali as well.
        Senator Portman. On TPP, I think earlier--I had to run out
    to give a talk--but I think earlier there was discussion about
    our concern about autos in TPP. The bottom line is, Japan is a
    very closed market. If you look at it as compared to our
    market, we are at about, I think, 40 percent imports now. I
    think they are less than 10 percent--in fact, less than 6
    percent, I think.
        So clearly we are concerned that this is not going to be a
    level playing field if Japan is brought in and we do not
    aggressively address this auto issue. Can you give us an
    assurance today that the administration is going to ensure
    that, before Japan is a member, that there are certain
    commitments made on autos?
        Ambassador Marantis. Yes, Senator. I mean, this is, as we
    all know, a long-standing issue of concern. We have made it
    very clear to the government of Japan that we have serious
    issues to work through on the auto side. We are doing that now,
    and we will continue our close consultation with this
    committee.
        Senator Portman. As you know, I spearheaded a letter last
    year and again this year on the U.S.-E.U. Trans-Atlantic
    agreement, maybe an FTA, maybe a trade and investment
    partnership agreement. Senator Hatch and Senator Baucus have
    been big supporters of looking at this issue because of the
    enormous amount of trade between our two regions and the fact
    that there are a lot of regulatory issues that could be
    addressed, some standardization uniformity that would help
    tremendously.
        One of my concerns has always been on the agricultural
    side. Again, for Ohio farmers, we want to have these
    agreements. This is the biggest market in the world, and we
    want to have access to it for things like soybeans and corn,
    beef and pork, all of which have various non-tariff barriers
    attached to them.
        Are you making an effort with the Europeans up-front to
    ensure that those issues are addressed?
        Ambassador Marantis. Yes, Senator. We have a huge
    opportunity with the E.U. We have no illusions that agriculture
    trade is not going to be a difficult issue, but we are going
    into this with the expectation that we are going to work
    towards eliminating all tariffs, and that includes agriculture
    tariffs, and that we will address key non-tariff issues like
    sanitary and phytosanitary issues. So we are ready to go, and
    we look forward to working with you as we develop our trade
    negotiating objectives.
        Senator Portman. Thank you, Ambassador.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Next is Senator Carper.
        Senator Carper. Thanks, Mr. Chairman.
        Welcome, Ambassador Marantis. Nice to see you.
        I want to put my questions in context, if I can. We are
    taking up the budget resolution here this week and hopefully
    will find some common ground with our Republican friends, but I
    think the people of the country are looking at us and are
    asking maybe three questions: (1) can they--that is, us--
    govern; (2) can we in our country be fiscally responsible
    again; and (3) can we provide certainty with respect to our tax
    code and that kind of thing?
        I gave a speech a little bit earlier this morning. I said I
    think there are about four things we need to do to strengthen
    our economic recovery as we come out of the recession, continue
    to come out of the recession, and at the same time pull back on
    spending. One of those is to try to invest a little money in
    workforce development, workforce skills, especially the STEM
    skills: science, technology, engineering, and math.
        The second area the President has called for investing in
    is infrastructure, broadly defined--not just roads, highways,
    bridges, but infrastructure broadly defined. A third area is
    research and development, R&D, that can be commercialized and
    lead to the development of products, goods, and services that
    we can sell all over the world.
        With that in mind, that takes us to where we are today, and
    that is the ability to grow exports by negotiating the kinds of
    free trade agreements that we are discussing here, both on the
    Pacific side and on the Atlantic side.
        A couple of people talked about cars. We used to build a
    lot of cars. We built more cars, trucks, and vans per capita in
    Delaware for decades than any other State. We lost both our GM
    plant and our Chrysler plant, but we still have a strong
    interest in the auto industry. We have talked about Japan. I
    should say I think their market penetration here is pretty
    robust.
        I know it is about 40 percent here, but we are at about 6
    percent over there. When we were negotiating the South Korea
    Free Trade Agreement, for every 500,000 cars they sold to us,
    we sold about 5,000 to them. We have passed the free trade
    agreement, negotiated it, ratified it, and my question on South
    Korea is, are we starting to see any kind of changes there with
    respect to that ratio, 500,000 Korean vehicles coming here to
    5,000 of ours going there? Is that changing at all?
        Ambassador Marantis. Senator, actually we have good news to
    report.
        Senator Carper. We are ready for it.
        Ambassador Marantis. Passenger vehicle exports to Korea in
    the past year have increased by 45 percent. That is in addition
    to a lot of the other good statistics we have seen with respect
    to Korea: cherries have increased by 88 percent; orange juice
    has increased by 130 percent; overall manufactured goods have
    increased by 1.3 percent; services have increased by 10.3
    percent. So we are seeing increases.
        Senator Carper. That is good. All right.
        We have heard a good deal about the challenges that our
    American businesses face in India. That is an area that I think
    you know a little bit about. I remain concerned with the
    restrictive trade practices that particularly our poultry and
    other products face in that country which remove opportunities
    for market access in a growing economy of, I think, about 1.2
    billion people.
        For instance, the non-scientifically based policies that do
    not conform to World Organization for Animal Health standards
    have shut out the U.S. poultry industry, as I believe you know.
    Additionally, the U.S. bio-pharmaceutical industry has had
    several patents disregarded, just disregarded, due to
    inappropriate use of compulsory licensing and patent
    revocation.
        I think India has been a big part of your focus at USTR.
    Let me just ask, what are USTR's plans over the next year to
    address the increasing challenges our industries face in India,
    and are you concerned that not addressing these challenges will
    set a negative precedent among other nations?
        Ambassador Marantis. Thanks, Senator. We have a huge and
    vibrant trading relationship with India. It has the potential
    to really create new opportunities for us, but there are some
    very real frustrations that you have pointed to.
        On poultry, for example, we have brought a WTO dispute
    against India challenging their poultry ban. You point to
    issues with respect to compulsory licensing. We have deep
    concerns over deterioration in the innovation climate in India
    with respect to what you mentioned, Senator, as well as market
    access policies that are affecting electronics.
        I was in India in December and raised these issues very
    clearly with our counterparts, and we hope to work very closely
    with them to grow and develop the relationship and address the
    irritants that are unfortunately rising.
        Senator Carper. All right. Thank you.
        One quick follow-up question, if I could. Is it correct to
    say that, as you look to begin negotiations on the other side,
    on this side of the ocean, this side of the country, the Trans-
    Atlantic Trade and Investment Partnership, that everything,
    including agricultural barriers, will be on the table?
        What other steps is USTR taking to address the challenges
    abroad that our poultry industry in particular faces? The
    reason why I focus on poultry is, for every person who lives in
    Delaware--probably for every person who lives on the Delmarva
    peninsula--there are 300 chickens, so this is something that is
    of enormous value. We used to export very few chickens. Today,
    I think one out of every five is exported that we raise in
    America. So could you just respond to my question?
        Ambassador Marantis. Sure, Senator.
        Senator Carper. Is everything on the table, all the
    agricultural barriers? Is that on the table?
        Ambassador Marantis. Yes, Senator, they are. And we have
    good news with respect to our poultry exports. They are at an
    all-time high of $6.3 billion, which is up 7 percent over 2011.
    But we are working in all contexts to address barriers in that
    sector.
        Senator Carper. All right.
        Lastly, what other steps is USTR taking to address the
    challenges abroad that our poultry industry in particular
    faces?
        Ambassador Marantis. There are, as you know well, a number
    of challenges. I mentioned with India we have filed a WTO case.
    We are working with other countries to address non-scientific
    barriers to poultry exports, and we are working in the context
    of our trade negotiations to ensure a level playing field for
    our poultry exporters. We appreciate your pushing us as hard as
    you do to stand up for U.S. poultry exports, and we will
    continue to do so.
        Senator Carper. Thanks so much. Thank you.
        Senator Hatch. Senator Grassley?
        Senator Grassley. I was at the Judiciary Committee meeting
    on antitrust, so I missed what you said, but I want to say that
    I appreciate that you said that the administration wants to
    begin work on Trade Promotion Authority. This is long overdue,
    and I thank you and the President for moving in that direction.
        Like my predecessor, I have some questions on agriculture.
    I know that you have personally been involved with the
    discussions with Taiwan on ractopamine. This issue simply has
    not been resolved satisfactorily. While Taiwan sets a residue
    level for beef, they continue to discriminate against pork.
    This simply ignores science and plainly does not make sense.
        In addition, I will also point out that the Taiwanese
    promised me that they would fix this issue after their last
    presidential election. I think we are a year beyond that, and
    they have not kept that promise. So could you assure us in some
    way, and particularly Iowa pork producers, that this issue is
    going to get resolved and Taiwan is going to take down this
    unjustifiable barrier to U.S. pork? If you cannot do that--I
    mean, if you cannot assure us of that--tell us the extent to
    which we would take actions through the WTO.
        Ambassador Marantis. Senator, thank you for raising that
    issue. I was just in Taiwan a week ago discussing the range of
    our trade and investment relationship with our counterparts. We
    had good news on the beef side of the house with respect to
    establishing a Maximum Residue Limit for beef, but you are
    absolutely right that we are not there yet on pork. It is a
    priority for us, and it is an issue that we will continue to
    press with the Taiwan authorities.
        Senator Grassley. And, if they do not take action, are
    there any plans to take a case to the WTO?
        Ambassador Marantis. I think what we would want to do is to
    work with the industry and you to determine what are the best
    steps to encourage the Taiwan authorities to do the right thing
    on pork.
        Senator Grassley. All right. I will just express my own
    view on that, and that is that I think we have been working on
    this so long, it is about time to throw in the sponge that
    there is going to be any faithful negotiation with them and
    that we need to take other action. I know that will be your
    decision, but that is my opinion.
        A number of U.S. companies have come to me recently to
    express frustration with what they see as a growing number of
    countries using discriminatory practices on local content
    requirements. For instance, India is attempting to implement
    such a requirement on some technology firms.
        Many of these countries, including India and Brazil,
    receive preferential treatment for their products under GSP.
    Has the administration considered using its GSP to limit or
    eliminate privileges for countries like India that impose these
    discriminatory measures on U.S. companies?
        Ambassador Marantis. Senator, thanks for raising the issue
    of localization and local content requirements. It is a huge
    problem, and we are seeing it proliferate in various markets.
    In India, as you mentioned, we recently filed a WTO case
    challenging local content requirements in India's national
    solar mission.
        You asked about GSP, Senator. We have a variety of tools at
    our disposal and need to look very carefully at which ones are
    the most effective in addressing the proliferation of local
    content requirements in India and elsewhere.
        Senator Grassley. All right. You have already been asked
    several questions about Japan and TPP, so I am going to pass
    over that and ask my last question. The European Union's
    renewable energy directive now being implemented by some
    European countries poses a significant and unfair barrier to
    bio-diesel and our feedstocks from the U.S. The renewable
    energy directive imposes greenhouse gas emission reduction
    requirements and sustainability standards that are simply
    inappropriate.
        I understand there has been an effort by your agency to
    negotiate these issues bilaterally with the E.U. and DG Energy
    in Europe, and they have refused. Can you confirm for me that
    these issues with the E.U. renewable energy directive will be
    addressed during the U.S.-E.U. trade negotiations that have
    just been set up, or are starting to be set up?
        Ambassador Marantis. Senator, I am not familiar with this
    issue. I will check back with our staff and will get back to
    you this afternoon.
        Senator Grassley. Can you give me a written response then,
    please?
        Ambassador Marantis. Yes.
        Senator Grassley. Thank you very much.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Senator Menendez?
        Senator Menendez. Thank you, Mr. Chairman.
        Ambassador, last year I raised, and I think Senator Hatch
    did earlier, the issue of regulatory protection of biologics in
    the context of ensuring that the TPP is truly a 21st-century
    trade agreement with the highest standards of protection for
    intellectual property.
        Correct me if I am wrong, but it is my understanding that
    negotiations on the pharmaceutical intellectual property text
    are still ongoing and that you have not yet tabled a proposal
    for 12 years of data protection for biologics.
        These protections enjoy strong bipartisan support from
    Congress, as our highly innovative pharmaceutical industry
    supports millions of high-quality jobs, and a lot of us would
    like to see a TPP agreement that builds on the strong IP
    protections in the U.S.-Korea Free Trade Agreement.
        As any renewal of TPA would likely include similar
    negotiating objectives, is it the administration's plan for the
    TPP to table 12 years of data protection for biologics as set
    out in U.S. law?
        Ambassador Marantis. Senator, we agree with you that
    biologics are a vital area of pharmaceutical innovation. I do
    not know yet what we are going to do with respect to the term
    of data protection in the context of TPP. We have been talking
    to our trading partners very seriously about that. It is an
    area where we have been in consultation with this committee. We
    do not have a position yet and are continuing to formulate it.
        Senator Menendez. What type of opposition are you getting
    from the trading partners?
        Ambassador Marantis. There is a lot. It is a new area. It
    is a new area of innovation and different in how our TPP
    partners treat biologics. Some do not provide protection, some
    do, so we are trying to strike the right balance between
    flexibility and specificity. We look forward to working with
    you to strike that balance.
        Senator Menendez. Well, it is one of the areas that I am
    going to be looking towards in terms of judging whether or not
    we can be supportive.
        Let me turn to another area that in past trade hearings I
    have emphasized: the importance of ensuring that our trading
    partners comply with the commitments they make. Our companies
    face discriminatory measures and market access limitations in
    countries as diverse as China, India, and Argentina.
        Theft of U.S. trade secrets is an increasingly urgent
    problem. We have the Wiley publishing company in New Jersey,
    one of the largest publishing companies in the world of
    scientific manuals. In a recent meeting with their board, they
    told me how their manuals get stolen in China with impunity.
        So, as our firms and workers face competition from large
    state-owned companies, like in Russia and China and elsewhere,
    that compete globally, they are not limited by the normal rules
    of business competition, unfortunately. So I would like to have
    you elaborate on your earlier comments regarding the
    administration's efforts to enforce our trade agreements;
    particularly, what is USTR's plan for using the International
    Trade Enforcement Center and other mechanisms to ensure trading
    partners fulfill their obligations, eliminate barriers, further
    open their markets, improve protections, particularly those
    markets such as China, Russia, India, and Argentina, with long
    histories of raising obstacles to U.S. companies.
        As part of that answer, given comments in your testimony
    about lack of resources, how does the administration intend to
    organize its financing to continue prioritizing enforcement? An
    agreement--any agreement--is only as good as that which is
    enforced. Some of us believe that on the enforcement side, we
    have not been as aggressive as others.
        Ambassador Marantis. Senator, I could not agree with you
    more. Enforcement is----
        Senator Menendez. You can stop right there. [Laughter.]
        Ambassador Marantis. All right.
        Senator Menendez. No, no. Go ahead. I am sorry.
        Ambassador Marantis. Enforcement is at the center of the
    President's agenda. We open markets through trade agreements,
    but we have to make sure that Americans get the benefit of the
    bargain of those trade agreements, and that is through
    enforcement. We have had a very vigorous enforcement regime. We
    have brought 19 WTO cases since 2008.
        With the creation of the ITEC, the Interagency Trade
    Enforcement Center, it has given us the ability to leverage
    interagency resources to be able to bring enforcement cases.
    ITEC's role has been fundamental in our ability to launch a
    recent case against China affecting autos and auto parts, as
    well as a recent case against Argentina affecting import
    licensing for U.S. exports. We will continue to place a very
    strong priority on enforcement and look forward to working with
    you and this committee as we do so.
        Senator Menendez. And you have the resources, you believe,
    to do it effectively?
        Ambassador Marantis. As I had mentioned before, Senator, we
    have so much on our plate--enforcement of the various trade
    agreements--that the sequester cuts and the additional $1-
    million cut in the CR has the potential to significantly affect
    our ability to carry out these trade agreements simultaneously,
    as well as continue the vigorous enforcement that has been a
    hallmark of the President's trade agenda.
        Senator Menendez. Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Senator Wyden?
        Senator Wyden. Thank you, Mr. Chairman.
        Mr. Marantis, welcome. Thank you for always being so
    helpful. As you know, I chair the Finance Committee
    Subcommittee on Trade, and we were also trying to deal with
    timber this morning, so I apologize for being late.
        I want to get your sense about the next steps, particularly
    as it relates to solar and renewable energy, because my sense
    is we are really at a fork in the road with respect to our
    policy in this area. As you know, American companies basically
    have had to stand up for their rights.
        I mean, they have had to stand up to dumping and unfair
    subsidies and file all these cases. As a result, I think it is
    fair to say there is a fair amount of market uncertainty now
    with respect to renewable energy, and particularly solar.
        So it seems to me there could be some real value in the
    United States looking to put together what I have essentially
    called, in terms of my own thinking, kind of global resolution.
    I would like to know if you think there would be some value in
    that, and what role you think the United States might play in
    pursuing something like that.
        Ambassador Marantis. Senator, thank you for your leadership
    on this issue. This is a new and emerging issue, and we in the
    administration are committed to creating and maintaining green
    jobs. We are eager to work with you and stakeholders in terms
    of determining how to address this issue holistically and look
    forward to doing so.
        Senator Wyden. We will pursue that with you in greater
    detail, but I will just tell you, I think this is an
    extraordinarily important moment for the administration. I
    think that, if the United States says there would be real value
    in moving now to try to put together a global resolution, that
    alone would perhaps bring a little bit more certainty and
    predictability to what is ahead. I think the United States
    ought to be leading those kinds of discussions, so I look
    forward to following that up with you.
        Let us go to the question of TPP and start with digital
    trade. As you know, I think that the Internet is essentially
    the shipping lane of the 21st century. I think you look back at
    what hearings were in this room 25 or 30 years ago, and it is
    obviously very different in terms of the opportunities for
    digital goods and services.
        Our problem is, we take steps here in our country to
    protect our kind of key emerging industries in the tech sector
    from discrimination and ensure they have a set of rules that is
    going to allow them to prosper and grow, and then the threat is
    that we will essentially have a variety of practices, sometimes
    it is out-and-out censorship, but there are a whole host of
    other kinds of barriers that get imposed and, in effect, not
    only can unravel gains we have made in the United States, but
    hamper our ability to get our digital goods and services into
    other markets.
        Will the administration make this a priority to ensure that
    there is a pro-growth, non-discriminatory focus with respect to
    digital trade for the TPP?
        Ambassador Marantis. Senator, thank you for your long-
    standing leadership in this area and for pushing us so hard in
    it. Yes, absolutely, this is a huge priority of ours to pursue
    pro-growth, non-discriminatory market-opening disciplines in
    the TPP, as well as in the international services agreement on
    digital trade. We look forward to working with you to ensure
    that they are as strong as they can be.
        Senator Wyden. One last question. As you know, in our part
    of the world there is great concern about a number of other
    economic issues: footwear, clothing, and others. My sense is,
    in the past there has not been sufficient focus on the global
    supply chain as it relates to these kinds of industries.
        Can you assure the committee that the administration's part
    of TPP--and it is not just footwear and clothing, which I have
    raised, but the global supply chain generally--will be a bigger
    part of future trade agreements starting with the TPP?
        Ambassador Marantis. Yes, Senator. The beauty of the TPP is
    we have the opportunity to rationalize supply chains with the
    most competitive region in the world, with the effect of
    creating and supporting more jobs for us here at home. So this
    is a big priority of ours, and again, as in other areas, we
    look forward to working closely with you.
        Senator Wyden. I think, Mr. Chairman, my time is about up.
    That is an area I would like to follow up with you on. I
    remember when you chaired the Trade Subcommittee that issues
    like the global supply chain, those certainly did not carry the
    same importance they do today. I would like to follow that up
    and work with you on it.
        The Chairman. Sounds good. Thank you, Senator.
        Senator Thune?
        Senator Thune. Thank you, Mr. Chairman, for holding this
    hearing today, you and Senator Hatch. I also want to thank
    Ambassador Marantis for your willingness to testify. We all
    know the importance of trade and how vital it is to our economy
    and to improving America's competitive position in the world.
        We always hear the statistic that 95 percent of the world's
    population lives outside the United States, and yet the United
    States and Americans generate more than one-fifth of the
    world's income. The only way that we are going to be able to
    maintain that level of income is to open new markets and expand
    the sale of American-made goods and services.
        So I want to commend the administration for recognizing the
    importance of expanding opportunities for trade. That said, I
    am troubled by the administration's lack of commitment
    regarding a request for Trade Promotion Authority, which
    expired back in 2007.
        We all agree and recognize the importance of trade
    agreements like the E.U.-U.S. agreement, like TPP, but we also
    have to recognize how important Trade Promotion Authority is to
    ultimately getting those approved by Congress. If we do not
    have Trade Promotion Authority, a negotiated agreement may not
    be able to pass Congress, and we are not going to get any
    action on lowering tariffs, eliminating non-tariff barriers, or
    increasing American exports.
        So I would hope that the first order of business for the
    next Trade Representative will be to work really hard on
    getting Trade Promotion Authority put back in place.
        I was pleased to see the recent statement by the Japanese
    Prime Minister regarding Japan's desire to join the TPP
    negotiations. They are the world's 3rd-largest economy and have
    historically been a very important market for American
    agricultural exports, but there remain some significant
    outstanding issues that need to be addressed concerning
    persistent barriers that they put in place to certain segments
    of American agriculture.
        So I guess I would ask if you could talk about the
    potential benefits to the United States and our agricultural
    economy from Japan's inclusion in the Trans-Pacific
    Partnership, and how will USTR evaluate whether Japan is truly
    ready to join those negotiations.
        Ambassador Marantis. Thanks, Senator.
        You point out Japan is the world's 3rd-largest economy.
    They are our 4th-largest trading partner. There are huge
    opportunities, huge untapped opportunities, in our trading
    relationship with Japan. We do have concerns. They are concerns
    that we are all familiar with on autos, on insurance, on non-
    tariff measures, and on ensuring that Japan is able to live up
    to the high standards we are negotiating in the Trans-Pacific
    Partnership. It is work that we are continuing to do with our
    counterparts in Japan. We have made progress, and we will
    continue that work in close consultation with this committee.
        Senator Thune. Let me ask you another question that deals
    with the E.U.'s recent decision to impose a 10-percent duty on
    all imports of ethanol from the United States. Their ethanol
    production--people who are in that industry in this country
    believe that what the E.U. did in imposing a country-wide
    antidumping duty on all U.S. ethanol imports is both
    unprecedented and unsupported from a legal standpoint, and that
    it will completely close the E.U. to U.S. ethanol.
        What action is the USTR prepared to take to challenge this
    act by the E.U., and what impact do you think the E.U.'s
    decision might have regarding the future of our trade
    relationship with them?
        Ambassador Marantis. Senator, let me take that question
    back and get you an answer. I am not familiar with the issue as
    well as I probably should be to answer this question here, but
    we will get back to you today.
        Senator Thune. All right. That would be great if you could.
    I think that is an issue that could have some bearing on some
    of the discussions that are going on about our opening up
    additional trade opportunities between the U.S. and Europe.
        Just a final point. I come back to where I started, and you
    probably answered this from a number of my colleagues already,
    but what is the administration's current posture with regard to
    Trade Promotion Authority? I mean, why have we not received a
    request from the administration for TPA, and what is being done
    about that?
        Ambassador Marantis. Senator, we have heard--we had calls
    from you and others on this committee--loud and clear about
    moving forward on TPA. We discussed today so many great
    initiatives that we are pursuing as part of our job-focused
    trade agenda and the importance of TPA as a tool in furthering
    that. We stand ready to begin our work with this committee on
    TPA.
        Senator Thune. Well, I would say the sooner, the better.
        Ambassador Marantis. All right.
        Senator Thune. I hope we get that going.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator, very much.
        I just have a couple of quick questions. One is, with the
    OIE, the World Organization for Animal Health, now stating that
    U.S. beef is safe, which is a higher level of protection than
    before, how are we best utilizing that around the world? In
    what countries will that have the greatest potential?
        Ambassador Marantis. Senator, it is great news that the OIE
    has recommended that the U.S. be given a negligible risk
    status. We have had a good year on beef. Our exports are at an
    all-time high. Our beef agreement with Japan has just gone into
    effect. That will present hundreds of millions of new export
    opportunities for safe and delicious beef from Montana and
    elsewhere.
        The OIE negligible risk classification should help us in
    the remaining markets that are not open to U.S. beef, China and
    others, and we will use this new certification to work very
    strongly with our trading partners to ensure that they give us
    access on beef.
        The Chairman. What leverage do we have on China? When you
    answer that question, I would note that China, Japan, and South
    Korea are trying to put together their own trade agreement
    while we are working on TPP, which is interesting, because
    Japan wants to be in both. But how does that effort of those
    three countries interact with TPP? The other question I would
    ask is, generally, how can we use the OIE to get access to
    China?
        Ambassador Marantis. On the beef side, Senator, I think the
    positive news that we have had in South Korea and in Japan and
    in Taiwan will help us in our beef talks with China. More
    broadly, with respect to our relationship with China, there is
    so much going on. I mean, you have always said it best: our
    relationship with China is full of opportunities but full of
    real challenges.
        We are moving on all cylinders with China with our results-
    oriented dialogue as part of the JCCT and the Strategic and
    Economic Dialogue. We have filed 8 cases against China in the
    WTO since 2008, and we are working closely with China to
    develop strengthened regional and global rules, whether it is
    in the WTO or in APEC. So there is a lot of work that we intend
    to continue with China in close cooperation with this
    committee.
        The Chairman. Thank you. Could you also just indicate the
    importance of the Codex standard for safe use of ractopamine
    and how we can leverage that to sell more pork and other
    related products?
        Ambassador Marantis. Senator, thanks for asking that. I
    mean, as with the OIE certification of negligible risk for
    beef, Codex established a minimal risk level this summer on
    ractopamine, and that should help us strongly in our efforts to
    ensure that countries do not impose non-scientific bans on our
    products that are treated with ractopamine.
        Taiwan has recently established an MRL for beef on
    ractopamine, but, as Senator Grassley mentioned, it has not
    done so with respect to other meat products. It is an issue
    that we are focused on with Taiwan, with Russia, and with our
    other trading partners.
        The Chairman. Thank you. Thank you very much.
        Senator Hatch?
        Senator Hatch. Well, thank you. I will not keep you much
    longer.
        There is a lot of activity in Geneva at the World Trade
    Organization. Efforts continue to complete a trade facilitation
    agreement before the ministerial in December. Negotiations on a
    plurilateral international services agreement should formally
    begin in April, and many are pressing to expand the
    International Technology Agreement.
        The Doha Round is not going anywhere that I can see, but
    perhaps some of these initiatives can demonstrate that the WTO
    can still produce results through negotiations. Can you please
    give us the administration's assessment of what deliverables
    are possible from the WTO this year?
        Ambassador Marantis. Senator, thanks for raising that. It
    is important always to remind ourselves how important the WTO
    is and how important it is for us to ensure that it remains
    robust and the center of multilateral trade liberalization.
        The WTO does so much in the area of its committees and
    overseeing implementation of the various WTO agreements. We are
    working now, as we prepare for the WTO ministerial that will
    take place in Bali at the end of the year, to come up with a
    practical but robust package that includes trade facilitation,
    that includes certain elements of agriculture and development,
    too.
        You also, Senator, mentioned the ITA. We concluded that 16
    years ago, but a lot has happened in those 16 years in the
    information technology sector, and we need to update the
    product coverage. We are accelerating negotiations to do so. As
    we speak, the U.S. is hosting negotiations in Geneva on
    expanding the ITA, and I am hopeful that we should be able to
    get this done as well by the next WTO ministerial.
        Senator Hatch. Let me just ask one other question. That is,
    last year the administration announced a new model Bilateral
    Investment Treaty, or BIT program. I want to underscore our
    interest in ensuring that you and your colleagues continue to
    pursue strong investment disciplines around the world, both
    through the enforcement of existing BITs and through the
    negotiation of high-standard investment disciplines and new
    trade agreements such as the TPP.
        These investment disciplines are critical, at least in my
    view, and I think in the view of many others here on the
    committee, to the ability of U.S. companies to manage risks
    associated with overseas investment and to ensure that they
    have access to a neutral dispute settlement process.
        Now, I raise this issue because I have grave concerns
    regarding Ecuador. There are real questions as to whether
    Ecuador is upholding the awards of arbitral tribunals. In
    addition, the president of Ecuador has indicated that he
    intends to review Ecuador's participation in various BIT
    agreements with a view towards withdrawing from them in the
    near future.
        Now, I would just like to know what you and the
    administration are doing to send a powerful message to Ecuador
    that you expect them to live up to their treaty obligations
    towards our country, the United States. Further, Ecuador is
    emblematic of some of the challenges we face in the region,
    from Venezuela, to Argentina, to Cuba.
        Now, apart from TPP, what is the administration's plan for
    engaging economically with our neighbors in South and Latin
    America?
        Ambassador Marantis. Senator, thank you. I could not agree
    with you more about the importance of our Bilateral Investment
    Treaties and our investment provisions. The whole purpose of
    them is to level the playing field so that we can help ensure
    that investment creates jobs here in the United States.
        With respect to Ecuador, we share your concern. We regret
    the deteriorating investment climate in Ecuador and the recent
    moves by Ecuador to withdraw from our Bilateral Investment
    Treaty. We have a petition from a company before us right now
    that is asking us to consider the revocation of GSP in Ecuador
    because of its deteriorating investment climate. We are looking
    at that seriously.
        On Latin America, Senator, we agree strongly with you that
    the western hemisphere is a critical trading partner. We have a
    $1.5-trillion, 2-way trade relationship. We are moving with
    Canada, Mexico, Chile, and Peru in the TPP. We are working with
    Panama and Colombia on implementing our trade agreements. The
    President recently, in 2011, announced with Brazil an agreement
    on trade and economic cooperation. We are working on IP-related
    issues in that context with Brazil, as well as investment.
        So, we have a lot on our plate in the western hemisphere,
    and in Latin America in particular, and we look forward to
    working to continue to deepen that relationship with them.
        Senator Hatch. Well, thank you so much. This has been a
    great hearing as far as I am concerned. I want to thank you
    again for heeding my calls on TPA. I think it is time to get
    this done, and we have to do that. As you know, it is always a
    hassle up here, but that helps us to get through the hassle a
    lot easier than if you do not get it.
        So I cannot imagine anybody not wanting that who has to
    deal in this area, but we are grateful to you, grateful for
    your service. We miss you on this committee, but know that you
    have gone on to higher and greater things; we accept that. But
    thank you for being here, and we appreciate the testimony you
    have given to us today.
        Thanks so much for that, and we will recess until further
    notice.
        [Whereupon, at 12:19 p.m., the hearing was concluded.]
                                A P P E N D I X

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