[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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