[Senate Hearing 113-360]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-360
 
                  ADVANCING CONGRESS'S TRADE AGENDA: 
                THE ROLE OF TRADE NEGOTIATING AUTHORITY 

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

                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 16, 2014

                               __________

            Printed for the use of the Committee on Finance

                               ----------

                         U.S. GOVERNMENT PRINTING OFFICE 

89-425 PDF                       WASHINGTON : 2014 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Printing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001


                          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...................     4

                               WITNESSES

Cote, David M., chairman and chief executive officer, Honeywell 
  International, Morristown, NJ..................................     6
Allen, Jim, president, New York Apple Association, Inc., Victor, 
  NY.............................................................     8
Stegemann, Elena M., director of international business, NuStep, 
  Inc., Ann Arbor, MI............................................    10
Cohen, Larry, president, Communications Workers of America (CWA), 
  Washington, DC.................................................    12

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Allen, Jim:
    Testimony....................................................     8
    Prepared statement...........................................    47
    Responses to questions from committee members................    50
Baucus, Hon. Max:
    Opening statement............................................     1
    Prepared statement...........................................    53
Cohen, Larry:
    Testimony....................................................    12
    Prepared statement...........................................    56
Cote, David M.:
    Testimony....................................................     6
    Prepared statement...........................................    75
    Responses to questions from committee members................    80
Hatch, Hon. Orrin G.:
    Opening statement............................................     4
    Prepared statement...........................................    84
Stegemann, Elena M.:
    Testimony....................................................    10
    Prepared statement...........................................    87
    Responses to questions from committee members................    98

                             Communications

Advanced Medical Technology Association (AdvaMed)................   105
Computer and Communications Industry Association (CCIA)..........   109
National Association of Manufacturers (NAM)......................   116
United Automobile, Aerospace, and Agricultural Implement Workers 
  of America (UAW)...............................................   120

                                 (iii)


                   ADVANCING CONGRESS'S TRADE AGENDA:
                           THE ROLE OF TRADE
                         NEGOTIATING AUTHORITY

                              ----------                              


                       THURSDAY, JANUARY 16, 2014

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:03 
a.m., in room SD-215, Dirksen Senate Office Building, Hon. Max 
Baucus (chairman of the committee) presiding.
    Present: Senators Wyden, Cantwell, Nelson, Menendez, 
Carper, Cardin, Brown, Casey, Hatch, Grassley, Crapo, Thune, 
Isakson, Portman, and Toomey.
    Also present: Democratic Staff: Amber Cottle, Staff 
Director; Bruce Hirsh, Chief International Trade Counsel; 
Elissa Alben, International Trade Counsel; Chelsea Thomas, 
Professional Staff Member; Lisa Pearlman, International Trade 
Counsel; and Jason Park, International Trade Counsel. 
Republican Staff: Chris Campbell, Staff Director; Everett 
Eissenstat, Chief International Trade Counsel; Kevin Rosenbaum, 
Detailee; Rebecca Eubank, International Trade Analyst; and 
Shane Warren, International Trade Counsel.

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

    The Chairman. The committee will come to order.
    Thomas Edison once said, and I quote, ``We often miss 
opportunity because it is dressed in overalls and looks like 
work.''
    Today we have a tremendous opportunity to boost our economy 
and create American jobs through trade. Talks are underway with 
countries in Europe and across the Pacific. These agreements 
will open huge new markets for American exports.
    Ninety-five percent of the world's consumers are outside of 
the United States. They hold 80 percent of the world's 
purchasing power. We need trade deals to reach those consumers. 
Why? To create jobs here in the United States, and to 
strengthen our economy.
    Some people argue that pursuing trade deals is not the 
right solution for America's jobs crisis, but here are the 
facts. Exports support nearly 10 million American jobs. That 
includes 25 percent of all jobs in manufacturing. Those numbers 
are increasing. These are good-paying jobs. Workers in 
factories that export earn nearly 20 percent more than workers 
in factories that do not export. Businesses that export create 
jobs more quickly, and they are less likely to go out of 
business.
    So how can we help create these jobs? How can we get more 
American exports into foreign markets? Through trade 
agreements. And, to complete trade agreements, we need Trade 
Promotion Authority, also known as TPA.
    Last week, Senator Hatch and I introduced a bill to renew 
TPA. It is called the Bipartisan Congressional Trade Priorities 
Act of 2014. Why do we need this bill? For several reasons. 
First, we have to level the playing field with our 
international competitors. The United States is already open to 
trade. Too often, our trading partners are not. The trade deals 
we are negotiating will provide new opportunities for U.S. 
exports in many countries, and that would mean more jobs here 
in the United States.
    The fact is dozens of nations are cutting their own deals 
with one another as we speak: China, Japan, Korea, just to name 
a few. If we do not stay in the game, we will be left on the 
sidelines. Our exports will face high tariffs, whereas our 
competitors will not. And, frankly, we may not like the look of 
some of the deals that other countries--that is, our 
competitors--are cutting.
    That leads to another reason why the TPA bill is so 
important. Labor rights, environmental protection, currency 
rules, disciplines for state-owned enterprises--all of these 
issues and more will be left out of trade deals if we do not 
push for them. We will have forfeited our role as a global 
power. We will have lost the chance to shape the rules on 
trade.
    Some argue that we need to do more, that we need to bring 
our policies into the 21st century. The TPA bill does that. It 
reflects the bipartisan agreement on labor and environment and 
the need to foster innovation and promote access to medicines.
    TPA will call for countries to adopt and maintain core 
labor standards and environmental commitments, not just enforce 
their own laws as they stand. The bill will direct USTR to back 
those commitments with the same strong dispute settlement and 
remedies that apply to commercial commitments.
    The bill ensures that parties to U.S. trade agreements 
cannot manipulate their currency. The bill also recognizes the 
importance of the Internet. It ensures that trade rules 
facilitate legitimate digital trade. And it calls for tougher, 
enforceable rules against unscientific barriers to U.S. 
agricultural exports.
    The bill updates TPA to address several other 21st-century 
challenges. These provisions need to be included in trade deals 
to win congressional support. This helps guarantee that 
America's workers and companies can compete on a fair, level 
playing field. What are some of the updates that are in this 
bill? Localization barriers to trade that shut out American 
companies or force them to surrender intellectual property; 
restrictions on the flow of data across borders.
    In short, this is not the same old TPA. This strengthened 
bill tells the administration and our trading partners the 
provisions that need to be included to win congressional 
support. As I said, it helps guarantee that America's workers 
and companies can compete on a fair and level playing field.
    Many in Congress have expressed concerns about lack of 
transparency and consultation in trade negotiations. We heard 
that message, and this bill addresses those concerns. It sets 
significantly stronger rules for the administration to follow 
in negotiations, and ensures Congress is a full partner.
    The bill gives every member of Congress a strong voice in 
the negotiation process. That includes the right to access 
information, including classified information. And it includes 
the ability to attend all negotiating sessions and serve as an 
advisor. These privileges were previously reserved for only 
some members. Now they are available for all members of 
Congress. Our bill would make these privileges available to 
all.
    The bill also requires USTR to hold close consultations 
with any committee whose jurisdiction would be affected by a 
trade agreement. It also requires USTR to prepare new rules of 
engagement with Congress, stakeholders, and the public. For 
Congress, these rules will ensure detailed and timely briefings 
and access to information. For stakeholders, they mean improved 
coordination. And for the public, they will boost transparency, 
public participation, and collaboration in the negotiation. All 
of these improvements are backed by a strong mechanism for 
congressional disapproval.
    If the trade agreement fails to meet any consultation 
requirement, Congress can disallow the final deal from being 
considered under TPA procedures. In short, the bill gives 
Congress a much bigger role in trade negotiations.
    Some have argued we do not need TPA. They say this is not 
the right time. But I believe we have an obligation--not just 
an opportunity, but an obligation--to show that the United 
States leads on world trade. For a trade negotiation to work, 
countries need to know that our negotiators are good for their 
word. So we need TPA, and we need a TPA that empowers Congress 
to play a larger role in negotiations from the beginning.
    As I noted at the outset, Thomas Edison said, ``We often 
miss opportunity because it is dressed in overalls and looks 
like work.'' In order for our job-creating trade agenda to 
succeed, we have to act, and we have to renew Trade Promotion 
Authority now, as well as Trade Adjustment Assistance. TPA and 
TAA have always gone together, and that will be no different in 
this case.
    Trade bills are always tough, but we work together to get 
them done. This committee has a history of rolling up our 
sleeves and working together to get a product that will pass 
the Senate and the Congress. I am deeply proud of the work we 
have done together in my time here as chairman. And I am 
confident that that spirit of collaboration will continue in 
the days, months, and years ahead.
    This bill is not a perfect solution to all the issues we 
face, but I know that we can work together and get it done.
    [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. Thank you, Mr. Chairman. I want to thank you 
for holding this hearing and also for your leadership on these 
trade agreements that are so important for our country and its 
future.
    Today we are examining the role trade negotiating authority 
plays in advancing our Nation's international trade agenda.
    Before I begin my remarks, I just want to take a moment to 
express my sincere disappointment that the U.S. Trade 
Representative did not accept our invitation to testify at this 
hearing today. This is an important issue. It should be 
important to the administration too. If the administration does 
not get more involved in this effort to pass trade negotiating 
authority, we are not going to be successful. It is just that 
simple.
    Put simply, this is not an issue where the President can 
lead from behind. With that in mind, I hope we can still have a 
productive and informative hearing today.
    As any student of government knows, article 1, section 8 of 
the U.S. Constitution grants Congress the power, quote, ``to 
lay and collect taxes, duties, imposts, and excises,'' and, 
quote, ``to regulate commerce with foreign nations.'' Congress 
uses this constitutional authority in many different ways. 
These ways include creating trade remedies to help U.S. 
businesses compete with unfair imports; imposing sanctions on 
imports from unfriendly nations, such as Iran; granting 
unilateral tariff reductions through approval of bills granting 
miscellaneous tariff relief, or through programs such as the 
Generalized System of Preferences; implementing reciprocal 
trade agreements among countries to reduce tariffs; and, 
finally, creating agencies to administer U.S. trade law and 
policy, such as the Office of the United States Trade 
Representative and the International Trade Commission.
    When it comes to negotiating trade agreements with other 
countries, however, Congress's capacity to speak with one voice 
to foreign nations is inherently limited. Under article 2 of 
the Constitution, the executive branch has the authority to 
negotiate treaties and international agreements. Throughout 
U.S. history, Congress has sought the most effective way to 
enhance and effectively utilize its authority over 
international trade agreements.
    As our world became increasingly globalized at the turn of 
the 20th century, the issue became more acute, culminating in 
congressional approval of the Smoot-Hawley Tariff Act in 1930. 
Now, I do not want to unfairly denigrate Senator Smoot. After 
all, Senator Smoot had a highly distinguished career as the 
senior Republican Finance Committee leader from Utah. But in 
this instance, he and Congressman Hawley got it flat wrong, 
although I sincerely do not believe that they should have 
gotten the whole blame for the Depression, which some have 
tried to lay on them.
    The Smoot-Hawley Tariff Act was perhaps one of the most 
misguided trade bills ever devised by Congress. It raised 
tariffs to unprecedented levels, contributing to the longevity 
and severity of the Great Depression.
    Franklin Delano Roosevelt recognized the role trade could 
play in helping spur economic prosperity and proposed a new 
framework under which Congress could effectively regulate 
tariffs at home and, in so doing, reduce tariffs overseas and 
open up markets for U.S. products, which means jobs in America.
    Under the Reciprocal Trade Agreements Act of 1934, Congress 
authorized the President to negotiate limited tariff reductions 
on a reciprocal basis. That bill has served as the foundation 
for every iteration of trade negotiating authority since 1934. 
It has been a highly effective tool in reducing trade barriers 
overseas and opening up global markets to U.S. goods and 
services, all the while retaining Congress's constitutional 
authority over trade.
    Unfortunately, the last iteration of trade negotiating 
authority expired over 7 years ago. Since then, our Nation has 
not concluded negotiations on a single new trade agreement.
    The Obama administration has launched several new trade 
initiatives, including the Trans-Pacific Partnership in the 
Asia-Pacific region and the Transatlantic Trade and Investment 
Partnership with the European Union. But without trade 
negotiating authority, Congress's power to set priorities for 
these negotiations and to ensure that our priorities are met is 
really limited. That is why Senator Baucus and I, along with 
Chairman Camp of the House Ways and Means Committee, recently 
introduced the Bipartisan Congressional Trade Priorities Act, 
which will renew trade negotiating authority.
    Through the strong negotiating objectives outlined in our 
bill, Congress has the opportunity to set forth clear 
priorities for our negotiations and to articulate standards 
that our trade agreements must meet in order to be approved. 
These negotiating objectives were developed after close 
consultation with many stakeholders. The objectives are updated 
to address many of the challenges our workers and job creators 
face when competing to export American goods and services 
overseas, including problems related to localization barriers, 
state-owned enterprises, and currency manipulation.
    The bill also maintains objectives seeking high standards 
of protection for U.S. intellectual property rights holders and 
advances trade negotiating objectives for the digital age.
    In addition, the bill expands and enhances Congress's role 
in ongoing international trade negotiations through 
strengthened consultation mechanisms, including provisions that 
require USTR to meet and consult with any interested member of 
Congress at any time. It also allows any member of Congress to 
be designated as a congressional advisor and to attend 
negotiating rounds. Should the administration fail to consult 
with Congress or abide by the procedures outlined in the bill, 
Congress retains the ability to cut off the authority provided 
under our legislation.
    Finally, our bill ensures that Congress retains clear 
authority over the scope of the implementing bill, as well as 
enhancing congressional oversight over ongoing trade 
negotiations. It is a carefully crafted and balanced package 
which will enable Congress to more effectively utilize its 
constitutional authority to open global markets for U.S. goods 
and services and grow our economy even better than it does 
today.
    While I am, once again, disappointed that Ambassador Froman 
did not accept our invitation to testify today, I am pleased 
that we have a number of witnesses representing a broad range 
of views to help us discuss Congress's role in advancing 
international trade negotiations.
    So, Mr. Chairman, I look forward to the testimony of our 
witnesses today. I want to thank you again for all of your hard 
work, both on this legislation itself and in helping us prepare 
for today's hearing. And this is a bill I hope we can get 
through before you leave for China. It would be a great 
capstone to your very, very good career while you are here.
    [The prepared statement of Senator Hatch appears in the 
appendix.]
    The Chairman. I am going to have to ask the demonstrators, 
those holding the signs, to bring them down. I think it would 
be inappropriate, frankly, for this committee to allow a 
contest of who has the best signs during a congressional 
hearing. So I am going to have to ask you all to bring your 
signs down and listen to the hearing, because, if you do not 
bring your signs down, we are going to have to ask that you be 
removed. So, please, just bring your signs down. Otherwise, 
there will be a competition on signs, and I do not think that 
would be appropriate here.
    I see one sign still up. Thank you very much. Now, I will 
introduce the witnesses.
    We are pleased to begin our hearing today with Mr. David 
Cote, who is chairman and chief executive officer of Honeywell 
International in Morristown, NJ. Following Mr. Cote is Mr. Jim 
Allen, president of the New York Apple Association in Victor, 
NY. Our third witness is Ms. Elena Stegemann, director of 
international business of NuStep, Incorporated, located in Ann 
Arbor, MI. The fourth witness is Mr. Larry Cohen, president, 
Communication Workers of America.
    Thank you all for coming. We deeply appreciate your effort, 
both in preparing your remarks and taking the time to come 
here, because I know you are all deeply committed to trying to 
figure out the best solution for this issue. Obviously, it is 
to pass the TPA.
    I will begin with you, Mr. Cote.

   STATEMENT OF DAVID M. COTE, CHAIRMAN AND CHIEF EXECUTIVE 
        OFFICER, HONEYWELL INTERNATIONAL, MORRISTOWN, NJ

    Mr. Cote. Chairman Baucus, Ranking Member Hatch, and 
distinguished members of the committee, thank you for the 
invitation today. It is my pleasure to appear on behalf of 
Honeywell, the Business Roundtable, and Trade Benefits America, 
a coalition of about 160 associations and companies that 
support passage of 21st-
century Trade Promotion Authority legislation.
    In order to meet the challenges and seize the opportunities 
in the global economy, the United States needs policies to 
ensure American companies and workers are the most competitive 
in the world. A pro-growth trade policy, including passage of 
TPA, is an area where government can create an environment 
where jobs can be created. I therefore commend you, Mr. 
Chairman and Ranking Member, for working with House Ways and 
Means Committee Chairman Dave Camp to develop legislation to 
significantly improve TPA to address today's trade issues.
    With more than 95 percent of the world's population and 
about three-quarters of world GDP outside of the U.S., economic 
growth and jobs increasingly depend on the expanded trade and 
investment opportunities available worldwide. By strengthening 
and passing TPA, a key enabler for trade agreements, Congress 
can help complete 21st-century agreements that U.S. companies 
need to be competitive.
    The global economic world has changed significantly over 
the last 20 years and will change even more in the next 20. 
Twenty years ago, there were only about a billion people 
involved in the global economy, basically the U.S., Europe, and 
Japan. Today there are about 4 billion people participating in 
the global economy with the addition of China, India, and 
numerous other countries that have recognized that a robust 
private sector is essential for their prosperity.
    Now, this is a good phenomenon for the world, because we 
now have at least 4 billion people thinking about how to make 
things better and how to improve productivity. An improved 
standard of living comes from productivity, the ability to 
innovate and invent, and the ability to have free flow of 
ideas, of people, of goods, and of money.
    So, as a country, we need to recognize, first, that we are 
in a different global economy than we were 20 years ago; 
second, that the global economy will move forward with us or 
without us; and three, that in all our political arguments, 
there is truth on both sides, and we need to pull together 
toward a common objective.
    While the negative effects of trade are sometimes more 
obvious, they are more than outweighed by its positive effects 
overall on jobs. And trading nations from the Phoenicians to 
the Hanseatic League to the Dutch, the British, and the U.S. 
have done well.
    According to research provided by the Business Round Table, 
trade and U.S. trade agreements have helped support American 
growth and jobs. U.S. companies, including Honeywell, have 
capitalized on opportunities that trade agreements have 
created.
    Honeywell is a $39-billion industrial company with more 
than 130,000 employees. Since 2002, we have grown sales by more 
than 75 percent from a base of about $22 billion. During that 
time, we also grew sales outside the U.S. from 41 percent of 
total sales to 54 percent of our total sales. In other words, 
while sales in the U.S. during those 10 years grew about 33 
percent, sales outside the U.S. more than doubled.
    Since the vast majority of the world's GDP is outside the 
U.S. and many developing countries are growing faster than the 
U.S., we need to be there. The rest of the world is moving, and 
we are not.
    There are legitimate concerns about labor and environmental 
laws--helping those disrupted by trade--and adherence to 
agreements. So we need to work together to achieve the best 
balance of both. This will become especially important over the 
next 20 years, because the geographic composition of world GDP 
will be changing substantially. As you can see in the chart 
provided with my testimony, by 2030, the percentage of world 
GPD generated from the U.S. will decline from 26 percent to 24 
percent. Other developed countries will decline from 39 percent 
to 29 percent of world GPD. And importantly, developing 
economies will grow from 35 percent to 47 percent of world GPD. 
In other words, in 20 years what we think of as developing 
countries will account for about half of the world's GDP. That 
is a big deal, and we need to be in there forging relationships 
now.
    If the U.S. is not in the vanguard of pursuing new 
agreements, we risk falling behind other countries that are 
pursuing agreements of their own. We also surrender the 
opportunity to negotiate new rules to address trade barriers 
and issues that did not exist previously. And that is why it is 
crucial for the U.S. to continue to aggressively pursue new 
agreements and for Congress to pass the improved Trade 
Promotion Authority.
    So thank you for the opportunity to testify, and I look 
forward to answering any questions the committee may have.
    The Chairman. Thank you very much, Mr. Cote.
    [The prepared statement of Mr. Cote appears in the 
appendix.]
    The Chairman. I see signs back there. One more time, if I 
see the signs up, I am going to have to ask the police to 
remove you.
    Mr. Allen, you are next.

          STATEMENT OF JIM ALLEN, PRESIDENT, NEW YORK 
              APPLE ASSOCIATION, INC., VICTOR, NY

    Mr. Allen. Good morning. Thank you, Chairman Baucus, 
Ranking Member Hatch, and distinguished members of the Senate 
Committee on Finance. I am honored to be invited here today to 
speak with you about the importance and the value of Trade 
Promotion Authority in the execution of free trade agreements.
    My name is James S. Allen, and I am president of the New 
York Apple Association. I have the pleasure of representing 
close to 700 commercial apple growers in the State of New York. 
In my 14 years as president, I have worked very closely with 
our past and present apple leaders, serving on Senator 
Clinton's, Senator Gillibrand's, and Senator Schumer's many 
different ag advisory committees and related task forces.
    At the risk of sounding provincial, I would like to take 
the opportunity to recognize the honorable Charles Schumer for 
his unyielding support of the apple industry in New York State. 
He is often referred to as the Senator Farmer from Brooklyn.
    We take apple growing very seriously here in New York 
State, and we are presently the second-largest apple-growing 
State in the Union, pumping over $300 million dollars a year 
into our economy. The leader in production is Senator 
Cantwell's State of Washington. And number three is held by 
Senator Stabenow's home State of Michigan. Pennsylvania and 
California round out the top five.
    But today I want to speak to you with an industry message 
with an industry voice, echoing concerns of all the major apple 
producing States across the country.
    The United States is the world's leading exporter of ag 
products, reaching a value of $140 billion a year and providing 
nearly 1 million U.S. jobs. It is well-known that soy beans, 
corn, and wheat are the top three, but fruit and fruit products 
is number four, reaching $7.82 billion. Fresh apples represent 
well over $1 billion in trade to over 70 countries.
    The four mentioned apple-exporting States rely on export 
markets to help balance the domestic supply levels and to 
expand their markets. For New York State, the close to 1 
million cartons exported greatly enhance our overall apple 
business; for Washington State exports, close to 40 million 
cartons a year, which is close to 32 percent of their total 
production.
    I would be remiss if I did not point out that the Market 
Access Program, MAP, which is authorized in the Farm Bill, 
plays a major role in our export programs and underscores the 
importance of the Farm Bill.
    In the world apple market, all U.S. apples generally 
compete on the same playing field. And when it comes to trade 
agreements and Trade Promotion Authority, as an industry, we 
work closely together to benefit all U.S. apple growers. It is 
safe to say that a trade barrier that impedes Washington apple 
exports would adversely affect New York, Michigan, and 
Pennsylvania in the same way.
    My counterpart, Todd Fryhover, president of the Washington 
Apple Commission, makes a good point, and I agree, when he 
states that trade agreements provide a platform for all 
participants to address the wants and the needs of potential 
exporting countries, while extending the same benefits to 
importing countries for the betterment of consumers. Without 
trade agreements, the status quo remains the same and 
consistent and is adverse to the principles of free trade. 
Ultimately, free trade is best for every economy, and FTAs open 
the door for increased commerce.
    The U.S. apple industry supports renewing the TPA for two 
reasons, the first being timing. Trade agreements are being 
negotiated every day between countries, and, because TPA is not 
authorized, the U.S. lags behind in our ability to effectively 
negotiate and quickly execute trade agreements. Secondly, 
authorizing TPA provides the negotiators the ability to act 
within the parameters set forth by Congress, while being a 
credible negotiating party. It is difficult to image our 
negotiators returning to Congress with the risk of potential 
amendment.
    TPA provides the detail in negotiating objectives and a 
strong consultations process which allows for an up and down 
vote on agreements. A great example of a successful free trade 
agreement that previously passed under TPA is CAFTA. U.S. apple 
exports into those countries are now treated equally as the 
other trading countries are. TPA could allow us to conclude 
trade talks that similarly level the playing field in Europe 
and Asia.
    As U.S. Trade Representative Michael Froman said last week, 
we need to open markets, support U.S. jobs, and increase 
exports of products made in America. The TPA will help 
accomplish this. Apple growers urge Congress to support updated 
TPA legislation so that they can grow markets and supply 
nutritious and delicious apples to new markets around the 
world.
    Mr. Chairman, Ranking Member Hatch, and distinguished 
members of this panel, thank you for allowing me the 
opportunity today to discuss the importance of TPA for American 
apple growers. And I would close with just one simple question, 
and that is: Have you had your apple today?
    Thank you.
    The Chairman. Thank you, Mr. Allen, very much.
    [The prepared statement of Mr. Allen appears in the 
appendix.]
    The Chairman. Ms. Stegemann, you are next.

  STATEMENT OF ELENA M. STEGEMANN, DIRECTOR OF INTERNATIONAL 
             BUSINESS, NUSTEP, INC., ANN ARBOR, MI

    Ms. Stegemann. Chairman Baucus, Ranking Member Hatch, and 
distinguished members of the committee, my name is Elena 
Stegemann, and I am the director of international business at 
NuStep, located in Ann Harbor, MI.
    I am very pleased to testify today on behalf of my company, 
as well as 3 million small businesses, State and local chambers 
of commerce, as well as large companies that are members of the 
U.S. Chamber of Commerce and its national federation. We 
strongly support the Bipartisan Congressional Trade Priorities 
Act of 2014, which will renew TPA.
    TPA is vital because economic growth and job creation at 
home depend on our ability to sell American goods and services 
to the 95 percent of the world's customers living outside of 
the U.S. NuStep designs and manufactures recumbent cross-
trainers to make exercise possible for users who are unable to 
access regular exercise equipment due to injury, medical 
conditions, or other physical limitations.
    We manufacture our product in a beautiful state-of-the-art 
facility in Ann Arbor. We supply our products to thousands of 
rehab centers across the U.S., but we also have sales in more 
than 25 other countries now.
    Why does trade matter to NuStep or to our country? In a 
word, it comes down to jobs. Our biggest challenge as a Nation 
is to get Americans back to work, and we believe trade can help 
do that.
    Let me tell you a bit about our company's experience with 
international trade. NuStep began to focus on exporting in 
2009, when our country faced a terrible recession. Our CEO and 
owner, Dick Sarns, saw the decline in our domestic sales and 
decided to go look for new customers abroad. Since then, our 
international sales have almost quadrupled. Exports today 
account for nearly 20 percent of our unit sales. Our success as 
an exporter was even recognized with the President's ``E'' 
Award at a White House ceremony in May of 2012, definitely a 
career highlight for me.
    Today NuStep employs nearly 100 people, which is twice as 
many as when I started in 2009, and about 20 of our employees 
are involved in our international business. But all of our 
people are proud of the fact that our products are shipped all 
over the world. So you might be wondering, how do you take a 
small company from a small town in Michigan and go global? 
Well, with a lot of enthusiasm and a lot of help.
    The first step was to create a job for someone like me. I 
was hired to help develop the international business for our 
company. And today, our international sales are growing in many 
countries. However, the playing field for trade is not always 
level. While our market is generally open, U.S. exports face 
foreign tariffs that often soar into double digits, as well as 
the thicket of non-tariff barriers.
    Now, as you have heard, I am not from Washington. But, as 
we have already heard today, TPA will require Congress and the 
White House to work together on trade agreements. Well, that 
does not sound like a radical notion to me.
    And those trade agreements will tear down the foreign 
barriers that shut out products made by companies like mine, 
and I think it makes a world of sense. So where are the big 
opportunities? Asia is currently my company's biggest export 
market, because 2 billion Asians have joined the middle class 
in the past 20 years. We are very pleased to see containers 
full of our beautiful products headed to Japan and a growing 
number now going to other countries in Asia.
    TPP will get rid of many of the barriers that make it hard 
for us to compete in some Asian markets. Also, the Trade 
Priorities Act will guide American negotiators to ensure that 
TPP protects intellectual property and trade secrets.
    Even though we are not a high-tech company, NuStep has made 
big investments in producing high-quality, innovative products, 
and it would be simply devastating for us to have our know-how 
stolen because we either did not have a trade agreement in 
place or because the agreement lacked strong protections that 
we need.
    Europe is another big market for us. We are proud that our 
products are gaining popularity in such markets as Germany, 
where consumers have very high standards and where we face 
intense competition. Regulatory cooperation is another big 
focus of the Transatlantic Trade and Investment Partnership. 
NuStep is committed to complying with regulatory standards 
everywhere that we do business. But anything our trade 
negotiators can do to streamline regulatory compliance for U.S. 
exporters would be a huge help for a small business like 
NuStep.
    In conclusion, I have had the privilege during my travels 
of meeting with business owners and decision makers all around 
the world. And I have met with people who use our products and 
whose lives are transformed by them. On one such visit to a 
care home in Britain, I had the privilege to witness the first 
time that a wheelchair-bound man saw his legs move in a very 
long time. I was so proud of the fact that a small company from 
Michigan had made this product and made this moment possible 
for him. As an exporter, it is a huge honor for me to represent 
our country abroad.
    During my travels, many people refer to me as the lady from 
America, and I am very happy to see that being an American is a 
door-opener. People are hungry for our products, and we are 
hungry for more trade.
    On behalf of small exporters like NuStep, I urge you all to 
support TPA and the trade agreements it can make possible.
    Thank you.
    The Chairman. Thank you, Ms. Stegemann.
    [The prepared statement of Ms. Stegemann appears in the 
appendix.]
    The Chairman. Mr. Cohen?

STATEMENT OF LARRY COHEN, PRESIDENT, COMMUNICATIONS WORKERS OF 
                 AMERICA (CWA), WASHINGTON, DC

    Mr. Cohen. Thank you, Chairman Baucus and members of the 
committee. I am here today not only as president of the 700,000 
members of the Communication Workers of America, but as part of 
a broad citizens coalition with more than 30 million members 
quite concerned about where we are going in this Nation on 
trade, as well as fast-track or Trade Promotion Authority.
    When we come to see any of you in your offices, we are as 
likely to be there with Public Citizen or the Sierra Club or 
Food and Water Watch. We are a community organization, as we 
are with the AFL-CIO, and it is in that spirit that I am here 
today.
    We recognize that we are living in a global economy, but we 
must ensure that our trade framework serves our national goals, 
and we must measure those results. We cannot delegate the 
responsibility to achieve those goals to private or secret 
negotiations or appointed officials without meaningful, 
democratic control.
    This hearing is timely, coming on the 20th anniversary of 
the North American Free Trade Agreement. As the administration 
seeks to negotiate two more massive trade pacts that would 
dwarf NAFTA, Congress must establish negotiating priorities and 
enforceable consultations by the administration.
    Key are the following: one, we must document that any new 
trade deal will not add to the nearly $1-trillion annual trade 
deficit. When do we start to measure the results of 20 years of 
these trade deals in fast-track authority? No other nation has 
trade deficits like this, and, while we respect this body in 
deliberating over budget deficits, every economist, Economics 
101, knows there is a direct relationship between trade 
deficits and budget deficits.
    Second, we must document the likely net effect on 
employment. These micro-examples are wonderful, and we applaud 
them. But what is the net effect? What has the net effect been 
of 20 years of these trade deals? What has happened to our 
jobs, our communities, the North Philadelphia that I grew up 
in, the Cleveland that I can picture right now? Devastation 
throughout those communities; nowhere near the replacement in 
jobs for the more than 700,000 jobs lost from NAFTA alone. Even 
the Korea trade agreement that was supposed to bring new jobs--
in fact, we have lost 40,000 more jobs since its passage.
    We can take micro-examples, like telecom equipment. There 
is no telecom equipment made in this country at all. And yet 
what do we have today? What did we have when we grew up? We had 
Bell Labs, we had Western Electric, we had Lucent. Every one of 
those hundreds of thousands of jobs is gone, and yet we are the 
biggest consumer of those products. And yet China, which stayed 
on to enterprise ZTE and Huawei, and European companies that 
are promoted by their nations, whether Alcatel or Siemens, or 
Ericsson or Nokia, are thriving.
    Third, we must document the effect on pay and the standard 
of living. Since NAFTA, in these 20 years, average weekly take-
home pay in the United States has declined by more than $100. 
It is directly related.
    I could tell you story after story where CEOs say to me, it 
is gravity. We have to move the jobs or you have to cut the 
pay. And so we have high-tech jobs, like Internet help jobs, at 
$10 an hour in Goldsboro, NC, and we cannot raise the pay 
despite collective bargaining.
    We must ensure, fourth, that consumer protection 
regulations by Federal, State, and local governments are not 
diminished. We are quite concerned about that in terms of the 
text that I have read on Trade Promotion Authority that we are 
considering here today. Most U.S. consumer groups are concerned 
that trade agreements can be used to degrade our food safety 
protection. Allowing for fast-track consideration of TPP would 
further jeopardize the safety of food consumed in the U.S., as 
food standards, country-of-origin labeling, and other laws 
could be undermined.
    Fifth, we must ensure that all trading partners comply with 
International Labor Organization principles and conventions. 
Most countries have ratified eight core conventions. Sadly, the 
United States has only ratified two. Amazingly, those 
conventions--child labor protection, freedom of association--
require a two-thirds vote of this body. Yet, this fast-track 
authority would provide that a multilateral trade bill covering 
a billion people would go through with a majority vote.
    We need to take those ILO conventions and put them in the 
fast-track authority.
    Sixth, we must ensure that environmental standards are not 
degraded and are enforceable. If recent leaks in news reports 
are correct, the USTR may be backing down on some key issues, 
like internationally recognized pollution controls and logging 
regulations. We need to make improvements in global environment 
issues, not negotiate a retreat.
    Seventh, we should ensure that social goals on the 
environment, labor rights, and consumer protection are 
enforceable, at least at the same level as other sections. We 
cannot have a democratic society if corporations have access to 
superior remedies to address their concerns.
    And finally, we must ensure that Congress plays a 
meaningful role. We applaud those members of the committee who 
have written to the USTR demanding exactly that.
    Thank you.
    The Chairman. Thank you very much, Mr. Cohen.
    [The prepared statement of Mr. Cohen appears in the 
appendix.]
    The Chairman. I would like to ask Mr. Cote, Mr. Allen, and 
Ms. Stegemann, in your companies, your businesses, what are 
some of the opportunities that you see we could pursue here 
with TPA and the trade agreements to further help your 
companies export overseas?
    That is, what are some of the barriers that you face today? 
I might say, just for example--it is not your business--but 
Malaysia, for example, has a 40-percent tariff on tires, and we 
have a big export business in the United States that exports 
tires overseas. But they have a 40-percent duty on American 
tires, and Malaysia is doing an agreement with other countries, 
which means other countries nearby, Indonesia and others, will 
not have to face that same 40-percent tariff.
    There are really two parts to that question. One, we are 
looking for opportunities. But, second, if we do not pursue 
opportunities under TPA, other countries will do their 
agreements and give an advantage to their companies.
    But in your industries, what are some of the areas where 
you see barriers that could be addressed with TPA and TPP, for 
example? Any of you.
    Ms. Stegemann. I will take that. It is a great question. I 
am thinking about the TPP agreement. There are a lot of 
countries involved.
    For a small company like us, as I mentioned, we are very 
committed to meeting very high regulatory standards in every 
market that we participate in.
    Because the countries are so varied in their approach to 
regulatory requirements, from Canada to Japan to Australia to 
Singapore, they all have a different take on requirements in 
our industry. It is very difficult for us, with very limited 
resources and a limited budget, to stay abreast of regulatory 
requirements as they develop and change in every country.
    For every country we export to, we have to ask ourselves, 
``What are the latest requirements? What do we need to do to 
stay compliant?''
    So, if the negotiators on both sides can take a look at how 
we can make things more efficient, easier for a small company 
to understand what the regulatory requirements are in the TPP 
member countries, so that we have some kind of a simplified 
approach, if you will, an ability to meet very high regulatory 
standards, that would be a great help for us.
    The Chairman. Mr. Allen?
    Mr. Allen. Thank you very much for asking that question, 
Senator.
    I would refer back to CAFTA as an example, once again. Once 
that trade agreement was settled, it put U.S. apples on the 
same playing field as the other importing countries from the 
southern hemisphere. By removing the tariffs and removing some 
of those barriers, our business into that part of the world 
grew very quickly.
    I think it is very important that we are able to compete on 
a level playing field in different markets. Traditionally, 
unfortunately, what has happened is that we are confronted with 
a lot of barriers, such as phytosanitary and protocol issues, 
that are built to keep us out of those markets. And I believe 
that the trade agreements should address and can address them, 
but being mindful that we need to make sure that we protect our 
markets with the products coming into this country the same way 
that we are being asked to protect foreign markets.
    The Chairman. Mr. Cote?
    Mr. Cote. I would say those are two very good, specific 
examples. I would have to get back to you with some of our more 
specific examples. But I would say we are a net exporter and 
have been for a long time, and, to the extent that tariff 
barriers are reduced, it makes it easier for us to increase the 
capability of our exports.
    The Chairman. I would like to ask all of you--I do not have 
much time left here--the degree to which you are concerned that 
if we do not do this, that is, if we do not have a solid Trade 
Promotion Authority and, therefore, negotiate solid trade 
agreements, like the Trans-Pacific Partnership, that we will 
lose the opportunity to set higher standards, because those 
other countries negotiating agreements are not going to set 
high standards.
    A good example would be right now, for example, Mexico and 
Japan have concluded a trade agreement 2 years after the last 
TPA expired, and that contained no commitments on labor 
standards or rights. It contained no provisions on environment, 
which, obviously, is of interest to the United States in trying 
to set standards in agreements.
    In addition, I might say China is now negotiating their own 
deal with Japan and Korea, and that surely will not address 
currency manipulation, another issue that is very, very 
important to this country, certainly members of Congress, but 
also this country and companies as they do business overseas.
    So to what degree are you concerned, panelists, that a 
failure to negotiate this agreement, to conclude an agreement, 
will tend to result in the United States missing an opportunity 
to set higher standards?
    Let me put it differently. If those agreements other 
countries are negotiating have low labor standards, low 
environmental standards, the United States will still do 
business in those countries, but under low labor standards and 
low environmental standards and no currency manipulation 
provisions.
    So to what degree is that a concern? Because, if we do not 
do these agreements and other countries do theirs, it helps 
their people but does not include standards which are important 
to the United States.
    I do not have much time. In fact, my time has expired. You 
can think about that. I will ask you on my next round.
    Senator Hatch?
    Senator Hatch. Thank you.
    Mr. Cote, a number of op-eds in prominent papers across the 
country are calling upon the administration to more actively 
engage in ensuring prompt passage of TPA. For example, the 
Chicago Tribune wrote that, quote, ``The President made no push 
for TPA in his first 4 years. Recently, he has spoken out about 
the need for it, but he has not twisted arms on Capitol Hill. 
If TPA is the high priority that it should be for the 
administration, Obama needs to demand it from members of both 
parties.''
    The Washington Post recently wrote that, quote, ``The GOP 
is demanding that the President himself advocate fast-track 
aggressively. It's not an unreasonable request. Mr. Obama could 
start by giving the issue a prominent mention in his State of 
the Union Address.''
    Do you agree that the renewal of Trade Promotion Authority 
should be a top priority for President Obama this year?
    Mr. Cote. I absolutely agree it ought to be a top priority, 
not just for the President, but for the Congress. And I really 
think that there is not enough recognition in the country about 
how much the economic world has changed over the last 20 years, 
with the fall of the Berlin Wall, and how much it is going to 
change over the next 20 years. And that shift, where developing 
countries are going to become half of world GDP, and the fact 
that other countries are creating agreements and this is our 
best opportunity to start to influence how those economies 
develop--it would be a shame if we would miss that opportunity.
    I really think that that is a huge trend that we need to be 
addressing as a country, as part of our global competiveness.
    Senator Hatch. Thank you. As you know, intellectual 
property is increasingly critical to the U.S. economy. In my 
own home State of Utah, it is the lifeblood of our industries, 
from information technology to the life sciences. Like many 
businesses in Utah, I know that Honeywell has a long history of 
innovation and depends on strong intellectual property 
protections.
    As I said in my opening statement, our bill maintains 
negotiating objectives that seek the high standards found in 
U.S. law. So let me ask you this question. Can you please 
discuss why it is so important for innovative job-creating 
businesses such as yours to have these high IPR standards as a 
benchmark for U.S. trade agreements?
    Mr. Cote. Yes. It is a huge deal for us. And to your point, 
technology is one of the ways we differentiate all of our 
businesses.
    If a country wants innovation, if the world wants 
innovation, it has to be protected or people stop innovating, 
because it just gets stolen. To the extent that you can help to 
improve IP standards around the world, that is absolutely 
wonderful for any company that is trying to innovate.
    Senator Hatch. Well, thank you.
    Mr. Cohen, I respect you for your advocacy on behalf of 
your members, but I just want to mention a few things to you.
    One of my really dear friends, in the early part of my 
service here in the Senate, was none other than Irving Brown, 
who was the international vice president of the AFL-CIO and, of 
course, the head of our tripartite negotiators at the ILO in 
Geneva, Switzerland. In fact, at one time, he asked that I come 
over and help him with a particular problem that could have 
resulted in the United States leaving the ILO.
    In all my discussions with Irving--and I used to stop in 
Paris, and we would get together. We had a very close 
relationship, and I had nothing but great respect for him. I 
thought he was one of the greatest people I ever met.
    But he seemed to appreciate the importance of international 
trade in creating jobs in America, and I think Mr. Cote would 
certainly agree that this is a way of creating jobs, not 
hurting jobs. Naturally, some jobs do go, but by and large, it 
is much better for us.
    I do not see anybody there at the AFL-CIO today of Mr. 
Brown's caliber. Of course, he was unique, there is no question 
about that, and one of the truly great people, and yet hardly 
anybody in America knows anything about him. But he actually 
headed our tripartite delegation over in Geneva, Switzerland, 
at the ILO, the largest U.N.-affiliated organization, and 
everybody respected him. Our tripartite delegation consisted of 
business, management, and government.
    This international vice president of the AFL-CIO, who saved 
Europe from communism, like I said, was one of the greatest men 
who ever lived. It seemed to me he was pretty solidly in 
support of really good trade agreements.
    You are a very intelligent man. Why is it that the unions 
cannot see that there are a lot of high-paid jobs that come 
from really effective international trade?
    Mr. Cohen. So, we support global trade, number one, and our 
own union is--most of our members are high-tech and work in a 
global economy----
    Senator Hatch. Right.
    Mr. Cohen [continuing]. Every single day. I think the 
question is, what is the platform that we work off of? And, 
again, I speak not only for labor in this case, but a broader 
group of environmental and consumer groups. And we are quite 
concerned about the platform.
    So we need some version of fast-track authority, but we 
need to make the standards that you spoke of, ILO standards, 
for example, part of our standards. When we go to look at a----
    Senator Hatch. But even Irving Brown knew that we could not 
sign on to the conventions that the Soviet Union did all the 
time, but never lived up to, because we would have to live up 
to them, and it would throw a lot----
    Mr. Cohen. For example, on TTIP, which this would also 
effect, every member of the E.U. has adopted Convention 97. And 
the conventions on freedom of association and child labor are 
never considered here in this body, and we are saying that 
those are the global standards.
    Senator Hatch. But is that a reason for rejecting this 
bill?
    Mr. Cohen. It is a reason to say--excuse me for 
interrupting. It is a reason to say that because, apparently, 
those require a two-thirds vote, that we can put those 
standards in fast-track and say that we support child labor 
laws as a global standard, we support the global environmental 
standards as a basis of the trade deals, and we support freedom 
of association as a basis for these trade agreements, and that 
that is enforceable as opposed to saying it is up to each 
nation to figure it out.
    We are just saying those should be part of fast-track 
authority--and the currency manipulation standards--and that 
they should be enforceable in the same way that a Honeywell can 
go and enforce the standards in a TPP.
    So we do not really disagree, except that the standards, in 
our view, should be part of the fast-track authority.
    Senator Hatch. My time is up, Mr. Chairman. Thank you very 
much.
    The Chairman. Thank you, Senator.
    Senator Carper?
    Senator Carper. Thanks, Mr. Chairman.
    I want to really thank our friends, our witnesses from 
across the country, for being here, for the work that you do 
and the leadership that you provide, not only in your own 
businesses or your own union, but really for our country.
    I am going to ask--I have heard Mr. Cohen speak any number 
of times, very convincingly, compellingly. I aspire to be more 
like you in the way that I speak.
    But I am going to ask our other three witnesses--I am going 
to make a statement, and then I want to ask our other three 
witnesses to reflect on what we just heard him say and to see 
where you think there might be some areas for agreement. I 
think this is an important issue for us to push forward. We 
need trade. We need free, fair trade, and our economies grow 
when we have that free and fair trade. But I just want you to 
reflect on what he said and see where there might be some area 
for consensus.
    While you are thinking about that, I think I have shared 
this story once maybe with Mr. Cote, and it goes back--this is 
12, 13, 14 years ago--to the White House with President 
Clinton, Vice President Gore, the President's cabinet, and 50 
Governors from all over the country.
    I was privileged to be the chairman of the National 
Governors Association at the time. The President spoke, and 
then we had an opportunity just to have a conversation, and it 
was my job to call in people to ask questions.
    I asked the first question, and the question I asked of 
President Clinton was, I said, ``Mr. President, over here to 
your right is Mel Carnahan from Missouri. He is going to run 
for the Senate next year,'' being 2000. I said, ``I am going to 
run for the Senate next year. We are both Democrats. One of the 
issues that will be raised with us is how we feel about NAFTA. 
How do you feel about NAFTA?'' And I said, ``Why should we 
support that?''
    And Bill Clinton, as you know, he is a pretty good 
communicator too. And he smiled, and he said--he went into his 
``ah shucks'' mode, and he said, ``Well, Tom,'' he said, ``You 
know, in Arkansas, we raise chickens, and in Delaware you raise 
chickens.'' And he said, ``There are a lot of countries around 
that don't want to let us sell our chickens to them, and we 
would like to sell our chickens to those people.''
    He said, ``We let them sell their stuff to us. We have 
forever. But there are countries around the world that put up 
these tariff barriers, these non-tariff barriers.'' And he 
said, ``The idea behind a free trade agreement is not so much 
to let other countries sell their goods and services to us; 
they're already doing it.'' He said, ``The idea behind it is 
that we want to sell more of our stuff to them and to get them 
to take down their barriers, whether they are tariff barriers 
or non-tariff barriers.''
    I have never forgotten that conversation. Another thing I 
will not forget soon is a visit I had last Monday to Detroit 
with Debbie Stabenow. And it was the North American 
International Auto Show. I call it the Detroit Auto Show.
    If anybody has questions about whether or not the American 
auto industry is back, they are back. The top truck of the 
year, GM Silverado; top car of the year, Chevrolet Corvette. I 
mean, we are rolling, up from about 10 million units to 16 
million unit sales this year, record profits, profit-sharing is 
up, as you probably heard.
    But we still have problems, and one of the problems we have 
is South Korea. Last year, they sold over 500,000 cars, trucks, 
and vans here. We sold fewer than 5,000 there.
    In the negotiations on the Trans-Pacific Partnership that 
are underway right now, one of our negotiating partners is 
Japan. Last year, God only knows how many cars, trucks, and 
vans they sold here. It was a lot. We sold just a fraction of 
that over there.
    They are still able to sell their stuff to us. We are not 
able to sell our stuff to them. And my hope is--with the South 
Korea free trade agreement which we negotiated, supported by 
the UAW, as I recall, the idea was to be able to get our stuff 
sold in those markets, to open up those markets.
    Mr. Cote, just, if you can, give us a reflection on what 
Mr. Cohen has said that might help us find some consensus here.
    Mr. Cote. I see this TPA bill as an opportunity for us to 
raise standards around the world. So whether it is work 
standards, environmental standards, IP standards, this is an 
opportunity for us to engage and raise standards around the 
world and, at the same time, reduce the tariff barriers that we 
do confront. And I think Elena and Jim did a nice job of 
describing that.
    In any of these sort of discussions, it is not like we can 
unilaterally impose whatever it is that we want to do. The 
other side has cards also, and we have to deal with the world 
as it is, not with how we might wish it was. This is an 
important time for us to be thinking about how we work together 
to achieve an increase in standards around the world while 
reducing those tariff barriers.
    There is an old phrase that I like to use for a lot of 
things that says, we cannot let the perfect be the enemy of the 
good. And I think, as I take a look at what has been 
accomplished in this TPA, it is pretty substantial in terms of 
starting to advance standards around the world to more fairly 
level the playing field that all of us have to deal with.
    So I think it does a very good job of doing that and 
considers both sides of the argument.
    Mr. Allen. My comment would be that I represent food, 
apples, and there is nobody in the world that grows food as 
well as we do in the United States. That is why we are the 
number-one ag exporter.
    Senator Carper. No one eats as well as we do, either, or as 
much of it. [Laughter.]
    Mr. Allen. That is true. And we grow it----
    Senator Carper. In fact, we would be better off if we ate 
more apples and maybe used our Apple devices a little less.
    Mr. Allen. That certainly works for me.
    Senator Hatch. We are all going to eat chicken, I will tell 
you that. [Laughter.]
    Mr. Allen. But with that in mind, we grow the safest food 
in the world, and I think that in itself will help raise the 
standards as we negotiate these agreements and get into new 
markets. Foreign products will not be able to come into this 
country if they do not meet our standards. And the new Food 
Safety Modernization Act that is going to be in force soon, 
that is going to make sure that happens. So I think, on food, 
that would be my response.
    Ms. Stegemann. I think that is a great question. And I 
agree with Mr. Cohen on certain points, that we have to be 
mindful of what kind of standards we are embracing and messages 
we are sending. But, as my colleagues have pointed out--and I 
think Senator Baucus has alluded to some of that in one of his 
questions--is this an opportunity for America to show 
leadership to the world in terms of standards? I think the 
answer is ``yes.''
    As I reflect on some of our activities internationally, the 
fact that we have very high internal, almost self-imposed 
standards on how we build our products, how we comply with 
regulatory requirements around the world, in a way, we are 
creating barriers for other companies from overseas that are 
not willing to hold themselves to the same standards, and that 
is reflected in their products. Once you start using them, you 
can tell that they are just not as well-made. They are not as 
well thought-out. They fall apart. They may be unsafe to use.
    So, again, I think it is an opportunity for us to show 
leadership and to set very high standards for the rest of the 
world to follow.
    Senator Carper. My time has expired. Thank you all very, 
very much.
    The Chairman. Thank you very much, Senator.
    Senator Grassley?
    Senator Grassley. Thank you, Mr. Chairman.
    Thank you, Mr. Allen, for being a voice for agriculture 
here. There is not a lot of voice for agriculture in 
Washington, and we need more of it.
    I noticed in your testimony that you mentioned the sanitary 
and phytosanitary issues that American agriculture products 
sometimes face unfairly in foreign countries. Are you satisfied 
with the provisions in the base text of the TPA bill on 
sanitary and phytosanitary issues?
    Mr. Allen. I do not know if I can answer. I am not sure if 
I understand the base text at this point in time, but I would 
be happy to look at it.
    Senator Grassley. Well then, why don't you answer that in 
writing for me? Would you, please?
    Mr. Allen. Sure. Absolutely.
    Senator Grassley. Thank you.
    And I would like to ask Ms. Stegemann--and I thank you, 
also, for being here. Your testimony that I read--I was 
impressed with the success you have had taking NuStep products 
into the international market and doing it so quickly.
    You ended your testimony by stressing that trade agreements 
are not worth the paper they are written on if they are not 
enforced. I would like to have you give me a lot of examples, 
but I have a follow-up. I would like an example or two where 
you think that is not the case.
    But the most important part of my question is, are there 
specific areas that you are watching closely in the development 
of the TPP and TTIP agreements that you believe could have 
enforcement concerns?
    Ms. Stegemann. I thank you for the question, Senator 
Grassley. I would like to take this opportunity to say that one 
of the big concerns for us as a small company is intellectual 
property.
    I did mention that we are not a high-tech company, but at 
the same time, we have invested a lot of resources, time, and 
money to create a product that is very unique. It is a niche 
product. In fact, many of the countries where we have entered, 
the new markets that we have brought our product to, it is a 
new product category. So we are kind of leading in this health 
care segment, and a lot of people are beginning to take notice 
and are realizing that we have created a very attractive 
business segment for ourselves internationally.
    But being a small company, we do not have an in-house legal 
team, certainly not anybody who is an expert in international 
law. So we rely on our government to negotiate for us trade 
agreements that do a very good job of protecting us in the IP 
area.
    Senator Grassley. I think you are telling me that as far as 
these two negotiations going on, TPP and TTIP, you don't have 
any particular enforcement concerns at this time. Is that 
right? I mean the way that it is being negotiated.
    Ms. Stegemann. Correct.
    Senator Grassley. I would like to ask any or all of you my 
last question. And the chairman touched on this a little bit, 
but it is a new concern to me that has not been so much of a 
concern in previous TPA debates, and that is currency.
    The bill contains provisions related to currency 
manipulation for the first time. Like many of my colleagues, I 
believe this is an extremely important issue, and trade 
agreements might be one of the best means that we have of 
getting results.
    All of you represent different industries, but I am curious 
how important each of you believes addressing currency 
manipulation is, for your specific industry. Is it a top issue, 
is it part of the top five issues, or maybe it is not a worry 
to you at all?
    I would just like your opinion on that.
    Mr. Cote. Sure. With 54 percent of our sales outside the 
U.S., currency is something that obviously has an effect on us 
generally. And I would say I am always in favor of a more level 
playing field, no matter what it is we are dealing with.
    But I would also have to say that the whole issue of 
currency manipulation has not really affected any of our 
decisions as a company or affected our results in any way. So 
it is not even a top 10 concern for me.
    Senator Grassley. Mr. Allen?
    Mr. Allen. Again, I am not a finance expert as you folks 
are.
    Senator Grassley. Then I will give you an opportunity to 
answer in writing.
    Mr. Allen. All right. That would be fine.
    Senator Grassley. Ms. Stegemann?
    Ms. Stegemann. I would really echo the comments of Mr. 
Cote. While it is definitely a consideration--we understand 
that currency fluctuations can impact us either up or down, 
good or bad--overall, our approach is, we want to be able to 
export our products. That is our number-one priority. In my 
experience, the effects of currency fluctuations kind of even 
themselves out over time. Sometimes you are in the negative, 
sometimes you are in the positive.
    So, if you take a long-term approach to exporting, your 
number-one priority is to be able to participate in the 
markets, and the currency stuff, you just kind of deal with it 
as it comes.
    Senator Grassley. Mr. Cohen?
    Mr. Cohen. I would say it is a huge consideration, has huge 
consequences in terms of jobs, where production occurs, the 
exporting of environmental issues to some other nation; we put 
it way at the top. The key is that it has to be enforceable 
with major consequences.
    I think it is good that it is mentioned in this 
legislation, but we believe the consequences of it have to be 
enforceable in the same way that any other provision of a trade 
agreement would be enforced.
    Senator Grassley. Thank you, Mr. Chairman. And thank you, 
panel.
    The Chairman. Thank you, Senator.
    Senator Thune, you are next.
    Senator Thune. Thank you, Mr. Chairman. And thank you all 
for being here today. I appreciate the opportunity to hear from 
all of you about the importance of trade and the importance of 
TPA.
    I strongly support the push to get Trade Promotion 
Authority enacted as soon as possible. There are so many 
American manufacturers and farmers and service providers that 
can access and benefit from fast-growing economies around the 
world.
    TPA, at its core, is about building new trade relationships 
in a world where 95 percent of the population lives outside the 
United States and 80 percent of the purchasing power is outside 
the United States, and I use my own State of South Dakota as an 
example. Twenty years ago, 11 percent of the jobs in my State 
were related to exports and to trade, and now that is 22 
percent. So it has literally doubled. One in five South Dakota 
jobs depends on international trade.
    So you consider a State like mine, which has a small 
population, we ranked 13th in terms of agricultural exports--
and it is about $2 billion a year just in oil, seeds, and 
grain. So I see this as an opportunity to open even more market 
opportunities to our products and to grow those numbers, and I 
think this debate is long overdue. My only regret is that it 
has taken this long to get here.
    Every President literally since Franklin Roosevelt has had 
this authority, and I am glad that President Obama has chosen 
to request it, even though it has, unfortunately, in my view, 
been delayed now for 4 years. So, it is time to get it done.
    I wanted to mention one thing, and I guess I would direct 
this to you, Mr. Cote. One of the most important benefits of 
the TPA legislation that has been introduced by the chairman 
and Senator Hatch is the issue, I think, of digital trade. Last 
December, Senator Wyden and I introduced the Digital Trade Act, 
which modernizes, basically, our trade laws to reflect the 
Internet-enabled world in which we now live and do business.
    So I am very pleased that this TPA legislation that we are 
discussing today includes a robust section on digital trade, 
with provisions addressing nearly all of the issues that are 
included in my bill.
    I will just say, by way of example, that the TPA bill seeks 
to prohibit unjustified barriers to the free flow of data 
across borders, as well as forced localization policies that 
are designed to favor foreign businesses over U.S. businesses 
by compelling those businesses to use local infrastructure, 
such as data storage, Internet, or e-mail services.
    So I would say, just to you, Mr. Cote, as someone who is a 
CEO of a global company, can you comment on how important it is 
that we have provisions in our trade agreements that put 
American businesses on a level playing field as it relates to 
local businesses in foreign markets?
    Mr. Cote. In general, I would have to say I am always in 
favor of a more level playing field so that we can compete 
effectively around the world.
    I am not completely conversant with the details of what you 
described in the bill, but I would say that I am in favor of 
free flow, generally, whether it is goods, services, or digital 
trade, on a level playing field, because that will increase 
trade and, I think, benefit everybody.
    Senator Thune. Thanks.
    Mr. Allen--and I assume my colleague from Iowa, Senator 
Grassley, has probably already covered this to some extent--but 
in your testimony, you discuss barriers that are facing U.S. 
agriculture in foreign markets, such as unscientific sanitary 
and phytosanitary measures, or what we call SPS measures.
    As you may know, the TPA legislation includes provisions to 
ensure that SPS commitments by our trading partners will be 
enforceable, binding, and subject to effective dispute 
settlement. This is especially important in the context of 
trade agreements where our trading partners make commitments 
that go beyond WTO rules.
    So, could you just comment on this particular issue and how 
important it is that we have binding and enforceable rules to 
prevent unscientific barriers to American agriculture?
    Mr. Allen. It is absolutely important. We run into this 
scenario often in the apple industry based on insects and 
pests. We have an ongoing situation right now with Israel, 
which is a great trading partner for the United States and, 
specifically, New York State with apples, and we have been 
working under a protocol that has been accepted and documented, 
and research has proved it for decades. Yet, most recently, 
they have tried to change the protocol to make it much more 
difficult.
    I think under a trade agreement that was negotiated 
properly, we would avoid that, because we feel that they are 
using that as a barrier, because there is not a lot of data to 
reinforce the reasoning behind their request.
    Senator Thune. Just very quickly, anybody who chooses to 
comment on this, maybe Mr. Cote. The three trade agreements 
that we got in 2011 were really important. There was a big push 
for a Russia PNTR in 2012. In both cases, it took the active 
involvement of the White House. And it has been pointed out 
that the trade rep is not here today, but could you just 
comment on how important White House involvement is going to be 
to enacting TPA?
    This is not something, obviously, that Congress, in my 
view, can do without active engagement from the executive 
branch. Would you care to comment on that?
    Mr. Cote. I would have to agree with you. But the executive 
branch, along with the Congress, is going to have to work 
together to get this done, and I think that is why the USTR has 
been very much involved in trying to get something done here, 
and we should. Everybody is going to have to work together.
    The Chairman. Thank you, Senator, very much.
    Senator Thune. Mr. Chairman, I would say I hope they lean 
into it, and I really wish we had a trade rep here today. Thank 
you.
    The Chairman. Thank you, Senator.
    Senator Cardin?
    Senator Cardin. Thank you, Mr. Chairman.
    I want to agree with Senator Thune. This is a good first 
step, this hearing on Trade Promotion Authority, but we do need 
to hear from the administration, and we need to have them here.
    Let me make, first, a couple of comments. I want to ask a 
question about scope here.
    Trade is critically important. We are in a global economy. 
We need to participate in trade. It is impossible for Congress 
to negotiate trade agreements. Trade Promotion Authority is a 
reasonable request.
    But there are two areas here that need to be answered that 
a lot of us are uncomfortable with at this stage. One is the 
role that Congress plays, because we are delegating our 
authority. We have the authority, and we are giving up our 
rights to be able to make specific changes, and it is very 
important that there is a close working consultation process 
and that we do not get off track, and Senator Brown is going to 
be talking, I am sure, more about that. He has been our leader 
and is trying to bring us together on a reasonable proposal 
here. Times have changed, and I think it is important that we 
have a clear role that we play with the administration during 
trade agreements.
    The second is the scope of the expectations. And I have 
been in Congress long enough to see the resistance to expanding 
the scope. There was strong resistance for us dealing with 
labor and environment within a trade agreement, Mr. Chairman, 
and we finally got that changed, and now I think it is beyond 
question that we should have at least ILO standards in the 
countries that we deal with and that there should be 
enforceable provisions for labor and environment.
    But I raised the issue of, when we started, it was mostly 
tariffs. Then we got into non-tariff issues, such as 
intellectual property, and we now understand that labor and 
environment standards are important. Why? Because America has 
strong standards.
    I raise the issue that we need to do a better job on good 
governance. The countries that we are now entering into trade 
agreements with are countries that do not have good governance, 
which puts American companies at a strong disadvantage.
    And I appreciate the fact that the chairman's bill mentions 
corruption and is trying to deal with corruption. I think we 
have to be bolder than that. We have been bold enough to 
include ILO in the objectives of our trade agreements. There 
are international human rights conventions adopted by the U.N. 
that deal with protecting the rights of citizens from being 
arbitrarily arrested, and the right of privacy, and those types 
of issues that are fundamental.
    So I would like to see support from particularly the 
business community to fight on behalf of American companies for 
a level playing field and say, let us be bold. Let us use trade 
as an opportunity to advance good governance in the countries 
where we want to see more open markets.
    So can I get your help to expand the scope of TPA to 
include those types of issues so that American companies can 
have a more level playing field, so at least our trade 
negotiators can attempt to use trade as leverage to improve 
good governance, which is critically important if we are going 
to have open markets?
    I see everybody nodding ``yes.'' Mr. Chairman, I have full 
support. So when I offer the amendment I will be able to----
    Mr. Cote. My nod meant I was listening. I would have to 
say, at the end of the day, I do not know that we can use trade 
as a weapon overall in terms of how we get something done, just 
because 80 percent of trade is occurring outside the U.S.
    I am really concerned sometimes about that. I have kind of 
likened this to the elephant who is taking a walk to go get a 
drink of water, and we kind of look at it and go, ``Gee let's 
put this on the elephant.'' Well, you can get to a point where 
you put so much on the elephant, he never makes it to the 
water.
    I am not advocating against anything here. I would just be 
careful that if we put too much on something, we can kill it 
before it gets there. And, at the end of the day, I am very 
supportive of a level playing field, and I think corruption is 
one of the things that kills countries.
    Senator Cardin. And all I am asking is that we try, that we 
make that part of our objectives.
    But I will point out that we heard similar arguments when 
the United States took the leadership to use trade to bring 
down the Apartheid government in South Africa. And it worked. 
Other countries followed our leadership. And I think the same 
thing is true in other areas of good governance, including 
anticorruption, which I think is critically important to trade. 
And I thank you for that.
    The Chairman. Thank you, Senator.
    Senator Toomey, you are next.
    Senator Toomey. Thank you very much, Mr. Chairman. And I 
just want to thank you directly--and Senator Hatch and Chairman 
Camp--for producing, I think, a very good product here. And I 
appreciate your having this hearing.
    I want to express my disappointment that the trade rep 
could not be here, but I know he has indicated his support for 
Trade Promotion Authority, and I do very much hope that the 
President will aggressively engage on this, because, as the 
chairman has pointed out, this is our lift. It is always 
difficult politically to get this done, and we know that the 
support with our friends on the other side is at a level which 
could use some encouragement, I think.
    So I hope the President will engage. I am thrilled that the 
Commerce Secretary, Secretary Pritzker, has been a very, very 
forceful, outspoken proponent of expanding trade, and I think 
that is a very encouraging sign.
    Before I get to a specific question, I think it is 
important to underscore a macro point here, and that is, over 
the last 100 years, America's global leadership in expanding 
trade and opening markets has been profoundly and enormously 
beneficial for America and for the entire world.
    The result is, today we live in the freest trading 
environment in at least 100 years, maybe much longer than that. 
And the result is that countries around the world have been 
encouraged to develop market economies, rule of law, and more 
democratic societies. As a result of those things, we have 
lifted literally billions of people out of poverty, created 
opportunity, raised standards of living, and nowhere more than 
in the United States of America, where we have benefitted 
enormously from this.
    One of the ways that we benefit that we sometimes overlook 
is, as we lower barriers to trade and lower the taxes that we 
impose on imports, we save our constituents, the consumers, 
money. So the single mom who is struggling to raise her kids 
and make ends meet benefits when she can go to a store and buy 
a product at a lower cost. That is helpful to her, and that is 
a direct result of negotiating trade agreements that lower 
tariffs. She also has more choices in the goods and services 
that are available to her. And there is no question that it 
results directly in more exports. We have seen that time and 
again, and that means more jobs.
    In Pennsylvania, 20 percent of our manufacturing jobs are 
tied directly to trade, and they are some of the best jobs we 
have in our country and in our State, whether it is making 
locomotives in the area at General Electric, or the chemicals 
and gases at Air Products, or the technology at Westinghouse, 
these are some of the best-paying, most sought-after jobs we 
have. And if we lower barriers to trade elsewhere, we will have 
more of this growth.
    But that is my view of the history. I would like to pose my 
first question to Mr. Cote, and it is simply this: all else 
being equal, if we pass Trade Promotion Authority and that 
leads to completion of some of the big trade agreements that 
are currently under negotiation, all else being equal, do you 
think that would tend to result in you hiring more workers or 
fewer workers at your company?
    Mr. Cote. Well, first of all, I agree with the statements 
that you made up front, and I do think trade has been--and 
economics have been--a force for good, not just in the U.S., 
but in the world. And at the end of the day, to the extent that 
our sales increased for any reason, whether it is trade or 
something else, that is what causes me to add more employees. 
So the answer to that would be ``yes.''
    I think you would also get another affect, and that is, 
this has the opportunity to increase foreign direct investment 
in the U.S., because when foreign companies can export more 
easily out of the biggest market in the world, with the energy 
advantage that we already have and the rule of law that you 
mentioned, I think it helps to encourage FDI into the country.
    Senator Toomey. I also think that it is very important, in 
the context of these agreements--and I appreciate that several 
of the witnesses have mentioned the importance of protection 
for intellectual property. That is absolutely essential. It is 
our great competitive advantage in the entire world, and it has 
to be an important part of all of our trade agreements.
    I am particularly concerned that the pharmaceutical 
industry be able to sell products that are enormously expensive 
to bring to market. The only way that model works and we get 
new generations of life-saving drugs, is if we do protect that.
    My last question is for Mr. Allen. Pennsylvania ranks 
fourth in apple production and apple exports. Of course, our 
apples are the best, but we rank fourth in total.
    We sent a letter, several of my colleagues and I, because 
there has been a significant decline in apple exports to Europe 
recently. If we are able to complete the trade agreement with 
the Europeans that is under consideration, do you think that 
would likely reverse that or at least stop that decline and 
perhaps turn that around so that we could start exporting more 
apples to Europe?
    Mr. Allen. That is a very difficult question. 
Unfortunately, the European issue goes much deeper to Minimal 
Risk Levels and pesticide levels on certain chemicals. The 
European Union has very strict MRL levels, and a lot of them 
are very difficult to match. There is a material that we use 
extensively that, as of February 1st, we will not be able to 
ship into the country. And it is a proven safe material used in 
the United States.
    So unless the TPA addresses the MRL levels, it probably 
will not help it.
    Senator Toomey. Well, maybe that is the kind of thing that 
the negotiations ought to address. I appreciate that.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Nelson?
    Senator Nelson. I had a conversation last year with the 
chief negotiator in Brussels for the European Union, and, at 
the time, he was cautiously optimistic that we could get an 
agreement.
    Reflect, any one of you, if you will, on the enormity of 
the importance of a European-U.S. agreement that would cover, 
in effect, 45 percent of all the trade in the entire world and 
what that means to the U.S.
    Mr. Cohen. I would say that the negotiations with Europe 
are incredibly important. The question is, from the front end, 
can we state our objectives, frankly, to go up to the standards 
of the European Union on issues like the environment and 
workers' rights and labor standards?
    So we would see it as an opportunity, actually, to set 
higher standards, if that is what our goals and objectives are, 
compared to TPP, where, if there are not those same kinds of 
standards, American workers will compete with an average wage 
in Vietnam of 75 cents an hour, no right of association. The 
Vietnamese government told our staff, the negotiators, ``We 
have a communist government. We don't need labor standards.''
    The question is, what kind of a democracy do we have, and 
do we move to higher standards, which still exist in the world 
now, or do we unravel what we have?
    Senator Nelson. Is there any other comment on that, just 
briefly? I have two other things I want to----
    Mr. Cote. As you might imagine, I think it is a terrific 
thing for us to be doing. The two biggest trading blocs in the 
world reducing barriers and increasing the free flow of trade 
is, I think, a good thing for both of those trading blocs.
    Senator Nelson. Mr. Allen, you represent apples. I 
represent oranges. This is one of the few times that you can 
compare apples to oranges.
    Do you want to comment on all fruit, how it will be 
advantaged with such an agreement?
    Mr. Allen. Again, it is quite specific. Actually, Europe is 
a pretty large apple-producing group of their own. So the apple 
exports from the U.S. into Europe are not as high as many, many 
other countries.
    We compete against their homegrown product, and sometimes 
that is rather difficult. And, again, I mentioned the E.U. has 
a very strict level of MRLs. It is becoming more and more of an 
issue. And perhaps the reason those levels are what they are is 
because they want to put that up as a barrier, because they 
certainly grow a lot of apples on their own.
    By the way, England, the U.K., is a little different, 
because that is a good trading partner with the United States, 
and especially New York, on apples. But we face the same issues 
in the U.K. as we do with the E.U.
    Senator Nelson. Mr. Cote, you represent an aerospace 
business. I have some passing interest in aerospace. Talk about 
the future of aerospace with regard to TPA.
    Mr. Cote. Aerospace is one of those industries that is 
going to continue to grow, I think, for a long time to come, 
because the world is becoming more wealthy on a per capita 
basis, and, as it does, more people travel. Businesses become 
more global. Families just become more dispersed. So that is 
going to continue to grow.
    To the extent that we can compete better because we can be 
in every single country, that will add to the capability in 
which I would say the U.S. far exceeds the rest of the world, 
and we would like to keep it that way. And our ability to be 
able to sell into these countries with the reduced barriers 
would be a wonderful thing for the aerospace industry.
    Senator Nelson. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Brown?
    Senator Brown. Thank you, Mr. Chairman.
    Often, when we debate trade agreements, history is 
recalled, and revisionist history seems to come into play.
    Just a reminder, as my colleagues love to cite Smoot-Hawley 
and how that caused the Depression--and Senator Hatch did not 
exactly say that, I understand. But keep in mind, when Smoot-
Hawley was passed, we had a trade surplus in this country. And 
that is what angered the world so much, that we already were in 
a dominant position, then we passed Smoot-Hawley, not that we 
had the biggest trade deficit in the history of the world and 
then did something.
    This is for Mr. Cote, Mr. Allen, and Ms. Stegemann. If you 
would answer, then I will have another question for Mr. Cohen.
    The country of Australia, with which we have a bilateral 
trade agreement, passed a strong public health anti-tobacco 
law. Philip Morris, a company domiciled here but having, I 
assume, subsidiaries in different places, sued the Australian 
government, sued a government, a locally controlled, sovereign 
state, democratically elected, that passed a strong public 
health law to protect their citizens, particularly children, 
against tobacco.
    They went all the way to the Australian Supreme Court. The 
government of Australia spent a lot of money defending this 
against this large, rather profitable tobacco company. 
Ultimately, the Australian government won in Australian courts. 
But then, after the Supreme Court upheld that Australian public 
health law, Philip Morris then sued the Australian government 
pursuant to the investment treaty that they had with Hong Kong.
    Now, here is my question. Since NAFTA, we have had in these 
agreements something called investor state, the first time I 
believe ever in trade policy where a company can sue a foreign 
government. The foreign government's democratically attained 
rules or regulations--a company from outside sues them to 
overturn what that sovereign country has done.
    My question is this, to the three of you: do we want this 
kind of power where a company can go into another country and 
sue that country on a food safety or tobacco protection or a 
consumer law or a public health law like that?
    Are those provisions we want, both for companies in the 
U.S. to sue other countries or companies in other countries to 
sue us to weaken these laws that are democratically attained 
rules and regulations?
    Mr. Cote, if you would answer that first.
    Mr. Cote. I would say, even though I am not a lawyer, I 
generally do not mind opining on the law. But this time, that 
is a level of legal complexity that is beyond my capability.
    Senator Brown. Well, it is really simple. It is not 
complex. Should a company like yours have the right to go into 
Guatemala and undertake litigation to weaken their public 
health laws, when, first of all, Guatemala probably does not 
have a whole lot of money to defend these kinds of rules? 
Should that be part of our international trade regiment 
generally?
    Mr. Cote. My apologies, but I just do not have an answer. I 
am not knowledgeable enough to even comment.
    Senator Brown. Could you have someone in your corporation 
who--I assume you have a legal team that could answer that, 
then, please.
    Mr. Cote. Unfortunately, I have to have a very good legal 
team.
    Senator Brown. And I understand that.
    Mr. Allen?
    Mr. Allen. My gut feeling would be ``no.'' That is only my 
personal opinion.
    Ms. Stegemann?
    Ms. Stegemann. Unfortunately, I do not have any experience 
with these matters, legal or tobacco. But you mentioned 
Australia, and I was just kind of getting excited because it is 
a market that we are beginning to get established in. It is a 
great opportunity. I would love to go and visit our distributor 
there.
    They actually have shown a lot of leadership in health care 
for seniors, and that is why it is an important market for us. 
They understand why it is important for people of all physical 
abilities or disabilities to exercise, and it is a very 
attractive market for us, and we are happy that we have a free 
trade agreement with them.
    Senator Brown. You are a great advocate for your business, 
and thank you for that.
    Mr. Cohen, I have written two letters to Ambassador Froman, 
spoken to him personally, spoken to the President's Chief of 
Staff about this, regarding my concerns related to tobacco and 
the Trans-Pacific Partnership. I am concerned, from editorials 
written in the New York Times to the article you cited and the 
environmental issues, that TPP may allow private companies to 
undertake legal action against common-sense tobacco regulations 
through investor state.
    Given past agreements, do you think the U.S. is able to 
effectively address labor, environmental, and public health 
standards in trade agreements? What standards do you think we 
need included, and how do we enforce them?
    Mr. Cohen. Well, again, there is a long answer to that, but 
the short answer is, we absolutely need them. I think it is 
clear what many of those standards are. We have covered many of 
them. There are key global standards on the environment, on 
workers' rights, on investor state. And, if we are not careful, 
we are going to unravel all of those, not only in our own 
Nation, where, frankly, we are sinking on every one of those 
instead of rising up, but it will be the reverse of what we 
heard here, because we will help unravel them in the rest of 
the world as well, because of the so-called competition.
    We have to level that by looking at what is most important, 
what is most important for our children, what is most important 
for children in other nations as well. I think the examples you 
gave are right on target.
    And, no, corporations should not have the right to sue 
governments that provide consumer protection. Unfortunately, 
TPP and even this Trade Promotion Authority will not stop that, 
and TPP will actually encourage it by leveling up.
    I cannot help but say one more thing. The multinational 
corporation, like a Honeywell, can produce anywhere, and their 
challenge is to produce at the highest rate of profit. This is 
nothing about Honeywell. This is about any of them. And so, if 
we do not set standards, those corporations, in fact, can 
produce in Vietnam at a minimum wage of 25 cents an hour and 
actually make higher profits.
    So, if we do not look at those standards and have them as a 
basis for trade, we will continue to run downhill, as we have 
done since--and before even--but particularly since NAFTA, and 
the pay of all workers in this country is affected, not just 
those in tradable sectors, and the living standards of all of 
us are affected. And the environment--we have one atmosphere, 
and we have to move from the micro--yes, very important--and 
look at the macro: how are we all affected, what is the net 
result, as you said, of the worst trade deficit that the world 
has ever seen, and, actually, how does it affect the budget 
deficit? It is quite concrete. Yet, we seem to worry about the 
budget deficit and never the trade deficit.
    So we would say the trade deficit needs to be thought 
through as well when we are doing trade deals.
    The Chairman. Thank you, Senator.
    Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman.
    The Chairman. Actually, Senator Casey was in earlier.
    Senator Cantwell. Yes. Thank you.
    The Chairman. Senator Casey, you are next.
    Senator Casey. Thank you, Mr. Chairman.
    Senator Cantwell, thank you very much for allowing the 
rules to be enforced. I did not realize that that was the case, 
and I am grateful.
    How about if I give you like 3 more minutes of my time? 
Would that work?
    Senator Cantwell. Take as much time as you need.
    Senator Casey. But thanks very much. Allow me to do 
something which I try not to do, which is--I try to avoid this, 
but I do not always comply--to do a broader statement of kind 
of how I see some of these issues and then get to the 
questions. So I may be limiting my own question time by doing 
what I am about to do.
    I do not know all the panelists. I know Mr. Cohen, and I 
know Mr. Cote. But I am grateful for all of you being here 
today and for your testimony, because these are tough issues.
    Let me make a broader statement first and then get to Trade 
Promotion Authority. One of the reasons that I have a very 
substantial degree of skepticism when I approach these issues, 
trade agreements generally, Trade Promotion Authority in 
particular today, is because it seems to me, the way I view it 
and the way I view it from the perspective of what has happened 
to Pennsylvania and the country--but I will speak mostly from 
the vantage point of Pennsylvania--is we seem to get the short 
end of the stick or have gotten the short end of the stick on 
trade agreements spanning several administrations and, frankly, 
even a generation or two.
    It seems one of the reasons we get the short end of the 
stick, or our workers do, is because the United States of 
America, as I see it, does not have and has not ever had in 
recent history a trade policy. It is an area of our national 
focus where we deal with the rest of the world. It is unlike 
national defense, where there is no country in the world, 
unless they are really sleeping, that does not understand what 
our priorities are when it comes to national security. When we 
walk in the door to every meeting, every negotiation, they know 
exactly where we stand. We say we stand for freedom, we stand 
for democracy. We are going to not just fight against 
terrorism, we are going to find the terrorists before they get 
to us. So it is a very clear set of priorities.
    But on trade, we walk in the door, our negotiators, for 
years now, decades, have walked in the door and said, ``Well, 
we don't have a policy that we can tell you about,'' unlike a 
company. In Honeywell, you could recite your mission statement 
in probably 30 seconds. I will not give you that chance today, 
Dave. You know what it is.
    But we walk in the door without a policy, number one, but 
sometimes a list of concerns: environmental standards, labor 
standards, the effect on jobs, as Mr. Cohen has pointed out. 
And yet, by the end of the negotiation, we say, that stuff is 
really important to us, these concerns are really important, 
but, if we want the deal, we will get the deal, and we will get 
to those priorities later.
    It seems, without a policy that has been arrived at, all 
you have are these trade battles when a trade agreement is on 
the agenda, and there is a big debate and there is a vote held 
and then people go back to their corners, and we have not 
resolved the basic issue, which was the lack of a policy. And I 
think it is a real failing. I think is a failing of both 
parties, and I think we have to try to address that.
    Then we come to Trade Promotion Authority, and we just have 
a number of concerns that Senator Brown raised with me in a 
letter to Mr. Froman, along with Senator Cardin, Senator 
Menendez, and Senator Debbie Stabenow. I know these may have 
been alluded to earlier, but we say we are now prepared to 
support TPA, Trade Promotion Authority, legislation that 
resembles the current framework for consultations, and it goes 
on from there. So, obviously, anyone who wants to read that 
letter can see our concerns.
    Here is my question, in the 36 seconds I have left. Do you 
view that as a problem? And I will say, parenthetically, that I 
think Mr. Cohen's test or set of priorities where we measure, 
on pages 2 and 3 of his testimony, he has eight elements. I 
think we should try to arrive at some consensus. If it is not 
eight, it should be some other number.
    There is a lot we agree on, but we never seem to get to 
that foundation that will allow us to get a better result at 
the end.
    Now, we are down to ``yes'' or ``no.''
    Mr. Cohen, do you think we need a policy?
    Mr. Cohen. Yes, absolutely. I think that is really the key. 
We need a policy and clear objectives, whether those eight, as 
you said, are modified, that the American people understand, 
that are totally transparent and are the basis for Trade 
Promotion Authority and, therefore, of our negotiations, and 
that those of us who care deeply about those priorities are 
involved in a similar way as, say, a multinational corporation 
that can produce anywhere in order to meet its mission, which 
is about maximizing its profits.
    There is no harm in that. It is a question of balancing 
that against the popular and public and social priorities that 
we would have on a macro basis, looking at the history of these 
trade deficits and the devastation that you talked about, not 
just at the successes on the export side.
    Senator Casey. I know we are over time. Maybe do ``yes'' or 
``no,'' and you can supplement it certainly with written 
testimony.
    Ms. Stegemann. We just want access to the new markets, and 
we will take it from there.
    Senator Casey. Thank you.
    Mr. Allen?
    Mr. Allen. Agreed. We need policy so we can expand our 
markets.
    Senator Casey. Mr. Cote?
    Mr. Cote. I like the idea of a policy, but given that it is 
a negotiation, it is always important to recognize the group 
that we are dealing with has policies also. So there is a 
reconciliation or negotiation that has to go on to achieve the 
best for both and get a deal that benefits both.
    Senator Casey. Thanks very much. Sorry for the long 
prelude.
    The Chairman. Thank you, Senator, very much.
    Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman. I thank the 
Senator from Pennsylvania for his comments and for his asking 
us to pull up a little bit and look at this, because I think 
that is what we need to do: to look at this from a 
comprehensive perspective and try to move forward.
    So I think people have said some very interesting things.
    Mr. Cohen, you said we do need some form of a Trade 
Promotion Authority. I find that encouraging in the context of 
making sure we address all the issues.
    Obviously, Mr. Allen, I have certainly appreciated your 
focus here today on the apple industry, which employs about 
59,000 people in Washington State.
    So when I look at this issue, I think about how many 
bilateral agreements have been done in the time that we have 
not had Trade Promotion Authority. It is something like 83 
bilaterals.
    So, while we are not moving ahead on what we put on the 
table, everybody else is playing this game. It is like we are 
not even suited up. They are playing the game. And the end 
result has been that they do bilaterals and they reduce 
tariffs, which, on apples, can be as much as 10 percent. So 
China does a deal with Vietnam. The next thing you know, they 
are sending every shipment in for $2,000 to $4,000 less than 
what we are doing.
    While you can complain about that, and you can say, well, 
this agreement or that agreement will catch us up, to me, the 
real issue becomes market share, because once you start losing 
market share, once you have lost 30 percent market share, it is 
a problem. Apples may be one thing--I will say I have been to 
China, and I have definitely seen people steal the Fuji, 
Washington label and stick it on some other apple just to try 
to confuse the marketplace that somehow that quality apple is 
being produced by some other country, when it is not.
    It is a bigger issue when it comes to technology.
    So first, Mr. Allen, if you would comment on the market 
share issue and why, as these developing countries have enough 
resources to buy apples, we have to keep pace. Otherwise, we 
are just competing against a cheaper product and oftentimes an 
agreement that basically establishes the marketplace for that 
product.
    Mr. Allen. Absolutely. And I know you are aware that the 
emerging markets are where the growth is: India, Brazil, 
Russia, Asia. And one of the biggest concerns in the apple 
industry is not necessarily losing a customer in that market, 
but the concern is that the other countries are moving in and 
taking that market away because of those bilaterals.
    And we need to be equal to them, there is no question about 
it. Again, I keep going back to CAFTA, and I hope that is not a 
dirty word, but when we passed CAFTA, the Washington exports 
into that part of the world just multiplied unbelievably. And 
New York exports increased. So it was a win-win for the apple 
industry, and that is what we need in these new emerging 
markets.
    Senator Cantwell. Well, I have certainly seen that, where I 
have gone on congressional delegation trips and, while there on 
military purposes or whatever, talked to them about one of our 
products, only to find out they already have a bilateral with 
somebody. Then the first thing that the country says to me is, 
``Oh, it is really going to be tough, because we have had a 
bilateral with so-and-so or so-and-so for so many years now, 
and you are never going to beat their price or their 
infiltration to the market.''
    So it is not just that we are getting beaten on price by 
bilaterals. It is the fact that, over time, that market share 
loss will really put us behind, and it will be harder to catch 
up.
    So, Mr. Cote, when it comes to technology, it is a 
different story, because technology adoption can solidify even 
more someone's usage.
    But back to Mr. Cohen's point. To me, this issue is also 
about Trade Adjustment Authority. It is about better 
partnerships. It is about making a more robust system so that 
our workforce can be trained. I think one of the biggest 
opportunities for us on a global basis is going to be a smart-
grid technology and the adoption of more energy efficient 
policies.
    But, if Mr. Cohen is losing workers because industry will 
not even bother to retrain them using TAA or apprentice 
programs--I mean, is that not right, Mr. Cohen? Have we not 
seen, at the same time we have seen this growth in opportunity, 
a lot of companies laying off?
    How could we be laying off electric workers when the 
biggest opportunity for us is smarter electrification? So I 
guess I would like to ask Mr. Cohen and Mr. Cote, quickly, 
their thoughts on just funding more apprentice programs, 
funding more training of American workers so that we can 
capture these opportunities.
    Mr. Cohen. Just in less than 1 minute, I think that that is 
critical, but I also think we have to block the low road. So 
you had workers at a new Samsung plant in Vietnam rioting this 
week because of their conditions there. That low road has to 
get blocked. They have to have rights. Otherwise, the American 
worker competing with that situation--it is gravity, as a top 
CEO said to me. The production will go there if that low road 
is not blocked, if we do not use trade as an opportunity to 
say, on a global basis, we have to have minimum standards.
    Senator Cantwell. Mr. Cote?
    Mr. Cote. I mentioned earlier the need for a global 
competitiveness agenda for the country, and one of the 
fundamentals for that, for me, is training across the board, 
and specifically in math and science.
    If we believe that productivity comes from innovation, and 
innovation is going to continue to be significant for us, if we 
take a look and just compare ourselves with China, for example, 
in the year 2007, we graduated about 450,000 engineers. China 
graduated about a million, and that is with only about a third 
of a percent of college-age eligible kids going on to college. 
So when that equates, it will be like 500,000 engineers a year 
to their 3 million.
    We need a much bigger focus on math and science across all 
our schools, from the time that kids start in Head Start all 
the way until the time they get to high school, whether it is 
apprentice programs, how do you just do more, work with 
software. It is going to be important across the board.
    Senator Cantwell. Thank you. Thank you, Mr. Chairman.
    Senator Hatch. Mr. Chairman, can I just point out that half 
of our engineering students are foreign students? So we are 
really not producing that many engineers, and that is a big 
problem.
    The Chairman. Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman. Thank you to all 
the panelists. I was in and out, because we had other hearings 
important to New Jersey.
    Mr. Cote, thank you for being here today. Honeywell is a 
great American company. We are thrilled that it is 
headquartered in New Jersey, and I personally appreciate not 
only your corporate, but civic engagement in the State.
    Let me ask you this. One of the things I fight for on this 
committee and also as the chair of the Senate Foreign Relations 
Committee, with others in the world, is intellectual property 
rights, because it is no value to have great American ingenuity 
create a product and then have it arbitrarily and capriciously 
stolen globally and not be compensated for it.
    So do you think the intellectual property objectives, as 
delineated in the bill, would provide a type of adequate 
protection for companies like yours and other American 
companies as it relates to intellectual property?
    Mr. Cote. I cannot say I am expressly knowledgeable of 
exactly what the provisions are in the bill and what they do. 
But I would say, in general, I am very supportive of anything 
that increases IP compliance around the world.
    And, like the discussion we had on corruption, I think the 
lack of protection on IP hurts a country over time. And I can 
say that we are extremely careful about where we develop IP 
around the world, and the safer it is, the greater the chance 
that we can protect it. And we do now go to places that do not 
protect it.
    Senator Menendez. I hear from many American companies and 
many New Jersey companies, which have an enormous innovative 
capacity, about the nature of how countries, many in trade 
agreements that we have--or on WTO and others--ultimately, 
still will rather arbitrarily and capriciously go ahead and 
constantly violate intellectual property rights.
    One of the concerns that I have is, what standards do we 
create and what enforcement mechanisms do we have, because, at 
the end of the day, regardless of what agreements we enter 
into, it is only the enforcement of those agreements that makes 
them valuable. Otherwise, as with any law, there is very little 
value to the agreement if you do not really seek enforcement.
    So that is one of the things I am going to be looking at 
here, because I think the distinguished chairman has been 
nominated to be the ambassador to China. There is a place that 
is probably at the top of the list in the number of entities 
that consistently take American products and innovation and 
just violate IP left and right. So that is a huge problem.
    I want to ask--I know this has been asked in general, and I 
think your answer was a consideration as a panel--but a recent 
study by the Peterson Institute of Economics estimates that 
currency manipulation has cost between $1 million and $5 
million and increased the U.S. current account deficit by $200 
billion to $500 billion. And, given that currency manipulation 
has an impact at least as great as any provision of a trade 
agreement and that venues such as the IMF and the G-20 have 
failed to resolve this issue to date, would not any true, high 
standard, 21st-century agreement have to include some type of 
binding provision on currency manipulation to ensure that 
benefits from trade that should accrue to the United States are 
not undermined by a country's effort to artificially weaken its 
currency?
    Mr. Cohen. I would underscore that and say that currency 
manipulation in TPA, labor standards, environmental standards, 
and making it clear that our consumer rights at the Federal, 
State, and local level cannot be abridged are really the core 
for TPA, as well as the need to anticipate what are the likely 
results in terms of jobs, the standard of living, and the 
deficit itself that you mentioned for this Nation.
    Those should be the core priorities as we move forward.
    Senator Menendez. Does anyone else have a view on that?
    Mr. Cote. From my perspective, I am all in favor of a level 
playing field, in general, on everything, because I really do 
believe that with market access and a level playing field, 
American companies do a very good job of winning.
    That being said, I can say that, while I have to be 
conscious of currency, as I mentioned earlier, I would be hard-
pressed to point to a decision I have made or any results in 
the company that have been impacted by it. So it is not even on 
my, I would say, top 10 worry list.
    Senator Menendez. Maybe as an individualized company, I 
could understand that. But as a collective--when I see 1 to 5 
million jobs, U.S. jobs, and $200 billion to $500 billion lost, 
it certainly, even in this town, raises a light for me.
    Finally, Mr. Chairman, if I may.
    What is the difference between the answer you gave earlier, 
Mr. Cote, about these trade opportunities being an opportunity 
to raise the standards across the board, including on labor, 
and the position that Mr. Cohen has that, yes, we support 
trade, but there should be ILO standards. Is there a difference 
between your two views?
    Mr. Cote. Well, it sounds to me like there is not that much 
of a difference in how we are saying it, but there is probably 
a difference in terms of how far we would go to implement it, 
because I do think it is important to try to raise the 
standards around the world. But I also think it is a question 
of degree and at what point do you look at something and say, 
``This is a walkaway,'' versus, ``Okay, this is something that 
I have to work through, and this advances the world, advances 
the U.S., and this is as good as we can get at this point.''
    So I would say it is more a question of degree.
    Mr. Cohen. And I would say that, as important as it would 
be to raise standards, we are actually faced here with 
unraveling what we have done. So the race to the bottom, as I 
have said, gravity takes us there, because in an economic world 
workplace, if there are not minimum standards that are 
enforceable, that is where you lower production costs and 
create profits.
    So we must set those minimum standards, is our view. It 
does no good to have even a discussion about a higher minimum 
wage in this country to have production occur in the U.S., 
Honeywell or anything else. A decision is made. How much does 
it cost in Vietnam, and how much does it cost in Trenton or 
Camden? That does not do us any good if we are not establishing 
some kind of minimums about children doing it, about workers 
with no rights doing it.
    So we would say, quite passionately, whether it is our 
environment, our workforce, or our rights as consumers, we must 
maintain and increase those standards or they will sink into 
oblivion.
    Senator Menendez. Thank you, Mr. Chairman. That may be a 
little preview of some of the questions you might get when you 
go.
    The Chairman. I might have to leave pretty quickly. I would 
just put this out, just a reaction, because the legislation 
does include the core labor standards, and they are all 
enumerated, as you know. And it provides further that they must 
be enforced and in the same way that other provisions are 
enforced, that commercial provisions are also enforced.
    That is at a much higher level than it was in prior TPA.
    Mr. Cohen. The key would be those ILO conventions that we 
have not adopted or even discussed here, that they be as 
enforceable as anything else.
    The Chairman. They are in the agreement.
    Mr. Cohen. I think, again--I do not want to be 
disrespectful--but I think the question is, are they 
enforceable in a way that anything else in the agreement would 
be enforceable, even though we have not adopted them? That is 
the key.
    The Chairman. The provisions in the proposed legislation 
provide that they are as enforceable as any other provisions, 
which were previously more enforceable.
    Mr. Cohen. Even if we have not adopted them? So, if the 
U.S. has not adopted six of the eight core ILO standards--that 
is our concern. But I appreciate the effort, and we are happy 
to follow up.
    The Chairman. I am reminded of Dave Cote's ``you can't let 
the perfect be enemy of the good'' here, because it is a major 
advance, and I think, therefore, it should be treated as such.
    Senator Wyden?
    Senator Wyden. Thank you very much, Mr. Chairman. And I am 
glad we have you here for an additional minute, because I 
wanted to take just a minute before talking to the panel to 
acknowledge your extraordinary record on the trade issue.
    The reality is that Chairman Baucus was talking about 
global economics long before it became cool. And you held the 
position that I hold now, chairman of the Trade Subcommittee, 
and you basically moved the entire committee to focus on East 
Asia, to focus on Japan.
    And in the tradition of your great mentor, Mike Mansfield, 
you led. And what has been especially striking is, you showed a 
lot of us how to look at the trade toolbox in a creative kind 
of way, and I still recall when you brought in U2's Bono to 
help get AGOA unstuck and create economic opportunity in 
Africa.
    So your work is not going to end when you go to China. But 
I just want, as we move toward the end of this hearing, to make 
sure people are aware and take this opportunity to really 
celebrate your exceptional record and your leadership on the 
international trade issue.
    For the panel, my bottom line today is pretty 
straightforward. Democrats and Republicans need to write a TPA 
that leads to better trade agreements and, in effect, can 
expand the winner's circle in the international trade area so 
that Senator Casey's constituents in Pennsylvania do not feel 
that they are getting the short end of the stick, and the 
agreement works for, for example Oregon, where one out of six 
jobs depends on international trade, and the trade jobs often 
pay better than do the non-trade jobs because they reflect the 
higher level of productivity.
    Now, going into this challenge, we must face the reality 
that the economic landscape in 2014 is very different than in 
2002 when the last TPA was passed.
    Senator Thune talked about our work on digital goods. The 
Internet is now the shipping lane of the 21st century, and our 
workers and businesses face a whole array of new challenges, 
particularly in the rise of state-owned enterprises and 
aggressive currency manipulation. So TPA is going to have to 
reflect these changes and be written so that future trade 
agreements, particularly those with Europe and Asia, are well-
shaped.
    Now, I heard you talk to Chairman Baucus--and I apologize 
for running in and out of the room. I chair the Energy 
Committee and had some business there. And I have not heard, 
for example, your thoughts with respect to the economic 
challenges for your companies in Europe, which is a very big 
market. You touched on the challenges with Asia with Chairman 
Baucus.
    But as we close on this, if you could just highlight--and 
let us start with Europe, because I have not heard that 
mentioned. What are the big challenges there? And for those of 
you who want to pick up again on the discussion with respect to 
the challenges in Asia, I would be interested in that. And I 
think I have almost enough time to get all four of you in. And 
I feel badly, again, for being in and out this morning.
    Mr. Cote?
    Mr. Cote. When it comes to Europe, I really do think they 
are going to have a tough economy for at least another 3 years, 
because they still have major issues that they need to address.
    And I can tell you the way that we have planned in our own 
company is to assume that Europe grows about zero to 1 percent 
a year, and I think, unfortunately, that is what they are going 
to be dealing with for a while. It is difficult, but that is 
what they are going to have to deal with.
    Something like this--the agreement that we have talked 
about with Europe--would benefit both Europe and the U.S. at a 
time when both of us are lagging economically, because we are 
also planning in our own company by looking at the U.S. as 
being more of a 2.5-percent-type growth country for the next 3 
years.
    This would do something to elevate both of our economies as 
a result of that and be good for the two biggest trading blocs 
in the world.
    Senator Wyden. Very good.
    Mr. Allen? Just go right down the row.
    Mr. Allen. Thank you, Senator. Again, with different items, 
different markets, there are different situations involved. For 
the apple industry nationally, the biggest export markets are 
Mexico, Canada, Thailand, Asia, Vietnam--a very emerging 
market--and India.
    Again, the European market is not that strong because of 
their production of apples. So it is tough to answer that 
question. It is a market for us, but it is not the emerging and 
growing market as the other ones are.
    Senator Wyden. Ms. Stegemann?
    Ms. Stegemann. In Europe, we see more in terms of 
opportunities than challenges. It is a relatively new market 
for us. We are entering into a lot of northern and western 
European countries. There are great opportunities there, very 
high standards.
    Of course, I guess one of the challenges for us is being 
able to produce a product that meets very high standards for 
people who are used to having locally made goods--Germans think 
of themselves as exporters, not as importers. So to convince 
them that we know how to make a good product in the U.S. takes 
a little bit of selling.
    I would say in terms of challenges, of course tariffs come 
to mind. We manufacture a product that is expensive for us to 
make. By the time our distributor buys it from us, they have 
paid a lot for it, and then they need to make some money when 
they resell it. So, by the time it reaches the end user and 
they have paid VAT and tariffs, it becomes much more difficult 
for us to get our product into the European market in greater 
quantities.
    Senator Wyden. My time is up. Mr. Cohen?
    Mr. Cohen. I think there are great opportunities to look at 
sustainable production and trade based upon, again, leveling up 
to many European standards.
    It was fascinating to hear Chancellor Merkel, a 
conservative, talk about all renewables within 10 years. They 
have much higher labor standards than in the U.S. in terms of 
freedom of association, collective bargaining rights--
obviously, much higher standards.
    They have adopted all eight core ILO standards. So, whether 
it is environment or workers' rights, they have much higher 
standards. We need to promote those, and they need to be the 
goals we talk about in TPA.
    Senator Wyden. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Portman?
    Senator Portman. I thank the chairman. And I want to 
congratulate you and Senator Hatch and Chairman Camp and the 
administration for working together on putting together a good 
bill on Trade Promotion Authority.
    I know the White House is not here today, so I will speak 
for them in saying that they support moving ahead with Trade 
Promotion Authority. In fact, they say, in this release I have 
in front of me, ``We look forward to working with Democrats and 
Republicans alike to pass Trade Promotion Authority as soon as 
possible.'' Broad bipartisan support.
    So I wish they were here, because they are going to be 
needed in order to get this done. Having been a U.S. Trade 
Representative, I know that it is required that the executive 
branch get engaged, and I know that they are going to. And I 
know from talking to Ambassador Froman, he is already talking 
to folks on both sides of the aisle.
    We have to get this done for our country. It is sad to me 
that since 2007, we have not had the ability to open up markets 
for the workers, farmers, and service providers that I now 
represent in Ohio and around this country. We may disagree on 
some of the specifics, but let us be honest: not having this 
authority has resulted in other countries completing agreements 
without us, sometimes regional, sometimes bilateral, taking 
away our market share, and this is a huge problem right now. We 
have enough problems in our economy not to have the ability for 
us to export the best products, the best services in the world.
    Interestingly, when you look at the United States compared 
to other countries--exports as a percentage of our GDP--we are 
now tied with Ethiopia. There are only 12 countries behind us 
in the entire world. We are not punching above our weight. We 
are punching below our weight, as they say. We can do a lot 
more.
    With more exports, we have more jobs. Over a quarter of the 
manufacturing jobs in my home State of Ohio are now export 
jobs. And we need to access the 95 percent of consumers who 
live outside of our borders, as has been said today many times.
    This is the first administration since Franklin Delano 
Roosevelt not to either have Trade Promotion Authority in place 
or some other equivalent prior to the Trade Promotion Authority 
being in place. And I was delighted when they asked for it last 
year. They were also the first administration in the history of 
the United States since FDR not to have asked for it until that 
point. They finally asked for it, thank goodness, again, for 
the sake of our economy and our workers.
    Now, we have to get it done. I was U.S. Trade 
Representative. I have spoken on the floor with Senator Baucus 
and Senator Hatch about this, but I will tell you, the last 
best offer will not be on the table to complete agreements 
unless other countries know that we have this ability.
    Our system works differently than the vast majority of 
other countries, and they need to know that we are not going to 
nickel and dime an agreement that is thought over and contested 
and carefully negotiated and, in your worlds, whether it is 
labor negotiations or whether it is business negotiations, you 
see this all the time.
    You have to be able to say, okay, this is it--at least to 
go to Congress for an up or down vote. Ultimately, Congress has 
the ability to turn these things down, and we have come very 
close to doing that many times, as you know, and that is fair. 
The people's voice needs to be heard. But we cannot compete in 
this global marketplace without this authority, and I am 
really, again, interested in working closely with the chairman 
and the future chairman, who just left, and Senator Hatch and 
others, to try to get this done.
    There were comments made earlier about how, because we have 
a trade deficit, it means that this USTR stuff, the opening of 
markets, does not work. Here are the facts. Only 10 percent of 
the world's economy is comprised of countries with which we 
have a trade agreement--10 percent, that is all--and yet we 
send 46 percent of our exports to those countries.
    Think about that. We do not have a trade agreement with 
China. The talk earlier was about how we have a trade deficit. 
Yes, our trade deficit is made up primarily of two things. One 
is exports to the United States of energy, and we need to have 
a new energy policy for that, which we are making progress on 
with domestic sources. And second is trade with China, and it 
needs to be on a level playing field.
    I fought, with my colleague, Senator Brown, and others, to 
help ensure that. I will continue to do that. I believe in 
enforcement. I believe it needs to be fair.
    But, folks, we cannot say that these things do not work 
when you look at the fact that in 2012, we had a $58-billion 
manufacturing goods trade surplus with the 20 FTA partners we 
have--a $58-
billion trade surplus. They purchased over 10 times more goods 
per capita from the U.S. than non-trade partners.
    So that information needs to be out there as we talk about 
this. I really appreciate your testimony today. All four of you 
made important points.
    To Dave Cote, because you have a lot of workers in Ohio, at 
21 facilities, I just have one question for you. Because you do 
travel the world, you talk to a lot of folks about this. As you 
are talking to government and business leaders in other 
countries, how big a concern is it that we have not been 
engaged in trade, and what impact does it have, as a matter of 
fact, with your business and the people whom you represent, 
your workers, your stakeholders?
    Mr. Cote. It is a huge concern, and it is an opportunity 
for us as a country, and I think you stated it very well up-
front.
    As I said in my testimony, the global economy has changed 
significantly over the last 20 years and is going to change 
even more significantly in the next 20. And a lot of these 
countries that we refer to as developing countries or 
developing regions, in 20 years are going to represent almost 
half of the global economy.
    And, if we are not participating in free trade agreements 
with that half of the world economy, that puts us behind a lot 
of others who are moving in that direction. So it is important 
for our growth as a country and for the prosperity and jobs in 
the country for us to be out there doing this. I completely 
agree.
    Senator Portman. It is an important point, and that is one 
reason we need to complete some agreements with some of those 
countries.
    We mentioned earlier that we do not have an agreement with 
China, or Brazil for that matter, or India, countries that are 
growing--Malaysia, Indonesia, and so on. So there is an 
opportunity here to do more.
    Specifically, Mr. Chairman, I do want to mention the health 
care tax credit issue. We talked about this when we were 
debating the SGR, and, at that time, you indicated that there 
would be an opportunity to discuss including this health 
coverage tax credit with an extension of TAA, which may well be 
part of a TPA discussion.
    I offered a bipartisan amendment, along with Senator Brown 
and Senator Stabenow, to extend this health care tax credit. 
The reason this is so important is that it is critical to 
thousands of workers whose pension plans were taken over by the 
PBGC, the Pension Benefit Guaranty Corporation, and are now 
struggling to pay their health bills, including thousands of 
retired Delphi workers in Ohio and across the country.
    So I would hope that we could have a commitment as we move 
forward with this that we do take the opportunity to also 
extend the health care tax credit if we do move forward with 
TPA and the likelihood of TAA being involved with that in some 
respect.
    I know I am over time. I appreciate, again, your testimony 
here today and look forward to working with all of you on this 
going forward.
    Thank you, Senator Hatch.
    Senator Hatch [presiding]. Thank you, Senator Portman.
    I have to say, we are very lucky to have Senator Portman on 
this committee, with his experience as the Trade Representative 
of our country. He adds a great deal to this committee, and I 
am grateful to have him here.
    Let me just ask a couple more questions, and then we will 
finish up.
    Did you get enough time, Senator Portman? Did you have 
enough time? Did you have anything else you would like to ask?
    Senator Portman. I am good. Thank you.
    Senator Hatch. Ms. Stegemann, let me just turn to you. The 
Finance Committee received written testimony from J&J, Johnson 
and Johnson, in strong favor of our bill. J&J is a member of 
the Alliance for Healthcare Competitiveness, AHC.
    A group of 19 leading firms and nonprofits involved in 
American health belong to that organization. In their written 
testimony, they note that health care is one of the largest and 
fastest-growing sectors of the world economy, currently valued 
at $6 trillion in 2010 and likely to surpass $8.5 trillion by 
2015. They also note that the United States is uniquely 
positioned to take advantage of this market if many of the 
trade objectives outlined in our bill become law, and it will 
be of great advantage to our country.
    Now, do you agree that health and rehabilitative services 
represent significant export opportunities for the United 
States, and do you agree that our bill will help not only large 
companies such as Johnson and Johnson, but also smaller 
companies such as yours, to access these growing opportunities?
    Ms. Stegemann. Absolutely. And thank you for the 
opportunity, Senator Hatch, to comment on this.
    Yes. Health care, particularly in terms of rehabilitation, 
is a growing field. In terms of just demographics, the world is 
aging everywhere, not just in the U.S. And so there are growing 
opportunities for big and small companies to participate in the 
commercial opportunities that this creates.
    I also would like to mention that in my experience--and I 
have traveled all over the world in the last 5 years with this 
job--over and over again, I see how American companies and the 
U.S., in general, are actually leaders in terms of addressing 
the needs of people with physical disabilities and the aging 
population.
    So our company is also kind of at the forefront of this. We 
have decided to focus on creating a product that addresses the 
needs of the aging population and people with special needs. 
And the world is looking to us.
    Many people whom I have talked to in hospitals and at trade 
shows around the world have said, ``We are not like you in the 
U.S., where a person in a wheelchair feels comfortable going 
out and being seen.'' In many parts of the world, people like 
that feel like they have to hide at home.
    So we have an opportunity not only to act on the commercial 
opportunities that are out there, but also to show leadership 
to the rest of the world through the products and services, and 
even the legislation, that we have in the U.S. that address and 
protect the needs of people in that population.
    Senator Hatch. Thank you. I am very grateful to hear your 
testimony regarding the benefits international trade has 
brought to your company and to other companies of similar size.
    I hear a lot of similar stories from small and medium-sized 
businesses in my own home State of Utah, and one problem that 
many of them face, as you have mentioned, is trade secret 
theft. This is a growing problem around the world, and it is 
estimated to cost U.S. businesses literally billions of dollars 
every year.
    Now, our bill specifically addresses this problem by 
providing for high standards for the protection of intellectual 
property rights, including new objectives prohibiting foreign 
government involvement in the theft of trade secrets, limiting 
government's ability to collect undisclosed proprietary 
information, and directing governments to protect any 
undisclosed information they do collect.
    So my question to you is: do you agree that it is important 
for TPA to address the problems of trade secret theft so that 
companies like yours can safely export your equipment overseas?
    Ms. Stegemann. Definitely. That is a definite ``yes.'' As I 
mentioned before, being a small company, we do not have our own 
legal staff. If we are ever faced with any kind of a threat, we 
have to go to a third party or to a consultant.
    So we really rely on our government and our negotiating 
team to look out for the interests of companies like ours that 
do not have a global staff. We do not have offices in other 
parts of the world with staff who can advise us on legal issues 
there. We very much look to our government to have a free trade 
agreement that looks out for us specifically in this field.
    Senator Hatch. Thank you. This has been a particularly good 
panel, as far as I am concerned. All of you contributed much to 
this hearing.
    Let me just ask one more question of you, Mr. Cohen. I have 
enjoyed your testimony, I enjoy you personally, and we do not 
agree on some things, but that is okay. But this is more of a 
comment than a question, I suppose.
    I read your testimony, and sometimes I feel like you and I 
are living in an alternate universe. Rather than trade 
agreements costing U.S. jobs, company after company comes to me 
and tells me that trade agreements helped them create and 
retain jobs, both here and abroad.
    In fact, I just received a letter from the 
Telecommunications Industry Association, where they write that, 
``Experience shows that the effects of prior trade agreements 
on telecommunications exports are both demonstrable and 
dramatic,'' and that, ``although countries having trade 
agreements with the United States currently represent only 10 
percent of the overseas economy, they account for 35.7 percent 
of U.S. exports in telecommunications equipment.''
    Now, the National Association of Manufacturers tells a 
similar story, noting that, while the 20 countries with which 
the United States has concluded trade agreements under TPA 
account for just 9 percent of global GDP, they purchase nearly 
half of all manufacturing exports.
    These statistics clearly show we export more manufactured 
goods to our trade agreement partners than to non-trade 
agreement partners. These facts seem to fly in the face of your 
argument that trade costs jobs, and I simply disagree with your 
premise. I personally do not think that welding ourselves off 
from the global economy will help our economy grow, and I fear 
that if we do not act soon, the U.S. will fall further and 
further behind our competitors.
    Now, let me just say this. I am going to re-read your 
testimony, and I am going to look for what we can do, where we 
can find common ground. But I have to say, this agreement goes 
a long way toward, I think, creating jobs in America that you 
have every privilege in the world of unionizing, and many of 
which are unionized.
    So, I do not mean to lecture you. I am not trying to do 
that. I just want you to be aware that I feel really deeply 
about this, and yet I respect a number of the things that you 
said as well. And we also run into the risk of, can we impose 
our high standards on others, and, of course, the trade union 
movement would love to be able to do that, in many respects. 
But we would never get an agreement anywhere if we started 
doing that.
    The reason I mentioned Irving Brown is because he 
understood all that, and the whole world listened to him.
    Now, hardly anybody knows Irving Brown today, and it is a 
doggone crying shame. He was one of the greatest men I met in 
my whole time here. And he disagreed with me on a number of 
things, but we agreed on a lot too. In fact, because I went 
over to Geneva and helped him resolve a major problem that 
would have forced us to withdraw from the ILO, the largest 
labor organization in the world, the largest U.N.-affiliated 
organization, we were quite close.
    And I had done a number of other things internationally. I 
helped raise money--and helped raise paper, mimeograph 
machines, all kinds of things--for Solidarnosc over in Poland, 
when Lech Walesa was getting tarnished by the Soviet people, 
and helped to develop the National Endowment for Democracy. I 
was one of the key people who developed it, was on the board 
for the first 2 years, which is composed of three groups: 
business, labor, and government.
    I will never forget, Lane Kirkland, who was then the head 
of the AFL-CIO, said to me, he said, ``Senator, if only you 
were as good in domestic policy as you are in foreign policy.'' 
And I turned to him, and I said, ``Lane, I was thinking 
precisely the same thing about you.'' And he laughed. He caught 
himself, and then he got a big grin on his face. We had a great 
relationship in those years. He also was one of the great 
people on our foreign policy.
    So I would like you to take back to our friends in the 
labor movement--and by the way, I am one of the few guys in the 
whole Congress who actually earned an AFL-CIO union card in a 
skilled trade. So I will never forget that. But I would like 
you to take back to them that this is going to create jobs. 
This is going to help them. This is not going to hurt them. And 
I do admire, in many ways, their position, though it is very 
difficult to implement, of trying to get other countries to be 
as fair to their labor employees as we are, and even trying to 
get us to be more fair, and I respect that.
    But I would like to see organized labor get a little bit 
more behind these international trade agreements, because I 
think they create more jobs. I do not just think so--I know it 
means more jobs. I can make a tremendous case for it.
    But just know that I respect you and respect the 
leadership, and I appreciate you coming here today and giving 
us your point of view.
    I particularly appreciate you others as well. I will tell 
you, Ms. Stegemann, you represent every small business in 
America today that has any chance of exporting.
    The apple industry, that is extremely important not just to 
New York, but so many other States on the west coast and east 
coast.
    And of course, for Honeywell, I just have nothing but 
admiration.
    So we appreciate all of you being here. I want to come down 
and shake hands with each of you, and thank you for being here.
    With that, we will end this hearing and hopefully get this 
bill to the floor.
    [Whereupon, at 12:25 p.m., the hearing was concluded.]



                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                             Communications

                              ----------                              


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

