[Senate Hearing 113-526]
[From the U.S. Government Publishing Office]







                                                        S. Hrg. 113-526
 
                 TRADE ENFORCEMENT: USING TRADE RULES 
                       TO LEVEL THE PLAYING FIELD

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

                                HEARING

                               BEFORE THE
                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 25, 2014

                               __________

                                     
                                  
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                          COMMITTEE ON FINANCE

                      RON WYDEN, Oregon, Chairman

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

                    Joshua Sheinkman, Staff Director

               Chris Campbell, Republican Staff Director

                                  (ii)




                            C O N T E N T S

                               __________

                           OPENING STATEMENTS

                                                                   Page
Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee 
  on Finance.....................................................     1
Hatch, Hon. Orrin G., a U.S. Senator from Utah...................     3

                               WITNESSES

Brosch, Kevin J., trade consultant, BroschTrade, LLC, on behalf 
  of the National Chicken Council, Washington, DC................     8
Wilkins, Richard, treasurer, American Soybean Association, 
  Greenwood, DE..................................................    10
Peterson, Bart, senior vice president, corporate affairs and 
  communications, Eli Lilly and Company, Indianapolis, IN........    12
Gerard, Leo W., international president, The United Steel, Paper 
  and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, 
  and Service Workers International Union (United Steelworkers), 
  Pittsburgh, PA.................................................    14
Longhi, Mario, president and chief executive officer, United 
  States Steel Corporation, Pittsburgh, PA.......................    16

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Brosch, Kevin J.:
    Testimony....................................................     8
    Prepared statement...........................................    35
    Responses to questions from committee members................    40
Gerard, Leo W.:
    Testimony....................................................    14
    Prepared statement...........................................    42
Grassley, Hon. Chuck:
    Letter from the National Cattlemen's Beef Association to 
      Senator Grassley, dated June 25, 2014......................    60
Hatch, Hon. Orrin G.:
    Opening statement............................................     3
    Prepared statement...........................................    62
Longhi, Mario:
    Testimony....................................................    16
    Prepared statement...........................................    65
    Responses to questions from committee members................    71
Peterson, Bart:
    Testimony....................................................    12
    Prepared statement...........................................    73
Wilkins, Richard:
    Testimony....................................................    10
    Prepared statement...........................................    78
    Responses to questions from committee members................    85
Wyden, Hon. Ron:
    Opening statement............................................     1
    Prepared statement...........................................    88

                             Communications

American Wire Producers Association (AWPA).......................    91
ANSAC............................................................    95
National Association of Manufacturers............................    97

                                 (iii)


    TRADE ENFORCEMENT: USING TRADE RULES TO LEVEL THE PLAYING FIELD

                              ----------                              


                        WEDNESDAY, JUNE 25, 2014

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 2:12 p.m., 
in room SD-215, Dirksen Senate Office Building, Hon. Ron Wyden 
(chairman of the committee) presiding.
    Present: Senators Stabenow, Carper, Cardin, Brown, Casey, 
Hatch, Grassley, Crapo, Thune, and Toomey.
    Also present: Democratic Staff: Jason Park, International 
Trade Counsel; Jayme White, Chief International Competitiveness 
and Innovation Advisor; and Elissa Alben, International Trade 
Counsel. Republican Staff: Chris Campbell, Staff Director; 
Everett Eissenstat, Chief International Trade Counsel; Rebecca 
Eubank, International Trade Analyst; Kevin Rosenbaum, Detailee; 
and Shane Warren, International Trade Counsel.

   OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM 
             OREGON, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The Finance Committee will come to order.
    Much of the recent debate in the Congress over 
international trade has focused on new agreements, agreements 
that are currently in the works, including the Trans-Pacific 
Partnership and the Trans-Atlantic Trade and Investment 
Partnership. It is my view that not enough time has been spent 
on the trade agreements that are already in place. Have they 
created American jobs? Have they boosted our economy? Are they 
being effectively enforced?
    While I intend for the Finance Committee to examine all 
aspects of U.S. trade policy, today it is going to focus on 
enforcement. Without strong enforcement, no trade deal old or 
new is able to live up to its potential for jobs and economic 
growth, and it becomes extraordinarily difficult to build 
support for new agreements. Foreign nations will continue 
locking American goods and services out of their markets. 
Foreign companies that get unfair backing from their own 
governments will continue to undercut our manufacturers. They 
will undercut our farmers, they will undercut our ranchers, and 
they will drive hardworking Americans out of business and out 
of their jobs.
    The latest tactics used by some foreign nations and 
companies to skirt our trade rules seem like they have been 
ripped from the pages of crime and spy novels. They hide paper 
trails to make it harder to build cases in trade courts. They 
intimidate witnesses, force American businesses to relocate 
factories or surrender intellectual property, and threaten 
retaliation if they speak out against unlawful behavior. They 
even spy on our trade enforcers and our companies to undermine 
efforts to hold them to the rules, and, after they have been 
caught breaking the rules, they engage in outright fraud to 
avoid punishment. They play cat-and-mouse with Customs 
authorities, and they use shell games and fraudulent records to 
exploit weaknesses in our system.
    The global economy is more interconnected than ever, which 
means that there is even more at stake for American workers and 
American businesses. China, India, Brazil--the list of critical 
markets with serious, serious enforcement challenges has grown. 
As that process has played out, for example, currency 
manipulation has hit American workers and our businesses harder 
than it did in previous decades, and that is particularly true 
when it comes to China. Currency manipulation makes any product 
manufactured in our country--any product--artificially more 
expensive. In effect, it is a way for China to keep a finger 
planted on the scale, costing the U.S. jobs and making it 
harder to recover further from the Great Recession.
    Now, when I came to the Senate, the U.S. had only three 
free trade agreement partners. Today it has free trade 
agreements with 20 countries. China joined the World Trade 
Organization in 2000, bringing with it a host of enforcement 
challenges. With so many new agreements and issues to confront, 
the enforcement job has gotten bigger. Our enforcement policies 
have to account for new rules in trade. Guatemala, for example, 
is now a U.S. free trade partner. When Guatemala repeatedly 
fails to enforce its own labor laws, our country has to take a 
stand, and our country has to uphold the rules.
    All trade commitments and all agreements have to be 
enforced with the same vigor. The challenges of the modern 
global economy simply do not always fit within our aging 
enforcement system. American trade enforcement, in short, needs 
to be brought into the 21st century. For example, when the 
Chinese government gives its domestic solar companies massive 
subsidies, our government needs to respond quickly and with all 
available resources. In practice, the response took years, and 
it was too little and too late to protect thousands of American 
jobs and homegrown technologies. The Chinese solar companies 
had already crippled their American competitors. That is why a 
more effective enforcement authority is needed. Better 
enforcement tools would identify and stop a problem more 
quickly before it costs our people jobs.
    Now, the same goes for enforcement on our borders. When 
fake tennis shoes or counterfeit computer chips arrive in our 
country, Customs often appears too focused on security rather 
than its trade mission. This is especially damaging, since 
foreign companies and governments are finding new ways to mask 
where the products come from before they show up at our 
doorstep. For example, Chinese companies avoid antidumping 
duties by routing merchandise through a place like Singapore 
before it heads to the United States.
    The schemes are becoming even more complex, sometimes 
involving shell companies that appear one day and disappear the 
next without leaving any paper trail. The ENFORCE Act, 
bipartisan legislation I first introduced in 2011, would mount 
a stronger defense against those practices. It would set up a 
standardized process to move investigations forward, and it 
would establish better lines of communication between agencies 
to get information in the right hands. It would also refocus 
Customs so that its trade mission does not get short shrift.
    Proper trade enforcement is an increasingly difficult job. 
It takes time, and the fact is that it is impossible to stand 
up a trade case in a single day. But it is essential for 
enforcement agencies to have the resources needed to do their 
jobs effectively. Too often when these cases lag, American 
workers are losing their jobs, and our businesses close their 
doors. Succeeding in the global economy is already challenging. 
The U.S. should not add to the difficulty by underfunding 
important enforcement efforts.
    This is especially true when our country is negotiating 
more trade agreements. There are lots of American businesses 
and workers who look at the North American Free Trade Agreement 
and the World Trade Organization and wonder whether more trade 
agreements are really a pathway to growth, and that comes up in 
my State all the time, a State where one out of six jobs 
depends on international trade.
    If enforcement falls short for the agreements already in 
place, it is going to call into question America's ability to 
enforce future agreements, and our international competitors 
will see an opening to break the rules at the expense of 
American jobs and American exports. So the challenge now is to 
build a strong enforcement system that befits a modern global 
economy and one that ensures trade agreements respond to 
today's challenges to deliver jobs and economic growth to more 
Americans.
    [The prepared statement of Chairman Wyden appears in the 
appendix.]
    Senator Hatch?

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

    Senator Hatch. Thank you, Mr. Chairman. I apologize for 
being a little late, but I appreciate you holding this hearing.
    Today we are examining the role of trade enforcement in 
advancing U.S. international trade interests. Now, some of the 
most important trade enforcement tools we have are U.S. 
safeguard and antidumping and countervailing duty laws for 
companies like U.S. Magnesium, which operates in Salt Lake City 
and Rowley, UT. Trade laws are essential to their ability to 
compete against imports that unfairly benefit from foreign 
government interference in the market. I want to ensure that 
these laws remain effective tools in our international trade 
arsenal.
    That is one reason the Bipartisan Congressional Trade 
Priorities Act, which I introduced with former Senator Baucus 
in January, includes, as a principal negotiating objective, a 
directive to preserve the ability of the United States to 
rigorously enforce our trade laws. I also want effective trade 
enforcement at the border. That is why I worked with Chairman 
Wyden to craft a version of the ENFORCE Act that gained 
unanimous bipartisan support in the Finance Committee. This 
bill provides new tools to help stop circumvention of our trade 
remedy laws, and I want to compliment Senator Wyden for his 
work on that. Legislation I introduced with former Senator 
Baucus in 2013 to reauthorize U.S. Customs and Border 
Protection includes the ENFORCE Act, in addition to a number of 
other tools that will help stop the entry of counterfeit and 
other illegally shipped goods into the United States.
    Now, I hope the committee will act on that bill soon. And, 
while we work to ensure that our Nation has the tools to battle 
unfair trade practices domestically, we also need to create 
effective multilateral and bilateral systems to help us enforce 
our rights abroad.
    When used well, the World Trade Organization dispute 
settlement system has proven to be an effective forum. Senator 
Portman, when he was the U.S. Trade Representative, brought the 
first WTO dispute against China, in which China was found to 
have breached its WTO commitments. Before that case, China was 
imposing restrictions on imports of U.S. auto parts that were 
harming U.S. companies and workers. By effectively employing 
the WTO dispute settlement system, we were able to get China to 
reverse course and remove those restrictions, and, as you can 
see, we have a system that works.
    Of course, the effective use of the dispute settlement 
tools at our disposal depends upon the proper prioritization of 
enforcement efforts by the administration. I remain 
disappointed in the Obama administration's failure to bring a 
single case against Russia since they joined the WTO.
    When Congress considered legislation granting Permanent 
Normal Trade Relations to Russia in 2012, the administration 
argued vigorously that we needed Russia in the WTO so we could 
bring them to dispute settlement when they violated 
international trade rules. Ironically, Russia recently 
announced that they would pursue a WTO case against the United 
States while our administration refuses to act, even though 
Russia has repeatedly violated WTO rules concerning sanitary 
and phytosanitary practices, intellectual property rights, and, 
of course, localization barriers.
    I am similarly disappointed when it comes to the 
administration's enforcement of intellectual property rights 
abroad. Despite Canada's, Chile's, China's, and India's rampant 
and repeated disregard for their obligations regarding 
intellectual property rights, the Obama administration refuses 
to bring a single case against any of these countries' 
practices, sending a signal not only to these nations, but to 
the rest of the world, that this administration will not act to 
protect U.S. holders of intellectual property rights abroad.
    I also remain deeply disappointed in the Obama 
administration's selective implementation of our trade 
agreements with Colombia, Panama, and South Korea, time and 
again choosing labor over innovation. For example, Panama was 
forced to make statutory and regulatory changes to its labor 
laws before the administration would even submit that free 
trade agreement to Congress for approval. In the case of 
Colombia, the administration required the Colombians to make 
changes to their labor regime that were not even required by 
the free trade agreement before sending the agreement to 
Congress.
    Contrast this with the case of the Korea Free Trade 
Agreement, where the Obama administration allowed the agreement 
to enter into force knowing that the Koreans had not created an 
effective and fully independent review mechanism for pricing 
and reimbursement of pharmaceuticals and medical devices. In my 
view, they squandered the leverage of entry into force, and now 
we face an uphill battle to bring Korea into compliance.
    We should not tolerate similar practices going forward. 
That is why the Trade Promotion Authority bill that former 
Senator Baucus and I introduced contains strong new oversight 
mechanisms that will help ensure full implementation and 
effective enforcement of our trade agreements. I intend to make 
absolutely sure that each country with which we have a future 
trade agreement is fully in compliance with that agreement 
before the agreement enters into force.
    We must also do a better job of protecting U.S. innovation. 
That is why I introduced legislation to create a Chief 
Innovation and Intellectual Property Negotiator in the Office 
of the U.S. Trade Representative. This individual would ensure 
that intellectual property rights are no longer an 
afterthought, but a key component of our trade and enforcement 
policies.
    Now, strong enforcement of existing obligations is vital, 
but we also need to be pushing boundaries, constantly 
developing and negotiating the international rules to counter 
unfair trade practices with new high-standard trade agreements. 
Again, our bipartisan Trade Promotion Authority bill achieves 
this, addressing currency practices, digital piracy, digital 
trade, cross-border data flows, cyber-theft of trade secrets, 
localization barriers, non-scientific sanitary and 
phytosanitary practices, state-owned enterprises, and trade-
related labor and environment policies.
    Many of the tools I mention today will only be effective 
once they are put into law. So I hope the committee will soon 
act on these pending trade bills so that we may provide the 
American people with the best, most up-to-date, and effective 
enforcement regime possible.
    Again, Mr. Chairman, thank you for holding today's hearing. 
I look forward to hearing from our witnesses.
    The Chairman. Thank you, Senator Hatch.
    [The prepared statement of Senator Hatch appears in the 
appendix.]
    The Chairman. I simply would like to offer to the folks in 
the back with the signs: I understand that Americans have 
strong views that they want to express, and the First Amendment 
protects our right to say what we want, but we also have to 
respect the rights of others in order to have a discussion.
    So at this point, I would like to make clear that I am 
going to be listening in the days ahead to those who share the 
views of those with the signs, and I would like to ask our 
guests in the back to put away their signs and sit down, 
please.
    Thank you very much.
    Senator Grassley. I have a letter I would like to submit 
for the record from the National Cattlemen's Beef Association 
dealing with trade.
    The Chairman. Without objection, Senator Grassley's letter 
is entered at this time.
    [The letter appears in the appendix on p. 60.]
    The Chairman. We are pleased to begin our hearing today 
with Mr. Kevin Brosch, representing the National Chicken 
Council in Washington, DC.
    Following Mr. Brosch is Mr. Richard Wilkins, a soybean 
farmer from Greenwood, DE and treasurer for the American 
Soybean Association.
    Senator Carper, would you like to say a few words about Mr. 
Wilkins?
    Senator Carper. No. No. [Laughter.] Yes I would.
    I have known Richard for a long time. I am happy to see 
him, and he and his wife, Donna, along with--I think it was a 
nephew named Christopher--farmed near a place called Greenwood, 
DE, which is in Sussex County.
    Richard, the fellow sitting here to my right had the 
temerity of asking me before we began this hearing whether or 
not 400 acres was just about the size of Delaware, and I am 
just here to say that this man, he lives and he farms in Sussex 
County, DE, the third largest county in America. They raise 
more soybeans in Sussex County, DE than any county in America, 
and more chickens than any county in America.
    So we are proud of all that. Not only does Richard raise 
soybeans, he raises corn, wheat, barley, vegetables, hay, and I 
think about 150 head of cattle. No chickens, is that right?
    Mr. Wilkins. Senator, unfortunately, I married a beautiful 
young lady who had an allergic reaction to feathers.
    Senator Carper. Well, that is too bad. You are probably the 
only farm family in Sussex County that does not raise chickens.
    We are happy that you are here. The farm has been in their 
family for, gosh, since 1951, that would be over 60 years. And 
I have been told that your family has been farming this area 
for hundreds of years.
    In addition to his day job, Richard is also the treasurer 
of the American Soybean Association. I do not know what that 
pays, but we are proud that you hold that position, one of nine 
soybean growers nationwide who make up that organization's 
executive committee.
    He has been active in the American Soybean Association for 
over a decade, serving in the past as president of the 
association's Delaware chapter and vice president for the 
entire organization. Vice president kind of runs in our blood 
in Delaware--the Soybean Association, the country, whatever it 
might be.
    Richard also serves as a member of the American Farm Bureau 
Soybean Advisory Committee--a blue hen, a fighting blue hen, 
not a mud hen, as Richard Durbin likes to say, but a fighting 
blue hen from the First State of Delaware, earning a bachelor 
of science degree in agriculture from the University of 
Delaware, one of my alma maters.
    It is great to you see here. Thank you for being a big part 
of our State and for being here today.
    Mr. Wilkins. Thank you, Senator.
    Senator Carper. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Carper.
    After Mr. Wilkins is Mr. Bart Peterson, senior vice 
president for corporate affairs and communications at Eli Lilly 
and Company from Indianapolis, IN.
    After Mr. Peterson, we are going to hear from Mr. Leo 
Gerard, international president for the United Steelworkers 
from Pittsburgh, PA. Mr. Gerard will now be introduced by our 
colleague, Senator Casey.
    Senator Casey. Mr. Chairman, thank you, and thank you to 
Ranking Member Hatch for holding this critical hearing.
    We know that aggressive trade enforcement is critical to 
maintaining a level playing field for all of our companies. Too 
often we find ourselves on the defense. For example, we know 
that the domestic steel industry now is facing a new crisis due 
to unfair trade practices from our competition. According to 
the recent report by the Economic Policy Institute, domestic 
steel imports increased by almost 13 percent just from 2011 to 
2013. Without action, we stand to lose half a million jobs in 
this country, over 35,000 in Pennsylvania alone. So we cannot 
afford to send any of these good-paying jobs overseas.
    So, given the importance of this topic, I am pleased to 
have the opportunity to informally introduce Leo Gerard of the 
United Steelworkers and also welcome Mr. Mario Longhi, who is 
head of U.S. Steel, two great organizations that work together 
every day to create jobs.
    Many of you know Leo Gerard's story, but I will just 
summarize it quickly. I do not think there is anyone who has 
fought harder to level that playing field over these many years 
than Leo Gerard.
    He is the son of a union miner and activist. He was 
appointed International President of the Steelworkers in 2001. 
Since taking the helm, the Steelworkers have filed more trade 
law complaints than any other union or company.
    He is a superb and effective advocate, especially for his 
workers. We know that Leo and the 850,000 steelworkers, 
including over 55,000 in Pennsylvania, live these issues day in 
and day out, and I look forward to hearing his testimony and 
Mr. Longhi's as well.
    We are grateful that he is here with us fighting these same 
battles. He came to Pittsburgh and U.S. Steel in 2012 and was 
named president and CEO in June of 2013.
    So we are grateful for their leadership and their presence 
here and their testimony. We are happy to have the chance to 
say hello to both.
    Thank you.
    The Chairman. Senator Casey, thank you, and thank you also 
for making it clear that this is a business/labor kind of 
effort that you are focusing on. That is very constructive.
    My thanks to all the witnesses for being here. It is our 
usual practice that your prepared statements are automatically 
going to be made part of the record. We would like you to use 5 
minutes or so to summarize. And even by Senate standards, the 
next hour is going to be a little bit chaotic because we are 
going to have three votes on a very important piece of 
legislation involving essentially the workforce and training.
    So you are going to see Senators try to keep this going. We 
will be almost like trolleys, but I hope that you all will 
recognize that we would rather be able to just do this 
continuously. That is not going to be possible. So we will 
start and get as far as we can.
    Mr. Brosch?

 STATEMENT OF KEVIN J. BROSCH, TRADE CONSULTANT, BROSCHTRADE, 
 LLC, ON BEHALF OF THE NATIONAL CHICKEN COUNCIL, WASHINGTON, DC

    Mr. Brosch. Thank you. Thank you, Mr. Chairman and members 
of the committee. My name is Kevin Brosch. I am a Washington 
trade lawyer who has specialized in agricultural trade for more 
than 30 years. I have worked in private practice here in 
Washington, at the Department of Agriculture, and here in the 
U.S. Senate.
    Today I appear before you on behalf of the National Chicken 
Council. Chicken is one of our most important agricultural 
products and exports. U.S. production value in 2013 was $30.7 
billion, and we exported 20 percent of our production to nearly 
100 countries. U.S. poultry exports have quadrupled since 1990.
    The topic you have chosen for today's hearing, Mr. 
Chairman--enforcement of U.S. rights under trade agreements--is 
an issue of paramount importance to the U.S. poultry industry. 
The United States is the most efficient poultry-production 
country in the world, and potential benefits from free and fair 
trade are substantial for our industry.
    In general, trade agreements have been a success story for 
our industry. In addressing the issue of enforcement, I should 
begin by thanking the Obama administration for a very 
significant recent WTO victory.
    In 2009, China imposed unfair antidumping duties on U.S. 
chicken. The Obama administration aggressively litigated that 
case before the WTO, and last summer a WTO panel ruled in our 
favor. We are currently awaiting China's announcement and hope 
that it will comply with WTO rules. The China case is the best 
example we can point to of vigorous and timely trade 
enforcement. Unfortunately, not all unfair trade practices have 
been pursued this aggressively or successfully.
    Several years ago, Mexico brought a similarly unfair 
antidumping case, and their officials found us in violation. 
But because Mexico was struck by a virulent outbreak of avian 
influenza, it has experienced a significant shortage of poultry 
meat, and Mexico has held imposition of the duties in abeyance. 
Because of the threat that these antidumping duties could be 
imposed anytime in the future, we challenged Mexico's decision 
under the NAFTA agreement's private right of action provisions. 
The NAFTA dispute settlement system depends upon the 
governments agreeing to formation of a panel. In our case 
against Mexico, the case was instituted nearly 2 years ago, but 
at present we still do not have a panel to hear the case. We 
believe this is a significant problem of enforcement that needs 
to be addressed.
    Since 1996, we have been shut out of the European market 
because of supposed SPS restrictions, in particular, the ban of 
the use of hyper-chlorinated water. As you know, the use of 
hyper-chlorinated water has long been approved as safe and 
efficacious by USDA's Food and Safety Inspection Service. Every 
week Americans safely consume approximately 156 million 
chickens that have been processed under FSIS rules.
    In 1998, the U.S. agreed to forego the right to use hyper-
chlorinated water in trade with Europe if the E.U. would 
consider four alternative anti-microbial treatments. After 7 
years, the E.U. Scientific Advisory Committee finally opined 
that these AMTs were safe and efficacious and presented no 
health risk to consumers. However, when the European Commission 
presented the proposal for acceptance of the use of 
antimicrobials, the E.U. member states defeated the proposal 
27-0.
    A few months before it left office, the Bush administration 
requested dispute settlement before the WTO. After a year, the 
case moved to panel selection phase. For reasons that have 
never been explained, the U.S. and E.U. have taken no action to 
form a panel over the past 4 years, and there is no indication 
that our government is pursuing enforcement in this case at 
present.
    In 2000, South Africa, a WTO signatory, began imposing 
unfair antidumping duties on U.S. poultry as well. Despite 
repeated requests from our industry over the past 14 years, the 
U.S. Government has not invoked WTO dispute settlement. Prior 
to 2000, we had a 55,000 metric ton market in South Africa, 
and, given the rise of the middle-class citizens and the 
competitiveness of U.S. chicken prices, that market would have 
grown substantially since that time. Had the U.S. pursued 
enforcement against South Africa, it would have prevailed. The 
South African case presents exactly the same legal issues as 
the China case that we recently won.
    In the same year that South Africa began imposing these 
unfair duties, our Congress passed the African Growth 
Opportunity Act, which gave South Africa preferential duties 
access to our market. South Africa has consistently benefitted 
from a trade surplus with the United States in the range of $1 
billion to $3 billion annually. In September 2015, AGOA will 
expire if Congress does not renew it. In our view, it makes no 
sense for the United States to give special preferences to 
South Africa under AGOA if they treat our trade unfairly. So, 
Mr. Chairman and members of this committee, you could help be 
our enforcement entity in this particular case.
    With respect to the two new trade agreements--TPP and 
TTIP--trade is an important part of the future for the poultry 
industry, and we are generally supportive of all major trade 
initiatives, but the trade agreements, as the chairman said, 
must provide not only strong market access, but adequate 
systems of enforcement.
    With respect to TPP, our major goals are strong commitment 
to enforcement, and particularly in the area of sanitary and 
phytosanitary measures. We support the so-called ``SPS plus'' 
initiative, but once again, stronger rules only benefit us if 
there is timely, aggressive, and consistent enforcement.
    Our second major ambition----
    The Chairman. Mr. Brosch, I feel badly about interrupting 
you. We already have the vote on. There is just over 5 minutes 
left. If you could come to a----
    Mr. Brosch. I can end this by saying our major ambition is 
to open the Canadian market in TPP, and, with respect to TTIP, 
we are a lot less sanguine about that agreement, Mr. Chairman.
    Thank you.
    The Chairman. Very good.
    [The prepared statement of Mr. Brosch appears in the 
appendix.]
    The Chairman. Mr. Wilkins, we may be able to get you in. I 
know colleagues are going to start having to rush off for the 
vote.
    I think at this point, colleagues, we will suspend and go 
make the vote, and we are going to all come back as quickly as 
we can.
    Thank you.
    [Whereupon, at 2:39 p.m., the hearing was recessed, 
reconvening at 3:22 p.m.]
    The Chairman. The Finance Committee will come to order.
    I want to apologize again to all our guests for an 
afternoon which, even by Senate standards, is bedlam.
    Mr. Wilkins, welcome. We look forward to your testimony.

           STATEMENT OF RICHARD WILKINS, TREASURER, 
          AMERICAN SOYBEAN ASSOCIATION, GREENWOOD, DE

    Mr. Wilkins. Good afternoon. I am Richard Wilkins, a 
soybean farmer from Greenwood, DE and treasurer of the American 
Soybean Association. ASA represents all U.S. soybean producers 
on national and international issues important to our industry.
    Thank you, Mr. Chairman, Ranking Member, and the committee, 
for holding this hearing. We appreciate the opportunity to 
speak to you.
    Since 1996, biotechnology has expanded to encompass the 
majority of our production. In 2013, more than 90 percent of 
U.S. soybeans, canola, corn, cotton, and sugar beets were grown 
with biotech, which is critical as we work to feed a global 
population of 9 billion by the year 2050. As part of the U.S. 
Biotech Crops Alliance, ASA urges the administration to make 
biotech a top trade policy priority by engaging our trading 
partners on these issues at the highest level and ensuring that 
each partner honors its obligations under international trade 
rules. Only with this engagement can we overcome our regulatory 
challenges, minimize trade disruptions, and strengthen our 
competitive access. The best way to do this is through 
bilateral and multilateral negotiations, including under TPP 
and TTIP.
    While enforcement tools through the WTO exist, negotiations 
to remove barriers with our partners can resolve problems 
without litigation. Differing regulatory frameworks between 
importers and exporters pose a challenge for agricultural 
biotech. In the U.S., the interagency Coordinated Framework 
establishes that, once a biotech trait is determined to be safe 
for food, feed, and the environment, it is deregulated.
    Other countries have adopted systems for approving biotech 
traits, but these decisions are subject to different 
regulations or are overtly political, which can result in 
lengthy delays between approvals in importing and exporting 
countries. This is a concern because, until an importer 
approves a new trait, even a trace amount of that trait 
detected in a cargo can result in its rejection and major 
losses for the shipper.
    We need a system for harmonizing these approvals. The best 
approach would be for countries to synchronize their approval 
timelines or to recognize each others' approval decisions. 
However, given the varied current regulatory approaches, these 
solutions may be many years away.
    One answer is to establish a global Low Level Presence 
policy. An LLP would allow a shipment containing a small amount 
of an exporting country's approved trait without resulting in 
rejection by an importer. Unfortunately, this discussion has 
not advanced globally. We believe the United States' leadership 
on this issue is critical to bringing others to the table. We 
urge the committee to work with the USTR, USDA, EPA, and FDA to 
establish an LLP policy that can serve as an example, and to 
work with our trade partners to establish these policies.
    China is by far the largest buyer of U.S. soybeans, 
importing over one-fourth of our annual production and over 
one-half of our exports. USDA forecasts that China will also 
become the world's largest corn importer by 2020. In the past, 
China routinely deregulated new biotech traits. However, since 
2011, China has adopted requirements that unnecessarily 
lengthen the approval process, including field testing of crops 
not intended for cultivation.
    It is critical for the administration to engage the Chinese 
at the highest level and remind them that their food security 
depends on our ability to commercialize new traits in a timely 
manner. We ask for your help in this effort.
    We also have serious problems with the regulatory system in 
the E.U. While the E.U. approved the first biotech crops in 
1996, it has since taken steps to limit their use and to slow 
new trait approvals. It now requires products containing more 
than .9 percent of a biotech ingredient to be labeled. Faced 
with likely consumer rejection of such labels, food companies 
reformulated and effectively eliminated these foods in the 
marketplace. The E.U. could have provided information to 
consumers without distorting trade by establishing voluntary 
labeling standards for non-biotech foods.
    As a WTO member, the E.U. is obliged to choose a less 
restrictive measure if one that accomplishes its objective is 
available. The E.U. also has allowed its process for approving 
imports of new traits to become politicized. Member states 
routinely block approvals despite positive safety 
recommendations by the European Food Safety Agency. The result 
is that the E.U. regularly fails to meet the approval time 
frames established in its own regulations. Together these 
factors have led to more than a 50-percent drop in soybean 
exports to Europe since 1995.
    In 2003, the WTO found the E.U. guilty of undue delays in 
processing applications. The administration should restart 
negotiations on implementation of this ruling in the context of 
the TTIP, and should refuse a TTIP that does not bring the E.U. 
into full compliance.
    Prior to the launch of TTIP, ASA called for negotiations to 
address the E.U.'s labeling regulations and the delayed 
timeliness for decisions on new traits. However, E.U. officials 
have repeatedly stated that they will not change any of their 
biotech laws under a new TTIP. This is unacceptable.
    Trade agreements require cooperation by all parties to 
implement their provisions. We urge the administration and 
Congress to ensure that the E.U.'s discriminatory policies are 
addressed within TTIP.
    In conclusion, biotechnology must be a top priority in 
these and future trade agreements. Only when they have real 
teeth will the U.S. be able to use enforcement tools to protect 
our interests. If we do not hold our trading partners to their 
obligations, it will make improving conditions for our exports 
that much harder.
    Thank you again, Mr. Chairman, and to Senator Carper for 
having me. I am happy to respond to any questions.
    The Chairman. Mr. Wilkins, thank you. We are glad you are 
here. I know Senator Carper looks forward to asking questions 
as well.
    [The prepared statement of Mr. Wilkins appears in the 
appendix.]
    The Chairman. Mr. Peterson, welcome.

 STATEMENT OF BART PETERSON, SENIOR VICE PRESIDENT, CORPORATE 
      AFFAIRS AND COMMUNICATIONS, ELI LILLY AND COMPANY, 
                        INDIANAPOLIS, IN

    Mr. Peterson. Thank you, Mr. Chairman and members of the 
Finance Committee, and ladies and gentlemen. I appreciate the 
opportunity to testify before you today on a matter of great 
importance to my company, Eli Lilly and Company, to our 
industry, and to all U.S. businesses that are involved either 
directly or indirectly in trade.
    My name is Bart Peterson. I am the senior vice president of 
corporate affairs at Lilly. And since our founding in 1876, we 
have been committed to discovering and developing medicines 
that make life better for people here and around the world.
    Fair and transparent trade rules are fundamental to our 
success as a business, and the U.S. Government must have the 
tools and the resources necessary to enforce them. We welcome 
the committee's efforts to ensure that those tools and adequate 
resources are available. In particular, we welcome Senator 
Hatch's proposal to create the position of Chief IP Negotiator 
at USTR. We also encourage the committee to work diligently to 
pass Trade Promotion Authority. The bipartisan TPA bill 
introduced earlier this year addressed a number of important 
issues for our sector. We hope that any future versions of TPA 
legislation will be equally strong on these important 
provisions.
    Intellectual property is the lifeblood of the 
pharmaceutical sector, and its protection is one of our most 
pressing trade issues. Nowhere is the need for strong language 
to protect IP more important than in the Trans-Pacific 
Partnership. It is critical that the final TPP agreement has 
pharmaceutical IP provisions equal to KORUS and U.S. law, 
including 12 years of data exclusivity for biologics.
    On TTIP, we strongly favor an ambitious, comprehensive, and 
high-standard trade and investment agreement. Lilly and the 
biopharmaceutical industry believe that TTIP represents a 
unique opportunity to promote the highest standards of 
intellectual property protection, market access, and 
regulation.
    I would like to provide four brief examples of why trade 
enforcement is so important to Lilly employees and to the 
hundreds of small and medium-size businesses that depend upon 
us in the United States.
    First, Canada. Since 2005, Canadian courts have struck down 
20 pharmaceutical patents, including three Lilly patents, for 
lack of utility or usefulness, resulting in considerable lost 
revenue. Domestic generic companies have then been allowed to 
copy these clearly useful drugs. Canada is the only country in 
the world using this heightened utility standard, which is in 
violation of their trade obligations under both NAFTA and 
TRIPS.*
---------------------------------------------------------------------------
    * The Agreement on Trade-Related Aspects of Intellectual Property 
Rights.
---------------------------------------------------------------------------
    In India, in recent years, Indian administrative and 
judicial decisions have undermined biopharmaceutical 
intellectual property in ways that are inconsistent with 
India's WTO commitments. We greatly appreciate the efforts of 
Congress and the administration so far on these issues, and we 
are hopeful that the innovative industry and the U.S. 
Government will be able to engage in a renewed dialogue with 
the new Indian government on these issues and work productively 
toward solutions.
    In China, when China joined the WTO, it committed to 
provide 6 years of protection against unfair commercial use of 
data submitted to the regulatory agency in the approval of new 
medicines. However, China defines ``new'' as new to the world, 
and this unique interpretation allows non-innovators to rely on 
an innovator's approval outside of China to produce 
unauthorized copies of those medicines inside China. This is 
not only inconsistent with common international practices, but 
it also stands to undermine the protection of the next 
generation of important medicines.
    Then finally, Korea. Certain Korean government pricing 
practices fundamentally conflict with commitments made under 
KORUS. Patented pharmaceuticals are priced by referencing the 
prices of similar products on the market, including the prices 
of generics and off-patent originator drugs. This fails to 
recognize the value of the significant investment it takes to 
develop and bring new patented medicines to the people of 
Korea.
    Let me conclude by mentioning anti-counterfeiting efforts. 
Counterfeiting is not only a serious form of trademark 
infringement, it costs jobs and revenue and, most importantly, 
threatens human health. Current laws have had limited effect in 
stopping this counterfeit trade. Lilly supports the expansion 
of stronger enforcement measures to better combat this problem, 
examples like Operation Pangea that targets Internet sales of 
counterfeit medicines and devices worldwide.
    In closing, Mr. Chairman, I would like to compliment the 
work that your committee and staff have done with the White 
House and with USTR to continue to put advancing trade and 
enforcing the rights of U.S. innovators front and center. Lilly 
looks forward to working with you on improvements to U.S. trade 
policy and enforcement, to the benefit of our economy and our 
citizens.
    Thank you.
    The Chairman. Thank you very much.
    [The prepared statement of Mr. Peterson appears in the 
appendix.]
    The Chairman. Mr. Gerard?

STATEMENT OF LEO W. GERARD, INTERNATIONAL PRESIDENT, THE UNITED 
   STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, 
  ALLIED INDUSTRIAL, AND SERVICE WORKERS INTERNATIONAL UNION 
             (UNITED STEELWORKERS), PITTSBURGH, PA

    Mr. Gerard. Thank you very much, Mr. Chairman and Ranking 
Member Hatch. My name is Leo Gerard, and I am the international 
president of the Steelworkers Union, the largest industrial 
union in North America, representing 850,000 workers.
    I know that my time is short, so I will try to summarize as 
quickly as possible by saying that manufacturing is the key to 
a strong global economy, to a strong American economy. And let 
me just report that, since the allowance of China into the WTO, 
we have managed to accumulate slightly over a $7-trillion 
accumulated trade deficit with China. Each $1 billion results 
in the loss of 18,000 jobs, just like each $1 billion spent on 
infrastructure results in the creation of that many jobs.
    But I know that my time is short, so I want to get to it 
quickly.
    Unfortunately, the Steelworkers Union has more experience 
in trade enforcement than almost any other single entity, and 
our experience is often the result of products being sold, 
dumped, and subsidized at subsidized prices in our market. We 
have filed or supported cases on countless products ranging 
from steel to paper to tires to rare earth to solar to wind 
turbines, in a continuous attempt to try to stop unfair trade.
    Let me just say now, quickly, in order to win a case at the 
USTR, we first have to lose. And what I mean by that is, we 
have to demonstrate that we have lost jobs, that we have lost 
market share, that our employers are losing income, that our 
employers may be losing profitability, that we have people on 
layoff. We have to show that somehow we have been badly 
damaged.
    Our trading partners have figured that out. So, when we 
file a trade case, by the time it gets from start to finish, 
not only have we had to lose jobs at the start, but we continue 
to lose jobs as they steal market share and damage our 
industry, not just for the short term, but for the long term.
    So let me highlight a couple of issues. First, the issue of 
currency manipulation is an area of inaction. Both the Senate 
and the House have individually passed legislation against 
currency manipulation, but they have never been able to do it 
at the same time and get any results. Not only does China cheat 
on currency, so does Japan, Korea, Malaysia, and many others, 
using the practice to tax our products out of their market and 
to subsidize the flood of products into our market.
    Everyone talks about this problem. That is why we are in 
this mess. This administration and the last one pointed to 
dialogue, but engagement is the answer. To point to the members 
of my union and workers and farmers all across the country, we 
lose jobs, and that is the result of inaction. The time for 
talk should be over. The time for action is now. The House and 
Senate, as I mentioned, have both passed legislation at one 
time or another.
    I urge you to pass legislation and put it on the 
President's desk, to work with the House and pass legislation 
to prevent currency manipulation. I want to thank Senators 
Brown and Schumer--members of the committee--and indeed Senator 
Sessions, for their leadership on this issue.
    The second issue I want to talk about briefly is Oil 
Country Tubular Goods, at this point in time, an area where 
government inaction is going to be the cause of a huge problem 
if government does not act.
    Oil Country Tubular Goods is the product being used to 
bring natural gas and oil to the surface. It is a high-value 
product, and our companies have invested billions--I say 
billions with a ``b''--in plant and equipment needed to make 
this and many other critical advanced products that they now 
have in the marketplace.
    We supported a trade case to address the dumping of this 
product in our market. In their preliminary finding some weeks 
ago, the Department of Commerce found dumping margins against a 
range of companies from various countries, but let Korea off 
the hook. Their decision was based on faulty assumptions and 
analysis.
    South Korea produces this product for export--and I 
repeat--they produce this product only for export. They do not 
produce a pound for their own consumption. They do not drill a 
foot. They do not use a pound of Oil Country Tubular Goods. It 
is all for export. None of it is sold in their home market.
    So what Commerce chose to do was to check a low-grade, 
standard, run-of-the-mill construction tubing and use that as a 
comparison against Oil Country Tubular Goods. That would be 
like comparing an old used car against a spaceship. They are 
both vehicles, but they are both dramatically different.
    The decision was preliminary. The law provides for a review 
of their finding and an assessment of their determination. So 
workers across this country, those directly involved in 
production of this product and those dependent on the job 
simply allied with their case, have been rallying for change. 
Their words have been heard by elected officials. Fifty-seven 
members of the Senate signed a letter to the administration 
asking the administration to use the correct analysis.
    Those are only two of dozens of efforts that we have made 
to get this highlighted, but we must do better. There needs to 
be dramatic reform of our trade policy.
    Mr. Chairman, Ranking Member, members of the committee, 
enforcement of trade laws is good, but if we are trying to 
enforce bad laws, it does not make much difference. I want to 
compliment the administration for a lot of the enforcement they 
have done, but I also say that too much of the trade law is 
antiquated and does not serve our purpose.
    I want to skip some of my testimony to make a case that I 
have come to understand just recently.
    Congress could inform the International Trade Commission of 
what it deems to be the definition of the term ``actual and 
potential.'' ``Actual and potential'' is in the trade law of 
actual and potential harm. And, as I said, currently under 
trade law, for the USTR, for Commerce, we have to demonstrate 
that we have been injured, substantially injured. And right 
now, with just the preliminary decision that Commerce has made, 
we have hundreds of our members, if not thousands, who are 
either laid off, working shorter hours, or waiting to be laid 
off because the market is being distorted by Korea and the 
faulty assumption.
    So I want to just close--I know my time is up--but I want 
to just close by saying we believe that enforcement is 
important. We believe there should be aggressive enforcement. 
But we also believe enforcement is not the remedy for bad trade 
laws in the first place. It is time that we fix our trade 
regime.
    Thank you very much, Mr. Chairman.
    The Chairman. Thank you, Mr. Gerard.
    [The prepared statement of Mr. Gerard appears in the 
appendix.]
    The Chairman. Mr. Longhi?

   STATEMENT OF MARIO LONGHI, PRESIDENT AND CHIEF EXECUTIVE 
    OFFICER, UNITED STATES STEEL CORPORATION, PITTSBURGH, PA

    Mr. Longhi. Good afternoon, Mr. Chairman. Good afternoon, 
members of the Congress. Thank you, Senator Casey, for the kind 
introduction.
    I am Mario Longhi, president and CEO of United States Steel 
Corporation. I want to thank you for this opportunity to share 
the significant role U.S. trade laws play in the American steel 
industry and our industry's urgent need for a level playing 
field.
    I am proud to be here with my friend, Leo Gerard, 
international president of the United Steelworkers. Together we 
share the responsibility of ensuring our workers have a fair 
chance at a fulfilling job and living a fruitful life.
    I personally came to this great country when I was a 
teenager. My parents wanted me to learn, live, and sleep under 
the blanket of American freedom, to understand and to live by 
the rule of law, and to embrace the American sense of fair 
play.
    Today I am privileged to lead an iconic American company, 
that is, United States Steel Corporation. As the largest 
integrated steel producer headquartered in the United States, 
our more than 21,000 American employees produce the backbone of 
our America. But our industry is under attack.
    The U.S. manufacturing industry is one of the most 
successful and vital global markets in the world, but foreign 
companies are abusing our trade laws. In the case of steel, 
they are dumping thousands of tons of products into the U.S. 
market unchecked. These actions demonstrate that American steel 
companies are being targeted potentially for elimination.
    One such product that is being dumped is Oil Country 
Tubular Goods, or OCTG. OCTG pipes are among the most 
sophisticated high-tech products that we manufacture, meeting 
the highest safety and quality standards. They are used 10,000 
feet under water, 10,000 feet carved into the earth for the 
extraction of oil and natural gas. The use of American-made 
pipe for American energy production directly impacts our 
Nation's economic and energy security.
    Last year, U.S. Steel and other domestic OCTG manufacturers 
filed a trade case against nine countries for abusing U.S. 
trade laws, for dumping their products into our markets. From 
2010 to 2012 alone, there was an enormous 113-percent increase 
of OCTG products dumped into our market. Last month, total OCTG 
imports hit in excess of 400,000 net tons, a more than 77-
percent change year over year. The most notable abusers are 
South Korean companies that dump 98 percent of their products 
into the U.S. They do this because they have no home market for 
their product and are taking direct aim at companies such as 
U.S. Steel.
    This is an important product for us. In the past few years, 
U.S. Steel has invested more than $2 billion across our 
facilities, including $200 million in a few quarters alone in 
our Lorain tubular operations in Ohio. These investments are 
definitely at risk from the unprecedented surge of unfairly 
dumped products. Unfortunately, Leo's and my fellow employees 
in my company, as well as countless related industries, will be 
the ones who will bear the financial burden, because U.S. Steel 
and other domestic manufacturers cannot stop foreign companies 
from abusing U.S. trade laws. We must rely upon you, Congress, 
and the administration to enforce our trade laws.
    Earlier this year, the Department of Commerce issued 
disappointing preliminary findings. They failed to recognize 
illegally dumped South Korean products. South Korean 
gamesmanship of our system of laws is very disquieting. Their 
efforts are unchecked and, sadly, very effective. They have 
routinely abused the process, and, as a result, the 
investigators are forced to review incomplete information in an 
untimely manner. This almost assures that the adjudicators 
formulate their decisions based upon misleading information. It 
is not only an economic imperative to open new markets for both 
American goods and services, it is a moral imperative to 
provide for the greater economic good by ensuring that the 
rules governing trade in our own markets are respected.
    The laws of this country can and should be used to help the 
rest of the world better understand fair play. Specifically, we 
must clearly showcase that, when our trade laws are followed, 
companies around the world can succeed in the global 
marketplace, showing that, when everyone follows the rules, 
everyone can compete and win. But this must be done under the 
rule of law.
    Unfortunately, Mr. Chairman, this is not the world in which 
we are operating. Your leadership in introducing the ENFORCE 
legislation is certainly most welcome, and this should be one 
of many powerful tools in our trade toolbox.
    We are very grateful to Senators Brown, Portman, and 
Sessions for their continued commitment to our industry as we 
fight currency manipulation and promote other measures to 
strengthen our trade laws. These trade law initiatives and 
others are desperately needed to stop the abuses and level our 
playing field.
    I want to thank you for holding today's hearing on this 
critical issue, for certainly the livelihoods of thousands of 
Americans and the future of the steel industry hang in the 
balance.
    Thank you.
    The Chairman. Thank you all. It has been an excellent 
panel, and I know Senators are going to have questions.
    [The prepared statement of Mr. Longhi appears in the 
appendix.]
    The Chairman. My first question is for you, Mr. Gerard and 
Mr. Longhi. Given the fact that you basically outlined how it 
seems that Congress and the administration are basically 
getting there too late in the game, my question would be, what 
can Congress do so that unfair trade is identified and remedied 
sooner? For either one of you.
    Mr. Gerard. Let me come back to the point that I was making 
in a rush while I was trying to close. I think Congress could 
certainly give much clearer direction--and I do not know that 
there needs to be necessarily legislative change--but much 
clearer direction on what is already in the international trade 
rules about the term ``actual and potential'' injury.
    We could look at actual and potential decline in output 
sales, market share, profitability, productivity, return on 
investment, utilization. We can prove that day in and day out 
in the Oil Country Tubular Goods case we started.
    You can see what happened with China. We filed cases 
against China. It took them 3 years because they could not play 
on a level playing field. They basically left the market, and, 
as they were leaving the market, the Koreans came in and did 
the exact same thing as China, except they did not use any of 
the OCTG in their own market.
    So we knew potentially what was going to happen, but, 
because of the trade law, the ITC demands that you prove injury 
first. We have to lose jobs first, and, as I say, we have to 
lose in order to win. That is something that Congress could do 
right away, and the Senate could lead on it.
    The Chairman. Let us relate this to another matter, and we 
will get you in on this, Mr. Longhi, if we might. Obviously, 
this is a lot about priorities. It is about choices. I think 
the administration made the right choice recently in 
successfully challenging China's restriction on rare earths.
    My question would be, should there not be a more systematic 
system of identifying the enforcement priorities? For you, Mr. 
Longhi.
    Mr. Longhi. Absolutely, Mr. Chairman. The technology 
available today should grant us the ability to facilitate the 
effort at our borders, whenever something arrives there, so 
that we can easily check whether it is in violation by 
circumventing specifications or through which systems it is 
being brought into the country.
    But the other point is that we should change the way the 
rule applies. If importers are found creating that condition, 
they should be immediately punished, not allowed to go 2 years 
unpunished--creating all the harm that we feel today--before 
anything can be done.
    The Chairman. Very good.
    On IP, for you, Mr. Peterson--this is something of enormous 
importance in the Pacific Northwest that we hear about with 
respect to counterfeit computer chips, fake Nikes, all of this 
flowing through the ports of the Pacific Northwest.
    My question to you is, obviously, the pharmaceutical 
industry cares about this matter. Are there specific proposals 
that you would like to see the Congress consider in the IP 
area?
    Mr. Peterson. I think the major concern we have about 
counterfeit drugs is, first of all, it is an enormous business, 
estimated to be in excess of $200 billion now annually in 
counterfeit drugs.
    Counterfeit drugs, obviously, not only have an enormous 
economic impact, but they affect human health. The likelihood 
that someone ordering medicines from a website or responding to 
an ad on satellite radio will get something that is either not 
efficacious or potentially even dangerous to them is very 
significant.
    These drugs tend not to come from where they are supposed 
to be coming from. So what we want to do--what we would 
recommend, Mr. Chairman--is, first of all, to encourage greater 
cooperation among nations in this battle against counterfeit 
drugs. INTERPOL and the collaborative team they have put 
together under this Operation Pangea, which is focused on 
cracking down across the world on counterfeit drugs, has shown 
some real impact.
    So encouraging that kind of thing and then providing the 
funding necessary for it, as well as the funding necessary for 
increased resources for Customs officials, would be helpful. 
Now, I know this is not a great time to be talking about 
additional resources, but I think that clearly our Customs 
services could do better if they had additional resources to 
combat counterfiet drugs.
    The Chairman. I am going to see if I can get one other 
question in.
    Mr. Gerard, I gather you wanted to comment on this question 
of the systematic process for identifying enforcement 
priorities as well.
    Mr. Gerard. Well, one of the things, Mr. Chairman, I think 
that could be done is that the Commerce Department could also 
establish guidelines so that the Commerce Department could 
self-initiate complaints, self-initiate that way.
    Then we go on top of what Mr. Longhi just said about, when 
the products come in, we can monitor them right there when they 
enter into the country to make sure that they are not being 
trans-shipped or make sure that they actually are what they say 
they are.
    There are a number of ideas that we could give you on that, 
and we will put them in a follow-up response to you, because I 
know time is limited.
    The Chairman. That would be helpful.
    Let me see if I can get one other question in for Mr. 
Brosch and Mr. Wilkins with respect to agriculture, which is so 
important to the Pacific Northwest.
    My take is, as the country negotiates down a lot of the 
traditional barriers to American agricultural exports, 
basically what you have is our trading partners erecting new 
ones, new back-door ways to close their markets. And one of the 
most pernicious ways they do this is they impose new barriers 
purportedly to prevent the entry of pests that could cause harm 
to crops and livestock.
    Can you all just--because I am 40 seconds over my time--
give me any suggestions that you have to deal with this 
problem, because I know it is pressing to American agriculture. 
Either of you?
    Mr. Brosch. Well, I think the idea that we would have is 
simply to press forward with the rights that we have today. The 
WTO has shown to be a pretty successful place to pursue SPS 
issues.
    I was privileged to be one of the two U.S. negotiators of 
the SPS agreement. I think we did a pretty good job, and the 
track record since that time, in the hormone case against the 
E.U., in the salmon case against Australia, shows that if you 
bring these cases before the WTO, you can prevail, and then we 
can put the pressure on the other governments.
    So, in the case of chicken in the E.U., we would just like 
that case to be brought forward and to be pursued, and it has 
not been, as I have explained.
    The Chairman. My colleagues are all on a tight schedule. 
Senator Brown has to preside at 4 pm.
    Senator Hatch, what is your timing? Could we go--normally, 
it would, of course, be Senator Hatch next. Can we go with 
Senator Brown?
    Senator Hatch. Sure.
    The Chairman. And then we will go right to Senator Hatch.
    Senator Brown?
    Senator Brown. Thank you. Thank you always for being such a 
gentleman and giving me that chance. I appreciate that. Thanks.
    Thank you to all the witnesses. It was interesting. Sorry 
for the truncated way we had to do this today.
    I will start with Mr. Gerard. The Commerce Department, as 
you point out, will make the final determination in the Oil 
Country Tubular Goods case with South Korea, they say on July 
10th. I have heard you say that if this Korea case goes in the 
wrong direction, it will be a template, a model, a blueprint, 
if you will, for more and more countries to do what Korea has 
done.
    Even though they have no domestic Oil Country Tubular Goods 
market, as you pointed out--they do not drill for oil and gas, 
the point of the Oil Country Tubular Goods production--they 
have an industry designed solely to take advantage of other 
markets, primarily our market, the most lucrative market, if 
you will, in the history of the world.
    If we lose this, if we lose on this, if Commerce decides in 
the opposite way--a loss for American companies and American 
workers--what is to stop other countries from doing the same 
thing?
    Mr. Gerard. Nothing. The reality of what South Korea has 
done is, as I said, when they saw what was happening with the 
Oil Country Tubular Goods issue with China, where we demanded 
China play on a level playing field, South Korea went and 
designed an industry for export, and they designed it in a way 
where they brag around Washington that they have designed it so 
that they cannot be found guilty.
    So the way they have designed their industry, there is no 
domestic consumption. They have no iron ore, they have no coal, 
they have no limestone. They have modern mills, and their 
workers get paid close to about 90 percent of what our workers 
get, and they have designed it simply so they can export it.
    So now we have a case we filed yesterday on tires. All that 
country has to do to make that tire is make a unique tire that 
they will not sell in their own market and then chew up our 
market and be better at it.
    We filed a case--somebody mentioned rare earth. That rare 
earth case was our case, because you need rare earth to make 
everything. We had China cornering the market on rare earth 
and, in fact, holding Japan hostage because they would not sell 
them the rare earth.
    So the model that has been built by South Korea in Oil 
Country Tubular Goods can be reintroduced in almost any 
product.
    Let me just say this about the steel industry, for people 
who do not know it. You drive by a steel plant and you will see 
all those rows of steel out there, and, from a distance, they 
all look the same. Every one of them could be different. Every 
one of those steel rolls that you see could be scientifically 
different, chemically different, made for a specific product.
    So there is nothing that stops any of that stuff going on 
in any country that wants to target us for export. They could 
build a mill in Thailand and decide, we are going to build a 
mill to take out this piece of their market and do it the same 
way that South Korea did.
    So what the Commerce Department does between now and July 
10th, when they make their determination, in many ways is going 
to predict the future not only of the steel industry, but lots 
of manufacturing in this country, and I, for one, am petrified 
about it.
    If Commerce does not do its job, and if they give us some 
ridiculous margin of 4 percent or 5 percent, South Korea will 
just eat that. They need to be treated the same way the Chinese 
were treated, with a duty of 95 percent or 96 percent, because 
they are cheating just like China did.
    Senator Brown. Thank you.
    Mr. Longhi, I have a very simple question. It seems to me 
that passing currency manipulation legislation--you have talked 
about it; a number of people have--is the single most effective 
thing we can do to boost U.S. manufacturing. Do you agree with 
that?
    Mr. Longhi. I agree with that. Congress should pass 
legislation right now. I believe you may have a moment where it 
can occur at this point. But it is a very important piece of 
legislation to give us the chance to apply the very same 
circumventing duties that apply in other circumstances to 
countries that play against the rules.
    Senator Brown. Thank you. The chairman certainly has been 
very helpful on this whole issue, and a number of members of 
this committee in both parties have signed onto that--either 
that legislation or pushing in that direction on currency 
overall.
    Let me ask you one question about enforcement. One of the 
most poignant parts of your testimony, Mr. Longhi, was about 
putting together a trade case, whether it is filed by industry, 
by unions, or by the government, and how much damage is done 
when a country violates our trade laws.
    We put these cases together month after month after month 
after month. These companies are in our country; their products 
are being sold into the United States. The damage has been 
done. Our laws are slow, they are complicated, and often relief 
comes too late.
    So answer this pretty simple question. When the U.S. files 
a trade petition, whether it is you or Mr. Gerard or the 
government, do you feel the process favors foreign respondents 
over domestic producers?
    Mr. Longhi. There is no question about it, Senator. And I 
would like to make sure that the timelines that you refer to 
are properly addressed. This is not about one country or one 
company out there. This has been doing on for more than a 
decade.
    So, when we are able to succeed against one rogue country 
out there, immediately somebody else is positioned to fill in 
that vacuum, and we have found ourselves, over a period of 15 
years, where we cannot invest the necessary amounts to keep 
competing, to keep bringing forth the R&D that is required.
    So this is why this is a generational issue that may 
destroy the industries that we have. You cannot survive. We 
just shut down two plants in the last month because of the 
issues that we are facing, and we cannot take 3 years, millions 
of dollars, to try to put together a case, especially with the 
highly sophisticated schemes that some of these companies and 
countries have in place today to circumvent our laws.
    Mr. Gerard. If I could just add to what Mario said about 
that.
    Currently in the world, there is an excess of 500 million 
tons of steel capacity. More than 35 percent of that comes from 
China. Almost 75 percent of it comes from Asian countries. And, 
if you go back 10 years, 10 years ago, the global oversupply of 
steel was 182 million tons. This year it is over 500 million, 
and this year China will produce 1 billion tons of steel--1 
billion tons--when the world consumption is about 1.4 billion.
    Do not tell me that they are not planning to put us out of 
the market. That is their plan.
    Senator Brown. Thank you for that, Mr. Gerard. And I will 
close.
    I just particularly thank Senator Hatch again for his 
gentlemanliness, if you will.
    The comments you made about the arduousness of this 
process--I have seen the coated paper industry in Ohio 
basically almost disappear, and paper industries in many of our 
States, with what has happened.
    The chairman asked, I think, the right question: what do we 
do to make this process quicker? How do we self-enforce in a 
better way so there is not the damage to far too many of our 
industries, and the layoffs of too many workers, and the 
devastation of towns that have these paper mills, steel mills, 
and other production?
    Thank you, Mr. Chairman and Senator Hatch.
    Mr. Gerard. We will send a supplement to our presentation 
to answer that question.
    Senator Brown. We need real answers on that. That would be 
really helpful.
    The Chairman. Thank you, Senator Brown.
    Senator Hatch?
    Senator Hatch. Thank you, Mr. Chairman.
    Mr. Peterson, I share the concern about India's 
international property rights practices. Just last month I 
apprised Ambassador Froman--or pressed him, I would have to 
say, on why the administration was not pursuing our rights 
against India. Ambassador Froman assured me that once India's 
new government was in place, and it is a brand new government, 
he planned to increase engagement on these issues.
    Now, I want to give the new government a chance, but I also 
want to make sure that there is progress. That is why I sent a 
letter to Ambassador Froman this morning requesting that, 
immediately following the conclusion of their out-of-cycle 
review, they inform me in writing what actions are being taken 
to address these serious problems. Now, at a minimum, I would 
expect such action to include the development of a written, 
meaningful, and effective action plan with definite timetables 
for implementation.
    Now, do you agree that India's policies are undermining 
U.S. holders of intellectual property rights and that USTR must 
take action to ensure that we see rapid progress from the new 
government in India?
    Mr. Peterson. Yes, Senator Hatch. I do agree that India's 
approach to intellectual property has been harmful to 
innovative industries, U.S. companies and others trying to do 
business in India. And I do believe that, and hope that, with 
the new Indian government there is an opportunity, with action 
from our government, represented by the United States Trade 
Representative, to make a real difference in a country that has 
been among the most challenging in the world for creators of 
innovative products.
    Senator Hatch. Thank you.
    Mr. Gerard, I have been very interested in your testimony 
here today.
    Mr. Gerard. Thank you.
    Senator Hatch. And you are a very good representative of 
the industry.
    Intellectual property, in my opinion, is fundamental to the 
U.S. economy. It is just one of the things, but it is 
important. In my home State of Utah, in particular, more than 
half a million jobs and 67 percent of Utah's exports depend on 
strong intellectual property protections for their existence.
    Now, I was pleased to read in your testimony that you too 
agree that we need to place a greater priority on intellectual 
property protection. You noted the link between intellectual 
property and production and manufacturing, which I think is 
important. That is why I am so concerned that U.S. holders of 
intellectual property rights find themselves under attack 
around the globe in places such as India and China.
    As I mentioned in my opening statement, I have introduced a 
bill establishing a Chief Innovation and Intellectual Property 
Negotiator at USTR to ensure that protecting and enforcing 
intellectual property rights are not secondary issues, but are 
at the forefront of our trade policy.
    Now, Mr. Gerard, what additional steps would you suggest 
that we can take to improve the U.S. response to the challenges 
we face overseas in the area of intellectual property rights?
    Mr. Gerard. Let me say that I support your view about 
having a chief negotiator on intellectual property rights, and 
I think, as I said earlier, enforcement is a very important 
part of trade agreements, but we have to look at the trade 
agreement first. If you are enforcing a bad trade agreement, 
you are going to get bad results. But I agree that 70 percent 
of all patents come from manufacturing. By the way, most of R&D 
comes from manufacturing of one kind or another.
    Senator Hatch. Right.
    Mr. Gerard. Certainly, one of the things I would like us to 
investigate further is--you might have read a few weeks ago 
that a number of steel companies and our union got hacked by 
Chinese computer hackers, and we know what they were trying to 
steal. And I tell you that United States Steel, when you see 
those rolls, almost everything that they make did not exist 10 
years ago. It is scientifically different. So all of those are 
different patents. If they can hack into our computer systems 
and steal those patents, there ought to be an economic penalty 
for that.
    If that is something that the intellectual property 
negotiator does, that is fine, but we need to have, not only 
strong enforcement, but better trade rules. Ranking Member 
Hatch, I cannot stress how deadly it is that our trade laws 
mean that we have to lose jobs, lose market share, lose 
profitability, do all of that so that we can get a win at the 
International Trade Commission. Then, if they appeal that win 
to the WTO, as they could do with intellectual property, we 
continue to have our market destroyed.
    And I give credit to U.S. Steel; they have continued to 
invest in the industry and modernize the industry against that 
onslaught, and I will not talk about how many hundreds of 
patents I know they have for the number of products they make. 
But a trade negotiator with an Intellectual Property Negotiator 
who would also enforce those laws would be useful.
    Senator Hatch. Thank you. I have other questions for all of 
you on this panel, but my time is up. I will submit those 
questions in writing.
    The Chairman. Senator Hatch, you were very gracious to all 
of us. Did you want to ask another question at this time? We 
will have a second round too.
    Senator Hatch. Yes. I think that I will forego, because I 
will submit my questions in writing. But you have all been 
excellent, as far as I am concerned, and very helpful to the 
committee.
    I am not sure I agree with everything in your statements, 
but by gosh, they have been very, very important statements, as 
far as I am concerned. But thank you for being here, and thanks 
for your patience in waiting for us while we voted those three 
times.
    Mr. Gerard. Let me just say, before you leave, so that you 
know, our union has members in both the soybean industry and 
the chicken industry, and we are on their side too. [Laughter.]
    Senator Hatch. You are everywhere. That is the problem. 
[Laughter.]
    Mr. Gerard. Well, I saw you passing through the Pittsburgh 
airport. I thought you might stay. It is one of the greatest 
cities in the country.
    Senator Hatch. Well, I happen to know a lot about it, since 
I was born and raised there and was a member of the AFL-CIO, by 
the way, and learned a trade.
    Mr. Gerard. Come on back home. [Laughter.]
    Senator Hatch. I am home. [Laughter.]
    All I can say is, I have not forgotten Pittsburgh either. I 
was a young kid born under very trying circumstances, and 
Pittsburgh was a wonderful place to be raised, as far as I am 
concerned. But I am home in Utah, I want you to know that. It 
is a wonderful State.
    We are sorry we lost our steel mill out there. We would 
love to have both of you out there again.
    Mr. Gerard. Fix this, and we may come back.
    Senator Hatch. Well, we will be looking forward to that. I 
certainly appreciate the way you have your eyes on the steel 
industry, Mr. Longhi. I am sorry that I did not have questions, 
but I will submit questions in writing, and we support you very 
strongly.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Hatch.
    The two Pennsylvania Senators arrived in order of 
appearance, but I understand Senator Toomey is very much under 
the gun.
    Senator Casey, would that be inconvenient to you?
    Senator Toomey, let us go with you.
    Also, Mr. Gerard, you should know, apropos of the cyber-
hacking matter, Solar World in Oregon was also cyber-hacked 
when they stood up for their trade rights. So it is an 
important point.
    Senator Toomey?
    Senator Toomey. Thank you, Mr. Chairman. And I thank my 
colleague, the senior Senator from Pennsylvania, for allowing 
me to go ahead in line here.
    First, Mr. Longhi, let me just state something that should 
go without saying, but I think it is worth saying. I know that 
you are very sorry, as I was when I heard about the 
announcement of idling the plant in McKeesport. A lot of 
Pennsylvanians are going to be out of work as a result of that, 
and it is a very, very painful decision.
    I just want to be very clear that your employees should 
feel free to reach out to my office so that we can help them in 
any way possible, navigating various Federal bureaucracies, 
dealing with unemployment benefits, whatever it might be. I 
hope you will make sure that they know that.
    Mr. Longhi. We appreciate your support, and that is in the 
works already.
    Senator Toomey. Terrific. Thank you.
    You spoke about the pending case against the imports from 
South Korea, and, as you know, I spoke with Commerce Secretary 
Pritzker about this very matter. But, as you alluded to in your 
testimony, there are some technical aspects to this, and 
specifically there is apparently a practice that has been 
highly refined by the South Koreans in creating corporate 
vehicles that allow them to hide information and make the 
investigation that Commerce needs to conduct very, very 
difficult for them, difficult for Commerce to get the facts 
that they need.
    Could you please explain for the committee in a little bit 
more detail about how that works, what they are doing, and why 
that is so problematic?
    Mr. Longhi. Thank you, Senator. The simple version of that 
is that they have created a very sophisticated cross-
shareholding structure through which information such as cost 
of production, research and development, marketing, logistics, 
transportation, and transactions in general occur in a very 
shadowy manner, so much so that when Commerce first made their 
assessment, they clearly stated in their preliminary report 
that they could not make sense of the information that was 
being provided to them.
    Now, when you add to this dimensions of being tardy in 
responding to the requests of Commerce to explain some of the 
topics, and the way that they were managing them, and requests 
for delays, it reduces the time in which the investigators can 
properly do their investigation.
    Also, what happens is that they are coming up with a very 
significant level of aggression in so many different products 
and fronts that, potentially today, two-thirds of all of the 
Department of Commerce investigators are being consumed in 
dealing with steel cases, again, reducing the ability for 
proper investigation to take place.
    Senator Toomey. Just to follow up, you mentioned that, 
apparently, one of the tactics is intentionally delaying the 
time for responding to legitimate requests from Commerce.
    Is there any recourse that Commerce has in this process? 
What do they do if they are getting stonewalled?
    Mr. Longhi. The primary flexibility that Commerce has is 
that, within their statute, they have discretion to slap a fee 
on top of the country that is not responding in a timely manner 
nor with clarity to Commerce's requests, which is one of the 
reasons why we are so very surprised when all of a sudden South 
Korea comes across with a 0-percent fee as a determination.
    Senator Toomey. But that also suggests a possible avenue 
for going forward. If these delays are contributing to the 
inability of Commerce to come to that conclusion, then maybe 
there is another response that is appropriate. I appreciate the 
input.
    Mr. Peterson, I wanted to just quickly touch on something I 
think you had mentioned specifically, as well as Mr. Gerard: 
the danger of ongoing cyber-attacks, including from China.
    I think this is a huge national security issue, as well as 
a commercial concern. But as a general matter, I am very 
concerned about whether we have adequate IP protections in a 
wide range of industries.
    You had touched on some of the challenges you faced with 
Canada. Is there anything that we can be doing here in this 
committee to help improve the dangers we face in that regard?
    Mr. Peterson. I think the key is to continue to keep 
focusing on enforcement, because, in the situation with Canada, 
just as an example, the agreement is clear, and one branch of 
the Canadian government, in this case the courts, has taken 
these actions. But by virtue of the fact that we do have the 
opportunity as a private company to be able to undertake the 
action that we have, we are able to protect our property rights 
if we are successful through that process.
    So I think the encouragement of those kinds of enforcement 
mechanisms in free trade agreements is critical. And then the 
encouragement of strong statements and strong enforcement 
action by the USTR is what is key in these areas where we 
otherwise have good agreements, but they are being violated by 
the country that entered into them freely in the past.
    Senator Toomey. Thank you. I want to thank the panel. Thank 
you, Mr. Chairman, and thank you, Senator Casey.
    The Chairman. Senator Thune, Senator Casey was here ahead 
of Senator Toomey, but he gave way because of Senator Toomey's 
schedule. Would it be possible for Senator Casey to go next, 
and then you would go right after Senator Casey?
    The collegial Senator Thune--I thank you.
    Senator Casey?
    Senator Casey. Mr. Chairman, thank you very much. I 
appreciate Senator Thune's indulgence.
    It is good to be with all of you. I will direct my 
questions to this end of the table, if you do not mind, our 
other three witnesses.
    Mr. Gerard, I wanted to ask you--I have known you a long 
time, and you and I have talked about this in one way or 
another. But one of the concerns that I have, when we step back 
from the current issues, is the challenge that you face on the 
question of illegal imports and all the adverse job impact and 
adverse economic impact that has.
    I think we also have to step back and ask ourselves, do we 
not need, in addition to better enforcement and better 
strategies, do we not need an overall trade policy, what you 
might call a unified trade, manufacturing, and job-creation 
strategy, or maybe, for short, a real trade policy just like we 
have when it comes to national security?
    A lot of Americans, if you ask them what our national 
security strategy is, you might hear variations, but most 
people would say that we want to promote democracy, we want to 
protect human rights, we want to make sure that people have 
basic rights, and we also want to make sure that we are 
undertaking efforts to track down and destroy terrorists before 
they come to us--things like that that we all kind of agree 
upon.
    With trade, I am not sure we can enunciate that, and I am 
not sure our policy or our legislative enactments are 
consistent with our undergirded strategies.
    So, if you had to design or articulate or outline what a 
policy would be for the United States of America on trade, 
similar to what I articulated as it relates to national 
security or defense policy, what would the pillars of that be, 
or what are the elements that you would put forth?
    Mr. Gerard. Well, I guess this is probably a good time to 
quote Senator Obama before he became President, and what he 
said is that we ought to measure our progress on trade not by 
the amount of trade agreements we negotiate, but by the quality 
of them and how many jobs they create at home.
    So, if I was to be able to help design a new trade policy--
let me start off by saying that our union is not against trade. 
We are just against trade that is designed to give away our 
jobs. And, when I make the comment that, since PNTR with China, 
we have had a $7-trillion trade deficit with China, that should 
say it all.
    So I think that, starting down that path, we should be 
looking at developing our energy sector and our trade and our 
manufacturing sector so they are integrated, and looking at our 
education system.
    If you look at what is happening now in the oil and gas 
industry, you would know that in Pennsylvania we had to go and 
put on special schools to get people trained to go into that 
industry, because we did not plan ahead. We did not have a 
strategy.
    Now we are having to talk about exporting liquefied natural 
gas. We are not against exporting LNG, but we ought to take 
care of America first.
    So I think you need an integrated strategy. Some people 
would panic, but I would call that an industrial strategy. Of 
the major OECD countries, we are one of the only countries that 
does not have a strategy.
    So when you come to trade, I think, as I said in my 
testimony, enforcement is a very, very important component of 
that. We negotiate trade deals. We ought to demand that they be 
enforced. It is like imagining that you put up a series of stop 
signs in a school district, but you do not tell people to stop. 
You inevitably know what is going to happen, and I think this 
is a complicated question with a complicated answer.
    But I would start by looking at our trade agreements and 
quit BSing us. Why do we need a trade agreement with Bernai? It 
has nothing to do with trade. It has something to do with the 
State Department.
    So we need to have an honest discussion about what we are 
doing with trade, and is it really bringing jobs home.
    Senator Casey. Well, I appreciate that. I will submit some 
questions for the record for other issues.
    But, Mr. Longhi, one of the concerns that you raise, when 
it comes to the fundamental challenge of illegal imports that 
lead to job loss, is what we have to do to engage with the 
Department of Commerce.
    I know that a number of us have made it very clear to 
Department of Commerce Secretary Pritzker not just what our 
concerns are about, but what we hope and expect that they will 
do to be responsive.
    I know we are at a point now where it is in the hands of 
Commerce and the International Trade Commission, but we will 
keep working together with you and with the steelworkers to put 
forth an ongoing strategy so we can continue to work together 
to prevent some of the job loss.
    But I will try to submit some more questions to you for the 
record.
    Mr. Gerard. If I could just say for the record, Mr. 
Chairman and members of the committee, I really want to thank 
you, Senator. As you said, you and I have been talking about 
this since way before you were a Senator, and you have been a 
champion for us, not just in the steel industry, but across a 
number of industries of manufacturing, and this is my first 
chance to publicly acknowledge it.
    So thank you.
    Senator Casey. I appreciate it. Thank you.
    The Chairman. Mr. Gerard, you should know that there are a 
lot of us in the Senate whom Senator Casey has talked about 
these issues with, and it reflects the urgency that you and Mr. 
Longhi are talking about, and we appreciate it.
    Senator Thune?
    Senator Thune. Thank you, Mr. Chairman. Thanks for having 
the hearing today. I think it is an important hearing. I 
appreciate the panelists who are here to testify.
    I do wish, however, we were talking about enacting an 
updated and strengthened Trade Promotion Authority bill so that 
we could actually close some of these ongoing trade deals 
rather than simply talking about them. But that said, I am 
pleased the committee is holding the hearing, and I would agree 
that effective trade enforcement is an important component of 
any successful trade agenda.
    Any administration, regardless of political party, should 
seek to ensure that our trading partners live up to their 
commitments, whether it is in the area of market access for 
agriculture or production or intellectual property rights. So I 
hope this committee, Mr. Chairman, will soon consider the 
Customs modernization bill that was introduced last year so 
that we can give our Customs agents at ports of entry better 
tools to enforce our trade laws.
    Mr. Wilkins, it has been a year since China last approved a 
new type of biotech corn or soybean. I am very concerned about 
these barriers that some of our trading partners around the 
world are putting up in terms of sanitary or phytosanitary 
measures, and there probably is not a more important market to 
the people whom I represent in South Dakota when it comes to 
soybeans than is China. As you know, last year, 28 percent of 
total U.S. soybean production, which was worth over $13 
billion, was exported to China.
    So tell me what you make of what they are doing now. Could 
you elaborate on what that is going to mean for soybean 
production and the soybean farmers in this country and then, 
also, how you believe the United States can best address that 
situation?
    Mr. Wilkins. Thank you, Senator. The enormous amount of 
soybean trade with China is, in a way, a two-edged sword. They 
are a wonderful trading partner. Their people are having an 
increase in their standard of living. As their standard of 
living is increasing, the first thing they want to do is 
improve their diet, and what better way to improve their diet 
than with the miracle protein of soy?
    The two-edged part of it is that the Chinese regulatory 
process is such that they will not begin to entertain the 
deregulation of a new biotech trait until the exporting 
country, which in our case is the United States, deregulates 
the trait.
    The way that our efficient agricultural system in the 
United States aggregates production into an efficient 
infrastructure system, we fear that if we commercialize new 
traits that are approved in the United States, there is a 
possibility that those traits could unintentionally find their 
way in a very minute amount into a cargo destined for China. 
China could then use that unregulated trait as a way of 
providing an artificial trade barrier to manipulate market 
prices or to turn away cargos when it does not suit them to 
receive cargos.
    The asynchrony of the global biotech deregulatory process 
is frustrating to us as farmers. We want the opportunity to be 
able to start to use these tremendous new genetic enhancements 
to our crops, allowing us to use less pesticides, allowing us 
to control our pests in safer ways, and to be able to continue 
to provide safe and abundant food for our trading partners 
around the world.
    Senator Thune. Well, I am interested in not only what is 
happening there, but also, as we look at the U.S.-E.U. trade 
agreement, about the future of biotech and whether or not that 
ought to be part of the negotiated outcome there.
    I believe that we need to ensure, as we negotiate that 
agreement, that it is as comprehensive as possible when it 
comes to issues of market access and regulatory cooperation. So 
I am just curious. Is that something that you believe ought to 
be a priority for the U.S.-E.U. trade agreement as well?
    Mr. Wilkins. Absolutely. The renewable energy directive 
that the E.U. has established in the case for biofuels, that is 
hindering the export of our United States biofuels into the 
European marketplace.
    Their labeling requirements of food stuffs that contain or 
may contain genetically enhanced molecules is an egregious 
point.
    The European Food Safety Administration, EFSA, they review 
the biotech traits. They give them a clear bill of health that 
they present no concerns for safety, but the E.U. parliament's 
political system of not wanting to vote to approve new biotech 
traits is substantially hindering the advancement of 
agricultural production here in the United States.
    Senator Thune. Thank you.
    Mr. Chairman, I guess I would simply say that, as we talk 
about these issues, it is really important that we tear down 
these types of barriers for a lot of reasons, of course, the 
obvious one being the health and economic vitality of American 
agriculture.
    But there is also the issue that these types of biotech 
corn and soybean seeds that he is talking about, also 
significantly increase yields. You get greater productivity, 
and that is going to help us feed the world. And right now we 
are adding 70 million to 80 million people to the world's 
population every single year, and the American farmer is going 
to be looked to to help meet that demand, and this issue is 
really critical in that regard.
    When you run into these barriers that are artificial 
barriers imposed by the Europeans and China and other countries 
around the world, it is going to be increasingly difficult for 
us, and it will be difficult for those other countries around 
the world that need the food to get it.
    So I really hope this will be a priority for our 
negotiating teams in the U.S.-E.U. trade agreement, but also as 
we continue to try to drill down on some of these relationships 
that we have with other countries around the world, and 
specifically right now China, which, as I mentioned earlier, 
for over a year now, has not approved a new type of biotech 
corn or soybean. That is very problematic for agriculture, not 
only here in America, but, again, for the world's population.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Thune. You and I have been 
working on these trade issues for a long time, going back to 
the days when I was chair of the subcommittee and you were the 
ranking minority member.
    I think about our work on low-value imports and Customs and 
the digital trade issue. And I am struck--and I am not sure you 
were here for this part of it, but it is something we have 
always worked together on, these bipartisan issues, trade 
issues in particular--that it was not a coincidence that we 
chose enforcement today as our first issue after Mike Froman 
came to talk to us, because what I find again and again is, 
even in a State as dependent on trade as mine, so many workers, 
particularly middle-class workers, come up and say, ``Hey, Ron, 
why are you talking about a new agreement before you enforce 
the laws that are already on the books with respect to the 
existing trade agreements?''
    Of course, TPA is about facilitating new trade agreements, 
and my judgment was that, when we can work together in a 
bipartisan way to enforce what is on the books, we build 
credibility for the future trade challenges, and it has been 
great to work with you on these kinds of issues in the past, 
and I know we are going to do a lot of bipartisan work together 
on them as well.
    Senator Cardin?
    Senator Cardin. Thank you, Mr. Chairman. I first want to 
identify myself with your strong opening statement, which is 
that we first need to start with the enforcement of our trade 
laws. It starts with our existing trade remedies that we have, 
and, in too many cases, our antidumping laws or countervailing 
duty laws have been compromised through negotiation.
    That is one thing we do not want to see happen. We want a 
strengthening of these laws, not a weakening. This is one of 
the areas where the United States has been a victim of being 
naiive at times, because--particularly on steel--we have 
entered into certain understandings only to find that as we 
reduce capacity, other countries increase capacity, then they 
dump into our market and we try to use remedies and they yell 
they cannot do it.
    So it starts with enforcing and strengthening our current 
laws. But as you mentioned, and I just really want to 
underscore this point, we have expanded the trade agreements to 
go beyond traditional barriers. It used to be we would try to 
reduce tariffs, then we went to the non-tariff barriers.
    Then we started recognizing that to have a level playing 
field for American companies, to help our competitive situation 
globally, we had to look beyond just the traditional trade 
issues, and we got into environment, we got into labor, and we 
thought that we could do either sidebar agreements or action 
plans and that that would be adequate.
    And we did that. We did it in NAFTA. We did that in the 
trade agreements in our hemisphere, only to find that the 
countries violated those provisions, but there was no real 
enforcement. So the truck issues with Mexico or the labor 
agreements issues with South American countries went 
uncorrected, because there was no real enforcement within the 
terms that we negotiated.
    I think the lesson that was learned from that is that, if 
it is going to work, you have to make enforcement part of the 
core trade agreement. You are going to need ways to try to 
resolve issues before you impose sanctions, but it has to end 
up with the threat and power to impose trade sanctions if it is 
going to be enforceable. I think that is the lesson we learned.
    So now we are working on the Trans-Pacific Partnership, 
TPP, and the struggle here is that we are dealing for the first 
time with a trade agreement that deals with countries that are 
market economies--developed countries and developing countries.
    In many cases, we hopefully are going to demand in these 
trade agreements that there be good governance so that our 
companies that will not participate in corruption are 
protected; that for countries that have state-operated 
enterprises, we make sure that their provisions for opening up 
these state-operated enterprises are actually done, and, if 
they are not, that we have enforcement; that we have 
anticorruption provisions; that we have government contract 
provisions to level the playing field. All of that is in good 
governance. We are seeing progress in the countries that are 
developing countries in TPP. But once an agreement is signed, 
if it is signed and ratified, past practice shows us that that 
progress will slow down, if not stop, unless there is 
enforcement in the trade agreement to make sure these countries 
carry out their commitments.
    So that, I think, is the real lesson. And I know we had 
Ambassador Froman here, and we talked to Ambassador Froman 
about these issues. I think he understands it.
    In the recent days, I have met with the prime ministers of 
New Zealand and Singapore, two countries that are part of the 
TPP, to urge them to understand that you are not doing anyone 
any service unless we have a quality agreement, as I think some 
of you have mentioned.
    Mr. Brosch, I want you to know that on poultry, we have 
weighed in on the issues, and we have a major poultry industry 
in our State, and I thank you very much for your leadership on 
that. We are not going to forget the traditional problems that 
we have.
    Mr. Gerard, you have been really our leader in trying to 
focus on where the priorities need to be in enforcement, and I 
know that we do not know what this agreement looks like. We 
have not even had a TPA bill here. But I would appreciate your 
help in identifying areas where we could advance true 
enforcement as we look towards these trade agreements.
    Mr. Gerard. We would be happy to do that. I think the first 
area that you could move on is recovering Congress's ability to 
approve the agreement in detail rather than through fast-track.
    We have seen what the results of fast-track are, and I 
think that Congress should have never ceded its authority to 
review those agreements and make sure they do what the 
President said that they should do, which is create jobs in 
America. Unequivocally, I challenge anybody to prove me wrong. 
We have had no net job gains from any trade agreement that has 
been negotiated since NAFTA.
    So put that to the side. The one thing I do want to 
stress--it is good to see you. We lost one of the most 
important steel mills to the United Steel Workers Union in 
Baltimore, MD, and we lost that mill primarily because the 
trade laws do not work, and I say this with all due respect.
    The other countries surge our market. By the time we file a 
trade case--and you know how many we file; you have been part 
of them. When we file those trade cases, we will win, but we 
have already lost a bunch, and they will come down a bit. Then 
they will nail us in another part of our industry in steel, and 
we will surge again and countervail again and subsidize again 
and we will file another case and we will win, and we slowly 
starve the capital until our companies cannot earn the cost of 
capital.
    The only steel industries that are left standing in America 
were the strongest ones, and we are on the verge of--this is 
quite emotional for us in the Steelworkers Union. We are on the 
verge, if Commerce does not do the right thing, of losing the 
most important value-added part of the steel industry to two 
countries that have deliberately set about to cheat us out of 
our own market--China and South Korea.
    So we are happy to help and submit more in detail in 
writing, because I think you are on the right track. But you 
have to recognize that you should not cede your authority to 
make sure the agreement does what it is supposed to do.
    Senator Cardin. I thank you for your testimony, and you 
know I agree with you on Bethlehem. That was a tragic loss for 
our country and certainly for our community.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Cardin. You have made a 
number of important points, and I very much look forward to 
working with you on these issues and trade generally.
    I think you could hear--and I say this to all of the 
witnesses--that Senators do feel strongly that our country 
needs rules in trade agreements that have teeth, and they have 
to be enforced. A variety of Senators have said it in a variety 
of different ways, but it seems to me that is what this is 
really all about.
    I simply would close by saying, again, the topic of today's 
hearing was not randomly chosen. Trade enforcement is central 
to protecting what I call red, white, and blue jobs, and it 
seems to me we have made some headway here recently.
    That is why I specifically referenced the rare earth 
minerals, the efforts at USTR. Mr. Gerard, we appreciate your 
involvement in this, and it is why I and others talked about 
making sure that unfair trade is identified and remedied sooner 
in the process, and what we have talked about here, at least a 
couple of times, is that there should be a more systematic 
system of identifying enforcement issues.
    So you all have given us a big agenda, and really it is 
reflected in concerns all the way from the wheat fields of 
eastern Oregon, where we have been concerned about some of the 
agriculture issues that we have talked about here today and how 
those practices affect our State, to some of the steel mills 
that are thousands of miles away.
    I think what we are united on is that enforcement, making 
sure that there are rules, number one, and meaningful rules, 
and that they are adequately enforced, is something that cannot 
be given short shrift. And it goes right to the heart of our 
ability in the future to grow things in America, to make things 
in America, to add value to them in America, and then ship them 
somewhere. Nowhere is this more important than Oregon, where 
one out of six jobs depends on international trade, where the 
trade jobs often pay better than do the non-trade jobs.
    You all have, I think, laid out the enforcement issue very 
well, and we appreciate your patience with Senators, on a 
particularly hectic day, having to be out for votes.
    I know we are going to be calling on you, and we are going 
to be calling on others who may not share your views, because I 
think there is an opportunity here, and trade is so important 
to our country and to our economy.
    We are determined to get it right. We are determined to get 
it right on a bipartisan basis.
    With that, the Finance Committee is adjourned.
    Mr. Gerard. Mr. Chairman, could I just--I missed one point, 
and I do not want to be an apologist for USTR, but a bipartisan 
increase in their budget so they could do more enforcement 
would be wonderful.
    The Chairman. Very good.
    [Whereupon, at 4:39 p.m., the hearing was concluded.]
                            A P P E N D I X

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