    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

                       THE U.S. REBALANCE IN EAST ASIA:
                         BUDGET PRIORITIES FOR FY 2016

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

                                    HEARING

                                   BEFORE THE

                      SUBCOMMITTEE ON ASIA AND THE PACIFIC

                                     OF THE

                          COMMITTEE ON FOREIGN AFFAIRS
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 APRIL 23, 2015

                                   __________

                               Serial No. 114-35

                                   __________

            Printed for the use of the Committee on Foreign Affairs

     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

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                          COMMITTEE ON FOREIGN AFFAIRS

                     EDWARD R. ROYCE, California, Chairman
    CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
    ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
    DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
    STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
    JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
    MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
    TED POE, Texas                       BRIAN HIGGINS, New York
    MATT SALMON, Arizona                 KAREN BASS, California
    DARRELL E. ISSA, California          WILLIAM KEATING, Massachusetts
    TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
    JEFF DUNCAN, South Carolina          ALAN GRAYSON, Florida
    MO BROOKS, Alabama                   AMI BERA, California
    PAUL COOK, California                ALAN S. LOWENTHAL, California
    RANDY K. WEBER SR., Texas            GRACE MENG, New York
    SCOTT PERRY, Pennsylvania            LOIS FRANKEL, Florida
    RON DeSANTIS, Florida                TULSI GABBARD, Hawaii
    MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
    TED S. YOHO, Florida                 ROBIN L. KELLY, Illinois
    CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
    SCOTT DesJARLAIS, Tennessee
    REID J. RIBBLE, Wisconsin
    DAVID A. TROTT, Michigan
    LEE M. ZELDIN, New York
    TOM EMMER, Minnesota

         Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

                   Jason Steinbaum, Democratic Staff Director
                                     ------

                      Subcommittee on Asia and the Pacific

                         MATT SALMON, Arizona Chairman
    DANA ROHRABACHER, California         BRAD SHERMAN, California
    STEVE CHABOT, Ohio                   AMI BERA, California
    TOM MARINO, Pennsylvania             TULSI GABBARD, Hawaii
    JEFF DUNCAN, South Carolina          ALAN S. LOWENTHAL, California
    MO BROOKS, Alabama                   GERALD E. CONNOLLY, Virginia
    SCOTT PERRY, Pennsylvania            GRACE MENG, New York
    SCOTT DesJARLAIS, Tennessee
                                C O N T E N T S

                                  ----------
                                                                       Page

                                   WITNESSES

    The Honorable Daniel R. Russel, Assistant Secretary, Bureau of
      East Asian and Pacific Affairs, U.S. Department of State.......     5
    The Honorable Jonathan Stivers, Assistant Administrator, Bureau
      for Asia, U.S. Agency for International Development............    17

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    The Honorable Daniel R. Russel: Prepared statement...............     7
    The Honorable Jonathan Stivers: Prepared statement...............    19

                                    APPENDIX

    Hearing notice...................................................    38
    Hearing minutes..................................................    39
    The Honorable Alan S. Lowenthal, a Representative in Congress
      from the State of California: Material submitted for the record    40

                        THE U.S. REBALANCE IN EAST ASIA:
                         BUDGET PRIORITIES FOR FY 2016

                                  ----------

                            THURSDAY, APRIL 23, 2015

                           House of Representatives,

                     Subcommittee on Asia and the Pacific,

                         Committee on Foreign Affairs,

                                Washington, DC.

        The subcommittee met, pursuant to notice, at 1:08 p.m., in
    room 2172, Rayburn House Office Building, Hon. Matt Salmon
    (chairman of the subcommittee) presiding.
        Mr. Salmon. Good afternoon. The subcommittee will come to
    order.
        I would like to thank our distinguished witnesses,
    Assistant Secretary of State Daniel Russel and Assistant
    Administrator for USAID Jonathan Stivers, for being here this
    afternoon.
        We called this hearing to assess U.S. foreign assistance to
    East Asia and the Pacific for Fiscal Year 2016. This is a
    critical topic because it is clear that the future of the
    United States is inextricably linked with East Asia.
        The region encompasses many of the greatest opportunities
    for our country. What remains to be seen is what shape its
    future will take because some of our greatest strategic
    challenges also come from East Asia. For example, the United
    States should assist in the peaceful resolution of maritime
    disputes and military buildup in the South China Sea or we risk
    tensions erupting into kinetic conflict.
        The United States must engage in new trading relationship
    with burgeoning regional powers in Asia through the Trans-
    Pacific Partnership or we risk markets could remain restricted
    to our businesses. The United States must retain its leading
    role in ensuring the peaceful sharing of land, sea, air, and
    cyberspace or we risk paving the way for less savory
    alternatives, such as the dominance of authoritarian Chinese
    rules and norms.
        As a Pacific power, the United States must seek positive
    outcomes for these challenges and others. We also need to
    balance these challenges abroad with our financial constraints
    at home, which will require allocating U.S. funds efficiently
    and effectively.
        The administration initially proposed a rebalanced Asia as
    a centerpiece of its foreign policy. However, the follow-
    through we have seen on the rebalance or the pivot has not
    reached its full potential. Last week I spoke at an event with
    Senator McCain, and he observed that we had not yet truly
    pivoted. I agree.
        The attention given to East Asia and the Pacific by the
    administration does not seem to be indicative of a concerted
    effort. In Fiscal Year 2015, the East Asia Bureau's budget is
    the second smallest of any of the State's regional bureaus.
        If we are ever to truly rebalance, the effective allocation
    of foreign aid for the region, rather than the sheer amount we
    spend, must be the critical factor for our foreign aid spending
    in the Asia Pacific. I am eager to hear from our distinguished
    witnesses today about their respective efforts on this issue.
        In China, we are supporting sustainable development,
    environmental conservation, and cultural preservation
    initiatives in Tibetan areas as well as HIV/AIDS programs,
    international narcotics control and law enforcement, and
    democracy programs. Over the last few years, we have seen
    reduced funding for democracy, human rights, and rule of law
    programs, which I am concerned about because of increased
    levels of repression from the Xi administration, which puts at
    risk our efforts in these areas. The controls and limits on the
    freedom of expression have indicated that the Chinese
    Government intends to rule by law rather than uphold the rule
    of law.
        Moving to Southeast Asia, I have concerns about countries
    in the Lower Mekong region, which includes Burma. Cambodia,
    Laos, Thailand, and Vietnam. I see that this year's budget
    request for the Lower Mekong Initiative is nearly 20 percent
    lower than last year's. This broad initiative supports aid
    programs and education, the environment, health, food security,
    and infrastructure.
        And I would be very interested to hear the reasoning behind
    its deemphasis in this year's budget. I am particularly
    interested to hear the witnesses' views on whether this
    reduction will constrain the U.S. presence in the Lower Mekong,
    especially now, in light of China's aggressive infrastructure
    investments in the region and the U.S.'s exploration of closer
    relations with nations such as Vietnam.
        This year's budget requests reflect an increase and
    involvement with Vietnam, which is a forward-looking decision.
    Though our current efforts for Vietnam are still focused on
    disease control and development, we are also working toward the
    U.S.-Vietnam relationship of the future by helping to improve
    governance, strengthen civil society, improve human rights
    conditions, and to promote Vietnam's involvement in the TPP.
    Our aim should be continuing to support Vietnam's
    transformation to become a more responsible and inclusive
    partner. I look forward to discussing these priorities with
    Vietnam when I travel to the region in just a couple of weeks.
        I am pleased to see that this year's budget request places
    significant emphasis on enhancing the defense capabilities of
    Indonesia, Vietnam, and the Philippines through foreign
    military financing as well as training in anti-terror programs.
    We have had longstanding and productive counterterror
    cooperation with Indonesia, and helping the world's largest
    Muslim-majority nation to deal with radicalism should continue
    to be a top priority. Vietnam and the Philippines, as claimants
    in the South China Sea, face heightened risk of state-to-state
    conflict due to China's aggressive island-building in disputed
    waters. So the security emphasis we see for these two nations
    in this year's request is welcome, also.
        President Reagan once said, ``We can't help everyone, but
    we can help someone.'' Our mission here today is to hold a
    dialogue about which ``someones'' to help. And it is a truly
    exciting and daunting time to have these kinds of conversations
    because the East Asia Pacific presents colossal opportunities
    and vexing challenges. I give my sincere thanks to my
    colleagues today and our witnesses for joining me in this
    conversation today.
        And I turn the time over to Mr. Lowenthal for any opening
    statements he might have.
        Mr. Lowenthal. Thank you, Mr. Chairman.
        And thank you, witnesses, for joining us today.
        As you have just heard, we are at a critical junction for
    U.S. foreign policy in Asia. And I look forward to hearing how
    the United States can advance our security interests, our
    quality of life and our human rights, and promote human rights
    and democracy in the region.
        With the ongoing negotiations on the Trans-Pacific
    Partnership, there is no better time to have an open and frank
    discussion about U.S. priorities in Asia. I believe that the
    United States can play a key positive role in Asia by promoting
    universal ideals of human rights.
        Cambodia, a country with a long and bumpy and often winding
    road to democracy, can benefit greatly from the United States'
    assistance in building democratic institutions. In Vietnam, an
    autocratic, authoritarian regime must be made to improve its
    human rights record.
        I would also like to highlight the challenges posed to the
    United States' security interest by the, quote, deg.
    ``threat multiplier of climate change and rising sea levels,
    which will disproportionately affect over 1 billion people who
    live along the coast in this region, many of whom depend upon
    the rivers, the estuaries, and the oceans for their
    livelihood.''
        As the United States seeks to build international consensus
    to limit carbon emissions, we must also work with countries in
    the region to prepare for an already changing climate.
        Thank you, Mr. Chair. And I yield back.
        Mr. Salmon. Thank you, Mr. Lowenthal. The Chair yields to
    Mr. Rohrabacher.
        Mr. Rohrabacher. Thank you very much, Mr. Chairman.
        I have been around here for about 28 years now, and I have
    always understood, being a Californian, that Asia plays a
    significant role in the well-being of the people of the United
    States of America. If we don't have good policy toward Japan
    and China and the Philippines, Vietnam, Korea, that region of
    the world, we will not prosper, nor will we be secure.
        Those of us, as I say, in California know more about that.
    And I served with Ronald Reagan in the White House, and he
    certainly understood that. Today, however, there are serious
    challenges, but they are over the horizon. They have yet to
    come into view.
        And I would suggest that the emergence of China as such a
    powerful entity and a China that has had absolutely no
    political reform--they have had lots of economic reform and
    they have--people say, ``Oh, no. They are having all this
    reform.''
        No. They are not having any reform as long as they maintain
    that the government has total control over the political
    process. There are no opposition political parties there.
    People are not permitted to have private newspapers that
    criticize the government. They have hundreds of thousands of
    people--or 100,000 people tracking down anyone on the Internet
    that criticizes the basic nature of their system. And this is a
    monstrous threat that is just over the horizon.
        Let me note for my friends who are so aggressively
    attacking Mr. Putin in Russia and their shortcomings in Russia,
    which there are many, there have been numerous reforms in
    Russia compared to China. Yet, we continue with a hostile
    attitude toward Russia and more of an open attitude toward
    China. So I am looking at that very closely.
        And one thing that gives me heart that we will be able to
    confront any emerging threat in the Pacific is that Japan now
    is moving forward to basically step into its rightful role as a
    major power in the Pacific and Asia. We have had for far too
    long the stigma of World War II in which the Japanese were
    totally wrong and committed some monstrous acts, just like the
    Germans were totally wrong and committed monstrous acts.
        But we forgave the Germans a long time ago. And we now have
    the Germans actually involved with peace efforts in Ukraine.
    They are sort of in charge of that. Well, Japan is ready to
    step up into that role in Asia and the Pacific. And the United
    States needs to have a strong partnership.
        Next week we have President Abe coming to visit, to do a
    joint session of Congress. I think this is a good way to
    inaugurate a new era of relations between Japan and the United
    States and, hopefully, a new era of security and a new era of
    peace and prosperity in the Asia-Pacific region.
        Thank you, Mr. Chairman, for holding this hearing today.
        Mr. Salmon. Thank you.
        Would you care to make some comments, Mr. Sherman? Any
    opening comments?
        Mr. Sherman. Just a few.
        First, there is some confusion on the floor of the House as
    to when I will be recognized to do a special order, this being
    the 100th anniversary of the Armenian genocide. And so I will
    need to balance my responsibilities here with that special
    order.
        With regard to these hearings, I will try to be brief,
    showing up late.
        And I do want to point out, Mr. Russel, that I hope that
    you would be with others at State and the intel community,
    giving our subcommittee and, perhaps, the Terrorism,
    Nonproliferation, and Trade Subcommittee a classified briefing
    on the China 123 Agreement that the administration has set
    forth before us.
        I would urge members and those staff members that have
    classified clearances to go see the reports and classified
    information on this and particularly focus on two things,
    first, whether China is doing a robust or even adequate job on
    making sure that its private and quasi-private entities are
    adhering to nonproliferation standards.
        And, second, I urge members and those staffers with
    security clearance to focus on whether China is using nuclear
    technology which they promised would be used only for civilian
    purposes for military purposes. So I look forward to looking at
    that issue.
        As to the panoply of issues that we will deal with at this
    hearing, I think other opening statements have covered that.
    There is no more important region in the world for the United
    States than Asia, which is why we have all chosen to serve
    under the leadership of our chairman on this subcommittee.
        I yield back.
        Mr. Salmon. Thank you.
        We thank the State Department and USAID for our
    knowledgeable witnesses this afternoon.
        Assistant Secretary Russel joins us from the State
    Department's Bureau of East Asian and Pacific Affairs, and we
    are grateful to Assistant Administrator Stivers of USAID's
    Bureau for Asia for returning as this his second time
    testifying before the subcommittee.
        And, without objection, the witnesses' full prepared
    statement will be part of the record. And members will have 5
    calendar days to submit statements, questions, and extraneous
    materials for the record.
        And, with that, Mr. Russel, I will turn to you first.

        STATEMENT OF THE HONORABLE DANIEL R. RUSSEL, ASSISTANT
       SECRETARY, BUREAU OF EAST ASIAN AND PACIFIC AFFAIRS, U.S.
                          DEPARTMENT OF STATE

        Mr. Russel. Thank you very much, Mr. Chairman, and Ranking
    Member Sherman, members of the subcommittee. And thank you in
    particular for the committee's support of our work with the
    East Asia-Pacific region and for the opportunity also to
    testify today about President Obama's Fiscal Year 2016 budget
    request. And I am pleased, of course, to be here with my
    colleague from USAID, John Stivers.
        As you pointed out, Mr. Chairman, in your opening remarks,
    our strategy toward the region reflects the fact that the U.S.,
    as a Pacific power and as a trading Nation, finds the Asia-
    Pacific region hugely consequential to our interest. It is
    consequential for our security, for our economy, and its
    importance will only grow.
        Over the last 6 years, the administration's rebalance
    policy has established what I would call a new normal. It is a
    pattern of relations that is marked, first, by sustained
    engagement with the region by the President, by the Secretary
    of State, other Cabinet members in the Government and, second,
    marked by an unprecedented and extensive collaboration with our
    Asian allies, with our partners, on a full range of regional
    and global issues that face us.
        And the results of this policy and the benefits to the
    people of the United States are very clear. One, we are safer.
    We are safer because our alliances in the region, especially
    with Japan and South Korea, the Philippines, and Australia,
    have never been stronger. And that is shown by updated defense
    guidelines, by increased host nation support, by rotational
    force agreements. And we have also built closer security
    relationships with other new partners and longstanding
    partners, like Singapore or New Zealand.
        Second, our economy benefits. Since 2009, U.S. exports to
    East Asia are up about 23 percent and we are nearing conclusion
    of the Trans-Pacific Partnership, TPP, agreement. This is a
    trade agreement that also has unprecedented protections for
    workers, for the environment, and the digital economy. We
    welcome warmly the introduction of bipartisan, bicameral
    legislation for trade promotion authority, which will help us
    complete this agreement.
        Third, Mr. Chairman, we are promoting stability in the
    region. Our deeper engagement with China has helped our two
    Governments to make progress on areas of common interest, like
    climate and bilateral investment, helped us to calm tensions
    with the military-to-military dialogue that we have
    established. It facilitates the exchange of ideas and of
    commerce by extending student visas and business visas while
    always standing up for human rights, standing up for
    international law, standing up for American workers and
    businesses. And throughout the region, our commitment to
    universal values is key to the strength of the American brand.
        Fourth, I mention our work to strengthen regional
    institutions and organizations, like APEC, like ASEAN, like the
    East Asia Summit. This supports economic growth and also helps
    us manage complex disputes like those in the South China Sea,
    and our engagement with nations like Indonesia, Malaysia,
    Vietnam, and Burma position us to participate in the dynamic
    Southeast Asia area, a youthful area with a fast-growing middle
    class that already numbers in the hundreds of millions.
        The $1.4 billion budget for East Asia and the Pacific in
    2016 helps us build on these accomplishments. Our requested
    increase of $75.4 million, which is 6 percent over 2014, will
    allow us to maintain a robust presence as a preeminent trade
    and investment partner, a security guarantor, a champion of
    democracy, development in good governance.
        And the $845 million for foreign assistance sustains and
    expands our funding for the region in areas such as regional
    security cooperation, inclusive economic growth and trade,
    democracy, regional institutions, and war legacies in Southeast
    Asia and the Pacific.
        I would add, Mr. Chairman, that 2015 is a very big year for
    the U.S. in the region. We have got anniversaries, the 70th
    anniversary of World War II, 50th anniversary of Singapore's
    independence, 50th anniversary of normalization between Japan
    and Korea, 20 years since normalization with Vietnam. The ASEAN
    economic community will be launched this year, a step forward
    in regional integration. And four Asian leaders will visit the
    White House, beginning, as you mentioned, with Japanese Prime
    Minister Abe next week.
        We have a lot to discuss. And I am happy to take your
    questions once my colleague has made his statement. Thank you.
        [The prepared statement of Mr. Russel follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  ----------

        Mr. Salmon. Thank you.
        Mr. Stivers.

        STATEMENT OF THE HONORABLE JONATHAN STIVERS, ASSISTANT
     ADMINISTRATOR, BUREAU FOR ASIA, U.S. AGENCY FOR INTERNATIONAL
                              DEVELOPMENT

        Mr. Stivers. Chairman Salmon, Ranking Member Sherman,
    distinguished members of the subcommittee, thank you for the
    invitation to testify on the role of USAID in advancing our
    foreign policy goals in the East Asia and Pacific region.
        It is an honor to appear here before the committee again.
    Having worked in the House of Representatives for almost two
    decades, this side of the Capitol always feels like home to me.
    And it is also a pleasure to be here alongside my colleague,
    Assistant Secretary Daniel Russel.
        The President's budget request of $845.6 million for the
    East Asia-Pacific region represents an 8-percent increase over
    Fiscal Year 2014, laying the foundation for strengthening our
    relationships in Asia.
        It is an exciting and pivotal time for U.S. policy in Asia.
    Hundreds of millions have been lifted out of poverty, and
    economic growth is strong. Yet, the region still has the bulk
    of the world's poor; 70 percent of the world's malnourished
    children; a majority of all natural disasters occur in this
    region; and a host of other development challenges related to
    governance, human rights, trafficking, and gender empowerment.
        President Obama's Asia-Pacific Rebalance policy recognizes
    that our future is inextricably tied to this region. In Asia,
    we are working through three primary approaches to implement
    USAID's mission to end extreme poverty and promote resilient
    democratic societies, while also advancing our own security and
    prosperity.
        First, we are institutionalizing USAID's new model of
    development, which leverages the private sector, innovation,
    and regional approaches to do more with less. In the last 5
    years, USAID has moved from just 8 percent of its resources
    programmed for this model, which leverages the private sector,
    to 40 percent.
        Second, through the Presidential initiatives on Global
    Health, Feed the Future, and Climate Change, USAID is helping
    to achieve historic results that improve health, fight disease,
    increase food security, and help communities manage a changing
    environment.
        Third, USAID is promoting democratic governance and
    empowering reformers. Solutions to challenges will ultimately
    come from the people of the region, and our best chance of
    promoting democratic change and human rights is to empower the
    reformers. For this reason, this budget request includes
    increases in funding for democratic governance and human rights
    for almost every country in the region, representing the
    administration's desire to robustly fund such programs.
        Next, I will delve deeper into select countries. In Burma,
    this is a pivotal year with national elections scheduled for
    November. At the core of our efforts is our support for civil
    society organizations that are working to hold the government
    accountable and to help those resisting discrimination and
    violence.
        USAID is helping prepare for the elections by building the
    capacity of the election commission, training domestic election
    observers, supporting voter registration and education, and
    strengthening the capacity of political parties. In Rakhine
    State, USAID continues to support humanitarian assistance to
    the Rohingya population. This is a dynamic period in Burma and,
    as it progresses, we will be reassessing the nature of Burma's
    needs in close consultation with Congress.
        In Cambodia, promoting democratic governance and human
    rights continues to be our highest priority. Civil society,
    while not fully respected by the government, has grown in
    vibrancy and strength in recent years, thanks in part to USAID
    assistance. In health, USAID has helped Cambodia meet its
    Millennium Development Goals on child and maternal mortality
    ahead of schedule. The country has set an ambitious goal of a
    zero incidence rate for HIV/AIDS by 2020. To combat human
    trafficking in Cambodia, technology developed by USAID partners
    is raising awareness of safe migration to reduce the number of
    victims and prevent trafficking.
        Indonesia is a democratic success story, but there are
    major governance challenges. USAID is partnering to support the
    Anti-Corruption Commission, strengthen the judicial system, and
    promote Indonesian civil society. USAID also partners with
    Indonesia to protect and manage ocean and coastal resources.
    USAID has helped secure a commitment by the world's leading
    palm oil producers to transition to sustainable production that
    breaks the link with deforestation.
        In the Philippines, our Partnership for Growth initiative
    promotes economic growth and good governance. It has
    contributed to the Philippines becoming one of the fastest
    growing markets for U.S. food and farm products. Since Typhoon
    Haiyan struck, we have strengthened our partnership to mitigate
    the risk and impacts of natural disasters and rebuild typhoon-
    affected communities. Lack of formal access to land ownership
    is a key cause of poverty and a driver of conflict. Land reform
    is a USAID priority and we continue to work to improve the
    regulatory environment and streamline the land registration
    process.
        In Vietnam, USAID's Governance for Inclusive Growth program
    provides technical assistance to improve compliance with trade
    agreements, rule of law, and improve our access to Vietnam's
    growing market for U.S. exports. In addition, USAID is focused
    on addressing war legacies, health and disabilities, and has
    reduced susceptibility to climate change and natural disasters.
        Mr. Chairman and members of the committee, the future
    development and growth of the East Asia and Pacific region is
    ever more important to our own future. I appreciate the
    opportunity to testify today, and I look forward to hearing
    your thoughts and any questions.
        [The prepared statement of Mr. Stivers follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  ----------

        Mr. Salmon. Thank you.
        Now time for member questions. I will start it off.
        I am extremely worried that the existing model of U.S.
    funding for programs in China is going to be impossible to
    sustain because the recipients of the funds for China
    predominately have been U.S.-based NGOs and universities.
        However, China's National People's Congress is moving ahead
    with legislation right now called the Overseas NGO
    Administration Law. Though subject to typically opaque
    procedures, it seems that this law will block virtually all
    foreign funding in Chinese civil society and hamstring NGOs
    operating on the Chinese mainland.
        How could this law affect State's activities in greater
    China, including democracy, human rights, rule of law? And how
    will State approach China about current deliberation on this
    legislation?
        Mr. Russel.
        Mr. Russel. Thank you, Mr. Chairman.
        Human rights and universal rights--not American values, but
    universal rights--is a major element of our ongoing dialog with
    China. In that connection, we miss no opportunity to underscore
    the importance that we place not only as Americans, but in our
    partnership and our bilateral relationship with China, on the
    vitality and the ability of civil society to operate freely and
    to act.
        We have, from President Obama and Vice President Biden on
    down, repeatedly made the point directly to China's leadership
    that NGOs, that civil society, that the free exchange of ideas,
    and the ability of citizens to engage and participate in
    political life of the nation is a critical element to
    sustainable economic growth.
        We have made the point that, for China to avoid the middle
    income trap and to move from a manufacturing economy to an
    information economy, which is what the 21st century requires,
    it is essential that they allow groups to operate, including
    and especially NGOs, both foreign and domestic. This is an
    important part of our dialogue.
        In terms of funding----
        Mr. Salmon. Are we communicating that pretty robustly with
    our counterparts in China?
        Mr. Russel. Yes. I have been in meeting after meeting, as I
    mentioned, with the President, the Vice President, and the
    Secretary of State, in which we have emphasized that point. I
    myself have met with Chinese NGOs during my visits to China.
        There are areas where the Chinese authorities allow them to
    operate, but there are constraints. And we believe strongly
    that the direction that China would be well advised to move in
    is in loosening, not tightening, those constraints.
        In terms of funding, I will defer to my colleague, Mr.
    Stivers. The bulk, though, of the programs that we support are
    aimed specifically at the communities in Tibet as part of our
    effort to sustain the linguistic, religious, and cultural
    traditions there.
        Mr. Salmon. If they do pass this law and it becomes
    imminently more difficult to go through NGOs and universities,
    do we have a Plan B?
        Mr. Russel. Well, we are in discussion. We looked seriously
    at that set of issues. We want to ensure that Chinese
    university students and groups, including NGOs, continue to
    have the opportunity to visit the United States, to study in
    the United States, and that we, as well as international NGOs,
    can operate to the benefit of the Chinese people as well as the
    international community.
        Mr. Stivers. Thank you. Thank you, Assistant Secretary.
        I just want to clear up, in terms of USAID's perspective,
    there is no funding in this budget request for the Chinese
    Government or that would benefit the Chinese Government.
    Certainly they can fund their own development programs.
        The funding in this request focuses on Tibetan communities,
    one of the most vulnerable and repressed populations in the
    world. And this committee and you, Mr. Chairman, and Mr.
    Sherman and Mr. Rohrabacher have really been leaders on that
    over the years. And I worked a bit on that when I was a staffer
    in Congress, in terms of that assistance.
        There is a small amount of health funding that is part of
    our regional funding, which does affect southern China. But the
    funding in this request is for the Tibetan community in the
    Tibetan Plateau.
        Mr. Salmon. Thank you.
        I am going to run out of time. But I do have one other
    question, and it relates to the situation in Hong Kong.
        The situation in Hong Kong's Umbrella Movement in the pro-
    democracy protests of 2014 have evoked worldwide sympathy, but
    failed to gain true universal suffrage for the Chief Executive
    elections.
        I was there for the hand-over ceremony. I remember all the
    promises that were made about one country, two systems, and it
    is not materializing as it was promised it would.
        What are we doing with the administration?With State? What
    are we doing to try to make some headway on that issue? I am
    very, very fearful that it is going to get more dicey before it
    gets better.
        Mr. Russel. Mr. Chairman, I have visited Hong Kong. I have
    met with senior officials there. We have a very active consul
    general, and we engage both in the mainland and Beijing and
    directly in Hong Kong with the authorities in all of the
    political parties and protagonists as well as the business
    community.
        We have made it clear to the Chinese authorities that the
    international community and the United States expect them to
    honor their commitments under the basic agreement. We have made
    clear that the introduction of universal suffrage is a key
    element to living up to the promise of one country, two
    systems.
        And we have also underscored that the role that Hong Kong
    plays in the Chinese as well as the international economic
    community is a function of its tradition of openness and
    respect for the rule of law. That is a central tenet of Hong
    Kong's success and, therefore, of China's success.
        We believe that a society with the greatest degree of
    autonomy that listens to the voices of its citizens is going to
    thrive, and we have made that very clear.
        Now, it is for the Hong Kong Government and the legislative
    council, LegCo, and the people of Hong Kong to decide
    specifically about the pending proposal from the government
    with regard to universal suffrage. And so, on that score, we
    will defer to them.
        But we have made clear the importance that we place on
    allowing Hong Kong's residents to have a meaningful choice in
    the selection of their own Chief Executive.
        Mr. Salmon. Not to have to pick from some list that Beijing
    has given them, a list of three people that they have
    determined that they can choose from.
        We are going on a codel in 2 weeks to Hong Kong. Eliot
    Engel, the ranking member of the full committee, is
    accompanying me. Mr. Lowenthal, I believe, is as well.
        And we intend to meet with some of the student protestors
    and some of the folks that are very, very concerned about the
    eroding of democracy in Hong Kong, and we intend to make a big
    issue of it.
        And we hope that we can work very closely together with
    State throughout the next weeks and months and years to make
    sure that we get accomplished what the Hong Kong people deserve
    and the world deserves. Thank you.
        Mr. Sherman.
        Mr. Sherman. Thank you, Mr. Chairman. And thanks for an
    order of questioning that will allow both myself and Mr.
    Lowenthal to complete our responsibilities here.
        There is talk about whether our aid programs would benefit
    China. Over in the Ways and Means Committee, they are looking
    at an agreement that will be of tremendous benefit to China,
    namely, the TPP and the TAA and the fast-track bill that goes
    with it in two ways.
        First, it enshrines the idea that you can do a free-trade
    agreement and have absolutely no title about currency
    manipulation. Second, it will contain the rules of origin so
    that goods that are 60, 70, even 80, percent made in China can
    then go to Vietnam for a little additional work, slap a ``Made
    in Vietnam'' sticker on it, and duty-free entry into the United
    States while we get no access to the Chinese market.
        So I know the chairman wouldn't want to see our aid money
    go to China, but I think that many, many of our jobs will be
    going.
        I want to thank the chairman for working with me--or I am
    working with him--on the bill to help Taiwan enter INTERPOL.
    Who could be against international crime fighting? And I hope
    very much that the administration--I should actually ask the
    administration.
        Mr. Russel, will you be working in every way for Taiwan to
    able to be part of INTERPOL?
        Mr. Russel. Thank you very much, Congressman Sherman.
        Let me begin with TPP. And perhaps I will not surprise you
    by saying----
        Mr. Sherman. I have got very limited time. I will ask you
    to focus on INTERPOL.
        Mr. Russel. Okay.
        Mr. Sherman. That was kind of my opening statement.
        Mr. Russel. Well, without a doubt, though, with all due
    respect, TPP benefits the United States and our partners
    immensely. And we hope that it will----
        Mr. Sherman. Mr. Russel, I will interrupt you. I have asked
    you to focus on INTERPOL, but I will respond.
        These deals are part and parcel of an effort that has
    destroyed the American middle class over the last 30 years. And
    to say it is going to benefit the United States when there
    isn't a single economic study of any merit that says that it
    will raise wages in the United States and a program that tells
    us that we count all the jobs that we get from exports without
    subtracting the jobs we lose from imports, an economic analysis
    that leaves out the rules of origin that I focused on--I will
    use my time to make those points and ask you to answer the
    question about INTERPOL.
        Mr. Russel. We strongly support and have been active in
    helping to promote Taiwan's international space and its active
    participation in appropriate organizations, including INTERPOL.
        We want Taiwan to be a member of organizations for which
    statehood is not a prerequisite, and we want Taiwan
    appropriately to interact, whether as an observer or as the
    beneficiary of technical programs and other kinds of
    institutions.
        We very much agree that Taiwan is a net contributor to
    international law enforcement, and we are looking for ways to
    build on that.
        Mr. Sherman. Good.
        The focus of our hearing is on rebalance and budget, but we
    are leaving out at this hearing the big rebalance budget
    effect. And that is what is happening over in the Pentagon,
    where they are engaged in a reconfiguration of our military,
    starting with research and then procurement, that will end up
    costing this country literally trillions of dollars as we over
    the next decade or two devote a very expensive military not to
    defending the United States from those who have killed
    Americans, but, rather, to help fight over a few islets that
    are of so little economic value that they are completely
    uninhabited.
        And we will be told, ``Oh, but there is oil there.'' There
    isn't. But if there is, it is not our oil. And we will be
    spending far more on this than the countries who claim these
    islets where there isn't any oil that might belong to them. So
    this is the real budgetary rebalance.
        Mr. Russel, I hope you would provide for the record a
    comparison of Japan's military budget to whatever share your
    study would indicate is the share of our military budget
    devoted to the Asia-Pacific region.
        Because every time I talk to the Pentagon about training,
    about procurement, about research that will help us in the war
    on terrorism, their response is, ``We have limited money and we
    are gearing up to fight China.'' And it is a very bad idea. Oh.
    And, by the way, there is no oil. And it is not our oil.
        I yield back.
        Mr. Russel. Thank you very much, Congressman Sherman.
        There are two indispensable ingredients to America's future
    prosperity. Number one is security in the Asia-Pacific region.
    Number two is free trade and open markets. And our rebalance
    strategy, including TPP, secure those interests for us. We
    are----
        Mr. Sherman. Mr. Russel, I thought my time had expired.
    Because I usually do get to control the time.
        And I will simply say MFN for China devastated the American
    middle class. And now we are going to squeeze what is left of
    them to be able to finance efforts to confront China militarily
    while we then figure out ways, without an agreement where China
    is a signatory, to shift our jobs to China just in case there
    are pockets of middle class prosperity somewhere in America
    that haven't yet been devastated by this policy.
        So I yield back.
        Mr. Salmon. The gentlemen's time has expired.
        Mr. Lowenthal.
        Mr. Lowenthal. Thank you, Mr. Chair.
        And thank you, Mr. Rohrabacher, for allowing me to jump
    forward. I really appreciate that.
        I, along with Chris Van Hollen, Congressman Van Hollen,
    Congressman Peters, and more than 50 of our House colleagues
    sent a letter supporting the President's Green Climate Fund
    request of $500 million. This fund would be used to invest in
    resilient and low-emission development in East Asia and around
    the world, Mr. Chairman. I would like to, Mr. Chairman, enter
    that letter into the record, if I may.
        Mr. Salmon. Without objection.
        Mr. Lowenthal. What I would like to ask Mr. Russel and,
    also, Mr. Stivers, if he wants to, is: How do you see the
    international Green Climate Fund helping to invest in
    sustainable development in East Asia that will result in what
    the Department of Defense calls reducing the threat multiplier
    of climate change? How do you see this helping? And how else is
    U.S. foreign assistance supporting Asian and Pacific nations'
    efforts to deal with climate change?
        Mr. Russel. Well, thank you very much, Congressman
    Lowenthal. I will speak to the first part of your question and
    then defer to Mr. Stivers.
        First of all, thank you. Thank you and your colleagues for
    the support that you have extended to the President's Green
    Climate Fund initiative. We think that it addresses directly
    one of the world's greatest challenges and the East Asia and
    Pacific region in particular.
        Given the vulnerability--the huge vulnerability of the
    region to the effects of climate change, global warming, and
    rising sea levels, as well as the impact on fish stocks and
    sustainable food security, we are determined and committed to
    get at this problem.
        No one has been more active and vigorous than Secretary
    Kerry. And advancing the efforts to deal with and mitigate the
    effects of climate change are major parts of our Asia-Pacific
    strategy.
        Last November President Obama announced a $3 billion pledge
    for the Green Climate Fund and the U.S. commitment to reduce
    carbon pollution. He has worked, as you know, last year to also
    induce the Chinese to follow suit with strong commitments for
    carbon emission reduction.
        And he has also elicited tremendous support from partner
    countries, most notably from Japan, whose prime minister will
    be here this weekend and has pledged $1\1/2\ billion to the
    Green Climate Fund. Our work with Asian countries on climate is
    an example of what I would call the rebalance going global.
        But for the specifics--Jon.
        Mr. Stivers. Thank you, Mr. Lowenthal, for that question
    and for your leadership on climate change issues.
        Climate change is affecting the people of the East Asia-
    Pacific region. In support of the President's Global Climate
    Change Initiative, we are helping with cleaner energy sources,
    adaptation and sustainable land practices, and disaster
    resilience.
        In the Mekong Delta, 1 meter of sea level rise will
    inundate 40 percent of the land where 18 million people live. I
    was just there a few weeks ago to see what USAID is doing. And
    we are helping farmers adapt to increased salinization of the
    rivers, droughts, and with new farming techniques for salt-
    resistant crops for local communities, and to raise their
    awareness for best practice as they deal with these issues.
        And so USAID has a number of initiatives in many countries
    in East Asia-Pacific, which is extremely vulnerable to climate
    change.
        Mr. Lowenthal. Thank you.
        I don't know if I am going to get a chance to have you
    answer this, but I just want to put it out on the record.
        This year marks 20 years since the United States normalized
    relations with Vietnam. We have increased in recent years our
    engagement with Vietnam on trade and the TPP negotiations, as
    well as shared security interests.
        My question is: Has the United States' engagement and
    assistance to Vietnam further respect--has it furthered respect
    for human rights and dignity?
        I personally believe Vietnam has done little to improve its
    human rights record in recent years and continues to jail those
    who have spoken out. Bloggers, labor activists, religious
    leaders, all have been imprisoned.
        And talking about labor, you mentioned, Mr. Russel, about
    improvement in labor relations. Well, Vietnam has one union,
    the Communist Party, and denies all other unions the ability to
    exist. It still does.
        How is the TPP going to help that?
        Mr. Russel. Thank you very much, Congressman.
        Briefly, the answer to your question is yes. Our
    comprehensive partnership and our engagement with the
    Vietnamese, in the first instance, has led to some milestones
    on what will still be a long road toward legal reform.
        Vietnam ratified the U.N. Convention Against Torture, the
    U.N. Convention on the Rights of Persons with Disabilities.
    They have committed to and we are keeping score on their
    progress on institutional reforms, including revision of the
    Criminal Code, and that is something that we are supporting.
        With respect to the TPP, I am convinced that we would not
    be seeing nearly the progress that we do see, including on
    labor, were it not for the promise of the economic benefits
    that come from free trade with the United States and the other
    members.
        What we are seeing are commitments that are enforceable,
    with sanction provisions, as in any trade agreement, for
    noncompliance on labor. We are seeing significant changes in
    the climate, including bringing steps to bring Vietnam up to
    International Labor Organization standards, which is a
    prerequisite for membership in TPP. We are working and will
    work to develop the capacity, and we will work to ensure that
    there are proper enforcement mechanisms in place. That is for
    labor.
        I think it is also important, even though Congressman
    Sherman has left, to say that, on environment, the TPP
    Agreement, even if it didn't have a single trade provision,
    would be the best and strongest environmental agreement that
    the U.S. has ever entered into. And for a country like Vietnam,
    with problems of wildlife trafficking and overfishing, illegal
    logging, that is hugely important.
        Mr. Salmon. Mr. Russel, I am going to give you another
    chance. His time has expired, but I am going to give you
    another chance on the TPP when it gets to a second round of
    questions because I know you have got a lot of burning things
    inside you want to get out of there. So we will give you
    another chance.
        I will turn the time over to Mr. Rohrabacher.
        Mr. Rohrabacher. Okay. Thank you very much.
        And let me just note that, when you base decisions on
    nonsense, it shouldn't be surprising to anybody that we come up
    with bizarre policy advocacy.
        It is bizarre for me to sit here and listen to people talk
    about financing in the millions of dollars--American tax
    dollars an environmental program on the mainland of China,
    which, of course, is the world's worst human rights abuser and
    a country that is right now taking ever more aggressive stands,
    for example, the declarations of--territorial declarations,
    alone--what China has been saying in the South China Sea and in
    the shipping lanes that would strangle Korea and strangle
    Japan.
        For us to be talking, ``Oh, well, the environment is going
    to let us work together with these guys,'' that is such utter
    nonsense, especially giving American dollars to their project
    in China. We'll let the American people decide what is absurd
    and what isn't.
        Let me note, when the Chinese started building these
    islands out of rock piles in the ocean and then start making
    them--claiming that they are territory and, thus, gives them
    the right to control huge, vast areas of the Pacific Ocean,
    maybe somebody will see that that is an aggressive act and
    deserves so much outrage on our part that we wouldn't be even
    considering providing China with millions of dollars for their
    global warming program.
        China is at this time, for example, behind Hun Sen in
    Cambodia. I mention Hun Sen. Who is Hun Sen's greatest friend?
    It is Beijing. Who is North Korea's best friend? Beijing. And
    China has a horrible relationship with gangster regimes
    throughout the world. They are robbing the people of their
    resources in any country that they are engaged in by making
    deals with gangster regimes that have no rightful role in terms
    of what we believe in, democracy.
        So one thing that I mentioned earlier on, the one thing to
    give us hope is that we have a new rising power in a democratic
    Japan reasserting itself as an influence in that region of the
    world. Japan can counterbalance what has been, basically, China
    run amuck with the acquiescence of America's business community
    and America's, it seems, environmentalists.
        We were told a long time ago, if we build up China's
    economy, there would be political reform. Well, there has been
    no political reform. They haven't become more modernistic in
    terms of the way they deal with other people's rights. In fact,
    this theory that I always called the ``Hug a Nazi. Make a
    liberal theory'' didn't work.
        And it is not working in Vietnam as well. In Vietnam, they
    do not have--everything you cited was fine about how they are
    making their economy more efficient. Well, making the economy
    more efficient for a Nazi-like regime is not something that we
    should be bragging about. We should be supporting the people of
    Vietnam against their oppressor.
        And we certainly support the people in Cambodia and
    elsewhere that are suffering under--and even as we talk we have
    China reaching an agreement with Pakistan in order to take over
    a port in the Balochistan region of Pakistan. And one wonders
    who is being bribed there. Who is being bribed to give away an
    important maritime asset in that country of Pakistan?
        So I would like to just suggest that we need to look at
    these matters in a much more serious tone. I'm sorry that I
    just can't believe that, after 18 years of steady weather and
    steady climate and no big jump in the temperature, which we
    were promised by those people who believe that CO2 emissions
    cause increases in the temperature--I don't buy it anymore, and
    most Americans don't, especially if it is going to mean that we
    have to go along with giving money to Chinese programs.
        Thank you very much. I have got to go. Please feel free to
    say everything bad about what I just said. I have got to be on
    the floor.
        Mr. Stivers. Just real quick, Mr. Rohrabacher, I just want
    to assure you that we provide no assistance to China on the
    environment. The example I was using was in Vietnam.
        I have shared many of your concerns about China from my
    time working almost 18 years for Ms. Pelosi. And so I have been
    fortunate to work alongside you and your staff on a lot of
    these issues.
        But I can assure you there is no environmental assistance
    we provide in China except for a little bit on the Tibetan
    Plateau that helps the Tibetans, but none that benefits China.
        Mr. Rohrabacher. Thank you very much.
        Mr. Salmon. Mr. Russel, did you want to make a comment?
        Mr. Russel. Yes. Very briefly, if I may, Mr. Chairman, in
    response----
        Mr. Rohrabacher. I've got to run off. I have a speech on
    the floor.
        Mr. Salmon. I will pass it on to him.
        Mr. Russel. Japan is indeed our great ally and great
    friend. We are honored to welcome a visit of the Japanese Prime
    Minister to Washington and thankful and grateful that the
    Congress will host him for a speech.
        Our partnership and our security alliance with Japan is a
    major element, in fact, the cornerstone of our regional
    security policy and, indeed, our rebalance. And Secretary
    Kerry, along with Secretary Carter, will be announcing the
    details of our revised defense guidelines on Monday in New
    York, and this will represent a very major milestone in
    increased Japanese contributions to the South China Sea and
    China. I would be prepared to address that, if you wish.
        Mr. Salmon. That would be great.
        I do have a couple of other questions I would like to--and
    maybe you can weave it in. But I just wanted to--Mr. Sherman
    asked you about the involvement of Taiwan in INTERPOL and asked
    you if you were supportive, and you did say that you are
    supportive of Taiwan doing that.
        Could we get a commitment of support from State for--for
    the legislation that would do that?
        Mr. Russel. Mr. Chairman, I won't speak to the legislation
    itself. Please allow me to consult with my colleagues and
    review----
        Mr. Salmon. That will be fine. In fact, I don't expect you
    to have read it by now.
        But barring the fact that it does what it says we are doing
    and it is in concert with what you said your position is as far
    as Taiwan participating, we are hoping that you will support it
    and hoping that you will get back to us because we are hoping
    that we can get it marked up and passed through this Congress
    and on the President's desk and get it signed and start moving.
        The second thing I wanted to ask--and then at the very--my
    last question is going to be to just give you an opportunity to
    expound a little bit more on TPP. Mr. Sherman raised a lot of
    concerns about TPP and its economic benefit to the United
    States, to individuals, jobs here in the United States.
        And he also mentioned that his fear was that, in Vietnam,
    they could actually make the product in China, send it to
    Vietnam, slap a Vietnamese label on, so the country of origin
    doesn't really matter. I would love you to address that, too,
    if you can.
        But before that--and I am just going to give you the
    microphone and let you say whatever you want about TPP. You do
    your best.
        But my other question is about the Asian Infrastructure
    Investment Bank. And many of our allies have joined that.
    Australia just recently said that they are going to join. In
    fact, really, the only significant holdout is Japan, who is, I
    think, trying to be a good friend and partner of the United
    States.
        What is our strategy on that going forward? It doesn't seem
    like continuing to oppose that is going to be of much value.
        Do we have a Plan B as far as how to work with them and
    make sure that the World Bank and the IMF work in concert with
    what they are trying to do for the region, that we are looking
    out for the United States' interests? So that is my question.
    And then you have at it with TPP.
        Mr. Russel. Thank you very much, Mr. Chairman.
        My brief comment on South China Sea in response, first, to
    Congressman Rohrabacher's point is simply this: He mentioned
    rocks. He mentioned sand. The issue isn't about rocks. It is
    about rules. The issue isn't about sand. It is behavior.
        And the United States has for going on seven decades been
    the guarantor of the security in the Asia-Pacific region that
    has enabled not only our economic growth, but the growth of the
    countries in the region, including China.
        And that is the responsibility that we will not abrogate.
    We will take the measures necessary to preserve that and
    freedom of navigation and mitigate the risk of coercion against
    our treaty allies.
        Mr. Salmon. I am so glad you brought that. I support that
    100 percent.
        Mr. Russel. Mr. Chairman, our strategy vis-a-vis AIIB is to
    use direct persuasion with the Chinese, consultations with
    friends and partners, and the elements of the multilateral
    development and other banking systems to try to ensure that the
    AIIB evolves into a high-quality, transparent, responsible
    actor that functions in tandem with multilateral development
    banks and by the same standards that have been developed for
    multilateral development banks.
        It is, I believe, telling that so many major economies held
    back on a decision to join the AIIB as a founding member until
    they were satisfied that, number one, the elements in the
    articles of agreement would be, from their point of view,
    minimally sufficient to warrant joining, and, second, until
    they became convinced that, by joining, they would be able to
    exert influence from within that would help bring the AIIB to a
    level of governance, of transparency, of standards, of
    oversight that they consider to be on par with other
    multilateral development banks.
        Our strategy, Mr. Chairman, is to use those other banks
    like the Asian Development Bank, like the World Bank, in which
    we have a tremendous leadership role and a long history and a
    lot of money invested to partner with the AIIB in an effort to
    address what is, in fact, a genuine need, a need for
    infrastructure investment in the Asia-Pacific region. We are
    insistent, however, that that investment should be responsible.
    It should have appropriate safeguards in terms of debt
    sustainability and environment and so on.
        So the canard that we somehow sought to block the
    development of a new bank is misguided, but the fact that we
    are determined and committed to help ensure that China and the
    other founding members caused that bank to operate at
    international standards is absolutely right. And Japan is an
    important partner with us in that effort.
        With regard to TPP, first and foremost, although I am not a
    trade expert, I know that the safeguards to prevent back-door
    entry to products from non-TPP countries is a central element
    of the design of the rules pertaining to rules of origin, and
    that is--that is a principle that has suffused the design and
    the negotiations of TPP.
        More broadly--and it is perhaps precisely because I don't
    come from the trade world--what is so striking and so valuable
    about TPP is, number one, the strategic value. This agreement
    is seen in the region, if not the world, as an example of the
    United States exercising leadership to establish high
    standards, inclusivity, and free markets.
        We must succeed. Our credibility, as well as our economic
    interests, are deeply interlinked. We are the preeminent rule-
    setter, and to set rules that will benefit both the countries
    of TPP and around the Pacific Rim growing economies and the
    United States, including and especially of the U.S. middle
    class, is our responsibility as well as our interest.
        But I mentioned other non-trade elements, including
    environment. But there are more. There are very fundamental
    good governance provisions in the TPP agreement that go to the
    heart of our collective concerns about the Vietnamese
    Government, for example, and about the kind of rules-based
    system that we want to see prevail in the Asia-Pacific region.
        The agreement has anticorruption provisions and dispute
    settlement mechanisms that are entirely consistent with
    American values and American procedures. I mentioned labor
    standards with built-in enforcement mechanisms.
        And the digital economy, which is the new frontier, is
    another area in which TPP contains meaningful protections to
    intellectual property at the same time that it promotes freedom
    of information and cross-border migration of data and
    electronic information.
        It also has a chapter on development, which I know Mr.
    Stivers can speak to. This is a first-ever development chapter
    in a trade agreement, and it will help promote broad-based
    economic growth.
        The last thing I would mention--I'm sorry to go on long--is
    that the agreement also focuses very heavily on small- and
    medium-sized enterprises. That is part and parcel of the
    advantages that it offers to the United States and to working
    men and women here. It is also of tremendous advantage in the
    region in terms of promoting microenterprise, worker
    participation, access to the global economy, and the
    flourishing of nongovernmental organizations.
        Mr. Salmon. I am going to ask one last question and then
    let you guys wrap up. And I really appreciate you taking the
    time today. But I spoke last night before a group of
    stakeholders in the region, and these are the questions I was
    asked. And so I want to throw them out to you, too, and they
    are along the lines of TPP.
        Do we expect or anticipate a second round of TPP? And along
    with that, do we expect that China will later want to
    participate with TPP? And what is the likelihood that Taiwan
    would be included in a second round of TPP?
        Mr. Russel. I don't want to walk too far out onto the thin
    ice of speculating on policy and trade matters, Mr. Chairman,
    particularly at a moment when the TPP negotiations are going on
    hot and heavy.
        However, I will take a few tentative steps in saying first
    that the line of important economies and countries, a line that
    includes countries like the Republic of Korea and a line that
    very clearly includes Taiwan, is starting to snake around the
    corner, so to speak.
        There is a tremendous interest in joining TPP. I think that
    is a healthy sign. And I at the same time will accept the
    caution by my friend and colleague and master, Mike Froman,
    that he needs to concentrate on first things first. Job number
    one is to close the agreement.
        The question of China is something that is widely
    discussed. I think that the way to look at it is this: The
    world would be a better place if China were in a position to
    meet the requirements on trade, on openness, on protection of
    intellectual property, on environment, on labor standards, that
    are requirements for membership in TPP. So the short answer is
    we should be so lucky.
        Mr. Salmon. I am going to get the transcripts of what you
    just said and carry that in my pocket with me because I think
    that was a really great answer. I really appreciate you taking
    the time.
        Mr. Stivers, did you have any final comments that you
    wanted to make?
        I really appreciate you both taking the time to come and
    testify before us today.
        And, without objection, this hearing is now adjourned.
        [Whereupon, at 2:15 p.m., the subcommittee was adjourned.]

                                A P P E N D I X

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             Material Submitted for the RecordNotice deg.
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    Material submitted for the record by the Honorable Alan S. Lowenthal, a
            Representative in Congress from the State of California
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