[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
ADVANCING U.S. ECONOMIC INTERESTS IN ASIA
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HEARING
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
MAY 14, 2015
__________
Serial No. 114-50
__________
Printed for the use of the Committee on Foreign Affairs
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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
C O N T E N T S
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Page
WITNESSES
The Honorable Charles H. Rivkin, Assistant Secretary, Bureau of
Economic and Business Affairs, U.S. Department of State........ 4
The Honorable Daniel R. Russel, Assistant Secretary, Bureau of
East Asian and Pacific Affairs, U.S. Department of State....... 14
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Charles H. Rivkin: Prepared statement.............. 6
The Honorable Daniel R. Russel: Prepared statement............... 16
APPENDIX
Hearing notice................................................... 52
Hearing minutes.................................................. 53
The Honorable Brad Sherman, a Representative in Congress from the
State of California: Material submitted for the record......... 55
The Honorable Gerald E. Connolly, a Representative in Congress
from the Commonwealth of Virginia: Prepared statement.......... 57
Written responses from the Honorable Daniel R. Russel to
questions submitted for the record by the Honorable Edward R.
Royce, a Representative in Congress from the State of
California, and chairman, Committee on Foreign Affairs......... 58
Written responses from the Honorable Charles H. Rivkin to
questions submitted for the record by the Honorable Michael T.
McCaul, a Representative in Congress from the State of Texas... 59
ADVANCING U.S. ECONOMIC INTERESTS IN ASIA
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THURSDAY, MAY 14, 2015
House of Representatives,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 10:08 a.m., in
room 2172, Rayburn House Office Building, Hon. Ed Royce
(chairman of the committee) presiding.
Chairman Royce. This hearing will come to order. Today we
will hear from the State Department regarding the positive
impact American trade with Asia has had--and promises to have--
on our economy and, additionally, on our national security.
That is if we are willing to put in place smart and fair
policies to tear down trade barriers overseas to better sell
U.S. products to the world.
For most of the last century, the United States-led system
of open global markets has dramatically increased our
prosperity, and it has lifted more than 1 billion people out of
extreme poverty in the last 20 years alone. More than 1 billion
people lifted out of poverty, greatly serving our economic,
political, and humanitarian interests worldwide, including our
interest in Asia.
The benefits of trade cannot be taken for granted. We have
reached an important decision point. A strong Trans-Pacific
Partnership agreement would bolster our economic and political
standing in a growing and increasingly important part of the
world, that is, in Asia.
To negotiate a strong Trans-Pacific Partnership or TPP, as
we are calling it, Trade Promotion Authority is needed. TPA
will establish high standards for the TPP, and it will
strengthen the hands of U.S. negotiators to strike an effective
and an enforceable deal. And if the White House strikes a bad
deal with TPA, Congress is still positioned to reject it.
TPP could be enormously beneficial, potentially adding
trillions of dollars to the world economy. TPP would give U.S.
exporters better access to 1 billion consumers. International
trade currently supports 38 million American jobs, and TPP and
the trade agreement additionally being negotiated with Europe
could add over 1 million more, helping build a healthier
economy.
Of course, there are concerns about the U.S. trade deficit.
But much of that is due to our large oil import bill, which is
dropping as domestic production increases. And the fact is that
we have a trade surplus with our 20 current trade agreement
partners. In manufacturing alone, we have a $55 billion surplus
with these countries, over double from only a few years ago.
Yet of the 75 trade agreements in Asia since 2000, we were a
party to three of them, just three.
We cannot be sidelined. Good agreements create enforceable
high standards for trade and help level the playing field for
our American companies. It is us who have the most to gain from
them as our exporters face far higher tariffs than their
competitors do here.
Meanwhile, Beijing is making rapid anticompetitive moves
that are throwing the world trade system off balance. These
include issuing regulations to make it easier to steal
intellectual property from American companies operating
overseas. Beijing also is creating its own parallel
institutions. The Regional Comprehensive Economic Partnership
and the Asian Infrastructure Investment Bank are designed to
shut out the United States. TPP strengthens the U.S., not the
government in Beijing.
Beijing is pressing its neighbors to choose U.S. or them.
Partner with one or the other. Asia is far too important
economically and geopolitically for us to disengage, not being
part of its economic fabric, which TPP will define.
We are members. We are a Pacific country after all. Let's
remain one.
And I will now turn to the ranking member for any opening
comments he may have, Mr. Elliott Engel of New York.
Mr. Engel. Thank you, Mr. Chairman. And thank you for
convening this morning's important hearing. Assistant Secretary
Russell, Assistant Secretary Rivkin, welcome. Thank you for
your testimony today, for your service to our country, and for
keeping American foreign policy focused on our many interests
across the Asia Pacific.
This year, we mark 70 years since the end of World War II.
In that time, American leadership has been indispensable in
rebuilding the global economy and establishing the modern-day
global economic order. American engagement has underpinned
seven decades of relative stability and growth in Asia, growth
that has benefited all the countries in the region as well as
our own. But much work remains to be done, and many
opportunities remain unexplored. Due to a thriving middle
class, the Asia Pacific is the fastest growing region in the
world. In the years ahead, we need to do everything possible to
ensure that growth in Asia translates to growth and job
creation here at home.
We have already made much progress. The 10 countries of the
Association of Southeast Asian Nations, ASEAN, are the fourth
largest export markets for American goods and service.
According to the Commerce Department, our trade with ASEAN
countries supports nearly \1/2\ million jobs. This success is
no accident. The United States has long encouraged countries
throughout the Asia Pacific to play by the same set of rules.
We have driven this message home to the Asia Pacific Economic
Cooperation Forum, or APEC. The 21 members of this group on
both sides of the Pacific accounted for 58 percent of global
GDP in 2014.
At the same time, we know that American economic engagement
in the Asia-Pacific region is an ongoing challenge. We continue
to run large trade deficits of many Asian economies, including
a staggering $327 billion deficit with China. And American
companies are running up against nontariff barriers and other
unfair practices by Asian governments that make real
competition in Asian markets impossible.
So, today, I would like to hear from our witnesses about
what we need to do to stay on the right track in Asia. How do
we advance what the President called a global economic order
that continues to reflect our interest and values and can
succeed against alternative, less open models?
As China pushes one of those alternative models, how are we
using the tools at our disposal to set new rules of the road,
strengthen our partnerships, and promote inclusive development?
From a geopolitical perspective, it makes sense for the
U.S. to look at free trade, to pursue free trade. I think that
is important. However, we would do well to listen to those who
are fearful that the current TPP as written will drive down
wages and cause the U.S. to lose jobs. I think we have to
listen to everybody's voices.
So how are our efforts being perceived in the region? In my
view, two questions should guide our trade and investment
efforts in Asia. Do they benefit American workers? Do they open
new markets to the makers of American goods and services? If
the answer to either question is no, we put the progress we
have made in Asia, along with the paychecks of American working
families, at risk. We need to bring that perspective to
individual cases, including the Trans-Pacific Partnership
talks. An acceptable TPP agreement must advance peace and
prosperity in Asia while, at the same time, creating new
exports and export-related jobs for Americans. The TPP is a
work in progress. But if an agreement is reached, we will have
to take a hard look to make sure it measures up to those
standards.
Regardless of the outcome of TPP, America will continue to
play an important role in Asia. The United States is a Pacific
power. We need to keeping building on the legacy of the last 70
years, both to advance our own interests and promote our values
in a way that benefits countries and individuals across the
region and, of course, in a way that benefits ourselves.
Thank you, again, Mr. Chairman. I look forward to the
testimony of our witnesses.
Chairman Royce. Thank you, Mr. Engel. So this morning we
are pleased to be joined by senior representatives from the
State Department. We have Mr. Charles Rivkin, Assistant
Secretary of State for Economic and Business Affairs. He leads
a bureau which includes the responsibility of managing trade
negotiations and investment treatise. Mr. Rivkin served for
over 4 years as Ambassador to France. And we thank you both for
being with us today.
Mr. Daniel Russel is the Assistant Secretary of State for
East Asian and Pacific Affairs and is a career member of the
Senior Foreign Service. Previously, Mr. Russel served at the
White House as the National Security Counsel Senior Director
for Asian Affairs.
So without objection, the witnesses full prepared
statements will be made part of the record. Members will have 5
calendar days to submit any statements or questions or
extraneous material they may have for the record.
And, Mr. Rivkin, we will begin with you. Thank you.
STATEMENT OF THE HONORABLE CHARLES H. RIVKIN, ASSISTANT
SECRETARY, BUREAU OF ECONOMIC AND BUSINESS AFFAIRS, U.S.
DEPARTMENT OF STATE
Ambassador Rivkin. Thank you, Chairman Royce, Ranking
Member Engel, and members of the committee. And I appreciate
the opportunity to testify before you about--today about our
economic engagement in Asia.
In my 15 months as Assistant Secretary of State, I visited
the region four times, and I will be going back again in 2
weeks to mark the 20th anniversary of our normalization of
relations with Vietnam. Five visits to eight nations in this
short span is no accident.
Our economic engagement is an Obama administration priority
for the opportunities that it will bring to our investors,
entrepreneurs, workers, consumers, and for the security that it
will underwrite for all American citizens.
Few geographical regions offer greater market
opportunities. It has some of the fastest growing economies, a
third of the global population, a rapidly expanding middle
class and more governments becoming democratic.
By supporting economic growth, we will not only create
economic opportunity, we will solidify our own strategic
interests. One of the most effective ways we could accomplish
this is through the Trans-Pacific Partnership, or TPP, whose 12
participants account for over 40 percent of global GDP. This
high standard and ambitious deal will level the playing field
for our businesses and investors and promote the values we live
by and hope to see across the region. Those include a system
for trade, an investment that is open, free, transparent and
fair. Open to all comers from both inside and outside the
region. Free from unwarranted at-the-border or behind-the-
border barriers to international economic activity. Transparent
so that all players can understand the rules, and fair so that
no entities have any improper advantage, whether based on
ownership or political relationship or any other consideration.
A successful trade deal will also assure our allies and our
partners that our long-term commitment to the region reaches
beyond security and into the economic realm.
During my recent visit to Japan, I spoke to government
officials, businesses, and the media about the importance of a
free and open Internet. Three billion people are currently
connected to the Internet, and trillions of devices are set up
to join them in the upcoming Internet of things. Now, that
connectivity holds the potential to reduce poverty, formalize
the informal economy, increase the efficiency of supply chains
and worker productivity, raise wages, and make possible
activities that we have not even begun to imagine.
Small- and medium-sized enterprises can especially benefit.
Digital technologies enable the smallest companies and
entrepreneurs to become micro multinationals and conduct
business across borders. In emerging and developing nations
whose small businesses are so often the backbone of their
economies, this global access can have dramatic results. From
trade agreements to building infrastructure to protecting
intellectual property, we work to create environments that will
enable small- and medium enterprises to flourish and get their
goods to market.
One of the most effective ways to open markets is through
open skies agreements where my Bureau takes the interagency
lead. By eliminating government interference, these agreements
enable commercial carriers to provide affordable, convenient,
and efficient air service to consumers that promotes increased
travel and trade and spurs high-quality job opportunities and
economic growth.
No discussion about the Asia Pacific should ignore China,
with whom we account for a third of global GDP, 600 billion of
trade between our countries, and 40 percent of recent global
growth. We believe that seeking practical and tangible
cooperation on challenges that face both nations, while
managing our clear differences, is central to our bilateral
engagement with China and our wider engagement in the region.
On the economic side, we have seen signs of real success
and potential. Last November on President Obama's trip to
Beijing, we agreed to expand visa validity for business
visitors to 10 years. And through the WTO's information
technology agreement, we agreed to eliminate tariffs on next
generation ICT products, like advanced semiconductors and high-
tech medical equipment.
Also, in November, I joined Secretary Kerry in Beijing to
meet 10 of the most important CEOs in China, major companies
that all of you, I am sure, have heard of and who are doing
extraordinary work, and they are investing in the United
States. Secretary Kerry used this CEO roundtable, as he does
with businesses around the world, to send a clear message that
the United States provides an open and reliable investing
environment.
Our bilateral investment treaty or BIT negotiations with
China offer great potential to unlock new opportunities for
U.S. firms and promote a more level playing field for U.S.
investors in China's market. We are pressing China to provide a
narrow negative list with greater openness to foreign
investment, and we are also pressing for more progress on
economic reform including stronger investor protections that
support transparency, predictability, and rule of law. And next
month, I will join Secretary Kerry and Secretary Lew in the
strategic and economic dialogue where we will have another
important opportunity to move our mutual objectives forward.
In conclusion, ultimately our economic engagement with the
Asia Pacific fulfills two fundamental foreign policy
objectives, to create prosperity for Americans, and to make
them safer. We must continue to define standards, open markets,
create jobs, and strengthen our alliances and partnerships.
With sustained commitment, we can build an even greater
architecture of prosperity and security for generations to
come. Thank you.
[The prepared statement of Ambassador Rivkin follows:]
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Chairman Royce. Thank you, Secretary Rivkin.
Now we go to Secretary Russel.
STATEMENT OF THE HONORABLE DANIEL R. RUSSEL, ASSISTANT
SECRETARY, BUREAU OF EAST ASIAN AND PACIFIC AFFAIRS, U.S.
DEPARTMENT OF STATE
Mr. Russel. Mr. Chairman, thank you very much. Ranking
Member Engel, members of the committee, I appreciate the
committee's strong support of our work in the Asia-Pacific
region and for the opportunity to testify today with my friend
and colleague, Assistant Secretary Charlie Rivkin, on U.S.
economic engagement in the Asia-Pacific region.
Assistant Secretary Rivkin has just spoken to the economic
relationship and interests that we have in the region. I would
like to speak to the broader strategic context. The U.S. is a
Pacific power. The U.S. is a trading nation, so the Asia
Pacific is hugely consequential to the United States, both to
our security and to our economy and the importance will only
continue to grow.
Over the last 6 years, the President's rebalanced policy
has established a new normal of relations marked, first, by
sustained engagement with the region by the President, the
Secretary of State, and other cabinet officials; and, second,
by unprecedented extensive collaboration with Asian allies and
partners on the full range of global challenges that we face.
The results of this policy and the benefits to the American
people are clear: We are safer, our economy is stronger, the
region is more stable, and regional institutions are more
robust as a result.
Now, concluding the Trans-Pacific Partnership negotiations
is the single-most important thing we can do this year to
continue that progress. The TPP is essential both to our
economic and to our strategic relationships with the Asia-
Pacific region. Let me explain why. The simple fact, Mr.
Chairman, is that stability nurtures prosperity. That is why we
have invested in our security alliances in the region and
reinforced our security partnerships, and that is why a strong
focus on getting our relationship with China right is also a
key part of the rebalance.
Strengthening regional institutions, another central tenet
of the rebalance, is also key to shared prosperity. Businesses
invest and commerce grows when there is dependable rule of law,
and the disputes that do arise are managed or resolved
peacefully. That is why we work to elevate the East Asia summit
to bolster the Asia-Pacific Economic Cooperation Forum, APEC
and that is why we support ASEAN and the emerging ASEAN
economic community that is being formed in 2015. These
institutions promote standards and they promote rule of law,
just like TPP will. And all of that is good for America and
good for American businesses and jobs.
But make no mistake, without TPP, our credibility and our
ability to lead are put at risk. Countries across the region
look to us to help establish fair rules, open markets, and
effective safeguards.
Moreover, the 2008 recession and the loss of U.S. market
share in Asia to China feed an inaccurate perception of U.S.
economic decline. The region worries about our staying power as
both a trading partner and an economic leader. Failure to
complete and improve TPP this year would feed those fears and
set back confidence in the United States.
Conversely, TPP is a golden opportunity to reclaim the
initiative and reaffirm American leadership. The alternative to
TPP isn't the status quo. If we don't move forward, we will
lose ground. Environmental and labor protections will diminish.
Unfair competition from state-owned enterprises will increase.
Obstacles to a free and open Internet will multiply. In other
words, we will find ourselves on a skewed playing field where
we struggle to compete.
Mr. Chairman, I have, from my experience serving overseas,
immense faith in American business. And I am particularly
proud, as a regional Assistant Secretary, of the extraordinary
diplomats who work overseas to facilitate our commercial and
economic interests.
Our system supports entrepreneurship. Our universities, our
legal system, our venture capital system, our tradition of
corporate social responsibility, all of these are part of what
I call the American brand; and our brand in Asia is strong. I
have seen that with my own eyes. And with continued leadership
and engagement, we will keep it that way.
Thank you very much.
[The prepared statement of Mr. Russel follows:]
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Chairman Royce. Thank you, Mr. Secretary.
Let me ask Ambassador Rivkin a question because for many of
the members on this committee over the last 3 years, we have
had four trips to Asia. And if the members could focus on this
for a minute, one of the things that we have found is that a
typical southeast Asian country imposes tariffs that are five
times higher than the U.S. average. At the same time, we have
duties on our agricultural products that frankly are triple
digits. I mean, it is a very different circumstance. And that
is without going into the nontariff and regulatory barriers
that exist today that could be eliminated in an agreement.
Those block market access in many of these countries to our
exports. Now, we know that.
So the United States already has among the lowest tariff
rates in the world. So the one compelling argument here, the
first argument made by TPP advocates, is that if it doesn't
pass, that means that a lot of these goods from southeast Asian
countries, they will keep selling them in the United States;
and we can't effectively sell to them. And that is a huge
argument in favor of trying to negotiate something where we
have lowered the tariffs to the equivalency.
So what specific role would TPP play in lowering tariffs,
increasing jobs here in the United States, strengthening our
exports, deepening our production networks? And I would ask
that of you, the Ambassador.
Ambassador Rivkin. Thank you, Mr. Chairman, for the
question. And the entire central focus of TPP is to reduce, not
only the tariffs, but the nontariff barriers.
And with your permission, Mr. Chairman, just to speak to
that, a little known fact is that 98 percent of our nearly $19
trillion economy comes from small and medium enterprises. And
of that 98 percent, which generate more than two-thirds of net
new job creation--of that 98 percent, only 1 percent export.
And of that 1 percent, 60 percent or so goes to Canada and
Mexico.
So imagine--you talked about tariffs, and they are
reasonably low to begin with. But it is existential for a small
or medium enterprise, in many cases, if you lower it even a
little bit. And the other benefit is that--I used to be the CEO
of a number of small medium enterprises. I know what it is like
to meet payroll.
Chairman Royce. You are in California?
Ambassador Rivkin. I am in California, southern California.
And I have got to tell you, it is a pleasure to have business
experience and have a chance to serve in policy in the U.S.
Government because I know what this can do for the
entrepreneur, the 28 million of them that exist in the United
States. And if this deal passes, small and medium enterprises
will have the chance to export for the first time. They will
have a chance to access markets that they never believed they
could access. And imagine what that could do for job creation.
And, sir, one last point: There is already 11.7 million
jobs in the United States related to exports. I would argue
that, with TPP, this number is going to dramatically increase.
Chairman Royce. Secretary Russel, your view on this?
Mr. Russel. As you pointed out, Mr. Chairman, the U.S.
market is already a wide open market. The countries that I deal
with in East Asia are asking themselves if the growth of
China's economy means that, ultimately, there is only one game
in town. There has been a proliferation of trade--so-called
free trade agreements in Asia, but none of them reflect a low--
a high standard or genuinely open markets. These are, by and
large, least common denominator agreements.
In order to create choices for our Asian partners, in order
to allow for economic diversity and in order to hedge against
the risk of economic coercion or economic retaliation, linking
these countries to a high standard free trade agreement with
the United States, TPP, not only opens their markets, it gives
them choices.
I would also add respectfully, Mr. Chairman, that there are
tremendous nontrade benefits to the agreement that mean a great
deal to us as Americans and to the region in terms of the
environment, in terms of labor and labor standards, in terms of
an open Internet and the free movement of data and ideas across
borders. This agreement, even if it weren't an agreement that
opened markets and lowered tariffs, brings tremendous benefits
to the United States.
Chairman Royce. Well, then, I guess my follow-up question
on that would be: How would the future look of the Asia-Pacific
region if the future includes the passage of this, if it
includes a U.S.-led rules for trade basically versus an
alternative model? What would you see play out? Mr. Russel.
Mr. Russel. Well, Mr. Chairman, the anxiety that I
regularly hear from my interlockers in Asia, as I mentioned in
my statement, is that the United States' best days are behind
us; and that is simply not true. The proof point, in the eyes
of so many of our Asian friends, is whether we remain
committed, whether our economy grows, and whether we stay
engaged present, active, and accounted for in the Asia-Pacific
region. And many of them, to be frank, Mr. Chairman, look on
TPA and TPP as the telltale, the litmus test, the bellwether of
both our ability to get things done in Washington and our
determination to remain active in the region. This has a
strategic and symbolic importance above and beyond all the
practical benefits.
Conversely, if we succeed, as I personally am very
confident we will, in completing this agreement in the course
of 2015, we will have, not only advanced the substance of our
trade agenda, we will be exporting the values that Americans
hold so dearly; the values of transparency, the values of
fairness, the sanctity of contracts, environmental
responsibility, good labor standards, good governance. Those
are values that the region cherishes. They want us there and
they want us to lead.
Chairman Royce. Mr. Russel, my time has expired.
Mr. Engel.
Mr. Engel. Thank you, Mr. Chairman.
Let me ask you a TPP question. Obviously, the Vietnamese
Government is eager to see a successful conclusion to the TPP
agreement, and some civil society groups have asserted that the
negotiations provide us sufficient leverage to encourage the
Vietnamese Government to take positive steps on human rights
issues.
So I would like to ask either one of you: To what extent do
you think this is true? What steps do you think the government
will take in advance of the agreement? How can we ensure that
they continue to make progress after the agreement is signed?
And do you think that similar progress on human rights is
possible for other countries like Malaysia and Brunei?
Mr. Russel. Thank you very much, Congressman Engel. I will
begin, if I may.
The first thing to consider is the alternative. It has been
my experience, working the Asia account for 4\1/2\ years from
the National Security Council and here at the State Department
for almost 2 years now, that without the leverage and the
traction that we have gained through the TPP negotiations and
the powerful interests, in the first instance of Vietnam, to
accede to this agreement, we would not have made a fraction of
the headway, nor would we have seen the progress in terms of
loosening of constraints on civil society in Vietnam that we
have seen.
Now, many members of the committee have visited Vietnam in
the last year or 2. No one now who goes to Vietnam can fail to
see the tremendous flourishing of ideas, of communication, of
expression, of openness. Now, don't get me wrong. Vietnam is
led by a Communist government. There are a large number of
repressive and troubling policies. These are things that we
raised at high-level dialogues. In fact, we just recently held
a high-level human rights dialogue with Vietnam. And when
President Obama has met with top leaders, when Secretary Kerry
meets with them, he raises these issues head on.
But we have seen positive steps. We have seen the release
of prisoners. We have seen Vietnam accede to the U.N.
Convention Against Torture and the Convention on Disabilities.
We have seen a number of institutional reforms, including the
ongoing revision of their criminal code and criminal penal
code. That would not happen absent the TPP negotiations. And
when TPP is concluded, the variety of safeguards and
enforcement mechanisms that are part and parcel of this trade
agreement will apply on areas such as labor standards.
This agreement will bring Vietnam up to International
Labour Organization standards. Now, we will not let off the gas
in pressing for human rights progress in partner countries.
Mr. Engel. If you--I am told that if you form an
independent labor union in Vietnam, you are thrown in prison
for 4 years. Is that not true anymore?
Mr. Russel. Under the TPP agreement, the Vietnamese--and
they understand this--are obligated to accept labor unions and
the right of assembly and the right to organize.
I am not going to go public with the details of the
negotiations and the commitments, but the binding labor rights
elements in the TPP agreement, which the Vietnamese understand
they will have to accept, are transformative in terms of
allowing for labor organizing in Vietnam.
Mr. Engel. Let me also ask you: You know, organized labor
has been fighting this tooth and nail. I have not seen such
vehemence from them since the days of the NAFTA treaty. They
claim that it will be a race to the bottom and that it will
wind up being a downward spiral, loss of American jobs because
of cheap labor in Asia and Vietnam and something that would
generally be not good for U.S. labor. How do you refute that?
Mr. Russel. Under this agreement, we will be able to do
things like assist union officials and help them to develop
practical knowledge and the skills to support grassroots union
organizations.
We will be able to improve labor rights information and
access to legal aid for workers. We will be able to identify
and assist children who are being trafficked or who are being
at risk of being trafficked.
Mr. Engel. How about the downward spiral? The fact that
they believe very vehemently that this will cause a loss in
American jobs and a lessening of wages, because if you--you
can't compete against wages from a country like Vietnam because
they are so cheap and the net result will be a loss of American
jobs or a downward spiral of what Americans will get paid. How
do you account to those?
Ambassador Rivkin. Well, I would like to add to Assistant
Secretary Russell's testimony by saying, in answer to your
question, in terms of labor, this is--and this will be--the
largest expansion of enforceable labor rights in human history,
increasing from 133 million covered outside the United States
workers to 588 million. And in terms of jobs, trade is a job
creator, and the jobs that trade creates generally pay 18
percent higher than other jobs. TPP will grow the economy, the
global economy, and it will generate jobs for Americans.
Chairman Royce. We will go to Mr. Chris Smith of New
Jersey.
Mr. Smith. Thank you very much, Mr. Chairman. Welcome to
our two distinguished witnesses.
You know on that issue that you just mentioned, the highest
labor standards or however it might be articulated by the
administration, Mr. Richard Trumka addressed that in his
testimony in the latter part of April before the Senate, and he
said the problem with language such as ``highest labor
standards ever'' is that the point of comparison is so low.
Even after the highly touted labor action plan in Colombia,
workers continued to be killed, beaten, and threatened for
exercising basic rights like organizing with fellow workers for
better wages and working conditions.
You know, before the bilateral trade agreement was agreed
to by the U.S. during the Bush administration, I and others
raised many serious questions about the religious freedom or
the lack thereof. The human trafficking, I believe that on
trafficking, especially labor trafficking, Vietnam ought to be
a Tier 3 country. I wrote that law, and I have had many
hearings on it, and I am appalled that the administration has
not designated Vietnam a Tier 3 country.
In like manner, CPC, if you try to practice your religion
in--and that goes for the Buddhists who aren't part of the
official Vietnamese Buddhist church, they are thrown into
prison. And I have met with many of these people under house
arrest, tried to meet with them when they were in prison, and
to no avail.
And the point of my comments is that the day after the
bilateral trade agreement, there was a snap back and the
Vietnamese Government basically said, ``These are internal
affairs, and you will have nothing to say about it.'' They were
removed from the CPC, as you know, by the Bush administration
in anticipation of benefits that would flow. None of it flowed.
It has gotten worse. So I--you know, the new normal, as you
talk about, is a near total decoupling in real terms of
universally recognized human rights and the respect for it,
especially in the nation of Vietnam.
So, you know, those human rights dialogues at times, they
have been suspended in the past. Because, like with China, they
are a vetting session and it does not go up the chain of
command to the policy level.
For example, if Vietnam continues to incarcerate labor
rights organizers, what does that do to the trade agreement?
Are they out of it? Bill Clinton delinked most favored nation
status and human rights on May 26, 1994. On a Friday afternoon
when most of us had gone home, I went and did a press
conference because I happened still to be in Washington, and
that was the end of our meaningful leverage with China on the
human rights issue.
And they have gone from bad to worse, not just on
intellectual property and all of those issues, but especially
on the human rights basket of issues that we care about. There
are no labor unions in China, and there are no independent
labor unions in Vietnam. So I am very disappointed. And maybe
you could tell us what happens when these labor leaders
continue to be incarcerated and tortured, what happens? Are
they out of the agreement?
And, secondly, since the textiles will malaffect our
friends in Central America as well as in the Carolinas, has
there been a study to determine--I mean, a good, empirical
study to determine the job loss potential to American workers
and, also, to those in Central America?
I yield.
Mr. Russel. Thank you very much, Congressman.
Please let me assure you that human rights is a central
tenet of our approach to Vietnam. It is not decoupled. It is
central to our engagement and the----
Mr. Smith. Let me go on. Will you then support legislation,
bipartisan legislation, I will be marking up today in my
subcommittee called the Vietnam Human Rights Act? So there, at
least, is a list of benchmarks. The administration has been
against it in the past. And I would hope that with this
probably going to go through, that you would at least say there
is a safeguard set of protections when it comes to human rights
in Vietnam.
Mr. Russel. Congressman, the critical phrase that you used
is ``point of comparison.'' And the question is, what is the--
what are the two alternative futures facing us? A future in
which Vietnam joins TPP and is subject to the enforcement
mechanisms, to the dispute resolution mechanisms is obligated
by treaty to honor and abide by ILO standards and principles,
ILO conventions. They are binding on Vietnam. That is the
future that we want for----
Mr. Smith. How is it enforced?
Mr. Russel [continuing]. Interest of human rights.
Mr. Smith. Are they out of the treaty? Are they out of the
benefits that will be gleaned from by being in the treaty?
Mr. Russel. The treat it itself like----
Mr. Smith. Because WTO has not done that--sorry.
Mr. Russel. It has sanctions, it has enforcement
mechanisms, and it has dispute resolution mechanisms.
Mr. Smith. What are the enforcement mechanisms and how
quickly can they be actuated?
Mr. Russel. Well, I will take that question and get you an
answer, Congressman.
Mr. Smith. I know I am out of time.
Mr. Russel. But there will be no enforcement mechanisms and
no standards without TPP.
Mr. Smith. Oh, but there will be. If we had human rights-
linkaged language, like our Vietnam Human Rights Act, a total
bipartisan piece of legislation, we would have leverage. And
two Congresses in a row have passed it. Hopefully, it passes
again. We want your support for it. And, again, in both of your
testimonies, there was not one mention of human rights.
Chairman Royce. And, Secretary Russel, we will pass that
out of this committee and off the floor with a large bipartisan
majority. And I intend to see it passed out of the Senate. So
that will give us additional leverage, Mr. Smith, on the human
rights issue.
We are going to go to Mr. Brad Sherman of California.
Mr. Sherman. Mr. Russel, that legislation that chairman
spoke of, is the administration going to veto it or can't you
tell us?
Mr. Russel. I cannot--I can't----
Mr. Sherman. Thank you.
Mr. Russel [continuing]. I can't speak to that.
Mr. Sherman. Thank you.
I agree with the chairman, we need a smart fair trade
policy. We have the largest trade deficit the world has ever
seen 20 years in a row. That is right. The best workers, the
best entrepreneurs, the best scientists, the most vibrant
economy loses to every nation 20 years in a row.
Why do the best lose? Because we--for 20 years, we have had
the worst trade policy in the world, and now we are asked to
double down on it. We are told that our trade deficit gets
better with free trade agreements. That is simply false.
I ask to put in the record this statement from public
citizen that shows a chart that supports the statement that
trade deficits surge under FTAs. U.S. trade deficits have grown
more than 425 percent with FTA countries, while declining
slightly with non-FTA countries.
Now, what is the confusion on the numbers? The proponents
ask us, when we calculate the effective FTAs, to ignore NAFTA.
That is like going to the zoo and ignoring the elephants. The
fact is, when you include all our FTAs, including NAFTA, we
have seen a 425 percent increase in our trade deficit with FTA
countries.
The other--NAFTA is the biggest thing we have done perhaps
in trade. The other biggest almost equally big thing we have
done is MFM for China. We were told that would have de minimus
effect on our trade deficit. The administration at the time
told us a $1 billion increase; they were off by 30,000 percent.
Every lobbyist in Washington whose job it is to create
higher profits is telling us to vote for the deal, and every
Representative in Washington whose job it is to create higher
wage is telling us to vote no on the deal. Maybe they are
right.
We are given the straw man that the choices between the
present system where we go into negotiations with the lowest
tariffs in the world, or get going with a trade deal that is
even worse. Real trade negotiation would be you start and you
go in and you threaten to increase our tariffs. You put us on
an equal playing field in the negotiations. You don't re-
announce your surrender.
Now we are told in Vietnam that we are going to get free
access to their markets, except they don't have freedom and
they don't have markets. We are told that they will change
their tariffs. The Communist Party of Vietnam controls every
importer. There is not a single decision that will be made
according to published rules or free access rules. Every
decision will be made based on Communist Party policy; and they
will buy our goods to the extent they choose to, and it will
have nothing to do with this agreement.
We are told that they will have a right to organized labor
unions, because you can't arrest them for organizing a labor
union. All you have to do is plant drugs on them and arrest
them for that. Do we really believe that the Vietnamese
Government isn't going to plant drugs or come up with some
other criminal charge against any effective labor leader?
And then, Mr. Smith, imagine how difficult it is going to
be to get U.S. support to enforce these labor agreements when
you have the Nike lobbyist on the other side? This is the end
of a chance for free labor unions in Vietnam.
But we are told by Ambassador Rivkin not to ignore China
and we shouldn't. What does China get in this agreement? They
get a deal that says ``never look at currency in trade
agreements.'' But they get more. Go to the basement, look at
the rules of origin. Goods that are admitted to be 50, 60, 70
percent made in China, finished in Vietnam or Japan, come into
the United States on a fast track duty free. And that is when
they admit they are 50, 60, 70 percent made in China.
Obviously, the businesses are going to bring in goods that are
70, 80, 90 percent made in China. They slap a ``Made in Japan''
sticker on it, bring it to the United States.
What could be a better deal for China than free access to
our markets and they don't even have to sign an agreement,
which they wouldn't adhere to anyway.
This is a deal worthy of a country that for 20 years has
had a trade policy capable of mutilating our trade flows, even
though we have the best workers, the best entrepreneurs, and
the best businesses in the world. I yield back.
Chairman Royce. Ambassador Rivkin.
Ambassador Rivkin. Congressman Sherman, I couldn't agree
with you that we have the best workers in the world, and all we
are asking is a level playing field where we can let our
workers complete evenly around the planet so that we can win.
And we will win when given the chance.
Sir, I would like to address your comment about trade
surpluses and deficits. For the record, in my mind, NAFTA is
not an elephant in the room. In fact, no countries in the world
buy more made-in-America products right now than Canada and
Mexico. There is a $56 billion trade surplus in goods and
services with NAFTA partners in 2013. This excludes energy.
There is a three times surplus--three times more than before
NAFTA.
Mr. Sherman. Ambassador, if I can reclaim my time.
You can't exclude energy. If we send $1 billion to Mexico
for oil, that is $1 billion they could spend in the United
States. Can't ignore NAFTA. You can't ignore energy.
If we are able--why not--you can't ignore agricultural. You
can't ignore cars. That would be--the fact is that our trade
deficit with Canada before the deal was $23 billion and after
58. Our trade deficit with--we had a surplus with Mexico before
the deal. Now, we have a $98 billion trade deficit. Those are
the facts.
You can hide NAFTA. You can hide oil. But the fact is when
we ship money out to buy oil, we have got to be able to export
something and you can't say oil doesn't count.
Ambassador Rivkin. If I may respectfully, sir, oil is as
much about geography as it is about trade. But I hear you.
You talk about agricultural. NAFTA has a $3 billion surplus
in agriculture. And agriculture exports are four times what
they were before NAFTA went into operation. Services with
NAFTA, $44 billion surplus. Manufacturing, U.S. manufacturing
exports went from $126 billion to $473 billion in 2013 between
'93 and----
Mr. Sherman. Ambassador, we are both products of the LA
schools. Where I went to school, they taught us to both add and
they taught us to subtract. If you increase exports by $2
billion and you won't tell us that you increase exports by $4
billion and you have increased the deficit by $2 billion and
that that costs 20,000 Americans their jobs and costs them the
American dream, then, you know, yes, you are going to increase
exports, but you are going to increase imports more. And that
is why our trade deficit with Canada is now $82 billion. It
used to be 23. With Mexico, it is $99 billion. It used to be a
positive 2. It has gotten $160 billion worse.
And all you can do is say, oh, but we are increased
agriculture exports by $1 billion or $2 billion. That is part
of the $160 billion worse. Look at the bottom line.
Ambassador Rivkin. And I would, sir, respectfully argue
that the trade deficit is obviously extremely complicated and
is not solely directed to trade deals. There is a lot of other
factors that go into that deficit----
Mr. Sherman. Ambassador, if proponents of the deal cite the
number----
Chairman Royce. In terms of the time--in terms of the time
limit.
Mr. Sherman. My time has expired?
Chairman Royce. I think your time is far----
Ambassador Rivkin. I think your time has expired.
Mr. Sherman. I think my time has expired as well.
Chairman Royce. All right. All right. We are going to go to
Ileana Ros-Lehtinen of Florida.
Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman.
Yes, we must counter China's expansion and increasing
aggression whenever and wherever possible. And we must have
freedom of navigation, free flow of commerce by pushing back
against China's territorial claims and its manmade islands in
the South China Sea.
However, as we negotiate trade deals like the Trans-Pacific
Partnership, TPP, we must not lose sight of the values that we
are trying to protect, like human rights as we achieve trade
pacts with responsible nations. And that is why I oppose TPP
because of the inclusion of Vietnam in the deal.
The people of Vietnam are living under a brutal Communist
regime, which is imprisoning thousands of political dissidents,
prisoners of conscious, and ethnic and religious minorities. In
Vietnam, violence and discrimination against women and
minorities are common, and the judicial system is corrupt.
Violations of religious freedom are so prevalent that the U.S.
Commission on International Religious Freedom is recommending
that Vietnam be added to the State Department's list of
countries of particular concern, something the Commission has
done since 2001.
In Vietnam, there is no rule of law. There is no freedom of
the press. There is no freedom of speech. There is no freedom
of assembly, and access to the Internet and information are all
severely restricted. Child labor and forced labor continue in
conditions that are already poor, and sex and human trafficking
remain horrendously rampant. And this is a country we want to
call a trade partner?
In addition to the human rights abuses, there are reports
that TPP would allow Vietnam and China, using Vietnam as an
access point, to do serious harm to the textile industry in
nations in Central America with which we already have free
trade agreements. There are estimates that Vietnam and China
subsidized textiles would put hundreds of thousands of people
in Central American nations and the Dominican Republic out of
work. Rights that we are--right when we are dealing with
enormous social and security problems in our own region.
According to some of the CAFTA-DR countries, if Vietnam
gets its way, the combination of its own massive state-owned
textile and apparel countries and subsidized inputs from China
may come in duty free into the United States. This could wipe
out most of the textile and apparel industry in our Western
Hemisphere. I am concerned that the loss of this sector to
China would result in mass unemployment, increase social
problems and mass migration.
Free trade agreements, especially with worthwhile partners
in Asia, are needed in order to secure U.S. economic interests
and to strengthen our alliance to counter Chinese aggression.
But they must not come at the expense of human rights and they
must take into account the interest and the obligations we have
with our free trade partners, especially in our own hemisphere.
So following up on the points that Congressman Smith and
Ranking Member Engel made, I was disappointed that neither of
you mentioned human rights a single time in your written
testimony. How important are human rights to the
administration's trade agenda? What have you communicated to
the Vietnamese regime about its human rights practices? What
repercussions will the regime suffer under TPP if it continues
to violate the human rights of its people?
You testified that TPP has enforcement mechanisms for
violation of labor standards. What are they and what about
other human rights? What mechanisms are in place to flag those
violations?
And, lastly, will TPP allow state-subsidized Vietnamese and
Chinese textiles to enter the market? And what impact would
this have on a textile industry in CAFTA countries?
Mr. Russel. Thank you very much, Congresswoman Ros-
Lehtinen. I will begin and then turn to Charlie Rivkin on rules
of origin and textiles, if I may.
First and foremost, human rights is central to our foreign
policy and central to our Vietnam policy. It is a key element--
--
Ms. Ros-Lehtinen. But it is not in your testimony?
Mr. Russel. Well, my testimony addresses U.S. values. And
the values component includes rule of law, includes
transparency, includes good governance, includes labor
standards, includes anti-trafficking. And that is what we are
working on with Vietnam. That is what we seek to advance
through TPP.
When the President of Vietnam was in Washington, President
Obama and I were there. The two leaders agreed, in a joint
statement, that protecting and promoting human rights will be a
key element of the U.S.-Vietnam comprehensive partnership and--
--
Ms. Ros-Lehtinen. Excuse me. But you realize that when you
come and you testify and we have the written testimony and your
oral testimony and it is not mentioned, I think that that
telegraphs a very strong message to the folks overseas. They
hear what we don't say as well.
Mr. Russel. Congresswoman, I am and certainly Secretary
Kerry and President Obama are abundantly on record. There
should be no doubt that human rights is central to our foreign
policy. And in Vietnam in particular, we push for lifting
restrictions on freedom of expression, we advocate for the
release of prisoners of conscience, and we push for all
Vietnamese to be able to express their opinions.
I believe that TPP does not come at the expense of human
rights. TPP is a driver for human rights in Vietnam.
Ms. Ros-Lehtinen. And what about the enforcement
mechanisms? You say we have it for labor standards. What about
other human rights? What are the mechanisms that we have
enforcement?
Mr. Russel. Well, if I may, before I get to enforcement,
let me tell you--may I share one episode. There is currently a
Facebook campaign underway in Vietnam called ``I Hate the
Communist Party Because,'' and it shows individual citizens,
Vietnamese citizens standing up and holding placards that are
posted in Vietnam on Facebook with their objections to the
Communist Party's Policies. This has been going on for months.
The government accepts it. It is a direct function of the
government's determination to do what it has to in order to
join TPP. That is enforcement mechanism number one.
Beyond that, within the agreement is----
Ms. Ros-Lehtinen. So let me get this straight----
Chairman Royce. Well, wait. Wait.
Ms. Ros-Lehtinen. That is okay. Thank you, Mr. Chairman.
Chairman Royce. Could we just hear the witness finish
because we are out of time and then we will go to the next
question.
Mr. Russel. The binding enforcement elements of the trade
agreement are similarly binding on the provisions regarding
labor rights, standards, government transparency; and they
create opportunities for either dispute resolution under the
TPP mechanisms, or even for sanctions and the suspension of the
benefits that accrue to Vietnam as a trading partner under TPP.
Chairman Royce. Okay. Okay. We are going to go to Mr.
Gregory Meeks of New York.
Mr. Meeks. Thank you, Mr. Chairman.
And I want to give the witnesses some more chance to answer
some of the questions. But, you know, it is hard to constrain
oneself, especially, you know, because there is no one more for
human rights, environmental rights, environmental standards
than I am.
I think doing nothing doesn't improve anything. It is being
engaged is what will make an improvement. To sit back and do
nothing doesn't change anything. And folks look at us, if we
sit back and do nothing. Geopolitically, there is a big
question of whether or not we should be engaged in the region
or not.
Now, I recently traveled to the region. I have had
conversations with several different heads of states in the
region, asking them what do they think? And let me tell you,
they are focused in what we are doing in Congress. And, quite
frankly, they say very clearly, whether the Congress does not
give the President first TPA authority, number one, we don't
get the best deal, because we are not going to be able to
negotiate the best deal because they will think that Congress
will just come back and not have an up-and-down vote or we
know--you know, whatever, try to put 1,000 amendments in, and
we know that we know how to put poison pills in to kill a bill.
So the question is, do we engage in the region or not? And
I think others are looking and because--I believe China is
licking its chops, hoping that we don't engage because then it
can engage, as it is doing now. And they are setting up various
trade agreements with countries in the region.
And, believe me, if you look at those trade agreements,
there are no environmental standards, there are no labor
standards, there is no anything about--anything about helping
human beings get a lift, a hand up.
So the question is, if we really want to get involved in
trying to say that we want what we believe in and lifting our
standards--and I have got to say this, too, because always I
love my country. This is the greatest country that this planet
has ever seen, in my estimation. But we have come a long way as
a country. Because the fact of the matter is, we have learned
from our mistakes, our mistakes. When we were a developing
nation, we didn't have these rules. When we were building, we
built a lot of our country on slave labor.
We have more people incarcerated in the United States right
now than any civilized nation. So we need to engage. We need
people to learn from our mistakes, admit that we have made
mistakes, because there is no one that is perfect and move from
there.
There is no question that we have lost a lot of jobs. But I
say, if you look at the jobs that we have lost, it is because
of our great technology and innovation. We have lost more jobs.
I just went to the supermarket the other day, no longer do
there need to be--young people used to be at the counter, you
know, counting. You just check yourself out.
So where do we go to gain more jobs? Well, we are told that
40 percent of the market is now part of this trade agreement. I
am told that by the year 2020, 1.2 billion middle class folks
will be in Asia. So it would seem to me to make sense, as we
are talking about the future, we want to make it here and be
able to sell to that 1.2 billion middle class folks that is
going to be in Asia and other parts of the world. That is why
we have to do TPP, also. We only represent 5 percent of the
world's economy--the world's buying population. So if we are
going to create jobs we have got to do it outside of here and
that is what this is all about. And I didn't want to take up
all of my time talking, but I just did just about.
So my question is, though: If we do nothing--I mean, even
with the geopolitical aspects of it, if we do nothing, what
happens to our Nation and where do we go from there?
Mr. Ambassador.
Ambassador Rivkin. Congressman, first of all, I wanted to
thank you for everything you do for American businesses abroad.
I had the chance to witness it firsthand when I served as
Ambassador in Paris, the delegation that you led.
On your question about geopolitics, sir. Secretary Kerry,
from the very first day of office, said that economic policy is
foreign policy and foreign policy is economic policy. And this
deal, this TPP, is as much strategic as it is economic. It
gives us a chance to cement our geopolitical relationships with
key allies around the world.
As you mentioned, sir, about the 95 percent of consumers
outside the United States, the TPP zone alone is 30 percent of
trade, 40 percent of GDP, and 50 percent of the future
projected economic growth on the planet. America needs to be
present. It needs to define these rules. It needs, as Assistant
Secretary Russel said, our values need to be driving this
process.
And if we don't write these rules, to your question, Mr.
Congressman, I can assure you that somebody else will. When
Secretary of Defense Ash Carter says that he would--values TPP
as much as a new aircraft carrier, that says a lot from the
Secretary of Defense. It shows you the geopolitical reality of
trade.
And it is important more now than ever, given what you
suggested about how there is 525 million middle class consumers
in Asia now, that number is going to go to 2.7 billion by 2030,
which will be six times the population of the United States.
Now more than ever, we need to engage in that region and we
need to set the rules for that region or someone else will,
sir.
Chairman Royce. Mr. Rohrabacher from California.
Mr. Rohrabacher. Thank you very much, Mr. Chairman, and
thank you for providing this forum for a lively discussion.
I would like to identify myself with Ms. Ros-Lehtinen's
statements as well as Mr. Smith's statements.
Prior to this--let me ask both of our witnesses, I take it
that both of you have--could you tell me just a yes or no, you
have actually read this agreement, TPP, have you read the
agreement?
Ambassador Rivkin. Sir, my trade----
Mr. Rohrabacher. May I have a yes or no?
Ambassador Rivkin. I am fully briefed on the agreement, but
I have not read----
Mr. Rohrabacher. You have not read it. Have you read it?
That is enough.
Have you read it?
Mr. Russel. I have read the parts that are relevant.
Mr. Rohrabacher. No you haven't. I am not saying the parts,
have you read the agreement as it stands now? Neither one of
them have done that. Let's be very clear, you have been here
testifying about all these magnificent things and you haven't
even read the agreement. Come off it. This is what we are
getting here, ladies and gentlemen. All these wonderful,
wonderful descriptions, and you haven't even read the treaty.
You know what? The American people aren't permitted to read the
treaty. And you are supposed to be giving us the information
and you haven't even read it.
Mr. Chairman, I am dismayed by that answer and we have
every American citizen--we have heard all of these predictions
on your part and haven't bothered to read it. Now let me ask
you this: Do you think that the agreements that we made with
China--you know what, this is the big deal, I call it the ``hug
a Nazi, make a liberal theory'' that we were just going to open
up to China and they were going to then democratize. Do you
think they got--let's put it this way: Do they have a rule of
law now in China? No. Do they have free labor unions in China?
No. Do they have opposition parties in China? No. And you think
this is going to work in Vietnam, but it didn't work in China.
Again, the contradiction between reality here and what we are
being fed on this TPP is----
Okay, let me ask you again, from what you have read in this
TPP, how does it affect intellectual property rights? Is there
a provision now in TPP that you were advocating that tells us
that we must publish our patent applications in the United
States after 18 months whether or not the patent has been
granted. Is that part of the TPP?
Ambassador Rivkin. Sir, intellectual property rights are
essential to any investment.
Mr. Rohrabacher. I asked you a specific question on a
specific part. Is there a provision in the TPP that mandates
that intellectual property on the intellectual property rights
area, that patent applications have to be published after 18
months, whether or not they have been granted--the patent has
been granted?
Ambassador Rivkin. The essence of investment has to do with
transparency predictability and rule of law, and rule of law is
clearly involved with intellectual property protections----
Mr. Rohrabacher. Can you answer the question? I have given
you a yes or no, you are here testifying about a treaty. I am
asking you a specific on it, you have already told us you
haven't even read it yet. Come on, is that part of the treaty?
Ambassador Rivkin. We will get you a specific answer form
USGR on your specific question.
Mr. Rohrabacher. Well, I hope so, and I hope it is soon,
because I have information, people have told me that something
that we defeated here in this House 20 years ago, an attempt by
huge multinational corporations to change our patent law, they
are still trying do it, but what we defeated 20 years ago they
are trying to sneak into this treaty. And what it says, my
fellow colleagues, is that after 18 months if we have an
application for a patent, that patent has to be published
whether or not it has been granted. I call that the Steal
American Technologies Act, because it gives all of our
competitors, all of these people that you had trust in with
this TPP--the fact is all of them will have our utmost secrets,
even before the patent has been granted and the person who has
invented this has the right to defend that creation that
belongs to him or her.
I am--again, that was a very specific question, it is very
important, I expect to get an answer within 24 hours. It is a
very easy one to confirm one way or the other.
Mr. Chairman, I think we have heard a lot of platitudes, we
have heard how grandiose things this is going to be from people
who have not even read the treaty. And I--and the American
people are being denied the right to read the treaty. Let's not
be so optimistic at a point when we know that the same approach
has not worked with China and has not worked to make this a
more secure world. Thank you very much.
Mr. Russel. If I may put Congressman Rohrabacher's
anxieties to rest on two important points. One, you associated
yourself with the concerns expressed by Congresswoman Ros-
Lehtinen about human rights. I would just point out in my
written testimony I do, in fact, on page 6 speak directly to
the American brand and promoting a political system based on a
rule of law, protection of civil liberties, safeguards against
corruption or the imprisonment of citizens for ideas. So even
on the economically focused thing we are focused on human
rights.
Secondly, with regard to----
Mr. Rohrabacher. Do you believe there is a rule of law?
Mr. Russel. And secondly, Congressman if I may say again,
the issue is what are we choosing between. We, under TPP, will
be able to obtain, and insist on, and enforce changes to IP
rules and laws in other countries. Our laws will not change. We
are raising their standards. We are, via TPP, making
significant advances in terms of the ability to move data and
move information and to protect it.
Mr. Rohrabacher. So if we sign this treaty into law that
this provision in the treaty does not apply to us?
Chairman Royce. No. I think what Mr. Russel was saying is
it is presumed this that language is not in the agreement
because what he is saying is that it is current U.S. law that
would apply, and U.S. law is not so defined. We will get an
answer, Mr. Rohrabacher, we will get an answer about whether or
not this provision is there. But his answer implies that it is
not changing the rules of the road with--and maybe we are going
to get a further clarification right now. Do you have any
additional information there, Mr. Secretary?
Mr. Russel. We will provide a written answer.
Chairman Royce. Provide an answer to Mr. Rohrabacher and me
on that issue.
Mr. Rohrabacher. The one point this treaty it will apply to
them but not will apply to us?
Chairman Royce. Well, what he is stating, what Mr. Russel
is stating is that the language that you presume is in there.
There may not be the language in there--we need to get to the
bottom of that and we will do that shortly, but in the
meantime, it is Mr. Albio Sires of New Jersey's time and we
recognize him.
Mr. Sires. Thank you very much. You know, we have this
strong, vibrant trading relationship with Taiwan, and we send
most of our agricultural products--we have a good break
exporting to Taiwan. Where do they fit in all this? Are we just
going to forget that they have been our friends for all these
years or how do they fit in this TPP? I give you a nice easy
question, I am not going to ask you if you read it. Thank you.
Mr. Russel. Taiwan is a very, very important partner to the
United States, we have thriving unofficial relations, and we
are deeply committed under the Taiwan Relations Act to support
for maintaining Taiwan's freedom from coercion and its ability
to maintain and protect its democracy. Taiwan's economy is a
central piece of that. It is also a glowing example of a free
society, of an open society, of a free market society.
We are working hard with the Taiwanese now in TIFA talks to
promote liberalization. We are also enjoying a renaissance of
bilateral investment in each other's economies. In fact, a very
significant delegation was recently in the United States to
attend the Select America Commerce and White House-lead program
on investment. We are looking at a bilateral investment
agreement, something we are researching at the moment. And in
principle----
Mr. Sires. They are not included in this TPP, right?
Mr. Russel. They are not a negotiating partner in TPP. They
have informally expressed interest. We have informally welcomed
their interest. Right now the focus of our negotiators is
exclusively on the challenge of getting TPP done with among the
existing----
Chairman Royce. If the gentleman would yield. The current
conundrum is that the bilateral investment treaty has not been
finalized between Taipei and Washington. And until that
happens, this is held in abeyance. So when it happens, the
presumption, I think it that Taiwan will have a seat at the
table in the second round, correct, Mr. Secretary? If that
happens? I have been led to believe that and I think Mr. Sires
and I would like to know the answer to that.
Mr. Russel. I would be getting ahead of myself, and the
President, and the trade representative if I said that there is
a presumption, but we have indicated that we welcome Taiwan's
interest. And certainly Taiwan with an economy that adheres to
the rule of law and an important partner and trading partner is
the kind of country that we would give serious consideration to
as a candidate, as I suspect most of the other 11 TPP members
would.
Ambassador Rivkin. To build on what Secretary Russel said,
we not only appreciate their interest, but we are deeply
engaged on an economic level. In fact, I am heading to Taiwan
at the end of this month to discuss economic issues. And Mr.
Chairman, for just 1 second I wanted to make sure that the
record--I can correct the record a little bit about an
allegation of transparency and whether or not Assistant
Secretary Russel and I have read the agreement. I just want to
point out that I have, in the Economic Bureau, some of the
world's most expert foreign service officers and civil service
officers on trade. My team will be at the next round of the TPP
negotiations in Guam. I am briefed on a daily basis on what is
happening on that deal.
Congress has the ability to see the deal, USGR's Web site
is highly full of information. We consult industry
representatives environmental groups, NGOs, labor. In order for
the American people to get the best deal, the USGR needs some
latitude negotiation. But certainly, I refute the idea that we
aren't familiar with the Trans-Pacific Partnership. I believe
that when you have 60 days before the President signs it
available for the entire American public to see, you will be
able to see whether we followed Congress's wishes, and
certainly what Assistant Secretary Russel and I say today is
accurate.
Mr. Sires. May I ask another question now to clarify that?
Chairman Royce. Mr. Sires, it is your time, yes, sir.
Mr. Sires. Thank you, you know, my concern with the
question that I asked you is I know China continues to incite
conflict and it keeps this region asserting itself. Won't they
object to us to continue dealing with Taiwan? Especially on the
economic level.
Mr. Russel. We have a vigorous and a thriving, ongoing
economic and trading relationship with Taiwan. That will not
change. The leadership in Beijing is well aware of our
determination and commitment to continue to build that economic
relationship. China itself has a tremendously close intertwined
economic relationship with Taiwan. Taiwan is heavily invested
in the mainland. And I see no indication or evidence that the
PRC seeks to, in any way, disrupt or preclude the Taiwan
economy from continuing.
Mr. Sires. My last question is with all these recent events
with China, how have the other nations in the region reacted to
this event?
Mr. Russel. With deep concern, and by soliciting
affirmation from the United States that we will continue to
serve both as the security guarantor in east Asia and the
Pacific, and also as the champion of the rules and the global
norms that prevent large countries from bullying the small.
Mr. Sires. There was just an incident yesterday or the day
before yesterday, on the seas with one of our ships. I don't
know if you--I just read that somewhere.
Thank you very much, Mr. Chairman.
Mr. Salmon [presiding]. Thank you. The Chair recognizes
himself because I have been chomping at the bit. I actually
just led a codel to Vietnam with Mr. Lowenthal, who, by the
way, a Great American, and Mr. Emmer, who is another Great
American. It was a real pleasure to be able to go with some
really open-minded folks that actually want to learn something
instead of having made already made up their minds, I really
appreciate that.
Also we were accompanied on the trip by State Department
personnel Julie Bulgrin. And if everybody was as great as her,
I think that this world would be a lot better off. We really
appreciated her great leadership and she represented the State
Department very well. Then also from the full committee Brady
Howell was there, and I just can't say enough positive things
about Brady. What a great guy and we are really just fortunate.
Actually, I have gone into that secret room and I have gone
through the agreement. And I know, you know, when you are
talking about the agreement, it is a moving target, and things
change as the negotiations change. And so, I think it was a bit
of an unfair question to ask if you have read the agreement. Of
course, you have read through the agreements, but when it gets
right down it, it changes on a frequent basis. I have read
through the agreements and I have looked at some of the piece
parts that especially have concerned some of the members of
this committee. Like the allegation that we can simply have a
product that will be manufactured in China and then slap a
Vietnam label on it and have it come into the United States.
Let me just state for the record there are very, very clear
rules of engagement on rules of origin. And I think there are
sufficient safeguards to make sure that something like that
doesn't happen.
Also let me say for the record that after having gone to
Vietnam, and seeing the animosity personally between Vietnam
and China, it will be a cold day in hell before they would slap
a label on something made in China in Vietnam. And they want
those jobs in Vietnam, they don't want them in China, they want
them in Vietnam. So the idea that they are going to slap some
Vietnam label on something made in China is complete claptrap.
So I think that that needs to be on the record.
Also on some of the human rights issues, knowing that the
members of this committee that were with me on the trip placed
human rights at the very top of the agenda, and every meeting
that we had I think the very first question that came out of
our mouths was regarding human rights, while I think that
Vietnam that is a long way to go in terms of human rights. We
have met with several of the dissidents, including we met with
Patriarch Thich Quang Do of the United Buddhist Church of
Vietnam, who is not just a hero in Vietnam, but is a hero in
the world because he stands for the things that we all care
about.
Mr. Lowenthal, who represents, I believe, the largest, if
not the largest diasporas, Vietnam diasporas in the entire
United States in his congressional district, was clear to ask
those questions regarding labor, regarding human rights. And I
believe that we have got answers that satisfies our questions.
Now the answers to those questions weren't always the way we
exactly wanted them to be, but almost to a tee, everyone of
those leaders, including Patriarch Thich Quang Do.
When we asked them what they thought about TPP, whether it
would help or hurt the situation, they all said that they
believe that it would help the situation, and that it would be
a positive thing for the U.S. to be constructively engaged.
Because guess what? We export lots of things, but the most
valuable thing that we export to these countries is our ideals.
The things that we believe, the things that we stand for. And
if we are not engaged, I think like Mr. Meeks said, if we are
not having a seat at the table, then we are not going to impact
anything. If we are just going to sit here and gripe from our
Ivory towers here in Washington, DC. And not be constructively
engaged don't expect anything to be change on the ground in
Vietnam. But if we do have these kinds of constructive
agreements, I think as was mentioned, it impacts so much more
than just trend, it is a major geopolitical tool that we have
to try to influence that region for a very, very positive
direction.
As for the comment that was made from one of the people on
my side of the aisle, that you didn't read the agreements and
the American people are never going to be afforded the ability
to read the agreements. After having looked at some of the
language myself, I know that that is also claptrap too, because
after all is said and done, the American people are going to be
given 60 days to review the agreement. I know that has all been
made public. They are going to be given 60 days to review the
agreement as are we as Members of Congress before we give an
up-or-down vote. We have not abdicated our responsibility for
trade under Article 1, Section 8 of the Constitution. It stays
with us. And ultimately, it is us that will give an up-or-down
on it after 60-day review. I don't know of any other trade
agreement in the history of the United States that has afforded
that much transparency to the American people to be able to see
exactly what is going on.
So, I get a little hot and bothered too, but I get hot and
bothered when I see things misrepresented for political
expediency. And I belive that while I believe we have a long
way to go in the region on some of the issues that we care
about, we don't have a seat at the table, we don't have an
ability to influence.
Okay, that is my diatribe.
Mr. Connolly. Would my friend yield just for a second?
Mr. Salmon. Yeah, I sure would.
Mr. Connolly. First of all thank you for your comments,
very passionate and very eloquent. Just a little footnote to
your point about the sort of, I think, pseudo argument about a
secret, nobody can see it and nobody can read it. But I would
hope that those critics would have----
Mr. Salmon. Would have read it.
Mr. Connolly. No, but I would hope those critics would hold
themselves to the same standard, because most of them have
signed on in opposition without one word being seen or being
made available. They didn't need to see it to decide they were
going to oppose it. And you can't have it both ways. You can't
insist that something not be ``secret'' when it doesn't matter
whether it is open or secret apparently to you, you have
decided to oppose it.
Mr. Salmon. I think you have made an excellent point. Right
now, any Member of Congress, any Member of Congress can go into
that top secret room, and they can look at the entire document.
They can spend as many hours as they want in that room, reading
every word, crossing every T and dotting every I. And if they
don't want to do that, then they have nobody to blame but
themselves, so I appreciate the comment.
I do have one question because I think it would be valid to
get an answer, it is on immigration. Ambassador Rivkin, I am
getting a few questions from my constituents concerned that TPP
might hinder our ability to manage our international--excuse
me, our national immigration policy, can you just speak to that
concern?
Ambassador Rivkin. Excuse me, but could you just clarify
exactly how?
Mr. Salmon. Some of my constituents, in fact, many right
now because apparently there is some kind of an email chain
going out there, are concerned that if we sign on to this
agreement, that somehow we are going to be compromising our
immigration standards and that our immigration standards will
be ruled by that agreement rather than our own immigration
policies.
Ambassador Rivkin. I think there is a common
misunderstanding about the part of TPP that is called ISDS, the
investor-state dispute settlement, which may be where that is
coming from. I want to assure you that ISDS, that no private
company or individual can overturn domestic laws, or overturn
regulation. President Obama would never sign any such deal.
Mr. Salmon. I read that section also, that is my
understanding as well. Thank you very much.
The Chair would go to Mr. Bera.
Mr. Bera. I appreciate the comments of my colleagues from
Arizona, Mr. Salmon. This is an incredibly important vote that
will be taking on an important piece of legislation. Let's just
look at our history as a Nation. If we look at the second half
of the 20th century, America is a benevolent nation, and the
would has benefited from American leadership, sometimes to our
own detriment. We did not have to rebuild Europe post World War
II, but we did, we did through economic development, we did
Free Trade. We did not have to rebuild and help the nations in
the Asia Pacific region, Japan and others become the economic
powers that they are, but we did. Because it represents our
values as Americans, we are a benevolent Nation.
But fast-forward to where we are today. These are
competitor nations, and that is not a bad thing because we have
lifted billions out of poverty; we have created stable
democracies; we have created stable allies. But when we are
looking at the rules of the 21st century, we are in a very
competitive global marketplace, and it is a question of who is
going to set the rules. I firmly believe, and I think the
nations that are in the Asia Pacific region firmly believe that
they want to play by the rules that the United States sets.
Here's an example, I had a chance to travel to China with
some of my colleagues, including Mr. Salmon, when we are
talking to business leaders in China, here are the rules that
we have to operate under. We talk to one of our auto
manufacturers, in order to do business in China, the Chinese
state-owned auto industry has to own at least 50 percent of
that business. They can't import cars to China because there is
a 25 percent tariff there. And we can see the writing on the
wall. What they are doing is they are learning how to
manufacture cars. They are learning from the best in the world,
our auto makers. And fairly soon, they will then say, we are
going to buy the other 50 percent or 40 percent, kick us out,
and start making those cars, taking our technology, taking our
intellectual property. That is why this is so important.
And what is China doing with its economic power? We are
seeing what is happening in the South China Sea, we are seeing
the tensions that are rising there. We are seeing China pen
deals with Pakistan to sell 8 submarines. They are not
operating in a benevolent Nation. We are when we invest in
Africa we are doing so to help the African countries grow and
develop. When China invests in Africa, they are doing it for a
singular purpose, to extract those minerals and so forth. And
when they have taken what they can, they move. They are not
leaving behind better countries. So that is what is at stake
here. This is as Secretary Carter said a geopolitical national
security issue. I mean, this is a seminal issue of what the
21st century looks like. I think this is why this vote is so
critical.
I will make one other point. To all my colleagues, what we
are discussing in terms of our most immediate vote is giving
the President the ability to negotiate the deal. Now that bill
that is before us is not a long bill, everyone can actually
access it, everyone in the public can read it, if they want. It
is giving the negotiating parameters and it does give solid
negotiating parameters. And I would encourage all my
colleagues, I would encourage everyone in the American public
to go read the bill and look at the parameters. Now if the
President negotiates a bad bill, we will get a chance to vote
on that. We will get to do our constitutional duties and vote
on the deal. But right now, let's give the President, a
Democratic President, the authority to go and negotiate this
deal.
I would ask either one of our witnesses, my concern is
certainly, if we create a fair playing field, I am not afraid
that we will lose to China, that we are going to lose to other
countries. We have the highest quality workers, we produce the
highest quality products. We will win this, and we are already
seeing manufacturing coming back to the United States, because
they are seeing the quality of products that are being
manufactured abroad, low cost, low quality. It isn't what the
world wants. I think, according to the administration, we have
created, since the recession, over 1 million manufacturing jobs
here in the United States.
We can win this. You know, we have got an advantage on
energy prices, we have got the highest quality workers. We can
compete on the highest quality products. Let's win this thing,
but let's do it on a fair playing field.
Ambassador Rivkin, I give you a chance to make some
comments as well as Mr. Russel.
Ambassador Rivkin. Well, Congressman, I really appreciate
the chance to respond. And just to reiterate what you said and
what President Obama recently said, you give the American
people, the American workers, the chance to compete on a level
playing field and we will win every time. And that is what
these deals are about. He specifically talked about China. I am
happy to say that we have a number of fora where we are
engaging China, including the U.S.-China Joint Commission on
Commerce and Trade, the JCTT, as well as the U.S.-China
Strategic and Economic Dialogue, and we are pushing for a 19th
round of our bilateral investment treaty. And it is our hope
through this diplomatic engagement that we can further level
that playing field with the second largest economy in the
world.
Mr. Russel. Thank you, Congressman. You mentioned two
things that are critically important to the administration, to
U.S. interest, and to the TPP agreement. Ideals and
development. In terms of ideals, the TPP includes a chapter on
good governance, provisions on good governance that includes
transparency; it includes anticorruption, government
accountability, public participation and decisionmaking, rules-
based disputes, settlements. These are critical elements to a
civil society, to a stable society, to good governance.
Secondly, on development, sustainable and responsible
development is an essential ingredient to promoting the global
economy from which the United States directly benefits in
addition to it being an intrinsic benevolence--to use your
word--imperative for mankind. The TPP has the first ever
chapter in a trade agreement on development. It is dedicated to
promoting cooperative activity to promote broad-based growth
and sustainable development. In addition and in a similar
spirit, when Secretary Kerry travels to China this weekend,
looking for working with the Chinese to encourage complementary
and responsible, sustainable development, including in Africa
will be high on his agenda. Thank you.
Mr. Salmon. Thank you. Mr. Weber.
Mr. Weber. Thank you, Mr. Rivkin. Should we be concerned
about the balance of trade?
Ambassador Rivkin. Of course we should, sir.
Mr. Weber. Mr. Russel?
Mr. Russel. Yes, sir.
Mr. Weber. Okay. So my colleague, Mr. Sherman, said that
for 20 years it has been going in the wrong direction. Should
we be concerned about that, Mr. Rivkin?
Ambassador Rivkin. The reason we are trying to negotiate
these deals is to strengthen our balance of trade.
Mr. Weber. Do you agree with his assessment that for 20
years, it has been headed the wrong direction and we haven't
been able to turn that around?
Ambassador Rivkin. Sir, I----
Mr. Weber. I mean, the numbers are either up or down, yes
or no.
Ambassador Rivkin. The numbers need to be parsed, because
as I mentioned, when you take energy out of the equation, and
we are in surplus in 17 out 23 trade deals that we have done.
Mr. Weber. Okay. You said, oil is as much about geography
as it is about trade. Would you agree with the statement that a
country that doesn't have energy doesn't produce products, and
doesn't remain nationally secure?
Ambassador Rivkin. Repeat the question, please, sir.
Mr. Weber. You said in your comments earlier that oil was
as much about geography as it was about trade. Would you agree
with the statement that the country that doesn't have energy,
doesn't get to produce its products and is not going to be
national--it is not going to be secure as a Nation.
Ambassador Rivkin. No, of course not. And energy is
critical and energy has been at the core of our current
resurgence in the economy.
Mr. Weber. Okay. Well, it is hard to take oil out of the
equation.
Ambassador Rivkin. Of course, it is part of trade, no
question about it. But the point is it is important to learn
from trade by parsing exactly what is driving job creation.
Mr. Weber. Now I go back to my previous question, do you
agree with Mr. Sherman's assessment that for 20 years, our
trade deficit has been getting worse?
Ambassador Rivkin. I would have to look at the statistics
and get back to you.
Mr. Weber. I have the Web site, I will get it for you in a
little bit.
Mr. Russel, you actually read from a statement about human
rights, you said the TPP doesn't come--and I watched you--at
the expense of human rights, but it is a driver, it is like you
had talking points on your list, okay?
Mr. Russel. I wrote those points down when I was listening
to some of the members speak.
Mr. Weber. Well, I hope your handwriting is better than
mine.
If that is true, then why is it that these other members
bring up all of these human rights violations going back 20
years? Lay aside the question I had for the Ambassador about
why haven't the numbers improved. Why haven't the human rights
violations gone away? If it is a driver, it doesn't come at the
expense of human rights, you said, but it drives it. And if
human rights are not getting that much better in Vietnam, for
example, does that kind of refute the statements you made?
Mr. Russel. To the contrary, Congressman. I think that the
prospect of joining TPP has been a driving force behind
relaxation of repressive and draconian policies. This is a
trend line, we are talking about change, we are talking about
direction, we are talking about reduction of offenses and
increases in civil society and space.
Mr. Weber. Okay. Do you have children?
Mr. Russel. Yes, sir.
Mr. Weber. And Ambassador Rivkin, do you have children?
Ambassador Rivkin. I do, sir.
Mr. Weber. Have they ever lied to either one of you all?
Ambassador Rivkin. My children would never lie to me.
Mr. Weber. You have perfect kids. I am glad to hear that.
Mr. Russel. I plead the Fifth Amendment.
Mr. Weber. So what makes us think that a government who
disrespects its citizens and has horrific human rights
violations would not lie to us and disrespect any kind of
agreements that we come up with, indeed dump cheap steel on the
market, Lord forbid that that would every happen out of China.
What makes us think they would honor, somehow--with all due
respect to the acting chair, that we want to exploit our
ideals, I get that. It would be better if they had their ideals
or not. What makes us think that they are going to abide by
those agreements and not do everything they can to mislead us?
You have children who were gone around your rules, who have
lied to you, and hopefully come back and seen the error of
their ways. Do you think these human violating governments are
going to do that? Do you honestly?
Mr. Russel. Congressman, I think the same principles that
apply in human nature apply in government in both directions.
And the consequences that governments such as the Government of
Vietnam face in terms of the loss of benefits they accrue under
TPP constitute a very formidable disincentive.
Mr. Weber. Has that been our history? The United States is
great on country building and exporting democracy to Iraq and
Iran and some of the other countries?
Mr. Russel. We are breaking new ground, in my view, by
taking a 21st century high standard trade agreement and
negotiating it with safeguards, with enforcement mechanisms. I
would add, Congressman, that there is also a very significant
training and capacity-building component. We are helping
Vietnam, we will be helping Vietnam to honor its obligations
under the ILO, for example, and honor its obligations under the
agreement in terms of wildlife trafficking and environmental
management.
Mr. Weber. Well, I would guess there are those who would
admire your faith in them, and the faith that we have the
chance to make that difference.
You said that the tenets of the agreement are enforceable.
Do we really have the wherewithal to be constantly checking on
them and making sure that they are complying with not only the
tenets of the agreement, the trade laws, but also, hopefully,
the decreasing the human rights violations? Can we police their
country to that extent?
Mr. Russel. We have a very significant monitoring presence
in Vietnam, as do the international NGOs, the other governments
who share our values and our concerns as does the international
press. I mentioned, for example, Vietnam's own Facebook, and
the access to citizens through Twitter, through Facebook gives
us abundant windows into what is happening in this society. We
are not saying that the Vietnamese are angels, nobody is.
Mr. Weber. Just ya'll's children as you testified here
earlier.
Chairman Royce [presiding]. Let's go to Mr. Connolly, if we
could, of Virginia.
Mr. Connolly. Thank you, Mr. Chairman. Thank you to your
panelists. I think, Ambassador Rivkin, this is your maiden
voyage testifying before Congress and you are doing just fine.
And I would say to my friend from Texas, he makes a point,
but the analogy can only go so far. Nations are not children,
and behavior among nations must be circumscribed by legal
agreements that have to be enforceable. The record will never
be perfect. The question for us, though, is shall we make
perfect through the enemy of the good. Will we disengage? If we
have any fighting chance to change behavior to norms closer to
our own, is it better to write off countries and say because
they cheat or because they don't share our values, we are going
to write them up or is it better to engage? And what does the
record show when we do that? That is, to me, the fair screen.
The questions you raise are absolutely fair, but I am not sure
the analogy can be taken too far. And I come down on the side
of saying it is better to engage, we are far better off with
the agreement that is emerging then not. And I think that is
really the choice.
The choice in front of us, not that my friend from Texas
was suggesting this, but some critics, if you listen to the
rhetoric, as if the choice were we can create an ideal world
only if we start all over again and reengage everybody, and
that is just not the case. It is really a straw man.
In listening to my friend, Mr. Sherman from California, I
think he is guilty of a logical fallacy, propter hic ergo hoc,
before because of this, therefore that. So it has to be NAFTA.
NAFTA is what caused a trade deficit among the three countries
of North America, and therefore it is bad. Now in order to
believe that, you have got to take out some inconvenient facts
like job growth. The same President who championed NAFTA and
put it through, Bill Clinton, also oversaw one of the largest
job growths in American history in the same time period.
So if I am going to buy into because of this therefore
that, then I have, the same logical fallacy must say it must be
NAFTA that created all those jobs. Are we only going to cite
certain statistics that serve our cause and, you know, take out
in convenient facts.
In the remaining time I really want to give both of you an
opportunity to slay this dragon about NAFTA. Ambassador Rivkin,
you were interrupted and now allowed to answer the question.
Tell us again, my friend from California said there is a $98
billion trade deficit with Mexico. How much of that is, in
fact, in the energy sector?
Ambassador Rivkin. Thank you so much, Congressman. I would
be honored to repeat some of the points that I made earlier. I
didn't have the chance, as I was mentioning some of the
strengths of NAFTA with Congressman Sherman, to mention that we
have improved upon NAFTA with the TPP negotiation. President
Obama, in his 2008 campaign, spoke about how he would improve
certain aspects of NAFTA specifically labor and environment.
And they are not separate chapters, fully enforceable, it is
definitely an improvement. We learn from that.
Specifically the statistics I wanted to mention I mentioned
to the congressman that more made-in-America products are sold
in Mexico and Canada than any other country in the world.
Fifty-six billion dollars trade surplus excluding energy in
goods and service, it was just three times before NAFTA. Three
billion dollars agricultural surplus.
Mr. Connolly. How much of the $98 billion in the deficit
net deficit is attributable to oil and gas?
Ambassador Rivkin. Yes, sir, I am going to have to get back
to you on the specifics amounts.
Mr. Connolly. I just want to point out because I think the
data you were just providing is very helpful and makes for a
much more complex picture, but the United States consciously
chose as part of NAFTA to use Mexico as a reliable supplier of
energy and as a substitute for unreliable sources of energy
such as the Middle East. Is that not correct, Ambassador
Rivkin?
Ambassador Rivkin. I believe that is true, sir.
Mr. Connolly. So to simply cite the gross number in
normative terms is bad, is to really distort a much more
complex picture in terms of the two-way trade. Is it also not
true, Ambassador Rivkin, that since NAFTA, trade among the
three North American countries has quadrupled?
Ambassador Rivkin. Yes, sir.
Mr. Connolly. Are we to believe that let to a net job loss
in America?
Ambassador Rivkin. As I said, sir, it is my belief that
trade deals done right generate jobs.
Mr. Connolly. Right.
Ambassador Rivkin. Generate high paying jobs, 18 percent
more than average. So no, I don't believe that is the cause,
sir.
Mr. Connolly. So one of the criticisms of NAFTA is it did
not codify integrally human rights environment and labor
standards, and that is fair criticism perhaps in retrospect.
Would you agree?
Ambassador Rivkin. Yes, sir. And President Obama identified
some of those himself before even becoming President.
Mr. Connolly. Right, that is right. And now what is before
us we can go read what is before us, as a matter of fact,
rectifies and codifies that which one would think satisfies
that level of criticism. Is that correct?
Ambassador Rivkin. Yes, sir. These chapters are very strong
and fully enforceable, something that might not have been
imagined 20 years ago.
Mr. Connolly. I thank you and I thank the chairman.
Chairman Royce. Mr. Lowenthal.
Mr. Lowenthal. Thank you, Mr. Chair. I think the last shall
be first and first shall be last.
I--before I ask some questions, I had the good opportunity
of traveling with Julie and the State Department and Chairman
Salmon to engage in Vietnam last week, not only with government
officials, but with business leaders, with human rights
activists, people who had just been released from prison as
pointed out, the patriarch Thich Quang Do, the government was
very gracious. It surprised me because I will have to admit I
left with tremendous misgivings about why we are rewarding a
country that engages in such bad behavior as human rights and
the lack of labor protections. And yet I came with--I learned a
lot. I changed some of my perceptions, but I also maintained
some perceptions that I really want to discuss with you.
On one hand, I think, as you pointed out, Mr. Russel,
Vietnam has made some progress on human rights. There is, my
understanding--is that there has been a moratorium on recent
arrests of political activists who speak out against the
government. Although on the other hand, there are still
imprisoned large numbers of political activists who have spoken
out.
One of the people that was just recently released from
prison, the government allowed us to meet with and to visit who
interestingly enough, although a great opponent of the
government, and of their labor rights, and of their human
rights did speak to us in favor of the TPP. I was very
surprised that someone fighting against the government saw this
as a positive step.
On the other hand, it was real clear to me there still
remains not even a semblance of freedom of the press, it is
just as troubling. There is not yet any kind of independent
trade union allowed in Vietnam. And although I listen to and I
really wanted to, and I do, hear the Vietnamese Government
saying they are making movement in this direction, just shortly
after we left, just a few days after we left, there was a
Vietnamese activist, Mr. Tuyen Chi Nguyen, was beaten severely
in Hanoi by allegedly five police officers not in uniform--and
I make the word ``allegedly,'' we don't know for sure. This is
a person who spoke out against some of the environmental
practice--spoke for environmental practices in Hanoi most
recently, one of the leaders on that position and also against
China. So on one hand, I am hearing that there are changes, the
other hand just after we left, they beat up an activist.
And so my question is, you know, how do we know that these
changes are really going to be institutionalized? Are we going
to require Vietnam to actually require? And will there be a
mechanism to ensure that there really be an independent trade
union? Are these changes that we are seeing, maybe begrudgingly
in human rights, are they just because we are initiating the
trade package, the TPP, and that there is enough evidence to
also indicate that the government is very frightened of these
kinds of changes, and that they will not exist after we have
done this? So I am kind of left with what is real and how much
of these changes are real and how do we know that there is
going to be trade? And as I say, there was no doubt by visiting
Vietnam that there are changes occurring. The question is are
they sufficient?
Mr. Russel. Congressman, I very much appreciate your
thoughtful questions and your willingness to travel personally
to Vietnam and make your own assessment and see for yourself.
But importantly to me as a diplomat for you to speak on behalf
of the American people and the Congress directly to the
leadership in Vietnam and to meet with civil society, the
fundamental question here is, do we think of economic
engagement as a reward or are we using it as a tool to try to
shore up these principles and these ideals and to safeguard the
fragile progress that has been made and to create incentives
for further improvements?
Obviously, my bias is in favor of the latter. But we are
very mindful of the need to build safeguards that ensure that
there is a consequence to partner country in this case, to
Vietnam for failing to honor the commitments that it makes, or
to live up to high standards that are embedded in the
agreement.
The question that it boils down to is how are we going to
influence the decisions that will be made in the ongoing
political debate and process in Vietnam? It is a long-term
process, they are in a period of transition. There is an
important party Congress coming up next year. As you heard
firsthand, there is a surprisingly vigorous discussion and a
multiplicity of ideas, even within the Communist Party.
TPP is not designed to replace governments or to unseat a
ruling party in a partner country such as Vietnam. But it is
designed to lift up the principles of transparency, of good
governance and good labor standards. We want--we have seen many
positive steps, but as you pointed out, we are also seeing
significant backsliding and periodic episodes that violate the
direction that we want Vietnam to move in.
We engage vigorously and directly in discussions with the
Vietnamese on these subjects and these problems. And we are
encouraging them to move forward on the institutional reforms,
including the reforms of the criminal code, including
relaxation of their restrictions on Internet use and on press
freedoms. And we continue to call on the Vietnamese Government
to release unconditionally prisoners of conscience.
I think--we think that the economic engagement that TPP
brings, both the incentives and the enforcement mechanisms and
safeguards will strengthen the rule of law. So this is, again,
a relative question, will we be better off by following through
and by collecting Vietnam's commitments by building their
capacity and by holding them to account? I am convinced the
answer is yes.
Mr. Lowenthal. Well, thank you, and just as I yield back I
have to say I want to believe what you are saying, but I also
was shocked by what just took place after we left. When the
government, which I think had our--was attending to what we
said and then the juxtaposition of then the severe beating of
an activist.
Chairman Royce. Mr. Lowenthal, it is shocking. When I was
in Vietnam, the head of the Buddhist church the venerable Thich
Quang Do was under house arrest, but I did talk to him about
these trade agreements. He said it has the opportunity to bring
the rule of law. It has the opportunity to bring that type of
engagement. And as you begin to set up standards and the rule
of law, that begins the process of empowering people. So you do
have that perspective as well.
Mr. Lowenthal. I heard that very clearly, Mr. Chair.
Chairman Royce. Thank you Mr. Lowenthal. Well, I want to
underscore some of the key points that have been made today,
including in the colloquy between Chairman Salmon and Mr.
Connolly, the TPA process is transparent. There are no secrets
there, this is going to be publicized for 60 days, or for a
period of time. You can correct me, Mr. Russel, but that will
be not just before the Congress, but before the people. The
Congress, under TPA, can vote down a bad deal. I am optimistic
that we will get a good deal, but if we don't, Congress doesn't
give up its right to approve or reject the Asia-Pacific arena
here. So there is great potential here because we have trade
surpluses with our trade agreement partners and manufactured
goods when we look at the numbers.
Now, we don't necessarily have surpluses and manufactured
goods with those who aren't partners, well, yes, because
typically the tariffs are higher overseas and then they are
here in the United States. This gives us in the United States
an opportunity to equalize those tariffs. And when that happens
it accrues to our benefit, because we are 5 percent of the
world's market, but we are a bigger percentage of the world's
export market. And so--5 percent of the world's population, I
should say, and so this is an opportunity.
I want to underscore Mr. Sires' comments that we want our
good ally, Taiwan, in the game and I think that is very
important. And I want to thank the witnesses here, Secretary
Russel and Ambassador Rivkin for your appearances, these are
critical issues touching on our economic, political and
security interests. And I think we aired some of the important
issues here today. But as I said in my opening statement, we
hope that we don't turn away from Asia, seating ground in Asia.
We need a fair and enforceable deal. And if we get that, then
American workers will absolutely excel and create a healthy
economy.
I think one other point that was raised to those who raise
the concerns about the laws changing in the United States. Just
to quote the administration on this last week, no trade
agreement is going to change our laws. We don't change U.S.
laws as a result of a trade agreement. This agreement would
make sure our companies aren't discriminated against in other
countries. That is the whole point.
So I think the idea of bringing standards there to our
higher standards, especially on the intellectual property,
gives us a way forward that will open more markets. And with
that, this hearing is adjourned. Thank you.
[Whereupon, at 12:08 p.m., the committee was adjourned.]
A P P E N D I X
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