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





               ADVANCING U.S. ECONOMIC INTERESTS IN ASIA

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

                                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

                              ----------                              


                         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.]
                                     

                                     

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