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


 
                  PROMOTING U.S. COMMERCE IN THE MIDDLE 
                          EAST AND NORTH AFRICA

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                    THE MIDDLE EAST AND NORTH AFRICA

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 22, 2015

                               __________

                           Serial No. 114-70

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]        


Available via the World Wide Web: http://www.foreignaffairs.house.gov/ 
                                  or 
                       http://www.gpo.gov/fdsys/

                                 _________
                                 
                     U.S. GOVERNMENT PUBLISHING OFFICE                                 
95-634PDF                 WASHINGTON : 2015                                   
                                 
                                 
________________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, 
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].  
                                 
                                 
                                 
                                 
                                 
                                 
                      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, MinnesotaUntil 5/18/
    15 deg.
DANIEL DONOVAN, New YorkAs 
    of 5/19/15 deg.

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

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

            Subcommittee on the Middle East and North Africa

                 ILEANA ROS-LEHTINEN, Florida, Chairman
STEVE CHABOT, Ohio                   THEODORE E. DEUTCH, Florida
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
DARRELL E. ISSA, California          BRIAN HIGGINS, New York
RANDY K. WEBER SR., Texas            DAVID CICILLINE, Rhode Island
RON DeSANTIS, Florida                ALAN GRAYSON, Florida
MARK MEADOWS, North Carolina         GRACE MENG, New York
TED S. YOHO, Florida                 LOIS FRANKEL, Florida
CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Ms. Elizabeth Richard, Deputy Assistant Secretary, Bureau of Near 
  Eastern Affairs, U.S. Department of State......................     5
Mr. Scott Nathan, Special Representative for Commercial and 
  Business Affairs, Bureau of Economic and Business Affairs, U.S. 
  Department of State............................................    13

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Ms. Elizabeth Richard: Prepared statement........................     7
Mr. Scott Nathan: Prepared statement.............................    15

                                APPENDIX

Hearing notice...................................................    36
Hearing minutes..................................................    37
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the Commonwealth of Virginia: Prepared statement..........    38


      PROMOTING U.S. COMMERCE IN THE MIDDLE EAST AND NORTH AFRICA

                              ----------                              


                        WEDNESDAY, JULY 22, 2015

                     House of Representatives,    

           Subcommittee on the Middle East and North Africa,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 10 o'clock a.m., 
in room 2172 Rayburn House Office Building, Hon. Ileana Ros-
Lehtinen (chairman of the subcommittee) presiding.
    Ms. Ros-Lehtinen. My opening statement, and I usually never 
start without Mr. Deutch being here, since he's usually beating 
me, and I'll ask Mr. Issa for as long as he can to take over, 
and then I'll be back.
    So, after recognizing myself and Ranking Member Deutch when 
he comes for 5 minutes each for our opening statements, I will 
then recognize any other member seeking recognition for 1 
minute.
    We will then hear from our witnesses, and without objection 
the witnesses' prepared statements will be made a part of the 
record. And members may have 5 days to insert statements and 
questions for the record subject to the length limitations in 
the rule.
    The chair now recognizes herself for 5 minutes.
    The Middle East and North Africa is a region rife with 
conflict, instability, insecurity, and uncertainty as the 
events of the Arab Spring have shown us, but it also a region 
with potential. If some of those nations take the necessary 
measures to step out from the uncertainty and instability, and 
institute reforms and develop democratic institutions that can 
bring them back into the global economy.
    My deepest apologies, Mr. Deutch.
    The Middle East and North Africa as a region accounts for 
about 5\1/2\ percent of the world's total population, a 
population that is one of the fastest growing in the world, but 
its economic output falls short of expectations contributing 
just over 4 percent of the world's GDP.
    In terms of U.S. Direct Investment, the Middle East and 
North Africa region as a whole accounts for just 1 percent of 
the nearly $5 trillion of outward U.S. foreign Direct 
Investment. Those numbers are incredibly lopsided, but that 
means that there's room to grow, and to expand. But it can only 
be done if many of the countries in the region implement much 
needed political reforms, economic reforms, rule of law 
reforms. Local businesses and foreign businesses alike run into 
rampant cronyism, protectionist policies, corruption, 
regulatory burdens that stifle economic growth and take away 
the incentive for those seeking to do business in the region.
    This makes it difficult not only for the governments 
themselves to invest in infrastructure and integrate themselves 
into the global economy, but it also makes these countries 
undesirable for foreign Direct Investment, which in turn 
exacerbates their economic struggles and their inability to 
reduce their already high unemployment numbers, and the cycle 
continues.
    This is a region that continues to significantly 
underperform in terms of economic output relative to its total 
population. That means they become overly reliant on outside 
foreign assistance. And one of the largest providers of foreign 
assistance is the United States, because these countries are 
behind in instituting democratic reform.
    In fact, the only democracy in the region is our close 
friend and major strategic partner, the Democratic Jewish State 
of Israel. It is probably no coincidence then that Israel 
enjoys the economic benefits that few countries in the region 
do, and that is why it is a great environment for American 
businesses to operate and thrive in. But Israel is not the only 
country in the region with whom we have strong ties. We have 
free trade agreements with five countries, including our 
partners, Israel, as I mentioned, Jordan, and Morocco. But 
there are others which we can continue to seek ways to expand 
our trade and investment opportunities.
    Is our policy too concentrated on security matters and not 
enough on trade and investment opportunities? We need to find 
ways for American businesses to help the economies of the 
region grow. If we can do that, we can gain more leverage, and 
we can help to promote and support democratic reforms. We need 
to work to help foster more hospitable positive environments 
for American and other foreign businesses because it is 
important that we transition from aid to trade.
    Increased trade with the region will help to strengthen 
their economies. The aim should not only be for American 
businesses to create opportunities and more American jobs, but 
to do the same for other countries in the region and help them 
become economically sound and less dependent on our economic 
assistance.
    This has been one of the missing pieces of the puzzle from 
the Arab Spring across the region. We need to find ways to spur 
privatization, investment, economic growth in these countries 
through democratic reforms. If we can get those countries more 
involved in the global economy, we may have a chance to see 
more countries like Tunisia with a path toward democracy and 
maybe finally see less conflict, and greater stability.
    So, today we're here to discuss ways in which we can work 
to reach a mutually beneficial position for U.S. businesses and 
the countries of the Middle East and North Africa through 
increased investment and trade. And with that, I will be glad 
to yield to my ranking member, my friend, Mr. Deutch from 
Florida. And if I could ask Mr. Issa to take over. Thank you.
    Mr. Deutch. Thanks, Madam Chairman, and thanks to our 
witnesses for being here today.
    Over 4 years have past since the protests started in 
Tunisia setting off a chain reaction across the Middle East and 
North Africa. With varying results, both positive and negative, 
the protest led to dramatic changes in the region. The Middle 
East and North Africa that we see today are different, in some 
ways it's even indistinguishable from before January 2011.
    Over these years, our Government has attempted to position 
itself and to direct our foreign aid in a way that would best 
promote the democratic principles that we cherish here in the 
United States.
    We often talk about the soft power that we use, commonly 
through civil society groups and NGOs to promote good 
governance, rule of law, equal treatment for women, and respect 
for religious minorities, among many other values. In this 
hearing, I look forward to hearing our witnesses discuss the 
role that the U.S. Government plays in promoting a mutually 
beneficial economic policy with our allies in the region.
    An important element for any country strategy for meeting 
the needs of the people including here in the United States is 
economic growth. A country that prioritizes job creation and 
developing a robust economic infrastructure that encourages 
innovation, entrepreneurship, foreign investment, and expanded 
trade relations will find support from its population. Simply 
put, an expanded and more widely accessible economy can 
contribute to a country's success, and of great importance in 
the region especially, its stability.
    For these reasons, it's important the U.S. Government do 
what it can to help countries improve their national economies. 
That's why our Embassies in the region are staffed with 
liaisons working to improve bilateral commercial ties. Of 
course, we wouldn't act unless there was a mutual benefit, a 
substantial return on our efforts.
    In this case, I think those benefits are clear. Each 
American private sector firm and business that benefits from 
this support will hopefully return the profits and jobs created 
to meet the new demands back--to meet those new demands back to 
the United States. In addition, a more prosperous country that 
offers more economic possibilities for its people will find 
greater stability.
    For a region experiencing significant population booms 
reaching working age, enticing the youth, many of whom might 
come from difficult regions, enticing them with attainable 
economic opportunities can help rebuff lures to turn to 
extremism and join ranks in terrorist groups like Ansar al-
Sharia or ISIS. And for a region with such severe security 
threats, the United States should invest in any options 
available to us that can contribute to the security and the 
stability of our allies.
    Understandably, destabilizing security threats and attacks 
discourage trade and investments. This is reflected in our 
fluctuating bilateral trade volume since 2010. In some cases, 
it has rebounded well. For example, U.S. exports to Egypt 
slipped in the years when the country was dealing with 
political uncertainties. In 2014 it returned to pre-2012 
levels. Today our exports to Tunisia have risen significantly. 
Since the revolution, obviously, we pay close attention to the 
results of the recent attacks. But it's important to remember 
that growing ones economy isn't simply increasing trade or 
foreign investment. We should not forget that many of the 
revolutions in the region were encouraged by large populations 
who did not feel the ripple effect of foreign commerce in their 
lives. That's why public trust in the government is also 
essential.
    If the people of a country don't see the benefits of 
expanded and more international commerce in their country; for 
example, if the profits and jobs remain solely among a small 
elite class, then the same grievances that we heard so loudly 4 
years ago will remain unabated.
    A country without the institutional framework for handling 
expansion into new sectors or increased demand volume for 
exports and imports will not run efficiently, and won't 
maximize the positive financial impact on the country.
    The government also needs to insure that they are fostering 
future generations of educated citizens able to continue the 
specialized work of modernizing an economy. Without proper 
worker protections and equal access for women, a modern economy 
cannot approach full efficiency and maximization of resources.
    These are important considerations for countries amid their 
political transitions, but we should also be cognizant of best 
practices so that we can be prepared to take on the rebuilding 
and the changes that will come in Syria, in Libya, and in 
Yemen.
    I look forward to the witnesses' testimony which I hope to 
hear what steps are being taken to support U.S. commerce in the 
region, while at the same time considering the other factors in 
play to insure that the expanded commercial ties benefit the 
entire country in all regions from the bottom to the top.
    I thank the chairman, and I yield back.
    Mr. Issa. I thank the gentleman. And, briefly, the 1 minute 
I would be given by the chair were she still here. t his is an 
important hearing and it will in many ways go unnoticed.
    Every day ISIS is in the front lines of discussion while, 
in fact, the areas that have fomented so much of this 
opportunity for extremism sometimes doesn't get looked at 
properly.
    Today, our witnesses are, in fact, two individuals who are 
at the front line of dealing with the pre-event portion of it, 
the diplomatic portion. Over the years, whether it was 
Ambassador Welsh, Ambassador Satterfield, or William Burns, all 
of Ambassador Burns, all of them have had similar jobs, or in 
some cases the identical job you have. Each of them has been a 
mentor to me, and acutely understood what it will take in order 
to fix the problem. So, as I listen to your statements and 
follow-up with questions, I will be asking, and I will be 
interested to know now that, as Mr. Deutch mentioned, now that 
the Arab Spring has proven that eliminating a dictator and 
replacing them with democracy is not the answer. It may, in 
fact, be an important step in some cases, but the institution 
of real rule of law, civil rights, and the opportunity in an 
entrepreneurial, economic way to go from a lack of prosperity 
to prosperity; in other words, the have nots having the 
opportunity to eventually be the haves, and not to the 
exclusion of others, the rising tide that in America raises so 
many out of poverty, or out of middle class, or out of the 
upper middle class and does not exist in Africa or most 
portions of the Middle East, in fact, will be a critical part 
of what I'll ask for today.
    And with that, it's my pleasure to introduce our panel of 
witnesses. First, I'm pleased to introduce Ms. Elizabeth 
Richard, who serves as the Deputy Assistant Secretary of State 
for the Bureau of Near Eastern Affairs. Previously, she served 
as the DCM or Deputy Chief of Mission in Sana'a. Boy, that was 
an esoteric place to be that you can tell us more about, and 
the border coordination in Islamabad. She also was the Deputy 
to the Special Ambassador for War Crimes and Special Assistant 
Undersecretary for Political Affairs. Welcome.
    Second, we welcome Mr. Scott Nathan, who is the Special 
Representative for Commercial and Business Affairs for the 
Bureau of Economic and Business Affairs. In the past, he has 
worked as the Chief Risk Officer in the private sector at the 
Bob Post Group in Boston, and served as the economic advisor to 
the Governor of Massachusetts, who will remain nameless, but a 
governor.
    And with that, Ms. Richard, you're recognized for more or 
less 5 minutes.

STATEMENT OF MS. ELIZABETH RICHARD, DEPUTY ASSISTANT SECRETARY, 
    BUREAU OF NEAR EASTERN AFFAIRS, U.S. DEPARTMENT OF STATE

    Ms. Richard. Thank you very much, sir. Thank you, thank 
you, Mr. Ranking Member and members of the subcommittee who may 
join us later. Thanks very much for the opportunity to testify 
here today.
    Those of us who work on the Middle East and North Africa 
are all too familiar with the distressing news that routinely 
comes out of the region. But as this subcommittee knows all too 
well, the region faces deep structural challenges that feed the 
historic instability that we're seeing today.
    However, what's too often overlooked and what seldom gets 
enough publicity is the good news story of the growing economic 
opportunities for American business in the region.
    Over the past 4 years alone, U.S. trade with the Middle 
East and North Africa has grown on an average by $1 billion a 
year, and it's reached $197 billion just last year. And U.S. 
exports to the region are at an all time high, and our trade 
deficit with the region is rapidly shrinking.
    American businesses can and do make an immediate and 
lasting impact on the region. Simply by investing and creating 
jobs in the Middle East and North Africa, American businesses 
can help make the region stronger, and that ultimately 
strengthens the American economy, as well.
    Let me be clear that jobs alone will not solve the problem 
of violent extremism, but they can provide opportunity and 
purpose for a very large population of at-risk people, 
including youth.
    Moreover, facilitating U.S. businesses access to markets 
around the region is a crucial part of Secretary Kerry's 
economic diplomacy. A central mission of all our Embassies is 
to fiercely advocate on behalf of American enterprises. 
Ambassadors and our Embassy staff frequently sit down with 
American businesses to advise, strategize, and work with them 
on local business opportunities. They'll meet personally with 
economic ministers if there's a public solicitation that U.S. 
business can bid on.
    For example, in April, Ambassador Joan Polaschik after 
numerous talks with Algeria's Minister of Transportation helped 
GE finalize a $20-million deal with the state-owned railroad 
company. In Iraq, Ambassador Stuart Jones and the U.S. Embassy 
team relentlessly advocated with high-ranking officials there, 
and 2 weeks ago finally the grain board of Iraq announced that 
it would spend $37 million to buy 63,000 metric tons of rice 
grown here in the United States is Louisiana, Missouri, 
Arkansas, and Texas. In Egypt, our Embassy in Cairo 
successfully advocated on behalf of the Great Lakes Dredge and 
Dock Company which has won a $135-million contract for work in 
the Suez Canal. And countries in the Middle East and North 
Africa have become some of Boeing's largest markets. Over the 
past few years, customers there have purchased or placed orders 
with Boeing worth more than $130 billion; 200 777 Aircraft 
which include 300 American-made GE engines were ordered just 
last year alone.
    Ranking Member Deutch, Mr. Congressman, 41 American 
companies with ties to Florida have foreign subsidiaries in the 
region, and companies from every part of our country do 
business there.
    Interestingly, and I think this is important, many of them 
are immediately recognizable to people in the region as 
American. For example, Arby's has opened a franchise in Iraq, 
and Nestle Tollhouse is poised to begin business there soon. 
Johnny Rockets, ReMax, Pizza Hut and 26 other franchises will 
open for business in Tunisia thanks in large part to the work 
that the U.S. Embassy has done with the Tunisian Government and 
other stakeholders to liberalize franchising laws.
    Obviously, these successes alone will not solve the serious 
challenges this region faces, but we need to make headway, and 
we need our business community to play a leading role in 
addressing the deep economic problem this region faces.
    So, I thank you very much for the opportunity to testify 
today, and I look forward to your questions.
    [The prepared statement of Ms. Richard follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
        
    
                              ----------                              

    Mr. Issa. Mr. Nathan.

   STATEMENT OF MR. SCOTT NATHAN, SPECIAL REPRESENTATIVE FOR 
    COMMERCIAL AND BUSINESS AFFAIRS, BUREAU OF ECONOMIC AND 
           BUSINESS AFFAIRS, U.S. DEPARTMENT OF STATE

    Mr. Nathan. Thank you, Mr. Issa, Mr. Deutch, and other 
members of the committee. I appreciate the opportunity to 
testify today.
    Despite the challenges facing this region, there are still 
many opportunities for business, and my testimony will focus on 
what the State Department is doing to help U.S. firms seize 
these opportunities.
    The business and investment climate in these countries can 
be difficult, but we are working with the private sector and 
our partners to try to reverse this trend, create more jobs, 
and spur inclusive growth. By investing and employing more 
people, U.S. firms play an important role in helping transform 
the economic landscape of the Middle East and North Africa. 
Because of their high standards and business practices, U.S. 
firms often set an example that helps catalyze broader change. 
They participate in local American Chambers of Commerce and 
other business councils helping to give important private 
sector voice to the reform agenda.
    My chief responsibility as the Department's Special 
Representative for Commercial and Business Affairs is to help 
level the playing field for our companies to win more contracts 
and enter new markets. In my 16 months as Special 
Representative, I visited the Middle East and North Africa 
three times, and I will return to continue our efforts to 
strengthen commercial linkages next week.
    To assist the economic transitions in the region, we're 
taking a three-pronged approach that presses for policy reform, 
support our companies in pursuing commercial opportunities, and 
helps the development of local entrepreneurs and SMEs.
    First, we're engaging with our Government partners through 
trade agreements and economic policy dialogues to support their 
market-oriented reform agendas, and to facilitate greater 
business ties with the United States. Creating jobs and 
opportunity through private sector-led expansion is critical to 
the future success of the region.
    We push for open trade and investment policies that will 
promote sustainable growth and enable American businesses to 
have fair access to these growing markets. Our two-way trade in 
the region more than doubled over the last 5 years, and around 
a quarter of our exports to the region were sent to our five 
free trade agreement partners; Israel, Morocco, Oman, Bahrain, 
and Jordan.
    Under the FTA with Israel, for example, bilateral trade 
reached approximately $38 billion in 2014, up from $2.6 billion 
when the agreement began 30 years earlier. In Jordan, our FTA 
enabled a local company, PETRA Engineering, to purchase over 
$15 million worth of equipment from U.S. SMEs just this year 
alone, and every air conditioning unit they produce and export 
around the globe uses components made in the United States.
    Second, we're hoping to connect our private sector with 
promising opportunities and we're doing what we can to position 
our companies to succeed. A high priority for Ambassadors and 
Embassy teams in the MENA region and around the world is to 
advocate for U.S. companies bidding on foreign government 
procurements.
    Last year our advocacy efforts contributed to over $45 
billion worth of sales in the region supporting thousands of 
jobs in a dozen states. For example, Bechtel won a $3.1 billion 
contract in Saudi Arabia last year to design and construct new 
metro lines in Riyadh assisted by advocacy from then Ambassador 
James Smith and Secretary Kerry. Divida Health Care Partners 
won a $1.3-billion contract to provide dialysis services after 
strong mission Saudi Arabia support. In 2014, State Department 
advocacy helped secure Florida-based Blumberg Grain, a contract 
to provide 93 storage and processing sites across Egypt. At the 
recent Egypt economic development conference, General Electric 
announced a $1.6-billion deal to provide more than 2 gigawatts 
of power generation equipment, most of which is now operating 
and helping Egyptians meet their peak summer demand.
    Third, we're helping to support local private sector 
development from the ground up through programs that bolster 
SMEs and entrepreneurs. Just one example, for the last few 
years, Coca-Cola has partnered with the State Department and 
the Kelly School of Business to host a summer entrepreneurship 
program for 100 college students from across the MENA region. 
These future business and civic society leaders returned to 
their countries with new skills and contacts better enabling 
them to start businesses and create jobs. On a much larger 
scale, President Obama's Global Entrepreneurship Summit helps 
deepen ties between business leaders, NGOs, academics, and 
aspiring entrepreneurs. And GES has been twice held in the 
region. Last year in Morocco, we instituted a day devoted to 
helping youth and women entrepreneurs.
    To conclude, I've discussed only a small sample of our 
economic engagement with the Middle East and North Africa. 
Sustainable economic development in this region is integral to 
defending our nation's interests and insuring the security of 
all Americans. Our private sector plays a key role in this, and 
we're there to support them.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Nathan follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
            
                              ----------                              

    Mr. Chabot. Thank you very much. We appreciate your 
testimony here this morning, and we'll now recognize members 
for 5 minutes, and I'll begin with myself.
    The--in May 2011, the President announced the launch of the 
Middle East and North Africa Trade and Investment Partnership 
Initiative with the proposed goals of facilitating regional 
trade, promoting integration with U.S. and European markets, 
and helping to construct a regional trade agreement. He stated, 
``This strategic objective was to create an economic force for 
reform and to assist with democratic transitions in the Middle 
East,'' yet, very little has been said about the partnership 
since its launch, and there's no mention of it at all in the 
President's latest trade policy agenda, or either of your 
testimonies. What is the status of the partnership, and why was 
it not included in the President's trade policy agenda? And 
I'll open it either one of you. Mr. Nathan.
    Mr. Nathan. Sure. Thank you very much, Mr. Chabot.
    In terms of our work with our partners in the region on 
trade, we have numerous bilateral dialogues in which the 
possibility of economic reform to lay the groundwork for a 
trade agreement is underway. Just this year we had economic and 
strategic dialogues with Morocco. We're doing so with Israel 
and the UAE, but in order to move forward with trade agreements 
either on a bilateral or a multilateral basis, we need to see 
progress on the reform agenda broadly.
    Mr. Chabot. Thank you. Let me move to another question 
here.
    Where are we in meeting in the partnership strategic 
objective, and if it's not yet been that, does the President 
plan on extending the partnership's mandate?
    Mr. Nathan. I can't give you a status report on where we 
are on the objectives. What I would recommend is that we have 
our experts from our trade area come up and brief you on that, 
specifically.
    Mr. Chabot. All right. Well, we would appreciate the 
administration get back to the committee with answers to that.
    Mr. Nathan. Absolutely.
    Mr. Chabot. Many countries in the region are working hard 
to diversify their economies. Which countries have been more 
successful at this diversification, which need to do more, and 
how is the United States helping in their efforts? Ms. Richard?
    Ms. Richard. Sir, I think Israel is a terrific example of a 
country that's done exactly that. Over the past 30 years, the 
diversification, the investment in the private sector, the 
investment in technology has allowed Israel to play on par with 
the developed world and with the West. There are a couple of 
others that are starting to make progress. I think Tunisia is 
working very hard in this direction, and we have quite a bit of 
engagement with the Tunisian Government on exactly this point, 
the need to diversify their economy beyond some of the 
traditional agricultural products, and some progress has been 
made there.
    Mr. Chabot. Do you think that the recent terrorist attack 
in Tunisia will have any impact on their progress in that area?
    Ms. Richard. I don't think it will have any impact on the 
government's commitment to diversify, but I think the fact that 
the tourism industry took such an immediate and significant 
hit, has only highlighted the need to further diversify that 
economy. I think that they are completely devoted to continuing 
to work on that.
    Mr. Chabot. Thank you.
    The United States has a number of trade investment 
framework agreements with countries in the region. How many of 
those are likely to develop into something more, and are there 
any countries that we consider concluding a free trade 
agreement with that we don't currently have?
    Mr. Nathan. So, in terms of countries that we might enter 
into free trade agreements, I can't specifically comment on 
what the prospects are with an individual country, but what I 
can say is that in all of our dialogue, either formal or 
informal, with countries in the region we're pressing forward 
with the reform agenda, providing technical assistance on the 
change in laws to move toward more market-oriented regulations, 
cutting through bureaucracy, protection of intellectual 
property rights, all the things that lay the basis for then 
taking the next step toward a free trade agreement.
    Mr. Chabot. Okay, thank you. I think I've got time to get 
one more question in here before my time expires.
    While Saudi Arabia is our largest trading partner in the 
Middle East by overall volume, it's mainly due to U.S. oil 
imports, of course. What's preventing additional U.S. exports 
and investment in other economic sectors, and what is State 
doing to encourage additional opportunities for U.S. commerce?
    Mr. Nathan. So, as I mentioned in my testimony, we've been 
advocating hard. Our Ambassadors and posts on the grounds, as 
well as Washington-based principals to win contracts for 
American countries in Saudi Arabia. I cited a few examples.
    There's always progress that could be made on transparency 
and openness of procurement processes, and opening up of the 
business and investment climate. But, for example, Saudi Arabia 
already is the third largest importer of automobiles from the 
United States, so it's a high indication of opportunities to 
diversify our trade with Saudi Arabia.
    Mr. Chabot. Thank you very much. My time has expired. The 
ranking member, Mr. Deutch, is recognized for 5 minutes.
    Mr. Deutch. Thanks, Mr. Chairman.
    Ms. Richard, you spoke about the--you gave us some big 
picture data points on the growth of our economic 
relationships. And, Mr. Nathan, you spoke about individual--you 
gave some examples of individual companies who have benefitted, 
but if you could--I would love to hear you tell us what you're 
most excited about. I mean, this is what you do every day. What 
are you most excited about in the region and opportunities for 
American business?
    Ms. Richard. Maybe I can start with that, sir. And thank 
you for the question, because there's a lot to be excited 
about. And I think that's--we're very thrilled to be there--to 
be here today for exactly this reason. There is so much bad 
news coming out in the press that you can't believe anything 
good is happening, but there is a lot. And I think one of the 
things, we always talk about the youth demographics here as a 
problem, and an obstacle, and a danger, and something that can 
be exploited by terrorists, and that's all true. But it's also 
an incredible opportunity, and I think if you look at some of 
what's being done on the small and medium enterprise scale, 
particularly as regards technology, there is a lot that's 
happening, and it's very exciting.
    It is moving around a little bit some of the moribund 
economies, some of the things that keep these economies from 
developing like lack of transparency, poor regulatory 
environment and the like. And it's also really opened up an 
avenue for women to join the workforce. Women in the workforce 
in the Middle East is the lowest level in the world. In Africa, 
for example, about 63 percent of the labor force is women; in 
the Middle East it's 21 percent. But technology has given an 
opportunity for women, and especially young people to work 
beyond those obstacles. So, for example, we can have women 
running a business from their home. They can employ other women 
who are also working from their home. And we have some really 
interesting programs to help with this, Tech Women, Tech Girls. 
We bring female entrepreneurs to the United States to sit with 
their counterparts here and learn how to do this. So, I think 
the opportunity side of what's going on with this huge youth 
population and the opportunity for U.S. business to take 
advantage of that is huge.
    Mr. Deutch. Great, thanks. Mr. Nathan.
    Mr. Nathan. So, I echo my colleague's comments about the 
opportunities in entrepreneurship. There's just fantastic 
opportunities there for us to make progress, and empowering 
youth, women, disadvantaged communities by giving them the 
tools, the ability to reach their human potential through 
starting a business, and helping them navigate through what is 
often a very challenging environment of bureaucracy.
    But I want to return to what we do on commercial advocacy. 
It's really in many ways the bread and butter of what my office 
focuses on. There are many parts of the U.S. Government which 
help support this, the Department of Commerce and elsewhere 
around the interagency, but I'm a competitive guy. I'm a deal 
guy. I like to win, and the idea of helping U.S. companies 
compete on a level playing field and win contracts that not 
only help on the ground in the region bring examples of good 
business practice, but also strengthen our own economy at home 
and create jobs. That's a win-win. I know how much our 
Ambassadors on the ground are committed to this idea. They like 
to win, and they're competitive, as well.
    Mr. Deutch. All right, thanks.
    Can we just get back to something you both just mentioned, 
which was some of the positive aspects on the ground in 
society. Is it too soon for us--well, can you identify positive 
social trends? Is it too soon to describe trends we've seen 
with respect to advancement for women, or more opportunities 
for young people in countries where we've seen increased 
economic ties with the United States?
    Mr. Nathan. So, I'd say that I think from a statistical 
point of view it's probably too soon to prove that out. There 
are plenty of anecdotes, however. I mean, one that I'll just 
highlight, under the Global Entrepreneurship Program that we 
coordinate out of the Office of Commercial and Business 
Affairs, we've recently signed up an entrepreneur in residence, 
the first regional entrepreneur for the Gulf Region. She's a 
woman, a star on reality TV in Kuwait, has a huge social media 
following, and really serves as in a large-scale way a mentor 
to women throughout the region about the possibility of 
empowering themselves through business. It's anecdotes like 
that that I think give me hope for the future.
    Mr. Deutch. Ms. Richard.
    Ms. Richard. Yes, I would second that. And if I might from 
my own experience in Yemen for the 3 years from the start of 
the Arab Spring and 3 years on, one of the things I saw among 
the younger people is a willingness, and ability, and comfort 
level to sit with each other, to collaborate with each other 
among the youth, and among men and women, which is very, very 
different. And in quite a very conservative country as Yemen 
is, it was very interesting to see this through the Arab Spring 
protests and through the national dialogue process, which ended 
up with young men and young women sitting together to try and 
create a new constitution for the country.
    Mr. Deutch. Thanks. And to the extent--this is very helpful 
to the extent that there are American businesses who hearing 
all of the wonderful opportunities you discussed would like to 
learn more. I mean, what's the best place? Where should members 
direct them to go for the best and central location for this 
information?
    Mr. Nathan. Well, there's a--I mean, the best source of 
information about opportunities on the ground are our posts, 
our missions, our Embassies, the Ambassadors and their teams. 
But whether it's the State Department, the Commerce Department, 
or other parts of the Government here in Washington, we have 
many programs through our Web sites that provide that sort of 
information.
    Mr. Deutch. Any in particular, Ms. Richard? Thanks.
    Ms. Richard. No, I would agree with that. This is an 
absolute priority for Secretary Kerry. Economic diplomacy is 
foreign policy, and so the State Department is a great place to 
start. Our colleagues at the Department of Commerce also spend 
an awful lot of their time and energy doing this, and as Mr. 
Nathan said, our Ambassadors live and breathe to do exactly 
this.
    Mr. Deutch. Let me try it a different way.
    Mr. Nathan. I can mention one specifically.
    Mr. Deutch. Please, yes.
    Mr. Nathan. So, we have a program called the Direct Line 
for Business. It's instituted in 2012. It allows SMEs and other 
businesses here to connect with our posts on the ground to 
consider particular opportunities. The Ambassadors and their 
teams through webinars or conference calls can relate business 
opportunities. We've had 30 of these webinars just in the MENA 
region alone. They're focused on opportunities like the health 
care sector in Oman, or the security sector in Libya.
    Mr. Deutch. Finally, Ms. Richard, that's helpful if the 
business is not quite at that point, they just want to learn 
more and they went to State.gov, what should they look for? I'm 
just trying to really----
    Mr. Nathan. So, at State.gov, there's the Commercial and 
Business Affairs tab, and Business USA.
    Mr. Deutch. That's what I want.
    Mr. Nathan. Thanks.
    Mr. Deutch. Okay, thanks very much. I yield back.
    Mr. Trott. I want to thank the ranking member for holding 
this hearing, and also thank the witnesses for testifying. And 
I now recognize myself for 5 minutes.
    Either witness, the United States' decreased reliance on 
Middle Eastern crude oil has caused the price of oil to fall 
below $50 a barrel. Is that negatively impacting our 
relationship with countries in the region, either witness would 
be great?
    Ms. Richard. Let me start and simply say no, it has not 
really affected our relationships. Our relationships across the 
region are based very, very much more than simply on oil, and I 
think you see that today. What I would say that is the change 
in the price has changed the dynamics in the region a little 
bit, depending on whether you're a net producer or a net 
importer. But, fundamentally, we have such a broad range of 
interests in that region that this is only one aspect of it.
    Mr. Nathan. I would say, I mean, it probably goes without 
saying, but the effect of lower oil prices on the budgets and 
economies of some of the countries in the region has been 
detrimental.
    Mr. Trott. With respect to Egypt, the efforts to privatize 
state-owned industries has slowed in recent years due to legal 
challenges. What's the--how has that impacted U.S. commerce, 
and what are we doing to try and move the privatization process 
along in Egypt?
    Ms. Richard. That's an absolutely excellent question, 
because that is a fundamental problem for that economy. Egypt 
is a country with a moribund economy, with a very small, as in 
scale private sector. The private sector is actually quite 
closed, and there are many, many significant problems. If you 
look at a recent World Bank study, for example, on the 
constraints to growth, they are macroeconomic instability, 
regulatory instability, political instability, and corruption. 
And these four elements are present in Egypt in a significant 
way, so we are working very hard with the Egyptian Government 
to help them recognize these key areas that need to be worked 
on, to open up the economy not just for U.S. business, but for 
their own companies to grow.
    Mr. Nathan. Can I just briefly add to that?
    Mr. Trott. Please.
    Mr. Nathan. I had the opportunity to travel with Secretary 
Kerry to Egypt in March for the Egypt Economic Development 
Conference. It was really an event that highlighted that 
aspiration to move forward with the reform agenda, and to 
create more opportunities for business. There were many, many 
American companies there. The U.S. Chamber of Commerce hosted a 
huge event, and many deals, whether Coca-Cola, PepsiCo, GE were 
all announced at this event. So, there still are great 
opportunities in Egypt, and we're working hard at multiple 
levels to help them with the reform agenda to make sure that 
not only is their economy strengthened, but U.S. companies have 
a chance to compete.
    Mr. Trott. And how would you assess President Sisi's 
efforts to deal with the economic problems and attract foreign 
investment in Egypt?
    Mr. Nathan. So, as I just mentioned, the conference that 
happened in March was an event that I think was very personally 
important to President Sisi. Many leaders from around the 
region, many businesses from around the globe attended it. He 
was front and center the whole time, and I think really drove 
the agenda. There's a lot of challenge, as my colleague 
mentioned, in Egypt, but I think there's no shortage of energy 
devoted to pushing forward with the reform agenda and the 
economy.
    Mr. Trott. Okay. In Lebanon, they're working hard to combat 
corruption and the anti-bribery network, and is it--are they 
making progress? Is it lending itself to a more commercially 
reasonable environment for folks to do business in Lebanon?
    Ms. Richard. They are making some progress. It's slow, and 
the fact that there hasn't been a President for a long time, 
and the government is a little bit stuck is definitely a 
problem. The other thing I'd say is a problem, and the Lebanese 
economy is incredibly resilient, somehow has posted a very 
modest gain this year, I think about 2 percent, which is really 
saying something in the environment that exists there now.
    The instability in the region and the overflow from Syria, 
though, is creating serious problems for them, and they affect 
tourism, the tourism sector, they affect investment and the 
willingness of investors to go into the country. So, these are 
two areas that are extremely vulnerable right now, and I think 
that we need to keep working on the macroeconomic part of this, 
the laws, et cetera. But the stability issue is also very much 
an element here.
    Mr. Trott. With respect to Morocco, I think I have time for 
one more question. It's the gateway for growing economies in 
the African Continent, except unemployment is staggeringly 
high. Is there a reason for this disconnect? And, again, are 
they making progress in trying to bring the unemployment down 
in Morocco?
    Mr. Nathan. So, I know that they're very focused on the 
question. I was there last November. They hosted President 
Obama's fifth Global Entrepreneurship Summit, and two elements 
of what you mentioned in your question were highlighted by the 
Government of Morocco through this event. One is their place is 
a gateway to Africa, and I should mention they're the only 
country on the Continent of Africa with whom we have a free 
trade agreement. And the second point was doing what's 
necessary to spark entrepreneurship. In a clear way the 
bureaucracy changed the attitude in the region toward taking a 
risk and provide the support and mentorship necessary to make 
that possible. It's through small enterprises, through 
entrepreneurs that they'll be able to create the jobs to absorb 
the unemployment problem that you're talking about. And it was 
clear, 6,000 people attended this event in Marrakesh. It was 
clear that they had put a lot of effort into that, and were 
putting force behind it.
    Mr. Trott. All right. Well, my time is expired. I'm not 
sure if there are any other members of the committee that have 
questions. Ranking Member Deutch, please.
    Mr. Deutch. Thanks, I appreciate it. Thanks to both of you 
for coming. It's a very positive story that you're telling that 
we don't often get a lot of positive news in this committee, so 
I appreciate that.
    I just wanted to circle back, Mr. Nathan, to the--you both 
mentioned the Florida companies that are impacted by all this, 
but there's one in South Florida, in particular, Blumberg 
Grain. The suppliers for that project are U.S.-based. They are, 
as I understand it, mostly small and medium-sized businesses. 
How--on a project like that where there are some 93 storage 
sites I think you said, how do you--what role can you play to 
insure that a company like that, when deals like that come 
along, how do we insure that it can be built upon when there 
are successes that wind up having the benefits back home for 
the suppliers to those companies?
    Mr. Nathan. So, thanks for the question, because Blumberg 
Grain really is a success story. They attended the conference 
in March that I mentioned, the Egypt Economic Development 
Conference, and they've had good news since the advocacy that I 
mentioned that got them the first contract for the 93 storage 
facilities. President Sisi has recently announced a tripling of 
the program with this company. It's not only an example of an 
innovative solution with U.S. content that is a successful 
export, it's also solving a problem for Egyptian society and 
the Government of Egypt, which is food security, how to have 
better storage and processing at a cheaper price in a more 
efficient way throughout Egypt. I mean, it's been a millennial 
problem in the region, and Blumberg Grain is bringing a 
solution to that. They work closely with our post on the 
ground. They work closely with the U.S. Chamber of Commerce and 
the local U.S.-Egypt, and Egypt-U.S. Business Councils. They 
take full advantage of the opportunities to get in front of the 
Egyptian Government, and push forward the advantage of their 
product, and we're there to support them.
    Mr. Deutch. That's great. I appreciate that. Thanks very 
much, Mr. Chairman. I yield back.
    Mr. Trott. Well, I don't believe any other committee 
members--recognize the gentleman from Virginia for 5 minutes.
    Mr. Connolly. Forgive me, Mr. Chairman, I had a markup the 
Oversight and Government Reform Committee, and had a bill to be 
marked up. And welcome to our panel.
    If I could ask maybe some broader geopolitical questions 
about commerce in this region, has commerce effectively stopped 
in large chunks of the region given insurgencies, and 
instability, and violence? I mean, how has it affected our 
commerce with Lebanon? Either one.
    Ms. Richard. Well, maybe I can start. Absolutely, the 
instability in the region has affected commerce, but it 
certainly has not stopped commerce. And I think the two of us 
today have mentioned, and also in our written testimony, really 
a staggering number of success stories that we don't hear about 
every day in the press. And I know our Ambassador in Egypt, 
Ambassador Beecroft, is currently working on advocacy for I 
think about $19 billion worth of deals right now.
    Mr. Connolly. Of?
    Ms. Richard. About $19 billion worth of deals. The Embassy 
in Egypt is advocating right now. Now, that's a very good 
news--that's very much a good news story, and there's a lot 
happening.
    In Lebanon, in particular, I mentioned a moment ago, 
Lebanese companies somehow, and the Lebanese economy is somehow 
managing to be very resilient in the face of quite a bit of 
instability on its borders, and recently posted about a 2-
percent growth. That's modest growth, but that's growth in a 
region that's quite challenged right now. But there's no doubt 
that this situation is affecting, as I mentioned, investment, 
foreign Direct Investment in Lebanon. And it's affecting the 
tourism sector, and it's also affecting those sectors that 
depend on transportation because so many of the transport 
networks throughout the region, intra regional trade depend on 
going through Syria.
    Mr. Connolly. Sure. I would also--to what extent is 
personal security a barrier, as well? I mean, businessmen and 
businesswomen, and investors are willing to take risks up to a 
point, but if my own personal security is always at risk where 
I stay, where I eat, when I travel, who I meet with, there are 
plenty of places to invest and do business with that don't put 
me in that kind of risk. And have my family back home really 
worried sick about my personal security. To what extent is that 
a serious barrier in encouraging U.S. deals, trade, investment?
    Ms. Richard. Let me just have one personal story here. I 
can tell you from having served, a career foreign service 
officer and my last three postings have been Sana'a, Yemen, 
Islamabad, Pakistan, and Kabul, Afghanistan. So, I can tell 
you----
    Mr. Connolly. Somebody loves you at the State Department, 
obviously, Ms. Richard.
    Ms. Richard. I did something right or wrong.
    Mr. Connolly. Yes, you did something----
    Ms. Richard. But I can tell you, yes, risk is absolutely an 
issue, but one can work in these areas. And I think American 
companies are looking at these markets. Look at Egypt, 90 
million people, that is a vast market for consumer goods and 
for all kinds of commerce. So, they're looking at those, 
they're assessing their security, of course, and we work very 
closely through our OSEC councils to collaborate with U.S. 
companies. Our Ambassadors meet with them regularly to talk 
about risk, but there's a lot of opportunity here. And 
companies, I think, are making smart decisions.
    Mr. Connolly. Mr. Nathan?
    Ms. Richard. Mr. Nathan.
    Mr. Nathan. I really don't have anything to add to that. I 
was going to mention the role that our posts on the ground 
through the OSECs play in helping businesses.
    I guess what I would say is that we meet with businesses 
all the time that are looking for assistance in pursuing 
opportunities through the region, and the question you raised 
does not come up. I think in------
    Mr. Connolly. Does not?
    Mr. Nathan. Does not come up, and I think the reason is 
that many of these companies have operated in this region and 
elsewhere around the world for years where there are security 
challenges. And that doesn't make it easy, but it means that 
they've become to some extent accustomed with how to deal with 
it. It does act as a tax on doing business. This is true in any 
region where there's instability. But, nonetheless, the 
opportunities are such that they continue to pursue them.
    Mr. Connolly. Well, I'm somewhat--I mean, I worked in the 
private sector for 20 years until I came up here, and I can 
tell you, the two companies I worked for were both 
international, and we did our own assessment of risk. Now, 
maybe that's what happens, we decide we're not going to play in 
certain venues and you don't ever meet with us. And, as I said, 
I mean, I understand that especially in more dicey parts of the 
world the risk factor is higher, of course. But I guess I'm 
asking to what extent does it become a real high barrier for a 
U.S. presence? I was with some folks who have been multiple 
times, many multiple times to Afghanistan and, candidly, the 
security situation has just plummeted in the last few years, 
and you can't do business. I mean, it's very--I mean, maybe you 
need to stay in the compound. If you stay there, you have to 
hire armed guards. If you're outside the green zone you're at 
risk, you could be targeted. You're very aware of it, and 
they're having trouble recruiting anybody who wants to frankly 
work in that kind of environment.
    Mr. Nathan. Yes.
    Mr. Connolly. At any rate, I just--I think it's good to 
hear that we're still doing business in the region, and there 
are deals to be had and we haven't abandoned. But I'd love to 
get more of a sense of--but with rising instability in certain 
parts of the region, the rise of ISIS and, you know, outright 
warfare, and what's going on in Syria, and dislocations, and 
refugee populations swelling, and so forth, has that 
appreciably shown itself in data in terms of U.S. economic 
presence to a trade investment and the like? And I'd be very 
interested in following that. Thank you, Mr. Chairman.
    Mr. Trott. The gentlewoman from New York is recognized for 
5 minutes.
    Ms. Meng. Thank you, Mr. Chairman, Mr. Ranking Member, and 
to our witnesses for being here today.
    I have a question about in general localities in states 
such as California has had water shortage and drought issues. I 
know that in the region, Middle East in general, but 
particularly Israel has had a lot of success in groundbreaking 
technology and usage of techniques in water shortage situations 
of their own. So, I know that there's been some conversation 
and some action, but I was wondering your thoughts on 
potentially more areas of collaboration between Israel and 
localities or states, such as California, and what more could 
be done on a Federal level, how we can be more helpful?
    Mr. Nathan. So, I would just mention that our collaboration 
mostly at a private sector to private sector level with Israel 
could not be stronger. If you look at collaboration in research 
and development and innovation, the relationship between the 
high-tech community in the United States, much of which is in 
California, but spread throughout the country and the high-tech 
sector in Israel is incredibly strong. U.S. firms locate 
research and development centers in Israel because of the high 
level of talent.
    After China, there's no country that has more NASDAQ listed 
companies than Israel, a reflection of the innovation and 
dynamism of their private sector in the high-tech area. So, I 
think there's some that we can do to provide the backdrop and 
framework for that. We've had our very first free trade 
agreement with any country was with Israel. It's celebrating 
its 30th anniversary. There's exchange from a scientific and 
academic point of view. We have policy dialogues, economic 
policy dialogue with Israel in a very robust way. But I think 
really, ultimately, it's the private sector collaboration and 
deep linkage between the two countries that's going to produce 
the type of results you asked about.
    Mr. Trott. Thank you. Well, I don't believe there are any 
other members of the committee that are here with questions. So 
unless the ranking member has any other questions, or gentleman 
from Virginia, we thank you for your insight and your testimony 
this morning, and the committee stands adjourned.
    Mr. Nathan. Thank you very much.
    [Whereupon, at 10:56 a.m., the Committee was adjourned.]
                                     

                                     

                            A P P E N D I X

                              ----------                              

                                 [all]