[Senate Hearing 114-160]
[From the U.S. Government Publishing Office]











                                                        S. Hrg. 114-160

                        PRESIDENT OBAMA'S 2015 
                          TRADE POLICY AGENDA

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

                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 27, 2015

                               __________

                                     
    
    
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            Printed for the use of the Committee on Finance
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                          COMMITTEE ON FINANCE

                     ORRIN G. HATCH, Utah, Chairman

CHUCK GRASSLEY, Iowa                 RON WYDEN, Oregon
MIKE CRAPO, Idaho                    CHARLES E. SCHUMER, New York
PAT ROBERTS, Kansas                  DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming             MARIA CANTWELL, Washington
JOHN CORNYN, Texas                   BILL NELSON, Florida
JOHN THUNE, South Dakota             ROBERT MENENDEZ, New Jersey
RICHARD BURR, North Carolina         THOMAS R. CARPER, Delaware
JOHNNY ISAKSON, Georgia              BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio                    SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania      MICHAEL F. BENNET, Colorado
DANIEL COATS, Indiana                ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
TIM SCOTT, South Carolina

                     Chris Campbell, Staff Director

              Joshua Sheinkman, Democratic Staff Director

                                  (ii)





















                            C O N T E N T S

                               __________

                           OPENING STATEMENTS

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

                         ADMINISTRATION WITNESS

Froman, Hon. Michael, U.S. Trade Representative, Executive Office 
  of the President, Washington, DC...............................     5

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Brown, Hon. Sherrod:
    Prepared statement...........................................    41
Froman, Hon. Michael:
    Testimony....................................................     5
    Prepared statement...........................................    41
    Responses to questions from committee members................    49
Hatch, Hon. Orrin G.:
    Opening statement............................................     1
    Prepared statement...........................................    82
Wyden, Hon. Ron:
    Opening statement............................................     3
    Prepared statement...........................................    84

                             Communications

Advanced Medical Technology Association (AdvaMed)................    87
American Apparel and Footwear Association (AAFA).................    89
American Council of Life Insurers (ACLI).........................    90
American Enterprise Institute....................................    91
Coalition for GSP................................................    94
International Wood Products Association (IWPA)...................    98
National Association of Manufacturers............................    99
National Cotton Council of America...............................   106
Outdoor Industry Association.....................................   109
Rocky Mountain District Export Council...........................   112
Telecommunications Industry Association (TIA)....................   113
U.S. Chamber of Commerce.........................................   114
United States Council for International Business (USCIB).........   122

                                 (iii)

 
                        PRESIDENT OBAMA'S 2015 
                          TRADE POLICY AGENDA

                              ----------                              


                       TUESDAY, JANUARY 27, 2015

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10 a.m., 
in room SD-215, Dirksen Senate Office Building, Hon. Orrin G. 
Hatch (chairman of the committee) presiding.
    Present: Senators Grassley, Crapo, Roberts, Cornyn, Thune, 
Isakson, Portman, Toomey, Coats, Heller, Scott, Wyden, Schumer, 
Stabenow, Nelson, Menendez, Carper, Cardin, Bennet, and Casey.
    Also present: Republican Staff: Chris Campbell, Staff 
Director; Everett Eissenstat, Chief International Trade 
Counsel; Rebecca Eubank, International Trade Analyst; Kevin 
Rosenbaum, Detailee; and Shane Warren, International Trade 
Counsel. Democratic Staff: Elissa Alben, International Trade 
Counsel; Michael Evans, General Counsel; Jocelyn Moore, Deputy 
Staff Director; Joshua Sheinkman, Staff Director; and Jayme 
White, Chief Advisor for International Competiveness and 
Innovation.

 OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 
              UTAH, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The committee will come to order. Good 
morning. It is a pleasure to welcome everyone to today's 
hearing on our Nation's trade agenda. I want to thank 
Ambassador Froman for taking time to be with us here today, 
with all the obligations he has.
    I have to say that the trade agenda is looking up since the 
last time you testified. Things seem to be improving with our 
ongoing trade negotiations. For example, while significant gaps 
remain, the administration seems to be inching ever closer 
toward a conclusion of the Trans-Pacific Partnership agreement. 
Morale at the Office of the United States Trade Representative, 
after a long period of decline, is beginning to rise. Of 
course, there is still a lot to be done, and renewal of Trade 
Promotion Authority, or TPA, is at the top of my list.
    But even in that regard, things seem to be looking up. 
Compared with this time last year, this administration is much 
more engaged at all levels in making the case for renewal of 
TPA. President Obama's strong call for TPA in the State of the 
Union address was welcome, though, in my opinion, it was long 
overdue. I hope that he will follow his latest call to action 
with a real concerted effort to help us get TPA through 
Congress.
    Here in the Finance Committee, we are doing all we can to 
help in this effort. Although the bill I introduced last year 
with Chairmen Camp and Baucus received broad support, I am 
currently working with Senator Wyden to see if there is a way 
to address some additional issues that he has raised. We are 
working with Chairman Ryan as well. And while there may be some 
improvements we can make to the bill, I want to make one thing 
clear: the time for TPA is now.
    TPA is how Congress tells the administration and our 
negotiating partners what a trade agreement must contain to be 
successfully enacted into law. And TPA empowers our negotiators 
to get the best deal possible for American workers.
    Now, to succeed in getting TPA renewed, we will need an 
all-out effort by the administration to make the case for why 
TPA is so vital to our Nation's ability to fairly engage in 
international trade and to enhance the health of our own 
economy.
    Simply put, trade means jobs. Today, 95 percent of the 
world's consumers live outside of the United States. These 
potential customers account for 92 percent of global economic 
growth and 80 percent of the world's purchasing power.
    To maintain a healthy economy, we need the opportunity to 
sell American products in these markets. Right now the United 
States is engaged in some of the most ambitious trade 
negotiations in our Nation's history. The first, which I 
already mentioned, is the Trans-Pacific Partnership, or TPP. 
Renewal of TPA is key to the success of this agreement. And 
without TPA, the administration will not be able to bring back 
the high-standard agreement Congress needs to ensure its 
enactment.
    Let me be clear here. It would be a grave mistake for the 
administration to close TPP before Congress enacts TPA. Doing 
so may lead to doubt as to whether the U.S. could have gotten a 
better agreement, ultimately eroding support for TPP and 
jeopardizing its prospects for passage in Congress.
    There are also some key outstanding issues that need to be 
resolved in TPP. As I have stated in the past, my support for 
TPA by no means ensures that I will support just any version of 
TPP that happens to be submitted to Congress for approval. For 
me, the agreement must achieve a very high standard for the 
protection of intellectual property, including 12 years of data 
protection for biologics and strong copyright and trademark 
protections. The intellectual property provisions of TPP must 
also effectively address the theft of trade secrets and ensure 
effective implementation and enforcement of IP obligations. 
Provisions to enhance digital trade and address state-owned 
enterprises are also critical, as is real market access for 
U.S. exports.
    There are other major negotiations that are ongoing, and I 
am confident that renewal of TPA would help and will help in 
bringing those to successful conclusions as well. Most notably, 
there is the Transatlantic Trade and Investment Partnership, or 
TTIP. TTIP must be a comprehensive agreement and include 
provisions on financial services regulation and strong 
investor-state dispute settlement mechanisms. The agreement 
must also achieve a high level of IP protection and effectively 
address the systemic misuse of geographical indications to 
create market barriers.
    I am also hopeful the administration will soon be able to 
conclude negotiations to update the Information Technology 
Agreement, and I expect we will see progress in advancing the 
negotiation of a Trade and Investment Services Agreement and an 
Environmental Goods Agreement.
    Ambassador Froman, all of this represents a very ambitious 
agenda for your office and for the administration as a whole. 
But if I have not been clear up to now, let me restate. TPA 
must be considered an essential element for all of these 
endeavors. I believe congressional renewal of TPA will unleash 
new energy in our international trade agenda, helping to propel 
our economy to greater growth and prosperity.
    History shows that trade agreements concluded with TPA in 
place create new economic opportunities and, importantly, 
higherpaying American jobs. This year we truly are at the 
precipice of opportunity. The only question is whether both 
parties in Congress and the administration can work together to 
put in place the necessary tools to seize this opportunity.
    I certainly think we can, and I will do everything in my 
power as chairman of this committee to ensure our mutual 
success.
    Ambassador Froman, I look forward to your testimony today 
and to working with you to advance a strong pro-growth trade 
agenda.
    [The prepared statement of Chairman Hatch appears in the 
appendix.]
    The Chairman. I would now like to turn it over to Senator 
Wyden for his opening remarks.

             OPENING STATEMENT OF HON. RON WYDEN, 
                   A U.S. SENATOR FROM OREGON

    Senator Wyden. Thank you very much, Chairman Hatch. And it 
is good to be working with you and to have the Ambassador here.
    Today's global economy seems to move at a million miles an 
hour, so clinging to yesterday's outdated trade policies is a 
loser for the millions of middle-class American workers 
counting on political leadership to create more high-skill, 
high-wage jobs.
    Trade agreements need to bulldoze the trade barriers and 
open new markets to exports made by America's middle class--the 
things we grow or raise, build or forge. Done right, trade 
agreements can help grow the paychecks of middle-class 
families. That can help take our economic recovery from a walk 
to a sprint.
    According to a report by the Commerce Department's 
International Trade Administration, many export-driven jobs, 
from precision welding to engineering design, offer higher pay 
and more generous benefits than jobs that are not tied to 
exports. American workers who design and build products like 
machinery, electrical gear, or transportation equipment can get 
into the winner's circle when the goods they make are exported. 
The goal of trade agreements should be to take the fruits of 
American labor and to ship them to markets around the world.
    That said, it is easy to understand why many American 
workers are frustrated when they have not seen a meaningful pay 
raise in decades--or worse, they have lost their job and fallen 
out of the middle class. When discouraged Americans argue they 
have been hurt by trade, those voices must not be ignored. 
Those voices have to be heard, and those who favor a trade 
agenda that takes on the challenges of a hyper-competitive 
global economy have a responsibility to make the case that it 
is going to work for the middle class.
    I am raising that issue especially because the President 
said during the State of the Union address, and I quote, ``Past 
trade deals haven't always lived up to the hype,'' unquote. So 
I am looking forward to the Ambassador outlining today how the 
administration plans to change that with fresh policies that 
are going to lift wages, help create middle-class jobs, and 
expand the winner's circle. It is also important to hear what 
safeguards are going to be in place to ensure that any workers 
impacted by trade have access to retraining, health coverage, 
and other sources of support that connect them to new 
opportunities.
    Briefly, I am going to wrap up by mentioning three key 
issues. The first is, there must be tough trade law 
enforcement. There has never been a greater need for the U.S. 
to back its workers and businesses by strongly enforcing our 
trade laws and agreements. And, in the face of unfair schemes 
by foreign governments and companies that undercut our jobs and 
our exports, trade enforcement is essential.
    Just ask any one of the hundreds of workers who work in my 
State at Solar World, a solar panel manufacturer. When the 
Chinese made an end-run around our trade laws, it threatened 
Solar World and its employees. The company fought back and won. 
That victory preserved 900 good-paying Oregon jobs. And 
American trade enforcers have to keep at it, because China and 
other governments will not stop trying to get around the trade 
laws anytime soon.
    With 21st-century trade agreements, tough enforcement also 
needs to hold foreign governments accountable for commitments 
to uphold strong labor rights and environmental protections. 
Those are bedrock elements of a trade agreement, and they 
cannot be ignored or pushed to the sidelines.
    The second issue to address is technology. Just as 
containers changed trade in the 20th century, the Internet is 
changing trade in the 21st, enabling more efficient ways to 
exchange goods and services internationally. Three decades ago, 
an entrepreneur with big dreams in a town like Mount Vernon, 
OR, with a population of 500, did not have the Internet as a 
tool to access global markets. Today that entrepreneur does, 
and that access could be direct or through Internet platforms.
    The Nation's trade policies must take advantage of economic 
areas where there is clearly ``Advantage USA.'' That means 
promoting and protecting a free and open Internet, keeping open 
what is, in my view, the shipping lane of the 21st century.
    The last point I want to mention is transparency. The 
American people have made it clear that they are not going to 
accept secretly written agreements that do not see the light of 
day until the very last minute. That was too often the way 
things worked in the past. It is not good enough anymore. Nor 
is it enough to respond to important questions with the same 
inadequate refrain that somehow, some way people are going to 
benefit from trade deals. The American people have a right to 
know what is at stake in negotiations before they wrap up. Our 
trade policies are stronger when the American people are part 
of the debate and when their elected officials in Congress 
conduct effective and vigorous oversight.
    Furthermore, transparency is also critical for a Trade 
Promotion Authority bill. Once it is ready, that bill must be 
available to the public, and there has to be a fair and open 
process for its review and consideration, and Chairman Hatch 
and I have been discussing these and other issues.
    Finally, whatever a member of this committee feels with 
respect to trade, let us have a serious debate and work 
together on a bipartisan basis to find as much agreement as 
possible. My focus is going to be on finding new opportunities 
to sell red, white, and blue American goods overseas; helping 
our businesses create high-skill, high-wage jobs; and growing 
paychecks for middle-class families.
    Chairman Hatch, thank you for the opportunity this morning 
to discuss these important issues. We are glad the Ambassador 
is here, and I look forward to his views.
    The Chairman. Thank you, Senator Wyden. We appreciate your 
work in this area, and we are highly hopeful we can continue to 
work in a bipartisan way to do this very important work.
    [The prepared statement of Senator Wyden appears in the 
appendix.]
    The Chairman. We are so happy to have you here, Mr. 
Ambassador. I do not think you need an introduction beyond 
saying that we are very pleased to see you working in this 
area. We believe you are one of the best people we have had in 
this area, and we intend to work with you to try to make sure 
that we get this work done.
    But you come here with all the credentials and with an 
awful lot of experience in this administration. So we are 
looking forward to working with you, and we will turn the time 
over to you.

 STATEMENT OF HON. MICHAEL FROMAN, U.S. TRADE REPRESENTATIVE, 
       EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON, DC

    Ambassador Froman. Thank you, Chairman Hatch, Ranking 
Member Wyden, members of the Finance Committee. Thanks for this 
opportunity to talk about the President's trade agenda.
    As a central part of the President's overall economic 
strategy, our trade agenda is committed to supporting more good 
jobs, promoting growth, and strengthening the American middle 
class. At USTR, we are advancing those goals by knocking down 
barriers to U.S. exports and leveling the playing field for 
American workers and businesses of all sizes. As we work to 
open markets around the world----
    [Outbursts from the audience.]
    The Chairman. Let us have order. All right. Remove this 
person from the room. And if anybody else--if anybody else does 
this, you are going to be removed.
    [Outbursts from the audience.]
    The Chairman. Remove these people.
    [Outbursts from the audience.]
    The Chairman. All right. Let us take them out. Now look, 
the committee will be in order. Comments from the audience are 
inappropriate; they are out of order. If there is any further 
disruption, the committee will recess until the police can 
restore order.
    Let me just say this. I understand that some people have 
strong feelings about the subjects we are talking about today. 
That is fine. The First Amendment guarantees your right to 
express your views, but we have to allow civil discussion to 
occur in the context of this hearing----
    [Outbursts from the audience.]
    The Chairman [continuing]. So for people who are 
protesting, I ask that you respect the rights of others, 
respect this committee, and remain quiet so the hearing can 
continue, and we would appreciate having the signs removed as 
well. Show some courtesy here. But we are not going to put up 
with it, and, if we have to recess this committee, we will, 
which would be a shame, but we will recess until order is 
restored. So let us have no more of that. I ask our Capitol 
Hill Police to make sure that we do not have any more of this 
type of activity.
    Ambassador Froman, we turn the time back to you.
    [Outbursts from the audience.]
    The Chairman. Look, you are not representing your people 
properly. Take him out.
    [Outbursts from the audience.]
    The Chairman. You are not helping your case, I will tell 
you that right now.
    Mr. Ambassador?
    Ambassador Froman. As we work to open markets around the 
world----
    The Chairman. If any signs go up again, we are going to 
throw you out of the meeting too. So let us just stop the cheap 
politics.
    Ambassador Froman?
    Ambassador Froman. Mr. Chairman, as we work to open markets 
around the world, we are enforcing our trade rights so that 
American workers, farmers, ranchers, and businesses get the 
full benefit of all the economic opportunities the United 
States has negotiated over the years.
    Taken together, these efforts have contributed greatly to 
America's economic comeback. Since 2009, America's total 
exports have grown by nearly 50 percent and contributed nearly 
one-third of our economic growth. And, during the most recent 
year on record, 2013, U.S. exports reached a record high of 
$2.3 trillion and supported a record-breaking 11.3 million 
jobs. At a time when too many workers have not seen their 
paychecks grow in much too long, these jobs typically pay up to 
18 percent more, on average, than non-export-related jobs.
    Over the past year, I have traveled around the country and 
heard many of the stories behind these statistics. I listened 
to small business owners in Colorado, Maryland, and Ohio; 
farmers and ranchers in Iowa and Wisconsin; manufacturers and 
service providers in Texas and the State of Washington; and 
many others. And across our country, I have heard the same 
resounding message: confidence that as long as the playing 
field is level, our workers and businesses can win.
    Today, more small businesses are exporting than ever 
before, and, by tapping into global markets, these companies 
are able to increase their sales and their payrolls. And this 
success is all the more impressive when you consider that the 
United States is an open economy and other countries are not 
necessarily playing by the same rules. That is why we are 
working harder than ever to bring home trade agreements that 
will unlock opportunities by eliminating barriers to U.S. 
exports, trade, and investment, while raising labor, 
environmental, and other important standards across the board.
    If we sit on the sidelines, we will be faced with a race to 
the bottom in global trade, not a race to the top. And, as the 
President said last week, we should be the one to engage and 
lead. That leadership is apparent in our work during the last 
year to advance the Trans-Pacific Partnership, or TPP. The 
contours of a final agreement are coming into focus, and we 
have made important progress in the market access negotiations, 
and in addressing a number of 21st-century issues such as 
intellectual property, digital trade, competition with state-
owned enterprises, and labor and environmental protections. At 
the November TPP leaders meeting, all 12 countries reaffirmed 
their commitment to concluding a comprehensive, high-standard 
agreement as soon as possible.
    Another promising area is the Transatlantic Trade and 
Investment Partnership, or TTIP. With the new European 
Commission in place, the United States and the European Union 
are moving forward with a fresh start in the TTIP negotiations, 
which will build upon the $1 trillion in two-way annual trade. 
In November, President Obama and E.U. leaders reaffirmed their 
commitment to an ambitious, comprehensive, and high-standard 
TTIP agreement.
    At the World Trade Organization, the United States is 
working to conclude a WTO Information Technology Agreement 
expansion deal, which would cover roughly $1 trillion in trade, 
while moving forward in negotiations on the Trade in Services 
Agreement, and the Environmental Goods Agreement.
    This will be a critical year for trade. We look forward to 
continuing our efforts to engage the public, stakeholders, and 
members of Congress in a robust discussion about how we are 
opening markets and creating opportunities for American 
exports; how we are raising labor and environmental standards 
to level the playing field for American workers; how we are 
promoting innovation and creativity, as well as access to its 
products; and how we are ensuring that governments will be able 
to regulate in the public interest, while giving Americans 
abroad the same kind of protections we guarantee domestic and 
foreign investors here at home.
    As we move ahead, we are committed to providing maximum 
transparency consistent with our ability to negotiate the best 
agreements possible. We look forward to working with this 
committee and others in Congress to determine the best way to 
achieve that goal.
    Mr. Chairman, there is no other area of policy that 
reflects closer coordination between the executive branch and 
Congress than trade policy. To further strengthen that 
cooperation, as the President made clear last week, we look to 
Congress to pass bipartisan Trade Promotion Authority. TPA puts 
Congress in the driver's seat to define our negotiating 
objectives and strengthens congressional oversight by requiring 
consultations and transparency throughout the negotiating 
process.
    The previous TPA legislation was passed over a decade ago. 
An updated TPA bill is needed to address the rise of the 
digital economy, the increasing role of SOEs, and to reflect 
the latest congressional views on labor, environment, 
innovation, and access to medicines. TPA also establishes the 
timeline and process for the trade agreements we bring home to 
be reviewed not only by Congress, but also by the American 
people. TPA is Congress's best tool to ensure that there is 
ample time for public scrutiny and debate on U.S. trade 
agreements. And the administration looks forward to working 
with this committee and the new Congress as a whole to secure a 
TPA that has bipartisan support.
    We also look forward to working with Congress to renew a 
number of other programs, including Trade Adjustment 
Assistance; the Generalized System of Preferences, which 
expired in 2013; and the African Growth and Opportunity Act 
program well before its expiration in September of this year.
    We can only accomplish these shared goals and priorities 
through strong bipartisan cooperation between Congress and the 
administration. Together we can assure that our trade policy 
continues unlocking opportunity for all Americans.
    Once again, thank you for the invitation to testify, and I 
am happy to take your questions.
    The Chairman. Thank you, Mr. Ambassador.
    [The prepared statement of Ambassador Froman appears in the 
appendix.]
    The Chairman. Last year I expressed my profound 
disappointment that you refused to bring a WTO case against 
India for its continuing efforts to undermine U.S. intellectual 
property rights. High-level working groups and meetings are 
simply not good enough. I have long feared that if you did not 
act, more problems would emerge. Now, less than 2 weeks ago, 
India's patent office refused to grant a patent on an important 
drug that treats hepatitis C. Their rationale is based on a 
patentability standard that is out of step with the rest of the 
world, and which many believe is inconsistent with India's 
obligations under the World Trade Organization.
    Now, would you express to us today your plan to take 
meaningful action against India's breaches of our various 
companies' intellectual property rights?
    Ambassador Froman. We have been concerned about the 
deterioration of the innovation environment in India, and we 
have engaged with the new government since they came into 
office in May of last year about our concerns. We held the 
first trade policy forum in 4 years in November, and I just 
returned from India yesterday, as a matter of fact. And in all 
of these areas, we have laid out a work program with the 
government of India to address these and other outstanding 
issues.
    Recently the government of India published a draft 
intellectual property rights proposal, a policy proposal, that 
is now open for public comment, and we are in the process of 
providing comments on that draft proposal. And we are committed 
to continuing to engage with them to underscore areas of work 
that needs to be done in copyright, in trade secrets, as well 
as in the area of patents.
    I believe we have a good dialogue going now with the new 
government on this issue, and we are committed to working to 
achieve concrete progress in this area.
    The Chairman. Well, I hope you will follow up on that.
    China's leadership continues to pledge that the market will 
play a greater role in China's economy. Yet the government 
continues to use law as an instrument of industrial policy. 
This is increasingly pronounced in the use of China's anti-
monopoly law. Now, how will you ensure that China administers 
its anti-monopoly law in a nondiscriminatory and transparent 
manner?
    Ambassador Froman. Well, this has been an area of strong 
interest of ours. At the recent Joint Commission on Commerce 
and Trade that we held--that Secretary Pritzker and I held with 
China in December--this was one of the issues very much on the 
agenda. And we have made some progress in moving ahead on the 
application of anti-monopoly law, which we think should be 
applied to deal with issues of competition, not issues of 
industrial policy.
    So we are engaged with them, as are our competition 
authorities at the Department of Justice and the FTC, to work 
to encourage them to apply the law as it is intended to be 
applied.
    The Chairman. I know these are tough areas. Canada's 
creation of a heightened standard for patentable utility for 
pharmaceutical patents is a serious problem for our U.S. 
innovators. This standard is inconsistent with other countries 
and undermines the ability of U.S. innovators to obtain and 
enforce patent rights in Canada. It is also inconsistent with 
Canada's obligations under the World Trade Organization and 
under NAFTA.
    What are you doing to ensure Canada's patentability 
standards are consistent with its international obligations?
    Ambassador Froman. We have raised this concern directly and 
repeatedly with the Canadian authorities. That issue is now 
being litigated, and I believe the Canadian authorities are 
looking to see how it proceeds in litigation as we continue 
that dialogue with them.
    The Chairman. Thank you. Ambassador Froman, in remarks last 
June, you highlighted data localization requirements as a 
significant problem for U.S. services companies. Now, some 
foreign governments require U.S. financial services providers 
to set up local data centers as a condition of doing business 
in their markets. New trade agreements need to fix this 
problem. Do you agree that it is important that all U.S. 
industries, including financial services providers, receive 
protection against data localization requirements in ongoing 
trade negotiations?
    Ambassador Froman. I do agree, and this is a key area right 
now in our TPP negotiations, where, as Ranking Member Wyden 
mentioned, the digital economy is playing an increasingly 
important role in trade. And we want to, through TPP, secure 
agreements and commitments to maintain the open flow of data 
across borders so that our small businesses, for example, can 
be based here and sell into markets abroad, but also to ensure 
that there are not localization requirements which require the 
construction of redundant infrastructure, making companies 
build infrastructure in each country which they want to 
service.
    So this is a key part of our TPP negotiations. We are 
making progress in that area, and we hope that will set a new 
standard for bringing trade rules into the digital economy.
    The Chairman. Thank you so much. I am going to be strong on 
enforcing the 5-minute rule so everybody can have an 
opportunity here.
    Senator Wyden?
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Ambassador, the President said in his State of the 
Union speech, and I quote here, ``Past trade agreements haven't 
always lived up to the hype.'' And my sense is, based on my 
town hall meetings--this has come up repeatedly--what middle-
class families are going to ask is, ``So what is going to be 
different this time?''
    I think it would be helpful if you would spell that out.
    Ambassador Froman. Thank you. Thank you, Senator. Look, I 
think the President has made clear that as we pursue a new 
trade policy, we need to learn from the experiences of the 
past, and that is certainly what we are doing through TPP and 
the rest of our agenda.
    For example, when he was running for President, he said we 
ought to renegotiate NAFTA. And what that meant was to make 
labor and environment not side issues that are not enforceable, 
but bring labor and environment into the core of the agreement 
and make them enforceable just like any other provision of the 
trade agreement, consistent with what Congress and the previous 
administration worked out in the so-called May 10th agreement.
    That is exactly what we are doing through TPP. There will 
be strong labor and environmental protections in the core of 
the agreement, and they will be fully enforceable, consistent 
with the rest of the agreement. And that is important, because 
it is part of our effort to level the playing field, raise 
labor and environmental standards, as well as strengthen 
intellectual property rights standards and access to their 
products, creating new disciplines on the issues that are 
affecting real workers and real production right now, like 
state-owned enterprises.
    Right now, state-owned enterprises in other countries 
compete against our private firms on an unlevel playing field. 
TPP will put disciplines on state-owned enterprises for the 
first time and require those state-owned enterprises, if they 
are engaged in commercial activity, to act on a commercial 
basis, and also--you mentioned the digital economy--update our 
trade agenda to reflect changes in the global economy.
    So in all of these areas, we are working to make sure, and 
we are trying to use every tool at our disposal in the trade 
negotiations, to drive more production, more manufacturing, to 
the United States to make the U.S. the production platform of 
choice.
    Senator Wyden. Let us talk about transparency next, because 
I think this is another area where the public looks at the 
Internet and says, hey, we can find out a lot of information 
that you could not have, for example, back when the trade deals 
were being discussed in the 1990s. So there has, of course, 
been a concern about transparency in the Trans-Pacific 
Partnership discussion. And the concern here is that the 
President would sign a TPP deal that would be protected by 
fast-track, and then you would have middle-class families 
saying, ``We do not know what is in it.''
    Now, you and I have discussed this before, and I think it 
would be helpful if you could address the question of whether 
you expect the President to sign a Trans-Pacific deal before 
the agreement is made public for the American people to see.
    Ambassador Froman. Well, certainly in the past, the 
practice has been for it to be public before it is signed. That 
is our expectation here. We need to consult with our trading 
partners to understand what their processes and domestic 
constraints are, but we are beginning that consultation process 
with that expectation in mind.
    Senator Wyden. Good. On the issue of, again, looking at 
some of the sector-specific questions that you and I have 
discussed, there is a lot of concern with respect to dairy, and 
this is a very important issue in the Pacific Northwest. We, of 
course, have both defensive and offensive interests with 
respect to dairy. For example, we may be willing to open our 
market to more dairy goods from Australia and New Zealand, but 
only if Japan's and Canada's market is more open to our dairy 
products.
    How are you going to ensure that a Trans-Pacific agreement, 
on balance, is a better deal than what the industry has now?
    Ambassador Froman. Well, whether it is dairy or other 
agricultural commodities, we want to make sure TPP creates 
additional opportunity for them, and that includes both market 
access--getting access to markets abroad like Japan, Vietnam, 
Malaysia, Canada, and others--but also, dealing with issues 
like sanitary and phytosanitary standards and making sure that 
other countries are applying SPS standards consistent with 
science.
    It also goes back to an issue that the chairman mentioned 
of geographical indications, making sure that we can sell our 
high-quality products from the United States and have their 
trademarks and the common names respected in other countries.
    So we are working on a package as a whole to make sure that 
it benefits our dairy farmers, and the same thing could be said 
of our other commodity groups.
    Senator Wyden. One last question, if I might, and it 
addresses what the President touched on with respect to China. 
I think the President basically said that, if America is not 
leading in writing the trade rules in the Asia-Pacific region, 
China will.
    With which countries in the Asia-Pacific area does China 
either seek or already have a trade agreement, and how 
specifically would those agreements disadvantage America's 
middle-class workers?
    Ambassador Froman. It is my understanding that China has 
negotiated 14 FTAs since 2002, one with ASEAN--which is 10 
countries in total--plus Australia, Chile, Costa Rica, Hong 
Kong, Iceland, Korea, Macau, New Zealand, Pakistan, Peru, 
Singapore, Switzerland, and Taiwan. And right now they are 
engaged in what is called the Regional Comprehensive Economic 
Partnership negotiations, which include 16 countries spanning 
from India all the way to Japan.
    I think what is important about this is, these are the 
fastest-growing markets of the world. Right now there are about 
570 million middle-class consumers in Asia, but that number is 
expected to grow to 2.7 billion over the next 15 years. And the 
question is, who is going to serve that market? Is it going to 
be Made in America and Grown in America products, or is it 
going to be products made by China or others? And what are the 
rules of the road for that region going to be?
    The big differences between what we are doing in TPP and 
other trade agreements are things like raising labor and 
environmental standards, having strong intellectual property 
rights protection and commitments to access, putting 
disciplines on state-owned enterprises, and bringing into the 
digital economy rules like the free flow of data and 
information that come from the real economy.
    Those types of discipline do not exist in these other trade 
agreements, and that is why it is so important for American 
interests and American values that we be the ones who engage 
and lead to create a fair and level playing field to protect 
our workers and protect our jobs.
    Senator Wyden. Thank you, Mr. Chairman.
    The Chairman. It looks like China has a robust trade 
policy.
    Senator Grassley?
    Senator Grassley. First of all, I want to thank you for the 
number of times you have taken my telephone calls and given me 
updates on negotiations that we are talking about here. Having 
the opportunity to get updates is very important.
    Also, I want to, since you talk to the President probably 
more frequently than I do on trade, give a little bit of 
advice. I know that the President is very much a believer in 
trade and wants Trade Promotion Authority. I know he has 
mentioned it at least in the last two State of the Union 
messages, to the Business Roundtable, to the Export Council. 
But I hope you will tell him that if we are going to get Trade 
Promotion Authority passed, he is going to have to work the 
telephones one-on-one with some Senators to get us to the 60-
vote threshold.
    Now, I am going to ask my first question a little bit along 
the lines of what you discussed with Senator Wyden.
    When you were at the Iowa State Fair with me last August 
meeting with Iowa farmers, you stated--and I hope I am quoting 
you accurately--that you would ``know a good deal for 
agriculture when you saw it,'' end of quote. And that was in 
regard to TPP.
    My question for you is very simple. How close do you think 
we are to seeing a good deal for agriculture with TPP, and, 
more specifically, related to pork, how are the market access 
negotiations with Japan going?
    Ambassador Froman. Thank you, Senator. We are making good 
progress in these market access areas, including on agriculture 
and including on pork. We are not done yet. We still have work 
to do with Japan and other countries, and we have been working 
very closely with our stakeholders in this area, the pork 
producers and others, to ensure that the package that we come 
up with addresses their concerns and creates real value for 
American farmers and American ranchers.
    So we are not done yet, but I feel confident that we are 
making good progress, and we hope to close out a very positive 
package soon.
    Senator Grassley. Just to emphasize something from history, 
as well as things I have related to you in the past: for an 
overall agreement, whether it is manufacturing, services, or 
agriculture, it seems to be, at least from the part of the U.S. 
Senate, a good agriculture agreement tends to be the locomotive 
that brings along everything else, and I hope manufacturing and 
services will help along that line as well, for their own good.
    Second, over the last year we have seen China and the 
European Union continue to drag their feet on approvals of 
certain biotechnology traits. In some cases, market disruption 
developed from the lack of regulatory approvals. I know you 
have been working hard on these issues. But what else can we do 
to facilitate regulatory review processes throughout the world 
that are science-based, regarding biotechnology?
    Ambassador Froman. Thank you, Senator. That is very much 
our perspective on this: to encourage other countries to engage 
in SPS approvals based on science.
    Let me take the two examples you give separately. With 
regard to China, in the run-up to the Joint Commission on 
Commerce and Trade in December, we had a series of dialogues 
with them about biotechnology. They approved three biotech 
events on the eve of the JCCT, and we have a commitment now to 
have a strategic agriculture policy working group--co-chaired 
by USDA and ourselves on our side and various Chinese 
ministries on their side--to work on the improvement of their 
overall process for biotech approvals; so not just the 
particular events, but how they can bring their processes into 
conformity with international standards.
    With the E.U., we are very much encouraging them to--and we 
were disappointed that over the course of 2014, they did not 
approval any biotech events. There is a backlog of biotech 
events that have been designated as safe by the European Food 
Safety Agency, and we are encouraging the new commission to 
take those up, consistent with its WTO obligations, and to 
approve those.
    Senator Grassley. I have had a number of U.S. companies 
visit with me about the need to address currency manipulation 
in TPP. Has that issue been raised in negotiations?
    Ambassador Froman. This is an issue, as you know, of top 
importance to the administration, and we have been pursuing it, 
from the President on down, directly with countries such as 
China, but also through the G-7 and G-20 and the IMF, to 
encourage countries to move toward market-determined exchange 
rates.
    And I know you will be seeing Secretary Lew here soon. He 
obviously has the lead on those issues. It is something that he 
and I are consulting on and continue to engage with others 
about.
    Senator Grassley. Is your answer that it is being 
negotiated with individual countries through the President's 
efforts and your efforts? What my question was referring to is, 
is it being done through TPP negotiations, or is it not being 
done through TPP negotiations? And that is my last question.
    Ambassador Froman. At this point, Secretary Lew, who 
obviously has the lead on this, has been having conversations 
in the context of these other mechanisms bilaterally and with 
the G-7, the G-20, and the IMF.
    Senator Grassley. But not through TPP. Thank you.
    The Chairman. Senator Schumer?
    Senator Schumer. Thank you, Mr. Chairman. And thank you, 
Ranking Member Wyden.
    Ambassador, I think you know what I am going to say, but I 
am going to keep saying it until the administration actually 
hears me. I appreciate the value of our engagement in the Asia-
Pacific region through TPP. However, I am skeptical about 
supporting another trade deal based on the results of our 
existing agreements.
    To me, the number-one issue facing America is that middle-
class incomes are shrinking. So people can say that these trade 
agreements grow GDP, these trade agreements help corporate 
profits. But if they cannot show that they are going to help 
middle-class incomes increase when all the evidence is that 
lots of them help middle-class incomes decrease, I have some 
real problems.
    And even further, I am very skeptical about enforcement in 
these deals. It seems to me we sign these deals, we go right to 
the letter of WTO, and the other countries thumb their nose at 
WTO and say, ``Take us to court,'' and we lose.
    It took 4 years for WTO to rule on China's rare earth 
monopoly, and they captured the global market in that time. It 
is a never-ending battle with South Korea dumping steel pipes 
and tubes into our market. While all the litigation goes on, 
our people get clobbered, and our workers lose jobs. India 
regularly waives patent rights on pharmaceuticals. We seem to 
shrug our shoulders. The enforcement mechanism is powerless.
    So I am exploring proposals to combat intellectual property 
theft by countries like China and streamline adjudication when 
U.S. businesses are taken advantage of by state-owned 
monopolies, and I hope you will work with me on some of these 
ideas. If you are going to have any hope of gaining support for 
this agenda from many of us on this side of the aisle, not all, 
the administration needs to prove to us and to the world that 
we are going to start fighting back.
    We need concrete, predictable and unilaterally--that is a 
whole new world--unilaterally enforceable mechanisms in place 
to show the world that we are going to protect our workers and 
our economy. Let us start with currency. A bipartisan majority 
of both the Senate and the House have made it clear we want 
strong and enforceable currency manipulation language enacted 
as part of any TPP agreement. But it also must deal with those 
countries that are not part of the TPP agreement, particularly 
China.
    Now, I know you cannot have that in the agreement, but we 
can have the two things go alongside one another. And I for 
one, as China continues to manipulate currency, over the years 
throwing millions of American workers out of jobs unfairly, do 
not want to go forward with another trade agreement if we are 
not going to finally address this issue.
    And with all due respect, Secretary Lew is great and he 
talks to me, but the administration has not done very much 
here. They have never called China a currency manipulator when 
it is plain as the nose on your face that they are. And Japan 
and other countries, part of TPP, distort their currency 
exchange rates to push up their trading surpluses.
    And I am disappointed to hear your response to Senator 
Grassley that that will not be part of the TPP negotiations. It 
has very real consequences for jobs in the middle class. A 
study by the Peterson Institute for Economics found that 
foreign currency manipulation has cost America between 1 
million and 5 million jobs. According to the Economic Policy 
Institute, eliminating currency manipulation will reduce the 
U.S. trade deficit by $500 billion, increase annual U.S. GDP by 
$300 billion to $700 billion, and add between 2.3 million and 
5.8 million new jobs.
    I have long been the advocate here--in 2003 I was, I think, 
alone when I talked about this issue, and I was very proud when 
both the Wall Street Journal and New York Times editorial pages 
condemned me for it. Now, people have come around and said 
currency manipulation is real, but we still do not do anything 
about it. Administration after administration, unfortunately, 
yours as well as President Bush's, have taken the position that 
the issue can be dealt with, as Senator Grassley said, by 
country-to-country negotiation rather than legislative changes.
    Well, not for this Senator. We have had enough of country-
to-country negotiations for over a decade under Democratic and 
Republican administrations. So I want to make clear, I cannot 
support a TPP agreement if we do not, at the same time, enact 
new statutory law that includes objective criteria to define 
and enforce against currency manipulation. I will not support 
moving this trade agreement forward if we are not fighting to 
make sure we have the necessary tools to protect the American 
middle class and American jobs. You would not go to a game of 
baseball where your team only got two strikes per bat and the 
other team got four.
    If we enter into TPP without strong currency language, that 
is exactly what we are doing.
    The Chairman. Senator, your time is up.
    Senator Schumer. And I am just finished.
    The Chairman. That is a miracle. [Laughter.]
    Senator Schumer. All things come to those who wait.
    The Chairman. I am very proud of you, I will tell you.
    Mr. Ambassador, would you care to comment on Senator 
Schumer's comments?
    Ambassador Froman. Well, first of all, thank you. Thank 
you, Senator, and thank you for your leadership on this issue 
and on enforcement more generally, and we very much look 
forward to working with you on it.
    I will say the following. This administration has taken 
enforcement very seriously. We have brought more cases than 
ever before, more than any other country. We have brought 18 
cases before the WTO and the first 421 case against China. We 
have won every single case that has been brought to conclusion, 
and we are continuing to work to bring additional cases 
wherever we find that there is a problem and where we can make 
a case and win.
    So we look forward to working with you. We have set up the 
Interagency Trade Enforcement Center, which has allowed us to 
bring more resources from across the government, have a whole-
ofgovernment approach to trade enforcement. It has allowed us 
to bring more complex and more sophisticated cases.
    We look forward to working with you on the kind of 
enforcement actions that could be taken going forward, because 
we agree with you completely that it is important that it is 
not two strikes and four strikes, that there is a level playing 
field and that we do everything we can under our laws, 
consistent with our international obligations, to enforce our 
trade rights.
    Senator Schumer. Thank you, Mr. Ambassador.
    The Chairman. Senator Cornyn?
    Senator Cornyn. Thank you, Mr. Ambassador. I would like to 
join Senator Grassley in expressing my appreciation for your 
outreach on both the TPP negotiations and TPA.
    I have to think that if other members of the administration 
followed your good example in terms of letting Congress know 
what is going on, seeking input, we would be a lot more 
productive working together, as I hope we will be.
    I do not share the ambivalence that the senior Senator from 
New York has about the benefits of these trade agreements, when 
you consider the fact that 80 percent of the purchasing power 
in the world lies outside our shores. And selling our 
manufactured goods and things we grow and produce here in 
America to those markets abroad seems like an unequivocal good 
thing for the American middle class and for our economy and 
economic growth.
    I want to ask basically two questions. One really has to do 
with something outside of your immediate purview, but it is 
something I want to make sure you are aware of, and the other 
falls squarely within your purview.
    As you know, there has been a prolonged labor dispute out 
on the west coast that has resulted in a lot of our exports to 
Asia, particularly of our beef, pork, and poultry, basically 
sitting and rotting on the docks there at the Port of Oakland 
and other locations.
    The U.S. exports over 200,000 metric tons of beef, pork, 
and poultry a month to key Asian markets, and, of course, in 
2014, it was roughly $8.4 billion that cleared west coast 
ports. So I know that the Federal mediator has now gone to try 
to facilitate negotiations there, but even if that dispute in 
the Port of Oakland was concluded tomorrow or today, it would 
take 30 to 45 days to clear the backlog.
    I just would like to hear from you whether you know whether 
the administration views resolving this dispute as a priority.
    Ambassador Froman. Well, I understand, as you suggested, 
that the parties to the dispute have asked for Federal 
mediation and that Federal mediation is now happening, and we 
do hope that it will be successful and we will get this 
resolved as soon as possible.
    Senator Cornyn. I appreciate that. I hope you will carry 
that message back that this is a matter of grave concern to 
some members of Congress, and presumably all who represent 
constituents who are engaged in selling poultry, pork, and beef 
to Asian markets, and those who recognize the important impact 
that has on our economy and, conversely, the negative impact it 
would have if these shipments start rotting at our ports on the 
west coast.
    The second issue has to do with the critical importance of 
protecting intellectual property for biologic medicines in the 
TPP. As you know, the founders of our great country thought it 
was so important to protect our intellectual property in terms 
of advancing science that there is a provision, article I, 
section 8, known as the copyright clause, in our Constitution.
    Yet, a number of the countries we are negotiating with 
basically offer zero protection to intellectual property rights 
in their countries. And I would just like to hear from you 
about the administration's commitment, particularly on the 
issue of biologic medicines, to making sure that the 12 years 
for data protection in particular is included in the Trans-
Pacific Partnership negotiations.
    Ambassador Froman. Senator, we have 40 million Americans 
whose jobs depend on IP-intensive industries, and certainly a 
key part of what we are doing in TPP is to promote strong 
intellectual property rights, including strong enforcement of 
those rights, as well as access to medicine, consistent with 
the bipartisan consensus that has emerged here over the last 
several years.
    Biologics, specifically, as you suggest, of the 12 
countries in TPP, five countries have 0 years, four have 5 
years of protection, two have 8 years, and we have 12 years. 
And so this is one of the most difficult outstanding issues in 
the negotiations. We are continuing to make the case with our 
trading partners about how data protection can lead to greater 
innovation around the region, greater investment in this area, 
how to achieve access consistent with promoting strong 
intellectual property rights, and we are continuing to have 
that dialogue with our trading partners.
    Senator Cornyn. Thank you very much, Mr. Ambassador. I 
appreciate your good work, and we look forward to continuing to 
work with you.
    Senator Grassley [presiding]. For the chairman, I will 
announce that Senator Cardin is next. And after that, it looks 
like Isakson, Coats, and Carper.
    Senator Cardin?
    Senator Cardin. Thank you very much, Mr. Chairman. I want 
to join the praise to you, Ambassador Froman, for your 
consultation with us, your working with us, the open way that 
we have been able to work together and share views and share 
the challenges we have on the trade agenda. So I very much 
appreciate the manner in which you have involved us in the 
process.
    As Chairman Hatch pointed out, we have a challenge, and the 
challenge is that TPP is so far along the way--normally, we 
would have had a TPA enacted, we would have voiced our 
negotiating objectives, you would have come back to us with 
consultation on those trade objectives, negotiating objectives, 
and we would have had a chance to adjust our expectations along 
the way.
    Well, TPP is so far along the way that that becomes 
somewhat awkward, whether TPA really will work in the way that 
it was intended to work, with congressional input. I mention 
that because you know my number-one concern. My number-one 
concern is, in TPP, that TPA has very strong negotiating 
objectives as it relates to good governance, as it relates to 
anti-corruption issues.
    We are dealing with countries that are challenging in TPP: 
Brunei, where the LGBT community has legitimate human rights 
concerns; in Brunei and Malaysia and Vietnam, their record on 
labor is very suspect. And on anti-corruption, they could pass 
laws, but they do not have the institutions, the independent 
prosecutors and courts, to give us confidence that they would 
enforce those laws.
    So my priority from the beginning--and I think I have been 
very open about it--is that our trading objectives be very 
strong on good governance because of the TPP negotiations and 
that, yes, we are careful to make sure that we continue to have 
a level playing field on environment, on labor protections, but 
also on good governance, anti-corruption measures, and, as 
Senator Schumer said, enforcement, because if it is not 
enforceable under trade sanctions, it becomes very difficult to 
see whether we have really elevated the situation.
    And for those who are concerned, as I know some of my 
colleagues are, about mixing trade and human rights, let me 
just remind you that it was U.S. leadership in trade that 
helped change the apartheid government of South Africa. It was 
the U.S. leadership that spoke to the Soviet Union about their 
human rights and immigration issues through Jackson-Vanik that 
brought about change.
    It is critically important, if we are going to see change 
in Vietnam and Malaysia and Brunei and other countries that do 
not have that record, that we use this opportunity to achieve 
those objectives. So I will be evaluating very carefully, not 
just what we do on TPA, because we are so far down the line on 
TPP, but also an open process on both TPP and TPA as it deals 
with human rights and good governance.
    I want to ask one more question and then have your response 
on that and the second question.
    That is, TPA would deal with more than TPP. It would deal 
with TTIP, as you have already pointed out. And there is a 
growing concern with our European partners that they are 
sympathetic to BDS legislation dealing with boycotts, 
divestitures, and sanctions. I would be interested as to, in 
those discussions, whether we have been raising the issue that 
such action by our European partners would be considered to be 
against our overall trading objectives and whether we are using 
TTIP as an opportunity to protect against such legislation.
    I would be glad to hear your comments on both of my points.
    Ambassador Froman. Thank you, Senator, and thank you for 
your leadership on human rights and governance issues.
    TPP, in fact, does have strong governance and anti-
corruption provisions in it, and really it is one of the 
innovations of TPP to make that a core part of the agreement. 
And it really goes throughout the whole agreement with regard 
to transparency, regulatory transparency, and across the board. 
And of course it has strong enforcement mechanisms generally in 
the agreement. So we agree with you on the importance of that.
    TPP has also given us an opportunity to engage with 
countries like Vietnam, Malaysia, and Brunei on the kinds of 
issues that you have mentioned. So with regard to labor rights, 
for example, we are in deep consultations with these countries 
about what it would take to bring their labor regime into 
conformity with international standards; not just in terms of 
changing laws, as you said, but also what kind of capacity-
building, what kind of practice is necessary to really have 
changes on the ground.
    And it is only because of TPP that we have the opportunity 
to have that kind of dialogue with Vietnam, Malaysia, and 
Brunei. And even on the human rights issue with Brunei, which 
has been raised, we are working very closely with the State 
Department, which has the lead on the human rights issues. TPP 
gives us the opportunity to engage with them about their 
practices and ensure that what they do is consistent with their 
international human rights obligations.
    So I feel good that, through TPP, we will be able to make 
prog-ress in all those areas and that TPP will set a new 
milestone in terms of good governance, anti-corruption, and 
improving labor rights across the board.
    On the European issue, I am not familiar with that 
particular area of legislation. It is not something that has 
come up in our negotiations yet, but we are happy to follow up 
with you and look into it.
    Senator Cardin. Thank you. Thank you, Mr. Chairman.
    Senator Isakson. Thank you, Senator Grassley.
    Welcome, Ambassador Froman. For Senator Cardin's benefit, I 
was with Ambassador Froman in Addis Ababa, Ethiopia 2 years ago 
on the AGOA negotiations with the African Union and watched him 
hold Swaziland accountable for workers' rights as a 
participatory requirement of the United States in terms of 
AGOA.
    So I have seen this man firsthand look out for exactly what 
you are talking about, and I might add that Millennium 
Challenge Corporation compacts have the strongest anti-
corruption language of any agreement the United States 
negotiates. And I think the fact that TPP is talking about 
including that is a big benefit, because it has worked in 
Millennium Challenge. It has held people accountable who in the 
past have not been, and that is an excellent and outstanding 
point.
    And you do a terrific job. I will pile on with Senator 
Cornyn and with Senator Grassley and the others to thank you 
for the job you are doing. But I have a couple of questions for 
you.
    Question number one is--you and I have talked a lot about 
poultry. I traveled to South Africa a year ago with an industry 
representative--I think his name is Davies. I met with him at 
length at Johannesburg. Yesterday he was quoted as saying that 
there is an offer on the table regarding poultry between South 
Africa and the United States.
    To the extent that, as a negotiator, you can talk in public 
about that, is that a misleading quote or is that an accurate 
quote?
    Ambassador Froman. I saw Minister Davies a few days ago in 
Switzerland. He handed me a letter from the South African 
Poultry Association to the U.S. Poultry Association. We have 
not yet heard back from our poultry association what their 
reaction to that is. But we have made very clear to South 
Africa that resolving issues around poultry is going to be 
critical to moving ahead on a whole range of areas, including 
AGOA renewal.
    Senator Isakson. Well, I appreciate that, because that is 
very important to my State of Georgia. But Senator Coons, from 
Delaware, and I have joined together in a joint letter, which 
you will be receiving when you get back to the office, 
reinforcing our position that you use the opportunity of AGOA 
and the leverage that it brings with the South Africans, to be 
sure that we break through the impasse regarding poultry.
    With regard to enforcement, which Senator Schumer was 
talking about, I think nobody has mentioned it yet, but your 
work with India, in the case we took to the WTO against India 
in terms of poultry, proved to be very successful. We just 
recently won that particular ruling, and I thank you for doing 
that.
    On commodities, there is another great product of my State, 
and it is cotton. Cotton was at $0.80 to $0.85 a pound not too 
long ago. It is $0.55 to $0.57 a pound now. China is basically 
hoarding, buying cotton and hoarding it and stockpiling it, and 
they are subsidizing their producers at twice the world market 
price.
    What can be done with China, through the WTO or through any 
agreements we might otherwise have, to keep them from 
manipulating the cotton prices and suppressing the cotton 
market?
    Ambassador Froman. Well, I think there is a very important 
point more generally, which is that the whole pattern of 
agricultural subsidies has changed a lot over the last 10 or 15 
years. When the Doha round was first started, the focus on 
agricultural subsidies was really the United States and the 
European Union, but in both of those areas, subsidies have come 
down while subsidies from China and India in the agricultural 
area have increased and, by some measure, China is now the 
largest subsidizer of cotton.
    So we are engaging with them, and we had conversations also 
in the last couple of days about that, and about taking a fresh 
look at where subsidies are being provided, how they are 
distorting the market, and how that should play into global 
trade negotiations.
    I think it is important that we update our view of where 
subsidies are coming from and what impact they have. If you are 
a poor subsistence farmer in Africa, it does not matter whether 
the subsidy is coming from the U.S. or from China. It matters 
that the subsidy exists.
    So we are hoping to engage with China on this and to create 
some disciplines around this.
    Senator Isakson. Would that case have standing at the WTO 
if a case was brought?
    Ambassador Froman. We are looking at all of our options 
there. We have not yet determined whether there is a case to be 
brought in that area.
    Senator Isakson. One last point with regard to poultry. I 
was in Brussels shortly after a trip you had made--and I repeat 
again the respect the European negotiators have for your 
ability and your engagement.
    But one of the problems we have had in terms of market 
access is, on the one hand, the Europeans will talk about 
giving market access, for example to poultry, but on the other 
hand they will say, but we will not take any poultry that is 
washed with hyper-chlorinated water. Well, that is the way it 
is produced in the United States of America, whether it is 
Delaware or Georgia or Texas or California. They use the 
regulation as the barrier, not the product.
    What are you doing in negotiations on TTIP to try to avoid 
that type of thing happening again?
    Ambassador Froman. Well, you put your finger on it, because 
market access is not meaningful if it is just talking about 
tariffs and not talking about the other barriers that can 
exist.
    And our perspective on this with regard to Europe is that 
we are not interested in forcing anybody to eat anything, but 
we do think the decision about what is safe should be made by 
science, not by politics. And we are encouraging them to ensure 
that decisions on SPS standards reflect science, reflect the 
evidence, as based on safety.
    Senator Isakson. Thank you for your service to the country.
    Ambassador Froman. Thank you, Senator.
    Senator Carper. Thanks, Senator Grassley.
    Welcome, Ambassador. It is great to see you. And others 
have already said this, but we very much appreciate your 
responsiveness, and, frankly, your short, crisp answers are 
welcome too.
    I was talking to one of my sons earlier today--I have two 
boys, 24 and 26. And when they were little kids growing up, I 
used to say to them--they would make a mistake, and I would 
say, ``There is nothing wrong with making a mistake; let us 
just make sure we do not make the same mistake over and over 
again.'' And they are probably better at not making the same 
mistake over and over again than I am today. So I think it sunk 
in.
    NAFTA has been mentioned here before today. If we had to 
negotiate NAFTA all over again, we would probably do some 
things differently. The point that you made earlier today is 
that we do have the opportunity here to negotiate NAFTA, at 
least in part--maybe in whole, I am not sure.
    Just drill down on that particular issue. People say NAFTA 
has not been all that helpful to the U.S. It has been I think, 
arguably, very helpful to Mexico. They have a vibrant middle 
class today. There are probably as many Mexicans going into 
Mexico as there are Mexicans coming into the U.S. today. 
Arguably, it has been pretty good for the Mexicans. Not 
entirely bad for us, but sort of a mixed bag.
    But in terms of one of the issues mentioned by Senator 
Isakson, poultry, we have a real problem in NAFTA with Canada, 
as you probably know, and it is one that we can fix. But just 
drill down on the things that we know now about NAFTA. What can 
we do differently, and what are we going to do differently with 
respect to the Trans-Pacific Trade Partnership?
    Ambassador Froman. Thank you. NAFTA was 22 years ago and, 
as you said, there is a lot that we have learned from that 
experience and the experience since. There is a lot that has 
changed in the global economy and the global trading system.
    So first and foremost, I think one lesson we have learned 
is that labor and environmental issues need to be core to the 
agreement. They need to be fully enforceable just like any 
other provision of the trade agreement, and that is exactly 
what we are doing through TPP. But not just with Canada and 
Mexico, with 40 percent of the global economy.
    So we are spreading those enforceable labor provisions to 
half a billion workers around the world, and that reflects a 
very meaningful evolution of the global trading system. Whereas 
labor and environment were once considered to be literally side 
issues, now they are central, and they are going to be fully 
enforceable.
    It has also given us an opportunity to go back and address 
market access issues that we could not address in NAFTA. We are 
still negotiating. We have a ways to go. But we have made 
clear, for example, as you said, on poultry with Canada, that 
this is an area that we are going to want to see progress on in 
TPP.
    And there are other issues that have arisen since: some of 
the intellectual property rights issues that have evolved over 
time or the digital economy issues that have emerged since that 
time before there was an Internet economy. This gives us an 
opportunity to renegotiate and update our approach in all of 
these respects.
    Senator Carper. Thank you. Senator Schumer raised some 
serious concerns about enforcement mechanisms. There is an old 
saying, ``justice delayed is justice denied,'' and I think you 
mentioned that we have brought about 18 or so cases to the WTO. 
Those that have been resolved have been resolved in our favor.
    Could you just give us a breakdown of, out of the 18, how 
many have been resolved and how many are still outstanding?
    Ambassador Froman. I believe seven have been resolved fully 
through the process, all of them in our favor. We just recently 
won the case with Argentina on import licensing. As Senator 
Isakson mentioned, we won a case on poultry with regard to 
India. They are now appealing that case. But we have won, and 
up to now we feel confident in our approach.
    Some of the others we are resolving, we are trying to 
resolve through consultations to settle the case, and we are 
waiting for the other ones to make their way through the 
system.
    Senator Carper. Is there something that we need to do in 
the Congress in order to expedite the amount of time it takes 
to resolve these issues?
    Ambassador Froman. Well, I think the key thing is, with TPP 
we are able to have our own dispute settlement mechanism among 
TPP countries, and we have a very strong dispute settlement 
mechanism that we are negotiating with our partners, and one 
that has firm timetables and schedules and which we hope will 
find expedited resolutions.
    Senator Carper. The reason why Senator Isakson, yours 
truly, Senator Cardin, and Senator Warner continue to focus on 
poultry is, it is a huge industry on the Delmarva Peninsula. In 
Sussex County, DE--we only have three counties in Delaware, and 
Sussex is the third largest county in America--we raise more 
soybeans there than any county in America, and we use the 
soybeans and the corn that we raise on the Delmarva Peninsula 
to raise all of those chickens. They outnumber us 300 to 1 in 
Delaware, and we want to make sure that we can sell them to as 
many markets as possible.
    The last thing I want to say is, I just want to reemphasize 
a point made--I think it was by Senator Cornyn--on biologics. 
And you and I had an opportunity to discuss this earlier this 
month. Maryland, Delaware, Pennsylvania, other States, New 
Jersey, right along this row here, have huge interests, tens of 
thousands of jobs depend on our ability to have a fair 
settlement and a fair agreement with respect to biologics, and 
I would just continue to raise that issue with you.
    Ambassador Froman. Thank you.
    Senator Carper. Thank you.
    Senator Grassley. Senator Coats, I apologize. I passed over 
you to call on Senator Carper. I did not mean to do that. Thank 
you very much for being patient for me. So I call on Senator 
Coats. And then it would be Thune and Roberts, in that order.
    Senator Coats. Mr. Chairman, no apology needed. I am happy 
to yield to my friend and colleague from Delaware.
    Senator Carper. I owe you one.
    Senator Coats. I am new. I am trying to figure out the 
rules here in terms of--and I rushed over to be here on time, 
get my name on the list. You saw me. I had to go out and make a 
quick stop at another place and come back. And then I thought, 
oh, I have the rules wrong, it must go back and forth between 
parties. That is fine with me.
    In any event, I appreciate your apology, though it is not 
necessary.
    Ambassador, thank you, first of all, for diligent work on a 
very tough subject, but a very important issue for the economy 
and for the future of our country and for many, many people 
from my State and from many States that rely on trade for their 
well-being and their lifestyle and for our economy.
    In Indiana, we are a big export State. Getting this right 
means a great deal to many, many Hoosiers, several hundreds of 
thousands, approaching a million, whose jobs are there because 
we are able to export agricultural products, steel, auto 
products, pharmaceutical products, medical devices, and a whole 
range of other products that are produced in my State. So I 
wish you nothing but success.
    I am a strong supporter of trade, and I want to affirm that 
some of the reservations that have been expressed here by my 
colleagues relative to making sure that we have a level playing 
field and that we have established the rules and they are 
accepted and enforced, will be important.
    But my question to you is this. At the State of the Union 
address, one of the things that brought Republicans to their 
feet faster than anything else that the President said was his 
announcement that he wanted to go forward to gain Trade 
Promotion Authority and move these trade agreements forward.
    To get this done, in my opinion, based on my experience, it 
has to be an all-in. It has to be above partisan politics. It 
has to be done in a bipartisan way. There have been some 
reservations raised about proclamations from the White House in 
terms of what they will support and what they will not support. 
I want to just make sure that we are all in. If we are all in, 
we can get this done. ``All in'' means that Republicans and 
Democrats need to work together here in this committee and in 
the Ways and Means Committee in the House. Our colleagues have 
to work together to bring this home along with the President 
and the administration.
    Can you affirm to us that the President is all in on this, 
that the administration is all in, and that you have the 
support you need from your administration in order to work with 
us to get this accomplished?
    Ambassador Froman. Yes, Senator. The President has made 
that clear publicly and privately--and he has been meeting with 
folks privately as well--but we also have a structure now at 
the White House, organizing a whole-of-administration effort 
involving virtually the entire Cabinet, to promote the overall 
trade agenda, talking to members about TPP and what is in TPP 
and addressing their concerns and their questions, and talking 
about the importance of moving ahead on a bipartisan basis with 
Trade Promotion Authority as well.
    So I have a great deal of support from the President on 
down. It is a priority for him. We want to work on a bipartisan 
basis and make sure we are addressing concerns of Democrats and 
Republicans as we move this forward.
    Senator Coats. I am happy to hear you say that. I think the 
voters in November sent a very strong message to all of us on 
both sides: ``Get it done; get something done.''
    I think this ranks very close to the top in terms of things 
we can get done that will make a measurable improvement in 
terms of economic growth and providing jobs for people. So 
thank you for that. I wish you nothing but the best, and we 
look forward to working with you.
    Ambassador Froman. Thank you, Senator.
    The Chairman. Senator Thune?
    Senator Thune. Mr. Chairman, the Senator from Kansas has 
been waiting. I would defer to him first, even though he is 
after me.
    The Chairman. Senator Roberts?
    Senator Roberts. I want to thank you, Senator Thune. It is 
remarkable that you would do that--well, it is not remarkable. 
As a matter of fact, I just appreciate it.
    Senator Coats has pretty well summed up what I was going to 
say at the first in my comments. And so I would just like to 
reiterate that this committee is all in, and you have heard 
that with a strong statement from Senator Hatch, and you heard 
it with a strong statement from Senator Wyden, who represents 
the great State of Oregon but was born in Kansas. And you heard 
it with pertinent questions from Senator Grassley.
    Senator Grassley asked you about this, and this is of 
interest to the chairman emeritus of the sometimes powerful 
Senate Agriculture Committee, Senator Stabenow: a package soon 
on agriculture. What is soon?
    Ambassador Froman. Well, the market access negotiations are 
proceeding in parallel with the negotiations over the text and 
over the rules. And literally as we speak, our negotiators are 
meeting with the other 11 countries on both sets of issues.
    The market access negotiations on agriculture are done on a 
bilateral basis. So we meet with the other 11 countries one-on-
one and have our areas----
    Senator Roberts. I know that. But what is soon? What do you 
think?
    Ambassador Froman. Well, look, I am----
    Senator Roberts. I know it is hard to predict, and I am not 
trying to put you on the spot.
    Ambassador Froman. Our view is that, obviously, the 
timetable should be set by the substance, but we think everyone 
is focused on trying to get done in a short period of time, in 
the next small number of months.
    Senator Roberts. You say that, but here we have--I am not 
going to Schumerize you now. I want some questions back and 
forth.
    With the GIs, as the USTR, you really made this an issue 
with China at the end of the year, making our argument on 
trademarks much stronger. But we had 43 members of the Senate 
write you a letter on the GI issue, the geographical 
indications.
    By prohibiting the use of common generic food names such as 
parmesan and bologna, pardon me, baloney, and feta--thank 
goodness we do not have an Italian community named ``cheese.'' 
Last year, I wrote to you, along with the 43. I want to thank 
you and your negotiators for their steadfast support. But where 
are we on that, on the GIs?
    Ambassador Froman. This is one of the toughest outstanding 
issues still in TPP, because we and the E.U. have diametrically 
opposed positions. Our view is that our system works well for 
Europe. There are 18 trademarks for parmesan reggiano in the 
U.S., and Europe sells hundreds of millions of dollars of 
cheese in the United States, and we do not sell any in Europe.
    So we have been out there fighting hard to make clear that 
we can have a system where countries can take into account 
common names and trademarks before they grant any geographical 
indications, and that is the only way to balance the 
perspectives of the United States and the E.U.
    Our challenge is, our trading partners are negotiating with 
us, but they also want to negotiate and want to have good 
relations with the European Union. So they are stuck in the 
middle, and we are trying to find a middle path that will 
protect our trademarks and those common names.
    Senator Roberts. I appreciate that. Let me bring up the 
biotech situation. There are currently 12 products awaiting 
final approval by the E.U.'s College of Commissioners. The 
queue is growing. I am more concerned now that the new European 
Commission announced its intention to conduct a review of the 
entire European biotech import approval process. There is 
concern that the 12 products pending final import approval will 
not advance.
    The E.U. is sort of calling for instant replays on every 
play, and that is just not going to work. Would you comment on 
that, please?
    Ambassador Froman. We share that concern. We have raised it 
in our meetings with the European Union. I have had now three 
meetings with my new counterpart, the trade commissioner. We 
have made clear these are products that their own European Food 
Safety Agency has determined are safe and that they have an 
obligation under the WTO. They have an obligation even under 
their European Court of Justice decisions to move ahead with 
these approvals, and we are encouraging them to move ahead as 
quickly as possible.
    Senator Roberts. Thank you for answering these questions. I 
would like to repeat what Senator Coats said again. I think we 
have a unique opportunity here and you have done some excellent 
work, and I thank you for that. I think you know that every 
member of this committee is behind you. Each of us has our own 
initiatives that we are interested in.
    But I worry about the President's seven State of the Union 
veto messages, but as Senator Coats said, we were all on our 
feet on the trade issue to help the middle class, as Senator 
Schumer said.
    So we are in. I know you are in. I hope the President is. 
And I thank you for the job that you do. Thank you.
    The Chairman. Thank you. Now, Senator Thune?
    Senator Thune. Thank you, Mr. Chairman.
    Ambassador Froman, thank you for your efforts to engage the 
Chinese on agricultural biotech issues over the last year. It 
is critically important to American farmers, and I echo and 
associate myself with the comments of the Senator from Kansas 
and the Senator from Iowa who spoke to this issue earlier, both 
with regard to China, and I continue to emphasize how important 
those efforts are.
    Then also, with the TTIP agreement with the E.U., it is 
going to be very hard, I think, to get that agreement through 
unless we give American farmers more certainty with regard to 
the approval process for biotechnology products.
    So I wanted to make that point. I also want to just speak 
to an issue. Last year, in Brookings, SD, we had welcomed the 
opening of a state-of-the-art cheese plant by Bell Brands USA. 
It is a 170,000 square foot facility and employs 250 people, 
with the hope of more in the future, especially if we can bring 
down what are very high barriers to U.S. dairy products in 
Canada.
    As you know, Canada's dairy market was not sufficiently 
opened as part of NAFTA, and many of the tariff rates on dairy 
products range from 200 percent to 295 percent. So I want to 
strongly urge you to continue pushing our friends to the north 
when it comes to market access for cheese and other dairy 
products. And I guess I would appreciate any thoughts that you 
might want to share on that subject.
    Ambassador Froman. Well, this has been a high priority for 
us, and, before Canada joined TPP, we had a dialogue with them 
about this and how this is going to be an important part of a 
successful outcome. We are engaged with them on a whole range 
of outstanding issues, and they know that this is very 
important to us, and we are working toward hopefully a 
successful conclusion there.
    Senator Thune. That would be very helpful. The dairy 
business in places in the Midwest, especially processing, is 
really starting to explode in some ways, and we certainly want 
to see more of that and all the jobs that come with it, but 
these tariffs are pretty prohibitive.
    You made remarks last June in which you highlighted data 
localization requirements as a significant problem for U.S. 
service companies working to expand into foreign markets and to 
compete globally. I agree with your view on that matter. I am 
concerned about TPP not fully addressing those types of 
barriers for U.S. financial services companies, such as banks 
and insurers. Specifically, I understand that TPP will not 
explicitly prohibit our trading partners from requiring U.S. 
financial service firms to set up local data centers as a 
condition of doing business in their markets.
    That is a serious concern, and I am wondering if your 
office can work with mine to correct this oversight and to 
ensure that this omission is not repeated in other trade 
negotiations, such as TTIP and TiSA.
    Ambassador Froman. We are happy to work with your office on 
that. We are continuing to pursue our efforts to put 
disciplines on localization and to ensure free flow of data 
across borders. But we are happy to work with your office on 
that.
    Senator Thune. It is a big issue, and for the Europeans, in 
particular, it is an area where they are really--for reasons 
unrelated, I think, to trade--really trying to create some of 
these barriers, and I think that would be a big mistake and 
certainly make it more difficult for a lot of our businesses, 
service industries and financial services being a good example, 
to continue to do business in that part of the world.
    Could you just quickly comment on--it is an issue I brought 
up with you before--the E.U.'s decision in February of 2013 to 
impose a 10-percent duty on ethanol and what steps USTR is 
taking to bring that case to the WTO?
    Ambassador Froman. We have engaged in dialogue with the 
E.U. about that. We have not yet resolved it. We are hoping, 
with the new commission in place, to reengage with them on this 
and, as part of our overall discussion in TTIP about areas of 
cooperation, to try to bring that to a conclusion as well.
    Senator Thune. Thank you, Mr. Chairman. And I would echo 
what has already been said. We really need to get TPA done, and 
I hope that we can. The President talks about it; he talked 
about it in the State of the Union address, but we really need 
the administration engaged up here trying to help us as we push 
this across the finish line.
    Thanks.
    The Chairman. Senator Casey?
    Senator Casey. Thank you, Mr. Chairman.
    Ambassador Froman, thanks for being here. Thanks for your 
service on a tough issue, which we all have deep concerns about 
as it relates to not only our States, but the country overall.
    I wanted to start with a premise, or a foundation, upon 
which I will make determinations about these agreements, and 
that is that in my home State of Pennsylvania, despite promises 
and assertions in the lead-up to trade agreements, too often 
our State has gotten the short end of the stick. We can debate 
how that happened, we can debate the reasons for that, but I 
have real concerns and real skepticism, which I know we have 
talked about.
    And at the same time, when it comes to what I call the 
short end of the stick--job loss or dislocation or workers not 
getting basic fairness when it comes to these agreements--that 
is bad enough in and of itself, but then they see very powerful 
and well-financed special interests, in this town especially 
but in other places as well, that do not get the short end of 
the stick. They do quite well. So I have that concern, that 
skepticism. And frankly, it is more than skepticism--it is real 
worry.
    Then when we come to the question of, well, let us try to 
mitigate that somehow by remedies, trade remedies, that play 
out in the trade cases that are brought, even when we are 
successful, it seems that we are never where we ought to be as 
it relates to those workers. So I have real concerns, and I 
know you understand that, that the playing field never seems to 
be level when it comes to our workers.
    I know earlier you spoke, in answer to a question from the 
panel, about the improvements to labor rights or environmental 
protections or IP standards, but the question I have to get to 
is the question of jobs.
    Just when you look in the context of China, here is just 
some data. Between 2001, when China joined the WTO, and 2013, 
roughly 12 years, the trade deficit with China increased by 
$240 billion or $20 billion a year. When that plays out for 
Pennsylvania, we rank fifth in total net jobs displaced by 
trade with China.
    So how do you answer the question that these agreements and 
the path that you are on are good for workers in Pennsylvania?
    Ambassador Froman. Thank you. Thank you, Senator. 
Pennsylvania's goods exports are now $41 billion. They have 
grown by 150 percent over the last 10 years. More than 200,000 
Pennsylvanians are employed by export-related businesses; 
15,600 firms export from Pennsylvania, and almost 90 percent of 
them are small and medium-sized businesses.
    The question is whether, with these trade agreements, we 
can create more opportunities for those kinds of businesses. 
You talk about China and the trade deficit. If you take all of 
our FTA partners as a whole, we have a trade surplus, and that 
surplus has grown. Our trade deficit, as you note, is largely 
comprised of countries with whom we do not have trade 
agreements.
    So trade agreements are a way of shaping the forces of 
globalization, of opening markets, because our market is 
already quite open. Our average applied tariff is 1.4 percent. 
We do not use regulations as a barrier to trade, but other 
countries do.
    Just look at Pennsylvania's exports, sort of the five top 
areas of your exports. Chemicals face 35-percent tariffs in 
some of these markets. Pennsylvania exported $5 billion of 
these products. Those tariffs will go to zero. Minerals and 
fuels, 30-percent tariffs in some of these markets. 
Pennsylvania exported $4 billion of these products. That tariff 
will go to zero. Metals and ores, 35 percent. And it goes on 
and on and on.
    What we are going to do through this trade agreement is 
open up markets and then level the playing field so we can 
protect workers, protect American jobs, and then ensure a fair 
and level playing field by raising labor and environmental 
standards, raising intellectual property rights standards and 
enforcement, and making sure that we are putting disciplines on 
the type of practices, for example by state-owned enterprises, 
that pose a real threat to workers in Pennsylvania.
    Senator Casey. I have no doubt about your intention. The 
problem is that we have heard some of this before, and you 
mentioned some industries or some economic sectors in our 
State, but when I look at, whether it is sugar or solar panels 
or furniture or tires or paper or probably the best example 
would be steel, which is iconic as it relates to our State, we 
have had, time and again, promises made prior to trade 
agreements and then efforts after the fact to bring enforcement 
cases that have never been commensurate with the promise that 
was made.
    And I would argue that, as much as I know you want to level 
the playing field, I would hope we could level the playing 
field long before we have trade agreements in place. But we 
will continue to talk, and I appreciate your time.
    The Chairman. Thank you, Senator. We will now go to Senator 
Portman.
    Senator Portman. Thank you, Mr. Chairman.
    And I appreciate your being here, Ambassador Froman, and I 
thank you for what you do every day and what your team of 
professionals does to open up markets for the workers I 
represent, the farmers I represent, and the service providers I 
represent.
    We had some discussion earlier from some folks in the 
audience about how this affects people who are frustrated about 
the lack of wage growth, concerned about whether they are going 
to have a job at all going forward, and all I can say is, I 
think you just answered the question well with Senator Casey.
    If we are not selling to the 95 percent of the world 
outside of our borders, we are letting our people down. And we 
do have relatively low barriers here, as you said, but the rest 
of the world has a lot of barriers, and that is not fair. And 
so what you every day to knock down those barriers is what we 
want more of.
    I will give you one example. We have a little company in 
Akron, OH. You guys worked with us. We just opened up the 
Japanese market for them for their processed meat product. They 
were getting shut out. These are workers in Akron, OH who now 
have a chance to have a job, and, as you said, these jobs pay, 
on average, 18 percent more. They also have better benefits.
    The agreements that we talked about today, people say some 
agreements are good, some are bad. I am sure we can improve all 
the agreements that we have made. But the reality is that we 
send 45 percent or more of our exports to 10 percent of the 
world, because we only have trade agreements with 10 percent of 
the world--we do not have a trade agreement with China; we do 
not have a trade agreement with Japan or Europe--and we have a 
surplus with these countries.
    We have to figure out a better way to open more markets. It 
is unbelievable to me that we have not had the ability to open 
any markets since 7 years ago, because Trade Promotion 
Authority expired. Every President since FDR has had the 
ability to open up markets by trade negotiating authority until 
this President. And he has now asked for it. We, as Americans, 
ought to say--Republicans, Democrats, Independents, whatever--
we want our President out there opening up markets.
    During those 7 years, there have been over 100 trade 
agreements negotiated. We are left out of all of them. You 
mentioned China. China has negotiated plenty of agreements. Out 
of that 100, China has at least 14 of those agreements that 
they have negotiated during that time period. Maybe some of 
them came just before that, but around that time period. One of 
them, by the way, is with 10 different countries, and we are 
not part of it. So our workers are getting left out.
    And I do not know how we are going to make progress in 
terms of affecting this concern on stagnant wages, lack of 
benefits, high expenses, unless we do a better job of selling 
to those countries all around the world, and we do not do a 
good job. I mean, our exports per capita, we are somewhere 
between Tonga and Ethiopia, I think. Nothing wrong with Tonga 
and Ethiopia, but we are not a big trader. We are just not.
    We are, I think, looking at a great opportunity here to 
expand trade if we can get this negotiating authority done, do 
it the right way, and continue to make progress on leveling 
that playing field.
    We also have to do a better job on imports coming in. And 
as you know--you have been very helpful to me on this--we have 
had a couple good successes, one with China, one with Korea and 
other countries in the last year alone, on tubular products. 
These are steel pipes we make in Ohio. We want to keep making 
them. We do not want unfairly subsidized imports coming into 
our country, and that is what has been happening. So it is a 
balance here. We have to both get more exports out there, but 
also do a better job of making sure that imports are being 
fairly traded.
    I have so many questions for you, more than half a dozen. I 
am going to submit most of them to you to answer in writing, 
since we do not have time to go through them today. But they 
are all about Ohio workers and Ohio farmers, Ohio service 
providers who want to know what more we can do to open up more 
markets to them. Twenty-five percent, a quarter of 
manufacturing jobs in Ohio, factory jobs, are now export jobs. 
We want that to increase, because these are good-paying jobs.
    I will ask you one question, and it is one that will put 
you on the spot. Again, having said how much I appreciate all 
you have been doing, there is one thing that does concern me, 
and that is currency.
    When I was sitting in your seat, I was asked by Chuck 
Schumer, who spoke a little earlier--he did give me a chance to 
respond before his time was up. This was, gosh, almost 10 years 
ago probably.
    But he asked me about currency, and I said, yes, I think it 
does affect trade, and it affects it negatively. And I know it 
is not your bailiwick, in a sense. The Secretary of the 
Treasury has the responsibility for currency. But I would just 
ask you today about this new report by Larry Summers, former 
Secretary of Treasury, and other finance ministers from around 
the world that says, and I quote, ``New trade agreements should 
explicitly include enforceable disciplines against currency 
manipulations that appropriately tie mutual trade preferences 
to mutual recognition that exchange rates should not be allowed 
to subsidize one party's exports at the expense of others.'' 
That is what it says.
    Does that affect your thinking on this, and what are your 
views on currency and what we can do in trade agreements going 
forward?
    Ambassador Froman. Thank you, Senator, and thank you for so 
much leadership on trade and for being a great source of advice 
and guidance.
    Currency is a great concern to us, and it is a top 
priority. There is no difference of opinion about that. We 
think it is important that countries move toward market-
determined exchange rates so that there is not a misalignment 
of exchange rates.
    The Treasury Department, the President, and everyone on 
down has been focused on that bilaterally with countries like 
China, where, after pushing them to move their currency in June 
2010, they began to let their currency appreciate, and it has 
appreciated about 15 percent in real terms against the dollar. 
That is not fast enough, not far enough, and we need to keep on 
pushing toward full market-determined exchange rates, but we 
are making prog-ress in that area.
    When Prime Minister Abe came in in Japan, the G-7 finance 
ministers got together and said, ``You may want to stimulate 
your economy, but you have to do it through domestic actions 
for domestic purposes,'' and the Bank of Japan has effectively 
done so. It has had an effect on currency as well, but they 
have done the same kind of thing that our Federal Reserve did 
with quantitative easing.
    So I think it is important. This is a very important issue. 
We need to find the right ways of achieving the results. We are 
fully committed to doing that in the administration.
    There is a wide range of views, I know, in Congress, even 
on this committee, about how best to go about addressing the 
issue, and we are looking forward to continuing that dialogue.
    Senator Portman. I know my time is up. But I would hope 
that you will put some time and effort into it. I know, again, 
it is a Treasury issue, but the issue is intervention, and I do 
think that currency is something that more and more of us on 
this side of the aisle, and that side of the aisle certainly, 
are going to be concerned about, because it does affect trade. 
It affects our ability to have that level playing field we have 
talked about today.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Stabenow?
    Senator Stabenow. Thank you very much, Mr. Chairman. I too 
want to talk about currency. I know that is no surprise. And I 
do want to start by saying last Congress, as you know, a 
significant bipartisan majority, 60 Senators, sent a letter to 
you, and 230 Representatives signed letters supporting the 
inclusion of strong and enforceable currency disciplines in all 
future trade agreements. But before I get to that, I would like 
very much to raise something that came up this morning in the 
press.
    First of all, thank you for your enforcement. Thank you for 
continuing to have dialogue. I appreciate that. And I do 
appreciate the aggressive posture of the administration on 
enforcement.
    I care very much about agriculture, as you know, but I also 
care very much about manufacturing and about automobiles. I do 
not think we have a middle class unless we make things and grow 
things and sell both of those. The key is to export our 
products, not our jobs. That is the fundamental debate: 
exporting products, not jobs. And right now, as you know, 70 
percent of our trade deficit with Japan is autos.
    And this morning, as reported in the Detroit News, based on 
Asian reporting, we understand that the administration will end 
negotiations with Japan on standards for car imports in 
exchange for Japan's agreement to import more U.S. rice.
    I am all for Japan importing more rice. When you and I 
talked earlier, you indicated that the auto negotiations were 
totally separate from agriculture. The fact is that today we 
cannot put an American automobile in a car dealership in Japan. 
They will not even allow that--you know all the restrictions. 
We cannot sell to Japan right now.
    So first, I want to know whether or not this is true that 
you have decided not to proceed in opening up the ability for 
us to sell automobiles into Japan.
    Ambassador Froman. Senator, one thing I have learned in 
this job is not to believe everything you read in the press, 
and particularly the Japanese press. It is categorically wrong. 
We are continuing to pursue the parallel negotiations on autos 
and to address the non-tariff measures, including standards, 
financial incentives, regulatory transparency, and having 
strong and effective dispute settlements around that to make 
sure that Japan upholds its obligations.
    Senator Stabenow. Thank you. That is critically important. 
So let me go on now to currency. All we are asking is for 
internationally accepted principles on currency--that countries 
have all agreed to--to be enforceable in trade agreements.
    And over and over again, we have had conversations, you and 
I. You know the numbers. We are talking about anywhere between 
$6,000 and $8,000 per vehicle, off the price of a vehicle 
coming in. We have seen numbers where, at various points, the 
Japanese automakers have made more off of manipulating currency 
than other profits on selling automobiles.
    This is a huge issue in terms of not having a level playing 
field. We are talking about millions of jobs, anywhere from 2 
million to 5 million jobs, if we were, in fact, to enforce what 
everybody knows is potential at various points--they may not be 
doing it right this minute, but we know what they have done 
with the Bank of Japan. We also know that with Korea, with 
China, with others that we are involved in with this agreement, 
that this is a major issue.
    So where are we on this, and are we going to see 
enforceable currency provisions in these trade agreements?
    Ambassador Froman. As I have said, this is a priority issue 
for us that the administration, with the Treasury Department in 
the lead, has been addressing since day one.
    We have been pushing countries to level the playing field 
by moving toward market-determined exchange rates. We have been 
using bilateral engagement, for example with China, where I 
think we have made some progress. We have been using our 
engagement with the G-7, the G-20, the IMF.
    I know you will have Secretary Lew up here as early as next 
week, and I refer you to him for further discussion of it.
    Senator Stabenow. Let me just stress again, as you know, 
this is an absolutely critical issue in terms of making sure 
that American workers and the American people are getting a 
good deal on trade agreements, and so far I have not seen 
anything, any indication that, in fact, we will see currency 
issues addressed either in TPA or TPP or other agreements, and 
that is a serious flaw.
    So I would encourage you to continue to do everything you 
can and to actually give us some specifics.
    The Chairman. Thanks, Senator.
    Senator Stabenow. Thank you.
    The Chairman. Your time is up. Senator Bennet?
    Senator Bennet. Thank you very much, Mr. Chairman. And 
thank you very much for holding this hearing.
    Ambassador Froman, thanks for your efforts. Thanks for 
being here today. I know you have touched on this in the 
hearing today, and I appreciate your mentioning Colorado in 
your testimony and the importance of exports there. Nowhere is 
that more important really than in our agriculture sector, 
where we export roughly $2 billion a year. It is hugely 
important to our State's economic well-being. Our State's wheat 
growers export 80 percent of what they grow, and even through 
droughts and the tough times that we have had, exports have 
continued to grow.
    About a year ago, Senator Grassley and I sent you a 
letter--I know he touched on it generally, but I wondered if 
you could offer some more details. We sent you a letter to urge 
you to negotiate in a strong fashion with Japan to make sure 
that that market was really open to our beef producers, to 
dairy, to wheat, and I wonder whether you would speak in more 
detail about where you feel we are.
    What are the hurdles that remain, and what do you hope to 
achieve in the coming weeks in the closing of your 
negotiations?
    Ambassador Froman. Thank you, Senator. We have been engaged 
with Japan in agricultural market access negotiations for 
almost the better part of a year now, and it has been an 
ongoing process of going through the 1,800 tariff lines of 
agriculture, including their sensitive products, what they have 
identified as what they call their ``sanctuary'' products, and 
working with them and our stakeholders to, first of all, get 
agreement that all products will be covered.
    So, even beyond what we did in our agreement with Korea, 
all products will be covered in our TPP agreement with Japan. 
And then we will go line by line through those products to 
maximize the number of products where there can be full tariff 
elimination. And where there cannot be full tariff elimination, 
we will have a dialogue about how to achieve commercially 
meaningful market access for our stakeholders on their priority 
issues.
    And that is the process we have been going through. I think 
we have made substantial progress in a number of areas, but we 
still have work to do to complete that. Those discussions are 
ongoing.
    Senator Bennet. Certainly, in my case, the outcomes there 
are going to be really important to deciding whether or not to 
support this going forward. Do they include the sanctuary 
products in the products that are part of the negotiation?
    Ambassador Froman. Yes. All products will be covered. It is 
a question of how, and that is where we have worked very 
closely with our commodity groups, our stakeholder groups, to 
get the best understanding from them as to what their 
priorities are and what can create commercially meaningful 
market access for them.
    Senator Bennet. Thank you for the work you are doing. Thank 
you, Mr. Chairman, for giving me a chance.
    The Chairman. Thank you so much, Senator. I think we have 
completed the round. So maybe I can ask a question or two, and 
then I know you have a few questions.
    Senator Wyden. Thank you, Mr. Chairman.
    The Chairman. Ambassador Froman, last year I expressed my 
concern that, despite Russia's serial violations of its WTO 
commitments, you have not brought a single case against Russia 
in the World Trade Organization, or WTO. Now, this is despite 
the fact that the administration told Congress during 
consideration of PNTR that one of the major benefits to having 
Russia in the WTO would be our ability to bring them to dispute 
settlement.
    Could you explain why you have not brought a case against 
Russia?
    Ambassador Froman. Well, we have been exploring all the 
various issues around areas of trade friction with Russia. We 
have been consulting with other parties, such as the European 
Union and others.
    All the options are on the table. We are considering how 
best to address the outstanding issues and where to devote our 
efforts. So it is an area that we are keenly focused on, but 
not one that we have brought a case on yet.
    The Chairman. I suggest that you consider that.
    It is very important that the Trans-Pacific Partnership 
agreement provide for transparency and procedural fairness in 
reimbursement decisions regarding medical devices and 
pharmaceuticals. These are crucial elements which build public 
trust in national health care systems. And I consider strong 
provisions addressing transparency and procedural fairness in 
reimbursement decisions crucial to the strength of the final 
TPP agreement.
    I understand that some countries, such as Japan, may be 
resisting these efforts. What are you doing to ensure that 
strong provisions will be included in the agreement?
    Ambassador Froman. Well, we are working with our trading 
partners, but also our stakeholders here, to have a 
transparency provision that is based off of U.S. law and U.S. 
practice, the national coverage determinations process, that 
applies to Medicare.
    Nothing that we are doing is going to require any change of 
U.S. law. It is not going to affect Medicaid or veterans' 
benefits or anything else in our system.
    It is taking a national coverage determination process, as 
you say, the fairness and due process, and encouraging other 
countries to have that as well. It does not affect the level of 
reimbursement that a country might decide on. It simply makes 
sure that an individual can raise a request that a medical 
device, for example, be covered by their national health 
system. And we think that kind of procedural due process would 
be a positive development in this region, and we are continuing 
to negotiate on that.
    The Chairman. The Transatlantic Trade and Investment 
Partnership, or TTIP, is an opportunity to improve upon the 
already deep relationship between the world's two largest 
financial markets, the European Union and the United States. 
Now, do you agree that the inclusion of a financial services 
framework, including regulatory cooperation, is an essential 
part of a successful, comprehensive TTIP?
    Ambassador Froman. Our view is that financial services are 
a key part of our transatlantic relationship and should be part 
of this trade agreement, as in any other trade agreement, in 
terms of market access.
    In terms of regulatory cooperation, this is an area where 
there has been an explosion of activity since the financial 
crisis, whether it is in the Financial Stability Board, the 
Basel Committee, the 
G-20, or bilaterally. We have a bilateral dialogue with the 
E.U. over financial regulatory issues that the Treasury 
Department leads on behalf of our regulators. And our position 
has been that that is where we ought to make progress in 
parallel, alongside TTIP on financial services regulation, by 
looking at and strengthening existing mechanisms.
    The Chairman. Thank you. Senator Wyden?
    Senator Wyden. Thank you, Mr. Chairman.
    Ambassador, I want to talk to you for a couple of minutes 
about the importance of a free and open Internet. It is 
obviously critically important to the economy, but it is also a 
platform not just for commerce, but for the free exchange of 
ideas. Of course, there have been a lot of battles, a lot of 
them waged in this room, to come up with the policies that will 
ensure that the Net stays free and open.
    I know that years ago we were faced with the challenge 
that, if you owned a website, you could be held liable for 
something that was posted on the site, which would have pretty 
much meant you would not have had social media, because nobody 
would have been comfortable investing in it.
    So what I would like to hear briefly is how you are going 
to make sure that nothing in these trade agreements will 
undermine an open Internet?
    In effect, our challenge here is to buttress what we have 
accomplished in the United States to keep the Net free and 
open, and then do everything we can to build those principles 
into discussions and agreements we are having with our 
partners. And I do not think I am the only one who feels 
strongly about it, and I would be interested in your views on 
that.
    Ambassador Froman. Well, that is exactly right, Senator, 
and that is exactly our perspective. We view TPP as an 
opportunity to bring into the digital economy fundamental 
principles from the ``real'' or the physical economy, including 
the importance of the free flow of information and data across 
borders and maintaining a free and open Internet.
    So what we are pursuing in TPP is based on the approach 
that has been crafted here under U.S. law, including around 
issues like ISP liability, or around technology protection 
measures, or around copyright, making sure there are strong 
copyright laws. But at the same time, this is the first trade 
agreement in history that we will put forward that allows for 
exceptions and limitations to copyright consistent with U.S. 
practice. So our approach has been very much consistent with 
that approach.
    Senator Wyden. I just think that millions of Internet users 
want it clear and they want it straightforward that nothing is 
going to be done to undermine an open Internet. And 
particularly they want to buttress the victories that have been 
won here and look to overseas opportunities for the same kind 
of policies.
    Let me get into one other area, and that is the 
relationship of TPA to TPP. And suffice it to say, there are a 
fair number of people in Washington scratching their head 
trying to think through the relationship.
    We all know that TPA basically tells the President here, in 
effect, are the negotiating objectives for a trade agreement. 
And so people say, okay, that is what TPA is about. Then they 
open up their morning newspaper, and the morning newspaper says 
that TPP is pretty much done or close to being done and the 
like.
    I think it would be helpful as we wrap up to have your 
sense of what are the outstanding issues still left in the 
Trans-Pacific Partnership agreement and how does the procedural 
issue, the Trade Promotion Authority discussion, impact what is 
still being discussed in the Trans-Pacific agreement.
    Ambassador Froman. TPP is really two parallel negotiations, 
one on market access and one on a set of rules. So on market 
access, as we discussed here, we have made very good progress, 
but we still have remaining issues, whether it is in 
agricultural access to Japan, Canada, a few other markets, or 
resolving manufacturing tariffs in a few countries, or in the 
services area what we call nonconforming measures. And so we 
have bilateral negotiations with the other 11 partners to 
resolve those issues.
    On the rules side, we have made very good progress and 
continue to make progress this week in terms of closing out 
various issues, but there are, I would say, in the intellectual 
property rights area still a number of open issues; in the 
environmental area, still a couple of issues; some in state-
owned enterprises and investment. And those are all areas where 
we have been working with our partners bilaterally and in 
groups to try to find an appropriate landing zone to close out 
these agreements.
    In terms of the relationship with TPA, we had the 
expiration of TPA in 2007. Notwithstanding that, we have worked 
with Congress to ensure that we are consulting throughout the 
negotiation and getting input from this committee and from 
other members about what our negotiating objectives should be, 
and we have benefitted enormously from that give-and-take and 
that feedback.
    And I feel confident that, as we work in parallel on 
completing TPP consistent with the high-standard, ambitious, 
comprehensive objectives we set out, and securing TPA 
consistent with the work that has been done and continues to be 
done to try to build bipartisan support, we will be able to 
achieve those objectives.
    Senator Wyden. Ambassador, thank you. That is helpful. And 
suffice it to say I am sure you are going to get that question 
in other forums too, of the relationship between TPA and TPP.
    I will tell you, your answer also enforces something you 
and I have talked about, and that is the fact that the more 
information you can make available in a fashion that is 
understandable to Americans, the more likely, particularly 
middle-class families, who have been skeptical of trade 
agreements, are going to say, ``This makes sense.''
    The days are over when the American people are going to 
say, ``Hey, they can just go negotiate this thing, we will take 
their word for it.'' I think that last point just reinforces, 
as these discussions go forward, how important it is to make 
the information that is available, available to the public and 
to do it in an understandable fashion.
    Ambassador Froman. If I could just comment on that, 
Senator. We completely agree, and our objective is to achieve 
maximum transparency, whether it is with Congress, 
stakeholders, or the public, consistent with being able to 
negotiate the best possible agreement.
    I would say that this morning, for example, we have 
launched a new website as part of our continuing effort to 
increase transparency. We have added a number of features to 
increase the accessibility and facilitate communication between 
the administration and the public, including a new TPP 
information center on the website. And this is just one step.
    We can always do a better job of being more transparent and 
are committed to working with all of you to determine the best 
way to do so.
    The Chairman. Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman.
    And thank you, Ambassador, for your testimony.
    Before I start my line of questioning, I just want to say I 
think you are one of the brighter lights in the administration 
and certainly very responsive. So I appreciate your 
responsiveness on so many different issues.
    Now, I know this question has been asked--and I have been 
in between hearings and trying to glean from the TV and 
meetings your answer, but I still do not quite get it. And that 
is, you say you need fast-track from Congress to provide you 
with marching orders for negotiations and that it puts Congress 
in the driver's seat. Yet, the TPP is almost complete.
    So I am not quite sure how it is that the things that some 
of us who might contemplate supporting TPP would want to see in 
TPP, ultimately have an effect if your negotiations are almost 
complete.
    Ambassador Froman. Well, the Trade Promotion Authority that 
I believe this committee and Ways and Means have been working 
on, of course, is broader than TPP. It encapsulates TTIP, it 
encapsulates agreements that we might negotiate at the WTO.
    It is intended to be not just for this agreement in this 
year, but for a longer term.
    Senator Menendez. I get that. But TPP is first up at bat, 
and that is almost finished.
    Ambassador Froman. And with TPP, that is one reason why we 
have spent so much effort consulting with Congress, both this 
committee, Ways and Means, but also the membership more 
broadly, to get input throughout on what they would like to see 
us negotiate on it, whether it is on the digital economy or 
state-owned enterprises, market access, or labor and 
environment. Those are all issues that, through our 
consultations with this committee and others, we have been able 
to put on the table in our TPP negotiations, and I am confident 
we will come up with a positive result.
    Senator Menendez. All right. Some of us are very concerned 
about strong labor provisions, given the inclusions of 
countries like Vietnam and Brunei and Malaysia, just to mention 
a few. But that is all going to come, from my perspective, 
after the fact.
    So this is one of my concerns. What is the use of TPA if 
you have a deal done? Let me just join those colleagues, I 
think, including the chairman, who have talked about 
intellectual property rights, which is a critical issue for our 
country. We lead the world in this regard, and we see it stolen 
very often with impunity.
    And particularly, as part of that, in a State like New 
Jersey, which is the medicine cabinet to the world, there is 
the question of pharmaceutical intellectual property, including 
the goal to have 12 years of data protection for biologics 
within TPP as currently stipulated in U.S. law.
    I know you have talked about that, but I just want to make 
it very clear to you that this is a critical issue in my 
consideration of either TPP or, for that matter, any individual 
trade agreement. If we cannot protect, at the end of the day, 
the intellectual property of our companies, and if we cannot 
give them a reasonable time to recoup their investment after 
they invest billions of dollars in research--sometimes it works 
out and sometimes it does not--then it is a real problem.
    Let me ask you one other question. Getting the details 
right in TPP is particularly important because the agreement, 
as I understand it, will feature a docking mechanism that 
allows other countries to join in the future: Korea, China, 
Taiwan are potential newcomers. How is that docking mechanism 
going to work? For example, will the ascension of China, in the 
future, require new Trade Promotion Authority or any other role 
for Congress, or will they be able to dock and accede to such 
an agreement that is already in place?
    Ambassador Froman. As you suggest, Senator, the TPP is 
intended to be a platform which other countries that are able 
and willing to meet the high standards could potentially join 
with the consent of all of the countries around the table, and 
that consent has to reflect their domestic processes as well.
    So no country would be able to join TPP without Congress's 
involvement and approval.
    Senator Menendez. So each future country that wishes to 
accede to any agreement that would be made would need, 
individually, Congress's approval?
    Ambassador Froman. They would need Congress's approval.
    Senator Menendez. And finally, on CAFTA, several of our 
current free trade partners in Central America have raised 
concerns that if the final TPP includes concessions requested 
by Vietnam regarding rules of origin and short supply lists for 
textile and apparel, it will result in severe job losses and 
potentially gut the textile and apparel industry in the western 
hemisphere.
    As someone who is very concerned about our challenges 
already with Central America--its stability, its prosperity, 
and, as we saw last year in those who seek to flee their 
country because of instability and whatnot--this would be an 
enormous blow.
    How do you intend to deal with that reality?
    Ambassador Froman. We have worked in the textile area 
through the forward rule, the short supply list, rules of 
origin, and customs enforcement and cooperation, to take those 
issues into consideration, and we have been working very 
closely with our textile manufacturers in the U.S. who are part 
of the supply chain with Central America to get a best 
understanding of what their sensitivities are and to take that 
into account in our negotiations.
    Senator Menendez. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator. Senator Scott?
    Senator Scott. Thank you, Mr. Chairman.
    Ambassador, how are you today? A quick question for you on 
the Information Technology Agreement.
    As conversations continue surrounding the expansion of the 
WTO's ITA, China has recently agreed to include multi-component 
semiconductors into the agreement. This is a huge step forward, 
as China is one of the largest importers of semiconductors and 
could represent hundreds of millions of dollars for the U.S. 
semiconductor industry.
    Considering the importance of the Multi-Component 
Integrated Circuits or MCO agreement to the U.S. and to the 
ITA, what is the USTR's plan to bring the ITA to completion?
    Ambassador Froman. Thank you, Senator. We reached a 
significant breakthrough with China in November along the lines 
that you mentioned, which allows us to restart the ITA 
negotiations in Geneva. We have made some progress there, but 
there are remaining issues, particularly between China and 
Korea, and we are encouraging both parties to come to the table 
to negotiate.
    We are trying to create enough benefit for all the parties 
around the table to sign onto the agreement, and we are 
encouraging China to show flexibility in accommodating some of 
Korea's interests in order to bring ITA to a close. As you 
know, it would be a significant agreement for the U.S. and for 
the world. It would cover $1 trillion of trade. It is estimated 
to increase global GDP by $190 billion, including 60,000 jobs 
in the U.S. And so we are very focused on trying to resolve the 
remaining differences.
    Senator Scott. Thank you. During the State of the Union 
address, the President asked both parties to come together on 
TPA, and we have heard lots of conversation today about TPA, 
and it certainly is something that is important to my State of 
South Carolina, without any question. It is perhaps one of the 
States that would benefit the most from such an agreement.
    But when I look at the President's record as it relates to 
negotiating on behalf of the Nation, I turn my attention to 
things like the Iran sanctions negotiations, where we have seen 
delay after delay after delay. I think about the freeing of 
dangerous terrorists who really seem to be bent on killing more 
Americans or the deal with China on carbon emissions. We are 
going to work toward a 15-year timeline, and theirs really does 
not start until 2030.
    So my question to you is, what type of confidence--while I 
realize that the agreement has to come back to Congress for 
approval, my question to you really is, what kind of confidence 
should we have on the type of deals that will be structured 
going into the future with TPA?
    Ambassador Froman. Well, we are consulting closely with 
this committee and other members of Congress throughout the 
negotiations--and with stakeholders and with the public--to 
come back with the best possible agreement for the U.S.
    I think we have a strong record of doing that. For example, 
when we were renegotiating KORUS to deal with some of the auto 
issues, the President walked away from the negotiation, because 
the deal was not good enough. And 3 months later, we got a much 
better deal, and we were able to bring it back to Congress and 
get it approved with strong bipartisan support.
    So that is the model that we use. We want to bring back 
strong agreements that promote jobs in the U.S., go straight to 
the middle class, promote growth here, help create good, well-
paying jobs across all the areas--manufacturing, services, 
agriculture--that level the playing field, while protecting 
American jobs and American workers.
    We are creating a fair and level playing field by raising 
these standards and making sure that they are fully 
enforceable. And one thing that is very important is, we really 
are facing an important choice here, because we are out there 
trying to work on an agreement that reflects American values 
and American interests, and to us that has the greatest 
prospect of supporting and protecting American workers and 
businesses here.
    But there are others out there negotiating agreements that 
do not have these kinds of protections, whether it is labor and 
environment or intellectual property rights or state-owned 
enterprises or additional economic benefits. It is critically 
important to American workers and American businesses that it 
is the U.S. that leads and that we do not cede that role to 
another country.
    Senator Scott. Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    I want to thank you, Ambassador Froman, for your good 
testimony and for being with us today. I want to thank all the 
members who asked questions and everyone who was also able to 
attend the hearing today, even our noisy friends at the 
beginning of the hearing.
    The hearing record will remain open for 48 hours for any 
member's written questions.
    With that, you will be happy to know, Mr. Ambassador, the 
hearing is adjourned.
    [Whereupon, at 12:05 p.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


               Prepared Statement of Hon. Sherrod Brown, 
                        a U.S. Senator From Ohio
    Mr. Chairman, I want to thank you for holding today's hearing on 
the 2015 trade agenda. The Administration is pursuing an aggressive 
trade agenda, and it is important that Congress continue to provide 
equally aggressive oversight of all trade negotiations. I look forward 
to legislative hearings on the individual elements of U.S. trade 
policy, particularly on fast track.

    The United States Trade Representative is negotiating numerous, 
far-reaching trade agreements this year. USTR is aiming to conclude the 
Trans-Pacific Partnership in the next few months. Talks with Europe on 
the Trans-Atlantic Trade and Investment Partnership will pick back up. 
And negotiations on the Trade In Services Agreement and the 
Environmental Goods Agreement at the World Trade Organization will 
advance.

    President Obama has requested fast track from Congress for all of 
these trade agreements. It has been more than 12 years since Congress 
passed this type of bill. Fast track is truly singular legislation that 
gives full authority to the White House to negotiate U.S. trade policy 
and restricts Congress to an up or down vote on that trade policy. 
Besides budget reconciliation, no other procedure in the Senate 
expedites consideration of legislation and limits Congress' ability to 
amend it.

    These agreements will have major consequences for workers and 
companies in the U.S. and the global economy. They will shape the flow 
of goods and services and wages and employment and investment. They 
will affect our manufacturers, our farms, our service providers, our 
communities, and our families.

    If they have the same impact as previous trade agreements, they 
will erode the U.S. manufacturing sector, offshore jobs, and hurt 
American workers. Congress' task this year is to redirect our trade 
policy and prevent us from repeating these mistakes. We must work to 
ensure trade agreements create good-paying jobs here in the U.S.

    Trade agreements that grow the U.S. manufacturing sector, increase 
workers' wages, and create opportunities for the middle class would get 
broad bipartisan support in both chambers of Congress. They would not 
need to be considered under strict rules with limited amendments. They 
would pass overwhelmingly.

    I look forward to participating in more hearings on trade this 
year, and I hope my colleagues on the Finance Committee will join me in 
pursuing trade policies that benefit the middle class.

    Thank you.
                                 ______
                                 
               Prepared Statement of Hon. Michael Froman,
      U.S. Trade Representative, Executive Office of the President
    Chairman Hatch, Ranking Member Wyden, Members of the Senate Finance 
Committee, thank you for the opportunity to testify on the President's 
trade agenda.

    The Obama Administration's economic agenda of creating jobs, 
promoting growth, and strengthening America's middle class is supported 
by the work we do at USTR: opening markets and leveling the playing 
field to ensure that American workers, farmers, ranchers; manufacturers 
and service providers; innovators, creators, investors and businesses--
both large and small--can compete in the world's fastest growing 
markets.
                building on record-breaking u.s. exports
    In 2014, USTR built on record-breaking exports, market opening 
initiatives, intensive engagement, and trade enforcement to achieve 
strong results for America's economy. The data is compelling: 
Unemployment has dipped to 5.6 percent and we are creating more than 
200,000 jobs per month. Those jobs include a gain of 786,000 new 
manufacturing jobs over the last five years. Manufacturing exports have 
grown by 9 percent a year on average. Our total exports have grown by 
nearly 50 percent and contributed nearly one-third of our economic 
growth since the second quarter of 2009. In 2013, the most recent year 
on record, American exports reached a record high of $2.3 trillion and 
supported a record-breaking 11.3 million jobs.

    It's clear, more exports means more good jobs and more jobs are 
dependent upon exports than ever before. That's why we've worked hard 
to open more markets to Made-In-America goods and services, 
agricultural products, innovation, and investment. In the last four 
years, the increase in U.S. exports has supported 1.6 million more good 
jobs, which typically pay 13-18 percent more on average than jobs not 
related to exports.

    Done right, trade policy unlocks opportunities for Americans. Done 
right, trade policy promotes not only our interests, but also our 
values. And it gives us the tools to make sure others play by the same 
rules as we do. The United States is an open economy and our borders 
are already open to trade. But other countries still erect real 
barriers to our exports.
          exports drive small business growth and create jobs 
                        across the united states
    Over the past year, I heard many of the stories behind these 
statistics. I listened to workers, small business owners, farmers and 
ranchers talk about their efforts to grow their businesses and create 
jobs. I traveled to Iowa to promote President Obama's ``Made in Rural 
America'' export and investment initiative through the White House 
Rural Council and meeting with dairy farmers in Wisconsin to talk about 
USTR's efforts to open new markets. I toured a small brewery in Denver 
and a waste water treatment equipment manufacturer in Cleveland, where 
I heard about each company's contribution to Colorado and Ohio's 
record-breaking exports last year. I met with a high-tech firm in San 
Antonio and an advanced manufacturer in Baltimore to discuss the future 
of the digital economy and share how our trade agreements can unlock 
opportunities for their businesses. Today, more small businesses are 
exporting than ever before, and by tapping into global markets, these 
companies are able to increase their sales and their payrolls.

    But we know that the status quo is not an option to compete in the 
global economy. And we know that our workers are competing against 
workers in countries that lack even the most basic labor rights. Our 
businesses are competing against companies that get subsidies from 
their governments or that don't have to maintain any environmental 
standards. If we sit on the sidelines, we will be faced with a race to 
the bottom in global trade instead of continuing to promote a race to 
the top. That's not how we want to compete. As the President said last 
week, we should be the ones to engage and lead. We want to take the 
field, establish the rules of the game that reflect our interests and 
our values, and do so with all the tools we need to win.

    Our trade agreements will support American jobs by boosting Made in 
America exports from our businesses, farms, and factories. In fact, for 
every $1 billion we export, between 5,400 and 5,900 jobs are supported 
here at home. By opening rapidly expanding markets with millions of new 
middle-class consumers in parts of the globe like the Asia-Pacific, our 
trade agreements will help our businesses and workers access overseas 
markets, where 95 percent of the world's consumers and 80 percent of 
the world's purchasing power reside. Combined with our supply of 
energy, highly skilled work force, and culture of innovation, our trade 
agreements will help once again make America the global production 
platform of choice.
                        ustr priorities for 2015
    In 2015, USTR will take steps to: (1) lead the Administration's 
effort to secure Trade Promotion Authority with bipartisan support; (2) 
make significant progress to bring home high-standard trade agreements, 
including the successful conclusion of the Trans-Pacific Partnership 
(TPP) negotiations and the plurilateral deal to expand the Information 
Technology Agreement (ITA), and the advancement in the Transatlantic 
Trade and Investment Partnership Agreement (T-TIP), the Trade in 
Services Agreement (TiSA), and the Environmental Goods Agreement (EGA); 
(3) harness the preferential access provided by our FTA agreements to 
further expand exports of U.S. goods, services, and investment with 
those countries; (4) strengthen key trade and investment relationships, 
including with China, India, Burma, Taiwan, Brazil, and the countries 
of Sub-Saharan Africa; and (5) ensure that our trading partners honor 
their commitments, including in the WTO and under our trade agreements.
  unlocking opportunities through u.s. job-supporting trade agreements
    We're working harder than ever to bring home trade agreements that 
will unlock opportunities by eliminating barriers to U.S. exports, 
trade, and investment while raising labor, environment, and other 
important standards across the board.
Trans-Pacific Partnership (TPP)
    In 2014, we significantly advanced negotiation of the TPP, a state-
of-the-art trade agreement that will guarantee expanded U.S. access to 
the rapidly growing economies in the Asia Pacific. Together with the 11 
other TPP countries, we have made important progress in the market 
access negotiations for agricultural products, industrial goods, 
services and investment, and government procurement. We have also made 
substantial progress on ambitious, high-standard trade rules that will 
promote U.S. commercial interests and values in the region, in such 
areas as intellectual property, digital trade, competition with State-
owned enterprises, and labor and environmental protections. The 
Peterson Institute for International Economics estimates that TPP will 
add $123.5 billion to U.S. exports each year when it is fully 
implemented.

    We continue to make progress in closing gaps related to autos, 
agriculture, and other market access issues in our bilateral 
negotiations with Japan. Japan agreed upfront to provide the longest 
staging of any TPP products for U.S. autos and truck tariffs, and we 
continue to work with Japan to address the long-standing barriers to 
American autos in the Japanese market. We will continue to closely 
consult with our auto workers and industry as the negotiations proceed 
in order to get the best deal possible for them. In agriculture, we 
continue to work hard to dismantle high tariffs, restrictive quotas, 
and complex administrative policies to create new opportunities for 
U.S. producers.

    At the TPP Leaders meeting in November convened by President Obama, 
all 12 countries took note of the progress that has been made on TPP, 
and agreed that the end of the negotiation is now coming into focus. 
And the TPP countries reaffirmed their commitment to concluding a 
comprehensive, high-standard agreement, and to work toward finalizing 
the TPP agreement as soon as possible.
Transatlantic Trade and Investment Partnership (T-TIP)
    With the new European Commission, the United States and the 
European Union see an opportunity for a fresh start in the T-TIP 
negotiations as we work to bolster our economic partnership that 
already supports $1 trillion in two-way annual trade, $4 trillion in 
investment, and 13 million jobs across the Atlantic. In November, 
President Obama and EU leaders reaffirmed their commitment to an 
ambitious, comprehensive, and high-standard T-TIP agreement. We look 
forward to building on the progress we've made at the 8th T-TIP 
negotiating round next week in Brussels and we hope to make good 
progress across all chapters in 2015.
World Trade Organization (WTO)
    At the WTO, the United States played a critical role in building 
consensus on the first-ever fully multilateral trade agreement in the 
20-year history of the WTO, the Trade Facilitation Agreement (TFA). As 
WTO Members move towards TFA implementation, the cost of trading for 
developed and developing countries alike will be significantly reduced. 
By some estimates, the global economic value of the new WTO deal could 
be worth hundreds of billions of dollars. In November, the United 
States and China announced a major breakthrough in negotiations to 
expand the scope of goods covered by the WTO Information Technology 
Agreement (ITA), which provided the basis for the resumption of 
plurilateral negotiations in Geneva. We are working closely with all 
ITA participants to bring about the successful conclusion of an ITA 
expansion deal as soon as possible. This would be the first major 
tariff-cutting deal at the WTO in 17 years and help boost American 
exports to growing markets around the world. When completed, the ITA 
expansion is estimated to cover roughly $1 trillion in trade, adding 
$190 billion to the global economy and supporting tens of thousands of 
good-paying U.S. manufacturing and technology jobs. The United States 
will also work with WTO Members to develop a post-Bali work program 
that ensures balance among the largest Members in areas such as 
agriculture and industrial market access in the Doha Round 
negotiations.
Trade in Services Agreement (TiSA)
    The United States is the largest exporter of services in the world, 
and in 2013, services exports accounted for a majority of U.S. export 
growth. Services liberalization abroad is necessary to sustain that 
growth for industries such as information technology and 
communications, distribution, energy services, environmental services, 
professional services, express delivery services, and more. U.S. 
service providers should have opportunities and fair treatment abroad 
that other countries' firms already enjoy in the United States. To 
support this vital sector, the United States engaged in the Trade in 
Services Agreement (TiSA) negotiations, a free trade agreement focused 
exclusively on services. TiSA brings together nearly two dozen 
countries, which makes up more than two-thirds of the global trade in 
services market. In 2015, we will continue to push for greater access 
and promote fair and open competition across a broad spectrum of 
service sectors.
Environmental Goods Agreement (EGA)
    In July 2014, 14 WTO Members, including the United States and 
China, launched negotiations on the Environmental Goods Agreement (EGA) 
at the WTO. The goal in 2015 is to make essential progress toward our 
environmental protection and economic goals by eliminating tariffs 
faced by American exporters on a range of environmental goods. Tariffs 
on these environmental goods, including wind turbines, solar water 
heaters, and catalytic converters are unnecessarily high and limit the 
technological advancement for green technologies. In fact, as I speak, 
my team is in Geneva at the 4th round of negotiations pushing for the 
inclusion of key clean energy technologies, of which the United States 
is a major producer.
Agriculture
    In 2013, U.S. farmers and ranchers exported a record $148.7 billion 
of food and agricultural goods to consumers around the world. And we 
expect that we had another record year in 2014. Going into 2015, the 
Administration aims to help build on that record performance. America's 
strong competitive advantage is greatly due to our agricultural 
exports, and liberalizing trade in agricultural goods remains a 
priority issue in all of our bilateral engagements. We will open new 
export markets through our ongoing trade negotiations, including TPP 
and T-TIP. We will continue to work to remove non-science based 
sanitary and phytosanitary measures restricting exports of a variety of 
U.S. agricultural products.
Manufacturing
    In 2013, the United States exported nearly $1.4 trillion in 
manufactured goods, which accounted for 87 percent of all U.S. goods 
exports and 61 percent of U.S. total exports. Here too, we expect that 
2014 was a record year. In 2015, the Obama Administration will continue 
to pursue trade policies aimed at supporting the growth of 
manufacturing and associated high-quality jobs here at home and 
maintaining American manufacturers' competitive edge. U.S. 
manufacturing is vital to our economy and the Obama Administration is 
committed to making sure that the United States is competitive in 
attracting businesses to locate here. This is why we support a dynamic 
manufacturing sector and research and development policies to support 
broad-based innovation and advanced manufacturing that will help U.S. 
workers and firms win the future. As American manufacturers increase 
their capacity to produce more advanced and value-added goods, 
consumers around the world continue to place a high value on Made-in-
America products. Across our trade negotiations, we aim to create rules 
that ensure state-owned enterprises (SOEs) do not compete unfairly with 
private firms, and seek to ensure that rules of origin and global 
supply chain provisions create conditions for manufacturers to locate 
here in the United States.
Innovation, Intellectual Property, and the Digital Economy
    America's economic growth and competitiveness depend on its 
capacity to innovate. Our trade agreements, including TPP and T-TIP, 
promote strong and balanced IP protection and enforcement while opening 
markets for U.S. produced IP-intensive goods and services. In 
negotiations, like TPP, we are working to ensure access to affordable 
life-saving medicines, including in the developing world, and create 
incentives for the development of new treatment and cures that benefit 
the world and which create the pipeline for generic drugs. And to 
ensure we are advancing a balanced policy and defending jobs that rely 
on innovation, we are committed to receiving input from across the 
spectrum of the U.S. economy: those who create, distribute, produce, 
and use intellectual property.

    We will continue to support a free and open Internet that 
encourages the flow of information across the digital world. We know 
that the impact of digital trade is enormous, and thus that a 
supportive trade framework is critical for its continued expansion. 
Therefore, among the other twenty-first century issues we are 
addressing, we are modernizing our trade agenda to promote growth in 
the digital economy in particular. We will continue to work closely 
with Congress and all our stakeholders on a wide range of trade issues 
related to the protection and enforcement of copyrights, trademarks, 
patents, trade secrets, and other forms of IP. We will also work to 
push back against efforts by our trading partners to improperly use 
geographical indications to limit the ability of our farmers and 
exporters to use common food names and trademarks for their products.

    The theft of U.S. intellectual property puts American jobs at risk 
and generates counterfeit products that can pose a threat to the health 
and safety of consumers around the world. We utilize our annual 
``Special 301'' Report to identify and resolve IP concerns with many 
trading partners. This year, it included specific focus on India 
through an out-of-cycle review during which we were able to highlight 
the need for India to increase its engagement with the U.S. Government 
and with U.S. stakeholders on a broad range of IPR issues identified in 
the Special 301 Report. Use of the out-of-cycle review helped to secure 
commitments from India in the 2014 Trade Policy Forum on a broad range 
of IP issues of concerns to the United States and its stakeholders. And 
Israel, Italy and the Philippines were removed from the Watch List for 
their important legislative and regulatory reforms in enhancing 
intellectual property enforcement.
  enforcement tools utilized to protect u.s. trade rights around the 
                                 world
    As we work to open markets around the world, we are simultaneously 
working to hold our trading partners accountable for their commitments 
under existing agreements so that American workers, businesses, farmers 
and ranchers get the full benefit of all the economic opportunities the 
United States has negotiated over the years. From day one, the Obama 
Administration has shown an unwavering commitment to enforce our trade 
rights around the world. Within existing resources, we have undertaken 
a bold and ambitious trade enforcement agenda reflected in the scale, 
scope, and systemic importance of our disputes. And for every part of 
our economy, USTR is fighting on their behalf--from American auto 
workers to farmers to high-tech manufacturers that need rare earth 
metals to American service providers.
WTO Enforcement
    USTR is building upon significant WTO victories for the United 
States as we move forward with a robust monitoring and enforcement 
agenda in 2015. We continue to build on our strong success with major 
victories in several WTO disputes. In June, the WTO found that China 
had breached WTO rules by imposing on American cars and SUVs 
unjustified extra duties, which were assessed on over $5 billion of 
U.S. auto exports in 2013. In August, the WTO found that China again 
breached WTO rules by imposing duties and quotas on exports of rare 
earths, tungsten, and molybdenum, which discriminate against U.S. 
manufacturers of hybrid car batteries, wind turbines, energy-efficient 
lighting, steel, advanced electronics, automobiles, and more. In 
October, a WTO panel found India's ban on U.S. agricultural products--
such as poultry--allegedly to protect against avian influenza was 
imposed without sufficient scientific evidence, among other things. And 
earlier this month, the WTO finalized the outcome of a dispute against 
Argentina's import licensing requirement and other import restrictions 
that were imposed as protectionist measures against billions of dollars 
of Made-In-America electronics, aerospace, pharmaceuticals, precision 
instruments, medical devices and motor vehicles and parts. These 
outcomes are an example of our strong record on trade enforcement. For 
the 18 WTO complaints filed since 2009, every single case that has been 
decided has resulted in a win for the United States. And when you 
consider those victories I just mentioned--the range of trading 
partners, the types of trade barriers, and value and diversity of 
exports involved--the power of robust trade enforcement becomes clear. 
We're absolutely committed to ensuring American workers get all the 
benefits of U.S. trade agreements because we've seen that trade, done 
right, supports high-quality, middle class American jobs.
Enforcement of U.S. Free Trade Agreements
    The Administration also continued to vigorously monitor our FTA 
partners' implementation of their obligations under Congressionally-
approved FTAs. Under the CAFTA-DR, the Administration proceeded with a 
labor rights enforcement case against Guatemala to ensure it implements 
the labor protections to which its workers are entitled. We convened 
Labor Affairs Council meetings with our counterparts in Peru and Panama 
to discuss labor rights, including labor inspections and subcontracting 
arrangements. We convened FTA labor subcommittee meetings with Jordan 
and Morocco, where we discussed Jordan's progress on the Labor 
Implementation Plan, which was signed by both governments in 2013, and 
a U.S. Department of Labor (DOL) technical assistance project to combat 
child labor and empower women in Morocco. We engaged in constructive 
FTA labor consultations with Bahrain in 2014. Also working together 
with DOL, USTR released a report in April describing the progress and 
the work that remains in Colombia to address concerns about labor 
protection and labor rights. We also convened Environmental Affairs 
Councils and other bilateral meetings with our CAFTA-DR partners, as 
well as with Morocco, Panama, and Peru to review progress under our 
environmental chapters and discuss concerns. To ensure that the U.S.-
Korea FTA is fully implemented, we worked closely with our Korean 
counterparts to make important progress in resolving issues related to 
customs origin verification, financial services, and automotive issues.

    We will continue to be vigilant in 2015 to ensure that Korea, along 
with our other current FTA partner countries, fully adheres to the 
letter and spirit of their FTAs.
    deepening our trade and investment partnerships around the world
    The Administration continues to work to deepen our trade 
relationships around the world. This includes engagement with China, 
India, Burma, Sub-Saharan Africa and other regions to address concerns 
with our bilateral trading partners.
China
    On China, the Administration made progress on a wide range of 
issues, including protection and enforcement of trade secrets and other 
intellectual property rights, as well as SOEs, investment, services, 
global drug supply chain integrity, and transparency at the U.S.-China 
Strategic and Economic Dialogue in July. These engagements yielded 
concrete changes which support jobs and exports from the United States. 
We also made significant progress on key issues like transparency and a 
level playing field in competition law enforcement, agricultural 
biotechnology, the protection and enforcement of trade secrets, and 
technology localization at the 25th Joint Commission on Commerce and 
Trade held in December. There was further progress in the 
pharmaceutical sector at the JCCT, where China agreed to streamline its 
approval processes for pharmaceutical and medical devices. We also 
intensified our negotiations toward a Bilateral Investment Treaty (BIT) 
with China and expect to initiate the critical ``negative list'' market 
access negotiations in early 2015.
India
    In November, I led a U.S. delegation to the U.S.-India Trade Policy 
Forum (TPF), the first TPF since 2010 and an important step in 
invigorating our bilateral relationship. The TPF provided the forum for 
the discussion of several key trade and investment issues, including 
intellectual property rights, agriculture, services, manufacturing and 
others. The meeting resulted in substantive work plans for regularized 
engagement across these priority issues. In advance of this meeting, 
India and the United States worked together to address outstanding 
concerns arising from the WTO Bali package which, with the support of 
the other WTO members, will now allow the Trade Facilitation Agreement 
to be fully implemented. For 2015, we are planning a significant ramp 
up of our engagement with India to strengthen our bilateral 
relationship and work to address outstanding concerns in a number of 
areas.
Burma
    In November, the United States launched an initiative with the 
Government of Burma, the International Labor Organization, Japan and 
Denmark to improve fundamental labor rights and promote responsible 
business practices in Burma through a multi-year labor law reform plan 
and a stakeholder consultative mechanism. This is part of broader 
efforts to promote responsible trade and investment practices and 
sustainable economic development. Earlier in the year, the United 
States held the first-ever Trade and Investment Framework Agreement 
meeting with Burma to address economic reform, implementation of 
Burma's WTO commitments and labor rights.
Taiwan
    We continue to make progress with Taiwan on a broad range of trade 
and investment issues through the TIFA Council, during which Taiwan 
took concrete steps to lift data center localization requirements, 
address technical barriers to trade, and clarify investment criteria. 
Taiwan also made important commitments involving investment, 
agriculture, pharmaceuticals, and medical devices. In 2015, we look 
forward to make progress on these and other trade and investment issues 
important to the United States and Taiwan.
Brazil
    After resolving the long-standing cotton dispute with Brazil, we 
are looking to enhance cooperation on trade and investment through the 
U.S.-Brazil Agreement on Trade and Economic Cooperation. Brazil is one 
of the most dynamic countries in the world and a top customer of the 
United States for value-added goods, such as machinery, aircraft, 
chemicals and fuels. Our 2013 goods trade surplus of $16.5 billion is 
our largest in the hemisphere. In 2015, we will explore opportunities 
to deepen cooperation on a number of issues of mutual concern, 
including innovation, trade facilitation, and technical barriers to 
trade, and working together to reduce barriers to agriculture trade in 
third markets.
Africa
    In August, President Obama welcomed leaders from across the African 
continent for the historic U.S.-Africa Leaders Summit, which marked the 
largest event any U.S. President has held with African heads of state 
and government. During the Summit, I convened the AGOA Forum 
Ministerial with African trade ministers to discuss the future of the 
African Growth Opportunity Act (AGOA) program and opportunities to 
strengthen trade and investment ties between the United States and 
Africa--one of the world's most dynamic and fastest-growing regions. 
Before those meetings, President Obama determined that Swaziland would 
no longer be eligible for AGOA benefits because it failed to meet 
AGOA's eligibility criteria related to internationally recognized 
worker rights. The President also determined that Madagascar should 
regain its AGOA eligibility, following that country's return to 
democratic rule following a 2009 coup d'etat. Later in the year, the 
President determined that Guinea-Bissau would regain its AGOA 
eligibility following its return to democratic rule, and that The 
Gambia and South Sudan would lose their AGOA eligibility for reasons 
related to AGOA's human rights criteria. In addition, USTR hosted 
separate Trade and Investment Framework Agreement (TIFA) Council 
meetings with Nigeria and Angola. The Administration stands ready to 
work with Congress to renew the AGOA program prior to its September 30, 
2015 expiration.
Generalized System of Preferences (GSP)
    The United States is committed to creating economic growth and 
development around the world through our trade preference programs, 
trade capacity building, and other initiatives. The Generalized System 
of Preferences (GSP)--the oldest and most widely used U.S. preference 
program--provides developing countries with duty-free access on a range 
of goods. The GSP program promotes economic growth in developing 
countries while also helping to improve competitiveness for U.S. 
business because it reduces the cost of imported inputs used in U.S. 
manufacturing and production. We have made effective use of the GSP 
statute's labor provisions to encourage trading partners such as 
Bangladesh to make greater efforts to ensure respect for 
internationally recognized labor standards within their economies. The 
Administration urges Congress to expeditiously renew authorization of 
the GSP program, which lapsed in July 2013, and we stand ready to work 
with you to that end.

    In addition to important emerging markets, the United States will 
continue our robust engagement with trading partners around the world 
as we seek additional bilateral and regional trade and investment 
opportunities to help increase U.S. exports and grow our economy. The 
United States will seek to advance trade-enhancing investment measures 
with key trading partners in order to continue attracting the best jobs 
and industries here in America.
Trade Promotion Authority (TPA)
    Let me build upon the President's remarks on trade at the State of 
the Union. As the President made clear last week, the Administration is 
committed to securing bipartisan Trade Promotion Authority. America has 
always been strongest when it speaks with one voice, and that's exactly 
what Trade Promotion Authority, or TPA, helps us do. TPA puts Congress 
in the driver's seat to define U.S. negotiating objectives and 
priorities for trade agreements. It clarifies and strengthens public 
and Congressional oversight by requiring consultations and transparency 
throughout the negotiating process. It makes clear to our trading 
partners that the Administration and Congress are on the same page 
negotiating high standards in our trade agreements. There is no other 
area of policy that reflects closer coordination between the Executive 
branch and Congress than trade policy. And in return, I can promise you 
that we'll continue working hard to strike balanced agreements that 
benefit our workers, employers, our environment and the economy at 
large.

    The previous TPA legislation was passed over a decade ago and we 
agree with the Congressional voices that an update is necessary. The 
global economy has changed significantly since 2002 and Congressional 
views on labor, environment, innovation, and access to medicines need 
to be memorialized while the rise of the digital economy and the 
increasing role of SOEs need to be addressed. We agree with the broad 
group of stakeholders that these issues should be reflected in a new 
TPA bill.

    The Administration looks forward to continue working with this 
Committee and the new Congress as a whole to secure TPA that has 
bipartisan support. We also look forward to renewing Trade Adjustment 
Assistance (TAA), which helps provide American workers with the skills 
to compete in the 21st century.
    promoting increased engagement and transparency in negotiations
    As we work to open markets to support more American jobs, an 
important part of that work is keeping the public, Congress, and a 
diverse array of stakeholders engaged and informed. We believe that 
public participation, Congressional input, and an open national debate 
enhance trade policy. And to ensure these agreements are balanced, we 
seek a diversity of voices in America's trade policy.

    The Administration has taken unprecedented steps to increase 
transparency. Those steps have resulted in more public dialogue and 
outreach on trade agreements like TPP and T-TIP than on any other free 
trade agreements in history. This includes the more than 1,600 
consultations we've had on TPP alone. We have provided access to the 
current negotiating texts of both agreements to Members of Congress. We 
have previewed every new U.S. proposal with the Committees of 
jurisdiction before tabling them in both negotiations. And we have 
briefed interested Members of Congress before and after every 
negotiating round--seeking feedback at every stage of the game.

    The Administration has also engaged with the public around its 
trade agenda in new ways. We have held public hearings soliciting the 
public's input on the negotiations and suspended negotiating rounds to 
host first-of-a-kind stakeholder events so that the public can provide 
our negotiators with direct feedback on the negotiations. We have also 
shared information on the current status of the negotiations through an 
array of tools on our website.

    We are always looking for new ways to engage the public and welcome 
input, including from your committee, which will help inform and guide 
our trade policy. Enhancing transparency will remain a priority, 
consistent with the ability to deliver on our ultimate mission, which 
is to deliver agreements that achieve the maximum possible benefit for 
the American people.
                               conclusion
    The Obama Administration's trade agenda is focused on expanding 
opportunities to export more Made-in-America products, support jobs at 
home, and create economic growth by opening overseas markets and 
leveling the playing field for American workers, farmers, and 
businesses. In doing so, we will continue to advocate for strong, 
enforceable rules that promote core U.S. values and interests, 
including protection of U.S. creativity and innovation, access to 
medicines, fundamental labor rights, and robust environmental 
commitments. We can only accomplish these shared goals and priorities 
through strong bipartisan cooperation between Congress and the 
Administration. We look forward to working with you to ensure our trade 
policy creates opportunities for all Americans.

    Thank you again for the opportunity to testify today. I am happy to 
take your questions.
                                 ______
                                 
       Questions Submitted for the Record to Hon. Michael Froman
               Questions Submitted by Hon. Orrin G. Hatch
    Question. Strong intellectual property (IP) rights and enforcement 
are vitally important to our economy. In the Transatlantic Trade and 
Investment Partnership (TTIP), both the United States and the EU are 
already home to robust IP regimes. For that reason, TTIP provides an 
important opportunity for the two sides to demonstrate international 
leadership and to establish minimum benchmark standards that the United 
States and the EU should seek in future trade agreements with third 
parties. Even though the United States and the EU have strong, 
sophisticated systems in place to protect and enforce IP, each also 
faces challenges to the protection of those intellectual assets 
elsewhere in the world. How can the United States and the EU use TTIP 
to address critical issues surrounding the erosion of IP rights by our 
trading partners?

    Answer. T-TIP provides a significant opportunity to build on the 
shared transatlantic commitment to strong IPR protection and 
enforcement, consistent with our respective systems, to enhance our 
joint leadership in this area and to continue our work to promote those 
high standards, including in other markets. We start these negotiations 
in a unique and fortunate position, where both sides already have among 
the highest levels of IPR protection and among the most robust IPR 
enforcement in the world, as well as a successful track record of joint 
coordination. The United States and the EU are the world's most 
creative economies, and IP protection and enforcement are essential for 
encouraging innovation in new technologies, stimulating investment in 
research and development, and contributing to exports of U.S. products 
and the creation of American jobs. Nearly 40 million American jobs are 
directly or indirectly attributable to ``IP intensive'' industries. 
These jobs also pay higher wages to their workers, and these industries 
drive about 60 percent of U.S. merchandise exports and a large fraction 
of services exports. Our T-TIP objectives seek to build on our common 
IP strengths and successes to address IP issues in our own markets, 
while promoting good policies in third countries and international 
organizations as well.

    Question. As you know we will soon be considering legislation to 
renew the Generalized System of Preferences and to extend the African 
Growth and Opportunity Act. Forced localization in many of these 
beneficiary countries hurts U.S. exporters of high-tech goods and 
services, as well as many other U.S. producers of goods and services. 
For example, in Asia, we are seeing that Indonesia is systematically 
introducing a host of measures that force local manufacturing in order 
to sell in that market, without any due process or notice. The measures 
range in scope, requiring local content to manipulating its licensing 
regime, or both, along with a host of measures to force local 
production of ICT products and local storage of data. Another example 
is Nigeria, where Nigeria has imposed a host of local content and 
localization measures affecting ICT hardware, software, services, and 
data.

    I don't think we need to revise the eligibility criteria to deal 
with this problem. Countries that deliberately disregard their existing 
international obligations need to understand that there will be 
consequences to taking such action. I would like to know what you are 
doing to enforce existing prohibitions to local content manufacturing 
in beneficiary countries.

    Answer. Localization barriers to trade distort trade, result in 
higher costs for consumers, lower quality, reduce foreign investment 
and, over time, lessen employment in countries that have them. The U.S. 
Government has advocated against the development and implementation of 
local content requirements in both Indonesia and Nigeria, including in 
the ICT industry. We have raised concerns both bilaterally with 
Indonesia, including during the U.S-Indonesia Trade and Investment 
Framework Agreement (TIFA) meetings, and multilaterally in multiple 
committees at the WTO. I most recently raised this in January 2015 with 
the Indonesian Minister of Trade. USTR has also raised this issue with 
senior members of the Nigerian government on a number of occasions, 
including during the most recent U.S.-Nigerian TIFA Council meeting in 
Washington in March 2014. We will continue to address these trade and 
investment distorting practices around the world.

    Question. Even though we have a free trade agreement with 
Australia, U.S. beef has not been approved for sale to Australian 
consumers even though there is no legitimate science-based reason to 
restrict U.S. beef. Meanwhile, Australia is one of the largest sources 
of beef imports for the United States with over $1 billion of Aussie 
beef consumed by Americans in 2013. What is USTR doing to resolve this 
issue with Australia so that American ranchers can compete on a level 
playing field with Australian ranchers?

    Answer. USTR is working closely with the U.S. Department of 
Agriculture (USDA) to regain access to Australia for U.S. beef and has 
raised this issue in a number of meetings with the Government of 
Australia. Under Australia's food safety import requirements, Food 
Standards Australia New Zealand (FSANZ), a regional food safety agency, 
conducts an individual country risk assessment. In August 2013, an 
audit team from FSANZ conducted an inspection of U.S. production and 
processing facilities. The United States reviewed the draft report from 
that inspection, and the final report is currently being completed by 
FSANZ. In addition to the FSANZ review, the Australian Department of 
Agriculture conducts a separate import risk analysis for each exporting 
country to address animal health issues. USTR and USDA will continue to 
urge Australia to open its market fully to U.S. beef and beef products 
based on science, the OIE guidelines, and the United States' BSE 
negligible risk status.

    Question. As you know, we recently received the findings from the 
U.S. International Trade Commission's report on India. The report 
documented a number significant barriers to trade faced by U.S. 
business in India, including customs procedures, tariffs, IP 
protection, and local content requirement. In particular, it found that 
improved protection for intellectual property would improve economic 
engagement in India and increase U.S. exports in all sectors, with 
pharmaceutical exports increasing the most by almost 200 percent. As 
you know, I am profoundly disappointed that there is no meaningful 
action plan in place to address these problems. With a rising share of 
U.S. companies substantially adversely affected by Indian policies, how 
do you plan to work to address the challenges identified in the report?

    Answer. We appreciate the report produced by the U.S. International 
Trade Commission on India, and look forward to the subsequent report 
that will take into account the economic reform efforts of the new 
government under Prime Minister Narendra Modi. We have seen a 
significant increase in our engagement with the Modi government on 
trade and investment issues, including on those issues that the report 
highlights as having the most significant effect on U.S. companies 
operating in India, namely, tariffs and customs procedures, taxes, and 
financial regulations. We have also increased our engagement on 
intellectual property rights (IPR) related issues. Through this new and 
regularized engagement across trade and investment issues with India, 
we will continue to encourage the Indian Government to adopt policy 
reforms that address measures that have the most significant effect on 
U.S. companies operating in India. During the November 2014 Trade 
Policy Forum (TPF), India committed to structured work plans for 
continued engagement in 2015 on IPR, promoting investment in 
manufacturing (tariffs and customs procedures, and localization), 
agriculture (tariff and non-tariff barriers), and services (financial, 
distribution, and professional).

    With respect to IPR, we are actively engaging India on how to 
create an ecosystem that supports innovation through strong IPR 
protection and enforcement. USTR conducted a Special 301 Out-of-Cycle 
Review of India's IPR environment, focused on the level of government 
engagement with the U.S. on IPR issues, and during that OCR, we were 
able to achieve--for the first time ever--the establishment of a joint 
U.S.-India annual high-level Intellectual Property Working Group based 
on the common recognition of the need to foster innovation in a manner 
that promotes economic growth and job creation. We also continue to 
work with India on the entire range of IPR concerns under the Trade 
Policy Forum, including through intensive, technical discussions on 
policies to provide adequate protection for trade secrets and patents. 
We are also working closely on efforts to increase information sharing 
and enforcement against copyright infringement that affects U.S. and 
Indian industries alike.

    Question. It is my understanding that U.S. films are not able to 
freely enter the Chinese market today. However, almost three years ago 
the U.S. and China entered into an agreement to address China's WTO 
trade violations restricting access of U.S. films to the China market. 
Why has this agreement not been fully implemented? What steps must the 
U.S. take to ensure that China fulfills its trade commitments?

    Answer. In February 2012, the United States and China signed a 
memorandum of understanding (MOU) with regard to certain film-related 
findings and recommendations in a WTO case that the United States had 
won. The MOU provided for substantial increases in the number of 
foreign films imported and distributed in China each year, along with 
substantial additional revenue for foreign film producers. While work 
under the MOU continues, significantly more U.S. films have been 
imported and distributed in China since the signing of the MOU, and the 
revenue received by U.S. film producers has increased significantly. 
Benefits that have accrued to date under the MOU flow primarily to U.S. 
film producers whose films are imported and distributed in China on a 
revenue-sharing basis. China needs to do more on certain MOU 
commitments regarding film distribution opportunities for imported 
films that are distributed in China on a flat-fee basis rather than a 
revenue-sharing basis. The United States has been pressing China on 
these issues, and will continue to do so until U.S. concerns are fully 
resolved.

    Question. Many of our TPP negotiating partners share the goal of 
the United States of opening the TPP agricultural markets to greater 
trade. I am concerned, however, that certain partners, especially Japan 
and Canada, are currently unwilling to make the types of commitments 
needed to achieve a strong outcome for U.S. farmers and ranchers. I am 
particularly concerned as to whether we will achieve a balanced market 
access in the dairy sector, where other TPP partners also have a strong 
interest in our market. I ask for your assurance that you will achieve 
a strong and balanced market access package for U.S. farmers and 
ranchers, including dairy producers.

    Answer. We are working to provide new and expanded export 
opportunities for all American farmers and ranchers, including for U.S. 
dairy farmers, across the TPP markets. This will be achieved through 
tariff elimination, deep tariff reductions, and new preferential tariff 
rate quotas. Gaining new and commercially meaningful dairy market 
access in Canada and Japan are top priorities of the TPP agricultural 
market access negotiations, as it gains valuable new market access for 
U.S. dairy products exported to Vietnam and Malaysia. We are mindful of 
the sensitive nature of dairy imports in the United States, and are 
taking these sensitivities into account as we discuss providing 
expanded access to the U.S. market as part of the TPP negotiating 
process.
                                 ______
                                 
                 Questions Submitted by Hon. Mike Crapo
    Question. In your March 2014 hearing QFRs, you asserted that you 
``are looking at Japan and Canada . . . to provide comprehensive and 
meaningful access to its [sic] agricultural markets, including for U.S. 
dairy products. . . .'' How do you define ``comprehensive and 
meaningful access?''

    Answer. We are working to build on the recent strong export 
performance of our agricultural sector and provide new and expanded 
opportunities for U.S. farm products, including dairy products in all 
of the TPP markets. This will be achieved through tariff elimination, 
deep tariff reductions, and new preferential tariff rate quotas. 
Gaining new and commercially meaningful dairy market access in Canada 
and Japan are top priorities of the TPP agricultural market access 
negotiations, as it gains valuable new market access for U.S. dairy 
products exported to Vietnam and Malaysia. We continue to work closely 
with U.S. stakeholders to ensure we reflect their priorities and 
concerns.

    Question. Many Members of Congress support a full enforcement 
dispute settlement mechanism for sanitary and phytosanitary measures. 
If USTR seeks any exclusion from comprehensive enforceable dispute 
settlement, how will such variances be determined?

    Answer. We have reflected on feedback received from our extensive 
consultations with Members of Congress and U.S. stakeholders on the TPP 
SPS chapter, including with respect to dispute settlement. Although the 
United States is confident that under the TPP SPS chapter U.S. 
regulators will be able to continue ensuring the safety of our food and 
protecting animal and plant health, we prefer excluding two provisions 
from dispute settlement to maintain the utmost flexibility and minimize 
any defensive concerns. We are also mindful that we can always take 
countries to dispute settlement in the World Trade Organization over 
SPS measures not based on science.

    Question. Meaningful market access for agricultural and service 
products must result from the U.S.-Japan bilateral negotiations. Can 
you assure the committee that significant additional market access for 
commodities Japan considers ``sensitive'' will be included in any TPP 
agreement?

    Answer. U.S. exports of agricultural products to Japan reached 
nearly $13.2 billion in 2014, up 8 percent from a year earlier. 
Shipments of beef, pork, rice, wheat, and dairy products--identified by 
Japan as being their leading agriculture-related sensitivities--
combined to account for over $5.1 billion of that total. Through the 
TPP negotiations, we are working to build on this already strong 
foundation and deliver new and expanded market access opportunities in 
Japan for all U.S. food and agricultural products including with 
respect to Japan's co-called sensitive products. We expect this outcome 
to be achieved through a combination of tariff elimination, deep tariff 
reductions, and new preferential tariff-rate quotas.

    Question. Given that we allowed Mexico to export potatoes to the 
U.S. without first ensuring a viable agreement to permit U.S. potatoes 
into Mexico, what steps is USTR taking to address backsliding by 
Mexico, given its long history of non-compliance on SPS? Do you 
consider the Mexican government's own defense of its March 2014 rules 
sufficient?

    Answer. Prior to joining the TPP negotiations, Mexico reaffirmed 
its commitment to science-based SPS decisions, in line with the high 
standards of the WTO SPS Agreement. In March 2014, Mexico issued a 
final rule to expand access for U.S. potatoes. However, a Mexican court 
granted an injunction pending resolution of a lawsuit filed by the 
Mexican potato industry. We will continue to monitor this legal issue 
closely and press for an outcome that results in further market opening 
for U.S. potato exports.

    Question. With the potential expiration of the SLA in 2015, what 
changes to the agreement is USTR negotiating with Canada to address 
better the persistent Canadian flouting of the lumber restrictions?

    Answer. The nearly-decade-old 2006 Softwood Lumber Agreement (SLA) 
has been the most successful of several agreements reached over the 
past three decades to address U.S. concerns about imports of Canadian 
softwood lumber. USTR is continuing to consult with domestic 
stakeholders. To date, the Government of Canada has said it cannot 
consider any changes to the 2006 agreement. We continue to encourage 
the Government of Canada to engage with its stakeholders on a path 
forward.

    Question. Many Senators are concerned that, once implemented, the 
unnecessary and duplicative USDA catfish inspection program will harm 
the business interests of many American food producers and threaten our 
trade interests. As the program may officially be implemented in the 
near future, to what extent is this program a part of TPP negotiations? 
Do you have recommendations for Congress to consider on the future of 
the USDA catfish inspection program?

    Answer. The Congressionally-mandated change to how the United 
States assures the safety of catfish is not part of the TPP 
negotiations, although Vietnam as a TPP partner has raised concerns. 
USTR is working with USDA to ensure that any final rule is consistent 
with our international obligations and prevents unnecessary trade 
disruptions.

    Question. It is critical the TPP yields meaningful market access 
for the U.S. dairy producers, particularly with regard to Canada and 
Japan. As you know, concern persists among commodity groups that TPP 
negations may come up short in securing real market opportunities for 
U.S. exporters. What assurances can you share that USTR is diligently 
working to ensure significant market access for dairy in Canada and 
Japan?

    Answer. We are working to provide new and expanded opportunities 
for U.S. dairy products in all of the TPP markets. This will be 
achieved through tariff elimination, deep tariff reductions, and new 
preferential tariff rate quotas. Gaining new and commercially 
meaningful dairy market access in Canada and Japan are top priorities 
of the TPP agricultural market access negotiations, as it gains 
valuable new market access for U.S. dairy products exported to Vietnam 
and Malaysia. We continue to work closely with U.S. stakeholders to 
ensure we reflect their priorities and concerns.

    Question. Despite its WTO accessions commitments, Russia has banned 
the import of U.S. beef and other agricultural products for two years. 
What substantial progress has USTR made in ending this problem since 
your previous testimony before this committee?

    Answer. In August, 2014, Russia banned imports of U.S. beef and 
other agricultural products from countries that have imposed sanctions 
in response to Russia's illegal actions in Ukraine. By imposing an 
import ban on food items, the Russian government is placing a burden on 
its own citizens. We are sensitive to the negative impact that this ban 
has had on specific agricultural producers. Nevertheless, the 
overwhelming reaction from U.S. industry has been one of solidarity 
with the overall objective of not condoning Russia's illegal actions in 
Ukraine and efforts to use trade as a political weapon. We have and 
will continue to use the tools of the WTO to ensure that Russia 
implements the WTO Agreement on Sanitary and Phytosanitary Measures, 
and the commitments in its Working Party Report. For example, USTR and 
USDA met numerous times with Russian officials to open the Russian 
market to U.S. exports of, among other items, beef, pork, poultry and 
dairy, both at the technical expert level and at senior levels. We were 
able to make some progress and restart some U.S. exports of turkey and 
pork before Russia banned general food imports from the United States.
                                 ______
                                 
              Questions Submitted by Hon. Michael B. Enzi
    Question. In his State of the Union address, President Obama said 
that we shouldn't let China write the rules for the world's fastest-
growing region, as that would put our workers and businesses at a 
disadvantage. One of the ways that China puts U.S. exporters at a 
disadvantage is through its use of value-added tax (VAT) policy to 
distort trade. China incentivizes exports of soda ash, for example, by 
giving a 9 percent rebate of its VAT on soda ash that is exported. As 
you may know, soda ash is the largest exported product from Wyoming. In 
the context of the 2012 JCCT, China committed to have discussions with 
the United States to work toward a trade-neutral VAT system in China. 
Will the Administration commit to following through on these VAT-
related consultations with China?

    Answer. Since the 2012 meeting of the U.S.-China Joint Commission 
on Commerce and Trade (JCCT), the Administration has continued to press 
China to move toward a trade-neutral VAT system, using both the JCCT 
process and the U.S.-China Strategic & Economic Dialogue (S&ED) 
process. This past year, at the 2014 S&ED meeting, China recognized 
``the importance of fostering a more streamlined, efficient, and 
market-based business environment in which the market plays a decisive 
role in allocating resources'' and committed ``to improve its Value 
Added Tax rebate system, including actively studying international best 
practices, and to deepen communication with the United States on this 
matter, including regarding its impact on trade,'' as set forth in the 
Joint Fact Sheet reflecting the outcomes of discussions between the 
United States and China. China acknowledged that this approach would 
support ``strong, sustainable, and balanced economic growth'' in China 
and ``the transformation of China's economic development pattern.'' 
Going forward, the United States is committed to following through in 
this area with China.

    Question. The Trans-Pacific Partnership (TPP) and the Trans-
Atlantic Trade and Investment Partnership (T-TIP) are very important to 
the U.S. soda ash industry, based in Green River, Wyoming. Soda ash 
production is a shining example of U.S. competitiveness. The industry 
exports over $1 billion annually, about half its total output. The soda 
ash industry faces continuing challenges from subsidized suppliers such 
as China's soda ash industry; however, it is very important that soda 
ash tariffs imposed by Japan and Vietnam are eliminated immediately in 
the TPP, and by Europe in the TTIP. Can you speak to the status of the 
industrial tariff negotiations in these trade negotiations?

    Answer. USTR is aiming for rapid elimination of tariffs on a broad 
range of industrial goods in the TPP and T-TIP negotiations, including 
soda ash, which will enhance market access to the European market, as 
well as three key Asia-Pacific markets--Japan, Malaysia, and Vietnam. 
In addition, in both TPP and T-TIP, we are seeking to include 
disciplines to ensure that state-owned enterprises compete fairly and 
do not cause harm to U.S. companies and workers as a result of 
subsidies or other advantages they receive from the governments that 
own them, which would address a significant global challenge U.S. soda 
ash exporters face.

    Question. A number of my colleagues touched on the status of 
agricultural trade in a number of areas but I am concerned specifically 
about U.S. lamb exports. What opportunities do you see in the Trans-
Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment 
Partnership (T-TIP) for U.S. lamb producers?

    Answer. While most TPP countries' tariffs on lamb meat are already 
zero, Vietnam maintains a 7 percent tariff, which we would expect to be 
eliminated under the TPP agreement. More broadly, the TPP region 
encompasses a number of countries characterized as having an expanding 
middle class base and rising consumer incomes, where we would expect a 
growing market in lamb meat. Under T-TIP we also aim to increase market 
access for U.S. lamb exports. For those countries, like EU Member 
States and Japan, that maintain SPS-based market access restrictions on 
U.S. lamb, USDA is continuing its work at the technical level to 
address and resolve these constraints. As such, we would expect to see 
new market opportunities emerge over the coming years for high-quality 
U.S. lamb.
                                 ______
                                 
                Questions Submitted by Hon. John Cornyn
    Question. Ambassador Froman, as you know, farmers and ranchers in 
Texas rely heavily on exports. However, an example of one question that 
I get from producers is this: ``It is great to have trade agreements 
but what is the United States doing to ensure that the parties to all 
of our agreements are playing by the rules that they agreed to''? We 
continue to see foreign governments use tariff and non-tariff barriers 
to restrict U.S. agriculture products.

    Can you tell us what you are doing to ensure that countries who 
sign trade agreements with the United States are living up to their 
commitments?

    Answer. President Obama has made trade enforcement a top priority 
for U.S. trade policy. USTR and USDA continuously monitor and work to 
resolve barriers to U.S. food and agricultural products through a 
variety of mechanisms, and where we cannot resolve issues, we use 
dispute settlement as needed to enforce U.S. rights. For example, USDA 
has staff posted around the world that work to resolve unwarranted 
trade barriers on a daily basis. USTR and USDA also work together to 
resolve barriers, such as opening Malaysia to U.S. pork last year, and 
getting Mexico to fully open its market to U.S. beef. We utilize the 
consultation mechanisms in bilateral agreements where we have them to 
find resolution to barriers, such as pet food exports to Panama. Where 
needed, we have taken dispute settlement cases in the World Trade 
Organization, such as against India on its prohibitions on poultry and 
against China on its antidumping duties on poultry. The Administration 
will continue to work to hold trading partners accountable for trade 
agreement obligations and vigorously enforce the rules-based trading 
system to stand up for American workers, families, farmers and 
businesses. As we seek to dismantle unwarranted foreign SPS barriers, 
we need to ensure that the United States maintains a rigorous science-
based approach to our own regulations.

    Question. For over ten years, U.S. beef has been out of the Chinese 
market over BSE concerns. Even though some U.S. beef may find its way 
to stores and restaurants in China, U.S. beef is officially banned in 
China. China has proven to be a great market for U.S. pork and poultry 
exports as well as beef exports from our competitors in Australia, New 
Zealand, and South America. In 2013 the United States received the 
safest declaration possible from the World Organization for Animal 
Health (OIE), that of ``negligible risk''. Thankfully, USDA and USTR 
have worked with Hong Kong and Mexico to lift remaining age-based 
restrictions on U.S. beef and exports have increased as a result (Hong 
Kong and Mexico were both $1 billion markets for U.S. beef exports in 
2014). Unfortunately, many countries in addition to China have age-
based restrictions on U.S. beef. For example, beef is only acceptable 
if the cow was slaughtered before it reaches 30 months in age.

    What is USTR doing to lift the remaining age-based restrictions in 
China, Japan, and Vietnam?

    Answer. Full market access globally for U.S. beef, consistent with 
international, science-based standards--including lifting of the 
remaining age-based restrictions on beef, is a high priority for the 
Administration. One of USTR's top priorities has been to reopen China's 
market in a manner that is based on science, consistent with 
international standards, and commercially viable. Despite high-level 
engagement last year, we were not able to come to agreement with China 
on the opening of its market due to persistent demands from China that 
were neither scientifically necessary, nor commercially practicable. We 
are working with USDA to consider next steps.

    In February 2013, Japan allowed imports of beef from cattle less 
than 30 months of age, compared to the previous limit of 20 months, 
among other steps. In 2014, the value of U.S. beef and beef product 
exports to Japan, the United States top export market on a value basis, 
approached $1.58 billion, up 14 percent from the previous year. Efforts 
to address Japan's remaining access constraints are ongoing.

    While Vietnam lifted a ban on U.S. pork, poultry, and beef offal 
last year, we continue to work with the Government of Vietnam to ensure 
effective and full implementation of that decision, as well as to 
achieve full market access for U.S. beef, consistent with international 
standards.

    Question. Last fall, USDA-APHIS solicited comments on a proposed 
rule that will allow the importation of fresh and frozen beef from 
Brazil. Many of the cattlemen in my home state of Texas have raised 
serious concerns over this proposed rule due to USDA's lack of 
transparency and thorough risk assessment and analysis, especially 
given Brazil's long history of foot-and-mouth disease. As you know, the 
beef industry is still recovering from one isolated BSE case in 2003 
that cost the industry billions in lost export opportunities.

    How long do you think it would take to recover lost market access, 
and do you have the resources to focus on regaining market access from 
a foot-and-mouth disease outbreak?

    Is it wise to risk the entire U.S. cattle herd over one rule that 
lacks transparency and a thorough risk analysis?

    Answer. USDA is responsible for the regulatory process for imports 
of beef from Brazil, consistent with U.S. law and science. USDA issued 
a proposed rule on December 23, 2013 and the public comment closed on 
April 22, 2014.
                                 ______
                                 
                 Questions Submitted by Hon. John Thune
    Question. Ambassador Froman, thank you for your leadership and 
high-level engagement with China regarding its process to approve new 
ag biotech products, which, as you will agree, is essential to both the 
health of innovative R&D in agriculture here at home and the nearly $17 
billion worth of U.S. grain that is shipped there each year.

    Thanks to your leadership, there have been some great outcomes that 
should materialize into long-term gains. However, I remain concerned 
about the short term. I understand there are now five new products in 
the final stage of China's review process. Under normal circumstances, 
these products would secure a final import approval in early 2015.

    Given what is at stake for America's farmers and the future of 
innovation in agriculture, is it your belief that China will pursue a 
science-based decision-making process and approve these products?

    Answer. Advancement in agricultural technology are critical to 
helping feed the world's growing population and reduce the impact of 
agriculture on the environment. USTR works closely with other U.S. 
government agencies, including the U.S. Departments of Agriculture and 
State, to ensure export markets are open to U.S. agricultural products. 
Central to this effort is a strategy to address trade disruptions 
resulting from differences globally in approval systems.

    We engaged China on this important issue at the December 2014 Joint 
Commission on Commerce and Trade (JCCT). Around these meetings, China 
approved three products that had faced considerable delays. We also 
agreed to a new bilateral dialogue with China to discuss innovation in 
agriculture. We continue to use opportunities like the JCCT and other 
meetings to press China to improve the timeliness and transparency of 
its biotech approvals process and make decisions based on science.

    Question. We have seen a disturbing trend in recent years whereby 
countries are ignoring international commitments and standards for 
patent issuance in a veiled attempt to support certain domestic 
industries and constituencies. These decisions are shortsighted and 
ultimately discourage innovation, investment, and job growth.

    What is your agency doing to enforce existing intellectual property 
commitments and deter countries from weakening such standards in their 
own IP regimes, whether that is in India, Canada, or other trading 
partners? Additionally, can you also speak to your agency's efforts to 
secure IP protections that mirror U.S. law through the Trans-Pacific 
Partnership trade agreement?

    Answer. One of our key priorities is to protect intellectual 
property rights around the world and to ensure effective enforcement of 
IP rights to maintain markets for the full range of job supporting 
exports of products and services embodying American creativity and 
innovation. We use every possible avenue to engage with countries to 
strengthen their IPR systems, including their patent systems.

    We are actively engaging India on how to create an ecosystem that 
supports innovation through strong intellectual property rights 
protection (IPR) and enforcement. USTR conducted a Special 301 Out-of-
Cycle Review of India's IPR environment, focused on the level of 
government engagement with the U.S. on IPR issues, and during that OCR, 
we were able to achieve--for the first time ever--the establishment of 
a joint U.S.-India annual high-level Intellectual Property (IP) Working 
Group based on the common recognition of the need to foster innovation 
in a manner that promotes economic growth and job creation. We also 
continue to work with India on the entire range of IPR concerns under 
the Trade Policy Forum, including through intensive, technical 
discussions on policies to provide adequate protection for trade 
secrets and patents. We are also working closely on efforts to increase 
information sharing and enforcement against copyright infringement that 
affects U.S. and Indian industries alike.

    As detailed in the 2014 Special 301 report, we are actively engaged 
with Canada on issues related to the patent utility standard, as well 
as in other areas, including copyright and border enforcement. We are 
closely monitoring developments, consulting with affected stakeholders, 
and pressing Canada to address our concerns. As the United States' 
largest bilateral trading partner, it is critical for Canada to promote 
innovation through strong intellectual property rights protection, 
which is essential to economic growth throughout North America.

    For the TPP, we seek to obtain strong standards of IPR protection 
and enforcement that are grounded in U.S. law, and that will stand 
alongside those of U.S. FTAs in the Asia Pacific region, foster 
regional integration, and support U.S. economic growth and the creation 
and retention of American jobs.

    Question. As the world's fourth most populous country, Indonesia is 
a huge potential market for American goods and services. I understand, 
though, that the Indonesian government has enacted onerous local 
content requirements for mobile telecommunications devices, likely in 
violation of WTO commitments, that will harm the American technology 
industry.

    What is your office doing to combat this and other protectionist 
measures that would deny American companies access to the Indonesian 
market?

    Answer. We have been concerned about the rise of localization 
requirements, such as domestic manufacturing and local content, in 
Indonesia over the last couple years, especially recent efforts by 
Indonesia to force the development of a domestic IT industry. We have 
been raising our concerns both bilaterally with Indonesia, as well as 
in multiple committees at the WTO. Several other WTO Members, including 
Japan and the EU, have expressed similar concerns. This issue will be a 
priority for us in our discussions with the new government in 
Indonesia.

    Question. As you know, there has been a protracted labor dispute 
between the Longshoremen's Union and the Pacific Maritime Association, 
which has resulted in severe port congestion that could impact the 
economy by up to $1 billion per day. While a federal mediator has 
joined the talks, there has been no resolution, and the situation 
continues to deteriorate.

    What else can the administration do to resolve this issue as soon 
as possible?

    Answer. The Administration is engaged and we have urged both sides 
to resolve this dispute quickly at the bargaining table. Successful 
resolution of these negotiations is critical to both the ports--the 
employers, workers and communities--and our exports, including 
agricultural products, which depend on the smooth functioning of the 
ports to reach their markets. As you noted, the two parties in this 
labor negotiation, the International Longshore and Warehouse Union 
(ILWU) and the Pacific Maritime Association (PMA), have jointly 
requested federal mediation, and the Federal Mediation and Conciliation 
Service (FMCS) has begun mediation to assist the two parties to secure 
an agreement. In addition, out of concern for the economic consequences 
of further delay, the President directed Secretary of Labor Tom Perez 
to travel to California to meet with the parties to urge them to 
resolve their dispute quickly at the bargaining table. Secretary Perez 
arrived in San Francisco on February 16 and will keep the President 
fully updated on his meetings with the parties.

    Question. The U.S. film and television industry is a network of 
108,000 small businesses, 85 percent of which employ fewer than 10 
people. With a trade surplus of $12.2 billion in 2011, or 6 percent of 
the total U.S. private sector exports in services, I am concerned by 
the European Commission's effort to remove this sector from the scope 
of the T-TIP services negotiations.

    What are you doing to ensure that this sector is included within 
the scope of the T-TIP services and ecommerce negotiations?

    Answer. The EU and several of its Member States support policies 
designed to promote national content in television, film, and radio 
programming. We are confident that the consumer appetite for U.S. 
content is sufficient to support both U.S. and EU industries, and that 
we can find ways in T-TIP to accommodate EU sensitivities without 
unnecessarily restricting trade in a sector in which both EU and U.S. 
firms are globally competitive.
                                 ______
                                 
                Questions Submitted by Hon. Richard Burr
    Question. In 2009, the U.S. and EU reached the U.S./EU WTO 
Agreement on Bananas, under which the EU committed not to discriminate 
against U.S. banana service suppliers on licensing measures. Since 
then, it is my understanding that the country of Italy has levied 
sizable discriminatory penalties against U.S. banana service suppliers 
for engaging in licensing arrangements that were widespread and 
permitted under EU law. Italy's practices raise important questions 
about the EU's willingness to honor its trade agreements.

    Although USTR has protested these Italian measures in Brussels for 
nearly two years, the European Commission has not corrected the 
problem. What further enforcement actions, including consultations 
under the 2009 Agreement and other recourse, does USTR intend to take 
in the short term to uphold the Agreement and WTO ruling and remedy the 
situation?

    Answer. The United States in 2010 signed a bilateral agreement on 
bananas with the EU, which entered into force on January 24, 2013. That 
agreement was in turn related to a banana tariff-cutting agreement the 
EU concluded at the same time with a number of Latin American banana 
exporting countries. Both agreements were designed to bring an end to 
the longstanding bananas-related disputes then pending in the WTO. On 
November 8, 2012, the EU and Latin American countries announced they 
had settled all bananas-related disputes and claims pending between 
them.

    We have been in frequent contact over recent months with 
representatives of Chiquita, as apparently the sole affected U.S. 
banana service supplier, regarding the company's concerns about actions 
taken by Italian customs authorities, and related decisions taken by 
Italian courts, challenging Chiquita's use of certain EU banana import 
licenses under pre-2006 EU banana import regulations.

    Because Chiquita is insisting that its use of import licenses 
during the period in question was consistent with EU governing 
regulations in effect at the time, we have been pressing the European 
Commission to clarify its position on this matter, and will continue to 
do so.

    Before taking further action to settle the U.S.-EU dispute 
settlement proceeding on bananas, the United States will consider 
whether the EU has fulfilled the undertakings to which it committed 
itself under the U.S.-EU bilateral agreement.

    Question. North Carolina is home to some of the most groundbreaking 
research and development that is taking place anywhere in the world. 
I'm proud of this important work being done in North Carolina and it is 
important that our policies respect and reflect the hard work and many 
years that go into developing these life-saving products.

    It's critically important that robust intellectual property 
protections for biopharmaceuticals in general, and biologic drugs 
specifically, be included in trade agreements like the Trans-Pacific 
Partnership. Biologics have already given us treatments for cancer and 
asthma, and could help us uncover the secrets of some of our most 
debilitating diseases. The current standard of 12 years regulatory data 
protection for biologics, in addition to being U.S. law, is supported 
by a wide bipartisan consensus and is vital for ensuring R and D 
dollars continue to flow toward development of next-generation 
medicines like biologics.

    Given the important role strong intellectual property protections 
play in supporting the research and development of these life-saving 
medicines, what is being done to safeguard IP for biologics in these 
trade negotiations?

    Answer. Biologic drugs offer great potential for new treatments and 
cures that will benefit all of humankind, and this sector also is one 
in which U.S. companies are leading global innovators and competitors. 
As is our traditional practice, the U.S. approach to trade negotiations 
has been to base U.S. proposals on existing U.S. law, where the current 
standard is 12 years. In the TPP negotiations, views vary on the best 
term of data protection for biologics, and standards also vary across 
the TPP region. Some TPP countries currently have no data protection 
for biologic drugs, while some have five years and others have eight. 
We have been engaging intensively with TPP counterparts to try to 
resolve our differences on this issue.
                                 ______
                                 
                Questions Submitted by Hon. Rob Portman
    Question. In December 2013, I, along with a number of my 
colleagues, wrote you about our concerns for the glassware industry in 
these negotiations. As you may know, Toledo is the ``Glass City''--
anchored by hundreds of workers at Libbey Glass for over 125 years. 
Another Ohio company, The Anchor Hocking Co. was founded in 1905, and 
continues its work in Lancaster. The glass making sector has been 
treated as import sensitive for more than 30 years, and now is not the 
time to change that designation for workers in the Glass City and 
beyond. I understand there are efforts to complete the TPP negotiations 
later this year, can you reassure these Ohio workers that your 
negotiators will continue to treat this sector as import sensitive and 
ensure that that designation is fully reflected in the treatment it 
receives on rules of origin and on potential tariff phase-outs?

    Answer. We continue to treat glassware as an import-sensitive 
sector in TPP, and as such, are seeking a long tariff phase-out and a 
rule of origin that would require that glassware products be entirely 
formed, finished, and packaged in TPP countries.

    Question. I would like to reiterate the importance of the TPP 
Transparency and Procedural Fairness (TPF) provision to medical device 
companies in the state of Ohio and around the country, noting the 
provision has the potential to not only support trade and investment in 
medical devices between the U.S. and the TPP countries but it will also 
set an important precedent in future trade agreements for a key U.S. 
industry. I would also like to thank you for your outstanding support 
to date on securing this TPF provision in the TPP agreement. The 
medical device industry in Ohio is concerned about Japan's 
intransigence on the TPF provision as it pertains to medical device 
reimbursement policies. Specifically, the industry is concerned about 
concessions made to date on the TPF provision (i.e., the positive 
coverage list and no commercial dispute settlement). I would like to 
stress the importance of making sure the TPF provision is included 
without any further dilution. Could you please elaborate on how talks 
are going concerning the TPF provision in the TPP agreement?

    Answer. Transparency and good governance are key priorities for the 
Obama Administration's trade policy, and we are negotiating in the TPP 
specific transparency and due process provisions. These elements are 
already an integral part of the U.S. system, and through the TPP, we 
are seeking to promote a similar level of transparency throughout the 
Asia-Pacific region. We are engaging actively with all TPP partners, 
including Japan, to secure a robust outcome for these important 
provisions.

    Question. I understand the Administration has said throughout the 
Trans-Pacific Partnership talks that it is negotiating as if the 2002 
TPA law were still in place. Given that, the TPA objective for 
Intellectual Property is to obtain a standard of protection similar to 
that found in U.S. law. Current U.S. law regarding data-protection for 
biologics is clearly set at 12 years. So--consistent with TPA and 
current U.S. law--my firm hope is that the Administration and its 
trading partners will agree to 12 years of data protection for 
biologics as a part of these negotiations. Can you assure us that this 
is still your intention?

    Answer. Biologic drugs offer great potential for new treatments and 
cures that will benefit all of humankind, and this sector also is one 
in which U.S. companies are leading global innovators and competitors. 
As is our traditional practice, the U.S. approach to trade negotiations 
has been to base U.S. proposals on existing U.S. law, where the current 
standard is 12 years. In the TPP negotiations, views vary on the best 
term of data protection for biologics, and standards also vary across 
the TPP region. Some TPP countries currently have no data protection 
for biologic drugs, while some have five years and others have eight. 
We have been engaging intensively with TPP counterparts to try to 
resolve our differences on this issue.

    Question. I understand that a factor in the TPP negotiations for 
USTR is to consider the implications of an agreement on the Western 
Hemisphere textile and apparel supply chain. The Nicaragua Tariff 
Preference Level (TPL), which expired at the end of last year, has 
enabled companies to produce uniforms and certain other types of 
garments competitively in the CAFTA-DR region. At the same time, the 
special provision on woven trousers, which is part of the TPL, promotes 
the use of U.S. made fabrics. I think the extension of the Nicaragua 
TPL is even more important with, hopefully, the conclusion of the TPP 
negotiations on the horizon. This issue is vital to Cintas, which is 
headquartered in Ohio with over 3,000 workers in our state. Will USTR 
work with Congress to extend this important program and strengthen 
global supply chains?

    Answer. The Administration has not yet taken a position on 
extending the Nicaragua one-for-one program. However, we will continue 
to consult closely with Congress and the various stakeholders on this 
important issue.

    Question. I believe reaching agreement on the Information 
Technology Agreement is very important for American manufacturers and 
entrepreneurs. How is the U.S. helping to reach a final deal in 2015?

    Answer. Expanding the Information Technology Agreement's (ITA) 
product coverage to include new, technologically advanced products is a 
key U.S. trade policy priority, and one of the key initiatives we are 
pushing at the World Trade Organization (WTO). The benefits of an 
expanded ITA would be significant, and it is a result that could be 
achieved in the very near term if China and Korea are willing to work 
towards a bilateral compromise.

    We were disappointed that we were not able to reach a conclusion of 
the ITA expansion negotiations in Geneva last December, especially in 
light of the major breakthrough with China at APEC that allowed the 
multilateral talks in Geneva to resume. But we will continue to work 
closely with key players, and with WTO Director General Azevedo, in an 
attempt to break the current impasse, and conclude this important 
agreement as soon as possible. An expanded ITA would be the first major 
tariff-cutting deal at the WTO in 17 years and help boost American 
exports to growing markets around the world. When completed, the ITA 
expansion is estimated to cover $1 trillion in trade, adding $190 
billion to the global economy and supporting tens of thousands of good-
paying U.S. manufacturing and technology jobs.

    Question. I understand the U.S. is negotiating an environmental 
goods agreement that impacts a number of sectors, including glass 
composite manufacturers like Owens Corning, headquartered in Toledo, 
Ohio. This sector is very interested in the ongoing environmental goods 
agreement negotiations. Will the US support the inclusion of categories 
of glass fiber without consideration given to the application of these 
glass fiber products?

    Answer. The Administration is working to negotiate an environmental 
goods agreement (EGA) under the auspices of the WTO that advances our 
national priorities. We are currently in the process of evaluating a 
wide range of products for potential inclusion in the EGA. We will 
continue to consult closely with interested stakeholders as this 
important negotiation continues in order to ensure a strong outcome for 
the United States.

    Question. Mr. Ambassador, in remarks last June, you highlighted 
data localization requirements as a significant problem for U.S. 
services companies working to expand into foreign markets and compete 
globally. Specifically, you stated:

    ``Restrictions on the flow of data across borders or requirements 
that companies duplicate their IT infrastructure in a country in order 
to serve that market makes it harder for companies of all sizes, based 
in all countries, to compete, and for buyers of all types to connect.''

    I support your efforts to ensure that such barriers are addressed 
in ongoing trade negotiations, including the TPP. However, I am 
concerned that TPP won't fully address these barriers for U.S. 
financial services companies including insurers, reinsurers, banks, and 
electronic payments services providers. Specifically, I am concerned 
that the TPP won't explicitly prohibit our trading partners from 
requiring U.S. financial services firms to set up local data centers as 
a condition of doing business in their markets. Will your office work 
to ensure that this is not repeated in other trade negotiations, such 
as TTIP and TiSA?

    Answer. The significant increase in localization barriers to trade 
around the world is of serious concern to the Obama Administration. We 
are advancing efforts to reduce and prevent the proliferation of 
localization barriers to trade, including restrictions on data flows 
and requirements to establish infrastructure domestically, through the 
full range of bilateral, multilateral, and regional forums, including 
the WTO, APEC, and the OECD. We have also created for the first time 
ever a specific group in the T-TIP negotiations to develop concrete 
ways that the United States and the European Union can cooperate to 
address these issues around the world.

    Question. I would like to express my concerns with a recent WTO 
Appellate Body ruling that found a provision of U.S. trade remedy law 
which requires the International Trade Commission to assess the effects 
of subsidized imports with the effects of dumped, non-subsidized 
imports for purposes of its material injury analysis (i.e., cross 
cumulation), inconsistent with the United States' WTO obligations. 
Given the serious implications this ruling could have on domestic 
industries who rely on the trade remedy laws to counter foreign 
competitors' unfair trade practices, can you commit to us that you will 
brief this committee on our options for compliance should the U.S. 
Government decide to comply with this ruling and work with us to ensure 
we do not undermine the effectiveness of our trade remedy laws?

    Answer. The findings of the WTO Appellate Body were disappointing. 
USTR has consulted with the Committee regarding this and other issues 
raised in the dispute on a number of occasions. It is the 
responsibility of the International Trade Commission (ITC) to determine 
whether and how to comply with the WTO findings regarding cross-
cumulation. We welcome the Committee's views on this issue, and will 
continue to consult with both the ITC and USTR's committees of 
jurisdiction, as well as interested Members, regarding compliance with 
the findings in this dispute.

    Question. Ambassador Froman, what can you tell me about the current 
situation with the West Coast ports and what can the Administration do 
to resolve this issue as soon as possible?

    Answer. The Administration is engaged and we have urged both sides 
to resolve this dispute quickly at the bargaining table. Successful 
resolution of these negotiations is critical to both the ports--the 
employers, workers and communities--and our exports, including 
agricultural products, which depend on the smooth functioning of the 
ports to reach their markets. As you noted, the two parties in this 
labor negotiation, the International Longshore and Warehouse Union 
(ILWU) and the Pacific Maritime Association (PMA), have jointly 
requested federal mediation, and the Federal Mediation and Conciliation 
Service (FMCS) has begun mediation to assist the two parties to secure 
an agreement. In addition, out of concern for the economic consequences 
of further delay, the President directed Secretary of Labor Tom Perez 
to travel to California to meet with the parties to urge them to 
resolve their dispute quickly at the bargaining table. Secretary Perez 
arrived in San Francisco on February 16 and will keep the President 
fully updated on his meetings with the parties.

    Question. As you know, a Grain Oriented Electrical Steel, or GOES, 
dispute with China has been ongoing since 2010 which has a direct 
impact on Ohio workers. China's non-compliance is costing American jobs 
and hurting U.S. exports. What steps has the Administration taken to 
persuade China to comply with its WTO obligations including the removal 
of these duties? Did the United States raise this issue at the JCCT in 
December? If not, why not? If so, can you share any of the 
conversation? Further, the Secretaries of Commerce and Energy are 
planning an upcoming trade mission to China on energy efficient 
technology. Will you recommend this issue as a topic of discussion with 
Chinese officials during that trip?

    Answer. In November 2012, the WTO adopted the panel and Appellate 
Body reports in the GOES dispute. In July 2013, China issued its 
compliance measure, which continued the imposition of duties on GOES. 
We consider that China has not addressed the inconsistencies found by 
the WTO in the original GOES dispute. As a result, the United States 
initiated compliance proceedings against China in January 2014. This is 
the first-ever compliance proceeding initiated against China. A meeting 
with the compliance panel took place in October 2014. The compliance 
panel is expected to issue its final public report in the first half of 
this year. Because we are pressing forward on the GOES matter in an 
active dispute at the WTO, we did not raise this matter at the JCCT in 
December 2014. We will determine on next steps once we receive the 
compliance panel's decision.

    Question. The U.S. Department of Defense and U.S. Department of 
Energy have identified several critical materials whose availability is 
restricted but which provide essential functionality for defense 
systems and renewable energy production, respectively. Likewise, the 
European Commission has identified 20 substances it considers to be in 
short supply and essential for the European economy. The metal 
beryllium is an example, which DoD has designated as the only critical 
and strategic material for national security, and the EC has recognized 
as critical. Our European trading partners are proposing workplace 
exposure and REACH (Registration, Evaluation, Authorization and 
Restriction of Chemicals) regulations that will restrict the use of 
beryllium and other critical materials, essentially creating non-tariff 
trade barriers for U.S. exports to Europe. It is my understanding 
support for either of these restrictive regulatory policies is not 
uniform within EU Member States or within all branches of the EU 
federal government. Have you or your office objected to these trade 
restrictions on U.S. critical materials? What is USTR doing on a 
bilateral basis to oppose these proposed regulations before they become 
legal requirements?

    Answer. USTR is carefully examining this issue and is engaged with 
other U.S. agencies and stakeholders. Generally, the U.S. Government 
has urged the Commission and individual Member States to ensure 
transparency in the development of regulations. We have also stressed 
that regulation should be based on science and that all parties, 
including U.S. exporters, should have the opportunity to provide 
meaningful input on options under consideration.

    Question. Ambassador Froman, as you move forward with trade 
negotiations, you know that Congress will be watching the extent to 
which the Administration is enforcing existing trade policies and 
rules. However, in the sanctions area, the Belarus Government, led by 
President Lukashenko, one of the most reviled leaders of our time, 
appears to be evading U.S. sanctions without sufficient enforcement by 
the Administration. Lukashenko has engaged in a corporate maneuver to 
split off Belaruskali, the state-owned potash company, from a 
sanctioned entity, permitting them to argue Belaruskali is no longer 
subject to the sanctions. If Lukashenko succeeds, this would put 
Lukashenko in the driver's seat in deciding the force of U.S. 
sanctions. Those charged with enforcing U.S. trade and sanctions policy 
should not permit that to happen. Will the Administration conduct an 
investigation of this side-stepping of U.S. sanctions and ensure that 
they are rigorously enforced?

    Answer. Enforcing U.S. sanctions is a key objective of the 
Administration. However, U.S. sanctions, such as those imposed against 
Belarus, are administered by the Office of Foreign Asset Control (OFAC) 
of the Department of Treasury and the U.S. Department of the Justice. I 
will share these concerns with these agencies, and work with them to 
ensure that our sanctions are enforced.
                                 ______
                                 
             Questions Submitted by Hon. Patrick J. Toomey
    Question. U.S. law provides 12 years of data protection for 
biologic medicines. The biopharmaceutical research industry maintains 
that this exact amount of time is necessary to recoup the costly R&D 
investments that are made to bring new treatments to market. I am 
pleased that you working to ensure that this high level of intellectual 
property protection is included in the final Trans Pacific Partnership 
(TPP) agreement, but I understand you are facing some opposition from 
our negotiating partners. What are you and your staff doing to ensure 
that other nations agree to implement the full 12 years of data 
protection for biologics; and that nothing in this agreement threatens 
the future ability of American research firms to develop new lifesaving 
treatments?

    Answer. Biologic drugs offer great potential for new treatments and 
cures that will benefit all of humankind, and this sector also is one 
in which U.S. companies are leading global innovators and competitors. 
As is our traditional practice, the U.S. approach to trade negotiations 
has been to base U.S. proposals on existing U.S. law, where the current 
standard is 12 years. In the TPP negotiations, views vary on the best 
term of data protection for biologics, and standards also vary across 
the TPP region. Some TPP countries currently have no data protection 
for biologic drugs, while some have five years and others have eight. 
We have been engaging intensively with TPP counterparts to try to 
resolve our differences on this issue.

    Question. The dairy industry is very important to my state and the 
PA Milk Marketing Board estimates that dairy related activity supports 
over 60,000 direct and indirect jobs in Pennsylvania. To date, the 
dairy industry has been generally supportive of finalizing TPP 
negotiations and very excited about the possibility of selling their 
products in new markets. That said, I am concerned that some of our 
negotiating partners--namely Canada and Japan--may refuse to open their 
markets to U.S. dairy products. Can you assure me that if TPP is 
finalized, it will offer new and meaningful market access opportunities 
for the U.S. dairy industry in these key markets?

    Answer. We are working to build on the recent strong export 
performance of our agricultural sector and provide new and expanded 
opportunities for U.S. farm products, including dairy products in all 
of the TPP markets. This will be achieved through tariff elimination, 
deep tariff reductions, and new preferential tariff rate quotas. 
Gaining new and commercially meaningful dairy market access in Canada 
and Japan are top priorities of the TPP agricultural market access 
negotiations, as it gains valuable new market access for U.S. dairy 
products exported to Vietnam and Malaysia. We continue to work closely 
with U.S. stakeholders to ensure we reflect their priorities and 
concerns.

    Question. On December 19, 2014, the Commerce Department signed 
suspension agreements with Mexico to restrain U.S. imports of Mexican 
sugar. On net, these agreements will negatively impact our economy by 
limiting the supply of an essential input for U.S. food manufacturers, 
thereby reducing their global competitiveness. Do you recognize that 
policies prohibiting foreign sugar from entering the United States are 
detrimental to domestic sugar using industries and place the 600,000 
jobs they provide at risk? Will you seek provisions in ongoing trade 
negotiations that ensure American food manufacturers have adequate 
access to foreign sugar, such as that produced in Australia and other 
nations?

    Answer. Several countries in the TPP are seeking access into the 
U.S. market for sugar and sugar containing products. Our goal in these 
and all trade negotiations is to achieve a comprehensive market access 
package that reduces barriers and opens markets for U.S. food and 
agricultural exports. We also are guided by the laws passed by the U.S. 
Congress, and will seek to negotiate TPP in a way that does not 
undermine the U.S. sugar program as enacted by the U.S. Congress.

    --Question. Mack Trucks employs over 1,800 of my constituents at 
their Macungie, Pennsylvania plant where they build heavy-duty work 
trucks. Exports of work trucks to Colombia face a high tariff--
currently 9 percent--that decreases by only 1.5 percent every year 
under the U.S.-Colombia Trade Promotion Agreement. Exports of competing 
trucks from Mexico, however, enter Colombia duty free, placing American 
made trucks at a competitive disadvantage. I first highlighted this 
issue three years ago in a bipartisan, bicameral letter that urged USTR 
to negotiate with the Colombians to accelerate the reduction of the 
tariff on U.S. work trucks. I want to thank you and your staff at USTR 
for commencing that process and continuing to act with urgency on this 
matter. Will you continue to task your staff with getting this done as 
soon as possible? How do you see the process playing out?

    Answer. As a result of a USTR notice in the Federal Register, a 
number of U.S. stakeholders proposed products for tariff acceleration 
under Article 2.3 of the U.S.-Colombia Trade Promotion Agreement, 
including certain tariff lines for heavy trucks. Based on responses 
received, we have identified for Colombia products for possible tariff 
acceleration and are encouraging Colombia to inform us about any 
products for which Colombia wishes to seek tariff acceleration in order 
to develop a balanced package. Once a balanced package of products is 
jointly agreed upon, both sides would need to carry out their 
respective domestic procedures before the new tariff staging would 
enter into force. In the case of the United States, the domestic 
process follows statutory requirements and includes, among other 
things, advice from the ITC and advisory committees, a period of 
consultation and layover, and publication in a Presidential 
Proclamation. Engagement with Colombia on this issue slowed during 
Colombia's election season in 2014; however, we are working with 
Colombia to move this process forward as soon as possible.

    Question. As you know, the Colombian government has enacted an 
anticompetitive regulation that requires Colombian businesses to scrap 
old commercial vehicles before they can purchase newly constructed 
ones. This policy is a blatant violation of Colombia's WTO commitments 
and your office estimates it has prevented the sale of three thousand 
American made trucks in Colombia. I understand and appreciate that USTR 
has been working to resolve this issue for nearly two years. What 
progress can you report thus far and what additional actions will you 
take to settle this matter?

    Answer. We have been pressing the Government of Colombia to address 
this issue. The United States has sought to address this issue in 
multiple fora and at multiple levels, including in the negotiations on 
Colombia's membership in the OECD. Both USTR and other U.S. Government 
agencies have voiced strong concerns on this issue with senior 
Colombian officials. Colombia took some steps to improve the situation 
of the existing inventory of trucks in Colombia and has recently taken 
some additional actions intended to facilitate compliance with the 
scrappage program. We are continuing to press for a comprehensive 
solution that will restore market access for U.S. exports of trucks as 
soon as possible.
                                 ______
                                 
                Questions Submitted by Hon. Daniel Coats
    Question. What is USTR doing to ensure that provisions are included 
in the TPP that provide for transparency and procedural fairness in the 
process by which reimbursement decisions are made for medical devices 
and pharmaceuticals? What progress has been made with Japan, in 
particular, on this important issue?

    Answer. Transparency and good governance are key priorities for the 
Obama Administration's trade policy, and we are negotiating in the TPP 
specific transparency and due process provisions. These elements are 
already an integral part of the U.S. system, and through the TPP, we 
are seeking to promote a similar level of transparency throughout the 
Asia-Pacific region. We are engaging actively with all TPP partners, 
including Japan, to secure a robust outcome for these important 
provisions.

    Question. What is USTR doing to ensure the TPP provides for 12 
years of regulatory data protection for biologics? What is the status 
of the TPP negotiations with regard to this important issue?

    Answer. Biologic drugs offer great potential for new treatments and 
cures that will benefit all of humankind, and this sector also is one 
in which U.S. companies are leading global innovators and competitors. 
As is our traditional practice, the U.S. approach to trade negotiations 
has been to base U.S. proposals on existing U.S. law, where the current 
standard is 12 years. In the TPP negotiations, views vary on the best 
term of data protection for biologics, and standards also vary across 
the TPP region. Some TPP countries currently have no data protection 
for biologic drugs, while some have five years and others have eight. 
We have been engaging intensively with TPP counterparts to try to 
resolve our differences on this issue.

    Question. What is USTR doing to address Canada's standards for 
patent utility to ensure that pharmaceuticals and medical devices will 
be protected under the TPP? What is the status of the patent utility 
negotiations with Canada?

    Answer. As detailed in the 2014 Special 301 report, we are actively 
engaging Canada on intellectual property issues. We are closely 
monitoring developments, consulting with affected stakeholders, and 
pressing Canada to address our concerns. As the United States' largest 
trading partner, it is critical for Canada to promote innovation 
through strong intellectual property rights protection, which is 
essential to economic growth throughout North America. With respect to 
the TPP, we are seeking to obtain strong standards of IPR protection 
and enforcement that will stand alongside those of other U.S. FTAs in 
the Asia-Pacific region.

    Question. What is USTR doing to address the growing global 
subsidization of steel and its impact on domestic U.S. producers? What 
is USTR doing on this issue in the context of the TPP?

    Answer. The Administration is committed to strong enforcement of 
U.S. trade remedy laws to ensure that U.S. industry can effectively 
address subsidized injurious imports. Using WTO dispute settlement, 
USTR has vigorously defended U.S. trade remedy laws and enforced WTO 
rules on practices that provide unfair advantages to foreign steel 
producers, including prohibited export subsidies programs, export 
restraints on raw materials, and misuse of anti-dumping and 
countervailing duties against U.S. exporters. USTR is also actively 
engaged with other countries on steel trade and policy issues at the 
OECD Steel Committee. The OECD provides helpful statistical and 
analytical work on steel capacity and trade, but also provides a venue 
for the United States and other like-minded countries to raise subsidy 
concerns. In June 2014, the United States was joined by the Governments 
of Canada and Mexico in a joint statement urging other governments to 
refrain from subsidies and other policies that can contribute to global 
excess steelmaking capacity.

    USTR's International Trade Enforcement Center has also devoted 
significant resources to identifying steel subsidy programs in China. 
These efforts resulted in the counter notification to the WTO of over a 
dozen steel Chinese subsidy programs. We remain committed to working 
with industry to identify trade-distorting subsidies in the global 
steel industry and address them wherever possible. On February 11, the 
Administration launched a new WTO case on prohibited export subsidies 
that the Chinese are providing to a variety of industrial sectors, 
including textiles, apparel and footwear, advanced materials and 
metals, light industry, specialty chemicals, medical products, hardware 
and building materials, and agriculture.

    The steel industry in a number of developing economies is dominated 
by State-owned and State-supported enterprises. While subsidies rules 
are generally governed by the WTO, the TPP negotiations provide us with 
a unique opportunity to lay down rules to ensure that State-owned 
enterprises compete fairly with private companies, and do not put U.S. 
exporters, workers, and investors at a disadvantage.

    Question. What is USTR doing to engage with China on its subsidies 
related to steel?

    Answer. The Administration is engaging with China on multiple 
fronts in an effort to address the subsidies that China provides to its 
steel sector. The Administration has made sure to include excess 
capacity as a key part of its engagement with China. This past year, at 
the U.S.-China Strategic & Economic Dialogue (S&ED) meeting in July 
2014, the Administration secured China's agreement to ``establish 
mechanisms that strictly prevent the expansion of crude steelmaking 
capacity and that are designed to achieve, over the next five years, 
major progress in addressing excess production capacity in the steel 
sector'' in the context of China's ``efforts to rein in excess 
production capacity in key manufacturing sectors and to foster a 
business environment in which the market can play a decisive role in 
allocating resources.'' In addition, at the December 2014 meeting of 
the U.S.-China Joint Commission on Commerce and Trade (JCCT), the 
Administration held a candid, high-level strategic dialogue with China 
on excess capacity, including steel.

    At the same time, the Administration is committed to strong 
enforcement of U.S. trade remedy laws. Indeed, last year, the Commerce 
Department initiated a total of 52 antidumping (AD) and countervailing 
duty (CVD) investigations involving products from numerous countries, 
of which 33 were steel-related investigations. Through WTO dispute 
settlement, the Administration also has been successfully challenging 
Chinese government practices that have provided unfair advantages to 
the Chinese steel industry, including not only prohibited export 
subsidies programs, but also export restraints on raw materials and the 
misuse of AD and CVD investigations. The United States won a WTO 
dispute on China's export quotas and export duties on tungsten and 
molybdenum, two important steel inputs. And we brought the first WTO 
challenge to a Chinese compliance action addressing duties that China 
imposed on U.S. grain-oriented electrical steel. USTR has devoted 
significant resources to identifying steel subsidy programs in China. 
Recently, these efforts resulted in the counter notification to the WTO 
of over a dozen Chinese subsidy programs benefiting the steel sector.
                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
    Question. Within the 2011 USTR Green Paper on Conservation and the 
Trans-Pacific Partnership, you outlined a proposed conservation 
framework to address trade in illegally harvested or traded natural 
resource products, including timber, wildlife, and fish. This is an 
area of serious concern in the Asia-Pacific region. For this reason, 
with respect to conservation, the words on paper in the trade agreement 
must translate into meaningful action on the ground. If a deal is 
concluded, with respect to conservation, what tangible improvements do 
you expect to see in countries like Japan, Vietnam and Malaysia?

    Answer. The United States has put forward ambitious proposals in 
TPP to include provisions that would address some of the region's most 
urgent environmental challenges, including wildlife trafficking, 
illegal logging and fishing, and harmful fisheries subsidies. Once 
concluded, the TPP environment chapter will provide us with trail-
blazing, first-ever tools to effect on-the-ground change in places like 
Japan, Vietnam, and Malaysia, including by spurring environmental 
reforms, and providing for enhanced cooperation and enforcement 
efforts.

    Question. In recent trade agreements, the United States has 
required trading partners to commit to adopt and maintain laws 
implementing core labor standards such as freedom of association and 
the right to collective bargaining, and to effectively enforce their 
labor laws. Yet several countries participating in the Trans-Pacific 
Partnership negotiation, such as Vietnam, do not currently adhere to 
these important standards, and many question whether they will follow 
through on commitments once made. Indeed, serious labor concerns remain 
in countries that made labor commitments in connection with previous 
trade agreements, including Colombia and Mexico. How do you intend to 
ensure that TPP partners live up to their labor obligations if an 
agreement is reached?

    Answer. TPP will provide an important tool for ensuring protection 
of worker rights in Vietnam and other TPP parties. We are working 
closely with Vietnam and other TPP parties to ensure that they are 
prepared to live up to the high standard, enforceable commitments of a 
final agreement. Vietnam's inclusion in the TPP negotiations presents 
an unprecedented opportunity to make historic progress on labor rights 
and working conditions. Under the TPP, Vietnam would be expected to 
undertake significant reforms, particularly in the area of freedom of 
association, but also concerning forced labor, child labor, and 
employment discrimination. Officials from USTR and the Department of 
Labor have engaged closely with Vietnam to discuss needed reforms and 
will closely monitor Vietnam's continued implementation of these 
reforms, including the ability of workers to exercise freedom of 
association, after the agreement is in place.

    Question. In the town hall meetings I have held throughout Oregon, 
many citizens have expressed concern about the impact of investor-state 
dispute settlement on the ability of the U.S. government to adopt 
regulations that protect Americans' health and safety. Many are worried 
that TPP will simply lead to more corporations challenging U.S. laws, 
and that this will exacerbate problems dating to NAFTA. Given all of 
the concerns expressed to date, why is the United States Trade 
Representative pursuing investor-state dispute settlement procedures in 
TPP? If a final TPP agreement contains these procedures, how will it be 
any different from NAFTA?

    Answer. Ensuring that U.S. investors operating abroad receive fair, 
transparent, and non-discriminatory treatment--the same kind of 
treatment foreign investors receive in the United States under U.S. 
law--is an important component of our trade and investment policy. In 
our trade agreements, we advance this objective through rules 
establishing a level playing field and basic rule of law protections 
for our investors, and through procedures for neutral arbitration of 
investment disputes. We are seeking in TPP to establish meaningful 
investor-state dispute settlement (ISDS) procedures that are in keeping 
with the goals of fair, expeditious, and transparent dispute 
resolution. As in the U.S. model bilateral investment treaty, our 
approach in these negotiations is to seek a high level of protection 
for our investors while also ensuring that legitimate governmental 
interests in regulating in the public interest are fully protected. 
Through these negotiations, we seek to raise the standards for ISDS, 
including by adding important procedural safeguards, such as provisions 
on expedited review of potentially frivolous claims, transparency in 
investor-state proceedings, and participation of civil society 
organizations and other members of the public in investor-state 
proceedings. While the United States has never lost a case under NAFTA, 
the TPP investment rules will include significantly stronger safeguards 
than in NAFTA, including clearer definitions of key legal rules (e.g., 
incorporation of key U.S. Supreme Court criteria on expropriation) and 
stronger procedural safeguards, such as stronger transparency 
provisions and rules on expedited review and dismissal of claims.

    Question. Many citizens in my town hall meetings in Oregon are 
worried that obligations in the TPP will make the drugs they buy more 
expensive by delaying the marketing of generic drugs, and that other 
requirements being considered could hurt Medicare and Medicaid. Will 
you commit to ensure that any TPP agreement does not contain provisions 
that increase drug prices for ordinary Americans or require changes to 
U.S. health programs such as Medicare and Medicaid?

    Answer. Access to healthcare, strengthening the U.S. health system, 
and safeguarding programs such as Medicare and Medicaid are key 
priorities for the Obama administration. U.S. TPP intellectual property 
(IP) and pharmaceutical reimbursement proposals will not require any 
changes to U.S. law relating to IP or pharmaceuticals, including the 
legal framework that has fostered a marketplace in which 8 out of 10 
prescriptions are filled with generic pharmaceuticals, resulting in 
billions of dollars in savings to U.S. consumers annually. Nor will 
these proposals undermine the ability of the U.S. Government to set 
healthcare expenditure priorities or negotiate or manage pharmaceutical 
drug prices.

    Every U.S. trade agreement negotiated in the past 15 years has 
contained intellectual property provisions relating to pharmaceuticals. 
Yet, the proportion of generic drugs sold in the United States has 
nearly doubled from 43 percent of all drugs sold in 1996 to at least 80 
percent of all drugs sold today. As stated in the ``U.S. Objectives'' 
for the TPP, the U.S. Government is seeking, ``pharmaceutical IP 
provisions that promote innovation and the development of new, life-
saving medicines, create opportunities for robust generic drug 
competition, and ensure affordable access to medicines, taking into 
account levels of development among the TPP countries and their 
existing laws and international commitments.''

    Question. The open, global Internet is transforming the way people 
express themselves, share ideas, and engage in commerce. Non-
discrimination is a pillar of an open Internet just as it is to 
international rules. What do you expect to see in a final TPP agreement 
that promotes an open, global Internet that facilitates speech, 
discourse, and commerce? Will the U.S. agree to any proposal that 
constrains the U.S. in ensuring net neutrality, or will it agree to any 
intellectual property rights obligations that are more rigid than those 
found in the U.S.?

    Answer. We are looking to include in the TPP provisions that 
support an open Internet, including provisions that: (1) facilitate the 
ability of U.S. suppliers to invest in and operate Internet-based 
platforms in TPP markets, and to supply Internet-based services on a 
cross-border basis; (2) move data cross-border; and (3) ensure that 
products distributed digitally do not face discrimination. In addition, 
we are seeking to affirm the principle that consumers should have 
access to legitimate products and services of their choice, consistent 
with net neutrality principles. Nothing being proposed would constrain 
implementation of any net neutrality proposals of which we are aware. 
With respect to intellectual property rights obligations, nothing the 
United States is proposing would be inconsistent with U.S. law.
                                 ______
                                 
             Questions Submitted by Hon. Charles E. Schumer
    Question. New York's largest agricultural sector is the dairy 
industry and it supports a significant number of jobs in my state. Can 
you provide assurances that the U.S. will insist on concluding a 
package that will result in a balanced market access outcome for my 
state's dairy industry where new imports from big dairy countries are 
able to be offset by sizable, across-the-board new access into Canada 
and Japan?

    Answer. We are working to build on the recent strong export 
performance of our agricultural sector and provide new and expanded 
opportunities for U.S. farm products, including dairy products in all 
of the TPP markets. This will be achieved through tariff elimination, 
deep tariff reductions, and new preferential tariff rate quotas. 
Gaining new and commercially meaningful dairy market access in Canada 
and Japan are top priorities of the TPP agricultural market access 
negotiations, as it gains valuable new market access for U.S. dairy 
products exported to Vietnam and Malaysia. All TPP partners are working 
to conclude an agreement that is comprehensive and high standard, and 
Canada agreed to these goals when it joined TPP. We are mindful of the 
sensitive nature of dairy imports in the United States and we continue 
to work closely with stakeholders to ensure we reflect their priorities 
and concerns.

    Question. The European Union continues to pursue the creation of 
monopolies in markets around the globe, including right here in the 
United States, by excluding other countries from using common, generic 
food names like ``parmesan,'' ``bologna,'' and ``feta.'' Last year I 
joined my colleagues on letters to you and USDA Secretary Vilsack 
expressing our concern for the continued use of cheese names, signed by 
55 Senators, and meat names, signed by 45 Senators. Thank you for your 
work on this ``geographic indications'' issue--the Administration has 
been helpful in pushing back against the Europeans' aggression, and in 
protecting American jobs and preserving our domestic market and markets 
overseas. Congratulations on your recent progress with China on this 
issue at the end of last year. This issue is critical for my producers 
and processors in New York. What is the latest update on this issue?

    Answer. The United States and the EU have long-standing differences 
over the scope and level of intellectual property rights protection for 
geographical indications (GIs). We have raised our strong concerns 
regarding the impact of the EU's GI policies on made in America 
products, including those that use generic food names, such as 
``parmesan,'' ``bologna,'' and ``feta.'' Within the Transatlantic Trade 
and Investment Partnership (T-TIP) negotiations, we have been clear 
with the EU regarding our strong opposition to existing and future 
barriers. We will continue to press the EU to expand market access for 
U.S. producers into the EU and third country markets, including through 
the removal of barriers such as over-broad GI protection for EU 
products.
                                 ______
                                 
              Questions Submitted by Hon. Debbie Stabenow
    Question. During his State of the Union address last week, 
President Obama asked for Congress to give him Trade Promotion 
Authority. As you enter the late stages of the Trans-Pacific 
Partnership negotiations, how would Trade Promotion Authority alter 
those negotiations?

    What if Congress were to mandate a negotiating objective that 
required strong and enforceable currency disciplines in our future 
trade agreements?

    How exactly would such a requirement work, if a deal is nearly 
done?

    Answer. Addressing currency misalignments is a top priority for 
President Obama and this Administration. The Administration, led by the 
Treasury Department, which is responsible for currency issues, has 
worked hard to promote a level global playing field by moving major 
economies to market-determined exchange rate systems with transparent 
and flexible exchange rates that reflect underlying economic 
fundamentals. We have leveraged our engagement in the most important 
multilateral fora--the G-7, the G-20, the International Monetary Fund 
(IMF), and the World Trade Organization--as well as bilaterally, 
including, in particular, with China through the Strategic and Economic 
Dialogue (S&ED) and other fora.

    With regard to addressing exchange rates in our trade initiatives, 
we will continue to engage with Congress and our domestic stakeholders 
on how best to achieve our policy objectives in this area.

    Question. The administration oversaw the highly successful 
restructuring of the domestic auto industry, directly saving almost one 
million jobs and leading to commitments by the domestic automakers to 
create thousands of new American jobs going forward. More than two-
thirds of the U.S. trade deficit with Japan is in automotive goods. I 
remain concerned that the Trans-Pacific Partnership could make this 
trade imbalance with Japan even worse. As you continue with bilateral 
negotiations, what are the primary auto-related issues you are still 
negotiating with Japan?

    Will you commit to consulting closely with me and my staff on these 
issues--including on rules of origin--as you enter the home stretch of 
these negotiations?

    Answer. Since early 2009, employment in the U.S. auto industry has 
been increasing steadily, dramatically reversing a five-year period of 
declining industry employment. This job growth has been supported by 
growing U.S. exports. From 2009 to 2013, U.S. auto exports doubled to 
$65 billion, and U.S. exports of auto parts increased by more than 70 
percent, with exports of both autos and auto parts now at all-time 
record highs. U.S. auto exports to our FTA partners have increased by 
442,000 vehicles. We are pursuing a two-prong strategy with Japan--
working to keep our auto and truck tariffs in place for as long as 
possible, while addressing the wide range of non-tariff measures in 
Japan that have impeded access to the Japanese market for U.S. vehicles 
for decades. Japan has agreed that the timetable for eliminating U.S. 
motor vehicle tariffs will be the longest for any product in the TPP, 
and that the phase-out period will be back-loaded. With respect to non-
tariff measures, we are making good progress in our parallel 
negotiations with Japan to address such issues as transparency in 
regulations, standards, certification, financial incentives, and 
distribution. We are also pursuing commitments for strong and 
accelerated dispute settlement procedures with stiff penalties in the 
event of noncompliance. We will continue to work with Congress as we 
negotiate with Japan to achieve the best possible deal in all of these 
areas.

    Question. You mentioned during your testimony that the Trans-
Pacific Partnership incorporates many proposals suggested and supported 
by the U.S. labor community. Beyond the so-called, ``May 10 
Agreement,'' will you please highlight some of those proposals?

    Answer. The provisions that the United States is seeking on labor 
in TPP include the key May 10 requirement for each TPP country to 
``adopt and maintain'' fundamental labor rights as recognized by the 
International Labor Organization, including freedom of association and 
the right to collective bargaining. We are also pursuing first-ever 
obligations to improve worker rights and working conditions in TPP 
countries--specifically, provisions to discourage trade in goods 
produced by forced labor, including forced child labor; establish 
acceptable conditions of work, including minimum wages, maximum hours, 
and safe workplace conditions; and ensure labor protections in export 
processing zones. All the obligations of the TPP Labor chapter would be 
subject to the same dispute settlement mechanism as the rest of TPP 
including trade sanctions.

    We have also consulted with the U.S. labor community on a broad 
range of TPP issues beyond the labor obligations, and have worked to 
incorporate their suggestions, including with regard to disciplines on 
state-owned enterprises, rules of origin, tariffs, transparency in 
export licensing procedures, technology transfers, and reforms to 
investor-State dispute settlement.

    Question. You have argued that the Trans-Pacific Partnership will 
create U.S. jobs and grow the economy. Yet, that is at odds with our 
experiences with other free trade agreements, including NAFTA and the 
U.S.-Korea Free Trade Agreement. Will you please explain in which 
sectors you expect to see the greatest U.S. job and wage growth as a 
result of finalizing the Trans-Pacific Partnership?

    Answer. U.S. exports have grown to all of our existing FTA 
partners, ranging from 587 percent growth to Israel, 513 percent to 
Chile, and 505 percent to Jordan. U.S. goods exports to NAFTA countries 
are up 289 percent, while U.S. goods exports to Korea (despite its 
economic downturn during the first two years of entry into force of the 
Agreement) are up 2.5 percent. U.S. exports to FTA partners supported 
an estimated 4.1 million jobs in 2013. Every billion dollars of U.S. 
exports supported between 5,400 and 5,900 jobs in 2013. Jobs supported 
by exports pay an estimated 13 to 18 percent more than non-export jobs.

    TPP will open many new export opportunities for U.S. agricultural, 
manufacturing, and services exporters in sectors where high tariffs and 
non-tariff barriers currently exist.

    In agriculture, the largest gains are expected to occur in the high 
value categories of meats, dairy, fruits and vegetables, and a variety 
of processed foods and beverages. For example, U.S. apples and poultry 
exporters face tariffs of 10 percent and 40 percent, respectively, in 
Vietnam; U.S. beef and wine exporters face tariffs of 38.5 percent and 
50 percent, respectively, in Japan; and U.S. tree nuts exporters face 
tariffs of 20 percent in Malaysia.

    By addressing tariffs and easing non-tariff barriers, TPP will 
support increased U.S. exports and the development and expansion of 
regional supply chains, and will promote the competitiveness of both 
large and small U.S. manufacturers. For example, U.S. beauty and skin 
preparations exporters currently face tariffs of 20 percent in Vietnam, 
U.S. auto exporters face tariffs of 30 percent in Malaysia, U.S. 
construction equipment exporters face tariffs of 5 percent in New 
Zealand, and U.S. exporters of aluminum bars and rods face tariffs of 
7.5 percent in Japan.

    TPP will ensure fair and open markets in the dynamic Asia-Pacific 
region for our world-class service providers, which employ nearly 80 
percent of Americans. TPP will prohibit tariffs on digital trade, which 
will benefit all U.S. producers of software and audiovisual products 
stakeholders. Prohibiting restrictions on data flows and local server 
requirements will benefit all U.S. companies that do business over the 
internet. Establishing a level playing field with postal operators 
abroad will lead to benefits to our express delivery industry here in 
the United States. TPP will be the first trade agreement specifically 
guaranteeing rights to provide electronic payment services on a cross 
border basis, benefiting U.S. suppliers of such services.

    Question. In Michigan and many states across the country, 
agriculture has played a leading role in the economic recovery. Farm 
exports are a big part of that success story. Michigan's dairy sector, 
for example, continues to break its own export records year after year 
and supports nearly 40,000 jobs. When trade deals are done right, 
American agriculture wins big.

    With respect to the Trans-Pacific Partnership, significant and 
comprehensive market access in both Japan and Canada is critical to 
achieving a balanced package for farmers and ranchers, including 
Michigan's dairy farmers. Will you please update the Committee on the 
status of market access negotiations with Japan and how USTR's 
agriculture team plans to engage Canada, which has only half-heartedly 
participated in farm issue discussions thus far, before concluding the 
agreement?

    Answer. We are working to build on the recent strong export 
performance of our agricultural sector and provide new and expanded 
opportunities for U.S. farm products, including dairy products in all 
of the TPP markets. This will be achieved through tariff elimination, 
deep tariff reductions, and new preferential tariff rate quotas. 
Gaining new and commercially meaningful dairy market access in Canada 
and Japan are top priorities of the TPP agricultural market access 
negotiations, as it gains valuable new market access for U.S. dairy 
products exported to Vietnam and Malaysia. All TPP partners are working 
to conclude an agreement that is comprehensive and high standard, and 
Canada agreed to these goals when it joined TPP.

    Question. One of the biggest challenges facing U.S. agriculture in 
the ongoing 
T-TIP negotiations is the issue of geographic indications (GIs). As you 
know, the EU is keen on protecting GIs for certain food products, 
including many that are produced widely in the U.S. The GI issue is 
especially pressing for our dairy farmers and cheese manufacturers, 
which could be blocked from accessing European markets if the 
protective measures pushed by EU negotiators manifest in a final T-TIP 
agreement. I greatly appreciate your efforts thus far on the GI issue, 
and there is broad support in the Senate for maintaining the pressure. 
Could you please provide me with an update on where the negotiations 
currently stand with respect to GIs?

    Answer. The United States and the EU have long-standing differences 
over the scope and level of intellectual property rights protection for 
geographical indications (GIs). We have raised our strong concerns 
regarding the impact of the EU's GI policies on made in America 
products, including those produced by U.S. dairy farmers and cheese 
manufacturers. Within the Transatlantic Trade and Investment 
Partnership (T-TIP) negotiations, we have been clear with the EU 
regarding our strong opposition to existing and future barriers. We 
will continue to press the EU to expand market access for U.S. 
producers into the EU and third country markets, including through the 
removal of barriers such as over-broad GI protection for EU products.
                                 ______
                                 
               Questions Submitted by Hon. Maria Cantwell
    Question. According to Reuters and the Brookings Institution, the 
middle class around the world is expected to more than double in size 
from 2 billion today to 4.9 billion by 2030. A majority of this growth 
is expected to occur in Asia and by 2030, Asia is expected to have 64 
percent of the global middle class and account for 40 percent of 
consumption. But less than five percent of U.S. small businesses are 
currently exporting. How can we do more to raise awareness about this 
great potential market for all U.S. businesses, both large and small? 
Additionally, how does the Export-Import Bank help reduce the risk to 
exporting to markets with a rising middle class that have other 
challenges such as corruption and limited access to financial markets?

    Answer. USTR is actively reaching out to companies of all sizes, 
especially small businesses, about the benefits of U.S. market-opening 
trade agreements in Asia, Europe, and around the world since 95 percent 
of the world's consumers, representing roughly 80 percent of the 
world's purchasing power, live outside our borders. Small business are 
especially poised to benefit from the elimination of tariffs, reduced 
costs and red tape, greater transparency, regulatory cooperation, and 
the rule of law afforded by the TPP agreement being negotiated between 
the United States and 11 other Asia-Pacific countries. For example, of 
the 12,510 companies that exported from Washington State locations in 
2012, 90 percent (11,262 companies) were small and medium-sized 
enterprises with fewer than 500 employees. In 2014, Washington State 
exported $26.9 billion in goods, with 30% of total goods exports to TPP 
markets. To raise awareness about this great potential market for all 
U.S. businesses, USTR is teaming up with the U.S. Small Business 
Administration and briefing hundreds of small businesses around the 
country through webinars, conference calls, and meetings with business 
groups about the potential benefits of the agreement. The Export-Import 
Bank has also held 75 Exporter Forums over the past four years, 
including Washington State forums in Bothell, Seattle and Tacoma, to 
provide insights and expertise to small businesses seeking access to 
global markets.

    Question. In 2014 the Export-Import Bank provided $7.2 billion in 
financing for small businesses in Washington state and proved to be 
instrumental for increasing market access for small to medium size 
businesses. With your extensive experience can you explain some of the 
barriers that companies face in exporting their products overseas, 
especially when countries like China, Brazil, and India offer below-
market concessionary financing?

    Answer. Ensuring a level playing field for U.S. exporters is a core 
U.S. government objective, and specifically with regard to export 
financing, our goal is to ensure that our exporters are able to compete 
based on the quality and price of their goods and services, rather than 
based on the availability of any government-supported financing. 
Advancing this objective requires both U.S. government ability to match 
the financing that other governments provide their exporters, and for 
all major providers of official export credit support to operate within 
a set of international export credit guidelines.

    In early 2012, the Administration secured a commitment from China 
to establish the International Working Group on Export Credits (IWG) to 
negotiate a new set of international export credit disciplines that 
would apply to all major export credit providers. Through the IWG, the 
United States seeks to discipline official export credit support 
provided by China, Brazil, India and other large emerging market 
countries by developing new international export credit guidelines that 
that would bring their official export credit activities within a set 
of clear financing and transparency standards. Important progress has 
been made in these negotiations, including during President Obama's 
November 2014 visit to China, where the Administration secured China's 
commitment to take all steps necessary to advance the IWG initiative, 
such as by supporting the start of negotiations on horizontal 
guidelines as soon as possible, and by supporting comprehensive 
guideline coverage.

    Question. The current EU import ban on both frozen and fresh 
shellfish unfairly prevents U.S. shellfish harvesters from entering the 
European market. This has a particularly detrimental effect on certain 
American Indian communities along the West Coast who rely heavily on 
Geoduck export revenues and want to diversify their export markets. 
Recognizing SPS issues are going to be one of the toughest parts of the 
TTIP negotiations, what are you doing to ensure lifting the shellfish 
import ban is part of the SPS conversation? What, in particular, are 
you doing to open up the EU market to U.S. Geoduck?

    Answer. Recent bilateral technical exchanges are helping to 
establish a path forward for U.S. exports of molluscan shellfish, 
including Geoduck, to the European Union (EU). The next step will be an 
EU audit of the U.S. food safety system for molluscan shellfish in 
March 2015.

    Question. Trade is an essential component of the economy of 
Washington State, with nearly one in every three jobs directly 
supported by international commerce. It is particularly important to 
the high-tech industry, and Washington is home to many global leaders 
in this vibrant sector.

    By lowering tariffs on a wide range of tech products, the WTO's 
Information Technology Agreement (ITA) has helped facilitate domestic 
job creation and growth in the U.S. tech sector and U.S. economy over 
the past decade and a half. In fact, from 1996 to 2008, total global 
trade in ITA products has increased more than 10 percent annually, from 
$1.2 trillion to $4 trillion.

    While technological innovation has continued to grow, the list of 
products covered by the agreement has not been updated. As I understand 
it, trade negotiators have begun to meet monthly in Geneva to expand 
this agreement. If confirmed, do you intend to make this a high 
priority at USTR and within the Administration to ensure expansion of 
the ITA is completed by the end of this summer? What concrete steps 
will you take to get these important negotiations across the finish 
line?

    Answer. Expanding the Information Technology Agreement's (ITA) 
product coverage to include new, technologically advanced products is a 
key U.S. trade policy priority, and one of the key initiatives we are 
pushing at the World Trade Organization (WTO). The benefits of an 
expanded ITA would be significant, and it is a result that could be 
achieved in the very near term if China and Korea are willing to work 
towards a bilateral compromise.

    We were disappointed that we were not able to reach a conclusion of 
the ITA expansion negotiations in Geneva last December, especially in 
light of the major breakthrough with China at APEC that allowed the 
multilateral talks in Geneva to resume. But we will continue to work 
closely with key players, and with WTO Director General Azevedo, in an 
attempt to break the current impasse, and conclude this important 
agreement as soon as possible. An expanded ITA would be the first major 
tariff-cutting deal at the WTO in 17 years and help boost American 
exports to growing markets around the world. When completed, the ITA 
expansion is estimated to cover $1 trillion in trade, adding $190 
billion to the global economy and supporting tens of thousands of good-
paying U.S. manufacturing and technology jobs.

    Question. In the NAFTA agreement, Canada included a broad cultural 
carveout, allowing them flexibility to limit US exports to Canada. That 
agreement is now 20 years old and Canada is pursuing a similar policy 
now in the TPP. What are your thoughts on that?

    Answer. We have had longstanding concerns on the issues of cultural 
carve-outs, particularly as countries seek to extend these carve-outs 
to the digital realm. We are working to try to address this issue in 
the TPP in a way that allows countries to promote their cultural 
heritages without impacting U.S. exports of products or services of so-
called ``cultural industries,'' in which the United States is highly 
competitive.
                                 ______
                                 
                 Question Submitted by Hon. Bill Nelson

    Question. As we all know, Haiti is still reeling from a terrible 
earthquake in 2010. Damages were estimated at $7.8 billion, which was 
greater than Haiti's gross domestic product (GDP) in 2009. Haiti is the 
poorest country in the Western Hemisphere, and one of the poorest in 
the world.

    According to the World Bank, over 2.5 million people--about 24 
percent of the population--live on under $1.24 per day, and almost 60 
percent of the population lives under the national poverty line of 
$2.44 per day.

    This isn't a far-off country in a distant land. This is a country 
that's 597 miles from the coast of Florida. And that has consequences 
for regional security.

    It benefits no one to have so many people living in abject poverty. 
That's why I believe we must renew the trade preference program for 
Haiti. It's not only good for American consumers, but it's also good 
for our producers. A stronger Haiti will in turn create a better market 
for our higher-quality goods. It just plain makes sense. What are your 
thoughts on this?

    Answer. Haiti remains the poorest country in the Americas and one 
of the poorest in the world (with a GDP per capita of $820 in 2013) 
with significant needs in basic services. We expect donor financing to 
continue to decline, making it all the more critical for the Haitian 
government to use domestic and external resources more efficiently and 
effectively, as well as seek to develop the private economy. The IMF 
estimates economic growth was 3.75 percent in 2014 for Haiti, down from 
4.3 percent in 2013, and per capita GDP in 2014 was estimated at $853. 
Factors contributing to the slight slowdown in 2014 include delays in 
budget approval and adverse weather conditions that affected 
agricultural production.

    We see timely renewal of the HOPE II preference program for Haiti, 
which expires in part in 2018, as one way to remove uncertainly for 
those companies seeking to invest in Haiti. The HOPE II program has had 
a clear and direct role in supporting the creation of thousands of jobs 
in the textile and garment sectors, while providing important 
protections to workers. In 2013, total export revenues from the textile 
and garment industry accounted for 91 percent of national export 
earnings and 10 percent of national GDP. The apparel industry is also 
among the largest employers within Haiti, creating jobs for nearly 
30,000 people; sixty-five percent of these workers are women.
                                 ______
                                 
              Questions Submitted by Hon. Robert Menendez
    Question. Can you please explain in which U.S. sectors you expect 
to see the greatest job and wage growth due to the TPP? How many jobs 
do you expect to be created due to the TPP within the first year, 5 
years, and 10 years?

    Answer. U.S. exports have grown to all of our existing FTA 
partners, ranging from 587 percent growth to Israel, 513 percent to 
Chile, and 505 percent to Jordan. U.S. goods exports to NAFTA countries 
are up 289 percent, while U.S. goods exports to Korea (despite its 
economic downturn during the first two years of entry into force of the 
Agreement) are up 2.5 percent. U.S. exports to FTA partners supported 
an estimated 4.1 million jobs in 2013. Every billion dollars of U.S. 
exports supported between 5,400 and 5,900 jobs in 2013. Jobs supported 
by exports pay an estimated 13 to 18 percent more than non-export jobs.

    TPP will open many new trade opportunities for U.S. agricultural, 
manufacturing, and services exporters in sectors where high tariffs and 
non-tariff barriers currently exist.

    In agriculture, the largest gains are expected to occur in the high 
value categories of meats, dairy, fruits and vegetables, and a variety 
of processed foods and beverages. For example, U.S. apples and poultry 
exporters face tariffs of 10 percent and 40 percent, respectively, in 
Vietnam; U.S. beef and wine exporters face tariffs of 38.5 percent and 
50 percent, respectively, in Japan; and U.S. tree nuts exporters face 
tariffs of 20 percent in Malaysia.

    By addressing tariffs and easing non-tariff barriers, TPP will 
support increased U.S. exports and the development and expansion of 
regional supply chains, and will promote the competitiveness of both 
large and small U.S. manufacturers. For example, U.S. beauty and skin 
preparations exporters currently face tariffs of 20 percent in Vietnam, 
U.S. auto exporters face tariffs of 30 percent in Malaysia, U.S. 
construction equipment exporters face tariffs of 5 percent in New 
Zealand, and U.S. exporters of aluminum bars and rods face tariffs of 
7.5 percent in Japan.

    TPP will ensure fair and open markets in the dynamic Asia-Pacific 
region for our world-class service providers, which employ nearly 80 
percent of Americans. TPP will prohibit tariffs on digital trade, which 
will benefit all U.S. producers of software and audiovisual products 
stakeholders. Prohibiting restrictions on data flows and local server 
requirements will benefit all U.S. companies that do business over the 
internet. Establishing a level playing field with postal operators 
abroad will lead to benefits to our express delivery industry here in 
the United States. TPP will be the first trade agreement specifically 
guaranteeing rights to provide electronic payment services on a cross 
border basis, benefiting U.S. suppliers of such services.

    Question. News reports from last year indicated that the United 
States was attempting to strike language related to climate change from 
the TPP. Can you comment on whether the final TPP will include 
commitments specifically related to climate change?

    Answer. The TPP Environment Chapter is still under negotiation. 
Proposals to enhance cooperation on issues such as energy efficiency, 
deforestation, development of cost-effective, low emissions 
technologies and alternative, clean, and renewable energy sources, are 
under active discussion.

    Question. I would like to follow up on my question regarding the 
docking mechanism that will presumably be included in the TPP. You 
assured the Committee that the accession of a new country to TPP would 
be subject to a vote in the U.S. Congress. Please address how that 
would work.

    If a new country attempts to join TPP while U.S. Trade Promotion 
Authority is in place, would the Congressional vote on this new 
country's accession be subject to expedited consideration as a trade 
deal would be under TPA?

    Can Congress impose additional conditions on that country at the 
time of the vote?

    Will docking require the unanimous approval of all TPP members?

    Answer. TPP is intended be open to accession by new members willing 
and able to meet its high standards. The precise terms of any accession 
would need to be agreed by all TPP Parties after each Party had 
completed applicable domestic legal procedures. For the United States, 
this would include compliance with TPA procedures. As with the 
consideration of entrants to the initial group of TPP Parties, the 
Administration would consult with Congress and stakeholders as it 
engages with any candidate country. The United States would also expect 
to consult in depth bilaterally with any TPP candidate country before 
agreeing to its participation in accession negotiations. During this 
time, the United States would seek to ensure that the candidate country 
could demonstrate its readiness to adopt the high standards and 
ambitious commitments of TPP, as well as to address bilateral issues of 
concern.

    Question. I appreciate the attention you have given to our Latin 
American trading partners with regard to their concerns over TPP's 
effect on US-CAFTA trade, particularly in the apparel sector. During 
the hearing, you mentioned that the Administration is working to 
address some concerns of CAFTA countries.

    How specifically do you plan to address the potential negative 
impact the TPP could have on the apparel industry in Central America? 
Will this be done by amending the CAFTA agreement or through other 
means?

    Answer. We understand the importance of the textile and apparel 
sector to our FTA partners in Central America, as well as to our 
domestic industry, which provides much of the yarn and textile inputs 
utilized for these products. USTR has worked closely with our domestic 
industry in crafting our approach to TPP so as to take full account of 
their concerns and sensitivities, including with respect to the Central 
American apparel industry. We are committed to working with Congress 
and stakeholders to ensure these concerns will continue to be 
considered.

    Question. When we met last September, I expressed my interest in 
beginning negotiations for a bilateral investment agreement (BIA) with 
Taiwan in tandem with our bilateral investment treaty (BIT) 
negotiations with China.

    What is the administration's current position on pursing a BIA with 
Taiwan?

    In your opinion, would opening BIA negotiations with Taiwan at this 
point in time significantly undermine efforts to finalize the BIT with 
China?

    What is the Administration's current understanding of the legal 
framework under which we would pursue such an agreement?

    Answer. We are continuing to look at the complex issues that would 
be raised by BIA negotiations with Taiwan. Consistent with the Taiwan 
Relations Act, a BIA would need to be entered into between the American 
Institute in Taiwan (AIT) and the Taiwan Economic and Cultural 
Representative Office (TECRO). This raises difficult and novel 
challenges. Even as we continue to consider these issues, we are 
concurrently working through other channels such as the investment 
dialogue established under the Trade and Investment Framework Agreement 
(TIFA) to address concrete investment barriers for U.S. firms in the 
Taiwanese market and to strengthen the bilateral investment 
relationship between the two economies.

    Question. USTR has conducted several six-month reviews of 
Bangladesh's progress toward achieving the commitments it made under 
the GSP Action Plan. These reviews helped focus attention on areas of 
the action plan that required further progress, like the protection of 
workers' rights. I understand that USTR no longer plans to conduct 
these reviews every six months, but will initiate a review only after 
developments warrant one. I am concerned by the vagueness of this 
threshold. Please provide details on the conditions under which USTR 
would initiate a review of Bangladesh's progress on its commitments 
under the GSP Action Plan.

    Answer. Since the President's June 2013 decision to suspend 
Bangladesh's trade benefits under the Generalized System of Preferences 
(GSP), USTR has led three, formal interagency reviews of Bangladesh's 
progress in implementing the GSP Action Plan. Each review concluded 
that more progress was needed on worker rights and worker safety issues 
before reinstatement of Bangladesh's GSP benefits could be considered. 
Moving forward, USTR believes that a more flexible review cycle would 
encourage more open and effective discussions with the government of 
Bangladesh on the GSP Action Plan. Accordingly, USTR does not plan to 
conduct the next formal review until significant further progress on 
the GSP Action Plan has been reported, the Government of Bangladesh 
requests a review, or other circumstances warrant a review. Our ongoing 
engagement with the government of Bangladesh and other stakeholders on 
the GSP Action Plan will continue. This engagement, which involves 
USTR, the Departments of State and Labor, the U.S. Agency for 
International Development, and the U.S. Embassy in Bangladesh includes 
(1) high-level discussions in Bangladesh under the ``3+5'' consultation 
mechanism, (2) consultations with Bangladesh, the EU and the 
International Labor Organization (ILO) under the July 2013 
Sustainability Compact, (3) bilateral discussions with the government 
of Bangladesh in Dhaka and Washington, and (4) continuing discussions 
with project implementers, including the ILO, on technical assistance 
programs. USTR will also continue to coordinate closely with Members of 
Congress and their staffs on worker rights and worker safety issues in 
Bangladesh and to brief congressional offices on progress under the GSP 
Action Plan.

    Question. Would the Administration support a democracy and human 
rights clause in a future TPA bill that would limit expedited 
consideration of trade agreements to only those with nations that 
respect the freedom of association, free speech, fundamental human 
rights, and similar American values as determined by our State 
Department?

    Answer. The Administration is a strong advocate for democracy and 
human rights, including labor rights, and has a strong record promoting 
these American values through our international engagement. The 
Administration supports reflecting in TPA the protections that we have 
been negotiating in TPP and TTIP with respect to freedom of 
association, the right to collectively bargain, the right to be free of 
child and forced labor and to non-discrimination in employment. The 
Administration also supports the inclusion in TPA of provisions 
relating to rule of law and good governance that are the basis of a 
functioning system of basic human rights. Further, the Administration 
will continue to vigorously promote democracy and human rights using 
all of the leverage afforded by trade agreements as well the broad 
range of diplomatic and economic tools that we have available.

    Question. The recently implemented Sharia law in Brunei allows gay 
persons to be flogged, unmarried mothers to be imprisoned and 
Christians to be whipped. How are those practices consistent with your 
commitment to include strong labor and human rights protections in the 
TPP?

    Answer. We have serious concerns about aspects of Brunei's new 
Penal Code, which is in the process of being implemented. USTR has been 
working closely with the Department of State in conveying the strong 
concerns of both the Administration and Congress to the Bruneian 
government. In recent meetings with senior Bruneian government 
officials, we have made clear that protecting human rights--including 
the rights of LGBT individuals, women, and religious minorities--is a 
core U.S. value, and have stressed that Brunei should abide by its 
international human rights commitments. Brunei has not yet implemented 
certain sections of the law. As we work to conclude TPP, we will 
continue to engage closely with Brunei to address this issue. Brunei's 
engagement in TPP negotiations gives us a mechanism to press for action 
on human rights.

    Question. Mr. Ambassador, you have frequently stated that the labor 
chapter of the TPP will include high labor standards. Will the TPP 
prohibit signatory countries from repressing its citizens who try to 
exercise these rights? How will you deal with countries such as Vietnam 
that will be out of compliance from day one?

    Answer. We are working closely with Vietnam and other TPP parties 
to ensure that they live up to the high standard, enforceable 
commitments of a final agreement. Vietnam's participation in the TPP 
negotiations presents an unprecedented opportunity to make historic 
progress on labor rights and working conditions. Under the TPP, Vietnam 
would be expected to undertake significant reforms, particularly in the 
area of freedom of association, but also concerning forced labor, child 
labor, and employment discrimination. Officials from USTR and the 
Department of Labor have engaged closely with Vietnam to discuss needed 
reforms and will closely monitor Vietnam's continued implementation of 
these reforms, including the ability of workers to exercise freedom of 
association, after the agreement is in place. TPP will provide an on-
going tool for ensuring protection of worker rights in Vietnam and 
other TPP parties.

    Question. USTR has outlined in a blog that the U.S. ``will insist 
on a robust, fully enforceable environment chapter in the TPP or we 
will not come to agreement.'' Will you only finalize such an agreement 
if it has: (a) a compliance mechanism for the Environment Chapter that 
is based on the exact same structure as the commercial chapters; and 
(b) binding and enforceable obligations and timelines for countries to 
improve their public health, environmental, and conservation standards 
in the near-term that will have a tangible impact on the ground?

    Answer. Environmental stewardship is a core value of the United 
States, and advancing environmental protection and conservation efforts 
across the Asia-Pacific region is a key priority for the United States 
in the TPP. We continue to insist that the TPP environment chapter be 
fully enforceable through the same type of dispute settlement mechanism 
and timetable that apply to the commercial obligations in the 
agreement, and that countries effectively enforce their environmental 
and conservation laws. The Administration is also insisting on the 
inclusion of provisions that will address illegal logging and fishing, 
wildlife trafficking, and other environmental challenges. The 
Administration believes that these trail-blazing, first-ever 
conservation commitments will have a near-term, tangible impact on our 
work to tackle some of the region's most urgent environmental 
challenges.
                                 ______
                                 
              Question Submitted by Hon. Thomas R. Carper
    Question. Mr. Ambassador, I believe a comprehensive Transatlantic 
Trade and Investment Partnership (T-TIP) with the European Union 
represents enormous opportunities for U.S. manufacturers, farmers, and 
service providers. These opportunities exist by way of eliminating 
tariff and non-tariff barriers to trade as well as in enhanced 
regulatory cooperation.

    Financial regulation is one area where I believe regulatory 
cooperation could be mutually beneficial. As you know, the enactment of 
Dodd-Frank was the most comprehensive financial regulatory reform in 
the U.S. since the Great Depression. In this comprehensive legislation, 
we sought to empower a robust regulatory regime, and protect American 
consumers and taxpayers.

    However, as the law is being implemented, we have seen that many of 
the rules our regulators are working to propose have cross-border 
implications, and greater cooperation and dialogue could result in a 
more efficient and effective implementation of regulations.

    Can you give me a sense of how you plan to use the T-TIP 
negotiations to increase regulatory cooperation between the U.S. and 
the EU?

    Answer. Financial services are a critical part of our transatlantic 
economic relationship. In T-TIP, as in all of our free trade 
agreements, the Administration seeks robust market access commitments 
for financial services to help protect U.S. financial services 
suppliers from discriminatory treatment in foreign markets.

    The United States is pursuing an ambitious and comprehensive agenda 
on regulatory cooperation in the financial sector--multilaterally in 
the G-20 and the Financial Stability Board, bilaterally with the 
European Union in the Financial Markets Regulatory Dialogue, and in 
international standard-setting bodies. The Administration believes that 
financial regulatory cooperation should continue to make progress in 
existing and appropriate bilateral and multilateral fora, in parallel 
alongside the T-TIP negotiations.
                                 ______
                                 
             Questions Submitted by Hon. Benjamin L. Cardin
    Question. As I'm sure you know, Colombia in 2011 began a 10 year, 
$55 billion plan to update its infrastructure. As the U.S. Commercial 
Service has recognized, that makes it a top export opportunity for 
companies like Mack Trucks, whose unionized workers build engines that 
go into trucks exported to Colombia in a manufacturing plant in 
Hagerstown. But those truck exports to Colombia face a very high 
tariff, whereas competing truck exports from Mexico face no tariff at 
all. Under the U.S.-Colombia Trade Promotion Agreement, the tariff 
facing U.S. truck exports will not be at parity with Mexican exports 
until 2021, the year the Colombia's investment infrastructure plans are 
to end. Every month Mack sees significant sales lost in Colombia due to 
the high tariff. I raised this issue during your confirmation hearing. 
In answers to questions for the record from your confirmation you 
stated, ``If confirmed, I will ensure that USTR continues to pursue an 
agreement with Colombia on accelerated tariff elimination.''

    Where do those efforts stand? What do we have to do to get that 
done quickly given that the first U.S.-Colombian Free Trade Commission 
meeting is coming up?

    Answer. As a result of a USTR notice in the Federal Register, a 
number of U.S. stakeholders proposed products for tariff acceleration 
under Article 2.3 of the U.S.-Colombia Trade Promotion Agreement, 
including certain tariff lines for heavy trucks. Based on responses 
received, we have identified for Colombia products for possible tariff 
acceleration and are encouraging Colombia to inform us about any 
products for which Colombia wishes to seek tariff acceleration in order 
to develop a balanced package. Once a balanced package of products is 
jointly agreed upon, both sides would need to carry out their 
respective domestic procedures before the new tariff staging would 
enter into force. In the case of the United States, the domestic 
process follows statutory requirements and includes, among other 
things, advice from the ITC and advisory committees, a period of 
consultation and layover, and publication in a Presidential 
Proclamation. Engagement with Colombia on this issue slowed during 
Colombia's election season in 2014; however, we are working with 
Colombia to move this process forward as soon as possible.

    Question. The Colombian heavy duty truck market is very important 
for America's manufacturers. As recently as 2011, the Colombian 
commercial truck market neared 12,000 units annually and American 
brands captured market share exceeding 90%. The sales of those trucks, 
valued at nearly $1 billion, support thousands of manufacturing jobs 
across the United States and in Maryland. Those jobs, however, are 
threatened by the adoption of a restrictive series of decrees regarding 
the scrapping and registration of commercial vehicles. These 
regulations appear to violate both the spirit and letter of Colombia's 
obligations under the bilateral Trade Promotion Agreement, the World 
Trade Organization, and the free market principles of the Organization 
for Economic Cooperation and Development, to which Colombia aspires to 
join. You have since assured us that USTR would ``continue to press 
them until they have rescinded the measures that caused this problem 
and have restored market access for U.S. truck exports that existed 
prior to implementation of this measure.''

    What recent steps has USTR taken to restore American truck exports 
to Colombia?

    Answer. We have been pressing the Government of Colombia to address 
this issue. The United States has sought to address this issue in 
multiple fora and at multiple levels, including in the negotiations on 
Colombia's membership in the OECD. Both USTR and other U.S. Government 
agencies have voiced strong concerns on this issue with senior 
Colombian officials. Colombia took some steps to improve the situation 
of the existing inventory of trucks in Colombia and has recently taken 
some additional actions intended to facilitate compliance with the 
scrappage program. We are continuing to press for a comprehensive 
solution that will restore market access for U.S. exports of trucks as 
soon as possible.
                                 ______
                                 
               Questions Submitted by Hon. Sherrod Brown
    Question. In your prepared testimony, you identified securing Trade 
Promotion Authority as one of USTR's top priorities for 2015. Trade 
Promotion Authority has typically included negotiating objectives for 
the Administration to follow during negotiations of trade agreements. 
Absent existing fast track authority, please identify what negotiating 
objectives USTR has been using during the Trans-Pacific Partnership 
talks to guide your negotiations. In addition, please identify the 
negotiating objectives from the 2002 Trade Act that you do not expect 
to meet in the Trans-Pacific Partnership.

    Answer. TPP negotiations are informed by the expired 2002 Trade 
Promotion Authority, the bipartisan ``May 10 agreement'', and well over 
1,600 Congressional consultations with Members of Congress and their 
staffs. We also regularly engage with the advisory committees 
established pursuant to the Trade Act of 1974. Further, USTR solicits 
views from the public and interested stakeholders--including civil 
society, non-governmental organizations, labor unions, concerned 
citizens, businesses, and academia. As negotiations proceed, we will 
continue to rely on these broad-based consultations to guide our 
negotiations.

    Question. Have you consulted with any TPP partners on what their 
parliamentary procedures are for examination, ratification, passage, 
and implementation of trade agreements? If so, please provide an 
analysis of those procedures.

    Answer. We are consulting with other TPP Parties on their 
procedures for examining, approving, ratifying and implementing trade 
agreements. Procedures vary widely across the TPP countries depending 
on the form of government and other factors. Some governments simply 
require the approval of their Cabinet in order to ratify a trade 
agreement and bring it into force. Others require implementing 
legislation to be approved and authorization for ratification be 
provided.

    Question. What impact will TPP have on collective bargaining rights 
of U.S. workers? Does USTR estimate union membership in the U.S. will 
increase or decrease as a result of the agreement?

    Answer. The United States will be taking on the same labor 
obligations as other TPP Parties, including with respect to the 
fundamental labor rights that encompass the right to collective 
bargaining. United States law and practice is in compliance with those 
obligations and we would not expect any changes to U.S. labor law to be 
required to implement TPP. U.S. workers' collective bargaining rights 
would not be affected by TPP.

    Question. In your testimony, you stated that 95 percent of the 
world's consumers and 80 percent of the world's purchasing power reside 
outside of the U.S. But in many TPP countries, the average consumer's 
purchasing power is much lower than in the U.S. For example, the GDP 
per capita in Malaysia is $9,700 per person. The GDP per capita in 
Vietnam, where the minimum monthly salary was recently raised to 
between $12 USD and $19 USD, is even less. Given these low wages, what 
specific non-agricultural, American-made goods does USTR expect 
consumers in Malaysia and Vietnam to purchase? And in what specific 
U.S. sectors does USTR expect to see export-related jobs created as a 
result?

    Answer. The United States already exports many products to emerging 
markets and developing economies. Nearly 47 percent of total U.S. goods 
exports were purchased by these countries in 2014. Malaysia is our 24th 
largest goods export market in 2014, with $13.1 billion in goods 
exports (93 percent manufactured products) in 2014, up 21 percent over 
the past 10 years. Vietnam is our 44th largest goods export market, 
with $5.7 billion in goods exports (69 percent manufactured products), 
up 418 percent over the past 10 years. The OECD has projected that 
Asia's middle class will grow to 3.2 million by 2030, more than 8 times 
the projected size of the U.S. market, making it paramount that the 
United States have access to these markets.

    Currently Malaysia and Vietnam have much higher tariffs than the 
United States. In some sectors, such as autos, their tariffs run as 
high as 30 percent and 80 percent, respectively. TPP will level the 
playing field for U.S. exporters and provide them opportunities in many 
sectors. For example, in Vietnam, U.S. switches, relays, and fuses face 
tariffs of up to 20 percent. In Malaysia, U.S. polymers of ethylene 
face tariffs of up to 20 percent. Increases in U.S. exports will 
support additional jobs in these sectors. Every billion dollars of U.S. 
exports supported between an estimated 5,400 and 5,900 jobs. In 2013, 
an estimated 11.3 million jobs were supported by exports.

    Question. The Administration, at the most recent Asia-Pacific 
Economic Cooperation (APEC) summit, agreed to a study paving the way 
for the Free Trade Area of the Asia Pacific (FTAAP). In various 
comments, you and other officials have indicated that the TPP is a 
vehicle for stemming China's influence in the region. As the 
Administration has now agreed to a process leading to the FTAAP, why 
won't that broader agreement, which will include China, undermine U.S. 
interests and undermine the value you claim the TPP will have?

    Answer. The FTAAP is not a trade negotiation, it's an aspiration 
for a free trade area in the Asia-Pacific region supported by APEC 
Leaders for a number of years. In 2010, APEC noted that TPP and other 
ongoing regional negotiations are the appropriate paths toward an 
FTAAP. At the November 2014 APEC meetings, APEC economies agreed to 
conduct an analytical study related to the realization of the FTAAP. 
This study would address such issues as potential benefits of an FTAAP, 
measures affecting trade between APEC economies, existing FTAs among 
APEC economies, and previous APEC analyses.

    Question. Has USTR received from ITC any economic analysis 
(informal or formal) of TPP's potential impact on the U.S. economic 
generally and/or on any specific sectors, employment, foreign direct 
investment, and wages? Has the USTR asked for or received any economic 
analysis (informal or formal) of TPP's potential impact from any other 
federal entities? If so, please provide descriptions of the analysis. 
Have these analyses been shared with cleared advisors?

    Answer. The ITC conducts analysis regarding U.S. trade 
negotiations, including with regard to potential U.S. product 
sensitivities. The ITC's work will culminate in a report, ahead of 
congressional consideration of TPP, based on a detailed analysis of the 
outcome of the negotiations. This report typically includes discussion 
of the impact of the trade agreement on trade and investment, including 
on merchandise and services imports and exports and related 
macroeconomic analysis. The ITC's report will be informed by its own 
economic analysis of producer and consumer effects as well as a 
detailed literature review, public comments solicited through the 
Federal Register, and hearing testimony. The views of cleared advisors 
typically serve as an input into the ITC's process of writing the 
report.

    Question. If TPP is implemented, what percentage of federal 
procurement dollars do you believe will be spent on goods manufactured 
in TPP countries? Conversely, what approximate amount of procurement 
dollars from TPP countries should U.S. companies expect to gain because 
of TPP that they don't currently have access to?

    Answer. Our approach to government procurement in TPP is consistent 
with the Trade Agreements Act of 1979. It allows our trading partners 
to compete for a defined pool of U.S. Federal government procurement 
opportunities in exchange for their making comparable commitments to 
open their government procurement to U.S. suppliers. 8 of our 11 TPP 
partners already have access to this pool of U.S. Federal government 
procurement opportunities. TPP will not change that. It is difficult to 
predict how successful the exporters of the three additional partners 
will be in competing for the same pool of U.S. federal procurement 
already open to over 50 other countries. U.S. exporters are globally 
competitive and can be expected to see expanded opportunities as a 
result of new market access and transparency of government procurement 
with our trading partners.

    Question. In Mexico, protection contracts and labor boards 
routinely prevent workers from exercising their fundamental rights. 
What changes, both statutory and 
enforcement-related, is USTR asking Mexico to implement before the TPP 
agreement takes effect? Is USTR considering delaying implementation of 
TPP for Mexico to ensure sustained, institutional protection of Mexican 
workers' fundamental rights is achieved?

    Answer. TPP will provide an important tool for ensuring protection 
of labor rights in Mexico and the other TPP parties. Officials from 
USTR and the Department of Labor have engaged closely with Mexico to 
discuss issues related to the rights of worker rights in that country. 
We will continue to do so as TPP negotiations proceed.

    Question. What specific source(s) of data has USTR used to shape 
your TPP rule of origin proposal for autos? Has this data been shared 
and reviewed with all stakeholders, including manufacturers and 
employees, in the supply chain?

    Answer. We have taken a wide variety of information sources into 
account when developing our rules of origin proposal for automotive 
products, including academic studies, interviews with analysts in both 
the public and private sector, and experiences from workers, traders, 
and producers with the rules of origin in previous FTAs. We have had 
extensive consultation with a wide range of stakeholders and Congress 
on this issue.

    Question. As you know, I am concerned about the impact of investor-
state dispute settlement on public health policies. You have said that 
the TPP investment provisions will include protections for public 
health policies. Will these protections prohibit investors from 
bringing an investor-state case challenging U.S. public health policies 
and government health programs?

    Answer. The United States would not negotiate away its right to 
regulate in the public interest, including in the critical area of 
public health. The TPP investment rules have been carefully crafted 
though many years of close stakeholder consultation and a public 
comment process. They are specifically designed to protect legitimate, 
non-discriminatory public interest measures from challenge and to 
prevent some of the abuses of the investor-state dispute settlement 
(ISDS) process that have occurred under agreements negotiated by other 
countries that are less clear, more expansive, and have few (or none) 
of the extensive safeguards being proposed in TPP. These safeguards 
include clearer definitions of key legal rules (e.g., incorporation of 
key U.S. Supreme Court criteria on expropriation) and stronger 
procedural safeguards, such as more expansive provisions on 
transparency and public participation in ISDS proceedings and rules on 
expedited review and dismissal of claims. The rules are designed to 
protect legitimate, non-discriminatory public interest measures from 
any successful challenge and to provide a disincentive for non-
meritorious claims. Even in cases where a private party has a 
legitimate claim that its rights are being violated and it is entitled 
to compensation, a government cannot be compelled to change a law or 
regulation under the TPP investment rules.

    Question. Earlier this month the European Commission publicly 
released the texts of the EU's proposals for the legal text of the 
TTIP. Will USTR commit to publicly releasing the text of U.S. proposals 
for the legal text of TTIP? If so, when will they be released? If not, 
why not?

    Answer. We are committed to maximizing transparency, consistent 
with negotiating the best possible agreement for U.S. interests. Though 
the United States and the EU have very different government structures 
and processes, we share the view that our trade agreements are made 
better with public input and vigorous debate. The U.S. made public all 
of our negotiating objectives before we started the negotiations--a 
step the EU only took late last year--and, more recently, we published 
a detailed, chapter-by-chapter summary of those objectives. We have 
paused in the middle of every T-TIP round so that U.S. and EU 
negotiators can hear from the public. We provide detailed public read-
outs of every negotiating round. We give every T-TIP negotiating 
proposal, before it is tabled, to Congress, and every Member can review 
our proposals. We also make our proposals available to nearly 600 
outside experts who serve on our congressionally-mandated trade policy 
advisory committees, including representatives of small business, labor 
unions, environmental organizations, consumer groups, and academia. 
Together with the EU, consistent with our respective systems, are 
continuing to look at additional avenues for making sure that 
legislators, stakeholders, and the public are able to help shape our 
negotiating objectives and understand what it is that we are--and are 
not--negotiating in T-TIP.

    Question. In Ohio, the Jones Act supports 10,300 jobs and wages of 
$547 million annually. Preserving the Jones Act is critical to 
preserving these jobs and the $1.8 billion annual economic impact they 
bring to my state. Can I get your assurance that the Jones Act will be 
excluded from both the TPP and the TTIP agreements?

    Answer. Our TPP and T-TIP counterparts understand our longstanding 
sensitivity about domestic cabotage and other activities covered by the 
Jones Act statutes, and they know that those laws and related measures 
are exempted from the WTO Agreement and all of our previous FTAs. 
Having consulted with Congress as well as industry and labor groups, we 
do not foresee a change in this position.
                                 ______
                                 
            Questions Submitted by Hon. Robert P. Casey, Jr.
    Question. In December 2010, the U.S. International Trade Commission 
estimated that the U.S.-Korea Free Trade Agreement would increase 
American goods exports to Korea by $10 billion, supporting 70,000 
American jobs. Last March marked the second anniversary of that 
agreement, and International Trade Commission data showed that U.S. 
exports to Korea fell by $3.1 billion and imports from Korea increased 
$5.6 billion during the first two years of the agreement, driving up 
the U.S. trade deficit with Korea by a total of $8.7 billion, or 60 
percent. According to the Economic Policy Institute, this growing trade 
deficit cost nearly 60,000 U.S. jobs.

    How can we be confident that future trade agreements do not have a 
similar impact?

    Answer. A full review of the trade statistics, in particular those 
for the past year, presents a different picture. Despite headwinds 
resulting from the slowdown in the Korean economy over the first two 
years that the agreement was in force, U.S. goods and services exports 
combined were up 4.1 percent between full year 2011 (pre-FTA) and 2013, 
and were up 7.0 percent between the first three quarters of 2014 and 
the same period in 2013 (latest figures available). In comparison, U.S. 
goods and services exports to the world were up 2.9 percent for 2014.

    The initial decline in goods exports was comprised of a fall in 
corn exports (due to a drought in the U.S.) and coal exports (due to 
slower economic growth in Korea). Both have now rebounded. While U.S. 
exports (goods and services) increased 2.4 percent during Korea's 
slowdown, Korea's imports of products from its non-FTA partners (China, 
Japan, and India) have decreased (by 4 percent, 12 percent, and 20 
percent, respectively), underscoring the contribution of KORUS to 
maintaining and increasing U.S. market share.

    Year-on-year goods exports to Korea for 2014 were up 6.8 percent 
compared to 2013. At $44.5 billion, these were record export levels. 
Likewise, U.S. agricultural exports were up 31.2 percent to $6.9 
billion in 2014, making Korea our fifth-largest market for agricultural 
exports. U.S. agricultural exports to Korea grew nearly four times 
faster than U.S. agricultural export growth to the world. Similarly, 
U.S. services exports to Korea experienced robust growth since the 
entry into force of the agreement, and were up 25.4 percent to an 
estimated $20.9 billion in 2013 as compared to 2011. This rate was more 
than twice as fast as U.S. services export growth to the world (9.5 
percent).

    On the import side, much of the growth in U.S. goods imports from 
Korea was due to increased imports of intermediate products (such as 
semiconductors, electrical equipment, and plastic materials), which 
means many of them supported U.S. production. For 2013, 51 percent of 
total imports were intermediate products, as compared to 48 percent in 
2011.

    The study you cite is based on the false premise that both exports 
and imports have the same effect on jobs on a one for one basis (in 
effect saying that the trade deficit cost jobs). There is not a direct 
relationship between trade deficits and unemployment; in fact 
unemployment has often been low when trade deficits have been large. 
Conversely, the U.S. ran trade balances and surpluses when unemployment 
peaked at 25 percent during the Great Depression. Exports are made by 
U.S. labor, a U.S. work effort and job component that can be measured. 
But the relationship of imports to domestic jobs is more complex. While 
some imports displace U.S. production, others have no effect. American 
businesses large and small use imports to create or support U.S. jobs, 
such as the case with Korea, where the intermediate products were 
imported as inputs to build sophisticated manufactured goods, make 
processed foods, and create other job-supporting American goods.

    Question. Confronting currency manipulation is critical and will be 
a key issue in the upcoming trade debate. Thus far, I am greatly 
concerned by the Administration's response. The Peterson Institute 
recently estimated that upwards of 5 million U.S. jobs have been lost 
due to currency manipulation--a staggering figure. Despite the fact 
that 230 Members of Congress and 60 Senators have called for 
disciplines to be included in TPP, the Administration has by all 
accounts remained silent on the issue during negotiations.

    What are your plans for addressing currency manipulation in TPP?

    Answer. Addressing currency misalignments is a top priority for 
President Obama and this Administration. The Administration, led by the 
Treasury Department, which is responsible for currency issues, has 
worked hard to promote a level global playing field by moving major 
economies to market-determined exchange rate systems with transparent 
and flexible exchange rates that reflect underlying economic 
fundamentals.

    We have leveraged our engagement in the most important multilateral 
fora--the G-7, the G-20, the International Monetary Fund (IMF), and the 
World Trade Organization--as well as bilaterally, including, in 
particular, with China through the Strategic and Economic Dialogue 
(S&ED) and other fora.

    With regard to addressing exchange rates in our trade initiatives, 
we will continue to engage with Congress and our domestic stakeholders 
on how best to achieve our policy objectives in this area.

    Question. Strong and aggressive enforcement of our trade laws is 
critical, particularly to vital Pennsylvania industries such as steel. 
Over the last several years, we have seen a large surge in imports of 
steel products. In response, the industry has filed a number of trade 
remedy cases. I appreciate the Administration's focus on enforcement 
but I think we can all agree that the recourse is often too little, too 
late. As such, I believe we should be looking for ways to strengthen 
enforcement. The President alluded to the need for this type of 
enforcement in his State of the Union speech earlier this week when 
asking Congress to grant him Trade Promotion Authority (TPA).

    What are your plans in this regard, and in particular, as it 
relates to getting Congress to pass TPA and to your ongoing 
negotiations on the TPP and TTIP?

    Answer. From the outset, this Administration has put a major 
emphasis on trade enforcement, standing up for American trade rights 
abroad, so that American workers and businesses can compete on a level 
playing field. The Obama Administration has launched 19 WTO complaints 
since 2009, and we've won every one decided so far. We have announced 
four important victories in the past year alone on foreign barriers 
affecting billions of dollars of U.S. exports, including on China's 
unjustified duties on U.S. cars and SUVs and on China's export quotas 
and duties on key steel inputs. And on February 11, the Administration 
launched a new WTO case on prohibited export subsidies that the Chinese 
are providing to a variety of industrial sectors, including textiles, 
apparel and footwear, advanced materials and metals, light industry, 
specialty chemicals, medical products, hardware and building materials, 
and agriculture.

    Question. As you have acknowledged, the rise of state-owned-
enterprises (SOEs) represents a growing threat to fair trade and the 
ability of American companies to compete globally. In Pennsylvania, I 
have seen firsthand how these distortions impact the global steel 
markets and other global industries.

    Given the prevalence of SOEs throughout the global economy, 
especially in China and Asia, the establishment of new disciplines to 
address this anti-competitive behavior is critical. What can you tell 
us about USTR's efforts to address SOEs in the TPP and the China BIT?

    Answer. New rules on SOEs are one of the key innovations in TPP. 
Based on extensive consultation with stakeholders and Congress, we have 
developed a set of rules that focus on the activities of commercial 
SOEs and seek to ensure that governments do not provide the companies 
they own with unfair advantages. For example, we are pursuing strong 
rules on subsidies to SOEs that cause harm to our companies and 
workers, including subsidies given to SOEs operating in the U.S. 
domestic market. We are also negotiating rules that ensure that SOEs 
make commercial purchases and sales on the basis of commercial 
considerations and do not discriminate against U.S. goods and services. 
We are also seeking strong new transparency obligations related to SOEs 
so we have a better understanding of how commercial SOEs are affecting 
trade and investment between TPP countries. These new rules go 
significantly beyond the obligations in the WTO and our previous FTAs. 
Because this is a new and very complicated area, we have been careful 
to craft the rules that strike the right balance between strong 
enforceable rules on commercial SOEs and preserving space to supply 
public services through government corporations, when necessary.

    With China, we are pursuing a high standard BIT that would require 
major economic reforms and would play a significant role in addressing 
key concerns of U.S. and other foreign investors, including the need to 
level the playing field and ensure that domestic companies, whether 
privately or state-owned, do not benefit from unfair advantages. We are 
analyzing all opportunities to use the BIT to achieve these goals, 
including assessing valuable stakeholder input on SOEs.

    Question. Under the U.S.-Colombia Trade Promotion Agreement, the 
tariff facing U.S. truck exports draws down over a ten year period. 
Until that tariff is eliminated American made products are at a severe 
disadvantage. This includes Mack Trucks that are exported from 
Pennsylvania.

    I understand that USTR is attempting to accelerate the elimination 
of this harmful tariff but no progress has been made. What is the 
earliest possible time do you think we will be able to eliminate the 
tariff so that Mack can participate fully in the Colombian market?

    Answer. As a result of a USTR notice in the Federal Register, a 
number of U.S. stakeholders proposed products for tariff acceleration 
under Article 2.3 of the U.S.-Colombia Trade Promotion Agreement, 
including certain tariff lines for heavy trucks. Based on responses 
received, we have identified for Colombia products for possible tariff 
acceleration and are encouraging Colombia to inform us about any 
products for which Colombia wishes to seek tariff acceleration in order 
to develop a balanced package. Once a balanced package of products is 
jointly agreed upon, both sides would need to carry out their 
respective domestic procedures before the new tariff staging would 
enter into force. In the case of the United States, the domestic 
process follows statutory requirements and includes, among other 
things, advice from the ITC and advisory committees, a period of 
consultation and layover, and publication in a Presidential 
Proclamation. Engagement with Colombia on this issue slowed during 
Colombia's election season in 2014; however, we are working with 
Colombia to move this process forward as soon as possible.

    Question. In response to regulations, the Colombian heavy duty 
truck market has contracted by 70 percent from its high a few years 
ago, despite the recent U.S.-Colombia Trade Promotion Agreement. In a 
market where 90 percent of new trucks are imported that translates to 
thousands of lost American truck sales and the loss of more than $500 
million in exports.

    How is USTR addressing this issue? What are your future plans to 
ensure that Colombia reverses this policy?

    Answer. We have been pressing the Government of Colombia to address 
this issue. The United States has sought to address this issue in 
multiple fora and at multiple levels, including in the negotiations on 
Colombia's membership in the OECD. Both USTR and other U.S. Government 
agencies have voiced strong concerns on this issue with senior 
Colombian officials. Colombia took some steps to improve the situation 
of the existing inventory of trucks in Colombia and has recently taken 
some additional actions intended to facilitate compliance with the 
scrappage program. We are continuing to press for a comprehensive 
solution that will restore market access for U.S. exports of trucks as 
soon as possible.

    Question. The biopharma industry is a major employer in 
Pennsylvania--directly employing over 44,000 jobs and supporting 
another 168,000 jobs. As such, one area of concern is that we reach 12 
years of data protection for biologics within TPP.

    I know USTR has been pushing for provisions that reflect U.S. law 
for biologics--how do you intend to finalize the agreement in this 
area?

    Answer. Biologic drugs offer great potential for new treatments and 
cures that will benefit all of humankind, and this sector also is one 
in which U.S. companies are leading global innovators and competitors. 
As is our traditional practice, the U.S. approach to trade negotiations 
has been to base U.S. proposals on existing U.S. law, where the current 
standard is 12 years. In the TPP negotiations, views vary on the best 
term of data protection for biologics, and standards also vary across 
the TPP region. Some TPP countries currently have no data protection 
for biologic drugs, while some have five years and others have eight. 
We have been engaging intensively with TPP counterparts to try to 
resolve our differences on this issue.

    Question. In recent years, there has been an increase in economic 
espionage and cyber-attacks designed to steal trade secrets from U.S. 
companies. Last May, military hackers apparently linked to the Chinese 
government infiltrated the computers of several companies headquartered 
in Pennsylvania. I am deeply concerned about the threat of this type of 
economic espionage.

    Recognizing recent legislative action to strengthen cybersecurity 
defenses, particularly in last year's National Defense Authorization 
Act, from your perspective at USTR what other steps can Congress take 
to ensure our trade secrets are adequately protected from foreign cyber 
attacks?

    Answer. On February 20, 2013, the U.S. Intellectual Property 
Enforcement Coordinator (IPEC) issued the Administration Strategy on 
Mitigating the Theft of U.S. Trade Secrets. The Strategy highlights 
efforts to combat the theft of trade secrets that could be used by 
foreign governments or companies to gain an unfair economic advantage 
by harming U.S. innovation and creativity, including: (1) focusing 
diplomatic efforts to protect trade secrets overseas, which include 
sustained and coordinated engagement with trading partners, the use of 
trade policy tools (including through the use of the Special 301 
Report), cooperation, and training, among others; (2) promoting 
voluntary best practices by private industry to protect trade secrets, 
including information security, physical security, and human resources 
policies; (3) enhancing domestic law enforcement operations, especially 
through the activities of the Department of Justice, Federal Bureau of 
Investigations, Department of Defense, and the National IPR 
Coordination Center; (4) improving domestic legislation to protect 
against trade secret theft, as exemplified by the Theft of Trade 
Secrets Clarification Act of 2012, which clarified provisions in the 
Economic Espionage Act with respect to the theft of trade secret source 
codes, and the Foreign and Economic Espionage Penalty Enhancement Act 
of 2012, which increased criminal penalties for economic espionage; and 
(5) conducting public awareness campaigns and stakeholder outreach to 
encourage all stakeholders to be aware of the dangers of trade secret 
theft.

    Consistent with the trade policy elements of this strategy, in the 
TPP negotiations we are supporting new trade secret provisions that 
will go farther than any previous agreement in requiring Parties to 
make available to rights holders remedies consistent with those 
provided for in U.S. law. Specifically, this includes criminal 
procedures and penalties against the theft of trade secrets, including 
by cyber means. These enhancements in the international legal framework 
relating to trade secrets will provide an important platform for our 
global efforts to fight trade secret theft.
                                 ______
                                 
               Question Submitted by Hon. Mark R. Warner
    Question. USTR and the International Trade Commission (ITC) work 
hand in hand to ensure U.S. trade policy protects American intellectual 
property, while promoting U.S. competitiveness and innovation. One key 
to that protection is the authority under Section 337 to ensure foreign 
companies aren't unfairly importing products that infringe on U.S. 
products. Over the last decade, many U.S. interests have become 
concerned that the use of Section 337 is increasingly being used by 
patent assertion entities (PAEs) that don't make or sell anything to 
file abusive complaints at the ITC. The ITC announced a pilot project 
last year that would help limit abuse at the ITC by PAEs. It's my 
understanding the pilot project has been used only once. Given USTR's 
unique role in helping to provide policy guidance to the ITC, can you 
provide an update regarding the effectiveness of ITC's pilot project in 
curbing abuse by PAEs under the domestic industry standard?

    Answer. The ITC is an independent, quasi-judicial federal agency 
with broad investigative responsibilities on matters of trade. In 
addition to other statutory responsibilities, the ITC conducts 
investigations under Section 337 of the Tariff Act of 1930 involving 
imported articles that allegedly infringe intellectual property rights 
or other unfair acts or unfair methods of competition in the 
importation of articles into the United States. Although USTR has 
authority, delegated from the President, to review certain ITC section 
337 determinations for policy reasons, USTR's delegated review 
authority does not extend to matters of ITC procedure. For that reason, 
and because the referenced pilot project was developed at the 
initiative of the ITC, USTR defers to the ITC for an assessment of that 
effort.
                                 ______
                                 
 Prepared Statement of Hon. Orrin G. Hatch, a U.S. Senator From Utah, 
                     Chairman, Committee on Finance
WASHINGTON--U.S. Senator Orrin Hatch (R-Utah), Chairman of the Senate 
Finance Committee, today delivered the following opening statement at a 
committee hearing on President Obama's 2015 Trade Agenda:

    The committee will come to order.

    Good morning. It's a pleasure to welcome everyone to today's 
hearing on our nation's trade agenda.

    Thank you, Ambassador Froman, for being here today. I have to say 
that the trade agenda is looking up since the last time you testified.

    Things seem to be improving with our ongoing trade negotiations. 
For example, while significant gaps remain, the administration seems to 
be inching ever closer toward a conclusion of a Trans-Pacific 
Partnership agreement.

    Morale at the Office of the United States Trade Representative, 
after a long period of decline, is beginning to rise.

    Of course, there is still a lot to be done. And, renewal of Trade 
Promotion Authority, or TPA, is at the top of my list. But, even in 
that regard, things seem to be looking up.

    Compared with this time last year, the administration is much more 
engaged at all levels in making the case for renewal of TPA. President 
Obama's strong call for TPA in the State of the Union was welcome, 
though, in my opinion, it was long overdue. I hope that he'll follow 
his latest call to action with a real concerted effort to help us get 
TPA through Congress.

    Here in the Finance Committee, we're doing all we can to help in 
this effort.

    Although the bill I introduced last year with Chairmen Camp and 
Baucus received broad support, I am currently working with Senator 
Wyden to see if there is a way to address some additional issues he has 
raised. We're working with Chairman Ryan as well.

    While there may be some improvements we can make to the bill, I 
want to make one thing clear: The time for TPA is now.

    TPA is how Congress tells the administration and our negotiating 
partners what a trade agreement must contain to be successfully enacted 
into law. And, TPA empowers our negotiators to get the best deal 
possible for American workers.

    To succeed in getting TPA renewed, we will need an all-out effort 
by the administration to make the case for why TPA is so vital to our 
nation's ability to fairly engage in international trade and to enhance 
the health of our economy.

    Simply put, trade means jobs.

    Today 95 percent of the world's consumers live outside the United 
States. These potential customers account for 92 percent of global 
economic growth and 80 percent of the world's purchasing power. To 
maintain a healthy economy, we need the opportunity to sell American 
products in those markets.

    Right now, the United States is engaged in some of the most 
ambitious trade negotiations in our nation's history. The first, which 
I already mentioned, is the Trans-Pacific Partnership, or TPP.

    Renewal of TPA is key to the success of this agreement. Without 
TPA, the administration will not be able bring back the high-standard 
agreement Congress needs to ensure its enactment.

    Let me be clear here: It would be a grave mistake for the 
administration to close TPP before Congress enacts TPA. Doing so may 
lead to doubt as to whether the U.S. could have gotten a better 
agreement, ultimately eroding support for TPP and jeopardizing its 
prospects for passage in Congress.

    There are also some key outstanding issues that need to be resolved 
in TPP. As I have stated in the past, my support for TPA by no means 
ensures that I will support just any version of TPP that happens to be 
submitted to Congress for approval.

    For me, the agreement must achieve a very high standard for the 
protection of intellectual property, including twelve years of data 
protection for biologics, and strong copyright and trademark 
protections. The intellectual property provisions of TPP must also 
effectively address the theft of trade secrets and ensure effective 
implementation and enforcement of IP obligations. Provisions to enhance 
digital trade and address state-owned enterprises are also critical, as 
is real market access for U.S. exports.

    There are other major negotiations that are ongoing, and I am 
confident that renewal of TPA would help will help bring those to 
successful conclusions as well.

    Most notably, there is the Trans-Atlantic Trade and Investment 
Partnership, or TTIP. TTIP must be a comprehensive agreement, and 
include provisions on financial services regulation and strong 
investor-state dispute settlement mechanisms. The agreement must also 
achieve a high level of IP protection and effectively address the 
systemic misuse of geographical indications to create market barriers.

    I am also hopeful the administration will soon be able to conclude 
negotiations to update the Information Technology Agreement. And I 
expect we will see progress in advancing the negotiation of a Trade and 
Investment Services Agreement and an Environmental Goods Agreement.

    Ambassador Froman, all of this represents a very ambitious agenda 
for your office and for the administration as a whole. But, if I 
haven't been clear up to now, let me restate: TPA must be considered an 
essential element for all of these endeavors.

    I believe Congressional renewal of TPA will unleash new energy in 
our international trade agenda, helping to propel our economy to 
greater growth and prosperity. History shows that trade agreements 
concluded with TPA in place create new economic opportunities and 
higher-paying American jobs.

    This year we truly are at the precipice of opportunity. The only 
question is whether both parties in Congress and the Administration can 
work together to put in place the necessary tools to seize this 
opportunity.

    I certainly think we can, and I will do everything in my power as 
Chairman of this committee to ensure our mutual success.

    Ambassador Froman, I look forward your testimony today and to 
working with you to advance a strong, pro-growth trade agenda.

    I'd now like to turn it over to Senator Wyden for his opening 
remarks.
                                 ______
                                 
                 Prepared Statement of Hon. Ron Wyden, 
                       a U.S. Senator From Oregon
    Thank you, Chairman Hatch, and thank you, Ambassador Froman, for 
being here today. My bottom line on how the U.S. can improve its trade 
policy is this:

    Today's global economy moves at a million miles an hour, so 
clinging to yesterday's outdated trade policies is a loser for the 
millions of middle-class American workers counting on political 
leadership to help create more high-skill, high-wage, middle-class 
jobs.

    Trade agreements need to bulldoze barriers and open new markets to 
exports made by America's middle class--the things we grow or raise, 
build or forge. Done right, trade agreements can help grow the 
paychecks of middle-class families. That will help take our economic 
recovery from a walk to a sprint.

    According to a report by the Commerce Department's International 
Trade Administration, many export-driven jobs--from precision welding 
to engineering design--offer higher pay and more generous benefits than 
jobs that aren't tied to exports.

    Workers who design and build products like machinery, electrical 
gear or transportation equipment get into the winners' circle when the 
goods they make are exported. The goal of trade agreements should be to 
take the fruits of American labor and ship them to markets around the 
world.

    With that said, it's easy to understand why many American workers 
are frustrated when they haven't gotten a meaningful raise in decades--
or worse, they've lost jobs and fallen out of the middle class. When 
discouraged Americans argue that they've been hurt by trade, their 
voices should not be ignored. They must be heard. Those who favor a 
trade agenda that takes on the challenges of a hyper-competitive global 
economy have a responsibility to make the case that it will work for 
America's middle class.

    I bring that up because the President said during the State of the 
Union address that, ``. . . past trade deals haven't always lived up to 
the hype.''

    So, Ambassador Froman, I'd like you to outline today how the 
administration plans to change that with fresh trade policies that will 
lift wages, help create middle-class jobs, and expand the winner's 
circle.

    I hope to discuss what safeguards will be in place to ensure that 
any workers impacted by trade have access to retraining, health 
coverage, and other sources of support that connect them with new 
opportunities. And perhaps most importantly, I hope to hear how the 
administration will make the case to America's workers that these 
modern policies will deliver for them.

    To keep my remarks brief, there are a few specific issue I'll 
address.

    The first is tough enforcement. There has never been a greater need 
for the U.S. to back its workers and businesses by strongly enforcing 
our trade laws and agreements. And in the face of unfair schemes by 
foreign governments and companies that undercut American jobs and 
exports, trade enforcement works.

    Just ask any one of the hundreds of Oregonians who work at 
SolarWorld, a solar-panel manufacturer in my home state. When Chinese 
companies made an end-run around our trade laws that threatened 
SolarWorld and its employees, SolarWorld fought back and won. That 
victory preserved 900 good Oregon jobs. And American trade enforcers 
have to keep at it, because China and other governments won't stop 
trying to get around the rules anytime soon.

    With 21st century trade agreements, tough enforcement also needs to 
hold foreign governments accountable for commitments to uphold strong 
labor rights and environmental protections. Those are bedrock elements 
of trade agreements, and they are not to be ignored or pushed to the 
periphery.

    The second issue to address is technology. Just as containers 
changed trade in the 20th century, the Internet is changing trade in 
the 21st, enabling more efficient ways to exchange goods and services 
internationally. Three decades ago, an entrepreneur with big dreams in 
a place like Mt. Vernon, Oregon--a small town of 500--didn't have the 
Internet as a means to access global consumers. Today, that 
entrepreneur does. And that access could be direct or through Internet 
platforms, which could include eBay, Amazon, and Etsy.

    The nation's trade policies must take advantage of economic areas 
where there is clearly ``Advantage USA.'' That means promoting and 
protecting a free and open Internet--keeping open what is, in effect, 
the shipping lane of the 21st century.

    The third issue to address today is transparency. The American 
people have made it very clear that they will not accept secretly-
written agreements that don't see the light of day until the very last 
minute. That was too often the way things worked in the past, but 
that's not good enough anymore. Nor is it enough to respond to 
important questions with the same inadequate refrain: that Americans 
will benefit from trade deals. People have the right to know what's at 
stake in negotiations before they wrap up. Our trade policies are 
stronger when the American people are part of the debate--and when 
their elected representatives in Congress are able to conduct effective 
oversight.

    Furthermore, transparency is also critical for a trade promotion 
authority bill. Once a bill is ready, it must be available to the 
public. And there must be a fair and open process for its review and 
consideration. I will work with Chairman Hatch to develop a process 
along these lines.

    No matter where members of this committee stand, I know everyone 
here is ready to have a serious debate on how to make trade policy work 
best. My focus will be on finding new opportunities to sell red, white 
and blue American goods overseas, helping businesses create jobs, and 
growing the paychecks for middle-class families. I'm eager to find ways 
for this committee to work on a bipartisan basis with the 
administration to accomplish those goals.
                                 ______
                                 

                             Communications

                              ----------                              


           Advanced Medical Technology Association (AdvaMed)

                    SENATE FINANCE COMMITTEE HEARING

                     U.S. Trade Policy Agenda 2015

                            January 27, 2015

                        STATEMENT FOR THE RECORD

Introduction
The Advanced Medical Technology Association (AdvaMed) appreciates the 
opportunity to provide comments on the U.S. trade policy agenda for 
2015 to the Senate Finance Committee. AdvaMed represents approximately 
300 of the world's leading medical technology innovators and 
manufacturers of medical devices, diagnostic products and medical 
information systems. AdvaMed members range from the smallest to the 
largest medical technology innovators and companies. AdvaMed is 
dedicated to the advancement of medical science, the improvement of 
patient care, and in particular to the contribution that high quality 
health care technology can make toward achieving those goals.

The medical technology industry is one of the few remaining 
manufacturing sectors of the U.S. economy with a positive net balance 
of trade (over $6.3 billion in 2013), and the people who work in the 
U.S. medical technology industry depend on trade to ensure security, 
growth, and new opportunities. In fact, medical technology industry 
salaries are nearly 30% higher than the average U.S. salary because the 
industry employs so many highly skilled workers in the areas of 
research and development, manufacturing, sales and management. Nearly 
two million American jobs depend on the success of the medical 
technology industry--roughly 350,000 directly and 1.6 million 
indirectly.

Medical technology accounts for 3 percent of U.S. Gross Domestic 
Product. The United States exports over $42 billion worth of medical 
devices annually. AdvaMed members supply medical technology to almost 
every country in the world. Opening markets and ensuring a level 
playing field are essential to the future growth of the U.S. medical 
technology industry.

Our industry supports the Administration's current trade agenda and 
recognizes the Finance Committee's work to help push major agreements 
forward. We appreciate the committee's work with USTR on the 
negotiations on the Trans-Atlantic Trade and Investment Partnership 
(TTIP) and the Trans-Pacific Partnership (TPP) and other elements of 
the Administration's trade agenda. We look forward to continuing to 
work with the Congress to secure support for strong, comprehensive free 
trade agreements.
Trade Promotion Authority
AdvaMed members support free trade and believe Trade Promotion 
Authority (TPA) is critical to guide and strengthen United States Trade 
Representative's objectives in trade negotiations. AdvaMed supports the 
early adoption of trade promotion authority outlining key negotiating 
objectives for U.S. free trade agreements. TPA should include 
procedures for Congress to consider as it addresses trade legislation. 
This will help ensure trade agreements are implemented in a fixed time 
period and without amendments.
TPP
The negotiations on a Trans-Pacific Partnership (TPP) Agreement provide 
a critical opportunity to deepen the U.S. commercial relationship with 
the vital Asia Pacific region. While the United States already has FTAs 
with several of the TPP countries, the negotiations with this broader 
bloc provide an important demonstration of U.S. trade policy and can 
expand and enhance the economic benefits in these agreements. This is 
also an opportunity to demonstrate the U.S. commitment to strong FTA 
provisions.

AdvaMed strongly supports the inclusion of provisions in the TPP that 
would establish transparency and procedural fairness in the process by 
which national health care authorities establish reimbursement for 
medical devices. Such provisions would provide for a fair, predictable 
process that would limit disputes and enhance confidence in decision-
making processes, thus contributing to good governance.

AdvaMed believes that in order to fulfill its promise as a high-level, 
21st century trade agreement, the TPP agreement should include specific 
provisions to ensure full access to safe, effective, and high quality 
medical devices in order to advance public health and patient access. 
It is important for the TPP agreement to address non-tariff barriers 
affecting the medical device industry, especially non-transparent or 
discriminatory regulatory procedures. AdvaMed supports the inclusion in 
the TPP agreement of provisions that will ensure that members grant 
efficient regulatory approvals, while ensuring product safety.
TTIP
AdvaMed supports the negotiation of a comprehensive free trade 
agreement (FTA) between the United States and the European Union (EU), 
under the framework of the TTIP. We would like to see provisions 
addressing issues affecting our industry in U.S.-EU bilateral trade and 
in trade with third countries.

Although the U.S. and EU use different approaches to determine the 
safety and efficacy and/or performance, as appropriate of medical 
technology, studies have demonstrated that each system delivers similar 
results in terms of these basic objectives. AdvaMed supports 
cooperation between the regulatory agencies on both sides of the 
Atlantic as a way to promote understanding and reduce unnecessary 
regulatory burdens. Rather than attempting comprehensive 
``convergence'' of these two systems, such as a mutual recognition 
agreement (MRA), we recommend focusing on specific areas of 
``convergence.'' We have provided USTR an explanation of these issues.

We also believe that there should be improved transparency in the 
regulatory process in the EU. Stakeholders should be provided 
regulatory proposals while there is still a possibility of making 
meaningful changes--which is usually before the proposals are sent from 
the European Commission to the Parliament and Council. The Commission 
should be required to recognize such contributions--much in the way 
U.S. agencies operate under the Administrative Procedures Act. This 
process would improve the regulatory process.

AdvaMed also recommends that TTIP include a regular dialogue between 
the U.S. Food and Drug Administration (FDA) and DG Internal Market, 
Industry, Entrepreneurship and SMEs (GROW), involving USTR and U.S. 
Department of Commerce, to exchange information on regulatory measures 
being considered by either party that could impact trade and determine 
areas for additional ``convergence.'' In advance of these meetings, 
industry would be consulted to provide their views on regulators' 
proposals. This dialogue could be held under provisions similar to 
Korea-U.S. FTA, but strengthened to ensure that future measures be 
explicitly discussed and industry has the opportunity to comment on 
non-confidential proposals and has access to the results of such 
meetings.

In addition to regulatory cooperation, we urge both governments to 
address the following issues in the context of a comprehensive Free 
Trade Agreement. We have provided USTR our views on the eliminating 
border tariffs, improving Customs procedures, enhancing the single 
market in the EU for medical technology, reducing late payments to our 
members, and including provisions on transparency and procedural 
fairness in Member States' reimbursement systems.

Our industry faces an array of issues outside the U.S. and EU. Our 
member companies source many of their products sold globally from the 
U.S. and/or the EU. Therefore, governments in both the U.S. and EU 
should be interested in ensuring that medical technology companies are 
treated fairly by third country governments. We ask that the TTIP 
include provisions that encourage the relevant agencies to work on 
behalf of our medical technology firms. We have provided USTR with a 
list of specific areas for cooperation on third country issues.
Conclusion
Trade liberalization through the conclusion of TTIP and TPP would 
enhance economic growth and improve the quality of life for millions of 
patients in Europe, Asia, Latin America, and the U.S. The adoption of 
trade promotion authority that guides and strengthens USTR's 
negotiating objectives is critical for the early conclusion of these 
agreements. We hope the Administration and Congress will work together 
to accomplish these very important objectives.
                                 ______
                                 

             American Apparel & Footwear Association (AAFA)

                        we wear' jobs

                     Statement by Juanita D. Duggan

                           President and CEO

                American Apparel & Footwear Association

                  Before the Senate Finance Committee

                                 On The

                     2015 U.S. Trade Policy Agenda

                            January 27, 2015

On behalf of the members of the American Apparel & Footwear Association 
(AAFA), and the four million U.S. workers our industry employs, we 
welcome this hearing and the opportunity to secure quick action on a 
number of pending trade measures.

Our members make and sell clothes and shoes around the world and in the 
United States. In order to reach our customers and do business, our 
products and inputs need to be able to cross those borders easily and 
seamlessly.

Earlier this month, we submitted a letter to House Ways & Means 
Committee Chairman Paul Ryan (R-WI) and Senate Finance Committee 
Chairman Orrin Hatch (R-UT), urging immediate enactment of legislation 
to renew expired and expiring trade programs. The letter is attached 
for reference.

A robust trade agenda eliminates barriers that separate our members 
from their customers and from their suppliers. When we knock down these 
barriers, we create jobs, reduce costs, and generate consumer 
opportunities.

Below are some key statistics that highlight the importance of free and 
open trade for the U.S. apparel and footwear industry:

   98 percent of U.S. footwear is made offshore;
   97 percent of U.S. apparel is made offshore; and
   95 percent of the people on the planet who wear clothes and shoes 
        live offshore.

In 2015, we urge Congress to take immediate action on a number of 
pending measures, including:

   Renewal and update of the Generalized System of Preferences (GSP) 
        program;
   Renewal of the African Growth and Opportunity Act (AGOA);
   Renewal of the Nicaraguan Tariff Preference Level (TPL) program;
   Renewal of Trade Promotion Authority (TPA) to pave the way for 
        conclusion of trade agreements being negotiated with trading 
        partners in Europe and the Pacific Rim; and
   Renewal and restart of the expired Miscellaneous Tariff Bill (MTB) 
        process.

Early, bipartisan action on these measures will support trade-based 
U.S. jobs, benefit U.S. consumers, and signal immediate re-engagement 
to our trading partners.

We thank you for the opportunity to submit our comments, and look 
forward to working with the Committee toward quick Congressional 
approval of these critical programs.

American Apparel & Footwear Association (AAFA)
1601 North Kent Street Suite 1200
Arlington, VA 22209

(703) 524-1864
(800) 520-2262
(703) 522-6741 fax
www.wewear.org
                                 ______
                                 

                                  ACLI

                   Financial Security . . . for Life

                        Statement for the Record

                        Senate Finance Committee

        Hearing titled ``President Obama's Trade Policy Agenda''

                            January 27, 2015

The American Council of Life Insurers (ACLI) is pleased to submit this 
statement for the hearing record expressing support of the life 
insurance industry for a robust U.S. international trade agenda.

The American Council of Life Insurers (ACLI) is a Washington, D.C.-
based trade association with approximately 300 member companies 
operating in the United States and abroad. ACLI advocates in federal, 
state, and international forums for public policy that supports the 
industry marketplace and the 75 million American families that rely on 
life insurers' products for financial and retirement security. ACLI 
members offer life insurance, annuities, retirement plans, long-term 
care and disability income insurance, and reinsurance, representing 
more than 90 percent of industry assets and premiums. Our public 
website can be accessed at www.acli.com.

ACLI is a strong supporter of international trade liberalization, open 
markets and regional global efforts to remove unnecessary barriers for 
the efficient provision of insurance, reinsurance, and retirement 
security products. We thank the Chairman and Ranking Member of the 
Senate Finance Committee for holding this important hearing, and we 
support the Administration's robust trade agenda, which includes the 
Trans-Pacific Partnership (TPP), the Trade in Services Agreement (TISA) 
and the Trans-Atlantic Trade and Investment Partnership (TTIP) 
initiatives.

ACLI also supports passage of a modernized Trade Promotion Authority 
(TPA) for purposes of providing Congressional, and thus stakeholder, 
input into the negotiating process and to support conclusion and 
Congressional consideration of the aforementioned trade initiatives. 
TPA is critical to a seriously dedicated and effective trade agenda.

Trade issues presently of concern to the insurance industry include:

   Foreign equity caps--A threshold issue is the need for elimination 
        of unjustifiable and anticompetitive foreign equity caps, which 
        are particularly prevalent in Asia (China, India, Malaysia, 
        Myanmar, Philippines, Thailand, Indonesia, etc.) and truly 
        alter and restrict ACLI's member companies' ability to operate 
        effectively and holistically overseas. We are optimistic that 
        the cap will be raised in India from 26% to 49% as an 
        incremental but important improvement.

   Limitations on the conduct of cross border reinsurance--reinsurance 
        is a global risk transfer mechanism designed to diversify risk, 
        reduce risk concentrations in local markets and provide 
        additional capacity and coverage to local markets often against 
        the occurrence of low frequency high intensity events. 
        Therefore, the changes in Brazil and Argentina in 2012, India 
        in 2013 and now Indonesia not only place constraints on 
        reinsurers' business operations, but also risk pushing up 
        prices, limiting capacity for local consumers and increasing 
        local risk concentrations, and global fragmentation and 
        stagnation.

   Restrictions on cross border data flows (forced localization)--ACLI 
        believes that requirements that all data be maintained in a 
        given jurisdiction should be prohibited. Foreign companies 
        doing business in a foreign country should be permitted to 
        transfer electronic information out of that country for 
        processing offshore. Companies should be free to manage and 
        maintain data from headquarters, through affiliates, through 
        regional centers, and through third party vendors as long as 
        the data protection requirements of the local jurisdiction are 
        satisfied. Forced domestication of data processing in Korea is 
        already the subject of dispute with several of its trade 
        partners, and proposals in other countries would put many 
        global companies in a conflict of laws predicament between 
        their home country supervisor's requirement for comprehensive 
        group risk management and reporting.

   Reversals of Private Account Pensions--ACLI supports the 
        maintenance and expansion of the World Bank model of 
        individually funded defined contribution pensions, managed by 
        the private sector. We believe now more than ever that the twin 
        pressures of increased longevity and lower fertility rates will 
        only increase funding gaps for national governments in both 
        developed and developing markets. While still relatively new in 
        some markets (India 2013), these systems have substantially 
        reduced underfunding of government liabilities and created deep 
        and sustained markets for long term investment instruments.

   Other issues of strong interest include provisions supporting 
        regulatory predictability and transparency, provisions 
        addressing unfair competition from State-Owned Enterprises and 
        clearly articulated and transparent investment protections.

We appreciate the Administration's dedicated work on the TPP, TISA and 
TTIP initiatives, as well as on issues of implementation and 
enforcement of a bilateral nature--such as the cross border data flows 
issues currently under review in KORUS, and stopping the implementation 
of mandatory reinsurance cessions to a new state owned reinsurer in 
Indonesia. We look forward to Congressional passage of TPA as soon as 
is practicable. ACLI believes that such efforts will result in an open, 
strong and sustainable global marketplace.

The insurance industry is not only a provider of financial security by 
indemnifying risks faced by individuals and business--such as sickness, 
loss of life, liability, and property damage, to name a few, but also 
one of the world's largest institutional investors. A strong global 
marketplace with clear, transparent and dependable trade rules is 
critical to the health of our industry and to global security.

We appreciate the opportunity to submit this statement for the record. 
If you have any questions, please contact Maurice Perkins, Senior Vice 
President--Federal Relations (202.624.2137, [email protected]) or 
Dianne Sullivan, Vice President--Trade (202.624.2106, 
[email protected]).
                                 ______
                                 

                    The Honorable James K. Glassman

                     American Enterprise Institute

                            1150 17th St NW

                          Washington DC 20036

                           [email protected]

Senate Committee on Finance
Attn. Editorial and Document Section
219 Dirksen Senate Office Building
Washington, DC 20510

February 9, 2015

Dear Members of the Committee:

As the Senate Committee on Finance examines key issues within President 
Obama's 2015 trade policy agenda, I would like to share the attached 
op-ed that I wrote for Roll Call recently. The piece outlines the 
importance of resolving the problem of Sovereign Patent Funds (SPFs) 
via the Transatlantic Trade and Investment Partnership (TTIP) and the 
Trans-Pacific Partnership (TPP)--trade agreements that present historic 
opportunities to open up new markets and strengthen economic ties with 
important trading partners.

Already established in France, Korea, and China, SPFs are an 
increasingly important--and troubling--trade policy issue. SPFs are 
government-controlled entities that operate with the full authority and 
resources of national and local governments and distort markets by 
propping up home enterprises by threatening or pursuing intellectual 
property (IP) infringement litigation against foreign industrial 
rivals. Examples of these offenders include Intellectual Discovery 
(Korea), France Brevets (France), and the Chinese Government's Ruichuan 
IPR Funds, which was established in the spring of 2014.

As my op-ed argues, the United States must be a leader in preventing 
foreign governments from channeling their financial and diplomatic 
clout into SPFs, thus risking harm to free and fair trade, innovation, 
and the well-being of consumers both here and abroad. SPFs threaten 
this mission by degrading established trade relationships through de 
facto subsidization of private home companies and through threatened or 
realized retribution against competitive foreign companies. In this 
environment, U.S. businesses face an unnecessary threat, especially 
since the U.S. Government has prudently chosen not to go down the path 
of creating an SPF of its own.

For this reason, Congress must ensure that both TIIP and TPP prevent 
SPFs from becoming viable instruments of 21st Century international 
trade policy. In addition, the G-20, with Congressional support, should 
urge the World Trade Organization (WTO) to prevent member nations from 
hosting SPFs, on the grounds that these funds' existence and operations 
undermine the global economic growth and stability that the G-20 
advocates. SPFs also violate the spirit, and perhaps the letter, of the 
Agreement on Subsidies and Countervailing Measures, which prevents 
members of the WTO from using government power to secure advantages 
against foreign competitors.

The Senate Committee on Finance is committed to supporting free trade, 
fair competition and innovation. SPFs are on the rise and should be 
addressed as part of the Committee's agenda to prevent more serious 
problems from arising in the future.

Thank you for your work on this important issue and for considering my 
views.

Sincerely,

Ambassador James K. Glassman
Visiting Fellow, American Enterprise Institute
Member, Investment Advisory Committee, Securities and Exchange 
Commission
Former U.S. Under Secretary of State for Public Diplomacy and Public 
Affairs

The views in this letter are my own and do not represent those of any 
organization with which I am affiliated.
                                 ______
                                 

Will Patent Reform Tackle Government Trolls?--Commentary

Roll Call, James K. Glassman, November 30, 2015

With the election victory by the Republicans, Congress at last seems 
ready to tackle two issues on which the parties' differences are 
narrow: trade and intellectual property.

There's already a broad consensus that the U.S. must do more to open 
markets in Europe and Asia and that our patent system is badly broken.

These two issues are linked. The goal of reform for each is economic 
growth, driven in large measure by technological innovation, America's 
comparative advantage. But Europeans and Asians are well aware of the 
U.S. edge, and they are working hard to blunt it. One effective means 
affects both trade and IP policy. It's the sovereign patent fund, or 
SPF.

SPFs have become tools to deter foreign competition in countries where 
such practices exist, such as China, Japan, Korea and France. They are, 
in effect, government-sponsored patent trolls. Like private-sector 
trolls, or patent-assertion entities, they exist not to produce 
anything themselves but to own patents, license them and threaten or 
file litigation against what they consider to be infringers.

Certainly, there's a good case to be made for private patent-assertion 
firms, such as Intellectual Ventures, founded in 2000 by Nathan 
Myhrvold. He argues persuasively that ``our goal is to grow a more 
efficient invention economy that will energize technological progress, 
potentially changing the world for the better.''

But SPFs are different. They are owned, or co-owned, by governments, 
and the unabashed goal of these funds is to protect and promote home-
grown industries, not improve the global economy. ``Some SPFs, like 
France Brevets, even admit to being retaliatory or discriminatory 
instruments against foreign actors regardless of whether the original 
claim is legitimate or not,'' concludes a recent report by the European 
Centre for International Political Economy.

France Brevets is a =100 million SPF owned jointly by the French 
government and Caisse des Depots, a private firm ``under Parliament's 
supervision and guarantee.'' It's been aggressive in defending national 
interests, filing lawsuits last year against HTC America and LG 
Electronics. As a state-owned enterprise, SPFs can marshal government 
resources--including not just money but regulatory power, or the threat 
of it--against foreign firms.

Such behavior appears to be a violation of the spirit, and perhaps the 
letter, of the Agreement on Subsidies and Countervailing Measures, 
which prevents members of the World Trade Organization from using 
government power to secure advantages against foreign competitors. By 
marshaling state authority against innovators, they deter economic 
growth.

France Brevets, however, pales in comparison to China. Local and 
federal authorities are establishing patent pools ``to defend domestic 
companies,'' the ECIPE report states. SPFs are becoming an important 
element of China's announced strategy of promoting ``indigenous 
innovation.'' The ECIPE authors worry that SPFs ``legitimize similar 
behavior by bigger economies like China that are actively pursuing 
industrial policy through . . . the establishment of their own SPFs.''

Japan, an innovator in industrial policy if not necessarily in 
technology, established the Innovation Network of Japan in 2009 as a 
public-private partnership to promote home-grown industries. In July, 
the Network set up its own pool with plans to acquire and defend 5,000 
patents to start.

These SPFs--still growing in Asia and Europe--are exercises in 
mercantilism in nations where growth and innovation is slowing. IP 
rights are valuable assets, and with the weight of government behind 
them, they can be mobilized into battle against foreign competition.

In the long run, protectionism is futile. Only innovation itself can 
bring economic rewards. But SPFs can do enormous damage, igniting 
retaliation, raising the costs of innovation and reducing the value 
that flows to consumers from new technology. The ECIPE study says it's 
a ``lose-lose scenario.''

Patent reform in the United States must address the SPF phenomenon, 
placing restrictions on the ability of funds sponsored by foreign 
governments to litigate unfairly against U.S. firms. Also, the 
Transatlantic Trade and Investment Partnership and the Trans-Pacific 
Partnership, both under negotiation, must prevent SPFs from becoming 
protectionist instruments with the power to corrupt the free-trade 
objectives of those agreements. And last, the G-20 should assert its 
opposition to the very concept of SPFs with a consensus declaration 
that they should be outlawed by the WTO. The G-20's goal is to promote 
global economic growth and stability. SPFs do the opposite.

Ambassador James K. Glassman, a visiting fellow at the American 
Enterprise Institute, served as undersecretary of State for public 
diplomacy and public affairs from 2008 through 2009. From 1987 to 1993, 
Glassman was part owner and editor of Roll Call.
                                 ______
                                 

               President Obama's 2015 Trade Policy Agenda

               United States Senate Committee on Finance

                       Tuesday, January 27, 2015

                 Statement for the record on behalf of:

                           Coalition for GSP

                  1001 Connecticut Ave, NW Suite 1110

                          Washington, DC 20036

                              202-347-1085

The Coalition for GSP welcomes the opportunity to submit the following 
statement for the ``President Obama's 2015 Trade Policy Agenda'' 
hearing record. We are particularly happy to echo the testimony of U.S. 
Trade Representative Michael Froman, who stated ``the Administration 
urges Congress to expeditiously renew authorization of the GSP 
program.'' Like Ambassador Froman, the Coalition for GSP ``stands ready 
to work with you to that end.''

The Coalition for GSP is a group of American companies and trade 
associations organized to educate policy makers and others about the 
important benefits to American companies, workers, and consumers of the 
Generalized System of Preferences (GSP) program. Its members range from 
small, family-owned businesses to Fortune 500 corporations and operate 
in all 50 states, the District of Columbia, and Puerto Rico.

Implemented in 1976, the Generalized System of Preferences (GSP) is a 
special trade program that eliminates U.S. import duties on certain 
products from about 125 developing countries. Over time, American 
companies have come to rely on the GSP program to lower costs for 
inputs needed to produce goods in the United States and finished 
products for American families. Lower costs spur demand and allow 
companies to create good-paying American jobs.

However, GSP expired on July 31, 2013 and Congress has not yet passed 
legislation to renew it. As a result, American companies have paid 
nearly $2 million a day--and more than $1 billion to date--in higher 
taxes while awaiting congressional reauthorization of the GSP program. 
The mounting costs and uncertainty surrounding when GSP might be 
renewed have had a chilling effect on companies' ability to grow and 
compete in the competitive global marketplace.

American companies are impacted in a number of ways--sales fall if 
companies try to raise prices to compensate for the higher taxes, while 
margins are squeezed if they do not. Some companies with locked-in, 
long-term contacts actually lost money on every sale because of the 
imposition of new import taxes. All aspects of GSP importers' 
operations feel the effects of this negative business environment.

The Coalition for GSP surveyed hundreds of U.S. GSP program users in 
2014 and found that :

   44% of companies have delayed planned hires. For example, Kona 
        Bicycle in Washington has been unable to hire new R&D and 
        product development personnel, while Varaluz in Nevada and 
        McGuire Manufacturing in Connecticut cannot afford to replace 
        workers that have left voluntarily because of higher costs 
        resulting from GSP expiration.

   40% of companies have delayed or canceled job-creating investments. 
        B&C Technologies bought a facility to begin manufacturing in 
        Florida by April 2015, but it cannot afford the necessary 
        building upgrades to create those American manufacturing jobs 
        as planned because of higher costs imposed by GSP expiration.

   22% of companies have cut employee wages and benefits. The cost of 
        import duties has cut into the monies available to Stackhouse 
        Athletic in Oregon to pay for health care, forcing the company 
        to cut health care benefits for its nine workers.

   13% of companies have laid off workers. Matrix Metals laid off 75 
        workers at facilities in Iowa and Texas, while Vispak LLC in 
        Minnesota is going out of business completely because higher 
        production costs resulting from GSP expiration have made the 
        companies uncompetitive.

The full report, which includes many other company-specific examples, 
can be downloaded at http://bit.ly/GSP1Year.

Congress can stop this bleeding, and quickly, by passing legislation 
that provides for an immediate, retroactive GSP reauthorization. 
Renewal has bipartisan support in both the House and the Senate. 
Renewing the GSP program is ``low-hanging fruit'' for the 2015 trade 
agenda. It should be a priority because it would have an immediate 
positive impact on U.S. jobs and competitiveness.

More than 660 American companies and associations have joined the 
Coalition for GSP's call for Congress to do just that. The ever-growing 
list of organizations can be viewed at http://bit.ly/GSPsupporters. 
Nearly three dozen of them have provided brief statements (below, 
grouped by state) for this submission on the negative job impacts of 
GSP expiration and/or the potential jobs benefits of a retroactive 
renewal.

If you have further questions about the impacts of GSP expiration on 
American companies, or would like to speak with any of the companies 
that provided statements below, please contact Daniel Anthony at the 
Coalition for GSP at [email protected] or 202-347-1085.

The Coalition for GSP looks forward to working with the Finance 
Committee leadership on a bipartisan basis to pass an immediate, 
retroactive GSP renewal.

Zack Stenger, Owner of Blackbeam LLC in San Francisco, California: The 
GSP renewal would allow us to hire three sales and office-related 
employees for our growing small business.

Bruce Marlin, Purchasing Manager at Circa Corporation in San Francisco, 
California: As a rare, surviving U.S. manufacturer of leather goods, it 
is essential to us that GSP be renewed. Our competitors manufacture 
primarily in China and India, and we need as level a playing field as 
possible to remain viable as a U.S. domestic manufacturer.

Shaun Shroff, Vice President of Dura Brake Co. in Santa Clara, 
California: We would be able to reduce dependence on production in 
China and would be able to increase business on the East Coast. We 
would be able to hire two sales people on the East Coast as pricing 
would be competitive.

William Rebich, Owner of Pegasus Imports in Santa Rosa, California: 
Failure to new GSP has resulted in us being unable to hire new a new 
shipping and receiving person and has created mounting debt with 
declining sales. It is creating a condition where business expansion is 
almost impossible.

Peggy Altfater, Owner of Peggy V Designs in Petaluma, California: My 
business is a sole proprietorship. My sales have declined because I 
have needed to raise my prices on my product that no longer has GSP 
status. My job is in dire straits at this time because of price 
increases so I am asking you to please renew the GSP.

Jeffrey Tunstall, Vice President at Port Plastics in Chino Hills, 
California: Our company imports a substantial amount of materials from 
qualified GSP countries. Our total sales were down 7 percent in 2014 
while the economy grew an estimated 2.4 percent. We believe the 
downturn in our business is solely due to the higher costs of our 
products as a result of the GSP program not being renewed. This 
downturn in our business has resulted in our being forced to reduce a 
number of employees.

Jeni Tjoeng, Import Manager at Shamrock Manufacturing Co. in Chino, 
California: With the delayed renewal of GSP, we have seen the reduction 
of our sales in the past year because we have come uncompetitive. 
Instead of expanding our business, we are struggling to stay afloat.

William Dull, President of Triad Magnetics in Perris, California: Much 
of our industry produces in China. [With a GSP renewal], we could 
easily double our business--hire more workers and have the financial 
strength to invest in higher technology manufacturing here in 
California.

Fred Cohen, Owner of Omicron Granite & Supplies in Pompano Beach, 
Florida: The failure to renew the GSP has cost my company over $100,000 
per year in additional taxes, which has kept me from hiring at least 
two more workers. Please renew the GSP and make it retroactive.

Peter Allen, President of Royal Tropics, Inc. in McCall, Idaho: The GSP 
expiration and the uncertain return has caused my small company a 
hardship in the sense that the extra funds we have paid in duties has 
caused us to hold back on some planned expansion of our business. With 
the needed expansion we would be able to hire additional employees as 
well as fund some additional equipment. The GSP program is very 
important for small business in the U.S.

Brendan Naulty, Senior Vice President at Ajinomoto North America Inc in 
Itasca, Illinois: The impact of non-renewal of GSP impact for 2014 on 
Ajinomoto North America has been $690,678. This has put this business 
segment into a red figure for 2014. Therefore we could not expand our 
workforce or reinvest profits into other businesses. We would greatly 
welcome retroactive renewal, which would enable us to initiate capital 
projects that have been postponed due to availability of funds and 
uncertainty about the stability of this business segment.

Kelly Weinberger, Owner at WorldFinds Fair Trade in Westmont, Illinois: 
Our fair trade organization has been badly hurt by the non-renewal of 
GSP. A retroactive renewal would help create jobs in our U.S. office, 
as well as to provide more work to our low-income women artisan groups 
in the developing world.

Jim Angers, Partner at K2 Coolers LLC in New Iberia, Louisiana: We paid 
$79,000 in duties in 2014. We need to hire an additional warehouse 
worker and the duties are impacting our margins to the point of causing 
us to delay hiring.

Damian Jones, Designer & Founder at Aid Through Trade in Annapolis, 
Maryland: Our 22 year old fair trade company has depended on GSP since 
our inception. The current lapse and uncertainty makes it hard for me 
to have the confidence I need to invest and hire. Retroactive GSP 
renewal would give me cash and confidence to hire and invest.

Lisa Johnson, Vice President at COLE-TUVE, Inc. in White Marsh, 
Maryland: We sorely need renewal of the GSP so that our company has the 
chance to get back on track. Among other penalizing set-backs (such as 
limiting labor), we have not been able to raise our prices to account 
for this increase as we could not do that and stay competitive. Our 
capital is just about gone, and getting the GSP retroactively approved 
will allow us to reinvest resources back in to the business, to get 
beyond playing catch up and grow along with the prospects of a growing 
manufacturing sector.

Richard Harris, President of Accessories Unlimited in North Harwich, 
Massachusetts: Since the cancellation of GSP we have had our fixed 
margins reduced between 5 and 6 percent. We cannot raise our prices as 
they are set by our suppliers. We can cut corners where we can. We need 
employees on a full time basis, but have had to hire them on a part 
time basis and not hire the type of personnel we need to improve our 
business.

Steve Hill, Vice President at Polysource in Pleasant Hill, Missouri: 
The most damaging result of nonrenewal is the impact it has on U.S. 
manufacturers of global consumer goods. GSP allows U.S. manufacturers 
to take advantage of certain raw materials throughout the world that 
allows them to sell worldwide resulting in jobs and tax revenue. The 
impact on Polysource has limited our ability to compete and hire. We 
could easily justify the inability to hire for two new professional 
positions with full benefits if we had not experienced a loss of over 
$500k in the last 18 months.

Robert J. Murray, Operations Manager at General Carbon Corporation in 
Paterson, New Jersey: The lack of renewal of the GSP has caused General 
Carbon to limit its search for new hires. If the GSP was renewed and 
the duties refunded we would be in a much better position concerning 
new hires and improving the overall future of General Carbon. It may 
also lead us to make capital improvements to our facilities that we 
have been delaying to make pending the GSP renewal.

Gert van Manen, President of iTi Tropicals Inc. in Lawrenceville, New 
Jersey: We have paid $800,000 in duties since GSP expired and we are 
not charging our customers for this for various reasons, mainly we 
believe that it will be reinstated retroactively as it always has been. 
If this is not the case it will have serious consequences for our 
company. We are a small business with 25 people on payroll in business 
for 26 years.

Janis P. Rich-Gutierrez, Compliance Officer at Kalustyan Corporation in 
Union, New Jersey: We import materials from various countries around 
the world and have approximately 80 hard-working employees that further 
finish the product here. We value our employees and wish to keep them 
employed. However, due to GSP cancelation and the uncertainty of it 
being reinstated retroactively, we can purchase finished product for 
less money overall.

Joseph Kay, CEO of Biltmore Corporation in Manhasset, New York: We have 
lost business to foreign companies, for being unable to manufacture 
goods in the U.S.

Benny Nabavian, President of EORC in Farmingdale, New York: We are a 
very small company and the GSP expiration is really hurting our cash 
flow and income. Every penny counts in our business, especially in the 
current economic conditions. It is a question of survival for us.

Gabriel Khezrie, President of Fremada Gold Inc. in New York, New York: 
Due to the softness of the jewelry business in general, there has been 
tremendous pushback by our customers. They will not accept the 
additional price increases to accommodate the 5.71 percent tariffs that 
were never part of our pricing equation. This has led to less billings 
at our company. Accordingly we have had to let some staff go.

Donna O'Sullivan, U.S. Sales and Customer Service Manager at Janice 
Girardi Designs in Stone Ridge, New York: The non-renewal of the GSP 
has cost our company over $90,000. Unfortunately, we're not able to 
raise our prices to compensate for the duties we're now paying because 
it's already challenging to stay competitive in this economy. We've had 
to lay off a few people because of this and it's vital for us to have 
the GSP renewed.

Benjamin Justman, Royal Chain in New York, New York: Restoration of GSP 
will have a huge positive effect on our company. We will be able to 
reinstate some of the business lost to competition. Some customers have 
stuck with us based on our promise that we will refund the duty paid if 
GSP is renewed retroactively. Going forward, we will be able to rehire 
personnel that were laid off, as well as expand our business.

Nenad Milinkovic, Vice President at Vail International Corp. in New 
York, New York: Lack of GSP Renewal has precluded our company from 
hiring additional personnel, and we are now at a point facing layoffs 
for some of our workforce. We have been trying to hang in there in 
anticipation of the renewal, but this prolonged expiration has now 
placed a very serious financial strain on our business.

Scott Ferguson, President of CCS USA, Inc. in Hickory, North Carolina: 
To date, the expiration of GSP has cost my company over $125,000. It 
has cost jobs, investment and has crippled us competitively with lost 
business. Please retroactively renew this critical trade program!

Fred Starr, President of Thompson Traders in Greensboro, North 
Carolina: Thompson Traders is a start-up company, and after seven years 
of trial and tribulation, made it to a break-even in 2013. Then the GSP 
was allowed to expire, and due to our financial position and our 
inability to pass this charge onto our customers, we had to slow down 
growth, including hiring. We would be a different company today without 
this totally unanticipated tariff.

We've reduced our payroll by eight people, a 40 percent reduction and 
will not be adding people, until we have a better government 
environment, including the renewing of GSP. The renewal of GSP will 
allow us to grow, creating new job opportunities. Moreover, since we 
share profits with our employees, each job will become a better paying 
job whether salaried or hourly.

Most important, the return of our tariff payments, paid out since 
August 2013, will help Thompson Traders enter new domestic and foreign 
markets and build a much larger company, including domestic 
manufacturing investment--more jobs and 
better-paying jobs.

Greg H. Kirkland, President of Kirkland Associates, Ltd. in 
McMinnville, Oregon: In 2014 our small import company paid over $50,000 
in import duty charges on products imported from India. We currently 
desperately need to hire two additional employees. However, we simply 
can't afford to do that as the company profits will not support two new 
employees and continued import duty charges. If we were to see GSP 
passed, especially retroactively, we would immediately move toward the 
new employee additions. I know we are not a big deal to Washington, 
D.C. but this move would really help our company now and in the future.

Burak Cezik, Account Manager at Kervan USA LLC in Bethlehem, 
Pennsylvania: We ended up with a net loss in fiscal year 2014 due to 
GSP expiration. Accordingly, we are working on ways to cut jobs and 
holding off on our strategy of hiring regional sales managers. We would 
definitely hire new positions in the case of retroactive GSP renewal.

Amy Campbell, Founder of Brilliant Imports in Austin, Texas: Brilliant 
Imports has experienced, what is significant to a budding business, 
cash outflow due to GSP expiration . . . for a company that is less 
than three years old, this has been a hard blow to handle. In addition, 
there is extreme uncertainty on GSP renewal going forward therefore I'm 
keeping ``predictable'' cash outflows as tight as possible. As the 
Founder and Owner, I've let go of my PR firm, my Virtual Assistant (VA) 
as well as cut back on advertising (these are a few examples). There is 
no projection to hire any help going forward. Retroactive GSP renewal 
would be a nice boost to keep a relatively new business like Brilliant 
Imports afloat as well as lead to a hire of a VA and placement of 
Brilliant Imports in a fulfillment center . . . both of these are 
detrimental to my company's success.

Cathy Korndorffer, Chief Operating Officer at Chantal Cookware Corp in 
Houston, Texas: We are a small, privately owned company in the 
housewares industry. We struggle every year to compete on a global 
scale with huge conglomerates and every penny that our product cost 
increases counts. We have not laid anyone off because of GSP non-
renewal, but we cannot pass this along to our retailers. What happens? 
Our employees do not get raises. There is no money going into their 
401K plan. There is no Christmas bonus. There is a reduction in our 
medical insurance contribution from Chantal. Is it painful? YES!

Wajih Rekik, President of CHO America in Baytown, Texas: Importing 
olive oil from Tunisia and bringing a Tunisian olive oil to the U.S. 
consumer is a big challenge that was supported by the GSP advantage. 
Since GSP expiration, we froze hiring, gave up a plan to expand into a 
new warehouse. A retroactive renewal will be vital to us and will be 
translated into expansion of warehouse and at least three new hires.

Allan Zadik, Owner of FAZ Marketing in Houston, Texas: I had to close 
the import business as my selling price became uncompetitive. I did 
have to let go of two people as there was no way to keep sales up. I'm 
currently not importing products where GSP has affected my business.

Abe Shaheen, Owner of Shaheen Import Export Co. in Virginia Beach, 
Virginia: The GSP expiration and uncertainty about renewal has resulted 
in laying off three of workers at our company, and not being able to 
hire new employees. Retroactive GSP renewal would lead to more jobs at 
our company, and will enable us to expand our business.

Daniel Hamilton, President of Vortex Optics in Middleton, Wisconsin: If 
GSP is renewed with tariffs refunded, we could purchase new equipment 
needed for our U.S. manufacturing plans, move forward on building plans 
for expansion, and hire additional employees. All of the money would go 
right back into the local economy.
                                 ______
                                 

                      INTERNATIONAL WOOD PRODUCTS
                           ASSOCIATION (IWPA)

February 4, 2015

The Honorable Orrin G. Hatch
Chairman
Committee on Finance
United States Senate
Washington, DC 20510

The Honorable Ron Wyden
Ranking Member
Committee on Finance
United States Senate
Washington, DC 20510

Dear Chairman Hatch and Ranking Member Wyden:

Thank you for this opportunity to submit a statement for the record of 
the Senate Finance Committee's January 27th hearing on President 
Obama's 2015 Trade Policy Agenda.

IWPA is the leading international trade association for the North 
American imported wood products industry, representing 200 companies 
and trade organizations engaged in the import of hardwoods and 
softwoods from sustainably managed forests in more than 30 nations 
across the globe. Association members consist of three key groups 
involved in the import process: U.S. importers and consuming 
industries, offshore manufacturers and the service providers that 
facilitate trade. The vast majority of these companies are small- to 
medium-sized family-owned businesses.

We are hopeful that the Committee will move forward at the earliest 
possible date with retroactive renewal of the Generalize System of 
Preferences (GSP) trade program. As you know, GSP was enacted in 1974 
in order to eliminate import taxes on certain products from 
approximately 130 developing countries. The current GSP expiration, now 
in its 19th month, is the longest in GSP's 40-year history. Since GSP 
expired on July 31, 2013, American companies like our members have paid 
more than $1 billion in higher taxes.

The program's ongoing lapse is having a severe impact on these U.S. 
businesses. To compensate for higher taxes, some have been forced to 
lay off workers, delay new hires, cut worker benefits, and cancel job-
creating investments while awaiting congressional action. Retroactive 
renewal of GSP will allow for the refund of hundreds of millions of 
dollars in taxes paid by companies throughout the United States. 
Instead of struggling to stay in business, these companies could hire 
new workers, increase benefits for existing employees, and invest in 
future growth.

We look forward to continued opportunities to work with Senate Finance 
Committee Members and staff to renew GSP at the earliest opportunity. 
Please have your staff contact Joe O'Donnell, IWPA's Manager of 
Government Public Affairs, by e-mail at [email protected] or by phone at 
(703) 820-6696 if you have any questions or need additional 
information.

Sincerely,

Cindy L. Squires, Esq.
Executive Director

4214 KING STREET  ALEXANDRIA, VA 22302  TEL: 703-820-6696  FAX : 
                    703-820-8550

 [email protected]  WWW.IWPAWOOD.ORG

                                 ______
                                 

                        Statement for the Record

                 National Association of Manufacturers

               733 10th Street, NW, Suite 700

                          Washington, DC 20001

                      Senate Committee on Finance

               on ``President Obama's 2015 Trade Agenda''

                            January 27, 2015

    The National Association of Manufacturers (NAM) is pleased to 
provide the following statement to the Senate Committee on Finance on 
``President Obama's 2015 Trade Agenda.''

    The NAM is the largest manufacturing association in the United 
States, representing more than 14,000 manufacturers small and large in 
every industrial sector and in all 50 states. Manufacturing employs 
nearly 12 million women and men across the country, contributing more 
than $2.08 trillion to the U.S. economy in 2013 alone.

    Manufacturers in the United States increasingly participate and 
compete in a global economy that has become highly challenging, with 
slower-than-hoped-for growth in many parts of the world and increased 
competition from overseas. Not only do 95 percent of the world's 
consumers live outside our borders but world trade in manufactured 
goods has expanded to more than $11 trillion, of which U.S. 
manufactured goods exports only represent 9 percent. As well, economic 
activities overseas, from infrastructure and foreign government 
procurement to resource production and distribution, are providing 
fresh new opportunities for our manufacturers to invest and engage in 
growth-producing activities around the world that support a strong U.S. 
manufacturing base.

    The NAM has long championed a robust trade and investment policy to 
grow manufacturing in the United States. At its core, a robust and pro-
manufacturing U.S. trade policy should seek to open markets and level 
the playing field overseas, improve the competitiveness of 
manufacturers in the United States and ensure the strong enforcement of 
the rules of the trading system at home and by our trading partners.
Opening Markets Overseas Requires Trade Promotion Authority and Strong 
        New Agreements
    Trade and investment agreements play an outsized role in providing 
businesses of all sizes across all 50 states better access to the 
global economy. By setting the rules of the global trading system, 
multilateral, plurilateral and bilateral agreements level the playing 
field and enable manufacturers in the United States to compete more 
successfully.

    Most of the world's countries have agreed to a basic set of trade 
rules as part of several agreements under the auspices of the World 
Trade Organization (WTO). 
Efforts to strengthen and expand these rules for all WTO members and 
eliminate tariffs and other barriers in the ``Doha'' negotiations have 
unfortunately stalled as a few major countries have refused to pursue 
an ambitious agenda moving forward.

    The NAM is very pleased to see the WTO Trade Facilitation Agreement 
(TFA) move forward and is urging conclusion of an expansion of the 
Information Technology Agreement (ITA). The TFA is the first 
multilateral trade agreement to be concluded in the history of the WTO, 
and it has the potential to reduce significantly the barriers that 
countries--particularly developing countries--face in moving goods by 
increasing port efficiency, improving customs and regulatory processes, 
and upgrading infrastructure to increase trade exports. Now that the 
WTO agreement is on its way to ratification, countries will have to 
begin the work of assessing and implementing the commitments to realize 
the full benefit of the TFA. The United States is currently the largest 
single-country provider of trade-related assistance, and the U.S. Trade 
Representative has already committed to working with other donors and 
with WTO Members to help developing countries fully implement the TFA. 
The financial and technical assistance provided by the United States 
and others must be provided in a coordinated, strategic and efficient 
way to countries that are committed to implementation. We encourage 
Congress to work with USTR and other agencies to ensure that funds and 
other forms of assistance are being delivered in the most effective 
way.

    An expanded ITA, which is expected to eliminate tariffs on about 
200 additional technology products--or roughly $1 trillion in global 
sales each year--would create an estimated 60,000 new American jobs, 
enhancing innovation in the United States and increasing global GDP by 
roughly $190 billion. Manufacturers have strongly supported this 
expansion given the benefits of this tariff-cutting agreement not just 
to producers of new high-tech equipment, but to all manufacturers that, 
as consumers, will be able to benefit from lower costs and greater 
innovation. U.S. leadership on the ITA expansion has been critical and 
we continue to urge action by America's trading partners to agree to a 
broad ITA expansion package.

    Manufacturers also strongly support the negotiation of a broad 
Environmental Goods Agreement (EGA) as soon as possible. Global tariffs 
on environmental products are as high as 35 percent in some nations; 
eliminating these tariffs would have a substantial and positive impact 
on manufacturers who are working to develop new and improved goods 
aimed at solving environmental challenges. Achieving an EGA will unlock 
significant opportunities for manufacturers to decrease the cost of 
these products to consumers inside and outside the United States, drive 
innovation, and expand sales and manufacturing jobs. Negotiations are 
taking place this week on this important negotiation on which 
manufacturers are seeking quick action.

    The WTO is also seeking move forward on a long stalled global 
liberalization trade negotiations that began in Doha, Qatar, in 
November 2001. Manufacturers continue to seek an ambitious outcome that 
will open new markets, not lock in longstanding barriers to trade in 
manufactured goods.

    In addition to the WTO, the United States has negotiated free trade 
agreements on a bilateral or plurilateral basis. These agreements--
referred to as either free trade agreements (FTAs) or trade promotion 
agreements--eliminate barriers more comprehensively than the WTO 
agreements and set in place stronger and clearer rules to improve the 
competitiveness of manufacturers in the United States, including rules 
on the protection of intellectual property and investment and ensuring 
greater transparency and fair competition.

    The United States' experience under our FTAs demonstrates that 
where manufacturers from the United States can compete on a level 
playing field abroad, they can boost sales and grow their share of 
foreign markets. America's 20 existing free trade agreement partners 
account for less than 10 percent of the global economy but purchase 
nearly half of all U.S. manufactured goods exports.\1\ For many states, 
including Ohio and Texas, that figure is closer to 60 percent.\2\ The 
United States enjoys a nearly $60 billion manufacturing trade surplus 
with its trade agreement partners, compared with a $508 billion deficit 
with other countries.
---------------------------------------------------------------------------
    \1\ U.S. Department of Commerce, International Trade 
Administration, TradeStats Express, accessed at http://tse.export.gov/
TSE/TSEhome.aspx.
    \2\ NAM, U.S. Manufacturing Statistics--Manufacturing and Trade 
Data by State, accessed at http://www.nam.org/Statistics-And-Data/
State-Manufacturing-Data/Manufacturing-by-State.aspx.
---------------------------------------------------------------------------
            Renewing and Modernizing Trade Promotion Authority is 
                    Essential to a 
                    Robust U.S. Trade Policy
    To negotiate the type of comprehensive, high-standard and market-
opening trade agreements that have driven export growth and jobs across 
the country, trade promotion authority (TPA) is essential.\3\ TPA 
legislation has been in place and was utilized during the negotiation 
and implementation of the Uruguay Round Agreements creating the WTO and 
for 13 FTAs negotiated since 1974.\4\
---------------------------------------------------------------------------
    \3\ It is sometimes argued that hundreds of trade agreements have 
been negotiated without TPA. Those agreements are not the type that 
open markets overseas or include binding and state-of-the-art dispute 
settlement. For example, Trade and Investment Framework Agreements 
provide a useful opportunity for the United States to engage in 
economic discussions with foreign governments but do not obligate 
either country to open its market or address barriers.
    \4\ Of all U.S. market-opening FTAs, only the U.S.-Jordan FTA was 
implemented without TPA. Notably, the Jordan FTA is much less 
comprehensive and less developed than our other FTAs, and most 
prominently lacks the state-of-the-art time-limited dispute settlement 
provisions that are found in the North American Free Trade Agreement 
and all subsequent FTAs.

    Since TPA was put in place most recently in 2002, U.S. manufactured 
goods exports more than doubled from $623 billion to $1.38 trillion.\5\ 
Those exports support millions of American jobs, including, for 
example, 212,000 in Michigan, 189,000 in Pennsylvania, 185,000 in New 
York and 107,000 in New Jersey.\6\ In Oregon, Delaware and Maryland, 
manufacturing accounts for more than 80 percent of all state exports. 
Full state fact sheets are available at the NAM's website.\7\
---------------------------------------------------------------------------
    \5\ U.S. Department of Commerce, International Trade 
Administration, TradeStats Express, accessed at http://tse.export.gov/
TSE/TSEhome.aspx.
    \6\ NAM, U.S. Manufacturing Statistics--Manufacturing and Trade 
Data by State, accessed at http://www.nam.org/Statistics-And-Data/
State-Manufacturing-Data/Manufacturing-by-State.aspx.
    \7\ Id.

    Manufacturers welcomed the Bipartisan Congressional Trade 
Priorities Act of 2014, introduced at the beginning of last year by 
Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member 
Orrin Hatch (R-UT) in the Senate and by House Ways & Means Committee 
Chairman Dave Camp (R-MI) in the House.\8\ This legislation sets forth 
the much-needed Executive-Congressional framework to ensure that both 
branches of government work to achieve the strongest possible outcomes 
in our trade agreements. This legislation also provided important 
updates to the traditional TPA framework, including with respect to 
priority negotiating issues.
---------------------------------------------------------------------------
    \8\ NAM, Statement for the Record for Senate Finance Committee 
Hearing on ``Advancing Congress's Trade Agenda, the Role of Trade 
Negotiating Authority,'' (Jan. 16, 2014, accessed at http://
www.nam.org/Issues/Trade/Trade-Promotion-Authority/NAM-Statement-
Supporting-the-Bipartisan-Congressional-Trade-Priorities-Act/).

    Action on TPA is vital to ensure that U.S. negotiators can bring 
home the strongest possible outcomes in both the ongoing Trans-Pacific 
Partnership (TPP) and Transatlantic Trade and Investment Partnership 
(T-TIP) talks that will set in place new and stronger rules to level 
the global playing field and to engage in major new negotiations. Such 
legislation is also need for the EGA, the Trade in Services Agreement 
---------------------------------------------------------------------------
talks and future negotiations.

    Time is of the essence. Other major economies are already 
negotiating dozens of agreements without the United States that could 
put manufacturers and workers in the United States at a significant 
competitive disadvantage. If Congress does not move expeditiously to 
pass TPA and ensure the United States continues to lead in striking 
trade deals that drive manufacturing growth and job creation, we will 
be forced to sit on the sidelines while other countries negotiate deals 
that exclude us.

    Failure to move forward would deal a damaging blow to a recovering 
U.S. manufacturing sector facing significant competitive challenges. 
The United States is one of the most open economies in the world. 
According to the World Trade Organization, America has the lowest 
applied tariff of any G-20 country. But the World Economic Forum found 
that U.S. exporters face far higher tariffs abroad than their 
competitors in major markets like China, Russia, India and Brazil. 
Without TPA, the United States is unarmed in ability to eliminate those 
duties and other impediments to open and fair competition.

    The Bipartisan Congressional Trade Priorities Act of 2014 provides 
a very strong model to move forward on TPA as soon as possible. Not 
only does this legislation set forth clear and ambitious goals to 
eliminate tariffs and open overseas markets to U.S. goods, services and 
investment, it also establishes powerful new trade negotiating 
objectives that address existing and emerging commercial challenges to 
manufacturing growth and exports in markets around the world.

    For the first time in a TPA bill, the Bipartisan Congressional 
Trade Priorities Act confronts the serious and growing problem of 
forced localization barriers to trade. It seeks to eliminate trade 
distortions and unfair competition from state-owned enterprises and to 
promote regulatory transparency, procedural fairness and rule-making 
based on risk assessments and sound scientific evidence. It includes 
critical new provisions addressing cyber theft and protecting trade 
secrets and confidential business information.

    The legislation would foster manufacturing growth and innovation 
here in the United States. It includes highly important negotiating 
objectives to establish more open and fair trade in goods, improved 
transparency and protections and enforcement for intellectual property, 
and provisions that will ensure that U.S. property overseas is treated 
fairly and in accordance with core U.S. due process principles.

    Just as importantly, the legislation would restore the vital 
partnership between Congress and the President that facilitates the 
negotiation and approval of trade agreements. It enhances congressional 
oversight over trade negotiations and, for the first time, explicitly 
confirms and provides that any Member of Congress can access 
negotiating text, submit views and attend trade agreement negotiating 
rounds. Separate House and Senate advisory groups would oversee ongoing 
trade talks, including through regular, scheduled meetings.

    At the same time, the Bipartisan Congressional Trade Priorities Act 
provides the appropriate structure to empower U.S. negotiators to bring 
back the strongest possible trade agreements to open markets and level 
the playing field. Without this authority, our trading partners have 
little incentive to make tough decisions or put their best offer on the 
table.

    From the NAM's perspective, this legislation provided the type of 
framework needed to secure new, market-opening trade agreements. The 
NAM looks for new TPA legislation to be introduced shortly in the 114th 
Congress and urges Congress and the Administration to move forward on 
strong TPA legislation as quickly as possible.
            Strong, High-Standard and Market Opening Outcomes Are 
                    Required in 
                    Ongoing Negotiations
    The ongoing TPP and T-TIP negotiations hold enormous potential to 
expand U.S. exports and international sales and to promote jobs and 
economic growth if they are concluded successfully. Taken together, 
these agreements would open markets with nearly one billion consumers 
covering nearly two-thirds of global GDP and 65 percent of world trade.

    Yet, not just any agreement will suffice. The outcomes obtained in 
both the TPP and the T-TIP must be bold and concrete, particularly on 
market access, intellectual property and investment rules, the new 21st 
century issues and the agreement's overall enforceability. Weak and 
insufficient outcomes in these areas will put at risk broad-based 
manufacturing support for ultimate agreements which are made even more 
important given the number of countries at the negotiating table.

    In particular, the NAM has identified the following issues as 
critical:

   Market access: New and concrete market access, especially in the 
        major countries with which the United States does not already 
        have free trade agreements--Japan, Malaysia, Vietnam and each 
        of the EU member states. Each of these markets poses 
        substantial, but different, challenges to manufacturers, from 
        deeply embedded non-tariff barriers to tariffs and beyond. As 
        we have seen with the implementation difficulties in the Korea-
        United States Free Trade Agreement (KORUS FTA), strong and 
        detailed market-opening commitments matter deeply, particularly 
        in countries that have resisted more open competition and trade 
        liberalization. It is, therefore, critical that manufacturers 
        across our most vital industry sectors see outcomes on core 
        market access issues and related disciplines that will ensure 
        fairness and effective and substantial new market access. Even 
        with the EU, where tariffs are relatively low, the elimination 
        of tariffs would result in over $10 billion in duty savings, 
        and an even modest alignment of U.S. and EU regulatory 
        standards and nontariff barriers could increase combined GDP by 
        an estimated $106 billion.

   Strong and High-Standard Rules. The core rules of our modern free 
        trade agreements must actually achieve the ``model of 
        ambition'' that the TPP leaders promised in 2011. In 
        particular, intellectual property protections, from patents and 
        copyrights to trademarks and trade secrets, must be state-of-
        the-art, fully enforceable and applicable to all products. 
        Manufacturers strongly oppose any outcome that would provide 
        lengthy or indeterminate transition periods for some countries 
        on some types of intellectual property, whether or not based on 
        development or other indicators. Strong protections consistent 
        with U.S. law for duration of protection, as well as rigorous 
        enforcement provisions for intellectual property are a vital 
        jobs and manufacturing issue.

    Similarly, the outcomes on investment market access, protections 
        and enforceability must also provide full protection to 
        American investments in the TPP and T-TIP markets, including 
        access to the neutral investor-state dispute settlement 
        procedures that are contained in thousands of agreements 
        worldwide. All products and sectors must be accorded the same 
        basic neutral enforceability guarantees as should breaches of 
        major investment contracts in infrastructure, natural resources 
        and other domains that help drive U.S. exports into foreign 
        markets. Moving backwards on these rules as some countries have 
        proposed will undermine investment which is the biggest driver 
        of U.S. exports and commerce overseas.

   New Rules on Digital Trade and Fair Competition. New trade 
        agreements must also reflect the globally connected economy, 
        where digital trade and the use of cloud computing is 
        increasingly critical to manufacturers, particularly small 
        companies, as a means to access overseas markets. Strong trade 
        agreement commitments that ensure the ability to move data 
        across borders and that prohibit domestic localization 
        requirements for information technology infrastructure are 
        sought by industries across the manufacturing spectrum. As 
        well, fair competition in overseas markets, including with 
        respect to state-owned enterprises, is important to ensure 
        manufacturers can compete successfully in the global market. 
        Allowing strong standards in each of these areas to be riddled 
        with exceptions will not advance America's pro-manufacturing 
        agenda.

   Enforceability. Final agreements must also be fully enforceable and 
        comprehensive. The value of our trade agreements in helping to 
        grow manufacturers' opportunities and competitiveness overseas 
        is dependent on the fact that they are binding and enforceable.

    Strong and ambitious outcomes on market access, intellectual 
property, investment, cross-border data, fair competition and full 
enforcement are vital components of successful outcomes not only in the 
TPP and T-TIP negotiations but also other negotiations on which the 
United States may and should embark.
Improving Manufacturers' Global Competitiveness Requires New and 
        Improved Trade Legislation and Policies
    Manufacturers in the United States face stiff competition from 
competitors around the world both in global markets and here in the 
United States. To improve opportunities for our manufacturers, it will 
be important for Congress to pass and the President to sign key trade 
legislation, including the following legislation in this Committee's 
jurisdiction:

   Miscellaneous Tariff Bill (MTB). The MTB is a pro-competitive piece 
        of legislation that allows manufacturers in the U.S. to import 
        certain manufacturing inputs and other products duty free when 
        those products are not produced or available in the United 
        States. This decades old program has been critical to support 
        and grow manufacturing jobs in the United States by cutting 
        costs and strengthening our manufacturers' competitiveness in 
        the global economy. The MTB expired over two years ago, 
        resulting in a major $748 million tax on manufacturing in the 
        United States. Manufacturers are urging Congress to move 
        forward quickly on MTB legislation that will ensure a 
        predictable, transparent and timely process.

   Customs reauthorization. Customs reauthorization legislation is 
        needed to cut red tape and expedite legitimate trade at our 
        borders, while strengthening and requiring time-limited 
        enforcement activities to prevent transshipment and 
        illegitimate trade.

   Preference legislation. The NAM has long supported well-crafted 
        preference legislation, such as the Generalized System of 
        Preferences (GSP) that expired on July 31, 2013. Such 
        legislation helps developing countries expand their economic 
        growth opportunities, while also helping manufacturers reduce 
        costs on important inputs.

    Movement on this legislation is an important part of a robust trade 
policy that will advance our manufacturers' global competitiveness.
Enforcement of Trade Agreements and Trade Rules Is Also Critical
    Enforcement of trade rules, both domestic and those contained in 
international agreements, is also an important feature of a robust 
trade strategy.
            Trade Agreement Enforcement Ensures that America Gets the 
                    Bargain it 
                    Negotiated
    For our trade and investment agreements to be successful, it is 
vital to ensure effective enforcement of the commitments contained in 
those agreements by our trading partners and the United States to 
create a more level playing field.

    On the international side, the United States has worked actively 
through successive administrations to address market access barriers 
and other unfair treatment of U.S. exports and products. Before 
agreements first enter into force, the Office of the United States 
Trade Representative (USTR) works vigorously to ensure the full 
implementation of commitments. In most cases, commitments are 
implemented fully. In cases where they are not, USTR works through the 
consultation and ultimately the dispute settlement provisions provided 
in trade agreements to ensure full implementation. Indeed, since the 
WTO was established nearly two decades ago in 1995, the United States 
has brought and successfully resolved 70 of the 74 cases that have been 
concluded.\9\ Notably, the United States has brought more than 20 
percent of the over 480 requests for consultation made overall in the 
WTO.\10\ These cases have an important impact on growing manufacturing 
in the United States. For example, in March the United States won a 
very important WTO case that addresses manufacturers' concerns over 
China's export restrictions on rare earths that impeded access to such 
inputs.\11\ Most recently, the WTO Appellate Body sided with the United 
States in its complaint over Argentina's onerous and discriminatory 
import licensing regime.\12\ The United States has pursued cases with 
regard to actions by many of our major trading partners, from the 
European Union, Canada and Mexico to Brazil and India. Without the 
underlying agreements, such strong dispute settlement outcomes that 
open markets and ensure fair treatment would not be possible.
---------------------------------------------------------------------------
    \9\ Office of the United States Trade Representative, Snapshot of 
WTO Cases Involving the United States (May 22, 2014), accessed at
    http://www.ustr.gov/sites/default/files/Snapshot%20May.pdf.
    \10\ Id.; World Trade Organization, Chronological List of Dispute 
Cases, accessed at http://www.wto.org/english/tratop_e/dispu_e/
dispu_status_e.htm As USTR's snapshot explains, the United States has 
filed 103 requests for consultation.
    \11\ USTR, USTR Helps Win Case Against China, Helps Manufacturers 
Compete (March 2014), accessed athttp://www.ustr.gov/about-us/press-
office/press-releases/2014/March/US-wins-victory-in-rare-earths-
dispute-with-China.
    \12\ USTR, WTO Appellate Body Affirms U.S. Victory in Trade 
Enforcement Dispute Against Argentina's Import Licensing Restrictions 
(January 2015), accessed at http://www.ustr.gov/about-us/press-office/
press-releases/2015/January/WTO-US-Victory-Trade-Enforcement-
Dispute%20Against-Argentina-Import-Licensing.

    Sustained attention is needed to address other governments' failure 
to implement their trade and investment commitments fully, including 
where appropriate through the use of WTO and FTA dispute settlement 
mechanisms. Whether it is a newer agreement, such as the Korea-U.S. 
Free Trade Agreement or one that has been in force for decades, the 
United States should not hesitate to ensure that all trade agreement 
obligations are enforcement.
            Upholding the United States' International Obligations at 
                    Home
    Similarly, the United States should uphold its obligations under 
international agreements and honor remedies imposed when U.S. actions 
are found to be out of compliance with those obligations. Just as we 
expect our trading partners to meet the letter of their international 
obligations, so should the United States.

    Most recently, the WTO has found again that the U.S. Country-of-
Origin Labeling (COOL) regulations for meat products is discriminatory 
and therefore out of compliance with the United States' WTO 
obligations. The NAM believes it is critical that the United States 
bring this law into compliance with its international commitments as 
soon as possible to avoid the trade retaliation that may be imposed on 
exports to our two largest markets (Canada and Mexico), which would 
cause serious economic harm to many manufacturers in the United States. 
To prevent such negative impacts on manufacturers in the United States, 
the NAM is calling upon Congress to ensure that the Administration has 
the authority to act quickly to suspend indefinitely the COOL 
regulations in regard to meat products if the WTO rules against those 
regulations.
            Enforcement through Investor-State Dispute Settlement 
                    (ISDS)
    With regard to the enforcement of trade and investment agreements, 
the NAM also strongly supports the continued inclusion and use as 
appropriate of ISDS contained in U.S. FTAs and investment treaties. 
ISDS is a vital enforcement tool that allows individual investors 
(whether business or non-profit) to seek enforcement of basic 
principles--such as non-discrimination, compensation for expropriatory 
action (i.e., takings) and fair treatment--before a neutral arbitration 
panel. ISDS is in essence an enforcement mechanism and those seeking a 
more level playing field for manufacturers in the global economy should 
support the inclusion of this mechanism in existing and future 
agreements, including the TPP and T-TIP agreements, as well as 
bilateral investment treaties (BITs), such as currently being 
negotiated with China. Such provisions should be broadly available both 
for the core investment rules of the underlying agreements, but also 
with respect to contracts and other investment agreements signed by 
investors with the foreign government. Proposals to eliminate or modify 
these core enforcement rules should be rejected as such outcomes 
undermine rather than strengthen a strong enforcement agenda.
Full and Timely Enforcement of Domestic Trade Rules Is Essential
    Domestically, the NAM continues to be a strong supporter of the 
full and fair enforcement of our trade remedy laws that help 
manufacturers address government-subsidized and other unfair 
competition. These rules too are an essential part of a robust pro-
growth and pro-manufacturing trade policy. U.S. trade remedy laws have 
long been part of the U.S. legal system and are internationally 
respected mechanisms, authorized by the WTO.

    It is vital that both the Department of Commerce and U.S. 
International Trade Commission exercise their authority to counteract 
unfair practices overseas. Full, 
effective, timely and consistent enforcement by the U.S. government of 
these globally recognized rules is essential to ensure manufacturers 
get a fair shake in the global economy.

    Enforcement of U.S. trade rules must occur during the investigatory 
and review stages, but these trade rules must also be enforced fully at 
our border. Too often, we hear stories of manufacturers that have spent 
significant time and money to utilize the trade remedy rules only to 
find importers that are evading these orders. When manufacturers 
request that Customs and Border Protection (CBP) investigate these 
cases of evasion, years often pass with no resolution. The Senate Trade 
Facilitation and Trade Enforcement Act of 2013 (S. 662) includes an 
important fix to this problem, and manufacturers continue to urge 
Congress to move this legislation forward. In particular, the 
provisions in Title III of S. 662 would help strengthen CBP's authority 
to enforce antidumping and countervailing duty orders and to 
investigate effectively alleged evasion of those orders in a time-
limited manner.
Other Key Trade Issues
    The global competitiveness of manufacturers and other industries in 
the United States to expand exports and promote growth and jobs also 
requires movement on other key issues, which are outside this 
Committee's jurisdiction. In particular, the NAM is strongly supportive 
of:

   The long-term reauthorization of the Export-Import (Ex-Im) Bank. 
        The Ex-Im Bank is a vital tool to help grow U.S. exports and 
        increase American jobs. As the official export credit agency of 
        the United States, Ex-Im Bank assists in financing U.S. exports 
        from thousands of American companies and bolsters our global 
        competitiveness. In fact, nearly 90 percent of Export-Import 
        Bank's transactions directly support U.S. small business. While 
        Congress passed a short-term extension of Ex-Im's charter to 
        June 2015, this short-term reauthorization is insufficient to 
        provide U.S. exporters and their customers the certainty they 
        need to operate effectively in the global economy where just 
        nine of our major trading partners are providing more than 18 
        times the level of Ex-Im financing to our competitors 
        overseas.\13\ Manufacturers are, therefore, urging action on a 
        long-term reauthorization of the Ex-Im Bank as soon as 
        possible.
---------------------------------------------------------------------------
    \13\ National Association of Manufacturers, The Export Credit 
Dimension (July 2014), accessed at http://www.nam.org/uploadedFiles/
NAM/Site_Content/Issues/Global%20Export% 
20Credit%20Dimension%20Web.pdf.

   Continued reform of our export control system. In 2009, the 
        Administration embarked on a major export control reform agenda 
        to address longstanding features of that system that undermine 
        the competitiveness of U.S. manufacturers operating in the 
        global economy. The NAM strongly supports the objectives of the 
        President's Export Control Reform Initiative: to focus federal 
        resources on the threats that matter most, to bring 
        transparency and coherence to these regulations, and to enhance 
        the competitiveness of manufacturing and technology sectors in 
        the United States. While the Administration is making great 
        strides in reconciling the separate control lists, the NAM 
        urges continued efforts to prioritize key policy reforms that 
        would further streamline licensing and system administration, 
        such as establishing an effective program license framework, 
        deploying a truly connected information technology system 
        across licensing agencies, instituting periodic reviews of 
        current license exceptions, renewing the attempt to create an 
        efficient intra-company transfer license for trusted companies 
        and simplifying encryption controls. Accelerating 
        implementation of multilateral regime changes and addressing 
        the barriers to civil nuclear exports would also benefit U.S. 
        security and competitiveness.
Conclusion
    In manufacturing communities across America, the gains from trade 
can and should be increased. The United States achieved a record level 
of $1.38 trillion in manufactured exports last year, but we can do 
better so that America can expand manufacturing and jobs here at home. 
To improve the global competitiveness of manufacturers in the United 
States and grow our manufacturing economy, the NAM urges prompt action 
on TPA and on new market-opening trade and investment agreements to 
level the playing field globally, action on key legislation and policy 
reforms that will advance our global competitiveness and the full 
enforcement of our trade agreements and existing domestic trade rules.

                                 ______
                                 

                   National Cotton Council of America

                    1521 New Hampshire Avenue, N.W.

                          Washington, DC 20036

                  (202) 745-7805  FAX (202) 483-4040

                             www.cotton.org

      producers  ginners  warehousemen  merchants  cottonseed 
                      cooperatives  manufacturers

                              U.S. Senate

                           Finance Committee

                  Hearing on U.S. Trade Policy Agenda

                            January 27, 2015

                   National Cotton Council of America

                        Statement for the Record

Thank you Chairman Hatch, for the opportunity to share the concerns and 
priorities of the National Cotton Council of America (NCC) within the 
U.S. trade agenda. This hearing occurs during a crucial moment for the 
cotton industry, where we face twin threats on the international front 
from Chinese cotton policy and Turkey's unfounded antidumping 
investigation of U.S. cotton. Impacts of these trade actions will be 
felt throughout the chain of production and distribution. A loss of 
markets in China and Turkey means a loss of thousands of American job's 
and economic productivity.

The NCC membership includes producers, ginners, cottonseed processors 
and merchandizers, merchants, cooperatives, warehousers and textile 
manufacturers, in seventeen states, stretching from California to 
Virginia. Farms and businesses directly involved in the production, 
distribution and processing of cotton employ almost 200,000 workers and 
produce direct business revenue of more than $27 billion.
Turkey
Turkey is a major export market for U.S. cotton, in recent years 
ranking as the 2nd or 3rd largest export customer with exports valued 
at $850 million. By erecting damaging trade barriers that reduce U.S. 
exports, U.S. cotton farmers will suffer due to lower prices. An 
adverse finding by Turkey would compound the already critical price 
situation facing U.S. cotton farmers, which is being driven by 
distortive agricultural policies administered by the Chinese 
government, discussed in detail below. For these reasons, the NCC and 
its member companies were surprised and concerned when the Turkish 
government self-initiated an anti-dumping investigation of U.S. cotton 
on October 18, 2014.

The case appears to have been filed as political retaliation against 
the United States on matters unrelated to U.S. cotton exports. Shortly 
after the U.S. imposed anti-dumping and countervailing duties on 
Turkish steel during the fall of 2014, Turkey's Minister of Economy 
publicly warned they would retaliate against the U.S. by imposing three 
obstacles against U.S. exports for every one imposed on Turkish 
exports. The Turkish authority then self-initiated the anti-dumping 
investigation of U.S. cotton despite no Turkish cotton producers being 
on record alleging any kind of injury due to U.S. cotton imports. 
Although it is within Turkey's rights under the WTO to self-initiate, 
they must present ``special circumstances'' justifying the 
investigation. Turkey's initial report does not provide a description 
of such circumstances, and in fact is heavily redacted. It is entirely 
unclear as to what data they relied upon or where the data originated 
from to present a threshold case for conducting an investigation.

Turkey's self-initiation filing included a number of other ``red 
flags'' that are worrisome, such as blatantly disregarding actual U.S. 
data and ignoring lower import prices and increasing market shares from 
other countries. Turkey also ignores price data from the U.S. cotton 
market based on an erroneous claim that U.S. price subsidies cause U.S. 
market prices to be an unreliable indicator of market conditions. The 
U.S. cotton futures market is widely used by international cotton 
traders and international textile mills for price discovery and risk 
management.

Contacts in Turkey have said that the Turkish government is considering 
a ``provisional'' antidumping duty, even though they have not yet 
finished processing the initial industry questionnaires. Again, this 
raises WTO concerns: the WTO only permits a provisional duty upon a 
preliminary determination, which must rest on an assessment of adequate 
evidence of dumping and injury--but Turkey's fact-finding effort is 
still at a very early stage.

The U.S. cotton industry will show that the antidumping investigation 
has no merit. The NCC has been accepted as an ``interested party'' to 
the investigation and has already submitted a preliminary injury 
analysis in efforts to forestall a provisional duty. A detailed injury 
argument will be submitted to the Turkish authority in coming weeks. 
U.S. companies have responded in good faith to the Turkish government's 
detailed questionnaires, and will continue to cooperate by providing 
additional information and even hosting site visits, if requested. We 
are confident that the data will clearly demonstrate that no dumping is 
occurring, if analyzed in an objective manner. When comparing like 
qualities of cotton, cotton offered to Turkish mills is priced in the 
same manner as cotton offered to U.S. mills or mills in other 
countries.

We appreciate the efforts of the office of the U.S. Trade 
Representative, the Department of Commerce, the Department of 
Agriculture, and the Department of State. To date, all of these 
agencies have met with the NCC and its member companies and provided 
helpful guidance to the industry's efforts. The State Department 
delivered a demarche to the Turkish government and USDA submitted 
comments for the record, both documents emphasizing the importance of 
transparency and following the WTO process for antidumping 
investigations, and the mutual importance of the Turkey-U.S. trading 
relationship. We encourage the U.S. government to remain firmly engaged 
and to discourage the continuation of this retaliatory investigation.

Members of Congress have also provided valuable support to the industry 
by raising the profile of this investigation through letters to the 
Administration and the Turkish Ambassador.

We value the vibrant and growing economic ties between Turkey and the 
United States, but it can only continue to develop and flourish in 
accordance with the existing WTO rules governing international trade. 
USTR is key to impressing this message upon the Turkish government.
China
As the world's largest cotton producer (27 percent of global production 
in 2013) and also the largest processor of raw cotton (32 percent of 
global mill use), China's cotton policy has an enormous influence on 
the global cotton markets. China has been U.S. cotton's largest export 
market, with approximately 35 percent of total U.S. production 
delivered to its mills. However, recent changes to China's cotton 
policy are likely to disrupt this relationship.

Over the past four years, China has significantly increased its 
domestic support levels well above its WTO commitments. In 2011, China 
began a stockpiling reserve program through government purchases of 
domestic cotton at rates well above global prices. These support prices 
translated to product-specific support worth between 19-31 percent of 
the value of China's production, while China's WTO commitments only 
allow product-specific support at no more than 8.5 percent of the value 
of production. China now holds an estimated 63 million bales in stocks 
with more than 50 million bales sitting in government-owned reserves. 
In contrast, all other countries hold just 39 million bales, combined. 
Under WTO rules, China is required to provide notification of domestic 
support levels but has not done so since the 2008 crop.

China controls imports of raw cotton through policies that are 
restrictive, opaque and unpredictable. China's WTO minimum TRQ 
requirement is set at 4.1 million bales, but it supplements imports 
variously throughout the year. The process for determining additional 
quota is unknown and non-transparent. China's imports under the 
additional quota are also generally subject to a variable level duty 
ranging between 5 percent and 40 percent.

China recently revised its cotton support programs and will drastically 
reduce its imports of U.S. cotton. The support price for the largest 
cotton-producing province is set at a level more than twice the world 
price of cotton. Other provinces benefit from market support offered by 
the existing import policies, as well as a direct subsidy of $0.15 per 
pound. Together, these programs translate to product-specific support 
worth at least 25 percent of China's value of production; and as much 
as 44 percent if calculated at current market conditions. Moreover, the 
allocation of the import TRQ and import licensing scheme for 2014--as 
well as the disposition of the 50 million bale government reserve--
remains uncertain.

The NCC strongly encourages the Administration to challenge China's 
cotton policies in all avenues offered within the WTO. Its current 
policies raise serious concerns regarding China's WTO obligations under 
the GATT, the Agreement on Agriculture, the Subsidies Agreement, and 
China's WTO Accession Protocol. It is important to our industry that 
the U.S. government utilize all available legal tools to enforce 
against countries that unfairly support their domestic products to the 
serious detriment of U.S. farmers.
Trans-Pacific Partnership
As the Administration continues the ongoing negotiations in an effort 
to conclude to the Trans-Pacific Partnership (TPP) agreement, the U.S. 
cotton industry is unified behind the inclusion of a yarn forward rule 
of origin in TPP or any other international trade agreement. A yarn 
forward rule of origin requires that any product made with yarn 
produced in a country that is a party to the trade agreement may 
receive the benefits accorded to partner countries under that 
agreement. Failure to maintain a yarn forward rule of origin will 
damage the entire hemispheric textile trade that has been built under 
NAFTA and CAFTA-DR, which both contain the yarn forward rule of origin. 
The inclusion of Vietnam in the current TPP negotiations underscores 
the importance of a yarn forward rule of origin as a means to protect 
against textile products produced outside the partner countries from 
gaining preferential access to the U.S. market, thus resulting in 
severely negative impacts to the U.S. textile manufacturing sector.

Mr. Chairman, thank you again for holding this timely and important 
hearing, and for accepting our comments for the record. China and 
Turkey remain the two most important international markets for U.S. 
cotton, and it is vital to the U.S. cotton industry that those markets 
remain open and competitive. Although we appreciate the U.S. 
government's efforts to maintain strong trading relationships with 
Turkey and China, more work is needed. And we urge that the remaining 
negotiations on the TPP agreement ensure that there is a strong yarn 
forward rule of origin in place for textile products produced in the 
countries that are part of the TPP agreement. We would be pleased to 
provide any additional information or answer any questions regarding 
the information provided here. Reece Langley with NCC can be contacted 
at [email protected] or 202-745-7805.
                                 ______
                                 

                      OUTDOOR INDUSTRY ASSOCIATION

                            February 9, 2015

The Honorable Orrin Hatch
Chairman
Committee on Finance
U.S. Senate
Washington, D.C. 20515

The Honorable Ron Wyden
Ranking Member
Committee on Finance
U.S. Senate
Washington, D.C. 20515

Dear Mr. Chairman and Senator Wyden:

On behalf of the 1,400 members of Outdoor Industry Association, I am 
pleased to submit a statement for the record for the January 27, 2015 
U.S. Senate Committee on Finance hearing ``President Obama's 2015 Trade 
Policy Agenda'' with United States Trade Representative Michael Froman.

The outdoor industry is recognized as a critical sector of our nation's 
economy, generating $646 billion annually in U.S. consumer spending and 
directly supporting 6.1 million American jobs. Our members produces 
some of the most innovative products reaching all corners of the globe 
and enriching people's lives by supporting healthy and active 
lifestyles.

OIA's Trade Program represents the diversity of our membership, 
including outdoor companies whose products are conceived, designed, and 
produced in America and those companies that utilize global value 
chains to bring their products to retail markets. From some of the 
largest companies in the world, to small, family-owned businesses, we 
work to ensure that U.S. federal trade policy fosters and promotes a 
stable and predictable environment for all outdoor industry businesses, 
while seeking to lower costs for outdoor businesses and their 
customers.

International trade benefits U.S. importers and domestic manufactures 
alike, creates new jobs, lower consumer prices and open new markets to 
U.S. exports. For its part, OIA pursues a ``balanced trade policy'' 
meaning that we only seek tariff eliminations on outdoor products that 
have no commercially viable domestic production, while for those 
products that are made in America, we promote federal policies that 
support U.S. manufacturers and help them transition to competition in a 
global economy.

As such, the Trans-Pacific Partnership (TPP) negotiations present a 
tremendous opportunity for the outdoor industry. Outdoor products 
sourced from abroad are among the most highly taxed when entering the 
United States despite the fact that they face no domestic competition: 
the average bound tariff rate on imported goods is less than 3 percent, 
but duties on outdoor products average 14 percent or higher, with some 
as high as 40 percent. We understand the challenges in negotiating an 
agreement that balances the needs of U.S. manufactures and brands that 
conduct the research, development and innovation at home, but must 
manufacture their products abroad.

In that regard, we have offered USTR specific suggestions on how that 
can be accomplished in key areas as apparel and footwear. A ``one-sized 
fits all approach'' for apparel and footwear will lead to agreement 
that appeals to the lowest common denominator, resulting in tremendous 
lost opportunity for American workers and American innovation.

The duty savings from eliminating these disproportionally high tariffs 
on outdoor apparel and footwear produced in the TPP region will help 
lower costs for consumers, fuel innovation, and create job s across the 
U.S.

Like the administration, OIA must balance the interests of importers 
and retailers who source apparel and footwear from abroad and domestic 
manufacturers. Our proposal on outdoor apparel and footwear in the TPP 
will help the administration bridge the gap among this diverse group of 
stakeholders and conclude a commercially meaningful, 21st century trade 
agreement. With the appropriate definition of products, rules of origin 
and market access terms can be designed in a manner that does not 
diminish the transitions needed for U.S. made products.

We understand the administration is committed to a ``yarn forward'' 
rule of origin at the core of its proposal on textiles and apparel, and 
we support that. Accordingly we have appreciated the opportunity to 
work with the administration on the Short Supply List of textiles and 
fabrics. Outdoor apparel products are highly innovative, incorporating 
multiple complex, highly technical fabrics. In fact, the outdoor 
industry is on the cutting edge of developing new fabrics not yet on 
the market. From a rules of origin perspective, we believe the Short 
Supply List goes a long way towards accommodating the innovation of the 
outdoor industry.

We believe the next logical, and non-controversial step would be to 
support the immediate elimination of duties on performance apparel 
products that use the Short Supply List. These products are not import 
sensitive and domestic textile producers have not opposed tariff 
elimination on them because there is no commercially meaningful 
domestic production. At minimum, we urge the administration to support 
classification breakouts for performance apparel as identified 
previously in legislation introduced by Senator Ron Wyden (D-OR).

At the same time, OIA has identified products that should receive a 
yarn-forward rule, and for which there is ample production in the U.S.

Like outdoor apparel, outdoor footwear is innovative and complex. Yet, 
these products often fall within the same tariff codes as import 
sensitive footwear. The outdoor industry is deeply concerned that a 
``one-size fits all'' approach will be taken for 8-digit 
classifications of the Harmonized Tariff Schedule (HTS) that, due to 
outdated classification system, lumps together import sensitive 
footwear with non-import sensitive performance footwear. This is a 
particular concern for hiking shoes and boots, a critical segment of 
the outdoor footwear market. Our members have put a lot of time, 
energy, and investment towards developing new, innovative footwear 
products that attract new outdoor enthusiasts by providing protection 
against inclement weather.

The outdoor industry has identified certain performance footwear 
products that are not import sensitive to domestic manufacturers and 
should receive a tariff-shift rule of origin and immediate duty phase-
outs. Congress has enacted most of these breakouts in the past through 
the miscellaneous tariff bills (MTBs) process after a thorough vetting 
by the administration. Failure to differentiate these products would be 
a tremendous lost opportunity, and in fact harmful to the outdoor 
footwear industry, U.S. consumers and the U.S. economy more broadly.

For those footwear products on the import sensitive list, OIA proposes 
a strict rule of origin (NAFTA rule) and maximum duty phase-outs.

As with other stakeholders, the outdoor industry will conduct a 
comprehensive review of a final TPP agreement to determine the benefits 
to outdoor companies and consumers.

In addition, any TPP agreement should also include tough, enforceable 
provisions on the environment and labor rights. Outdoor recreation 
companies are at the forefront of developing sustainable supply chains 
that protect the environment and ensure fair labor practices. The TPP 
represents a significant opportunity to advance those standards 
throughout the Asia-Pacific region. The final TPP agreement must:

   require all parties to adopt and maintain internationally 
        recognized core labor standards and the provisions of 
        multilateral environmental agreements (MEAs); and

   these provisions should be subject to the same dispute settlement 
        procedures as other enforceable obligations.

In order to conclude the TPP negotiations and other trade agreements, 
OJA understands that the administration must have Trade Promotion 
Authority (TPA).

OIA supports the principle of TPA because it puts the administration in 
the best position to secure trade agreements that could have 
substantial benefits for the outdoor industry by eliminating tariffs 
and non-tariff barriers and expanding access to global markets. Our 
trading partners are unlikely to make their best offer if they think 
Congress will alter the final agreement.

The outdoor industry also supports including additional outstanding 
trade items in a TPA package including:

   The US OUTDOOR Act: Soon be re-introduced in the House and Senate, 
        the US OUTDOOR Act will create specific definitions and 
        separate classifications within the U.S. Harmonized Tariff 
        Schedule (HTS) for ``recreational performance outerwear'' and 
        eliminate duties on those products. The Senate bill also 
        includes the Sustainable Textile and Apparel Research (STAR) 
        Fund that will support the research and development of 
        sustainable textile and apparel supply chains. Recreational 
        performance outerwear is highly technical and specialized 
        apparel and should no longer be classified under the same HTS 
        codes as ready made, mass market apparel. According to a 2007 
        study by the International Trade Commission (ITC), there is no 
        commercially viable domestic production of recreational 
        performance outerwear. Eliminating duties on recreational 
        performance outerwear will help lower prices, fuel innovation, 
        and create jobs in the outdoor industry. It should be included 
        in any trade package.

   MTBs: The outdoor industry strongly supports the renewal of the 
        miscellaneous tariff bill (MTB) process. MTBs have suspended 
        duties on certain imported products that are proven to have no 
        competition from U.S. manufacturers. To date, twenty MTBs 
        related to the outdoor industry have resulted in savings of 
        more than $30 million for outdoor companies, leading to more 
        jobs, more innovation, and lower retail prices for outdoor 
        enthusiasts. Failure to renew the most recent MTB and the 
        tariff suspensions have forced outdoor companies to absorb cost 
        increases as much as 40 percent, stifling economic growth and 
        preventing more Americans from getting outdoors. The outdoor 
        industry strongly urges Congress to provide for a clear and 
        predictable MTB process in any trade package.

   GSP Update Act: The outdoor industry supports the renewal of the 
        Generalized System of Preferences program and urges Congress to 
        include the GSP Update Act in that initiative. This non-
        controversial piece of legislation simply allows for backpacks 
        and travel goods, no longer made in the U.S., to be considered 
        eligible for inclusion in that program.

Finally, we look forward to a TPA bill that includes strong 
consultation provisions and tough negotiating objectives on labor and 
the environment.

As leaders in the field of sustainable business practices and social 
responsibility, OIA supports such provisions as they could give the 
administration sufficient leverage to secure enforceable labor and 
environmental provisions in our trade agreements and ensure our trading 
partners match international standards.

OIA greatly appreciates the opportunity to summit a statement for this 
hearing and we look forward to working with Congress and the 
administration to support passage of TPA and TPP that will allow 
outdoor companies to lower costs for consumers, get more people 
outdoors, fuel innovation, and create more U.S. jobs.

Sincerely,

Richard W. Harper, Jr.
Policy Advisor
Outdoor Industry Association (OIA)
4909 Pearl East Circle, Suite 300
Boulder, Colorado 80301
303.444.3353  www.outdoorindustry.org

               PRESIDENT OBAMA'S 2015 TRADE POLICY AGENDA

                           HEARING TESTIMONY

                      BEFORE THE FINANCE COMMITTEE

                                 OF THE

                          UNITED STATE SENATE

                            JANUARY 27, 2015

                                 BY THE

                 ROCKY MOUNTAIN DISTRICT EXPORT COUNCIL

Mr. Chairman.

Thank you for the opportunity to submit this testimony on President 
Obama's 2015 Trade Policy Agenda and Trade Promotion Authority (TPA).

I am Louis X. (Kip) Cheroutes, Legislative Chairman of the Rocky 
Mountain District Export Council (RMDEC), 2648 Bellaire Street, Denver, 
Colorado. I submit this testimony of strong support on behalf of the 
RMDEC.

The RMDEC, one of 16 nationwide, is a volunteer trade advisory and 
advocacy body of the U.S. Department of Commerce. The members are 
small, medium and large exporters in Colorado and Wyoming.

Colorado and Wyoming have much to gain with passage of TPA and the 
subsequent Trans Pacific Partnership (TPP) and Transatlantic Trade and 
Investment Partnership (T-TIP). This testimony gives nine specific 
reasons to support TPA.

1.  Wyoming's export economy, 63,000 jobs strong, is largely 
        agricultural and mineral, being the point of origin in the 
        global supply chain. Products go to Canada, Brazil, Australia, 
        Indonesia, Chile, Mexico, Japan and elsewhere. How do TPA and 
        TPP help? Soda ash is a good example. Wyoming's main export is 
        sodium carbonate, which is used to make glass, detergents and 
        cosmetics. The market for these personal products is very hot 
        in Vietnam because of the rising middle class but a tariff 
        exists for Wyoming, not Chinese, soda ash. TPA and TPP will 
        secure and likely increase Wyoming's future market access by 
        eliminating the Vietnamese tariff on soda ash.

2.  Colorado shares the same nature-based export economy. Agriculture 
        and livestock are good examples. Japan enforces 1,400 separate 
        tariff categories on U.S. beef. U.S. trade negotiators are 
        currently negotiating that number down as part of TPA and TPP. 
        A more fair and manageable tariff structure will likely give 
        better market access to the 15,000 meat packers in northern 
        Colorado.

3.  Colorado's economy goes further. Colorado's 2013 manufactured 
        exports totaled $8.5 billion. Products went to Canada, Mexico, 
        China, Japan and Germany in that order. 5,580 companies, 89 
        percent of which are small and medium enterprises, made those 
        products. The likely growth of those companies is what's at 
        stake with passage of TPA. By congressional district, Denver-
        Aurora-Broomfield recorded $3.8 billion in exports, Greeley, 
        $1.2 billion, Colorado Springs $1.1 billion, Boulder $947 
        million, Fort Collins-Loveland $813 million, Pueblo $142 
        million and Grand Junction $121 million.

4.  Colorado's space industry leads the export way. A future TPA 
        safeguards intellectual property for a greater range of space 
        components approved last year for export. Computer, 
        electronics, food and machinery follow in trade sales.

5.  Colorado's export economy goes even further. Revenue from services, 
        not sold products, is not well tallied but is likely high. 
        Global engineering and consulting firms that headquarter in 
        Colorado have a stake in TPA to ensure that their own 
        intellectual data is protected. TPA will guide TPP negotiators 
        to make that a high priority.

6.  Many of these engineering firms abide by the same environmental and 
        labor values adopted by TPA. They see TPA as good business 
        sense and a way to get the edge on others.

7.  Wyoming and Colorado share a unique export market that TPA will 
        foster. This creative economy, from western art to outdoor 
        recreational equipment and clothing is vibrant. Big sky, the 
        Wild West and winter sports have great consumer appeal in Asia. 
        These jobs are safeguarded and likely augmented with TPA and 
        TPP emphasis on tariff reductions, trademark and other 
        intellectual property protections.

8.  The region's supply chain economy for exports, not just the 
        manufacturing itself, should also benefit from TPA. Getting 
        Colorado and Wyoming exports to port depends on local miners, 
        truckers, railway workers, overnight delivery drivers, 
        warehouse builders and workers, space machinists and engineers. 
        Their jobs depend on TPA to keep the supply chain fed.

9.  Finally, the country has been without a fundamental trade law for 
        too long. Export risk is higher without one due to an uncertain 
        or onerous foreign regulatory terrain. Enacting a TPA based on 
        strong values is a necessary and proper role of government. 
        It's time to finish the job. Common sense suggests once 
        enacted, the risk is reduced and the odds improve for regional 
        job creation among entrepreneurs, SMEs and large companies.

Thank you for the opportunity to submit this testimony.
                                 ______
                                 

             TELECOMMUNICATIONS INDUSTRY ASSOCIATION (TIA)

                    advancing global communications

                   1320 N. Courthouse Rd., Suite 200

                        Arlington, VA 22201 USA

                           www.tiaonline.org

                          Tel: +1.703.907.7700

                          Fax: +1.703.907.7727

January 27, 2015

The Honorable Orrin G. Hatch
Committee on Finance
219 Dirksen Senate Office Building
Washington, DC 20510

The Honorable Ron Wyden
Committee on Finance
219 Dirksen Senate Office Building
Washington, DC 20510

Dear Chairman Hatch and Ranking Member Wyden:

The Telecommunications Industry Association (TIA), the leading trade 
association for global manufacturers, vendors, and suppliers of 
information and communications technology (ICT), wishes to thank you 
for holding a hearing on ``President Obama's 2015 Trade Policy 
Agenda.'' With an ambitious trade policy agenda that includes the 
potential conclusion of the Trans-Pacific Partnership (TPP), TIA 
strongly supports the bipartisan renewal of Trade Promotion Authority 
(TPA) this year. Trade agreements like the TPP are critical to the 
telecommunications sector because they promote trade liberalizing, 
market-based, and technology neutral approaches in international 
markets, which facilitates U.S. exports and investment.

Global investment is increasing in both wireless and fixed broadband 
networks. This global trend includes the launch of long term evolution 
(LTE) 4G wireless networks, continued growth in smartphone penetration, 
and fiber deployments to enhance fixed broadband infrastructure. Each 
of these developments stems from a single underlying driver--the need 
for greater capacity to accommodate growing global data transmission 
demands. Driven by this need, the global telecommunications market for 
equipment and related services was valued at $5.4 trillion in 2014--
with about 75 percent of the total marketplace located outside of the 
United States.

The bipartisan renewal of TPA is essential to increasing the nation's 
level of exports overall and to the growth of the U.S. ICT industry in 
particular. In addition, renewal of TPA presents the opportunity to 
address 21st century trade negotiating objectives related to digital 
trade and cross-border data flows, as well as the proliferation of 
localization barriers to trade. Moreover, experience shows that the 
effects of prior trade agreements on telecommunications equipment 
exports are both demonstrable and dramatic. According to TIA's 2014-
2017 ICT Market Review and Forecast, although countries having trade 
agreements with the United States currently represent only 13 percent 
of the overseas economy, they account for 38.6 percent of U.S. exports 
in telecommunications equipment in 2013.

Updated TPA legislation will further strengthen the partnership between 
Congress and the Administration through enhanced Congressional 
oversight, transparency, and consultations, which will ultimately 
result in stronger trade agreements for the benefit of the economy and 
job creation. With active negotiations to conclude the TPP as well as 
to advance the Transatlantic Trade and Investment Partnership and Trade 
in Services Agreement, TPA renewal will send a strong signal to other 
negotiating parties on the priority the United States places on high-
standard trade agreements that enhance trade liberalization and market 
access for U.S. industry.

We appreciate the attention of the Committee on Finance on the 
Administration's 2015 Trade Policy Agenda because trade is critical to 
job creation and the expansion of the U.S. economy. In addition to the 
bipartisan renewal of TPA, we would also underscore that the United 
States must ensure that other countries live up to their obligations 
under the World Trade Organization or other agreements, and in 
particular, refrain from implementing localization barriers to trade, 
including requirements for the local storage or processing of data.

Thank you again for your work on these important issues related to the 
global competiveness of the U.S. ICT industry, and we look forward to 
working with you to ensure that TPA is enacted in 2015. For more 
information, please contact Danielle Coffey at 703-907-7734 or by email 
at [email protected].

Regards,

Scott Belcher
Chief Executive Officer
Telecommunications Industry Association
                                 ______
                                 
_______________________________________________________________________

                               Statement

                                 of the

                              U.S. Chamber

                              of Commerce

_______________________________________________________________________

ON: The U.S. Trade Policy Agenda in 2015

TO:  U.S. House of Representatives Committee on Ways and Means

     U.S. Senate Committee on Finance

DATE: January 27, 2015

_______________________________________________________________________

               1615 H Street NW  Washington, DC  20062

The Chamber's mission is to advance human progress through an economic,

        political and social system based on individual freedom,

         incentive, initiative, opportunity and responsibility.

    On the occasion of the annual hearings of the House Committee on 
Ways and Means and Senate Committee on Finance on the U.S. trade policy 
agenda, the U.S. Chamber of Commerce is pleased to take this 
opportunity to offer its own views and those of its members on the top 
priorities for U.S. trade policy in 2015. The Chamber is the world's 
largest business federation, representing the interests of more than 
three million businesses of all sizes, sectors, and regions, as well as 
state and local chambers and industry associations.

    In the Chamber's view, reinvigorating economic growth and creating 
good jobs are the nation's top priorities. Approximately 17.7 million 
Americans are unemployed, underemployed, or have given up looking for 
work. Participation in the workforce stands at 62.7%, the lowest since 
1978, reflecting a significant level of discouragement.

    World trade must play a central role in reaching this job-creation 
goal. After all, outside our borders are markets that represent 80% of 
the world's purchasing power, 92% of its economic growth, and 95% of 
its consumers. The resulting opportunities are immense, and many 
Americans are already seizing them: One in four manufacturing jobs 
depends on exports, and one in three acres on American farms is planted 
for hungry consumers overseas.
            A Level Playing Field for Trade
    While the United States receives substantial benefits from trade, 
there is more than a grain of truth in the observation that the 
international playing field is unfairly tilted against American 
workers. The U.S. market is largely open to imports from around the 
world, but other countries continue to levy tariffs on U.S. exports 
that in some cases are quite high, and foreign governments have erected 
other kinds of barriers against U.S. goods and services.

    Americans rightly sense that this status quo is unfair to U.S. 
workers, farmers, and businesses. U.S. exporters face higher tariffs 
abroad than nearly all our trade competitors. The United States 
received a rank of 130th among 138 economies in terms of ``tariffs 
faced'' by its exports, according to the World Economic Forum's Global 
Enabling Trade Report. That means U.S. exporters are often at a marked 
disadvantage to our competitors based in other countries. In addition, 
a thicket of non-tariff barriers adds to the burden exporters face.

    No one wants to go into a basketball game down by a dozen points 
from the tip-off--but that is exactly what American exporters do every 
day. These barriers are particularly burdensome for America's small- 
and medium-sized companies, approximately 300,000 of which are 
exporters. The U.S. Chamber believes that American workers, farmers, 
and companies must be allowed to operate on a level playing field when 
it comes to trade.
            Benefits of U.S. Trade Agreements
    The good news is that America's trade agreements do a great job 
creating a level playing field--and tremendous commercial gains are the 
proof in the pudding. According to data from the U.S. Department of 
Commerce, nearly half of U.S. exports go to countries with which the 
United States has free-trade agreements (FTAs) even though they 
represent about 10% of global GDP. By tearing down foreign barriers to 
U.S. products, these agreements have a proven ability to make big 
markets even out of small economies.

    The United States has entered into FTAs with 20 countries around 
the globe: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, the 
Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, 
Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Singapore, and South 
Korea.

    To settle once and for all the debate over whether these FTAs have 
benefitted American workers and companies, the U.S. Chamber recently 
released a study entitled Opening Markets, Creating Jobs: Estimated 
U.S. Employment Effects of Trade with FTA Partners. The study examined 
U.S. FTAs implemented with a total of 14 countries. It employed a 
widely used economic model known as the Global Trade Analysis Project 
(GTAP), which is also used by the numerous federal agencies, the U.S. 
International Trade Commission, and the World Trade Organization (WTO).

    The results of this comprehensive study are impressive: 17.7 
million American jobs depend on trade with these 14 countries; of this 
total, 5.4 million U.S. jobs are supported by the increase in trade 
generated by the FTAs. No other budget neutral initiative undertaken by 
the U.S. government has generated jobs on a scale comparable to these 
FTAs, with the exception of the multilateral trade liberalization begun 
in 1947.

    The trade balance is a poor measure of the success of these 
agreements, but the trade deficit is often cited by trade skeptics as a 
principal reason why the United States should not negotiate additional 
FTAs. However, taken as a group, the United States ran a trade surplus 
with its FTA partner countries in 2012 and 2013, and this surplus has 
grown since then. In fact, the United States has recorded a trade 
surplus in manufactured goods with its FTA partner countries for each 
of the past five years, according to the U.S. Department of Commerce. 
This surplus reached $27 billion in 2009 and had expanded to $61 
billion by 2013.

    Broadly, trade has been a lifeline for the U.S. economy in recent 
years. Exports have risen by more than 50% over the past five years, 
and one-third of the American jobs created in this period are in 
industries that depend on trade. However, the picture is not all rosy. 
U.S. trade is up, but we are still falling behind our competition. The 
U.S. share of global exports fell from 18% in 2000 to 12% in 2010. What 
can we do about this?
            Trade Promotion Authority
    First, Congress should approve legislation to renew Trade Promotion 
Authority (TPA). TPA is a vital tool to help Americans sell their goods 
and services to the 95% of the world's customers living outside our 
borders. Without TPA, we simply cannot enter into new trade agreements. 
We are excited to see that Congress is preparing to consider 
legislation to renew TPA, which promises to spur economic growth and 
job creation at home.

    The case for TPA is simple. In today's tough international markets, 
we need our trade negotiators to tear down the foreign tariffs and 
other barriers that too often shut out U.S. products. That is what 
trade agreements do. However, to secure new growth-creating trade pacts 
such as the agreements now under negotiation, Congress must first 
approve TPA.

    While the Constitution gives the president authority to negotiate 
with foreign governments, it gives Congress authority to regulate 
international trade. TPA allows the Congress to show leadership on 
trade policy by doing three important things: (1) It allows Congress to 
set negotiating objectives for new trade pacts; (2) it requires the 
executive branch to consult extensively with Congress during 
negotiations; and (3) it gives Congress the final say on any trade 
agreement in the form of an up-or-down vote. The result is a true 
partnership stretching the length of Pennsylvania Avenue.

    Without TPA, the United States is relegated to the sidelines as 
other nations negotiate trade agreements without us--putting American 
workers, farmers, and companies at a competitive disadvantage. 
According to the World Trade Organization (WTO), 398 bilateral or 
plurilateral FTAs are in force around the globe today, but, as noted, 
the United States is a party to just 14 such agreements covering 20 
countries.

    If we fail to renew TPA, U.S. workers and companies will be left at 
a sharp disadvantage. To oppose TPA is to guarantee that foreign 
markets remain closed to U.S. exports. To reject TPA is to accept a 
playing field skewed against American workers and companies.

    Congress has granted every president from Franklin D. Roosevelt to 
George W. Bush the authority to negotiate market-opening trade 
agreements in consultation with Congress. However, TPA lapsed in 2007. 
That is unacceptable; every American president should have TPA.

    As noted, TPA is an opportunity to provide guidance to the 
administration on negotiating objectives for new trade agreements. Some 
of these are simple: Lowering tariffs on our goods when they enter 
foreign markets will allow us to be more competitive with local 
suppliers.
            The Trans-Pacific Partnership
    And how should TPA be used? The first priority is the Trans-Pacific 
Partnership (TPP).

    As U.S. companies scour the globe for consumers, the booming Asia-
Pacific region stands out. Over the last two decades, the region's 
middle class grew by 2 billion people, and their spending power is 
greater than ever. That number is expected to rise by another 1.2 
billion by 2020. According to the International Monetary Fund, the 
world economy will grow by $21.6 trillion over the next five years, and 
nearly half of that growth will be in Asia.

    U.S. businesses and workers need better access to those lucrative 
markets if they are going to share in this dramatic growth. But U.S. 
companies are falling behind in the Asia-Pacific. While U.S. exports to 
the Asia-Pacific market steadily increased from 2000 to 2010, America's 
share of the region's imports declined by about 43%, according to the 
think tank Third Way. In fact, the growth in U.S. exports to Asia 
lagged overall U.S. export growth in that period.

    One reason U.S. companies have lost market share in the Asia-
Pacific region is that many countries maintain steep barriers against 
U.S. exports. A typical Southeast Asian country imposes tariffs that 
are five times higher than the U.S. average while its duties on 
agricultural products soar into the triple digits. In addition, a web 
of nontariff and regulatory barriers block market access in many 
countries.

    Trade agreements are crafted to overcome these barriers. But what 
happens if other countries make trade deals among themselves and leave 
the United States on the outside, looking in? The number of trade 
accords between Asian countries surged from three in 2000 to more than 
50 in 2011. Some 80 more are in the pipeline. Meanwhile, the United 
States has just three trade agreements in Asia.

    This challenge is growing: 16 countries are negotiating a trade 
deal called the Regional Comprehensive Economic Partnership (RCEP). It 
includes Australia, China, India, Japan, Korea, and New Zealand as well 
as the 10 ASEAN countries--but not the United States.

    The Trans-Pacific Partnership (TPP) is America's best chance to 
ensure the United States is not stuck on the outside--looking in--as 
Asia-Pacific nations pursue new trade accords among themselves. Its 
objective is to achieve a comprehensive, high-standard, and 
commercially meaningful trade and investment agreement with 11 other 
Asia-Pacific nations, including Australia, Brunei, Japan, Malaysia, New 
Zealand, Singapore, and Vietnam. It also includes Canada, Mexico, Peru, 
and Chile, thus offering a chance to integrate existing U.S. trade 
agreements in the Americas.

    The TPP must be a comprehensive agreement. In trade talks, whenever 
one party excludes a given commodity or sector from an agreement, 
others follow suit, limiting its reach. For the United States to 
achieve the goal of a true 21st century agreement--with state-of-the-
art rules on digital trade, state-owned enterprises, investment, and 
other key areas--its negotiators must hold fast to the goal of a 
comprehensive accord.

    One U.S. priority is to ensure the TPP protects intellectual 
property (IP), which plays a vital role in driving economic growth, 
jobs, and competitiveness. According to the U.S. Department of 
Commerce, IP-intensive companies account for more than $5 trillion of 
U.S. GDP, drive 60% of U.S. exports, and support 40 million American 
jobs. To build on these strengths, the TPP must include robust IP 
protection and enforcement provisions that build on the U.S. Free Trade 
Agreement and provide 12 years of data protection for biologics 
consistent with U.S. law.

    The TPP also needs to reflect how goods are produced in the 21st 
century using global value chains. Today, the goods we buy are usually 
labeled ``Imported'' or ``Made in the USA''--with no middle ground. 
However, companies often rely on global value chains that span the 
Pacific to hone their competitiveness.

    The United States is a principal beneficiary of these supply 
chains. One recent study found that 70% of the final retail price of 
apparel assembled in Asia is created by American innovators, designers, 
and retailers. Making customs and border procedures more efficient and 
enacting other trade facilitation reforms will remove sand from the 
gears of global value chains and enhance U.S. competitiveness.

    Completing the TPP would pay huge dividends for the United States. 
The agreement would significantly improve U.S. companies' access to the 
Asia-Pacific region, which is projected to import nearly $10 trillion 
worth of goods in 2020. A study by the Peterson Institute for 
International Economics estimates the trade agreement could boost U.S. 
exports by $124 billion by 2025, generating hundreds of thousands of 
American jobs.

    Working closely with the Office of the U.S. Trade Representative 
(USTR), the Chamber has led the business community's advocacy for the 
inclusion of strong disciplines in the TPP trade agreement on 
intellectual property, due process in antitrust enforcement, state-
owned enterprises, and regulatory coherence. Also, overcoming the 
tyranny of small differences between regulations in the United States 
and those in key markets would reduce costs for small and mid-sized 
companies, for which these expenses loom especially large. Companies 
would see an easier, less costly path to complying with standards and 
regulations in a meaningful way.
            The Transatlantic Trade and Investment Partnership
    As we consider new trade accords with our biggest commercial 
partners, Europe calls out for attention. Indeed, the European Union is 
by far America's largest commercial partner.

    Together, the United States and the European Union account for 
nearly half of global economic output, with each producing 
approximately $17 trillion in GDP. Total U.S.-EU commerce--including 
trade in goods and services and sales by foreign affiliates--tops $6.5 
trillion annually and employs 15 million Americans and Europeans.

    The U.S.-EU investment relationship is also without peer. Companies 
headquartered in EU Member States had invested nearly $1.7 trillion in 
the United States by the end of 2013 and directly employ more than 3.5 
million Americans. Similarly, U.S. firms have invested $2.4 trillion in 
the EU--a sum representing more than half of all U.S. investment 
abroad. It's also nearly 40 times as much as U.S. companies have 
invested in China. Because of this unique investment-based 
relationship, approximately 40% of U.S.-EU trade is intra-industry and 
intra-firm, which means that removing barriers to this trade will 
substantially boost the competitiveness of our companies in global 
markets.

    The United States and the Member States of the EU share common 
values as strong democracies with an enduring commitment to civil 
liberties and the rule of law. We uphold similar social, labor, and 
environmental standards in our laws and regulations.

    For these reasons and more, the United States and the EU have 
launched negotiations for a comprehensive and ambitious Trans-Atlantic 
Trade and Investment Partnership (TTIP). The goal is to eliminate 
tariffs; open up services, investment, and procurement; and promote 
regulatory cooperation to ensure high levels of health, safety, and 
environmental protection while cutting unnecessary costs.

    The benefits could be immense. The sheer volume of transatlantic 
commerce is so large that eliminating today's relatively modest trade 
barriers could bring big benefits. According to the London-based Centre 
for Economic Policy Research (CEPR), the TTIP would boost U.S. exports 
to the EU by $300 billion annually, add $125 billion to U.S. GDP each 
year, and increase the purchasing power of the typical American family 
by nearly $900--with similar benefits for Europeans.

    One key goal in the negotiations is to tackle regulatory barriers 
to trade. Companies selling their products on both sides of the 
Atlantic incur high costs complying with both U.S. and European 
regulations, even when they are very similar.

    For example, U.S. automakers run crash tests to comply with U.S. 
safety regulations but must do so a second time to comply with EU 
standards--and vice versa. Mutual recognition of these regulations 
would save consumers up to 7% on each car or truck and enhance the 
global competitiveness of U.S. and European companies.

    TTIP is also an opportunity to raise global standards. With a 
combined GDP of more than $34 trillion, the sheer size of the 
transatlantic economy will incentivize other countries to look to 
standards set in the TTIP. Accordingly, the United States and the EU 
should establish a high bar in such areas as protecting intellectual 
property, cultivating the digital economy, and combating trade and 
investment protectionism.

    Refusing to pursue this agreement would exact a price as other 
countries enter into new trade pacts with the EU. Already, the EU has 
dozens of FTAs in force with such countries as Mexico, Central America, 
Colombia, South Africa, and South Korea. It has concluded negotiations 
for additional agreements with Canada, Singapore, Ukraine, and others. 
The EU is currently in negotiations with India, Japan, Malaysia, 
Thailand, Vietnam, and the Mercosur bloc. Without a trade agreement in 
place with the EU, U.S. workers and companies could be put at a 
disadvantage in the giant European marketplace.
            The Trade in Services Agreement
    While it has not made national headlines, the United States has 
joined with more than 50 other countries to launch negotiations for a 
high-standard trade agreement in services dubbed the Trade in Services 
Agreement (TISA). This exciting new accord has the potential to ignite 
economic growth and job creation in the United States and abroad.

    Services generate about 75% of U.S. economic output and 80% of U.S. 
private sector employment. The United States is by far the world's 
largest exporter of services, which surpassed $682 billion in 2013. In 
addition, services sales by foreign affiliates of U.S. multinational 
corporations topped $1 trillion. Combined, total sales of U.S. services 
abroad reached approximately $1.7 trillion in 2013. The United States 
is home to large numbers of successful services firms in such sectors 
as audiovisual, banking, energy services, express delivery, information 
technology, insurance, and telecommunications.

    Many jobs in services pay well. For instance, approximately 18 
million Americans are employed in business services such as software, 
architectural services, engineering and project management services, 
and insurance--all of which generate billions of dollars in exports. 
Wages in these sectors are 20% higher on average than those in 
manufacturing, which employs only two-thirds as many American workers.

    Even so, the potential for service industries to engage in 
international trade is almost untapped. One in four U.S. factories 
exports, but just one in every 20 providers of business services does 
so. Just 3% of U.S. services output is exported, according to the 
Peterson Institute for International Economics.

    In this context, America's FTAs have provided significant gains for 
U.S. service providers. These agreements have expanded access to 
foreign markets for cross-border sales of services and barred 
discrimination against service providers on the basis of their 
nationality. They have also opened up services sectors that had 
previously been closed to foreign investment and ushered in greater 
transparency in the regulations that set the rules of the road for 
services markets.

    The chief goals of the United States in TISA are to expand access 
to foreign markets for U.S. service industries and prohibit 
discrimination against American service providers in foreign markets. 
In addition, the TISA will put in place rules to prevent regulations 
from being used as disguised trade barriers that shut out U.S. services 
exports.

    The TISA also aims to safeguard cross-border data flows. In today's 
global economy, companies often move data across borders to create new 
products, enhance productivity, deter fraud, protect consumers, and 
grow their business. This is particularly important for services, many 
of which were considered ``non-tradeable'' before the advent of the 
Internet. Recent studies estimate that within ten years products and 
services reliant on cross-border data flows will add over $1 trillion 
annually to the global economy, with the United States at the fore. To 
seize these benefits, the TISA should prohibit restrictions on 
legitimate cross-border information flows and bar local infrastructure 
mandates relating to data storage.

    Finally, the TISA should include rules to ensure that private 
companies are not put at a disadvantage when they compete with state-
owned enterprises (SOEs) and other national champions. It should guard 
against anti-competitive behavior by SOEs.

    The payoff from the TISA could be huge. Eliminating barriers to 
trade in services could boost U.S. services exports by as much as $860 
billion--up from 2013's record $682 billion--to as much as $1.4 
trillion, according to the Peterson Institute. Such a dramatic increase 
could create as many as three million American jobs.

    The TISA's potential to drive economic growth and job creation in 
the United States and beyond is significant. The Chamber is committed 
to working closely with U.S. negotiators, foreign governments, and the 
Congress to press for a strong agreement.
            The World Trade Organization
    The U.S. Chamber remains firmly committed to the global rules-based 
trading system embodied by the World Trade Organization (WTO). In the 
view of Chamber members, the U.S. business community needs the WTO 
today as much as ever. Its rules inform national policy at home and 
abroad, and its dispute settlement system commands global respect.

    The multilateral trading system has benefitted the entire world. 
Eight successful multilateral negotiating rounds have helped increase 
world trade from $58 billion in 1948 to $22 trillion today. This is a 
40-fold increase in real terms, and it has helped boost incomes in 
country after country.

    In recent years, the long impasse in the Doha Development Agenda 
negotiations led many to call into question the WTO's role as a forum 
for market-opening trade negotiations. In this context, it is difficult 
to exaggerate the importance of the Trade Facilitation Agreement (TFA), 
the first multilateral trade agreement since the organization's 
creation in 1995. On November 27, 2014, the WTO General Council 
unanimously approved a protocol to implement the TFA, and the WTO's 160 
Member States are now in the process of ratifying it.

    The TFA is a cost-cutting, competition-enhancing, anti-corruption 
agreement that will streamline the passage of goods across borders by 
cutting red tape and bureaucracy and establishing common approaches to 
clearing goods through customs. The Peterson Institute for 
International Economics has estimated it could boost the world economy 
by as much as $1 trillion and generate as many as 21 million jobs 
globally.

    The meeting in Geneva followed the November 13 announcement by U.S. 
and Indian trade officials that they had overcome obstacles preventing 
implementation of the WTO Bali Package, which includes the TFA and 
understandings on food security and development.

    The Chamber applauded these developments. We have been pressing for 
a commercially meaningful TFA in business delegations to Geneva over 
the past two years, at the Bali Ministerial, and in meetings with 
foreign officials in Washington and other capitals, notably with Indian 
officials.

    Similarly, the Chamber welcomed the news on November 10 that the 
United States and China had reached agreement on expanding the array of 
goods covered by the WTO Information Technology Agreement (ITA). The 
ITA negotiations were suspended after China demanded that half of all 
the proposed tariff lines be dropped from consideration or subjected to 
extraordinarily long phase-outs. While continuing disagreements 
continue over a small number of products--notably between China and 
Korea--we are optimistic that these negotiations can be concluded 
expeditiously.

    In the original ITA, a group of 29 countries agreed to tariff-free 
trade for specific IT products; today, 70 countries are members, and 
they account for 97% of world trade in IT products, which has reached 
about $4 trillion annually (or nearly one-fifth of global merchandise 
trade). Today's negotiations would eliminate duties from additional 
tariff lines, including for technology products that simply didn't 
exist in 1996.

    The Office of the U.S. Trade Representative reports that more than 
200 tariff lines will be reduced to zero under an expanded ITA: 
``Medical equipment, GPS devices, video game consoles, computer 
software and next generation semiconductors are among the high-tech 
products that will see tariff elimination.'' The expanded ITA would 
eliminate tariffs on approximately $1 trillion worth of tech goods, a 
sum greater than global trade in automobiles and three times greater 
than trade in clothing, the WTO has observed.

    However, the deal is not yet final. The U.S.-China understanding 
was presented to the other 52 economies involved in the ITA 
negotiations in December, but the parties were unable to come to a 
conclusion despite coming very close. However, negotiators are 
optimistic that a final deal between China and Korea involving one or 
two products could allow the agreement to be wrapped up.

    The Chamber has worked over the past two years to build support for 
an ambitious expansion of the ITA. Chamber delegations traveled to 
Geneva to meet with negotiators from dozens of countries and have also 
done so in missions to foreign capitals, especially Beijing.

    Separately, the United States and 13 other WTO Members, including 
China and the 28 Member States of the European Union, last year 
launched a new initiative to eliminate tariffs on environmental goods. 
These countries account for 86% of global trade in environmental goods. 
The initiative aims to build on the APEC Leaders' commitment to reduce 
tariffs on the APEC List of 54 Environmental Goods to make these 
technologies cheaper and more accessible.

    The Chamber welcomed the initiative. Eliminating barriers to trade 
in environmental goods such as solar panels, gas and wind turbines, and 
products to control air pollution and treat wastewater is both pro-
environment and pro-growth.

    Total global trade in environmental goods approaches $1 trillion 
annually, but some countries currently apply tariffs to these goods as 
high as 35%, discouraging their use. The countries taking part in this 
initiative have begun to reach out to other countries to encourage them 
to join in.
            Other Trade Priorities Before Congress
    In addition, Congress should move quickly to renew the Generalized 
System of Preferences (GSP), which expired on July 31, 2013. Since 
1976, GSP has promoted economic growth in more than 120 developing 
countries by providing duty-free access to the U.S. market for 
thousands of selected products. In 2012, U.S. imports under GSP reached 
$20 billion.

    GSP helps keep U.S. manufacturers and their suppliers competitive. 
Approximately three-quarters of U.S. imports using GSP are raw 
materials, parts and components, or machinery and equipment used by 
U.S. companies to manufacture goods in the United States for domestic 
consumption or for export. The products coming in under GSP generally 
do not compete with U.S.-made goods in any significant way. According 
to a 2006 U.S. Chamber of Commerce study, over 80,000 American jobs are 
associated with moving GSP imports from the docks to farmers, 
manufacturers, and retail shelves.

    The Chamber is also pushing for reauthorization of the African 
Growth and Opportunity Act (AGOA), which will expire on September 30, 
2015. Similar to GSP, AGOA benefits not only the economies of sub-
Saharan Africa but U.S. companies and consumers here at home.

    Moving this bill sooner rather than later will avert disruption of 
trade flows and afford companies the certainty they need to make 
investments and sourcing decisions. Moreover, as the first and only 
economic policy platform that exists between the United States and sub-
Saharan Africa, AGOA's looming expiration weighs heavily on U.S. 
relations with the region and threatens to undermine the gains that 
African economies have made under this program.

    The Chamber encourages Congress to begin work now to extend AGOA 
beyond its scheduled expiration next year. In the past decade, AGOA's 
multiple renewals have been limited to modest increments of time, which 
has limited the scope of its success.

    On an issue also of importance for the textile and apparel sector, 
the Chamber supports renewal of the recently expired Tariff Preference 
Level (TPL) granted to Nicaragua under the U.S.-Dominican Republic-
Central America Free Trade Agreement (CAFTA-DR). The TPL allowed 
apparel made of certain cotton and man-made fiber to enter the U.S. 
duty free if it was assembled in Nicaragua, regardless of the origin of 
the fabrics. This measure supported thousands of jobs in the United 
States and Nicaragua. It should be renewed swiftly.

    Further, the Chamber strongly supports the Miscellaneous Tariff 
Bill (MTB), which provides relief from tariffs levied on imported 
materials or intermediate products that are essential to U.S. 
manufacturers but unavailable from domestic sources. Tens of thousands 
of American workers and hundreds of American companies depend on the 
MTB for relief from tariffs that serve only to raise costs for U.S. 
manufacturers and dull their competitive edge. The last MTB supported 
an estimated 90,000 American jobs; the latest bill could benefit twice 
as many workers.

    In the view of some, the MTB's duty suspensions are earmarks 
because they provide a ``limited tariff benefit,'' which is defined 
under House rules as benefiting 10 or fewer entities. In fact, the 
MTB's benefits are not limited: Duty suspensions are available to all 
importers of the product. The bill makes no appropriation of public 
funds; it merely suspends a tariff that serves only to undermine U.S. 
competitiveness. The MTB is a tax cut, not an earmark.

    Since the expiration of the last MTB on December 31, 2012, U.S. 
businesses both large and small have faced higher costs for imported 
inputs not available from domestic sources. The Chamber urges Congress 
to renew the MTB and lift the burden of these damaging tariffs.

    In addition, the Chamber strongly supports efforts to modernize our 
own borders and to facilitate trade and travel through customs 
reauthorization legislation. A bill to reauthorize U.S. Customs and 
Border Protection is long overdue as the dramatic spread in global 
supply chains has made trade facilitation more important to business 
competitiveness.

    Technological progress and falling transportation costs--coupled 
with companies' need to access resources, labor, and markets--have 
pushed companies to source many raw materials, intermediate goods, and 
other inputs from locations around the world. Outdated customs 
procedures can raise costs for U.S. businesses that rely on global 
supply chains to access these inputs and to reach new consumer markets. 
Making improvements to customs procedures to ease cross-border friction 
will smooth the flow of trade and ensure the timely delivery of inputs 
and final products. These reforms could also help small- and medium-
sized businesses access foreign markets.

    The Chamber is eager to advance legislation in the 114th Congress 
to promote trade facilitation, modernize customs processes, improve 
enforcement of customs and trade laws, advance cooperation among 
government agencies, enhance intellectual property rights enforcement, 
and set the global standard for border management. There is bipartisan 
support for this legislation, and we hope to see it move soon.

    Finally, the Chamber urges Congress to defuse the threat to 
billions of dollars' worth of U.S. exports in the Country-of-Origin-
Labeling (COOL) dispute. Over the past few years, a series of WTO 
dispute settlement panels has ruled that the U.S. COOL rule on muscle 
cuts of meat violates obligations the United States has accepted as a 
member of the WTO.

    Canada and Mexico, which brought the dispute, are the two largest 
markets for U.S. exports. With this ruling in hand, the WTO is now on 
track to authorize our two North American neighbors to levy retaliatory 
tariffs against a broad array of U.S. agricultural and manufactured 
products. The Chamber shares the growing sense of concern in Congress 
that the threat of trade retaliation is real. In fact, retaliation may 
be just six months away. A list of products likely to be targeted by 
Canada and Mexico and the potential economic impact for each state may 
be found on an interactive map at www.COOLreform.com. The value of 
American exports subject to retaliation could top $2 billion.

    The Chamber and our allies in the broad-based COOL Reform coalition 
urge Congress to act swiftly to avert the threat of retaliation by 
bringing the United States into compliance with obligations the United 
States has undertaken as a member of the WTO.
            Conclusion
    To conclude, the United States cannot afford to sit on the 
sidelines while others set the rules of world trade. To create the 
jobs, growth, and prosperity our children need, we need to set the 
agenda. Otherwise, our workers and businesses will miss out on huge 
opportunities.

    We need a laser-like focus on access to foreign markets. We need to 
renew Trade Promotion Authority. Then, Congress and the administration 
should use this legislation to pursue new trade agreements to ensure 
that international commerce is fair. The trans-Pacific, trans-Atlantic, 
services, and WTO trade agreements now being negotiated represent a 
once in a lifetime opportunity to tear down the walls that have shut 
American goods and services out of foreign markets for so long.

    Finally, we need to ensure that all our trade agreements are fully 
enforced. Trade agreements are not worth the paper they are written on 
if they are not fully enforced.

    The bottom line is simple: Without a pro-active and determined 
trade agenda, American workers and businesses will miss out on huge 
opportunities. U.S. companies and the workers they employ will be shut 
out of foreign markets by unfair foreign trade barriers. Our standard 
of living and our standing in the world will suffer.

    The Chamber looks forward to working with Congress and the 
administration to advance a bold trade agenda to generate growth, 
opportunity, and jobs.

                                 ______
                                 

                       UNITED STATES COUNCIL FOR
                     INTERNATIONAL BUSINESS (USCIB)

                           Washington Office

                     1400 K Street, N.W., Suite 450

                         Washington, D.C. 20005

                            202.371.1316 tel

                            202.371.8249 fax

                             www.uscib.org

          Global Business Leadership as the U.S. Affiliate of:

                International Chamber of Commerce (ICC)

             International Organization of Employers (IOE)

      Business and Industry Advisory Committee (BIAC) to the OECD

                           ATA Carnet System

Senate Committee on Finance
Attn. Editorial and Document Section
Room SD-219
Dirksen Senate Office Building
Washington, DC 20510-6200

                                                  February 10, 2015
STATEMENT FOR THE RECORD
    RE: Full Committee Hearing on President Obama's 2015 Trade Policy 
        Agenda, January 27, 2015, 10:00am, Dirksen Senate Office 
        Building, Room 215

    The United States Council for International Business (USCIB) 
strongly supports an ambitious, proactive U.S. trade agenda to advance 
our national economy and promote American business at home and abroad. 
USCIB, as a trade association representing over 300 multinational 
corporations, associations and law firms, works with our members in 
policy areas spanning trade and investment, customs and trade 
facilitation, environmental issues, information and communications 
technology, intellectual property rights, product policy, agriculture, 
tax and much more. As the American affiliate of the International 
Chamber of Commerce (ICC), the Business and Industry Advisory Committee 
to the OECD (BIAC), and the International Organization of Employers 
(IOE), we advocate for open trade on behalf of U.S. business in the 
World Trade Organization (WTO) and other intergovernmental bodies.

    USCIB and its member companies are committed to strengthening a 
rules-based global trading and investment system through further 
opening of international 
markets, continuing trade and investment liberalization, and removing 
barriers American companies face around the world. To that end, the 
USCIB 2015 Trade and Investment Agenda along with the USCIB 2015 
Customs and Trade Facilitation Priorities and Goals outline five areas 
for action by our members to advance these goals:

   Press for an ambitious U.S. trade agenda that improves access to 
        major economies and addresses emerging protectionist polices.

   Promote global investment policies that open markets and level the 
        playing field for U.S. companies.

   Support efforts by the WTO to rebuild confidence and credibility 
        through concrete action on specific negotiations.

   Leverage USCIB international platforms to build global business 
        support for addressing key trade and investment policy 
        concerns.

   Streamline trade at the borders by actively supporting Customs 
        Reauthorization legislation and implementation of the WTO Trade 
        Facilitation Agreement.

    USCIB and its members look forward to working with the Obama 
Administration, especially U.S. Trade Representative Ambassador Froman 
and his team; the Congress; business; other stakeholders, and 
governmental organizations to realize our mutual goals of growing the 
American economy and creating jobs. Specifically, USCIB looks forward 
to working with USTR and the Administration on completing the 
TransPacific Partnership (TPP), substantially advancing negotiations in 
the Transatlantic Trade and Investment Partnership (TTIP) with the 
European Union, concluding the Trade in International Services 
Agreement (TiSA), and working with growing trading partners such as 
China to conclude Bilateral Investment Treaties (BITs). We have been 
active in providing stakeholder input on these efforts, in policy 
recommendations, through letters and in meetings with negotiators.

    Most urgently, USCIB and our members believe that Trade Promotion 
Authority (TPA) legislation must be approved by Congress early in 2015. 
TPA is critical to moving forward on the trade agreements listed above 
with guidance on important negotiating objectives articulated by 
Congress. TPA would enhance America's competitiveness in the global 
economy as well as strengthen our commercial and strategic relations 
around the world. USCIB has been advocating passage of this legislation 
and will continue to employ its resources to achieve this objective. 
Additionally, we believe the passage of customs reauthorization is 
critical to the facilitation of trade and ensuring a faster clearance 
of goods at the border.

    In addition to supporting a strong U.S. trade agenda, USCIB 
believes that multilateral approaches to trade can be the most 
effective means for opening global markets and leveling the playing 
field for U.S. companies. Directly and through our international 
affiliate organizations, USCIB supports a strong WTO. Successful 
ratification and implementation of the Trade Facilitation Agreement 
will provide a major boost to the work of the WTO and we are leading 
private sector engagement with the relevant government agencies to 
ensure a swift and positive outcome. We are also leading U.S. business 
efforts in support of completing the Environmental Goods Agreement this 
year in the WTO and we continue to support the conclusion of the 
Information Technology Agreement expansion. Success in these agreements 
along with progress on a post-Bali agenda would rebuild confidence in 
and the credibility of the WTO.

    Through U.S. trade negotiations, the work at the WTO, and other 
international venues, USCIB will seek to address a growing list of 
trade and investment barriers that its members encounter globally such 
as: localization requirements, restrictions on the cross-border flow of 
data, regulatory impediments, unfair competition from state-owned 
enterprises, and customs-related challenges at the border. USCIB will 
leverage its unique relationships with the ICC, BIAC, and IOE to 
coordinate our efforts with business associations in other countries to 
address these issues with governments in other countries as a 
complement to our work with the U.S. government.

    More details on the priorities and workplan for USCIB are included 
in the full USCIB 2015 Trade and Investment Agenda and key sections of 
the USCIB 2015 Customs and Trade Facilitation Priorities and Goals 
which we include as an attachment for the record.

Sincerely,

Robert J . Mulligan
Senior Vice President, Policy and Government Affairs
                                 ______
                                 

             USCIB Global Trade and Investment Agenda 2015

The United States Council for International Business (USCIB) is 
committed to strengthening a rules-based global trading and investment 
system through further opening up of international markets, continuing 
trade and investment liberalization, and removing barriers American 
companies face in doing business around the world. In 2015, our USCIB 
Trade and Investment Agenda will build on the work done in 2014 to move 
many trade and investment initiatives important to USCIB member 
companies forward, as well as address emerging sets of practices that 
have the potential to and/or are increasingly creating trade friction.

USCIB's Trade and Investment Agenda will work hard to bring a number of 
trade initiatives, where the U.S. is an active participant, to 
successful closure while substantially advancing others, including: 
reaching bi-partisan agreement on Trade Promotion Authority (TPA) 
legislation, completing the Trans-Pacific Partnership (TPP) 
negotiations and getting Congressional approval, finalizing the 
agreement on expansion of the Information Technology Agreement (ITA), 
making significant progress on the Trans-Atlantic Trade and Investment 
Partnership (TTIP) and Trade in International Services Agreement (TiSA) 
negotiations, continuing to move the World Trade Organization (WTO) 
forward in positive ways such as implementation of the Trade 
Facilitation Agreement (TFA) concluded in Bali, and supporting efforts 
to continue to negotiate a high-standard U.S.-China Bilateral 
Investment Treaty (BIT).

Through our work on these trade and investment negotiations and our 
engagement with a wide range of intergovernmental organizations, the 
USCIB Trade and Investment Agenda will target many emerging policies 
and regulatory practices that are having a growing impact on members' 
business and global trade and investment flows. We will continue to 
educate policymakers on global value chains that are critical to 
business growth and advocate against policies that restrict the 
movement of goods, services, capital and people such as: localization 
barriers to trade, limitations on cross-border data flows, unfair 
support for state-owned or state-supported enterprises, customs and 
border impediments, mobility-related obstacles, inadequate anti-bribery 
enforcement, inadequate or eroding IP protection, and illicit trade.

While we will actively engage U.S. policymakers on the USCIB Trade and 
Investment Agenda, our members see a growing need to also engage 
policymakers and business leaders in other countries on the issues they 
are confronting in global markets. USCIB will seek to more effectively 
leverage its unique network of relationships with business groups in 
other countries that are best placed to influence the policymakers in 
their countries. As the U.S. industry representative to the 
International Chamber of Commerce (ICC), the Business and Industry 
Advisory Committee to the OECD (BIAC), and the International 
Organization of Employers (IOE), we already work closely with the 
foreign business groups in these organizations but will look to expand 
the scope of our cooperation in addressing the key trade, investment 
and regulatory opportunities to better facilitate global growth and 
competitiveness.

Growing trade and investment can generate much needed economic growth 
and job creation in the United States and around the world if 
policymakers take the steps needed to address barriers to trade and 
investment. The USCIB Trade and Investment Agenda sets out a framework 
for continuing to open markets in 2015.
1. Press for an Ambitious U.S. Trade Agenda that Improves Access to 
        Major Economies and Addresses Emerging Protectionist Policies
Short Term (6-12 months)--
   TPP. As member of TPP Coalition Steering Committee, actively 
        support coalition strategy to press for completion of 
        comprehensive, high-standard TPP agreement and approval by 
        Congress by the first half of 2015.

   TPA. As member of TPA coalition steering committee, build bi-
        partisan Congressional support for approval of well-designed 
        TPA early in 2015.

   TTIP. As member of Business Coalition for Trans-Atlantic Trade 
        (BCTT) steering committee, and co-chairs of several key issue 
        work groups, play lead role in engaging U.S. and EU negotiators 
        to advance an ambitious and comprehensive TTIP agreement 
        including investment protection and regulatory cooperation 
        commitments, including specific sectors, and to promote a more 
        open environment for U.S. companies in Europe.

   TiSA. Support a successful conclusion of the TiSA negotiations that 
        sets high standards for opening services trade.

   WTO. Support U.S. efforts to move forward in the WTO, implementing 
        the Trade Facilitation Agreement, completing ITA expansion, and 
        moving forward with the Environmental Goods Agreement (EGA) 
        negotiations. (See agenda item 3 on rebuilding WTO).

   Press for the U.S. to address through trade negotiations and 
        bilateral engagement trade areas of growing concern such as: 
        localization barriers to trade, restrictions on cross-border 
        data flows and other forms of digital protectionism, state-
        owned enterprises (competitive neutrality), global value 
        chains, mobility/temporary movement of talent, illicit trade, 
        regulatory cooperation, food security and agriculture 
        regulations, and advocate for IP language in trade agreements 
        that establishes a robust and effective intellectual property 
        framework to promote innovation and creativity.

   Engage Congress in support of building capacity on trade--including 
        updating engagement with Africa in an AGOA 2.0 discussion.

Medium Term (1-3 years)--
   Identify new trade initiatives to follow after completion of TPP 
        and TTIP such as expansion of TPP around the Pacific Region 
        and/or integration of existing Free Trade Agreements (FTAs) 
        including contributing to the USTR's co-chair role on the FTAAP 
        working group.

   Provide thought leadership on future U.S. trade strategy and 
        anticipate changing policy issues resulting from rapid economic 
        and technological changes. Address growing trend of government 
        intervention in markets.

   Provide thought leadership on the growing inter-play between 
        regulation--coherence versus fragmentation and the need for 
        sound science-based policy-making--and trade policy.
2. Promote Global Investment Policies that Open Markets and Level the 
        Playing Field for U.S. Companies
Short Term--
   Continue leadership role on state-owned enterprise issues in the 
        TPP, TTIP, TiSA, and BIT negotiations and at the OECD.

   Press for high-standard Investment chapters in TPP and TTIP, 
        especially on investor-state dispute settlement; resist efforts 
        to carve out important provisions or sectors.

   Play lead role in working with U.S. government on China BIT. 
        Encourage U.S. government to move forward on high-standard BIT 
        negotiations with other key countries including India.

   Build coalition to support maintenance of investor-state dispute 
        mechanisms in investment agreements and ensure any discussions 
        of a multilateral investment framework focus on including high-
        standard investment protections.

   Strengthen relationships with business groups from other key 
        countries that are our partners in international affiliate 
        organizations and build global support on key investment 
        issues.
Medium Term--
   Encourage helpful and constructive ICC approach to addressing 
        global investment issues including through thought leadership 
        at the G-20/B-20.
3. Urge WTO to Rebuild Confidence and Credibility Through Concrete 
        Action on Specific Negotiations
Short Term--advocate for WTO to restore effective role in liberalizing 
trade:
   Ensure ratification and effective implementation of Trade 
        Facilitation Agreement concluded in Bali at WTO ministerial.

   Support efforts to conclude an agreement to expand product coverage 
        in the ITA in 2015.

   Lead coalition effort to advance negotiations in the WTO on an 
        environmental goods agreement.

   Engage our business group partners from other countries directly 
        and through our international platforms (BIAC, IOE, ICC) to 
        build consensus views on trade agenda in the WTO, post-Bali.

Medium Term--work to rebuild consensus in support of multilateral trade 
negotiations and the WTO.
   Propose improvements to operation of WTO, including the dispute 
        resolution process and consultation with the private sector.

   Develop paper on changing global economic environment and growing 
        role of large emerging economies. Underscore the importance of 
        a rules-based trading system.
4. Leverage International Platforms to Build Global Business Support 
        for Addressing Key Trade Policy Concerns
Short Term--utilize ICC, BIAC and IOE where appropriate to raise global 
awareness on issues and build support of broad international business 
community. Work through our foreign business association partners to 
build local advocates. Engage OECD on useful work they could do in 
these areas. Utilize other platforms such as APEC and G-20/B-20, as 
appropriate for addressing issues such as:
    - Localization barriers to trade
    - Cross border data flows
    - Regulatory cooperation
    - Illicit trade
    - State-owned enterprises/Competitive neutrality
    - Global value chains
    - Mobility
    - Support robust and effective intellectual property framework to 
            promote innovation and creativity
    - Anti Bribery/transparency
    - Supply chain transparency

   Engage governments on potential negative impacts on economic 
        growth/export generation from over-regulation and the benefits 
        of regulatory coherence among countries.

   Work with G-20/B-20 and other international organizations to 
        support policies on infrastructure (including financing) that 
        will improve trade and investment opportunities for members.

   Implement strategy building on USCIB unique expertise, access and 
        influence to intergovernmental organizations (IGOs) and the 
        U.S. government in order to advance members' interests, enhance 
        business participation and influence in key IGOs, and shape 
        policy at the international level.

   Strengthen our relationships with business groups from other 
        countries that are our partners in international affiliate 
        organizations and build support on key trade, investment and 
        regulatory issues. Organize meetings with these groups in 
        Washington and in their home countries to build relations. 
        Identify issues of common interest and pursue joint advocacy 
        efforts.

   Organize more meetings/lunches for members with foreign officials 
        when they are in DC to provide opportunity to engage on the key 
        trade policy concerns in that country and globally.
    Medium Term--
   Address growing concerns that some multilateral institutions are 
        pursuing policies that will restrict international trade and 
        investment rather than promote trade liberalization.

   Assist the smallest businesses and individual entrepreneurs to 
        engage in international trade by adopting trade policies aimed 
        at improving access to the global marketplace such as removing 
        red tape and simplifying customs clearance procedures.
5. Leverage Coordinated USCIB Committee Work on Trade Policy Related 
        and Regulatory Issues
Short Term--work closely with other USCIB policy committees on issues 
that intersect with trade and investment policy:
   Environment Committee--tariff reduction/elimination on 
        environmental goods and services, IP erosion efforts in Climate 
        Change talks, and unilateral environmental policies that become 
        nontariff barriers to trade.
   Customs Committee--trade facilitation and customs modernization.
   ICT Committee--localization barriers to trade, cross border data 
        flow and privacy.
   Competition Committee--competitive neutrality.
   IP Committee--support robust and effective intellectual property 
        framework to promote innovation and creativity.
   Labor Committee--ensure labor provisions in trade agreements are 
        consistent with member positions in existing agreements.
   Tax--ensure tax policy changes do not create barriers to trade and 
        investment.
   Country/regional committees--APEC, China, emerging markets, EU.

Medium Term--identify cross-cutting issues that involve more than one 
committee and develop coordinated strategies to address these issues.
6. Provide Thought Leadership and Improve Analysis on Trade and 
        Investment Policy to Inform Global Policymaking Activity
Short Term--continue to educate policymakers on member business models 
that utilize global value chains by leveraging USCIB study by Prof. 
Slaughter through briefings on Hill, meetings with policymakers, 
engagement with our international organizations, possible briefing in 
Brussels, webinars, and other venues. Utilize study throughout the year 
in pushing for policies that facilitate member company competitiveness 
and counter policies like localization barriers to trade.
   Encourage affiliate organizations in other countries to work with 
        local think tanks to write on impact of policies such as 
        localization barriers to trade and restrictions on cross border 
        data flows on global value chains and economic growth.
   Raise USCIB's public profile on trade and investment issues, 
        including public speaking, media interviews, and well-prepared 
        conferences.
   Support work of OECD on Trade in Value Added research and policy 
        analysis.
   Build on successful OECD/USCIB trade and investment conference by 
        establishing it as an annual event.
   Support organization of first ICC/USCIB conference on customs and 
        trade facilitation.
   Support business visit to OECD organized by BIAC.
   Support research connecting open government data with a more 
        efficient trading system and economic growth.

Medium Term--identify other issue areas for in-depth research and 
develop plan for producing one or more reports. Possible issues might 
include localization barriers to trade, challenges of state capitalism, 
cross border data flows, impact of sanctions on trade. Work with U.S. 
Council Foundation to expand study and research capabilities.

     USCIB 2015 Customs and Trade Facilitation Priorities and Goals

The United States Council for International Business remains committed 
to pushing a robust trade and customs agenda in 2015. We will continue 
to urge for passage of Customs Reauthorization legislation in the U.S. 
Congress. We believe updating this legislation is critical to improving 
transparency and efficiency and to fostering a better relationship 
between trade facilitation, security and enforcement. There is also a 
growing need for mutual recognition globally and will continue to 
engage other countries to further push for an international single 
window initiative.

The USCIB Customs and Trade Facilitation Committee 2015 goals and 
priorities sets a framework for the year and presents a clear path 
forward for the committee towards the areas in which we can make the 
most impact. USCIB and our membership bring a unique view that enables 
us to actively engage U.S. policy makers. Our perspective allows us to 
actively engage and strengthen our international partnerships to 
advance global customs initiatives while supporting U.S. Customs and 
Border Protection.
U.S. Congress:
Customs Reauthorization:
   Continue to work with U.S. Congress and business community to 
        facilitate passage of a Customs Reauthorization Bill
    - USCIB continues to support CBP's efforts to increase the current 
            values for de minimis and informal entry shipments. This 
            change would promote faster border clearance for low-value 
            shipments and allow Customs to focus on urgent priorities 
            like ensuring product safety and protecting intellectual 
            property. This in turn would benefit small business by 
            reducing the burden associated with importing low value 
            goods and international retail returns.
    - Push for language in the legislation to mandate mutual 
            recognition of customs in all countries. A single window 
            initiative benefits everyone and it is important to ensure 
            trusted traders benefit from achieving trusted status. 
            Today, one still has to apply for EU AEO even if they are 
            C-TPAT. By creating true mutual recognition across borders, 
            this would allow C-TPAT to be used for multiple purposes 
            and would cut down on red tape.
    - Continue to engage with policy makers to ensure that companies 
            benefit from their participation in trusted trader 
            programs.
    - Work with members of the business community to provide outreach 
            and education to Capitol Hill members about the importance 
            of legislation.
    - Finalize USCIB de minimis white paper and circulate to government 
            officials, multilateral institutions such as the WTO, WCO 
            and other groups of interest.

WTO Trade Facilitation Agreement/Trade Facilitation:
   Continue to monitor developments and pursue opportunities to 
        support ratification of agreement and ratification of protocol 
        of amendment regarding food security for the WTO ``Bali'' 
        Agreement on Trade Facilitation.
   Continue to play a leadership role in the USAID/USTR Alliance and 
        the private sector business coalition.
    - Coordinate with members of the international business community 
            to ensure there is one coordinated message for business.
   Identify resource capabilities and regions/countries of interest 
        for members involved in initiatives.
   Continue to work with the ICC, WCO, WTO , USTR and CBP to 
        coordinate donor effort on technical assistance and capacity 
        building.
   Coordinate with the OECD on creating helpful data, research and 
        information on the benefits of implementing the agreement and 
        how trade facilitation will help developing and least 
        developing countries.

                                   [all]