[Senate Hearing 114-221]
[From the U.S. Government Publishing Office]
S. Hrg. 114-221
CONGRESS AND U.S. TARIFF POLICY
=======================================================================
HEARINGS
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
APRIL 16 AND APRIL 21, 2015
__________
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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
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APRIL 16, 2015
Opening Statements
Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman,
Committee on Finance........................................... 2, 39
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 4, 41
Administration Witnesses
Froman, Hon. Michael, U.S. Trade Representative, Executive Office
of the President, Washington, DC............................... 5, 43
Lew, Hon. Jacob J., Secretary, Department of the Treasury,
Washington, DC................................................. 7
Vilsack, Hon. Tom, Secretary, Department of Agriculture,
Washington, DC................................................. 9
APRIL 21, 2015
Opening Statements
Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman,
Committee on Finance........................................... 53
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 55
Witnesses
Donohue, Thomas J., president and chief executive officer, U.S.
Chamber of Commerce, Washington, DC............................ 56
Trumka, Richard L., president, American Federation of Labor and
Congress of Industrial Organizations (AFL-CIO), Washington, DC. 59
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Donohue, Thomas J.:
Testimony.................................................... 56
Prepared statement with attachment........................... 87
Froman, Hon. Michael:
Testimonies.................................................. 5, 43
Prepared statement........................................... 96
Response to a question from Senator Toomey................... 98
Hatch, Hon. Orrin G.:
Opening statements........................................2, 39, 53
Prepared statements....................................99, 100, 101
Letter to Congress from chambers of commerce, manufacturing
organizations, and farm bureaus, April 22, 2015............ 103
Lew, Hon. Jacob J.:
Testimony.................................................... 7
Prepared statement........................................... 109
Trumka, Richard L.:
Testimony.................................................... 59
Prepared statement with attachments.......................... 110
Vilsack, Hon. Tom:
Testimony.................................................... 9
Prepared statement........................................... 125
Wyden, Hon. Ron:
Opening statements........................................4, 41, 55
Prepared statements...................................126, 127, 128
Communications
American Chemistry Council....................................... 131
Distilled Spirits Council of the United States, Inc.............. 132
LeadingAge....................................................... 134
National Association of Manufacturers............................ 135
National Farmers Union........................................... 138
21st Century Fox et al........................................... 140
CONGRESS AND U.S. TARIFF POLICY, PART I
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THURSDAY, APRIL 16, 2015
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 10:12
a.m., in room SD-215, Dirksen Senate Office Building, Hon.
Orrin G. Hatch (chairman of the committee) presiding.
Present: Senators Grassley, Roberts, Thune, Isakson,
Portman, Toomey, Heller, Scott, Wyden, Schumer, Stabenow,
Cantwell, Nelson, Menendez, Carper, Cardin, Brown, Bennet,
Casey, and Warner.
Also present: Republican Staff: Chris Campbell, Staff
Director; Everett Eissenstat, Chief International Trade
Counsel; Rebecca Eubank, International Trade Analyst; Kevin
Rosenbaum, Detailee; and Sahra Park Su, Fellow. Democratic
Staff: Joshua Sheinkman, Staff Director; Jocelyn Moore, Deputy
Staff Director; Michael Evans, General Counsel; Jayme White,
Chief Advisor for International Competiveness and Innovation;
and Elissa Alben, International Trade Counsel.
The Chairman. This hearing will come to order.
I would like to begin by engaging in a colloquy with my
friend, the ranking member, to tell the members of the
committee and the public where things stand. We have had a very
positive set of discussions, and we are, in my opinion, close
to reaching an agreement on Trade Promotion Authority, Trade
Adjustment Assistance, and other important trade programs. We
are not quite there, but I hope and expect that we will be very
soon.
Senator Wyden. Mr. Chairman, thank you. I agree with your
assessment. These have obviously been very challenging
negotiations. I do believe that we are close to finding common
ground. I want to be clear, because I know colleagues want to
see how we are going to spend the day--and particularly the
week ahead--that any agreement must include not only Trade
Promotion Authority but other vital issues like Trade
Adjustment Assistance and enforcement.
It may be that the best procedural approach is for these
provisions to be passed as separate bills, but the trains
absolutely must be on parallel tracks, and both TPA and TAA
must make it to the President's desk for signature so that one
cannot be enacted without the other.
The Chairman. I agree to help move these bills on parallel
tracks. I oppose the TAA program, but, as I said in the past, I
understand it is necessary to maintain Democratic support for
TPA, so, when we have an agreement, I will bring the agreed-
upon bill before our committee and ensure that it gets a fair
vote. I will also work with our Majority Leader to make sure it
gets a fair vote on the floor and that TAA and TPA move in
parallel.
Let me explain how we intend to proceed. If an agreement is
reached, we will make it available and will brief committee
members as soon as possible. At the same time that we work to
complete an agreement, this hearing gives us an opportunity to
examine TPA, TAA, and other important trade issues, and it
gives committee members an opportunity to ask questions of key
administration officials and raise issues of concern.
Senator Wyden. Mr. Chairman, I have one other suggestion.
If an agreement is reached soon, I believe the committee should
reconvene later today, so that it would be possible to consider
the agreement in further detail. Is the chairman willing to do
that?
The Chairman. Yes, that is a good suggestion. Subject to
scheduling considerations, we will reconvene the hearing, so
this will be a continued hearing throughout the day.
Senator Wyden. Thank you.
Senator Stabenow. Mr. Chairman, might I ask a question?
The Chairman. Sure.
Senator Stabenow. Thank you. I assume that that does not
mean voting today on an agreement we have not yet even seen,
that has not been reached?
Senator Wyden. The Senator is absolutely correct.
Senator Stabenow. Thank you.
The Chairman. The mark-up will be next Wednesday----
Senator Stabenow. Thank you.
The Chairman [continuing]. Assuming that we have this all
together, and I think we will.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
UTAH, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. Now, the committee will come to order.
I would like to thank everyone for attending today's
hearing on Congress and U.S. tariff policy and offer a special
welcome to this distinguished panel of witnesses we have before
our committee today: Ambassador Froman, Secretary Lew, and
Secretary Vilsack. Each of you gentlemen serves in key
positions and makes decisions every day on important trade
issues, so we really look forward to your testimony and
appreciate your contributions to this debate.
My hope is that this hearing will help kick-start the first
real opportunity we have had to debate U.S. trade policy in a
number of years as we get closer to introducing and enacting
legislation to renew Trade Promotion Authority, or TPA.
Let me start by stating one simple premise. U.S. trade with
other countries is a very good thing. Trade creates new
opportunities for America's workers, enhances the standard of
living for our citizens, helps our national security by
solidifying alliances with like-minded nations, advances
America's values abroad, strengthens the rule of law, and helps
lift people across the globe out of poverty.
To effectively achieve these goals, Congress must be an
effective partner with the administration. Our Nation's
constitutional framework is complex. Article I of the
Constitution grants to the Congress the power to regulate
commerce with foreign nations, but Article II grants the
President the power to conduct foreign policy.
I think most would agree that trying to negotiate an
agreement among many different parties with different
priorities and vague objectives is an inherently difficult, if
not impossible, proposition. Most would also agree that it
would be even more difficult to reach an agreement if the
parties are unsure if their negotiating partners will be able
to put the agreement into force.
Given those realities, it is pretty easy to understand why
TPA is so important. No potential trade partner will give our
negotiators their best offer unless they know what issues
matter to us the most and whether we can deliver on the final
deal. Simply put, for America to be able to succeed at the
trade negotiating table and to set the rules for a fair
international marketplace, we have to speak with one voice in
our demands and provide assurance that we will deliver what we
promise.
Now, people have different theories about how to best
achieve these goals, but there is only one legislative tool
with a proven track record, and that is Trade Promotion
Authority. TPA is the most powerful tool in Congress's trade
arsenal. For decades now, robust TPA laws have ensured that
Congress plays a leading role in setting our country's trade
agenda and providing our trade negotiators with the necessary
tools to reach the best deals possible.
Currently, the Obama administration is in the midst of
negotiating some of the most ambitious trade agreements in our
Nation's history. I commend the administration for that, and
these leaders here today. But, as I have stated on a number of
occasions, those negotiations will almost certainly fail if
Congress does not renew TPA.
Make no mistake, failure on these negotiations would have a
negative impact on our economy. More than 96 percent of the
world's consumers live outside the United States. In order to
be competitive, American businesses need to be able to sell
more American-made products and services to overseas customers.
Put simply, if we want to create more opportunity and high-
paying jobs here at home, we need to open more foreign markets
to U.S. goods and services.
We should be doing all we can to tear down barriers to
American exports, while at the same time laying down
enforceable rules for our trading partners so that we can be
sure that American workers and job creators are competing on a
level playing field. We need to be leading the world on trade,
writing the rules, and setting standards. If we do not, other
countries like China most certainly will.
We can address all of these concerns by passing strong TPA
legislation. Senator Wyden and I, and others on the committee,
are currently working to do just that. I want to personally
thank Senator Wyden for his efforts to help us get as far as we
have. I also want to once again thank the three Cabinet
officials who are here to share their views on the role of
Congress's U.S. tariff policy and what our work means to our
Nation's international trade agenda.
[The prepared statement of Chairman Hatch appears in the
appendix.]
The Chairman. We will now turn to Senator Wyden, our
ranking member, for his opening statement.
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman. It has
been good to work with you over the last few months. I look
forward, Mr. Chairman, to talking about this more today. I look
forward to talking about it extensively over the next week, and
then, I think it is clear we are going to be talking about it
for weeks after that.
This is an issue of such importance that it is essential to
provide that kind of time, and I know you share my view that,
on issues like this that really address the future of America's
place in the global economy and national security, it takes
that kind of deliberation.
I also want to say to colleagues that this also must
include the health care tax credit. In other words, it will not
just be the Trade Adjustment Assistance program in terms of
assisting our workers; it also is going to have to include a
strong health care tax credit. Our colleague who has led that
fight is not here, Senator Brown, but he has been eloquent in
talking about what it means for workers, and it absolutely must
be part of this agreement.
For purposes of my kind of brief opening statement, Mr.
Chairman, I had town hall meetings in my home State just this
last week. The one issue that came up again and again was the
excessive secrecy--the excessive secrecy--that seems to have
accompanied so much of this debate. My view is, if you believe
in trade and you want more of it, the last thing you should be
for is all this secrecy that just makes the public more cynical
and skeptical about what trade is all about.
So American trade policy needs to be debated openly, and it
is time to pull it out of the time warp so that it works better
for
middle-class Americans and delivers a new level of
transparency. The focus of trade policy has to be about
creating more red, white, and blue jobs and helping Americans
climb the economic ladder. The same old playbook on global
trade does not work for Oregonians; it does not work for
Americans. I want to be clear as we start this discussion: I
will not accept it.
Now, as Chairman Hatch and I have discussed, we are working
on a variety of issues that includes Trade Promotion Authority,
Trade Adjustment Assistance, particularly tougher trade
enforcement, and a variety of other important programs. I
believe, as we begin this debate, it is important to recognize
how important it is to have a fresh, strong strategy on
enforcing our trade laws.
This is critical to stop rulebreaking countries.
Enforcement ought to be based on defending American jobs and
promoting economic growth at home. It is also long past time to
raise the bar on enforceable labor standards, enforceable
environmental protection, and human rights. I am particularly
pleased that Senator Cardin has led the fight here on human
rights and governance and the fight for those values that are
so important to us as Americans.
Bottom line: make the system stronger and better for
middle-class workers in Oregon and across the country. Those
middle-class trade policies are going to work best when our
workforce is ready to compete and when workers have access to
job training, financial support, and health care.
At the end of the day, what is going to be different about
this is, the public has a right to know from this point on what
is at stake in trade. And we are going to start that, because,
before the President signs a Trans-Pacific Partnership
agreement, it will be published for a significant length of
time, and that will be directed for the first time by law.
In the future, we are also going to have to make changes to
ensure that the public knows, as negotiations go forward, what
is in those negotiations. So those are some of the priorities
that I have, Mr. Chairman. I know that this morning's session,
given the interest of colleagues, is a chance to talk about
some of those priorities, and I look forward to reconvening
this afternoon to examine moving ahead in greater detail. I
thank you for that opportunity.
The Chairman. Well, thank you, Senator Wyden.
[The prepared statement of Senator Wyden appears in the
appendix.]
The Chairman. We have three excellent witnesses here today,
Cabinet-level officials, and we are going to start with Jacob
Lew, who is the Treasury Secretary. We are very grateful to
have you here. Then we will go to Secretary Vilsack, the
Agriculture Secretary, and then we will go to our Trade
Representative, Ambassador Froman.
So, Secretary Lew, we will start with you.
Secretary Lew. Thank you, Mr. Chairman. But if I might
suggest, if Ambassador Froman went first, it might frame all
three of our presentations.
The Chairman. That would be fine with me.
Secretary Lew. All right. Thank you.
The Chairman. I thought about that too, but then we thought
we would----
Secretary Lew. I appreciate the recognition, and I am happy
to deliver a statement.
The Chairman. All right.
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 the
opportunity to testify today. Thank you to my colleagues,
Secretary Lew and Secretary Vilsack, for being here.
Increasing access to foreign markets for U.S. exports
through enhanced trade opportunities has long been a bipartisan
effort, because trade plays such a critical role in supporting
good jobs, promoting growth, and strengthening the middle class
in America.
Closely related to these economic stakes is the fact that
sustaining our Nation's strategic position hinges on our
economic strength and our ability to lead on trade. The
importance of trade to America's economic well-being has never
been clearer. Last year, U.S. exports reached $2.35 trillion, a
record-breaking amount that supported an estimated 11.7 million
jobs, an increase of 1.8 million jobs since 2009.
With those jobs paying up to 18 percent more on average
than non-export-related jobs, trade policy has an important
role to play in raising wages and living standards for the
middle class. Partially as a result of our exporting success,
our economy continues to grow. Job creation is happening at the
fastest pace since the 1990s, and wages are finally starting to
rise.
After nearly 2 decades of decline, factories are opening in
this country again, manufacturing is starting to return from
overseas, and we have added 900,000 new manufacturing jobs over
the last 5 years. But we can do better. The playing field is
still not level for American workers.
The United States made its decision decades ago to have an
economy that is open to the world. Our tariffs are low, and we
do not use non-tariff barriers to discriminate against foreign
countries. But when we sell our goods abroad, our businesses
and workers often face much higher tariffs and countless non-
tariff measures.
Many of these imbalances are in areas where the U.S. is
most competitive: 50-percent tariffs on certain machinery; 80-
percent tariffs on autos; up to 400-percent tariffs on certain
agricultural products. In a world where more than 95 percent of
all customers live outside our borders, the disadvantages our
workers and businesses face are less an inconvenience than an
injustice. Fundamentally, our trade agenda is focused on
addressing that injustice by changing the status quo so that it
works better for Americans.
A critical tool to help us level the playing field for our
workers is Trade Promotion Authority. During the 8 decades
since Franklin Delano Roosevelt signed the first version of
trade negotiating legislation into law, Congresses of both
parties have revised and renewed that legislation 18 different
times under Democratic and Republican Presidents alike. But TPA
has not been updated since 2002, and during that time the
global economy has changed significantly. Congress now has the
opportunity to account for those tectonic shifts, as well as
the emerging consensus around key trade issues.
Bipartisan TPA will bring us one step closer to delivering
trade agreements like the Trans-Pacific Partnership and the
Transatlantic Trade and Investment Partnership. With those
agreements in place, American workers, farmers, ranchers, and
businesses of all sizes will have access to nearly two-thirds
of the global economy. That will help make the United States
the world's production platform of choice, the premier location
for making things not only to serve the U.S. market, but for
exporting all over the world.
Within our reach is an opportunity to promote not only
America's interests, but also our values. That is why leaders
from civil society and the private sector have spoken out about
the important role that trade has in creating American jobs,
advancing the global development and anti-poverty agenda, and
protecting the environment.
Trade brings together voices from our agricultural sector
and our manufacturing and services sector, and it has united
Mayors from across the country from Tallahassee to Tacoma, from
Long Beach to Louisville. They understand that the choice we
face today is clear. It is between a world in which America
sets the rules of the road on trade and a world in which our
competitors do. We cannot change the status quo by sitting on
the sidelines.
As we speak, China and others are negotiating an agreement
that would encompass over 3 billion people. If we allow others
to carve up markets of the future, our workers and businesses
will pay a steep price. To drive production in the United
States and create good jobs here, we must lead, and we must
lead together with a unified, bipartisan voice about our
commitment to opening markets for our workers, farmers,
ranchers, and businesses of all sizes.
So, with so much at stake, Mr. Chairman, I look forward to
continuing to work with this committee and the Congress to pass
TPA and to advance the broader trade agenda, including renewing
the Generalized System of Preferences that expired in 2013 and
the African Growth and Opportunity Act well before its
expiration in September. We also look forward to working with
you to renew Trade Adjustment Assistance.
Thanks very much.
The Chairman. Thank you, Ambassador Froman.
[The prepared statement of Ambassador Froman appears in the
appendix.]
The Chairman. We will now turn to Secretary Lew.
STATEMENT OF HON. JACOB J. LEW, SECRETARY, DEPARTMENT OF THE
TREASURY, WASHINGTON, DC
Secretary Lew. Thank you very much, Mr. Chairman, Ranking
Member Wyden, members of the committee. I am happy to be here
today and appreciate the opportunity to testify on Trade
Promotion Authority. The Treasury Department has been working
hard on the President's trade agenda and working very hard on
bolstering global economic growth and stability.
Today, exports make up some 30 percent of global GDP, and
global per capita incomes are over 50 percent higher than they
were 20 years ago. These macroeconomic gains are due in part to
the rules-based trading system that boosts U.S. and global
exports of goods and services and opportunities for American
workers, even as it raises the standard of living for
consumers.
Reducing trade barriers and securing reforms abroad through
well-crafted trade agreements benefit both U.S. economic
competitiveness and global economic prosperity. First, our
firms and workers benefit as our partner countries open up
their markets to imported goods and services.
Second, as countries open up to trade, over time they
innovate more, invest more, and become more productive. The
result is a stronger and more stable global economy. That is
also important for American businesses and workers.
Trade Promotion Authority is critical in helping secure the
substantial economic gains that our ambitious trade agenda and
investment agreements can bring. TPA sends a strong signal to
our trading partners that Congress and the administration speak
with one voice to the rest of the world on our priorities. We
strongly agree with members of Congress that unfair currency
practices need to be addressed.
Since day one, the President has been clear that no country
should grow its exports based on a persistently under-valued
exchange rate, and currency has been at the top of Treasury's
international agenda.
We share the goal of moving major economies to market-
determined exchange rate systems that are transparent,
flexible, and reflect underlying economic fundamentals. We are
working tirelessly to address currency concerns, and our
efforts, through bilateral and multilateral engagements, have
met with considerable success. Japan and other G-7 countries
have affirmed they will not target exchange rates and will only
use domestic instruments to achieve domestic economic
objectives. G-20 members have also pledged to move more rapidly
toward market-determined exchange rate systems and flexibility
in order to reflect underlying economic fundamentals, avoid
persistent exchange-rate misalignments, not target exchange
rates, and refrain from competitive devaluations.
The IMF has bolstered its surveillance of its members'
exchange rate policy obligations and has begun publishing an
external sector report that includes estimates of exchange-rate
misalignment for 25 major economies.
We have made progress with China on exchange rates through
the U.S.-China Strategic and Economic Dialogue and continue to
raise the issue regularly with our Chinese counterparts. This
has contributed to a decline in China's current account surplus
from a peak of 10 percent of GDP before this administration
took office to just 2 percent of GDP last year. The RMB has
seen a real effective appreciation of nearly 30 percent since
China allowed its currency to resume appreciation in mid-2010.
We will continue to intensify our efforts on exchange rates,
using the tools and channels that are most effective.
We believe that more progress is needed, and Treasury will
continue to engage with Congress on how best to address
currency issues in a way that is consistent with our overall
strategy of bilateral and multilateral engagement, and I look
forward to answering questions from the committee.
Thank you.
The Chairman. Thank you, Mr. Secretary.
[The prepared statement of Secretary Lew appears in the
appendix.]
The Chairman. I might mention that we are going to go as
long as we can this morning. I have to leave. We have a vote at
11, and I have to go over to the House and enroll a passed
bill, but we will continue. Then we are going to re-continue at
3 today so that we can finish this up today, and hopefully
everybody will enjoy the 3 p.m. meeting as much as this
morning.
Senator Wyden. And, Mr. Chairman, I would just say I
appreciate that. I really urge colleagues to be here at 3. I
know it is short notice, but this will give us a chance to go
into more detail. I know, after this hearing, there are going
to be a number of meetings, and we just want to use the time,
particularly over the next week in this committee, because we
are going to have lots of debate after that before it goes to
the floor and lots of time on the floor.
But I want colleagues to have every opportunity to look at
what I hope will be put together here very shortly. So 3 today,
and I appreciate your announcing that at this time, Mr.
Chairman.
The Chairman. Thank you.
Secretary Vilsack, we look forward to your testimony at
this time.
STATEMENT OF HON. TOM VILSACK, SECRETARY, DEPARTMENT OF
AGRICULTURE, WASHINGTON, DC
Secretary Vilsack. Mr. Chairman, thank you very much. To
Senator Wyden and committee members, I appreciate the
opportunity to be here this morning to speak specifically on
the benefits of Trade Promotion Authority and the trade
agreements that are being negotiated for America's farmers,
ranchers, and producers.
Let me start with a bit of history. In August of 1941,
Franklin Roosevelt and Winston Churchill were off the coast of
Nova Scotia discussing the development of the Atlantic Charter,
a vision for post-World War II America and the world. In that
charter, they agreed as follows in the fourth paragraph, that
they will ``endeavor with due respect for their existing
obligations to further the enjoyment by all States, great or
small, victor or vanquished, of access on equal terms to the
trade and to the raw materials of the world which are needed
for their economic prosperity, and they desire to bring about
the fullest collaboration between all nations in the economic
field with the object of securing for all improved labor
standards, economic advancement, and social security.''
That was the vision in 1941, it is the vision today, and it
is one that is shared by agricultural groups throughout the
United States, as reflected in the letter sent to this
committee by 70 agricultural groups indicating support for the
Trans-Pacific Partnership agreement, as well as Trade Promotion
Authority. It is also reflective of the vision of the eight
former Agriculture Secretaries who, in a bipartisan way,
indicated their support as well for TPA and TPP.
And well they should: 30 percent of all agricultural sales
are a result of trade; 20 percent of all agricultural income is
directly related to trade, helping to create those middle-class
families we all want to support. The last 6 years have been the
best 6 years in agricultural export history, supporting nearly
1.1 million jobs.
Since NAFTA and the free trade agreements subsequent to
NAFTA, agricultural exports have increased by 145 percent,
despite high tariffs in other countries, sanitary and
phytosanitary barriers, and a strong dollar. Agriculture sees
TPP as leveling the playing field, reducing tariffs, breaking
down SPS barriers, and making access to American products more
readily available.
We want to take advantage of the expanding market
opportunities in Asia, with a growing middle class that is
projected to grow to 3.2 billion people in the next 15 years,
10 times the population of the U.S. We want America to stay in
the game. We do not want one-off agreements that America is
shut out of.
We want to balance the Chinese influence, using trade as a
strategic opportunity, and we absolutely want to assure high
standards for both labor and environment, with strong
enforcement mechanisms. This is an opportunity, as the
President promised to do, to essentially renegotiate NAFTA. We
see TPA as essential to getting TPP done.
I can tell you, Mr. Chairman, that I have been across the
table from some of my colleagues, agriculture ministers from
states that we are currently negotiating with. They are not
interested in putting their final or best offer on the table
until they are assured that whatever trade agreement Ambassador
Froman is able to negotiate is ultimately provided an up-or-
down vote and is not subject to modification or amendment.
We look forward to answering questions as they relate to
agriculture, and again, we appreciate the opportunity to be
here this morning.
The Chairman. Well, thank you, Secretary Vilsack.
[The prepared statement of Secretary Vilsack appears in the
appendix.]
The Chairman. Ambassador Froman, maybe I can lead off. You
are working hard to conclude agreements like the Trans-Pacific
Partnership. Also, you know this committee will carefully
review any trade agreement you submit to Congress to ensure
that you achieve our priorities. I intend to bring before this
committee a Trade Promotion Authority bill that has over 150
negotiating objectives that we expect you to achieve.
If you would, please tell us how you intend to deliver on
Congress's trade negotiating objectives and how TPA will help
you to achieve a strong trade agreement or set of agreements
that will benefit our country.
Ambassador Froman. Well, thank you, Mr. Chairman. TPA is a
critical tool for moving the trade agenda forward. We have been
working closely with this committee and other members of
Congress, both in the House and Senate, over the course of the
negotiations, consulting closely with them to ensure that we
have a clear understanding of what their expectations are for
our trade negotiations, that we have incorporated that into our
trade negotiating efforts.
We have been making progress in the negotiation, and now
getting TPA will allow us to move these agreements forward. We
have benefitted enormously from the input we have received,
whether it is on market access issues or on rules issues, and
we are confident that the agreement that we bring back
ultimately will meet the objectives set out by Congress.
The Chairman. Thank you. I share my colleagues' concerns
about countries unfairly manipulating their currency for trade
advantage, and I agree that we need to address this problem.
But I think a unilateral approach is not the answer.
The TPA bill I introduced in January of 2014 directs the
administration for the first time to fight currency
manipulations through trade negotiations. Would you please take
time to explain to me, and others here, how you are approaching
this issue in the context of Trans-Pacific Partnership
negotiations?
Ambassador Froman. Well, since we have the honor of having
Secretary Lew here, why don't I first defer to him?
The Chairman. That would be fine.
Secretary Lew. Mr. Chairman, we agree with you and with so
many members of Congress that currency practices are a
critically important issue. I want to begin by saying that we
engage on a very, very regular basis in the multilateral
institutions--the G-7, the G-20, the IMF--and in an intense way
in our bilateral relations to make sure that countries
understand the urgency of this issue, and that they understand
that the United States will not tolerate practices that we
consider unfair.
As I mentioned in my opening remarks, we have made
substantial progress in those efforts by getting agreements in
international settings that set rules that drive towards
market-determined exchange rates and that create more
transparency in terms of our ability to see what countries are
doing.
In the context of a trade agreement--obviously we have not
seen the final text of the TPA that you are working on, but the
provision that you refer to from the prior bill, for the first
time ever, raised currency to the highest level of being an
objective in a trade negotiation. That sends a powerful signal
to the world that strengthens our hand when we raise the issue
in terms of the importance of addressing it in a fair way.
I think that there is a question in terms of what the
nature of an approach would be, and we believe that any efforts
that are made here should strengthen our ability to be
effective and to bring the world together to agree with us on
treating currency in a manner that reflects the kind of
fairness that is appropriate.
I think that the question of how that is done is a
sensitive one. It is a challenging area, because there is a
line between legitimate macroeconomic policies, and things that
are truly unfair, that is sometimes difficult to define. It is
sometimes very clear when the line is crossed. We would look
forward to working with the committee to explore what kinds of
mechanisms we can use to strengthen our hand in a way that
would make it as effective as possible.
The Chairman. Thank you.
Secretary Vilsack, you have frequently been a strong voice
expressing the importance of TPA. Now, you have stated that the
United States will not get the best possible agreement from our
trading partners unless our partners know that the deal they
signed with the United States is a deal that Congress is going
to vote on.
At the same time, you have noted that Congress always holds
the ultimate power over any trade agreement: the power to vote
it down. Will you explain, as you have done so well before, how
TPA allows Congress to retain its power over trade agreements
while empowering our negotiators to get the best deal possible
for the United States?
Secretary Vilsack. Mr. Chairman, Congress basically sets
the framework and provides a set of instructions and borders
for Ambassador Froman and his team from which to negotiate.
They, I believe, have been listening very carefully during the
course of the last several years to the concerns that members
of this committee and other members of the Congress have
expressed, and I think that they are living up to the directive
that you ultimately will provide to them.
Clearly, everyone wants higher standards for labor,
environment, wants greater enforcement, and I think that there
has been no question that Ambassador Froman has been engaged in
ensuring the negotiations are focused on this.
I would say that it is difficult for someone on the other
side of the negotiating table to be confident in putting their
best offer forward if there is the possibility that members of
Congress could then subsequently amend or modify an agreement
after it has been agreed upon by the negotiators. That is why I
think it is appropriate to have the balance between a TPA which
provides you the ability to set instructions--and set the
framework and the boundaries, provide Ambassador Froman the
opportunity to negotiate--and then sufficient time for Congress
to review what the negotiated agreement is, because then
Congress has the opportunity and the appropriate power to
decide ``yes'' or ``no.''
The Chairman. Well, thank you. My time is up.
We are going to try to hold to a firm 5 minutes.
Senator Wyden?
Senator Wyden. Thank you, Mr. Chairman. Mr. Chairman, I
also want to note that Senator Casey has done yeoman work on
the health care tax credit, and I omitted that in my earlier
comments.
Gentlemen, I want to start with this. I have come to feel
that opponents of trade deals make a number of very valid
arguments. As Senator Hatch knows, I have been fighting to
change a lot of those policies. We have talked about the
excessive secrecy, the inadequate enforcement, the inadequate
congressional oversight through the process. So I want to be
clear as we start this, that I think opponents have made a
number of valid arguments.
Often they make an argument that I do not think stands up
to the facts, and I want to go into this in detail. There has
been an argument presented that somehow trade is no longer
about tariffs, that America can just get into these foreign
markets, and it is really not about tariffs anymore.
Our research shows that that is not the case. There are
substantial tariffs on information technology. Colleagues,
there are double-digit tariffs on American manufacturers, and
often there are triple-digit tariffs on American agriculture.
So, these are vital American industries that can pay good jobs.
I think Japan is pretty close to a 40-percent all-in tariff
on American agriculture. In my home State, we do a lot of
things well, but what we do best is, we grow things, and we
want to add value to them, we want to ship them somewhere,
because that is a good economic multiplier.
So I want to start with you on this point, Secretary
Vilsack. There have been a lot of promises made in the past
about trade agreements really turning this all around, and it
has not panned out. I would like to hear you tell the committee
this morning how you think this time it is going to be
different for American agriculture, how this time, under your
leadership, under the President's leadership, the
administration's team, it is going to be possible for more
American farmers to sell their products to a growing middle
class around the world.
There are going to be millions of consumers around the
world, and they like buying the Oregon brand, they like buying
the American brand. Tell us if you will, because it goes right
to this question of tariffs, how things are going to be
different for American farmers trying to sell to a growing
middle class around the world.
Secretary Vilsack. Senator, poultry producers will not face
a 240-percent tariff in Japan for their poultry products.
Vegetable growers in your State and around the country will not
confront 90-percent tariffs in TPP nations. Citrus growers will
not confront a 43-percent tariff.
The reality here is that Ambassador Froman understands that
in order to secure agriculture support for trade agreements,
market access has to be fair. The average agricultural export
tariff today in the U.S. is 1.4 percent, so we are at a
significant disadvantage. So you are going to see a significant
reduction, if not elimination, of those tariffs, which provides
a level playing field.
Second, oftentimes countries use sanitary and phytosanitary
rules to create artificial barriers that are not science-based
and not rules-based. Those also will be coming down, and we
will provide strong enforcement if folks decide to use non-
scientific and non-rules-based SPS to try to block American
agricultural products.
So there is no question, with an expanding market, reduced
and eliminated tariffs, and a process for enforcing science-
and rules-based sanitary and phytosanitary barriers, that we
are going to increase agricultural exports.
Senator Wyden. We are going to want to work with you to
really flesh out those numbers, because my understanding is the
number of middle-class households in the developing world by
2025 is going to double, and that would bring the global middle
class to more than a billion households.
Much of that additional income that that growing middle
class is going to have is going to be spent on food, so whether
it is Oregon wheat or blueberries, our farmers, in my view, are
in a position, as the most productive farmers in the world, to
sell a lot of what they grow to those middle-class consumers
around the world.
So, if you could get to every member of this committee the
specifics about the tariffs that they are facing now, and what
you envision changing for the future, I think that would be
very helpful. I am going to go into it some more, colleagues. I
have heard that there are no tariffs in, for example,
environmental goods. That is an upcoming, promising American
industry. They now face very large tariffs.
I want to make it clear that we are going to have to get
into this debate in considerable detail, and, if you could
furnish that to us, Mr. Secretary, that would be helpful. I
know my time is up.
The Chairman. Well, thank you. Thank you, Senator.
Senator Grassley?
Senator Grassley. Ambassador Froman, at the time of the
Chile and Singapore free trade agreements, there was a special
carve-out of H-1B visas for those countries. Since then, USTR
has consulted with the Judiciary Committee, which has
jurisdiction over immigration and nationality issues.
I expect USTR to continue this tradition of consultation;
however, we have reason to be concerned about over-reach of
this administration and, frankly, I would say future
administrations, to unilaterally change our immigration laws.
My question is, could you assure the committee that the TPP
agreement, or any related side agreement, does not and will not
contain any provisions relating to immigration, visa
processing, or temporary entries of persons?
Ambassador Froman. Thank you, Senator Grassley. The answer
is ``yes,'' I can assure you that we are not negotiating
anything in TPP that would require any modifications of the
U.S. immigration laws or system, any changes to our existing
visa system. In fact, TPP will explicitly state that it will
not require changes in any party's immigration laws or
procedures.
Senator Grassley. All right.
Ambassador Froman. Now, the 11 other TPP countries are
making offers to each other in the area of temporary entry, but
we have decided not to do so. So, I appreciate the opportunity
to clarify that.
Senator Grassley. Yes. And I am going to ask you some more
questions that kind of bring out some possibilities that maybe
are not legitimate, but I want to bring them up anyway.
According to USTR's website and the outlines of the TPP
agreement, countries have agreed on ``provisions to promote
transparency and efficiency in the processing of applications
for temporary entry,'' and then ``that specific obligations
related to individual categories of business persons are under
discussion.'' Could you explain? That comes from a 2011 memo.
Ambassador Froman. Sure. The text of the temporary entry
chapter contains commitments on transparency, visa processing,
and cooperation on border security. They are all good
governance provisions, and U.S. procedures are already
consistent with those provisions. There are no changes to U.S.
procedures required by this chapter. On that last issue, again,
that is not an issue that the U.S. will be making any offers
on.
Senator Grassley. All right. This may be something for
clarification. You have said that the United States is not
negotiating immigration changes--you have just said that--but
that other countries are discussing the issue. If the U.S.
signs the TPP, are we bound to what other countries have agreed
to with regard to temporary entry of people?
Ambassador Froman. What other countries are discussing are
reciprocal arrangements with each other with regard to
temporary entry, and again the U.S. has decided not to make any
offers in that area.
Senator Grassley. All right. Then the last question in this
area is, if Congress grants Trade Promotion Authority to
President Obama, could immigration provisions be included in
future trade agreements, or is that off the table because of
Congress's plenary constitutional power over immigration?
Ambassador Froman. Again, we have not seen the TPA bill
that is being finalized, but it is our expectation that we
would not be doing anything in this area without Congress's
approval.
Senator Grassley. All right. Then a short question for
Secretary Vilsack on country of origin labeling or COOL. I hope
it does not conflict with anything you have said, but I would
like to ask you anyway. The WTO is currently reviewing COOL--
that was brought forward by Mexico and Canada. I am told this
is our last appeal, and, if we lose again, we will be forced to
reconfigure COOL or face retaliation from our neighbors.
I have read in the press that you have said that there is
nothing more that you could do from an administrative
perspective to bring COOL into compliance with WTO, so I would
like to ask you if you could briefly explain why USDA is out of
options as it relates to this issue.
Secretary Vilsack. Senator, the COOL legislation passed by
Congress directs us to provide labels to distinguish between
U.S.-produced, processed, slaughtered, and raised beef and
poultry products versus those which may involve Canada and
Mexico. Because of the nature of that law, we are then required
to segregate livestock as it comes in to the processing
facility. It is this segregation that WTO objects to, at least
at this point in time.
Absent a winning of the appeal, we are in a situation where
there is a conflict between the law and what the WTO says is
inappropriate, which creates the opportunity for retaliation.
We just cannot fix it. We have tried, twice. We just cannot fix
it. You all have to fix it by either repealing COOL or
modifying COOL to create some kind of more generic label.
Senator Grassley. And I thank you, Secretary Vilsack. Thank
you, Ambassador Froman.
The Chairman. Thank you, Senator Grassley.
Senator Schumer?
Senator Schumer. Thank you, Mr. Chairman. First, I want to
thank Secretaries Lew and Vilsack and Ambassador Froman for
making the time to be with us. I would also like to thank our
ranking member, Ranking Member Wyden, for trying to get as much
time so that we can ask questions and see agreements. I know he
has tried hard on that.
But, Mr. Chairman, and you are my dear friend, this process
is not good. First, we are dealing with an issue that is
unique. We are supposed to vote on TPA, tie our hands, and not
vote on amendments before we have seen what the TPP is. I have
never seen anything like it.
They say there is no way to do trade agreements otherwise,
but at the very minimum we ought to be seeing and having ample
time to discuss the TPA agreement beforehand. To say that we
are having a hearing now before we have seen the agreement, or
even to say we will do it 1 hour after the agreement, is not
fair, not right, and not adequate on such an important issue.
So I would like to first ask our three witnesses, if we
needed you to come back once we see what the TPA agreement is
next week, would you be willing to do so? You can just answer
that ``yes'' or ``no.''
Ambassador Froman. I will take responsibility for this. We
are happy to work with the committee in whatever they deem is
appropriate in terms of engagement on this issue.
Senator Schumer. So you would be willing, if asked.
Ambassador Froman. I am happy to work with the chairman and
the ranking member in terms of engagement.
Senator Schumer. Thank you. And I would ask our chairman if
we could have--not at noon today if an agreement is shown to us
at 11:30, but at some point--a real hearing on what TPA is,
because it is throwing salt in the wound.
Here we go forward on a procedure that is unique, to put it
kindly, which is, you do not see what the treaty is before you
tie your hands so you cannot amend it. We do not even now know
what the TPA is going to be like. Not fair. Not fair. You are a
fair-minded man, Chairman Hatch, and you are a good man, and
you are my friend, so I hope you would just reconsider, and we
could stretch out this process a little bit.
The next question is on the substance----
The Chairman. Well, let me just answer on that.
Senator Schumer. Please.
The Chairman. We did have a hearing last year on the bulk
of what is in this.
Senator Schumer. But we do not have the agreement now.
The Chairman. I understand, and we will take that under
advisement.
Senator Schumer. Thank you. I very much appreciate that.
Let me just say, as somebody who at this point is opposed
to the agreement, it does not help the cause of those who are
for it, to do this rush-through-type situation in this
difficult situation.
Now, I would like to make a couple of substantive points,
first, on trade itself. I used to be a supporter of free trade.
In fact, I lost the AFL-CIO endorsement in my congressional
district several times because I supported free trade. I have
changed. Here is why I have changed. Here is why.
You can make the argument that a trade agreement like this
will increase corporate profits. It probably will. You might
even make the argument that it will improve GDP. Maybe it will.
But if it does not increase middle-class incomes--which to me
is the greatest problem we now face in America, which we did
not in the 1990s--I cannot be for such an agreement. Our middle
class is hurting. All the evidence I have seen says this hurts
middle-class incomes, and I cannot be for it in that regard.
Second, we have talked--my dear friend, Ron Wyden, has
talked about enforcement. I have been in the Congress 35 years.
With every trade agreement, we talk about enforcement, and we
get virtually none. None. We do not get labor enforcement, we
do not get environmental enforcement. We do not get all the
enforcement we are talking about, and that is why the deck is
so stacked against us. It just does not work on a multilateral
basis.
Other countries, particularly China, the most rapacious--
they are not involved in this agreement, and I agree with the
geopolitical goal of getting these countries in our orb, not
China's, although that is not equal to me with middle-class
incomes going up or down. That is why I am on the other side.
But China just does not abide by these agreements. They
say, we are doing what we want, take us to WTO. It will take 6
years. First, if you are a little company--I have had companies
in my area that want to sue WTO, 500-job, 1,000-job companies.
They cannot. They cannot afford it, and China threatens them.
Even the bigger companies, they do not agree.
So I went to the Business Roundtable, and I said, ``I do
not agree with trade because China steals your intellectual
property, manipulates currency, and does not even let you in
when you have a good product unless it is a 51-percent Chinese-
owned company.'' That is why I do not believe in these
agreements anymore.
Now, this is before the Business Roundtable--they are all
for your bill. Six CEOs ran to the back and told me, you are
right, keep it up, and this is including major companies and
people you know. They are all afraid to say anything because
China retaliates. So, at the very minimum, to make this
agreement well, we ought to do something--it is in consonance
with this agreement. Let us deal with China's rapaciousness.
Let us at least do something about China. What some of us have
proposed, on both sides of the aisle, is a strong currency
bill, a bill that is unilateral, a bill that lets our
companies, when they are aggrieved, take action.
Now, in good faith, the Secretary of the Treasury,
Ambassador Froman, and Mr. Zients have come to me and said,
``Here is a proposal.'' The problem with their proposals is
they are weak tea and will not do anything because they all
depend--they give an option to our government.
Every time our government has had an option to call China a
currency manipulator for 20 years, we have not done it. It does
not work. The bill we have proposed--I am sorry. Yes, it is; my
time is up. But the bill we have proposed is strong and
unilateral. It gives companies that are aggrieved an option for
relief, and we cannot have weak tea.
The Chairman. Your time is up.
Senator Schumer. I am sorry I went over time.
The Chairman. Your time is up, Senator, but I understand
your feelings. You are going to make an excellent Democratic
Leader, is all I can say. [Laughter.]
Senator Schumer. As Harry Reid reminds me, it is many
months away.
The Chairman. Yes, that is right. [Laughter.]
We on the inside know.
Senator Roberts?
Secretary Lew. Mr. Chairman, would it be appropriate to
take a moment to respond to some of the issues that Senator
Schumer raised?
Senator Roberts. I am going to do that, if you will give me
the time.
The Chairman. He has the time.
Senator Roberts. All right. Then I will be happy to have
you respond. Is there any way we can get transparency on that
agreement with the Senator from New York and Mr. Reid?
[Laughter.]
Senator Schumer. I did not hear what you said.
Senator Roberts. I know you did not hear it. I was just
wondering if we could get some transparency with regards to the
conversation between you and Mr. Reid on when we can achieve
the take-over and achieve common sense and all the goals that
the Senator has espoused on this trade agreement.
Senator Schumer. These Schumer conversations are governed
by something even tougher than TPA. [Laughter.]
Senator Roberts. All right. I will meet you on the
basketball court.
I want to thank the witnesses for coming. I appreciate all
the work you are doing. Thank you for your work, Mr. Chairman
and Mr. Ranking Member. I am not sure. Are we going to see this
agreement at 3, if in fact there is an agreement?
The Chairman. We are moving towards that goal, yes.
Senator Roberts. Right. Well, I know you are not quite
there, but I also know you have never been this far before.
The Chairman. That is right.
Senator Roberts. All right. Sorry for the country-and-
western allegory.
I fully appreciate the primary concern of the distinguished
ranking member regarding labor, environment, human rights,
transparency, currency manipulation. But, if we do not get a
bill, if we do not get an agreement, all of these concerns
become specious, and we have all heard those speeches. I would
remind everybody that any major bill like this may not be the
best possible bill, but it may be the best bill possible.
I think we have to get an agreement. If we do not, the
responsibility will fall on this committee. Everybody here has
testified that they are going to work very hard on the very
concerns that have been raised. I will simply count my
distinguished friend, who has now, I think, left, I will mark
him down as undecided. [Laughter.]
This may be the only issue where the new Congress and the
administration can reach agreement for the benefit, yes of the
middle class, but of everybody with regards to income. I would
invite the distinguished Senator from New York--and I apologize
for saying anything--and also the distinguished Senator from
Oregon, who actually was born in Wichita, KS, to come out and
talk to the Dodge City folks who are the wheat growers who have
endured 4 years of drought and say, where is the trade bill? I
would also remind the distinguished ranking member of the
famous comment on another major bill: ``If you want to know
what is in it, you have to pass it first.''
Now, I hope that we can see it, look at it. I hope we can
address your concerns.
Senator Wyden. Count on seeing it.
Senator Roberts. All right. Well, I share your concerns.
Let me ask a question of the distinguished Secretary of
Agriculture. Tom, thank you for everything that you do. There
is much concern regarding the E.U. Commission's consideration
of allowing individual state preferences on the acceptance of
biotech crops, even those approved by the Commission following
a positive safety assessment.
To me, this regards sound science and practices approved by
the world's premier food safety mechanism, the Food and Drug
Administration, as well as the science-based approaches at the
Department--our Department--and the EPA. It also disadvantages
the under-served in Europe and the famous middle class by
raising food prices and, obviously, hurting farmers.
Now, just last week, Germany's National Academy of Sciences
argued that biotech crops can increase yields, reduce the use
of insecticides, and increase farmers' income. The Academy
argues that modern molecular breeding techniques are safe and
that the cultivation of approved biotech crops presents no
risk. I agree with the Academy.
Mr. Secretary, do you believe the U.S. should, or can,
consider a trade agreement with the E.U. if member states have
the ability to reject U.S. seeds and commodities cultivated
after years of research and investment approved by the U.S.
Government?
Secretary Vilsack. Senator Roberts, we have made very clear
a number of concerns within Agriculture in the very preliminary
discussions on the Transatlantic Partnership, and that is one
of them. We have been very clear in our belief that
biotechnology is an accepted and an important practice for
agriculture to expand productivity, to reduce reliance on
chemicals and pesticides. We think it is critically important
to meeting the global food security challenge that we will
face.
So my expectation is that we will continue to negotiate
very hard on that issue, and I would say that we are also
deeply concerned about recent discussions in this space where
individual countries not only have the concern about
cultivation, but also about feed. We will be expressing our
objection to that approach as well. So we are going to be very
aggressive on that issue, as well as on the geographic
preference issue.
Senator Roberts. I know my time is up. I apologize to my
colleagues. One thing I want to say is, thank you for your
advice and counsel and your work with regard to COOL. COOL
isn't nearly as cool as some people thought it would be, and
the WTO stove is hot.
Now, I know that you have tried every way possible to
address this, and speaking on behalf of my distinguished
chairman--pardon me, chairperson--emeritus of the committee,
Senator Stabenow, we stand ready to fix that with regards to a
statutory change, and we look forward to working with you.
Thank you.
The Chairman. Thank you, Senator. Let me just say, I am
very appreciative of you folks. I am going to have to leave in
just a few minutes, but we are going to continue this hearing,
and then we will re-continue it at 3 p.m. So we will go to
Senator Stabenow now.
Senator Stabenow. Thank you, Mr. Chairman.
I do join with the chairman of the Agriculture Committee on
the issue of COOL. I know, Secretary Vilsack, we are going to
work through that and figure that one out. I want to thank all
of you for being here and for the roles you play in so many
areas.
I do have deep concerns about what is in front of us, but I
do want to start out by thanking the administration and
Ambassador Froman for the work that is being done on trade
enforcement. We have had some significant cases around auto
parts. Last June, WTO, as you know, found that China breached
rules regarding American automobiles and SUVs and extra-duties.
Thank you for that.
Again, China, in August, as it related to rare earth
issues, that was very important, as well as WTO finding in
favor of a dispute challenging Argentina's importation of U.S.
goods, and so there are a number of things. There are a number
of things.
One of my concerns is that we have been, and the
administration has been, focused on that, but it is very
dependent on a particular administration. So having strong
enforcement rules in place on an ongoing basis is very, very
important.
Let me speak now to something that will be no surprise to
any of you, and that is to add to what Senator Schumer was
talking about in terms of currency. We have had multiple
conversations on this. Senator Graham and I authored a letter a
year ago. Sixty members of the Senate signed a letter saying we
wanted strong, enforceable currency language in TPA and TPP.
That is a real issue in getting all of this passed. I do not
know how this passes without something strong, both in terms of
TPA and TPP.
I think it is also very important to reiterate--because I
know the discussion about American policy versus international
policy, other countries--we know that we have economists from
all over the political spectrum, from the Economic Policy
Institute, the Peterson Institute, former advisor to President
Reagan Arthur Laffer, who all agree that currency manipulation
has cost us millions of jobs in the United States. And they
also discount this argument that the U.S. has manipulated its
currency because of our domestic quantitative easing policy
that in no way mirrors what China, Japan, Malaysia, and others
are doing.
And so, I believe very strongly, as you know, that we need
to move forward on strong currency language that is
enforceable, not just wishing and hoping. I know there is a lot
of effort going on on this, but it needs to be enforceable.
So let me just ask, and, Secretary Lew, I know this is your
bailiwick; I know you bring this up over and over again. But we
have seen Japan, which is critical, as we all know--we cannot
sell automobiles to Japan. Part of this is, I appreciate us
opening this up, but they have in fact manipulated their
currency 376 times since 1991. So why do we think just moving
forward through international forums like IMF will prevent
number 377?
Second, if they say they are not going to do it anymore and
this is such a big issue for all of us, why can we not, why do
we not, include enforceable currency disciplines in TPP, so
that we have confidence, and the business community and workers
have confidence, that we are serious about 21st-century trade
rules?
Secretary Lew?
Secretary Lew. Senator Stabenow, first, as you and I have
discussed many times, we agree 100 percent that unfair
practices with regard to currency need to be opposed, need to
be stopped. The efforts that you have described in terms of our
engagement on the international front, both multilaterally and
bilaterally, have had real effect.
So, over the last several years, the last 3 years, I do not
think that the case could be made that Japan has intervened in
a way that would meet the standard that you have described.
Senator Stabenow. Then why not go ahead, I mean, if they
are not doing it now and they are not going to be doing it in
the future?
Secretary Lew. What have they been doing over the last 3
years? They have been engaging in macroeconomic policies,
quantitative easing policies, that some people characterize as
the same as the kind of practices that should be barred because
they are unfair and manipulative.
I think that the issue is one which, as I understand the
current draft--I have not seen it, so it is just based on
conversation--reflects raising the issue of currency to the
highest level it has ever had in a trade negotiation, making it
one of the principle objectives.
We would work with you and the committee on the kind of
flexible language that would empower us to have those
conversations effectively. I think the thing that we do have to
be careful about is anything that would confuse the issue of
unfair practices and legitimate macroeconomic policy.
I understand your question is not trying to get at the
legitimate macroeconomic policy, but in terms of our engagement
with other countries, one can understand why they would be
concerned if that line got crossed, just as we would be
concerned were there to be any kind of an international
agreement that restricted our Central Bank's ability to conduct
the monetary policy that it needs to conduct to manage the U.S.
economy.
So I think we agree on the goal. I think the language
matters, and some flexibility is important in terms of engaging
on the international front.
Senator Stabenow. Thank you. I would just say in conclusion
that this whole discussion is about whether we are going to
export our products or our jobs. That is a very big deal right
now for Americans.
Thank you, Mr. Chairman.
Senator Roberts [presiding]. Senator Carper?
Senator Carper. Thank you. Thanks, Mr. Chairman.
Gentlemen, thank you all for joining us. I know you have
worked hard on this. Ambassador Froman, I know, especially
worked hard on this.
Senator Schumer has spelled out with great passion and, as
you know, a lot of heart-felt feeling and thought, his views on
currency manipulation. I would just ask the Treasury Secretary,
at some point in time we are going to have to reconcile the
differences between those who share Chuck's views and the
administration. What can the administration live with?
Secretary Lew. Well, Senator Carper, we would start out
sharing a view that we should be together in opposing unfair
practices that use currency as a way to gain unfair trade
advantages, so we do not start out with a disagreement on an
objective.
In terms of approach, we do have some concerns, as you
know, with the countervailing duty proposal. First, there is a
very serious question as to whether or not it is consistent
with our WTO obligations, and that is something that we need to
pay serious attention to.
Second, it is a mechanism that would take our current
antidumping regime, which is run by the Commerce Department,
and turn it into a process that is devoted to reviewing
currency issues, making it more difficult to implement our
antidumping rules, which are designed to protect U.S.
businesses.
Third, it has the real risk of inviting retaliation and a
kind of tit-for-tat of defining currency. While we might define
it in a way that we think is fair and would not include
policies like the Federal Reserve's policies, other countries
could define it differently.
Where is there the potential for agreement? I think,
because we have a significant overlapping concern, we would
look to find tools that would supplement the current foreign
exchange report with an additional ability to use objective
criteria--things like significant bilateral trade surplus with
the United States, like a material current account surplus,
like persistent one-sided intervention and foreign exchange--to
set a standard that could trigger some additional actions that
we could take that would not have the kinds of problems that we
think the countervailing duty proposal has.
We would look forward to working with members of the
committee to see if there is a space there where there could be
agreement. I do not think it is appropriate for it to be part
of TPA. It is not really a set of concerns that are inherently
about the trade agreements that would be covered by TPA, but it
is a set of serious concerns.
As I said both to Senator Stabenow and earlier, we spare no
effort in making the case--I am doing it all week with
colleagues from around the world at the IMF meeting. Even if
there is a hint of a problem, I am confronting the issue. And
we have had significant success.
Getting the G-7 to agree that countries will only use
domestic tools for domestic purposes is one of the reasons
Japan is not doing the kinds of things Senator Stabenow is
concerned about. Getting the G-20 to agree to move towards
market-determined exchange rates strengthens our hand when we
engage with China, and we have had some significant progress
with China. I would worry about an approach that would
undermine our ability to make real progress.
Senator Carper. All right. Well, thank you very much for
those responses.
I have a minute and a half left. I want to go back to
Ambassador Froman. I do not want to leave without Senator
Warner, Senator Cardin, or I raising the issue of poultry.
Again, from the State where we have more chickens per capita
than any State of America, I think it is----
Ambassador Froman. Three hundred chickens per capita.
Senator Carper. Well, you have it. You are good! One of you
mentioned that this is an opportunity. This trade agreement is
an opportunity to go back and revisit NAFTA and actually fix
some things in NAFTA. I think one of them may actually deal
with our inability to sell poultry to our friends up to the
north, one of our best trading partners in the world, and that
is Canada. We just have not been successful.
Tell us how this trade agreement is going to help address
this issue for us.
Ambassador Froman. Well, thank you, Senator. Before Canada
joined TPP, we had a series of consultations with them about
the importance of addressing a number of issues that were not
fully addressed in NAFTA, including access to the poultry
market. We are encouraging our Canadian partners to come to the
table on this issue.
We have not yet seen the kind of engagement on agricultural
market access from them that we would like to see. Certainly
all TPP parties agreed to achieve a certain level of standards
when it came to market access, and we are hopeful that Canada
will be able to achieve that objective as we reach closure with
the rest of the TPP parties.
Senator Carper. We appreciate your efforts. Just do not
give up. Be vigilant. Thank you.
Senator Roberts. Senator Menendez?
Senator Menendez. Thank you, Mr. Chairman.
Let me start off by saying that if we agree that trade is
an issue with major domestic and geo-strategic implications for
the United States, then we should at the very least have
another hearing after reading a TPA bill, which presently is
not before the committee. I mean, 12 hours' notice before a
hearing is beneath this committee. And, as some of my
colleagues have said before, we should not fast-track fast-
track.
While I am glad to see that some of my Republican
colleagues are so eager to support this piece of the
President's economic agenda by giving President Obama
additional executive authority, I am concerned that we are
rushing too quickly to fast-track trade agreements that will
have major economic consequences.
Now, I know my colleagues know that, in the Senate Foreign
Relations Committee, we marked up the Iran Nuclear Agreement
Review Act earlier this week. It took a lot of time and a lot
of work and patience, but the committee leadership made sure
that members had ample time to consider the legislation and
offer amendments in an open and respectful process.
So I hope that today's last-minute hearing is not a sign
that TPA will be forced through this committee without the
open, broadly germane opportunity to first consider the bill,
and then to offer views as to how to perfect it. So I am
looking forward to getting a chance to actually see the TPA
bill currently being negotiated by the chairman and the ranking
member and having that opportunity.
So I would like to first ask our witnesses, have any of you
seen the text of the Trade Promotion Authority bill that is the
topic of today's hearing?
Ambassador Froman. We have exchanged ideas over the course
of the last several months about the various pieces of this
package, but we have not seen any final package or any final
text.
Senator Menendez. Has anyone else seen any text? All right.
You are shaking your heads, so for the record that is a ``no.''
So this reminds me of the framework agreement. We have
different views of what the agreement is, but we do not have a
text to be able to define it, so I do not know how one proceeds
without a text.
Ambassador Froman, I asked you at our last hearing on the
broad question of trade, how many jobs do you expect to be
created--net jobs, I would say, because in every process of
trade there are winners and losers--in TPP within the first
year, the first 5 years, the first 10 years? You did not give
me any figures, and I am wondering if at this point you are in
the position to describe what they would be.
Ambassador Froman. So, when the agreement is complete,
there will be a full economic analysis done. I think the most
authoritative analysis out there right now is probably the one
that comes from the report from the Peterson Institute that
talks about expanding exports, when fully implemented, by $123
billion a year, adding $77 billion to U.S. GDP, and
contributing to many more high-paying jobs. It depends a bit on
where you are on the spectrum of full employment. If you are
not at full employment, then it adds jobs. If you are at full
employment, then it adds better jobs. So it will bend a little
bit----
Senator Menendez. So we do not have a number on the jobs.
You are talking about just gross----
Ambassador Froman. What we know is that every billion
dollars of exports, additional exports, supports somewhere
between 5,000 and 7,000 jobs, and that those jobs pay, on
average, 18 percent more than non-export-related jobs in the
same sector.
Senator Menendez. And the loss of jobs?
Ambassador Froman. Well, we have been looking, and we have
been doing some studies, State by State or in various
districts, to see, because we have so few tariffs ourselves, so
few import-sensitive sectors ourselves, where there might be
job loss. With our average tariff of 1.4 percent and with no--
we do not use non-tariff measures as a barrier to trade----
Senator Menendez. So we do not have an answer on that,
exactly.
Ambassador Froman. We do not have a specific answer.
Senator Menendez. Let me ask you one other thing. We have
discussed many times my concern about adequate intellectual
property protection for U.S. innovators, such as those who are
working in the life science industry, as part of TPP.
In New Jersey, the bio-pharma industry represents nearly
70,000 employees. While many of us do not know yet how we will
judge the final Trans-Pacific Partnership agreement, I am sure
you know that one of my priorities remains that we reach 12
years of data protection for biologics within TPP, as currently
stipulated in U.S. law. However, I noticed that the President's
budget recommends lowering list standard protection to just 7
years as a matter of domestic policy.
So, if Congress passes TPA before TPP is finalized, will
USTR continue to negotiate for a 12-year standard as currently
in U.S. law, or will it negotiate for the lower standard that
the President proposes in his budget?
Ambassador Froman. Consistent with past practice where
Congress has spoken on an issue of that sort with a number, we
have tabled that as our proposal, the 12 years for biologics.
Around the table, you have 5 countries that have zero years, 4
countries that have 5 years, 2 countries that have 8 years, and
we are at 12 years. This is one of the outstanding issues still
to be resolved in terms of where the resolution of the data
protection period might be.
Senator Roberts. I would tell the distinguished Senator
that it is my understanding that we will have a full week to
chew and digest, if possible, all the details. It is like being
in the same church pew, and we are all going to sing the same
song. We know it is going to be ``How Great Thou Art,'' but we
just do not have the music. We will get the music.
Senator Menendez. Mr. Chairman, some of us sing better than
others, though.
Senator Roberts. I understand that. You can sing in the
next pew. [Laughter.]
We have Mr. Cardin next. Thank you.
Senator Cardin. Thank you, Senator Roberts. We have
different views on the Democratic side, I think on the
Republican side too, on trade issues. But I must tell you I am
in full agreement with Senator Menendez and Senator Schumer on
the process. We are talking about legislation that gives up the
prerogatives, the normal prerogatives, of Congress. We have not
had an issue like this for over 12 years.
At the very minimum, there needs to be a public hearing
when we have the text of the legislation. And it is not just
the TPA text, it is the TAA text, it is the extension of the
tax credits, it is the other related issues that I understand
the leadership of this committee intends to bring up for action
in this committee.
Mr. Chairman, let me tell you, that hearing must, in my
view, have a non-governmental panel. I do not know how we could
proceed without giving the stakeholders an opportunity to be
heard in this committee, including organized labor.
So I just hope you will relate that to Chairman Hatch and
the committee, but I think that due process of this committee
and the reputation of this committee requires that we follow
that process.
Senator Roberts. I would just tell the Senator that I have
not been riding this horse, but I do not intend to have it go
into a box canyon. So we are not going to go in there and ride
out when members do not have the full opportunity to discuss
everything that Senator Menendez and you have discussed. I
think we will have a full week to do that. If it takes longer,
it will take longer. I appreciate that.
Senator Cardin. Thank you very much.
There are several issues, Ambassador Froman, that I would
like us to be able to address. I obviously do not have the text
of the bill, so I am at somewhat of a disadvantage. Senator
Portman and I have brought forward a proposal that deals with
the Boycott, Divestment, and Sanctions movement. We do that
because this TPA agreement will deal with more than TPP.
It will also deal with TTIP, if I understand correctly.
Particularly with the European countries, the actions taken
with BDS have been pretty dramatic. I would hope that we would
use this trade opportunity to make progress on that, so we are
very much interested in that being a principal negotiating
objective. I say that--and I will give you a chance to respond
in a moment.
The area that Senator Wyden has mentioned frequently that I
did not hear you mention in your opening comments deals with
the request I made for principal negotiating objectives for
human rights. Several TPP countries are challenged in this
area. Using trade is our best opportunity to accelerate those
democratic reforms. I am very hopeful that you have made
specific progress in your TPP negotiations in these areas.
I specifically mentioned the various points that relate to
progress on human rights, to ensure implementation of trade
agreements and obligations by strengthening good governance,
including internationally recognized human rights, the rule of
law, including the right of due process, the right of fair
trial, the right of equal protection under the law, the
effective operations of legal regimes of our trading partners
of the United States through appropriate means, including
capacity building.
So my question to you is, can you share with us, before you
are going to ask us to act on TPA, the progress that you have
made on these issues specifically? Then secondarily, what
enforcement can we anticipate will be in the trade agreement,
TPP, particularly as to the use of dispute settlement
procedures or trade sanctions if there are violations of the
expectations in regards to good governance?
Ambassador Froman. Well, thank you, Senator. Thank you for
your leadership on this issue. Let me answer you in two parts.
One, within TPP we are negotiating a range of obligations that
touch upon these issues of governance, transparency, good
regulatory practice, participation, anti-corruption, all of
which, as you have noted, help contribute to the rule of law
and ultimately to the promotion of democracy.
So this has been a key part, one of the key themes of TPP,
and it cuts across many of the chapters in terms of focusing on
governments being transparent about what they are doing and how
they are doing it, putting on the web all of their regulations,
allowing for public participation in these processes.
Those are obligations that are subject to the same kind of
binding dispute settlement that the rest of the agreement is,
as a general matter. So I think you will find in TPP--and we
are happy to go through this in detail with you--a whole series
of obligations that are broadly in that area----
Senator Cardin. And enforcement?
Ambassador Froman [continuing]. And that as a general
matter are enforceable like the other provisions of the
agreement.
Senator Cardin. So, if they do not meet these obligations,
we have an opportunity to take that to dispute settlement
resolution?
Ambassador Froman. Right.
Senator Cardin. And ultimately trade sanctions?
Ambassador Froman. Correct, as a general matter. Separate
from the TPP agreement itself, we are using our engagement with
these countries to press them on human rights issues as well. I
will just use Vietnam as an example, where there clearly are
serious human rights issues. From the President on down, at
each of these meetings that we have with the senior Vietnamese
leadership, we raise issues, for example, around the release of
prisoners of conscience.
Vietnam has released a number of prisoners of conscience.
We are continuing to press them to release all of their
prisoners of conscience unconditionally. We are pressing them
on religious freedom and the ability for people to speak out
without fear of retribution. Because of our engagement on TPP,
we are able to have a more meaningful dialogue with them about
that.
Senator Cardin. And I assume no response about BDS means
you agree with Senator Portman and I that it should be a
principal term?
Ambassador Froman. Obviously, Israel is a key and vital
ally. We look forward to learning more about your proposals and
working with you.
Senator Roberts. Senator Portman? Let me say that, after
Senator Portman, it is my understanding it will be Senator
Bennet, and then Senator Casey, and then Senator Toomey, with
regards to the members who are here. Did I skip you, Mr. Brown?
Senator Brown. Yes, sir.
Senator Roberts. I did not mean to do that. So, Senator
Brown, you will be following----
Senator Bennet. Mr. Chairman, I think I am next on the
list.
Senator Roberts. Yes, I know. Well, I understand that, but
we have had four on the minority side. Senator Portman has
asked for consideration that he, like everybody else, has an
important meeting, if you could just hold on.
Senator Bennet. Well, I would defer to the Senator from
Ohio. I also have meetings that I need to----
Senator Roberts. Everybody in this room has meetings.
Senator Bennet. I agree. I was just wondering why we are
changing the rules.
Senator Roberts. I am not changing the rules. We have had a
coup, and there is going to be---- [Laughter.]
We have had four on the minority side. Senator Portman had
asked if he could be recognized because of this. I agreed to
that. So I would recognize Senator Portman, with the
understanding that we are going to go down the line over here
on this side, if you could just bear with us.
Senator Bennet. Well, with respect to my other friend from
Ohio----
Senator Portman. Senator Bennet is before I am.
Senator Roberts. I think your name is next, sir. You are
Senator Bennet from Colorado, a member of the sometimes----
Senator Bennet. Your neighbor.
Senator Roberts. Yes.
Senator Bennet. Thank you. To the west.
Senator Roberts. And member of the sometimes powerful
Senate Agriculture Committee.
Senator Bennet. That is very correct.
Senator Roberts. That is correct. All right.
Senator Bennet. Thank you.
Senator Roberts. Senator Portman?
Senator Portman. Thank you, Mr. Chairman, and thank you,
Senator Bennet. And, Ben Cardin, thanks for your passion on the
human rights issues, and also on the BDS issue we have been
working on. I appreciate the answer from Ambassador Froman, but
I do think this is a critical part of the overall package. We
will have an opportunity to have a good debate on that over the
next couple of weeks. This is really economic warfare against
some of our allies, including Israel. Senator Cardin and I are
going to be eager to get your support on it.
Thanks, too, for being here and for the great testimonies
this morning. You all have talked a lot about the importance of
trade. I do not disagree with what you said about the
importance for us to create more jobs and better-paying jobs,
and this is critical to Senator Schumer's point about, how do
you get more middle-class jobs, and how do we increase pay?
I mean, one way is you export more, because those are jobs
that are supporting goods and services being sold to the 95
percent of consumers outside of our borders. They do pay more.
The jobs pay, on average, 18 percent more, with better
benefits. We want more stuff stamped ``Made in America.'' I
think everyone agrees with that.
But we also have to be sure imports are not illegally
traded and they are fairly traded, and I think that is where
the enforcement that has been talked about here today is so
critically important. We are looking for a level playing field,
and if American workers, farmers, and service providers can
have a level playing field, we will be just fine, but we do not
see that now.
So I think that is the concern that, certainly, I
experienced when I was in your job and that you are seeing.
Just quickly, in terms of these trade agreements, what
percentage of the world do we have trade agreements with, in
relation to the global GDP or the global economy?
Ambassador Froman. That is a good question. I think at the
moment it is about 10 percent.
Senator Portman. About 10 percent of the world we have a
trade agreement with?
Ambassador Froman. TPP is about 40 percent.
Senator Portman. So we do not have a trade agreement with
China, for instance, or Japan, or the European Union. Of that
10 percent of the world, what percent of our exports did they
get?
Ambassador Froman. I would say it is about 30 or 40
percent.
Senator Portman. It is about 47 percent.
Ambassador Froman. Yes. Something like that.
Senator Portman. Forty-seven percent, almost half of the
exports that come from Ohio and other States--in fact, in Ohio
it is a little higher than that, it is over half--go to this 10
percent of the world. So we want more of that. We want more of
our products going overseas. But the trick is how to have a
level playing field. We talked about a lot of those aspects
today.
The one I want to focus on quickly is currency. Secretary
Lew said we have more work to do. He said we will not tolerate
practices we consider unfair. He talked about how we need to be
sure we are not jeopardizing appropriate macroeconomic policy
versus intervention. I do not disagree with that. We had a good
conversation about this earlier this week.
What we would like to do--and Senator Stabenow and I intend
to offer an amendment which I hope the committee can support--
is to set up a standard within TPA to be able to ensure that
currency is not just considered, but that it has teeth, that
there is some enforceability. As you know, there are IMF and
WTO principles on this, so all the countries we are talking to
about trade agreements are part of this.
I mean, they are members of the IMF or members of WTO.
These principles are very clear, but they are not enforceable,
so that is what we are trying to do. We do think there is a
distinction between macroeconomic policy versus what we would
consider to be intervention, and we will use those IMF
principles, follow those standards. I think this is one issue
where--to the question earlier from Senator Carper about how we
can find common ground here, I think this is the place to find
it.
I will tell you, it is just not fair, because, right now
when a country manipulates its currency--we talked about the
fact that, although Japan is engaging in macroeconomic policy
now, they have hundreds of times in the past intervened, as
have other countries. What happens is, our exports are more
expensive, because they have artificially intervened. That is
not fair to our workers and our farmers and our service
providers.
My colleague Senator Brown has been involved in this issue
for many years, because he, like me, goes to talk to these
workers and these companies, and they say, wait a minute, we
are finally competitive in terms of our energy policy, we are
doing everything we can in terms of technology, and we are
making concessions on our pay and our benefits, and yet you are
telling me that, as Paul Volker famously said, ``In 5 minutes,
someone can change exchange rates and currency that does away
with years of trade negotiating successes.'' It is just not
fair.
In a second, of course, the imports that they are sending
to us are less expensive. So this is the lack of a playing
field that is level that we are trying to address.
The final thing I want to say, quickly, is that it also
affects third-party countries--in other words, other export
markets that we have--because those products, whether they are
from China, Japan, or wherever, are being sold at an advantage
in those markets too, meaning that our workers, our service
providers, our farmers, do not have the opportunity to get the
market share that they deserve. So we want to work with you on
that.
On the health care tax credit that was talked about
earlier, Senator Brown and I have authored legislation on this.
We think the health care tax credit is incredibly important to
have as part of this process. We understand it will probably be
part of the TAA discussion. That is fine.
It is very important to about 5,000 Delphi workers in my
home State of Ohio. It frankly just lets them pay a portion of
their health bills, and that is the least we can do, because
their pensions were taken away from them. Their retirement
benefits were taken away. If they are not on Medicare yet, if
they are between 55 and 64 years old, their pensions were
terminated and administered by PBGC. It is a bridge to Medicare
for them. So, I hope you can support us on that as well.
With that, thank you, my colleagues, for indulging me and
allowing me to intervene.
Senator Bennet [presiding]. I thank the Senator from Ohio,
and I now see the opportunity for a real coup. [Laughter.] I
just do not know if we are going to be able to make the most of
it.
For, I think, probably everybody on this panel, and much
more importantly for people in our country, the central
challenge we face has been the decoupling of wage growth and
job growth from economic growth that we have seen over the last
20 years.
One of you mentioned that we have just begun to see median
family incomes begin to grow a little bit, but that is new--
very, very new. A lot of that decoupling, I think we would all
agree, has had to do with globalization. There are other things
as well: productivity and technology. But it is clear that
globalization has put pressure on middle-class wages. I have
often heard the administration say that we have learned lessons
from NAFTA. This is the first time in 20 years we have had the
opportunity to negotiate a trade deal.
So I would love to give the balance of my time to the panel
to address that issue, to go into some detail about what we
have learned from prior agreements, how this agreement is
different, and what assurances you can give to the American
people that TPP is actually going to help middle-class families
that are struggling with the effects of globalization, and also
what the effect would be of the alternative, of not passing
this trade agreement.
Ambassador Froman. Why don't I start, and of course invite
my colleagues to add? Look, Senator, I think you are absolutely
right. We have seen the impact of technological change, of
productivity increases, and of globalization on American jobs
and American wages. Globalization is a real force.
It is the product of the containerization of shipping, the
spread of broadband, the emergence of economies like China and
Eastern Europe from being closed economies to being open
economies, and the ease of air travel. It is a real force that
has an impact on the American economy.
The question is, what are we going to do about it? The risk
is that people conflate globalization with trade agreements.
Globalization is a force; trade agreements are how we shape it.
Through trade agreements, if we can not only tear down barriers
to our exports as we have been talking about this morning--
these barriers tend to be disproportionately high since our
market is open and other markets have higher tariffs and have
other non-tariff barriers.
If we can tear down barriers disproportionately, we can
increase our exports, which we know support jobs that pay more
than non-export-related jobs, therefore dealing with wages, and
at the same time use agreements to raise standards in these
other countries: labor and environmental standards, rule of law
standards, as Senator Cardin was saying, and intellectual
property rights.
TPP, for the first time ever, will put disciplines on
state-owned enterprises, government-owned companies, so when
they compete against our private firms and they get the benefit
of subsidies or other benefits from the government ownership,
if they do not compete fairly against our firms, we will then
have a trade action against them, whether it is in their
country or whether it is in our country, for the first time
ever.
TPP, for the first time, will bring to the digital economy
rules from the real economy, so that there is a free flow of
data and information so that companies do not have to move
abroad from the United States in order to service those markets
abroad.
This is particularly important for small and medium-sized
businesses that cannot afford to set up offices all over the
world, that cannot afford to replicate infrastructure all over
the world. TPP will allow them to engage through e-commerce,
through the digital economy, with 95 percent of the customers
outside this area.
The labor and environmental provisions are the strongest of
any trade agreement, and they are fully enforceable, just like
any other provision of the trade agreement, including though
the availability of trade sanctions. To go to a question that
Senator Schumer raised earlier, we demonstrated over the last 5
years--we brought 19 WTO actions, half of them against China.
We have won every case that has been brought to conclusion, as
Senator Stabenow noted, a number of them in important
manufacturing areas.
These are all things that we can do through TPP. The
lessons we learned from NAFTA, and the renegotiation of NAFTA
that this represents, means that we are pulling into the core
of the agreement labor and environmental provisions and making
them fully enforceable just like any other provision of the
trade agreement, which is what folks have been asking for for
some time.
Senator Bennet. Secretary Lew, would you like to answer?
Secretary Lew. I think Mike covered what I would have said.
I would just underscore that many of the concerns we raised
are, as you said in your opening question, related to
globalization. The fact that trade agreements raise the bar--we
already have high standards. The world will be a more
competitive place for U.S. goods, U.S. services, and U.S.
workers if other countries have higher standards, so I think it
will lead to more middle-class jobs.
Senator Bennet. Mr. Chairman, I am going to conclude just
by saying that I want to go on the record sharing Senator
Cardin's concerns about the process here, and I appreciate very
much the opportunity to ask questions.
Senator Toomey [presiding]. Next is Senator Casey.
Senator Casey. Thank you, Senator Toomey.
I will be brief. Number one, I wanted to thank our
witnesses, Secretary Lew, Secretary Vilsack, and Ambassador
Froman. We appreciate your service and the difficult work that
you have to do.
I would first, for the record, incorporate by reference
Senator Schumer's remarks about the process. I think this
process is wholly inadequate in terms of being able to consider
such an important policy as it relates to both Trade Promotion
Authority and trade itself. So, that is just for the record,
but I think there is a lot of agreement, at least on our side,
about the process. That does not involve our witnesses.
But I wanted to focus on manufacturing firms. Senator
Toomey and I represent a State that has had a tremendous loss
of manufacturing jobs, not just over a couple of years but
really over a generation. These firms get hammered, and have
been getting hammered, and often the damage is done before they
can even bring cases when competitors, foreign competitors,
break the rules. I think you understand that. I know that most
recently the steel industry and other industries have asked for
both clarity and stronger enforcement when it comes to
enforcing measures for domestic industries, and I know you are
aware of that request.
I would just ask--I guess it would be best to ask
Ambassador Froman. I know we will be coming back this
afternoon, but I would just ask you, on behalf of the
administration, if you are in agreement and if you will be
committed to working with the steel industry and others to
provide that clarity and stronger enforcement.
Ambassador Froman. Thank you, Senator Casey. We certainly
agree on the importance of enforcement. You note the steel
industry, which has been one of the areas that has taken
advantage of the enforcement resources more than most. I think,
of the 52 antidumping and countervailing duty procedures
brought last year, I think over 30 of them were from the steel
industry. We have been in dialogue with yourself and other
members of the Senate and the House, as well as the steel
industry, about how best to perhaps improve our trade remedy
laws. We are happy to work with you on that.
Senator Casey. Great. Thanks very much. That is all I have.
Senator Roberts [presiding]. Senator Brown?
Senator Brown. Thank you, Senator Roberts. Thank you very
much.
I join my colleagues in my disappointment about this
hearing today. I am a little incredulous, too, that the
chairman and the ranking member are not here. I do not ever
judge other people's schedules--I know we are all busy--but to
give such short notice for the meeting is a concern to all of
us. I want to talk for a second about what this committee has
done historically, and it has never done what it is doing
today.
Our predecessors took the consideration of this legislation
much more deliberately. The 1979 Senate Finance Committee held
2 days of hearings on trade policy in advance of considering
fast-track. They held 9 days of meetings with administration
representatives on the substance, 3 days of consultation with
the Ways and Means Committee. In 1988, this committee held 6
days of legislative hearings on the Omnibus Trade Act. In 2001,
in anticipation of fast-track legislation coming from the
House, the committee held 2 days of hearings on that alone.
Yet today we are meeting for a hearing that was noticed 12
hours before it began on a bill we have not seen, with
witnesses, I assume, who know more than we do and, frankly,
Ambassador, never tell us. Why? So we can rush through a bill
that will expedite consideration of the largest trade agreement
we have ever negotiated.
Whenever fast-track and other trade bills are finalized,
this committee needs to have a legislative hearing on the
package before we have a mark-up. I do not know if the ranking
member and the chairman plan to do that. You cannot fast-track
fast-track. That is a complete abdication of our
responsibilities.
I want to lay out a few other points. First, Democrats will
not accept massive cuts to TAA, nor will we tolerate separate
consideration of TAA which will jeopardize its passage,
especially in the House.
Second, there is strong support in this committee,
bipartisan, for provisions both on fast-track and on our trade
remedy laws to fight currency manipulation. It has cost our
country as many as 5 million jobs. We will not accept watered-
down versions in either of these proposals.
Third, the package of bills, as it has been described--
again, we do not know much--will not do nearly enough on trade
enforcement. Any trade package considered by this Congress must
include strong trade enforcement provisions, including my Level
the Playing Field Act, which was written with direct and
detailed consultation with this administration's Department of
Commerce, yet we can get no action from this administration on
including the Level the Playing Field Act in this legislation.
Fourth, we are considering a bill that will change Senate
rules for the consideration of two massive trade acts. The last
time we passed fast-track was 12 years ago. A lot has changed
in U.S. trade policy since then. The legislative process must
be open and methodical, for the committee and on the floor, for
the trade agreement itself.
If the administration is committed to helping working-class
Americans, you three will insist on a strong TAA program as
part of the bill; an omnibus package that includes strong trade
enforcement provisions, again, like the Level the Playing Field
Act that this administration helped us to write; and you will
accept strong bipartisan proposals to fight currency
manipulation.
Now, my question is this, to the Ambassador: I cannot speak
for everyone else on this committee, but from my own
experience, USTR's consultations with Congress have been--I
hesitate to use this adverb, but I will--pathetically
inadequate. Here are some examples. We asked for data showing
the utilization rate of the Korean FTA since it has gone into
effect. We have gotten nothing from USTR.
We asked for information used to justify the auto rules of
origin proposal the U.S. tabled in TPP. USTR gave us nothing. I
might add, that is where you are able to say--or maybe you are
not--that you actually did renegotiate the North American Free
Trade Agreement.
We asked for analysis comparing the NAFTA auto rules of
origin to the TPP auto rules of origin proposals. USTR said
they did not have it. USTR did say they would provide
information from Customs on academic studies that were used to
develop the auto rules of origin proposal. Two months later,
Mr. Ambassador, we are still waiting. My staff asked for a
meeting on rules of origin in October of last year. USTR
dragged their feet, they dragged their feet, they scheduled it
once, they did not show up. We are still waiting for an in-
depth briefing 6 months later.
We asked to be kept regularly informed on the negotiations
between the U.S. and Vietnam when implementing the agreement's
labor standards. It has been 17 weeks since that request; we
have gotten no update.
My staff director asked to see the TPP text over recess,
after she and I viewed it the week before. She was told ``no.''
To be clear, she has appropriate clearance and is bound by the
laws of our staff and all staff in this situation. So in other
words, Nora in my office can only go and look at the TPP text
with your staff person at USTR sitting there, only if I am in
the room. We can get access, staff can get access to DoD
documents, often, to Iran sanctions documents, to CIA
briefings, but we cannot get access to Trans-Pacific
Partnership text.
Finally, I was one of the 60 Senators who signed the letter
urging the administration to include strong enforceable
currency disciplines in TPP. It took me nearly a year to get a
response from the administration, and we have been told by
several officials, including yourself, that TPP will include
nothing on currency.
This list is long. It is actually incomplete. I could list
a number of other things where your office has been totally
unresponsive.
My question is this: is there any legislative text, Mr.
Ambassador, that we can include in fast-track that would get
you to be more responsive to Senators, more forthcoming with
meaningful information about the trade negotiations, and that
would get you to be less dismissive of the U.S. Senate and the
U.S. House of Representatives?
Ambassador Froman. Well, Senator, I am sorry that you feel
we have been unresponsive. We take our responsibilities of
consulting with Congress very seriously. We consult very
closely with the staff of this committee, which you have access
to, on every proposal before we table it. We have had literally
hundreds of consultations with the staff of this committee on
TPP.
We have had 51 consultations with your office, including 7
with yourself and 44 with your staff on a variety of subjects.
But we take this very seriously, and we want to do as much as
we possibly can to encourage the dialogue back and forth, and I
am happy to address the issues you have raised, either now or
later.
This is a key part, I think, of what TPA is intended to lay
out, which is, what are the processes for transparency and for
access to text? I am glad you raised the issue of text, because
we made changes in the last couple of months.
As you know, historically, personal staff did not have
access to text at all. The text was only shared with the staff
of this committee and of the Ways and Means Committee, our
committees of jurisdiction, and of course with members of
Congress themselves who have the fundamental responsibility for
reviewing the text.
We heard from a number of members of Congress over the last
couple of months, and the general view was of three things that
they wanted: (1) they wanted the text to be deposited up here
so that they did not have to set up an appointment with USTR to
view it; (2) they wanted to have the text unredacted so that
they could see the positions of our trading partners, not just
the positions of the United States where there is bracketed
text; and (3) a number of members of Congress and the Senate
asked that they be allowed to bring their personal staff with
them when they are able to view the text to help them
understand and analyze the text. We have accommodated all three
of those requests, both in the House and in the Senate. So we
look forward to working with you and with the leadership of
this committee and the leadership of the Ways and Means
Committee.
Senator Brown. If I can interrupt, Mr. Ambassador, there
has been a very, very specific request a number of times from a
number of us in the Senate that our staffs could go. Ms. Todd
and I went and spent an hour in the room, and I appreciated her
being nearby--as if that is a major concession on a trade
agreement that is 40 percent of the world's economy. But we
spent an hour there. She wanted to go back in the 2 weeks after
I had returned to Ohio, and she was not allowed to go back in
spite of repeated requests.
However, my staff can go and view all kinds of other
documents, with the proper intelligence clearance, having to do
with national defense. It just begs the question, this is not--
if I could say this, this is not smart politics for you and the
Trade Representative to try to sell this huge agreement to a
very cynical, very skeptical Senate and a very worried public,
because we know----
The Chairman. Senator----
Senator Brown. I am sorry, Mr. Chairman. I want to finish,
and I am going to, if you will allow me, Mr. Chairman. I did
not know you were in the room now. I apologize for that. I do
not understand why my staff director cannot go, just because it
might have been precedent, why she cannot go in this room in
the 2 weeks that all of us were gone, that she could not read
this text. It just begs the question of, what are you hiding?
Ambassador Froman. We are happy to work with the chairman
and the ranking member on this, and with the Ways and Means
Committee.
Senator Brown. The answer is not ``yes.'' The answer is
not, ``Ms. Todd can go in.'' The answer is, you will work with
the chairman to continue to stonewall and continue to deny
access to this agreement for a staff person in the U.S. Senate.
That is your answer?
The Chairman. Senator, your time is up, and we are going to
have to stop there. You have gone twice as long as anybody
else.
Senator Scott, you are next, but Senator Wyden would like
to say a few words.
Senator Wyden. Less than a minute. Less than a minute,
colleagues. I know you have been very patient. I just want to
be clear, on the record, that I think Senator Brown is making a
number of valid points, particularly with respect to staff
access to these kinds of materials. This will be the last
time--the last time--where this kind of restriction on staff
access is allowed to take place.
This goes to the question of whether there is going to be a
fairer debate and a fairer fight with respect to this
discussion. A lot of Americans do not think it is fair now. I
am committed to changing it, committed to work with the Senator
from Ohio. I thank you for the chance to respond briefly.
The Chairman. Well, let me just say this. I think it has
been a very fair process. We have bent over backwards time and
time again. Ambassador Froman, you have been up here
repeatedly, so has Secretary Lew. We are really happy to have
you, Secretary Vilsack. The three of you are terrific people,
working in this area. So let us face it, we are never going to
satisfy some people who just plain, honestly disagree. But
there comes a time when you have to move ahead, and with that
we are going to turn to Senator Scott.
Senator Scott. Mr. Chairman, I think Senator Toomey has an
event, and I will give him my time and take his.
The Chairman. I would be happy to do that, and then we will
take you after Senator Toomey.
Senator Scott. Thank you, Mr. Chairman.
Senator Toomey. Senator Scott, thank you very much. That
was very kind, indeed. I am going to try to be as quick as I
can here.
But I would like the panel to just answer directly some
straightforward questions, because I know they are on the minds
of the folks from Pennsylvania. Starting with Secretary
Vilsack, agriculture is the biggest industry in Pennsylvania.
We produce a lot of different agricultural products: dairy,
poultry, all kinds of fruits, vegetables, corn, soybeans,
mushrooms. We do a lot.
If TPA is passed, and subsequent to that we can pass TPP,
is it your view that Pennsylvania farmers will export more
products than they otherwise would?
Secretary Vilsack. Absolutely.
Senator Toomey. And the simple reason is why?
Secretary Vilsack. Senator, tariffs come down.
Senator Toomey. Right. So the single biggest thing is,
their products become more affordable.
Secretary Vilsack. More competitive. The second equally
important reason is, the SPS barriers are not going to be
constructed, or they can be torn down more quickly.
Senator Toomey. Right. Non-tariff barriers are eliminated,
so Pennsylvania farmers sell more products.
Secretary Vilsack. Yes.
Senator Toomey. Secretary Lew, according to the Department
of Commerce, exports supported 191,000 Pennsylvania jobs last
year. A majority of exports are manufactured goods in
Pennsylvania. Is it your view that if TPA is passed, and then
TPP is subsequently passed, that Pennsylvania manufacturers
will export more than they export today, would export more than
they otherwise would, and that we will have more employment in
the manufacturing sector than we otherwise would?
Secretary Lew. Senator, my view is that if U.S. products
compete on a more level playing field, where other countries
lower their tariffs and have to meet higher standards that we
already meet, that is a competitive environment that will be
helpful to U.S. manufacturers.
Senator Toomey. All right. That is an indirect answer,
though. Directly speaking, do you think that the TPP will
result in more manufactured exports from Pennsylvania?
Secretary Lew. I believe there will be more manufacturing
exports. I would not pretend to be an expert about Pennsylvania
manufacturers, but I believe it would help Pennsylvania
manufacturers.
Senator Toomey. Yes. We are a very large manufacturing
State. If we can manufacture more and sell more overseas, I
think that follows.
Secretary Lew, obviously we heard some discussion about the
controversy around currency manipulation. Specifically, I think
Senator Schumer has introduced legislation--actually for quite
some time--that would require currency manipulation to be
deemed to be an actionable subsidy with respect to our
antidumping law. Is it the administration's view that that
provision should be left out and should not be included in TPA?
Secretary Lew. Well, Senator, as I indicated earlier, I
think countervailing duties based on currency are problematic.
They might well not be consistent with our WTO obligations, and
I think there is the risk of retaliation, but we would look
forward to working with the Congress on strengthening our
remedies, not as part of TPA, but in a parallel process.
Senator Toomey. And then just very quickly, my last point--
I did not hear it come up. Maybe it came up, but I did not hear
once anybody make the point about how trade has the
characteristic of providing consumers with a range of choices
and lower costs and options that are valuable to consumers. We,
quite understandably, focus as I just did on the virtues of
more jobs that are associated with exports.
But, Ambassador Froman, maybe you would like to address
this. Is it your view that a working-class family benefits from
the availability of an affordable choice of whatever the
product might be that might originate overseas?
Ambassador Froman. Yes. Thank you, Senator. That is
certainly the case. There have been studies about how the
tariff reductions over the last several rounds of trade
negotiations have added upwards of $10,000 per family to their
income when it takes into account the lower costs of the
products that they buy, and it is particularly important for
lower-income Americans who spend a larger portion of their
disposable income on tradeable products like food and clothing
and shoes. So, by bringing down those barriers, we both bring
down the cost but also, as you say, increase the availability
and the choices that consumers have.
Senator Toomey. Thank you very much.
Once again, thank you to Senator Scott.
Senator Scott. You are very welcome.
The Chairman. Senator Scott, thank you for your patience.
We will now turn to you.
Senator Scott. Thank you, Mr. Chairman.
Thank you, Secretary Lew, Secretary Vilsack, and Ambassador
Froman, for investing so much time on what is a very important
issue.
I do have my first question for Ambassador Froman. There is
a well-known issue with a lack of enforcement and duty evasion,
looking only at the apparel imports. Of course, this is very
important to South Carolina. Last year--there is a conservative
estimate that about 15 percent of FTA entries are non-
compliant.
This translates roughly to about $500 million in lost
revenue just in 2014, and that is just with one specific
sector. These significant enforcement problems exist under the
FTAs with only 20 countries, and now we are considering an
additional 39 countries, which will cover about 65 percent of
global trading if you add in TPP and TTIP.
How does the administration plan to address the additional
resources needed to enforce the terms of these agreements and
ensure that the U.S. does not continue to lose billions of
dollars under current agreements?
Ambassador Froman. Well, thank you, Senator, for that
question. It is an important issue. One of the areas that we
are negotiating in TPP, and we expect to do in TTIP as well,
will strengthen our cooperation among Customs officials to
avoid circumvention and transshipment that has been a problem.
We have also worked very closely with our colleagues at DHS
and Customs and Border Protection to ensure that they have the
resources and the focus for enforcing our trade laws, and I
think they very much appreciate the significance of that
mandate that they have.
Senator Scott. Thank you.
Secretary Lew and Ambassador Froman, one of the challenges
that I have as I think through the process of approving a TPP
agreement is that the executive branch, for the last few years
from my perspective, has really undermined the authority of
Congress through rulemakings, regulatory measures, and
executive actions to achieve results that carry the weight of
law without it actually being a law. I certainly understand
that the current TPA proposal goes to significant lengths to
preserve U.S. sovereignty.
I am very concerned, however, about the potential to
effectively change our system of government, change our laws as
well, under the current proposal. Considering the troubling
actions taken already by the White House, I do not see any
reason why President Obama's Trade Representatives would not
use the trade agreements as an opportunity to negotiate
otherwise unpopular regulatory changes, whether they be
environmental, business, labor, or financial regulation.
My question then is, this TPA is being touted as setting a
new standard for transparency in trade negotiations that will
not allow for trade agreements to impinge on U.S. sovereignty.
Does Congress not deserve a chance to review whether certain
laws and regulations should be negotiated?
Ambassador Froman. Perhaps I can take the first shot at
answering that. First, to be absolutely clear, only Congress
can change the laws. There is nothing that we can do to our
trade agreement that can change the laws without congressional
approval, and we consult closely with Congress throughout this
process, throughout the negotiations, and of course through
whatever the process is that TPA establishes, to get a very
clear understanding of the steps that we may have to take to
comply with our trade obligations, if any. Ultimately, it is
only Congress that has the power and the authority to make the
decision about whether to change any laws.
Senator Scott. I will take that as a ``yes.''
Given that response, is it not reasonable for Congress to
require a full descriptive list of proposed regulations that
are going to be negotiated?
Ambassador Froman. We have not seen the final TPA bill, but
certainly, as part of the past processes of TPA, we will have
to lay out any changes to U.S. law. It tends to be, for
example, changes to the tariff schedule long before there is
any decision by Congress.
Senator Scott. So my concern, obviously, is that, in spite
of the laws of our land, the executive actions of the
administration, the regulations, the enforcement of those
regulations from a bureaucratic process, have in fact had the
impact of law without there actually being law.
So our concern is, as we move forward in further
negotiations and empower the President to negotiate on our
behalf, that part of the negotiation will lead to trade
agreements that have imbedded in them regulatory coherence that
allows for some new set of standards that are inconsistent with
the laws of the land that will be involved or imbedded in those
trade agreements.
Secretary Lew. If I could just add, no agency has the
authority to make regulations if it is not pursuant to an
authority that has been granted. So we do take actions like
every administration of both parties has taken for many, many
decades.
I think the question here about TPA actually goes the other
way, because TPA is a chance for the Congress to put objectives
in front of an agreement that comes up for approval. It is a
direction to the administration that has guidelines in it of
what are the issues that Congress is telling the administration
to weigh heavily in the negotiations, and then ultimately
Congress gets to vote on a trade agreement.
So I do not agree with the description of the use of
executive authority, obviously, but I do not think the TPA is a
case of granting that kind of new regulatory authority.
Senator Scott. There is no doubt that the process that we
would go through to achieve new agreements would require
Congress's final authority, final approval. I get that part.
The transparency and the timeline to understand and appreciate
what is part of that agreement and having transparency as a
part of that process up front, is very important for us to
consider in yielding more authority and power to the
administration.
Thank you, Mr. Chairman.
The Chairman. Well, thank you, Senator Scott.
I want to personally thank all three of you. You all three
have served with distinction in this administration, and I just
care a great deal for each one of you. You, Mr. Ambassador, you
have taken a lot of guff over the years, and this is a tough,
tough job, but I do not know of anybody who could do it better
than you have done it. We have had some very good people in
your position, but it is a very, very tough job. If we get this
done, this is really monumental. We are talking about nearly 80
percent of world trade if we get TPP and TTIP both done. Is it
more than 80 percent?
Ambassador Froman. It is about two-thirds of the global
economy, yes.
The Chairman. Yes. I thought it was more than that, but
that is a lot. I appreciate the hard work that you have done
and the time you have spent away from your family, traveling
around the world, debating with others and talking about these
matters.
Secretary Vilsack, I appreciate all you do in the world of
agriculture. You have done it with fairness across the board,
as far as I can see, and I have always had a great deal of
respect for you, even when you were Governor. Especially when
you were Governor, I should say.
Then, Jack Lew, you have been all over the world fighting
for this administration and this government, and all of that
effort that you have put forward, I just want to personally
thank you for. I want to thank all three of you.
This is a very important time. If we can get this done--and
I believe we will; I believe we will have this basically agreed
to before the end of this day, and I have good reason to say
that--then I intend to hold a mark-up next week, and,
hopefully, before the end of the month, we can have this
debated on the floor. Hopefully, with your help, we will be
able to have enough votes on both sides to be able to pass this
and put the United States back in the whole world as a trading
partner that everybody is going to want to trade with.
So I know this has been a long hearing. I know that some of
it may not have been as pleasant as you would have liked, but I
am just very grateful for you taking the time and being with us
today. Thanks so much.
With that, we will recess until further notice.
[Whereupon, at 12:15 p.m., the hearing was recessed,
reconvening at 3:20 p.m.]
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
UTAH, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. The committee is going to come to order.
Welcome back. I appreciate everyone who has returned for the
second half of our hearing on trade policy.
Ambassador Froman, I especially want to thank you for
appearing again today and for staying a little longer.
I am pleased to announce that Ranking Member Wyden, House
Ways and Means Committee Chairman Ryan, and I have reached an
agreement on legislation to renew Trade Promotion Authority. We
have also reached an agreement on bills to address Trade
Adjustment Assistance and to reauthorize and extend some trade
preference programs, all of which is very important and none of
which could have been done without the help of our ranking
member here.
I hope that all my colleagues will take the time to
carefully study these bills. Once they do, they will find that
we have been able to put together some balanced and effective
legislation that will help improve the health of our economy
and better serve our Nation's hardworking taxpayers.
The TPA bill contains the clearest articulation of trade
policies and priorities in our Nation's history. It includes
nearly 150 ambitious high-standard negotiating objectives,
including strong rules for intellectual property rights and
agricultural trade, as well as protections for U.S. investment.
Many of these objectives break down barriers that American
exporters face in the 21st-century economy, such as regulatory
barriers, currency manipulation, and state-owned enterprises.
The bill contains unprecedented consultation requirements
that will ensure that Congress is an equal partner throughout
the negotiations. It also includes new transparency
requirements that will help the public know and understand what
is being discussed before agreements are signed.
Unlike prior TPA bills, the procedures in our bill
guarantee that all trade agreements will get an up-or-down vote
in Congress. At the same time, we included new tools to hold
the administration accountable, including a procedure that
Congress can employ if our trade negotiators fail to consult or
make progress toward meeting the negotiating objectives. This
is a strong bill and one that builds off the success of
previous iterations of TPA. It enhances our efforts to expand
market access for our exporters and job creators.
Throughout the process of crafting this legislation, I have
worked closely with my colleagues, and I would just like to
thank all of them for their contributions. I would like to
thank Senator Portman for his input on trade issues. He has a
great background in this area, and his leadership on TAA and
the health coverage tax credit has been extremely important.
Senator Toomey has been a great partner on enforcement
issues. The trade bills we are looking at include the strongest
language yet on enforcement, and that is really because of
members like Senator Toomey and others and the work that they
have done.
I would like to thank Senator Grassley as well for his
leadership, especially on agricultural issues. I would also
like to say a warm thanks to Senator Isakson, who has also been
a strong voice for agricultural issues.
In addition, Senator Isakson has been a leader for years on
the African Growth and Opportunity Act, and I look forward to
working with him to get that renewed along with the Generalized
System of Preferences.
We are lucky to have Senator Burr and Senator Scott on the
committee. Both have been strong advocates in this process for
the textiles industry, and I would like to thank them for their
work.
Senator Thune has provided many creative ideas on digital
trade. I think we have been able to incorporate a lot of them
here, and I would like to thank him for his contributions.
Senators Crapo and Coats have been of great assistance on
some particularly challenging agricultural issues, and I would
like to thank them as well.
I would like to thank my colleagues on the other side as
well. We have been working together. Hopefully we can get
enough of our Democrat friends to go with us that we might be
able to put this bill through the Senate as well.
As I mentioned this morning, we intend to move
expeditiously on these bills. If we do not act now, we will
lose our opportunity, so I appreciate the cooperation of all of
our members moving forward.
With that, I will turn the time over to Senator Wyden for
any remarks that he would like to make.
[The prepared statement of Chairman Hatch appears in the
appendix.]
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman. Thank you
for your graciousness.
Suffice it to say, colleagues, Chairman Hatch and I have
been at this, by my count, for over 6 months now, week after
week, in effect trying to put in place a modern trade policy.
The reality is, much of the body of trade law was written
before there were iPhones and people were texting. I look out
in the audience and see lots of young people, and it is hard to
imagine there was even life before texting.
But there was trade law before there was texting, and what
we have sought to do in this debate is to start to flesh out
what a modern trade policy would look like and get us out of
this time warp where trade law has not kept up with the times.
There are a handful of areas that I have felt particularly
strongly about. The first addresses this question of what I
consider to be excessive secrecy in the debate about global
trade and global commerce. If you believe strongly in trade, as
I do, and you want more of it, all of this excessive secrecy
accomplishes nothing except making people more cynical and more
skeptical about trade.
Chairman Hatch and I--and I thank you for this, Chairman
Hatch--have put in place some very different policies with
respect to openness and accountability. I want to be clear, for
example, that the President of the United States will be
required by law to publish trade agreements, starting with the
Trans-Pacific Partnership, 60 days before he signs them.
If you take those 60 days and what is probably another
couple of months, you are talking about 4 months when, finally,
the American people and the Congress get to see what is in an
actual trade agreement. In my view, that will make for a fairer
debate, and it will make for a fairer fight between people who
have different views on this subject.
With respect to enforcement, we take, again, a very
different approach. It is designed to respond to Americans who
come up to their Senators and say, why in the world would you
guys work on a new trade agreement when you are not enforcing
the laws that are on the books today? So what we have done is,
we have taken the bipartisan ENFORCE Act--colleagues on the
other side, colleagues on this side--and we have in effect put
that in our enforcement section.
Then we have moved to address a very common concern of both
business and labor, that the enforcement process is
dramatically limited and flawed by the fact that people do not
really even find out in time in order to set in motion the
enforcement tools. So we have what amounts to an unfair trade
alert, unfair import alert, where people will get that kind of
information so that they can set in motion the enforcement
tools that they desire.
Then finally, we are seeking to ensure that Congress is
involved on an ongoing basis--on an ongoing basis--in the
negotiations. After many, many months where Chairman Hatch and
I had, I think it would be fair to say, Chairman Hatch, some
spirited discussions, we have set up a process that would allow
this committee, building on existing law, to turn off fast-
track just as it is turned on today.
So, higher standards for trade agreements, tougher
enforcement, a new level of transparency and accountability,
and vigorous oversight, raising the bar for trade deals. If
they fall short, if it does not meet our standards, Congress
can put the brakes on a bad deal.
The last couple of points that I would like to make--I see
my friend Senator Cardin, the ranking member on the Foreign
Relations Committee and a key architect in the historic
developments this week. He has led the fight for finally--after
years of, I think it would be fair to say, almost indifference
to governance questions and human rights--governance and human
rights to be right at the center of the trade agenda in the
future. The reality is, nobody has the muscle or the
determination to force progress on human rights like the United
States, and I think that is a real plus.
I just want to mention an issue that has been especially
important to me, and that is protecting the free and open
Internet and building for the future so as to have priorities
that can ensure that information flows freely across national
borders.
The last point: no trade deal is going to change U.S. law
without congressional action. There is going to be no back door
for powerful special interests to skirt U.S. law. Foreign
companies will have no more rights in international tribunals
than they have in American courts.
Finally, this legislation ensures that, when you have
changes in the American economy, in Oregon's economy, there is
the opportunity for workers to get job training and financial
support and access to health care. Competing in the global
economy is a tough challenge, it is a national challenge, and
that is why this package expands the Trade Adjustment
Assistance program to include not just manufacturing-sector
workers, but service-sector workers as well, to cover workers
hurt by competition from any country around the world. It also
extends the health care tax credit, and it includes preference
programs like the Generalized System of Preferences and the
African Growth and Opportunity Act.
If we were to talk about everything this package does, we
would be here until breakfast time tomorrow. There are booming
economies around the world that have more money to spend with
every passing year. I want them to spend it on products that
are made and grown here.
So I think that this is the right thing to do here. As
Chairman Hatch will tell you, these were very, very challenging
discussions. We have not addressed this issue really since
2002. We are going to have a lot more debate on this,
colleagues, here in the committee, and on the floor. I think we
are on our way to a modern trade policy that strengthens the
middle class, expands economic opportunity, and creates high-
skill, high-wage jobs at home.
Mr. Chairman, I look forward to talking to our witness
today and, as you and I have talked about, hearing from others
as well. I thank you very much for your consideration.
The Chairman. Well, thank you, Senator Wyden.
[The prepared statement of Senator Wyden appears in the
appendix.]
The Chairman. We have with us today again Ambassador
Froman, the U.S. Trade Representative. Ambassador, you are
becoming a very well-known figure to this committee. I would
like to thank you and welcome you back. I appreciate especially
your giving us so much of your time today.
Would it be all right if we just go into questions, or
would you care to make a statement? I would be happy to have
your statement if you want to make one.
STATEMENT OF HON. MICHAEL FROMAN, U.S. TRADE REPRESENTATIVE,
EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON, DC
Ambassador Froman. Well, it is good to be back so soon
again. Let me just say, as I mentioned this morning, Trade
Promotion Authority has always been a bipartisan effort, and it
is important that it is going forward.
I just want to congratulate the chairman and the ranking
member on this package of measures. At first glance--of course
we have not studied it yet in detail--we see very important
developments in terms of the negotiating objectives and with
regard to the importance of enforceable labor and environmental
standards; a balanced approach to intellectual property rights,
promoting innovation and access to medicines, the need to
address unfair competition from SOEs, to protect a free and
open Internet, to address currency manipulation, and to
increase transparency; and increased opportunities for
congressional oversight and engagement, strong safeguards of
sovereignty to make it absolutely clear that there can be no
change of law without congressional approval, and, as the
ranking member mentioned, the importance of good governance and
the rule of law, which is so important to promoting human
rights and democracy.
We look forward to working with you on this, and I am happy
to answer your questions.
The Chairman. Well, thank you, Mr. Ambassador. I am going
to withhold any questions, so we will turn to Senator Wyden.
Senator Wyden. Thank you very much, Mr. Chairman.
Let us start with this question of the Internet. As you
know, Ambassador Froman, in this room I put a hold on the
predecessor of what are called the PIPA and SOPA bills, these
anti-Internet bills, and then did everything I could to
actually block them in the next Congress because I thought that
these bills, while well-meaning because we are all against
piracy, would do a great deal of damage to the architecture of
the Internet, and keeping the Internet open and free is
absolutely critical.
So I think it would be very helpful to have on the record
whether the Trans-Pacific Partnership contains provisions such
as those in these anti-Internet bills, the PIPA and SOPA
legislative proposals or any others that would damage the
openness of the Internet, that would harm the cause of net
neutrality, any provisions in your view that would impede the
free flow of information and ideas.
Ambassador Froman. No, Senator Wyden, it does not include
any of those provisions, and it is very much focused on
maintaining a free and open Internet. We think that is one of
the important parts of the TPP agreement. It includes concepts
coming out of existing U.S. law, such as safe harbors for ISP
liability. Both technology protection measures but also the
exceptions to them, such as cell phone unlocking, create
opportunities for that, the flexibility to do that. And it is
the first trade agreement that both strengthens copyright but
also recognizes exceptions and limitations to copyright law,
similar to the fair use doctrine that we have here in the
United States.
Senator Wyden. One last question with respect to the
Internet and the digital economy. Would Congress still be able,
if the Trans-Pacific Partnership proposal passed, to change
U.S. laws to take into account the changing shape of the
digital economy?
Ambassador Froman. Yes.
Senator Wyden. All right. The other area that I would like
to explore at this time is trade law enforcement. You heard me
in my earlier comments talk about how central this is, both in
terms of the well-being of American workers and American
families, but also in terms of the credibility that a new trade
policy is going to have.
I want to commend you, by the way, in terms of the number
of approaches you all have taken with rare earth minerals, the
steel and plumbing matter, a variety of areas you have made
some very important headway on, even before these issues are
dealt with in the context of trade.
But we have to lock these more aggressive enforcement
policies into a very different strategy here. In my view, the
expansion of trade requires an expansion of trade compliance.
U.S. businesses and workers have to be able to realize that the
benefits you actually negotiate ensure that they can compete on
a level playing field with foreign competitors.
If the United States concludes the Trans-Pacific
Partnership--and, as you know better than we do, this is still
being negotiated--we are going to see an increase in trade with
Asia, a region of the world where American manufacturers and
American farmers have repeatedly, repeatedly faced unfair trade
practices that disadvantage our workers and disadvantage our
families.
How are you all going to ensure that the Trade
Representative's Office has an enforcement strategy that is
going to meet these new challenges that result from expanded
trade?
Ambassador Froman. Well, thank you, Senator. We completely
agree in what you laid out about the importance of enforcement
being part of the compact of these agreements. It is not just
about opening agreements, it is making sure that we fully
enforce the trade rights that we have negotiated for ourselves,
and our trade laws.
I think the first step is to make sure that, in TPP itself,
we get very good standards across the board that are fully
enforceable, which makes it easier to bring enforcement
actions. We have worked internally, as you know, over the last
several years to ramp up our enforcement efforts. We have
brought 19 cases before the WTO, half of those against China.
Every case we have brought that has gone to conclusion we have
won, and we are continuing to explore cases.
The President established the Inter-Agency Trade
Enforcement Center, which allowed us to bring resources from
across the government, from different agencies, to help build
better and more complex cases in enforcement. It has been very
successful to date, and we look forward to continuing to build
on that.
We are right now working with our inter-agency partners--
Commerce Department, Labor Department, EPA, and others--to make
sure that we have procedures in place for being able to fully
and effectively enforce what we negotiate.
Senator Wyden. Let me see if I can get one other question
in that is very important to a lot of Senators, and that is the
question of the relationship between trade agreements and
having stronger and better labor standards.
The President, as you know, has said that Trade Promotion
Authority is going to help him conclude TPP and set high
standards in Asia on labor rights. As you know, the
International Labor Organization already sets rules on labor
rights, and the countries that you are negotiating with have in
fact agreed to many of the rules, and yet the problems just
persist. They just go on and on. Mexico is part of NAFTA, and
it seems to be falling short when it comes to labor rights.
Why do you believe--and I think it is important as part of
this hearing--that a new trade agreement is going to help to
get these countries to actually live up to the higher labor
standards, and what do you propose to do to make sure that they
follow up on the promises that are made in TPP on these crucial
labor questions?
Ambassador Froman. Well, again, I think first, it is making
sure that the standards are set sufficiently clearly and at a
high level, so that we have the five basic ILO principles, but
we also have acceptable conditions of work around minimum wage,
hours, and safe workplace conditions.
We are working with countries to ensure that they not only
agree to these ILO principles, but that they have a pathway
towards bringing their laws into compliance with them and that
they also have the capacity-building mechanisms under way to
ensure that they can implement these standards fully, and that
is part of the process.
Senator Wyden. Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Isakson has not had his first round yet, so we will
turn to you, Senator Isakson.
Senator Isakson. Well, thank you, Mr. Chairman, and
congratulations to both you and the ranking member for good
work on the trade agreements. I look forward to working with
you, and I appreciate the acknowledgment of my work on AGOA.
It is to that end that I would like to address Ambassador
Froman after I express my complete support for Ambassador
Froman and his forceful and positive representation of the
United States of America in Europe, in Africa, and around the
world. You have done an outstanding job. I have seen you in
action in Africa; I have seen you in action in Brussels. We are
lucky to have you doing it, and I hope this all comes to a good
conclusion for you, and for us too.
Ambassador Froman. Thank you, Senator.
Senator Isakson. As you know, Senator Coons and I have
traveled to South Africa over the last 3 years, meeting with
Foreign Minister Davies. Foreign Minister Davies is in
Washington today because of our invitation, because there have
been artificial barriers to domestic chicken from the United
States being able to be exported into South Africa.
They have done arbitrary blockage along the way, and we
have been trying to use the AGOA extension as a lever to get
them to come to the table, asking the South African Poultry
Federation and the United States private-sector poultry people
to come together and come up with a quota that made sense for
both, which we think is the right way to do it.
After my meeting this morning, I think Senator Coons would
agree with me, we became concerned that this is a matter of
rope-a-dope with South Africa, that they like to string us out
until AGOA gets renewed, and they will forget ever talking
about it. I do not want AGOA to become subject to one country's
trade violations one way or another, but I do want to get on
the record two points.
One is, you will have the power, as the Trade
Representative, to revisit anybody's participation under AGOA
during the course of the agreement, is that correct?
Ambassador Froman. We have not, again, seen the final
version of the legislation, but yes, that is our expectation.
Senator Isakson. Well then, let me ask a third question. If
in fact it is not in the final version, would you help assist
us in putting in language that would give us the authority to
do that?
Ambassador Froman. We would be happy to work with you on
that.
Senator Isakson. Secondly, I understand it is a 10-year
agreement. Is that correct, Mr. Chairman, the extension?
The Chairman. That is correct, yes.
Senator Isakson. It is a 10-year extension of AGOA, and I
congratulate you on that time period. I think that is right.
Could we possibly, in amending it or dealing with the trade
agreement, put in, say, a 3-year look-back period where you say
at the end of 3 years, we will review South Africa,
particularly with regard to its market access in poultry, or
would that be something we could not do?
Ambassador Froman. Well, Senator, we first of all very much
appreciate you and your colleagues raising the concerns about
agricultural market access to South Africa. It is something we
have raised consistently with the South African government from
the highest levels on down, and we appreciate working with you
on that.
I just met with Minister Davies before coming back up to
the Hill to review the progress in the negotiations, and I made
clear that we are not seeing sufficient progress towards
resolving the outstanding issues at this point and urged him to
take further actions to try to resolve our differences.
If we do not make sufficient progress in that regard, we
would be happy to work with you on appropriate next steps in
the legislation.
Senator Isakson. Well, I would really appreciate it,
because it would be a shame for the continent of Africa to
suffer because one participant on the continent just refused to
cooperate in negotiations that are, I think, legitimate.
The last point I will make about the AGOA, Mr. Chairman, is
that Africa is a continent of 1.5 billion people with most of
the world's rare earth minerals, a tremendous amount of natural
gas and oil, and precious minerals. It is a great continent and
can become the continent of the 21st century for America, and
trade is the key to doing business with those countries, the
key to raising the standards in Africa, but also opening up
markets for the United States and our companies. So I commend
you.
Although AGOA is a footnote compared to TPP and TTIP, it is
a very important agreement for the continent of Africa, for the
United States, and United States business and investment. So I
commend you on what you have done for it, and I appreciate it.
When we get the final text of the bill, I will talk to you
about some look-back period in the bill if we do not get an
agreement out of South Africa.
Ambassador Froman. Thank you, Senator.
Senator Isakson. Thank you.
Thank you, Mr. Chairman.
The Chairman. Senator Thune has not had his first round
either. I missed that, so we will turn to you, Senator Thune.
Senator Thune. Thank you, Mr. Chairman. Congratulations to
you and Senator Wyden on working this out. Trade should be a
bipartisan issue. It is critically important to our economy.
When you get a President and leadership in Congress who agree
on something when it comes to economic policy, I think
everybody ought to take notice. I think it is really important
that this President and future Presidents have the authority,
the ability that they need, to bring down foreign barriers to
American products.
So, congratulations on your good work, and I look forward
to working with our colleagues, on both sides on this committee
and when we get to the floor, on getting this TPA bill through
the process and on the President's desk so these trade
agreements can continue and hopefully get completed.
Ambassador Froman, as you know, I think pretty well, there
is no greater priority in farm country than making sure that
other nations cannot discriminate against our agricultural
products or otherwise unfairly keep those products off the
market. These are decisions that ought to be left to consumers
in those countries.
Unfortunately, too often we have agricultural producers in
this country who are seeing access to foreign markets for crops
with new technology significantly delayed as a result of the
foreign approval process, which puts our farmers at a
competitive disadvantage. One of the key negotiating objectives
in the agricultural section of the TPA legislation that will
soon be introduced is intended to prevent foreign regulatory
approval processes from being used as a trade barrier to new
agricultural technologies.
I just want to know, do you agree that strong language on
this topic in the TPA bill is appropriate, and that addressing
these foreign regulatory issues should be a priority when it
comes to promoting American farm exports?
Ambassador Froman. Absolutely. As Secretary Vilsack
mentioned this morning, tariffs are one issue, but there are
several issues that block our agricultural exports. These SPS
measures, and particularly non-science-based approvals or
disapprovals of biotech products, are one set of serious issues
that we are trying to take on both in TPP and in TTIP.
We know it is a sensitive issue. There is a lot of public
debate about it. Our view is, we are not trying to force
anybody anywhere to eat anything, but we do think that the
decisions about what is safe should be made by science and not
by politics.
Senator Thune. Great. And I hope that that will continue to
be an area of emphasis for you and the negotiators as we move
forward.
One of the areas that I have been very involved with, as
Senator Wyden and Senator Hatch, I think, mentioned, both as a
member of this committee and as the chairman of the Commerce
Committee, is the area of digital trade and making sure that
other nations cannot restrict data flows across borders that
are essential today in the conduct of business.
In December of 2013, Senator Wyden and I introduced the
Digital Trade Act, which was designed to set new negotiating
objectives when it comes to that area of our trade
negotiations. As you know, these are cutting-edge issues that
have not been in previous TPA bills enacted into law, so I am
wondering if you could briefly discuss--I know you have touched
on it a little bit already--how important strong rules are in
the area of digital trade for American businesses, whether we
are talking about large multinational corporations doing
business around the world or the small business person who is
using the Internet to sell goods abroad for the first time.
Ambassador Froman. No, absolutely. It is absolutely a key
part of what we are trying to achieve in TPP. In 2002, when the
last TPA bill was passed, there really was not much of a
digital economy. There was not that much going on in the area
of e-commerce. Over the last 13 years, access to the Internet
and e-commerce has exploded all over the world, and we see
great opportunities for our companies and for our people.
As you suggested, it goes to the issue of the free flow of
data and information across borders. It also goes to the issue
of pushing back against localization requirements that some
countries have adopted around the world that require companies
to build unnecessarily redundant infrastructure in a market in
order to serve that market, creating an incentive to move the
businesses from the U.S., for example, to another market in
order to access that. These are all key parts of what we are
negotiating in TPP.
As you suggest, this is very much an issue that affects
small and medium-sized businesses. I have met with a number of
participants in Etsy, for example. These are people who sell
products, out of their homes sometimes, on the Internet, to
people all over the world. When they are engaging in e-
commerce, they are using software services, computer services,
telecommunication services, electronic payment services, and
express delivery services. Those are all covered by TPP.
We work on making sure that markets are open to the
provision of those services so that our small and medium-sized
businesses using the Internet, using the digital economy, can
access the 95 percent of the customers who live outside the
United States.
Senator Thune. Good. I am glad to hear that. I appreciate
the fact that the chairman and his staff worked hard to
incorporate some of those strong provisions in the TPA
legislation that we are considering here today, and glad to
hear that you are very focused on that in the discussions with
both the Europeans and our Asian partners as well.
So, keep up the good fight. Let us push this thing across
the finish line and hopefully get these trade deals completed
and open up what I think are some very significant markets to
American businesses, manufacturers, farmers, and ranchers. And
a lot of people in this country would benefit, not to mention,
I should say as well, American workers who I think are going to
benefit enormously from the economic growth that we see when we
are opening up markets abroad. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Thune.
We will go to Senator Cardin now.
Senator Cardin. Thank you, Mr. Chairman. First, listening
to the summary of particularly the TPA bill containing much
stronger provisions on labor, environment, and new provisions
on good governance, looking at the enforcement issues that were
attached to this legislation and the other bills we are taking
up, I just want to first thank you, thank Senator Wyden, for
developing a bill that tries to take TPA to the next level. I
think that is a very important accomplishment.
I want to repeat what I said earlier today, and that is, we
just got the bill today. I have read up to page 32, and I found
an inconsistency with Ambassador Froman's statement a little
bit earlier, and I am going to question you on that in a
moment. I have not read the entire bill, which is 113 pages. I
have a bad habit, Mr. Chairman. I like to read the bills. I
have not read the TAA bill or the health care bill or the
preference bills or the AGOA bill. I understand that----
The Chairman. What kind of Senator are you that you read
your own bills? My goodness!
Senator Cardin. I learned that at the University of
Pittsburgh. [Laughter.]
The Chairman. He knows we both graduated from there. That
is great. So I know you do, and you are one of the better
Senators here.
Senator Cardin. Well, my request to you is that I think,
for the reputation of this committee, I would just urge you to
consider a public hearing before we mark up, and particularly
to give non-governmental stakeholders an opportunity to be
heard. Organized labor deserves an opportunity to be able to
comment publicly before this committee on the provisions that
are in this bill, and I would just urge you to give that
opportunity.
Mr. Chairman and Ambassador Froman, let me just deal with a
couple of issues that I mentioned this morning. It looks like
the BDS, dealing with Israel and boycotts, is not in this bill,
so I take it from your comments this morning you are prepared
to work with Senator Portman and I to develop some language
that could be added to this bill.
As I explained earlier, we are interested in the TTIP trade
agreements, not TPP. If we could work on some language between
now and mark-up, we would certainly hope we could work together
in regards to that issue. I take it from your response this
morning that you are willing to sit down and work with us in
that regard.
Ambassador Froman. Yes. We would certainly like to learn
more about your proposals and are happy to work with you.
Senator Cardin. Thank you.
So let me talk about the human rights areas. What I am
trying to figure out is the difference between being in section
2(a) and section 2(b), the requirements on the President being
in section 3 rather than section 5, and I know those who are
listening to this have no idea what I am talking about.
But I read on page 32 that the dispute settlement
enforcement applies to principal negotiating objectives, but
you mentioned to me this morning that the dispute settlement
procedures and enforcement applied to the human rights
sections.
I am not quite getting that from what I have read so far,
but maybe I am reading the language incorrectly. So I like your
answer the best, that we do intend that these provisions are
going to be subject to enforcement, including trade sanctions,
if they are not remedied.
Ambassador Froman. Well, I have not had a chance to read
the bill, so you have it on me that----
Senator Cardin. I am only up to page 32.
Ambassador Froman. What I would like to do is to walk
through with you what we are actually negotiating in TPP and
the various provisions dealing with good governance,
transparency, et cetera, and talk to you about how the
enforcement applies to that. We are happy to set up a separate
meeting to go through that with you.
Senator Cardin. I appreciate that.
Last weekend I was pretty busy on another matter; this
weekend I have free time. I assure you, I am going to be
looking at this and taking you and the chairman at your word
that we will have the opportunity to get your input so that, if
we need modifications, we will have opportunity to present
those during a committee mark-up.
Ambassador Froman. Great.
Senator Cardin. Thank you.
Ambassador Froman. Happy to do that.
Senator Cardin. Thank you, Mr. Chairman.
The Chairman. Well, thank you.
Ambassador Froman, you have been a solid soldier here for
so many times before the committee. I personally am very
appreciative of the efforts that you have made and appreciate
you being here today, twice. Just one last thing. Please
describe how passage of TPA will help our trade agenda.
Ambassador Froman. Well----
The Chairman. You have been doing that, but if you can
summarize it in a paragraph, I would appreciate it.
Ambassador Froman. Sure. TPA is a critical tool for moving
our trade agenda forward. It allows us to speak with one voice
when we sit at the negotiating table with our trading partners
and ensures them that the executive branch and the Congress are
together on a bipartisan basis to pursue the negotiating
objectives. So we do view this as a critical tool for moving
the agenda forward, and I think today's introduction will have
a very positive effect in terms of momentum in our current
negotiations.
The Chairman. Well, thank you. I want to thank you and the
other witnesses who were here today, and I want to thank all
the Senators who have taken time out of what I know are really
busy schedules at this time to take part in this important
hearing and debate. I would look forward to continuing to work
with all of you on this matter.
The committee will stand in recess, subject to the call of
the chair. Thank you.
Senator Wyden. Mr. Chairman, I just want to say ``thank
you'' for that. I think you heard how strongly my colleagues
like Senator Cardin feel about this, and the voices of
organized labor. I very much appreciate your thoughtfulness. We
are in recess, and I look forward to working with you on this.
The Chairman. Well, that will be fine. We appreciate you,
Mr. Ambassador, and with that, we will recess until further
notice by the chair.
Ambassador Froman. Thank you.
[Whereupon, at 4 p.m., the hearing was recessed.]
CONGRESS AND U.S. TARIFF POLICY, PART II
----------
TUESDAY, APRIL 21, 2015
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 10:15
a.m., in room SD-215, Dirksen Senate Office Building, Hon.
Orrin G. Hatch (chairman of the committee) presiding.
Present: Senators Grassley, Crapo, Cornyn, Thune, Isakson,
Scott, Wyden, Schumer, Stabenow, Cantwell, Nelson, Menendez,
Carper, Cardin, Brown, Bennet, Casey, and Warner.
Also present: Republican Staff: Chris Campbell, Staff
Director; Bryan Hickman, Special Counsel; and Jay Khosla, Chief
Health Counsel and Policy Director. Democratic Staff: Michael
Evans, General Counsel; Jocelyn Moore, Deputy Staff Director;
Joshua Sheinkman, Staff Director; and Jayme White, Chief
Advisor for International Competitiveness and Innovation.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
UTAH, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. I would like to welcome everyone to the
continuation of our hearings on Congress and U.S. tariff
policy.
Today we have a very distinguished panel of witnesses that
I hope will help us expand the ongoing discussion of our
Nation's trade agenda. As everyone here knows, last week
Senator Wyden and I, along with the House Ways and Means
Committee Chairman Ryan, introduced legislation to renew Trade
Promotion Authority, or TPA.
Our intention is to mark up the TPA bill, along with a
handful of other trade-related bills, later this week. This
legislation is a long time coming. TPA expired in 2007. While
talks for various trade agreements have gone on since that
time, without TPA in effect, our negotiators have been
effectively negotiating with one hand tied behind their backs,
because they have not been able to assure our trading partners
that the deal they sign is the one that Congress will vote on
in the end. Our legislation will fix that.
I want to thank Ranking Member Wyden for his support and
assistance thus far, and also Congressman Ryan as well. We have
a long way to go, but, working together, I am confident we can
get there.
Now, some have expressed concerns about the process by
which we are moving this bill forward. For example, I have
heard arguments that we are moving too quickly without adequate
discussion or examination. Those concerns are, in my view, very
unfounded. First of all, the bill on which our current TPA
legislation is based was first introduced in January of 2014,
almost a year and a half ago.
Since that time, it has been available for examination,
dissection, discussion, and comment. Thousands of organizations
have weighed in on the merits of that bill, including business
associations, organized labor, think tanks, and advocacy
groups. Many members of Congress from both parties and in both
chambers are on record either praising or criticizing that
bill.
Officials in the Obama administration expressed their
support for it. True enough, in our discussions, Senator Wyden,
Chairman Ryan, and I made some improvements of that original
bill, but the fundamentals remain the same, and we have been
very transparent as to what the changes really have been.
Second, in the 113th Congress, the Finance Committee held
nine hearings on trade, and TPA was brought up in virtually
every one of them. I know this because, more often than not, I
was the one bringing it up. One of those hearings was devoted
specifically and entirely to TPA and included the testimony of
witnesses across the spectrum, including one representing
organized labor.
Finally, since the 114th Congress convened just about 3
months ago, this committee has had three hearings on which
trade and TPA were major topics of discussion. Today's hearing
is the fourth. In other words, this is a well-covered territory
for this committee.
So, while I understand and respect that there are sincerely
held views on this topic, some of which are different than
mine, any arguments that we have been less than forthcoming and
transparent with this TPA legislation are, not to put too fine
a point on it, nonsense.
I have been in the Senate a long time and I think am
generally considered to be pretty reasonable. I am certainly
willing to listen to and consider any genuine concerns that
some may have about process. I want all sides to be heard, and
I want to have a fair and open debate, and that is why we are
having this additional hearing. By all means, we should have a
frank and open discussion about these issues, and I hope we
will continue to do so today. But let us not dress up our
position on trade and TPA as concerns about process.
During our hearing last week, I made two assertions about
trade. I stated plainly that U.S. trade with foreign countries
is a good thing, and I said that TPA is the best tool Congress
has in its arsenal to help influence and facilitate trade.
Those are pretty fundamental assertions.
At the end of the day, people are either going to agree
with them or they will not. More hearings and weeks of
additional delays are not going to change many minds one way or
the other on these essential issues. With that in mind, I
welcome today's hearing.
Like I said, we have a very distinguished panel of
witnesses. It does not get any more distinguished than these
two gentlemen who are before us here today. I think they will
speak to the heart of these matters.
I look forward to a spirited discussion. For my part, I
just want to make clear, if it is not clear enough already,
that I believe Congress should be working hand-in-hand with the
administration to break down barriers to foreign markets in
order to give our businesses and job creators a chance to
compete in the global marketplace.
The United States should be a leader in international
trade. We should be setting the standards and making the rules.
We simply cannot afford to sit on the sidelines and let other
countries dictate where the world goes on trade. Trade is an
essential element of a healthy economy.
We should be doing all we can to advance a trade agenda
that works for America and advances our interests on the world
stage. I might add that this TPA will cover 11 nations in the
Trans-Pacific Partnership plus ours, and 28 different nations
in the TTIP European partnership plus ours.
So it involves a high percentage of trade throughout the
world, and it puts us in a position to be able to do a good job
with regard to trade and to advance our country in many ways
that we will not be able to do without this legislation. Now,
that is where we are. I will just stop right there.
[The prepared statement of Chairman Hatch appears in the
appendix.]
The Chairman. Senator Wyden, why don't you give your
remarks?
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you, Mr. Chairman. Mr. Chairman and
colleagues, normally I would make an opening statement, the
focus of which would be to lay out the significant differences
between this bill and the trade bills of the 1990s. Under
normal circumstances, I would detail that before the committee
at this time.
I have talked with Mr. Trumka often about this topic in the
past and have visited with a number of the members of the
Chamber to discuss the bill. Given the interest, however, with
colleagues on the committee in engaging with our two
witnesses--and we thank them both, Mr. Trumka and Mr. Donohue,
for doing it--I will forgo any further statement at this time,
Mr. Chairman, in the interest of my colleagues who are here to
ask questions.
The Chairman. Well, thank you, Senator Wyden.
[The prepared statement of Senator Wyden appears in the
appendix.]
The Chairman. Our first witness is Thomas J. Donohue. He is
the president and the CEO of the U.S. Chamber of Commerce, the
largest business organization in the world, representing the
interests of more than 3 million businesses across various
sectors and industries. Mr. Donohue has held this position at
the U.S. Chamber since 1997. We have had a lot of experience
working together. Prior to that, he served for 13 years as
president and CEO of the American Trucking Association. Earlier
in his career, he served as the Deputy Assistant Postmaster
General of the United States and as vice president of
development at Fairfield University.
Mr. Donohue received a bachelor's degree from St. John's
University and an MBA from Adelphi University. So we welcome
you, Mr. Donohue, to the Finance Committee. We are honored to
have you here. We appreciate your willingness to be here today.
Our second witness today on this panel is Richard L.
Trumka. Mr. Trumka is president of the 12.5 million-member
American Federation of Labor and Congress of Industrial
Organizations, or the AFL-CIO, the largest organization of
labor unions in the country. He has held this position since
2009. I might add that this organization has an effect for
American citizens all over the world. One of my closest friends
was the international vice president of the AFL-CIO. He has
since passed away, but what a great leader he was in this
world.
Now, prior to 2009, Mr. Trumka served for 15 years as the
AFL-CIO's secretary/treasurer. From 1982 to 1995, he was
president of the United Mine Workers. Mr. Trumka has a
bachelor's degree from Penn State University and a law degree
from Villanova. He is a tough guy and somebody I have a lot of
respect for. These are the two top people in this country, as
far as I am concerned, to appear at this hearing.
They have widely divergent views perhaps, but, on the other
hand, we need to listen to both of them. I want to thank you,
Mr. Trumka, and Mr. Donohue as well, for joining us here today.
Welcome to the Senate Finance Committee. I hope this will not
be the last time you come before this committee.
So with that, we will turn to you, Mr. Donohue. You will be
the first witness. We will take your statement now.
STATEMENT OF THOMAS J. DONOHUE, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, U.S. CHAMBER OF COMMERCE, WASHINGTON, DC
Mr. Donohue. Thank you very much, Chairman Hatch, Ranking
Member Wyden, and distinguished members of the committee. As
you now know, I am Tom Donohue, and I am president and CEO of
the Chamber of Commerce of the United States.
I am really pleased to testify today on behalf of our 3
million small and medium-sized businesses, State and local
chambers of commerce, as well as large companies that are
members of the Chamber and our national federation.
I am also pleased to be here with my friend, Rich Trumka.
We appear quite often together on matters of immigration,
infrastructure, and a whole lot of things we agree on. When we
retire, we are going to get a Mike-and-Ike show and go on the
road. We think we can make a good deal out of it.
The Chamber strongly supports the Bipartisan Congressional
Trade Priorities and Accountability Act of 2015, which will
renew Trade Promotion Authority. TPA is critical because
economic growth and job creation at home depend on our ability
to sell American goods and services abroad. After all, 95
percent of the world's consumers live outside the borders of
the United States.
Why does trade matter to our country? In a word, it comes
down to American jobs. Already, one in four manufacturing jobs
depends on exports, and 1 in 3 acres of American farms is
planted for consumers overseas. All totaled, nearly 40 million
American jobs depend on trade. Nearly 400,000 jobs in Utah and
500,000 in Oregon depend on trade, just to pick two States at
random. [Laughter.]
These numbers could even be higher, but unfortunately the
playing field for trade is not always level. While our market
is generally open, U.S. exports face foreign tariffs often
soaring into double digits, as well as a thicket of non-tariff
barriers.
No one wants to go into a game many points behind before
the tip-off, but that is exactly what American exporters are
doing every day. These barriers are particularly burdensome for
America's small and medium-sized companies, about 300,000 of
which are exporters from the United States. The good news is
that America's trade agreements do a great job leveling the
playing field, and the results include significantly higher
exports and new and better jobs.
The Chamber analyzed these benefits in a recent report
entitled, ``The Open Door of Trade,'' which we would like, Mr.
Chairman, to enter into the record today.
The Chairman. Without objection, it will be entered.
[The report appears in the appendix on p. 94.]
Mr. Donohue. Thank you.
Now, here are some of the highlights of that study.
America's 20 trade agreement partners represent just 6 percent
of the world's population. Let me say that again. The 20 trade
agreements we have around the world represent just 6 percent of
the world's population, but they buy nearly half of America's
exports.
By tearing down foreign barriers to U.S. exports, these
agreements have proven an ability to make big markets even out
of small economies. U.S. exports to new trade agreement
partners have grown by an annual average of 18 percent in the
5-year period following an agreement coming into force. That is
much faster than we typically see in U.S. export growth to
other countries.
The increased trade brought about by these agreements
supports more than 5 million American jobs, according to a
study commissioned by the Chamber. Trade-related jobs also pay
well. For instance, manufacturing jobs tied to exports pay
wages that average 18 percent higher than those that are not.
The trade balance is a poor measure of whether or not your
trade policy is successful, but we often hear the opponents of
trade arguments say that they cause deficits. That could not be
more incorrect.
The United States--I am going to say this: please listen.
The United States has a trade surplus with our 20 trade
agreement partners as a group. U.S. exports of manufactured
goods to our trade agreement partners generate revenue of about
$55,000 for each American factory worker. Many manufacturers
just could not make payroll without these export revenues.
For American farmers and ranchers, the stakes are
especially high. That is because foreign markets often slap the
highest tariffs on their products, and that is why our
agricultural exports soared under our new trade agreements.
U.S. service exports are also growing rapidly and supporting
millions of high-wage jobs, even though the potential for
service industries to export is nearly untapped.
But to get more of these benefits, Congress must approve
TPA. The United States has never entered into a major trade
agreement without it. A simple form of TPA was first enacted in
1934, but the latest version expired in 2007. TPA is based on
the common-sense notion that Congress and the White House must
work together on trade agreements.
TPA is how Congress sets priorities and holds the
administration accountable in trade negotiations. A few people
have claimed that this is a presidential power grab. I may be
uniquely qualified to comment on this; after all, the Chamber
has not been shy about criticizing some actions of the
administration when we see over-reach.
But TPA is not about Congress ceding power to the
President. On the contrary, TPA strengthens the voice of the
Congress on trade. Without TPA, the administration can pursue
its own priorities at the negotiating table and consult with
Congress only when and if it chooses. TPA lets Congress set
negotiation goals and sets forth detailed requirements for
consultation between the trade negotiators and the Congress.
What should we do with TPA? We should start by bringing
several trade negotiations to a successful conclusion. The
Trans-Pacific Partnership agreement would open the dynamic
Asia-Pacific markets to American goods and services.
It is critical that we do so, because nations across the
Pacific are clinching their own trade agreements that exclude
the United States, denying American exporters access to these
very important markets. TPA gives the United States a strong
hand in writing the rules for trade for this important region.
It makes us an active player, not a bystander, stuck on the
outside looking in.
TPP would affirm and deepen America's ties to Asia at a
time when there is a perception that we are pulling back. Then
there is the Transatlantic Trade and Investment Partnership,
which would further remove barriers between the United States
and Europe. This agreement could not come at a better time.
Both America and Europe are dealing with struggling
economies, aging populations, and new competition from emerging
nations. The United States and the E.U. represent nearly half
of the global economy. A relationship that huge, eliminating
today's relatively modest trade barriers, could bring
extraordinarily large benefits to both countries.
According to a study by the Atlantic Council and the
British Embassy, the agreement would create 740,000 new jobs in
America. The Trade in Services Agreement, which we have not
talked about enough, is another big opportunity, a free trade
zone for services with 50 countries around the globe. This
agreement plays to one of America's strengths: U.S. service
companies are among the most competitive on the globe.
From the U.S. business community's perspective, the
negotiating objectives laid out in the TPA bill are balanced
and ambitious. They reflect the evolution in U.S. trade
agreements in recent years and include the best new ideas in
trade policy, and the bill strikes just the right balance on
intellectual property, which is the lifeblood of the U.S.
economy.
Negotiating objectives have been modernized to reflect our
changing economy, with new provisions on digital trade and
state-owned enterprises, for examples. Importantly, the bill
directs the U.S. trade negotiators to seek comprehensive
agreements, avoiding exceptions or carve-outs from those
agreements for any industry.
The Chamber supports the TPA bill's negotiating objectives
on currency practices. It says that parties to a trade
agreement should avoid manipulating exchange rates to gain an
unfair advantage. I believe the U.S. should continue to press
economies to adopt
market-determined exchange rate systems that reflect economic
fundamentals.
In recent years, the G-7 and G-20 economies have affirmed
that they will not target exchange rates or engage in
competitive devaluations, but the notion that you can use trade
policy tools to address monetary policy challenges causes
concerns in many quarters.
Here is one, for example. It is not in the U.S.'s interests
to enter into an international agreement that would handcuff
U.S. monetary policy and limit the flexibility of the Federal
Reserve to respond to an economic crisis. The TPA bill's
negotiating provision relating to currency reflects a careful
and reasonable balance.
The Chairman. Mr. Donohue, your time is up. I let you go
over a little bit. Can you wrap up really quickly?
Mr. Donohue. Oh, sure.
The Chairman. All right.
Mr. Donohue. I was going to go as long as I could, it is
just that----
The Chairman. I did not realize that. I would have
interrupted you earlier. [Laughter.]
Mr. Donohue. No. Thank you.
The Chairman. No, you are fine.
Mr. Donohue. In sum, this is a strong bipartisan bill.
There is nothing fast about the manner in which it was done, as
the chairman indicated. Given the careful balance in many
areas, we urge all of the members to vote for this and get it
through.
To conclude, the United States cannot afford to sit on the
sideline while others set the rules of trade. To create jobs,
growth, and prosperity, our children need us to set the agenda.
Two quick points. To open foreign markets to American-made
goods and services, we need to renew TPA. Then we have to use
the legislation to get these trade agreements. Those agreements
now being negotiated are going to make a fundamental difference
for this country. With all our trade agreements, old and new,
we need to ensure they are enforced.
Mr. Chairman, Senator Wyden, let me thank you for having us
here. We will now hear from the other side of the argument, and
then we can get down to a good discussion.
The Chairman. Well, thank you. We surely appreciate your
testimony, and we appreciate very much your being here.
[The prepared statement of Mr. Donohue appears in the
appendix.]
The Chairman. Mr. Trumka, we will allow you a little extra
time if you need it too. So we will turn to you now and hear
your testimony.
STATEMENT OF RICHARD L. TRUMKA, PRESIDENT, AMERICAN FEDERATION
OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS (AFL-CIO),
WASHINGTON, DC
Mr. Trumka. Thank you, Mr. Chairman. Before I start my oral
testimony, I would like to submit for the record my full
testimony----
The Chairman. Without objection.
[The prepared statement of Mr. Trumka appears in the
appendix.]
Mr. Trumka [continuing]. Bipartisan letters signed from the
House and the Senate urging the administration to do something
on currency manipulation, and an analysis of the Hatch-Wyden-
Ryan TPA bill by Ranking Member Sander Levin. I would like to
have those submitted for the record.
The Chairman. Without objection, they will be placed in the
record at this point, or immediately following your remarks.
[The submitted materials appear in the appendix beginning
on
p. 114.]
Mr. Donohue. Excuse me, Rich. Mr. Chairman, there are a few
materials, like my formal testimony and so on, I know that you
have----
The Chairman. We will put all of that in the record.
Mr. Donohue. Thank you.
The Chairman. You bet.
Mr. Trumka. I would like to start, Mr. Chairman, by
stipulating that Tom Donohue is an expert on presidents. He
goes back to Abe Lincoln's days, so he is ably qualified to be
an expert on those presidents. [Laughter.]
I want to thank you, Chairman Hatch, Senator Wyden, and
members of the committee, and my friend Tom Donohue. The labor
movement has been advocating for new trade policy for more than
2 decades, for strengthening labor and environmental
provisions, for reforming investment rules, for finding the
appropriate balance in regulatory measures and intellectual
property protections, for fair rules of origin, and finally,
for including meaningful currency provisions, among many other
issues.
Far from being opposed to trade on principle, we have
supported trade deals when warranted. Some examples would be
the Jordan trade agreement, the African Growth and Opportunity
Act, the Generalized System of Preferences, and the
reauthorization of the Import-Export Bank.
Key to reforming our trade policies, we believe, is
abolishing the outdated, unaccountable, and un-democratic fast-
track process. The Trans-Pacific Partnership now being
negotiated by our government includes 12 countries and about 40
percent of the world's GDP. The TPP is designed to be
infinitely expandable, so it could very well be the last trade
agreement that we negotiate, so it is especially crucial that
we get the terms of this one right.
Mr. Chairman, the idea that fast-track lets Congress set
the standards and goals for TPP--I am not talking about other
agreements, but for TPP--is an absolute fiction. The agreement
has been under negotiation for more than 5 years and is
essentially complete, so the instructions that you send them
will have no effect whatsoever.
Congress cannot set meaningful negotiating objectives if
the administration has already negotiated most of the key
provisions. I might also add, this would be the worst possible
time to pass fast-track for TPP, because the leverage that you
have left for those issues that are remaining is right now, and
you give that away if you pass fast-track legislation. Congress
will lose that crucial leverage over any remaining provisions
by agreeing to fast-track at this late date. The administration
has ignored Congress's direct instructions to negotiate
meaningful currency provisions and to reform the flawed
Investor-State Dispute Settlement process.
Granting fast-track now takes Congress out of the picture
until the agreement is complete. While all fast-track bills
have gone through the charade of listing negotiating
objectives, there have been no consequences when the
administration willfully ignores, or fails to achieve any or
all of those objectives.
America needs an entirely new trade negotiating authority,
not minor tweaks at the margin. The Hatch-Wyden-Ryan Bipartisan
Congressional Trade Priorities and Accountability Act of 2015
falls far short of doing that. Congress must not agree to fast-
track a fast-track bill right now, Mr. Chairman. The time
allotted between the introduction of the bill, hearings,
committee consideration, and floor action is really short, and
it is a sign that I believe that, if it had more time and more
people knew about it, more people, not less people, would
oppose it.
A new and effective trade negotiating authority must do the
following. It must ensure that Congress approves trade
agreement partners before negotiations begin; create
negotiating objectives that are specific to the individual
trading partners that we are dealing with, because they are all
different; ensure that Congress, not the executive branch,
determines whether the congressional trade objectives have been
met; ensure Congress has effective opportunities to strip
expedited consideration provisions from trade deals that fail
to meet congressional objectives, or to incorporate
congressional and public participation; increase access to U.S.
trade policy making, trade proposals, and negotiating texts for
Congress, congressional staff, and the public; and include a
broader trade and competitive package that addresses
infrastructure, training shortcomings, and reforms tax policies
to ensure that all--and I mean all--can benefit from trade.
A few comments about TPP, to the extent that we know.
Bipartisan majorities of the House and the Senate have insisted
that currency manipulation should be addressed, but the
administration has failed to include any currency provisions in
TPP. An Economic Policy Institute study said that the U.S.
could add as many as 5.8 million jobs to our economy by
eliminating currency manipulation.
On investment, legitimate and serious concerns have been
raised by both the left and the right about Investor-State
Dispute Settlement, yet the investment provisions of TPP have
not addressed any of those concerns.
On climate, without a border adjustment, TPP will not stop
manufacturers from closing up shops in the United States and
moving to TPP countries with no carbon-reduction scheme. In
fact, it will encourage China, not a member of this agreement,
to move dirty manufacturing plants to countries that are
partners to this and to send dirty products back here, to the
disadvantage of American producers.
On the labor side, the labor movement has been clear that
the status quo on labor, the so-called May 10th agreement,
needs further strengthening. The May 10th standards were first
steps towards leveling the playing field for workers, but they
did little to ensure timely and effective action.
Let me list some of the problems. The highly touted Labor
Action Plan in Columbia, combined with the May 10th language
protecting workers' rights, has been totally ineffective. Since
that plan has been signed, 105 workers have been murdered for
trying to exercise their fundamental worker rights in Colombia
since the Labor Action Plan was implemented.
Mr. Chairman, we have been told by USTR staff, their
general counsel, and their Assistant USTR for Labor told us
repeatedly that murder of trade unionists and violence against
trade unionists is not a violation of the labor provisions in
our FTAs.
So, when people say this is the highest standard yet,
talking about labor, you have to excuse me if I am unmoved or I
am unsatisfied when they tell us directly, without any
equivocation, that violence and the murder of trade unionists
for exercising their rights is not a violation of these
agreements. Now, we have asked for reasonable measures to
strengthen the labor chapter, but USTR has ignored those
requests. They are not there.
I would also say that the human rights language in the
Hatch-Wyden-Ryan bill is not binding. The fact that several
very serious human rights violators--Vietnam, Brunei, Malaysia,
and Mexico--are already in the TPP demonstrates that the fast-
track objectives are ignored or irrelevant.
In sum, to get this thing right, Congress should not be
constrained by misguided secrecy, or speed, or unaccountability
of fast-track. We really urge Congress to reject the outdated
and undemocratic process known as fast-track and develop
instead a new trade negotiating authority for the 21st century.
This is going to affect 40 percent of the world's GDP. It may
well be the last trade agreement that gets negotiated, and the
lives of workers are at stake, and the livelihoods of workers
are at stake here. It is important that we get it right.
I can understand our friend Tom advocating for fast-track
and TPP. His members have benefitted by it, benefitted greatly.
But the average working folks in this country have not, and we
need a different deal. We need to have something that really
works on our behalf and protects the lives of trade unionists
from being murdered, or having violence perpetrated against
them, and not be told that it does not--does not--violate a
trade agreement.
Mr. Chairman, thank you for the opportunity to speak here
today, and I look forward to working with you and Senator Wyden
to strengthen this piece of legislation to make it better for
the American worker.
The Chairman. Well, thank you. Thank you, Mr. Trumka, and
thank you, Mr. Donohue. We appreciate both of you. We know you
are busy people. We also know that you are very sincere people
in your respective areas of the law.
Senator Wyden, let us turn to you first.
Senator Wyden. Thank you very much. Mr. Chairman, I
indicated I want to let my colleagues ask their questions. I
just want to make one very quick point. Mr. Trumka, with whom I
agree so often, suggested that there would be insufficient
public scrutiny of TPP. Colleagues, under this legislation, by
law, the American people will have TPP in their hands for 2
months before the President signs it, and months more before it
is fully debated on the floor of the House and the Senate. So
with that, I want to let my colleagues ask their questions.
The Chairman. Well, maybe I will take back my right to ask
questions at this point.
Mr. Donohue, as you noted in your opening testimony, and as
I have been saying for years now since Trade Promotion
Authority expired in 2007, other countries, other competitors
in the world marketplace, have not been resting on their
laurels when it comes to trade.
Indeed, there are hundreds of free trade agreements around
the world that are currently in effect or under negotiation,
and the U.S. is a party to relatively few of these agreements.
In your opinion, what is the cost to the United States if we
refuse to pass new trade agreements while our competitors press
forward with their own?
Mr. Donohue. Well, long-term refusal--and we have been at
it for a while--to pass new trade agreements will basically
provide markets across the world to our competitors. It will
cost American workers an ever-growing number of jobs, it will
have a measurable effect on the economy in the United States,
and it will make us far less significant in the geopolitical
and economic affairs of the world.
This is the equivalent of going out and resigning from the
rest of the world. We are going to say that none of this is
important in terms of how we get our children and grandchildren
into the economic system? We are going to say none of this is
important in terms of what effect we are going to have on the
general affairs of the world?
And most of all, Mr. Chairman, 95 percent of the people--
and we all agree to this--whom we want to sell something to do
not live in the United States. That is no reason to put
together agreements that are totally irresponsible, but it is a
reason to get out there in the marketplace and compete as we
have since our founding. A failure to compete is a resignation
from the global economy, and the results would be one of the
great tragedies of our time.
The Chairman. Mr. Trumka, let me ask you a question.
According to the USTR, average wages in export-intensive
industries in the U.S. are above those in non-export-intensive
industries. USTR also tells us that ``with every $1 billion in
services exports supporting an estimated 7,000 U.S. jobs,
expanded services trade globally will unlock new opportunities
for Americans.'' According to recent Bureau of Labor Statistics
data, close to 12 percent of those employed in service
occupations are represented by unions.
So, Mr. Trumka, the administration's data tells us that the
free trade agreements under consideration will expand exports
and create more jobs in export-intensive industries, including
services. In turn, that means more jobs in sectors with
significant union representation and higher wages.
With this data provided from a Democratic, union-friendly
administration, why do you oppose agreements that can expand
your membership and, more importantly, generate good-paying
jobs, including many union jobs for middle-class workers?
What are your thoughts on that, Mr. Donohue, after Mr.
Trumka finishes?
Mr. Trumka. Well, first of all, I would like to comment on
the last question that you asked Tom.
The Chairman. Sure.
Mr. Trumka. This is not a choice between TPP and no trade,
where, if we do not get TPP, we get no trade. That is the way
you made it sound, and that is the way he answered. There is a
lot of distance between there. What we are saying is, let us
have a good trade agreement that really does benefit people.
Look, the statistics that you quoted will also tell you,
for every billion dollars in trade deficit--and we have about
$500 billion of trade deficit a year--there are several
thousand, almost 15,000 jobs, lost per billion dollars of trade
deficit. Now, each one of the trade agreements that we have
signed so far has encouraged out-sourcing and increased that
deficit. It is sustaining--$500 billion a year takes jobs out
of the country.
I wish we could reverse that and bring it back. I swear, I
do not know where Tom got his figures earlier that we have a
surplus, a trade surplus. To have a trade surplus is no figure
that I know of, because goods and services and everything else
has been in deficit. So, with a good trade bill, Mr. Chairman,
we could create jobs, and it could benefit everybody.
But currently the TPP, as constituted, is not that bill. It
does not address currency, it does not address the investment
provisions, it does not address the labor provisions, and it
does not address the environmental provisions. It does not
address ``buy American'' provisions. There are a number of
other things that we have listed to try to make this agreement
into something worthwhile.
We have worked for 5 years to try to make TPP an agreement
that the American worker could benefit from, and precious few
of our suggestions--fewer than you can count on one hand--even
made it into the U.S.'s proposal to our trading partners.
Obviously you cannot achieve something if you do not even
propose it and negotiate for it.
So I would love to work with you to create something better
than TPP, but a lot better than nothing, because there is a lot
of room between that. To imply that, if TPP is not passed, we
are not going to do trade is just a misrepresentation, I
believe.
The Chairman. Well, thank you. My time is up. I am sorry.
Senator Cornyn?
Senator Cornyn. Thank you, Mr. Chairman.
I come from a State that, in 2013, counted an estimated 1.1
million jobs associated with trade. Just the binational trade
with Mexico is estimated to support as many as 6 million jobs
in the United States. In terms of its impact on small and
medium-sized businesses and the people they employ, 93.1
percent of the trade jobs were in small and medium-sized
enterprises with less than 500 employees.
I actually believe that one reason why Texas has done
better than the rest of the country, in terms of its economy
and jobs, has in large part been because of trade. We have led
the Nation in overall exports since 2002 in beef, cotton,
petrochemicals, machinery, and high-tech electronics. In 2014
alone, Texas manufacturers and farmers set new records of
exports with nearly $290 billion worth of merchandise to buyers
around the globe.
So I believe that this Trade Promotion Authority proposal
that we will mark up tomorrow represents real progress. The
challenge I think we have is that, absent Trade Promotion
Authority or so-called fast-track authority, we are left with
negotiations on behalf of 535 individual members of Congress,
which is just not feasible.
What I worry about--and, Mr. Donohue, you have alluded to
this--is what happens if we do not engage with Asia as on this
Trans-Pacific Partnership proposal, which we have not seen, by
the way, Mr. Trumka. I am looking, waiting to see what the
contents of it are, because I do believe that the impact of
trade does not fall uniformly. There are things we need to do,
and there are things we will do with Trade Adjustment
Assistance authority to help people who are dislocated as a
result of trade learn new skills and earn higher-paying jobs.
But, Mr. Donohue, what would be the consequences to the
United States long-term if we do not do this and, let us say,
countries like China step in to fill the void?
Mr. Donohue. I think it is important to first recognize,
Senator, that we are the largest manufacturer in the world. We
are the most significant economy in the world. But that reality
of what is going on around the world sees large--very large--
economies getting more efficient, more productive, and more
engaged with one another on trade.
If we are not major players in the trading affairs of the
world, it will have a fundamentally negative effect on our
economy, on jobs in the United States, and on our influence
around the globe.
Now, Mr. Trumka is a very passionate representative of his
ideas. I would say just for the record, Mr. Chairman, all of
our numbers on jobs from this deal or that deal come from the
Commerce Department. When I was talking about the significant
benefit in jobs in recent trade agreements, it is very, very
clear.
But I think there is another point that we should all look
at, if you would allow me to make a point. The jobs that are
lost in the United States in manufacturing, the great
percentage of them, they go to two countries. They go to a
country called efficiency and a country called productivity.
The American business system, which is the most efficient
in the world, has taken 40-plus percent of the jobs out of the
manufacturing process because of information technology,
robotics, process engineering, and supply chain management.
Those 40 percent of the jobs are never coming back.
But the way we get the jobs back, which Mr. Trumka wants, I
want, and we all want, is we do two things. Number one, we
encourage others to come here and produce their products. You
could go around this country today, and you would find
representatives of Europe looking for places to build their
factories, simply because their energy is three times more
costly than ours.
The second thing that we need to do, in a fundamentally
efficient way, is go out and produce more things in our
manufacturing plants and in new manufacturing plants that we
would build, and export them around the world. Those are the
only ways to expand manufacturing jobs in the United States.
Senator Cornyn. Mr. Chairman, I was not here when the North
American Free Trade Agreement was negotiated, but I can tell
you, in my State it is viewed as a net positive for that region
of the country, as the Central American Free Trade Agreement
is.
But part of the consequences--I would just close on this
point--I have visited with Senator Kaine down in Honduras
recently. You remember the influx of unaccompanied minors
streaming across our borders and moving into the United States.
Our failure to help our neighbors provide, not only security,
but also to help grow their economy where they live does have
residual impact on us in ways that perhaps we do not even
recognize.
So I appreciate the great work that you and the ranking
member have undertaken on this and look forward to supporting
the TPA in tomorrow's mark-up.
The Chairman. Thank you, Senator Cornyn.
Mr. Trumka. Mr. Chairman, might I comment to Senator
Cornyn?
The Chairman. Sure.
Mr. Trumka. Senator, you indicated that we would have to
have 535 different agreements without fast-track. That again
is--there is a whole lot in between there. I have suggested the
following things to improve Trade Promotion Authority: ensure
that Congress approves trade agreement partners before the
negotiation begins; create negotiating objectives that are
specific to each one of the trading partners, because they are
different; ensure that Congress, not the executive branch,
determines whether the congressional trade objectives have been
met; and ensure that Congress has effective opportunities to
strip expedited consideration provisions from trade deals that
fail to meet congressional objectives, or to incorporate
congressional and public participation. We also think that we
ought to integrate this with the rest of the things necessary
to make trade work: infrastructure, training, and tax policy.
So it is not that we are saying you cannot have it, or that
you should not have it, we are saying this one, the one that
you are considering, abrogates too much power. You give too
much power away, and you have no control, particularly over
this agreement that is almost completely negotiated.
Mr. Donohue. Mr. Chairman, we all recognize that a
negotiation is a give-and-take. You have experienced it here in
your own committee in recent weeks as you, working together,
have come up with a bill. That is exactly what happens in a
trade negotiation.
The fundamental reality is, we are in a new time. If we
fail to inject ourselves at the right time, and in a
significant way in this trading process, those other large and
growing countries are going to do it on their own.
I know everybody believes America is so essential, because
they are, because of technology, because of our value system,
and so on. To keep that position, we have to enter into these
agreements. We do not have to give away our value system--we
have to deal with the things that are important--but there is
no way that we can tell everybody else, look, just wait about
10 years, we will get our stuff together, we will think about
it, we will work on it. We have to have an expediting system.
We have to have a system that lets the people who do this every
day all day, professionals, bring you the results based on what
you have told them you want. But tomorrow is too late. Today,
it is time to move on these issues.
The Chairman. Well, thank you.
Senator Schumer?
Senator Schumer. Thank you, Mr. Chairman. Thank you for
holding this discussion today. I thank our ranking member for
pushing hard to get it. I want to thank both of our witnesses.
Mr. Trumka, my belief is the greatest problem America faces
is the decline of middle-class incomes. It is harder to stay in
the middle class, harder to gain the middle class. I know of
almost no one who has done more to try to reverse that trend
than you, and thank you for your good work across the board.
Mr. Donohue, thank you for your strong advocacy and
leadership. We have worked together on many issues, immigration
above all, but also export-import infrastructure, and, most
important, you are from St. Therese's Parish in Brooklyn. So,
it is good to have you both here.
Well, look. We know the administration, when they try to
sell me on TPP, it is almost the geopolitics that prevails over
the economics, that we want to keep these countries in our orb
rather than China's orb. If there is an economic web between
them and China and not one between us and them, it is hard to
do that. I agree with that. I agree with that goal.
With that said, though, if that is one of the main goals of
TPP, to lure countries away from China's influence, it makes
perfect sense, as part of the overall effort within TPP or
alongside TPP, to deal with China head-on to show them that
this is not business as usual. China is our most rapacious
trading partner. None of the other countries in TPP do what
China does, which is, not only do they manipulate their
currency, which has cost us millions of jobs and trillions of
dollars of wealth unfairly flowing from us to them, they steal
our intellectual property. That has been documented over and
over again.
And probably worst of all, when we have a good product,
they do not let us in. We are at a new phase. We are doing
high-end manufacturing, high-tech stuff. That is our hope and
our future. We have already had the competition with China on
furniture, toys, and clothing, sort of low-end stuff.
But if they start stealing our intellectual property in
these areas, and then they keep us out or they force us to join
joint ventures that are 51-percent Chinese government-owned and
take all that information to build their own industries from
their protected market and then compete with us, I do not know
of anything that is more frightening to me. That will constrain
the thing that I believe is so important, which is to get
middle-class income going again like it was in the grand era of
America from 1950 to about 2000.
So I think we can do two things, and I know what China
does. Let me say, small companies, big companies--I had a small
company in upstate New York; they needed a material from China,
rare earth, 500 jobs. The Chinese told them, if you want those
rare earths, you have to make your product in China.
The guy said to me, I know that is against WTO, but I
cannot spend 5 years not having the goods and going to court
through the long WTO process. Then I spoke to the Business
Roundtable--I guess just about every one of them is one of your
members--and I told them that I thought China does not play
fair and it is hurting our big companies. That is why we need
currency legislation. We need to do more against China
alongside, within, TPA.
The position of the Business Roundtable is against that.
That is six, six of the major CEOs, all of whom you know, Mr.
Donohue, and we all know, who came to me and said, keep doing
it. We cannot say anything, because China retaliates against us
if we say a thing. We need that big market. I appreciate that.
If I were CEO of one of these companies, I might do the
same thing. But they said, you keep it up. So my goal here is
to do something about China, the most rapacious of our trading
partners.
Frankly, I am disappointed. I was very disappointed in the
efforts of President Bush, and I am disappointed in the efforts
of President Obama. I have dealt with five Treasury Secretaries
on this issue of currency, in particular from Snowe on, and
none of them has done anything.
So this mark-up is a unique opportunity to stand, to do
something about the rapaciousness of China trade. It is the one
point in time throughout this TPP process where Congress will
have the opportunity to show, to China and the world, that it
is not business as usual, because they are just killing us.
They are just taking everything from us, and not in a fair way,
in a WTO non-compliant way. They just thumb their nose and say,
take us to WTO.
So I say to my colleagues, now is the time, if there ever
was one. If not now, when? We have been trying for a long time.
This is a unique opportunity to do something about China. Some
of us are against TPA, other people are for it.
But we can all agree--we had 60 people, as Mr. Trumka
mentioned, sign a letter saying we ought to do something as
part of this process with China, and I hope we will. I hope we
will. We cannot have weak tea. Anything that is just
discretionary, that just says, well, the administration could
do something against China if they wanted to--I have been
through the wars on this one.
I have tried every administration. I have spent hours with
every Treasury Secretary, and they never will say China is a
currency manipulator because the geopolitical forces are too
strong the other way. So, unless we have something stronger
than just giving to any administration, not just this one, more
tools, it is not going to work. So I hope we will do something
on currency, and I know you feel that way.
So my quick questions to each: Mr. Trumka, how do you feel
about currency manipulation as part of this; and, Mr. Donohue,
not on this particular bill, which I know you are strongly for,
but do you believe we should be doing something on currency
manipulation, that it is a problem here for our country,
China's currency manipulation?
Mr. Trumka. EPI says that currency manipulation alone costs
this country 5.8 million jobs. If we eliminate currency
manipulation, we have a chance to gain almost 6 million jobs.
We strongly support that and think it needs to be part of the
agreement.
I would also say, though, Senator Schumer, that some of our
partners in TPP have been identified as currency manipulators.
Malaysia, Japan, and Singapore have been identified as currency
manipulators as well.
Senator Schumer. I know. My bill just applies to China,
though.
Mr. Donohue?
Mr. Donohue. Senator, we have debated many subjects, but as
we know, the China card, so to speak, is an issue that we will
be dealing with for many years. It is complicated by serious
problems in China as well, economic problems.
My view about this bill is that there is a very serious
attention to currency, as there should be, and it is at a point
where I would encourage moving ahead without major amendments.
In terms of dealing with currency outside the bill, there are a
lot of things here that are important.
Mr. Trumka said Japan is a currency manipulator. Well, they
sure were back then, but they have not been for a long time.
People would accuse the United States of currency manipulation
when we were dealing with the crises of the recent years, when
we were handling and managing our interest rates and other
factors that came out of the Fed.
The specific challenge that you raise about China is one
that we will deal with for all of our lifetimes. I am very
willing and very anxious to talk about other opportunities
beyond this agreement to get the facts straight, to look for
ways to apply more, I will not say aggressive, but more
successful, pressure on these issues. I understand the point
about the theft of intellectual property.
I would make a point that we are making a little progress,
but surely not enough. I understand what happens when they
decide to make a product and do not need us any longer. The
China issue needs serious discussion. We would like to be a
part of it. I do not think at this date and this time you can
go beyond what we are talking about on currency in this bill.
Senator Schumer. Thank you, Mr. Chairman.
The Chairman. Well, thank you, Senator Schumer. I want to
make it clear that I believe this is a serious issue.
Senator Schumer. I know you do.
The Chairman. I do not think it should be part of this
agreement, which has been very, very fastidiously worked out.
But I am willing to hold hearings and do appropriate work after
we pass this bill, if we can get this passed with everybody's
cooperation.
Senator Schumer. Thank you, Mr. Chairman.
The Chairman. Senator Cantwell, you are next.
Senator Cantwell. Thank you, Mr. Chairman.
I am always struck, when you two gentlemen are before the
committee, that there are many things that you actually agree
on. Workforce training and Ex-Im Bank seem to be two of those.
Do I have that right?
Mr. Donohue. Yes.
Mr. Trumka. Yes.
Senator Cantwell. So you are both supportive of apprentice
programs for job training?
Mr. Donohue. We do not have enough of them. The private
sector spends something in the area of $60 billion a year on
it. The public sector--and Rich and I have talked about this.
There will have to be a bill for job training and Trade
Adjustment Assistance to follow all of these trade deals, but
we really believe that has to be thought out more. We are doing
old things in job training. We can do new things to train
people for new industries, but we both agree we need to do
those things in the private sector, and in the public sector.
Senator Cantwell. Well good, because we are proposing some
new things. But I definitely am a big supporter of TAA and do
not think that we should be doing TPA or TPP without it. But,
Mr. Donohue, could you please tell the Republican presidential
candidates that they are wrong about the Ex-Im Bank?
Mr. Donohue. Well, thank you. Let me say, Senator, we do
not do presidential politics. We do every other kind but----
Senator Cantwell. All right. Do you think people who----
Mr. Donohue. Wait. Wait. We talk to people who are in the
public world about presidential policies, and you are damn
right we tell them.
Senator Cantwell. That the Ex-Im Bank should be passed?
Mr. Donohue. I have told probably three of them myself, and
we have a little plan to have a visit with some of these people
in the normal course of business and point out what the bank
means to this country and to American industry, and
particularly the thousands and thousands of small companies.
Senator Cantwell. Well, I just want to say, with my time,
that I come from a big manufacturing State, and it has a lot of
labor members in it, and it has a lot of people who support
trade. In fact, probably 1 in 3 jobs are related to trade.
Mr. Donohue. At least.
Senator Cantwell. So I support having more bilaterals,
multilaterals, because a bunch have been done while we have
been sitting around not having TPA. But at the same time, I
believe that we have to have these tools that work together,
like the Ex-Im Bank and like Trade Adjustment Assistance and
investment in apprentice programs and the things that go along
with this. So I just hope that we can get our colleagues here
to understand that it is both, and I think you hold a lot of
punch to make sure that we get these things done.
Otherwise, then it is only shareholders at the top level
benefitting from these deals and not working people. I think
that I would put up our manufacturing skills against anybody in
the world.
Mr. Donohue. Best in the world.
Senator Cantwell. And I also do not apologize for our
country being a leader in aerospace manufacturing and making a
great product that is worth hundreds of millions of dollars.
When people talk about Boeing being a lot of the Ex-Im Bank, it
is almost as if people want us to apologize that we do not make
a lot of tchotchkes and ship them over to China for them to
buy.
We are lucky we make a very expensive product with a lot of
skilled workers, and we want people to buy those planes, so I
just hope people will stop and realize for one second that
aerospace manufacturing is a lot of jobs in the United States
of America.
Mr. Donohue. It is a bad thing to make predictions, because
then the people you want to work hard let up. The things that
you have raised, the issues of job training and some of the
related issues there--and we could talk about community
colleges and all of that--and the thing you raise on the bank
are issues that we are pushing very hard, and I feel that we
are going to get there.
Senator Cantwell. Thank you.
Thank you very much, Mr. Chairman.
The Chairman. Thank you, Senator Cantwell.
We are going to turn to Senator Stabenow next, then Senator
Warner right after Senator Stabenow.
Senator Stabenow. Thank you very much, Mr. Chairman, and
thank you for the hearing. Thank you to both of our witnesses.
I feel, when we are talking about trade, we always need to
start by saying that we are in a global economy, we know we are
going to trade, so this is really about whether we are
exporting our products or our jobs. It is a question of policy.
So we either have something that means we strengthen the
middle class and it is a race to the top and we bring other
countries with us, workers with us, or it is a race to the
bottom. I will never forget sitting in Greenville, MI with a
company that was making refrigerators a number of years ago
when we were trying all kinds of ways to keep them in western
Michigan.
Finally, they turned to us and said, you cannot compete
with a buck fifty-seven an hour in wages, sorry. I mean, this
cannot be a race down to that; this has to be a race up. So
fundamentally, when we are talking about fast-track, let us
talk about fast-tracking the middle class so that we can make
it a race up.
One of those issues is very much currency manipulation. I
know my colleague, Senator Schumer, has talked about this,
others are talking about this as well. Senator Graham and I
authored a letter with 60 members of the U.S. Senate. That is a
pretty magic number, 60 members, who said that we wanted trade
agreements to include enforceable currency language. It needs
to be in TPA; it needs to be in TPP.
But I am wondering, Mr. Trumka, if you could talk--I know
you have talked about currency, and the importance of enforcing
it, but talk more about what this means in terms of jobs,
because, from the numbers I have seen, we have lost millions of
jobs because we have not enforced against China, or back when
Japan was doing it, and they could do it again. So, it seems to
me that is a very important part of enforcement.
Mr. Trumka. Absolutely. EPI did a study, and it estimates
that correcting currency manipulation would create 5.8 million
jobs in this country. That is almost 6 million jobs with
currency manipulation being corrected. If one of the reasons
you want to vote for TPP is because you want the U.S. to be a
world leader, well, China is excluded from this agreement.
China is a leader in that area, and will continue to lead with
currency manipulation, and we do nothing about it.
TPP will not change the rules for currency manipulation
between us and those trading partners or China and those
trading partners. It is going to have a dramatic effect and
cause a continual drain of jobs. Everything that you gain in
this agreement by reducing tariffs and other things can be
obviated overnight by people manipulating their currency.
I want to say this, Tom. I want to put your mind to rest,
because I do not like you to worry. The actions of the Federal
Reserve do not constitute currency manipulation, according to
the IMF test, so you do not have to worry about that, and that
canard can be put to sleep for a little while.
Mr. Donohue. Rich, what I said, to be specific, is that
others would accuse us, because of the use of the Fed to
support us during the crisis, of manipulating currency.
Mr. Trumka. But you agree it is not currency manipulation.
Mr. Donohue. I agree that it is not in standard terms, and
people recently have come out and tried to agree within the
international organizations that going ahead and dealing with
interest rates that way would not be manipulation, and they did
it because all of Europe has now begun to do that to try to
save their own economy.
Senator Stabenow. I think the debate really is, again,
foreign currency issues versus domestic. We have economists
from the right and the left who have said, well, it has been
done here with the Fed. It is not what we are talking about
when we are saying ``currency manipulation.''
I can just say, as we approach not just TPA, but after this
TPP, the ability to open up with Japan, which right now is
closed--I grew up with a father who had a car dealership, and
my grandpa. They could not put a car dealership in Japan. They
could not put cars in Japan from the United States, cars made
in Michigan, in Japan right now. So we are trying to open that
up.
But one of the great concerns I have is that we see
Japanese automakers who have made their whole profit in the
past based on currency manipulation. Now, let us compete fair
and square. That is what I am very concerned about as we move
forward in all these trade agreements.
Thank you very much, Mr. Chairman.
The Chairman. Senator, your time is up.
Senator Warner?
Senator Warner. Thank you, Mr. Chairman.
Gentlemen, it is great to see both of you again. I guess I
want to make a couple of points. One, I do fear at times that
the analogies back to NAFTA--thank goodness we are in a
different world at this point. America is much more competitive
on manufacturing. American energy costs, because of things that
you again both have supported, like Keystone and others, make
us more competitive.
I think having a trade agreement strengthens our hands in
terms of attracting jobs. One of the things that Senator
Schumer and Senator Stabenow mentioned was currency
manipulation, and I think it needs to be addressed.
The curious thing is, on currency manipulation, at least in
the way I read Senator Schumer's bill, again, this will be a
prospective tool. But Japan would not be in violation right now
on currency manipulation. There is even a question of whether
China would with its current actions.
Now, should we add more tools to our tool kit going
forward, as a country that has lost money against companies in
China, which has manipulated currency? Absolutely. Which has
stolen our intellectual property? Absolutely. But the notion of
doing nothing right now and continuing the status quo would be
a disaster for America vis-a-vis China and vis-a-vis the
region.
I would point out to my colleagues, and I wish Senator
Schumer were still here, because most of his argument, until he
got to currency, was actually, you could argue, in favor of TPA
and TPP, because clearly America's position has weakened, and
it seems to be retreating.
I would point out the New York Times article Saturday that
points out the fact that we as a Congress have not taken up the
IMF reforms, that we as a Congress have not ended up doing
Export-Import Bank, that the Chinese have started to create a
brand-new financial institution that is focused on Asia but
ultimately could contest America in terms of the dollar as the
reserve currency. These are things that, if we want to truly
protect American jobs, we ought to be worried about.
So what do we do? Well, there is 40 percent of the world we
are talking about here. China is not part of TPP. Who is going
to set the framework for that region? I believe it ought to be
American-led, and I think the work of the chairman and the
ranking member, both in terms of the added transparency, added-
on intellectual property rights--and I get the fact that the
standards are not as strong on environment and labor as you
would like, but at least they are standards, and I believe they
are standards that can be enforced, which has not been the case
in the past.
If we take these 11 nations and combine them in what I hope
would be an American-led trading entity, this will give us an
ability to actually increase our leverage vis-a-vis China,
which, long-term, I believe we have to watch on every count, in
terms of intellectual property theft, in terms of trade
advantage, in terms of currency.
But let us not miss the opportunity for America to once
again reassert its national and international leadership in
trade, and in a way that I believe will actually increase jobs,
increase job opportunities. My fear is that re-fighting the
battles of the 1990s in 2015 is not the format we ought to be
looking at.
Let me just close with one question for Mr. Donohue,
although, Rich, you can come back at me as well.
Mr. Trumka. I would like that.
Senator Warner. All right. ISDS. We have folks, members of
the Senate, who are saying this could open up a whole new can
of worms. Ambassador Froman has said repeatedly that it does
not, that there are prudential exceptions in the ISDS language
as put forward. This is a tool that has not been used a lot in
the past. There is some question that it is being ramped up and
potentially could undermine our labor, environmental, and other
laws.
Do you want to make a comment on that, Mr. Donohue? And
then, obviously, Mr. Trumka gets the last word.
Mr. Donohue. Senator, it is an issue that cannot stand the
argument. I mean, it is so much stronger than the argument when
you look at it. There are 3,000 trade agreements that have
these provisions. We have never lost--never lost--one of these
issues. They have no authority to impede on Federal law.
If we ever lost a negotiation, it would be the case that
somebody would have to pay them money. But it has been in trade
agreements. It provides a rational way to address issues. The
only reason anyone would bring this up as a reason not to do
what we are about to do here is because they did not want to do
it. This argument does not carry water.
I think it is very important to understand something. I
respect people--Rich and I disagree 80 percent of the time, but
we get along pretty well, and I respect his positions. But what
is going on here is that the people who do not want to do the
trade bills, under the current circumstance, would like to stop
this bill, and it is the only way they could do it.
I think to leave those trade bills on the side of the road,
to deny, as the Senator from Michigan said, the opportunity to
create lots more serious jobs in manufacturing and to sell to
that 95 percent of the people around the world who want to buy
our stuff, would be a serious mistake. I respect Rich's really
strong views here, but I am telling you, he is going to have a
hell of a lot more members if we do these deals than he is if
we do not.
The Chairman. All right. Senator, your time is up.
Mr. Trumka. May I respond, Mr. Chairman?
The Chairman. Sure. Of course.
Mr. Trumka. First of all, Senator, this is not, again, an
issue about doing nothing or having TPP. This is about making
TPP worthy of every American, and not just Tom's members,
because they are going to do really fine. No matter what, they
are going to do fine, but it is everybody down below who is
not.
When you say, oh, these are some standards and they are
better than no standards, we were told by the USTR general
counsel that murdering a trade unionist does not violate these
standards, that perpetuating violence against a trade unionist
does not violate these agreements. Excuse me. Excuse me if I am
not willing to accept that standard, because I think the
country can do better.
With regard to ISDS, look, this is a special privilege for
companies. No individual gets access to ISDS. Tom, we have not
lost a case yet. We won a couple by technicalities that we
should have lost.
There was just a case in Nova Scotia 2 weeks ago, a stone
quarry. They wanted to expand a stone quarry, and all around it
was an environmentally sensitive area. They denied the permit
to expand the stone quarry. The ISDS panel said, ``You are
entitled to damages.'' They are going to collect because they
did not get an extension of their boundaries into a sensitive
environmental area.
This will affect food safety, it will affect the
environment. It affects trade unionists, I can tell you that.
This is a secret tribunal that you cannot control, because,
once you give them instructions, once that panel is in place,
they have the absolute power to do what they want to do, and
they have interpreted the language that you have given them--
fair and reasonable economy--beyond any stretch of the
imagination.
So, Senator, we can do a lot better, and American workers
deserve a lot better, than what we are getting with TPP or with
this version of fast-track.
The Chairman. Senator Casey?
Senator Casey. Thank you, Mr. Chairman. I appreciate the
hearing.
I thank Mr. Donohue and Mr. Trumka for being here. I
especially want to note Mr. Trumka's Pennsylvania roots. He is
using that Villanova law degree today, right?
I am grateful for the opportunity, because it is important
that we debate this, even an issue that tends to divide the
country and even divides both political parties between and
among themselves at times.
My concern here, with both Trade Promotion Authority and
TPP, the trade deal itself, is the same concern I had about
NAFTA and every other agreement since then: what is the impact
not just broadly on Pennsylvania, that is my first priority,
but in particular, what does it mean for workers and wages?
Unless it can meet the test that I set forth with regard to
workers and wages, it is very difficult for me to support
either Trade Promotion Authority or the trade deal itself.
Let me focus, first, on wages. I would argue, and in a very
similar way to what Senator Schumer said about the middle
class, that our central challenge as a country, at least our
central domestic challenge, is, how do we solve this wage
problem?
There was a recent report by the Economic Policy Institute
which very graphically, and in a very alarming manner, set
forth the correlation between wages and productivity--post-
World War II, basically 1948 to 1973, almost perfect alignment.
So if productivity was up as it was in those years 97 percent,
wages went up 91 percent. That is the way it ought to work.
Since 1973, for a whole variety of reasons, not simply
because of trade obviously, but certainly trade, I believe, is
a substantial factor, we have in the United States of America
productivity up 74 percent in those 40 years--1973 to 2013--
with wages up 9--not 91--but 9 percent. Neither political party
has come up with an answer to that central challenge.
Part of this debate, I think, or I should say part of the
resolution of that problem, is what we do on trade, though it
is not the only part of the solution. So we see now that a
recent paper by economists at the University of Pennsylvania,
as well as other universities, found that when workers are
displaced by trade and they switch jobs, they suffer real wage
losses of between 12 and 17 percent.
So I guess, Mr. Trumka, I would ask you--and some of this
you set forth in your testimony--what is the best approach in
terms of using our trade policy to address this wage problem or
lack of wage growth?
Mr. Trumka. Well, first of all, you have to get it right on
trade authority, the fast-track authority. I have laid out a
series of things that would make it right so that Congress has
more control and can actually certify when they believe that
the objectives have been met.
Then, when you look at it, we have laid out a whole
chapter. In fact, we worked with the European Union in
anticipation of TTIP and laid out an entire chapter about how
to make labor standards better so that we do not destroy their
standards in Europe or our standards here, and I would love to
submit that to you.
Senator Casey. Thanks very much.
I want to say for the record as well, you say, in the
section of your testimony at the very end about labor, and I am
quoting here, ``When you analyze the so-called May 10th
provisions and how they have fallen short''--I think very few
Americans, very, very few, a very tiny percentage of Americans,
know the story about what has happened in some of these
countries to trade unionists. The number of murders in
Colombia, you said, was 100 and----
Mr. Trumka. Five.
Senator Casey. A hundred and five. That is evidence enough.
But even if it does not rise to the level of the gravity of a
murder, just the intimidation and the threats and the failure
to have any kind of enforcement mechanism in place, what are we
doing about that? I think virtually nothing, as a country. So
that is where I think your proposal, as it relates to giving
Congress more of a role in terms of weighing in on who these
trading partners are and who gets into our agreements, is a
pretty reasonable and appropriate approach.
I know I am over time. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Menendez is next.
Senator Menendez. Thank you, Mr. Chairman.
Let me say at the outset, I think we all have the same goal
in mind, and that is jobs for our families and markets for our
businesses that together build a stronger American economy.
Trade may offer some new opportunities, but it also brings its
challenges.
We talk about breaking barriers to trade, or ending
barriers to trade, but I have a broader view of what those
barriers are than just simply tariffs and regulations. For
example, lower labor and environmental standards abroad make
foreign workers with fewer skills less expensive than highly
skilled American workers with greater expectations for higher
living standards. I think the failure to protect our
intellectual property in other countries leads to cuts in the
value of our investments and the value of our products in
international markets.
So, at the end of the day, for me, I have not just had a
knee-jerk reaction against all trade bills. I have voted for
some when I thought the balance was right. But for me, trade
bills have been about protecting and providing opportunities
for my State's workers and our businesses, in a world where
competition is not always fair and it is not always open. It
seems to me that we should judge the standards we set for any
trade deal and the deals themselves on how well they deliver on
those priorities.
So with that, let me ask you, President Trumka--I heard
your comments in the office when I was getting ready to come,
and I know you are very passionate about workers' rights. I
think a barrier to trade is also the inability to enforce the
provisions of our trade agreements, which I think have sadly
not gone in the direction that I would like to see. Those
include the provisions of trade agreements as they relate to
negotiated labor standards.
So can you talk a little bit--you started with my
colleague, Senator Casey--about Colombia, about the lack of
enforcement mechanisms, and would you support an amendment that
would mandate that all countries must meet negotiated labor
standards prior to any new trade deal going into effect with
them, in other words, to verify before we trust countries with
lax labor standards?
Mr. Trumka. I would. The other thing I would suggest right
off the bat is that the wage standard that is talked about in
most of the trade agreements, including TPP, is the minimum
wage. It does not talk about anything beyond the minimum wage.
Vietnam's happens to be 65 cents an hour.
The lack of enforcement is one of the major problems of
labor standards and environmental standards. The May 10th
agreement was a step in the right direction, but it does not
get us there. The truth is that the Guatemalan situation, where
we are dealing with gross violations of the ILO standards, has
been going on for 6 years now with no end in sight.
Colombia--we have had 105 trade unionists killed since the
labor action plan was put into place, and there is nothing that
they can do about it. That is why, Senator, getting the rules
right now is so important, because no matter how great the
enforcement, if the rules that you have are inadequate, no
matter how great the enforcement, they do not get you there.
The rules or the standards that are being told to us that
are in TPP are inadequate to protect American workers and
discourage American manufacturers and employers from sending
jobs offshore. So we are all for enforcement, and I am sure Tom
would agree that we want to eliminate every one of the cheaters
that we can, but if you do not have the standards to enforce,
you cannot get the job done.
Senator Menendez. Well, I agree you need the right
standards. But even when we have had standards that some of us
might agree to, we have not had the enforcement mechanisms that
actually pursue it.
Mr. Trumka. That is correct. That is absolutely right.
Senator Menendez. Let me ask you this, President Donohue. I
have long advocated for strong intellectual property
protections in any trade deal. Does the Chamber believe that
protecting innovation through strong IP protections is an
important priority in any trade deal?
Mr. Donohue. The Chamber, Senator, has a major, broad
system, both international and domestic, for dealing with
counterfeiting and the theft of intellectual property. We have
put a great deal of money in it. We work with individual
countries, and we work with groups of countries. We have had
very significant improvement in about 70 percent of the
countries, which are giving us a much better protection of
intellectual property.
We are also doing it at home, because you can lose your
intellectual property here in the United States faster than you
can get ready to go to work. The points made about China and
others, there are still issues where there is a sophisticated
way of going after your intellectual property.
Senator Menendez. Let me ask you one final question, if I
may, Mr. Chairman. The current U.S. standard is 12 years of
patent protection for biologics. This is an incredibly
important industry in my home State of New Jersey, where we are
the medicine cabinet to the world.
Do you think that our trade deals should protect that
standard?
Mr. Donohue. I do not exactly know the answer to that, but
I will tell you something. I know more about the protection of
biologics and patent deals on pharmaceuticals just in my own
family. I am dealing with that issue now. I want to do anything
I can to protect America's ability to drive the innovation in
biologics, pharmaceuticals, and other things that we are doing.
You cannot catch up with me on that deal.
Senator Menendez. I am glad to hear that. I know that you
will have to run after me on that part, so I look forward to
working with you on that issue.
Thank you, Mr. Chairman.
The Chairman. Senator, your time is up. Let me just say
that it was Senator Kennedy and myself who drove that 12-year
data exclusivity, without which we would not have a biologic
empire in this country. So you are speaking the truth, and I
appreciate you raising the issue.
Senator Isakson?
Senator Isakson. Thank you, Mr. Chairman, Ranking Member
Wyden. I appreciate the opportunity. I have learned a lot from
listening to the other questions. I am one who favors doing
business. I sold houses for 33 years of my life before I came
to Congress. I never saw the perfect deal, but I made a lot of
deals. We had a meeting of the minds. This is not a perfect
deal, but the question I have in my mind is to make sure it is
the best deal we can get to move forward for our country.
I give you this premise. Two years ago, Mike Enzi took a
mission to India. It was called All of America's Jobs Have Gone
to India. Do you remember that, Tom, when all the help desks
were going to India? We went to meet with Mr. Murthy, the owner
of Mphasis, which is now the largest trading company on the
NASDAQ. He has an 80-acre campus in Bangalore, India, where he
was doing back-room operations for U.S. hospitals and emergency
rooms, help desks for corporations.
We asked him this question. We said, Mr. Murthy, all of
America is so scared all of our jobs are going to India because
of what you are doing with lower wages, more technology, things
like that. What would you tell the American people? Why should
we not fear India?
He said, ``For a very simple reason. When I started my
business, I drove an Indian car, I banked with the Bank of
India, and I drank an Indian soft drink. Today I drink Coca-
Cola, I bank with Citibank, and I drive a Ford.'' The point
being, when you do business with people, you end up doing
business both ways. American products were then being sold in
India.
Today, interestingly enough, 12 years later, the help desks
have come back to the midwestern United States and left India
because the standards have grown in India for wages, labor
laws, and things like that, where they are on a comparable
playing field with the United States.
So I believe doing business is good for America. I respect
the middle class. Mr. Trumka, I was in Savannah, GA yesterday,
where we have a new plant that has come in. Caterpillar has
come in to Georgia from Japan, where they are now building the
tractors they were building in Japan. They are building them in
Georgia and shipping them back to Japan out of the Port of
Savannah. That is good for manufacturing jobs in Georgia. Those
are the
middle-class jobs. It is very important that we promote jobs
and promote trade, because 1.2 million Georgians' jobs are
directly dependent on trade. We are now the eighth largest
State in the Union. We have 10,400,000 people.
I want to make sure we continue to trade and have a vibrant
trade policy, not one that looks the other way at currency
manipulation, not one that looks the other way at labor
standards, but one that is realistic enough to continue to do
business. Because, if you do business with people, you have a
better chance to influence them than if you do not do business
with them. Would you agree with that, Tom?
Mr. Donohue. The history of the U.S. economy, from our very
beginning, was doing business with people around the world to
bring us products we did not have, innovations we had not yet
achieved. It has shifted to where we are shifting products and
innovations all around the world, which has given us, over
time, more influence around the world than we otherwise would
have had.
We could sit here for a week and talk about the value of
America's export of ideas and values and products. I think the
argument on this particular bill here should come down to
finally, after all these years, putting us in a place to do
more of what we have done for years, to sell American products,
to move American ideas and values. I hope we do not screw it up
looking for the perfect, or seeking to get rid of this bill
because we really do not want to do the trade bills.
Senator Isakson. Mr. Trumka, I really have a lot of respect
for what you do and the people whom you represent. One of the
things you talked about that meant a lot to me and that I
believe in seriously is workers' rights, and making sure people
are treated right, and not doing business with people who abuse
other people.
But you have a better way of exporting your values overseas
if you are doing business with somebody rather than if you are
folding your arms and not doing it. One example: Swaziland.
Swaziland is in Africa. I do a lot of work in Africa with AGOA,
the African Growth and Opportunity Act, which I think this week
we are going to hopefully extend for 10 years.
In that, Swaziland was a participant until we learned they
were beating up and imprisoning their workers for not working
hard enough or long enough or being productive enough, and we
suspended them on a temporary basis. They came back to the
table. They started treating their workers right, because doing
business with America was more important than abusing their
workers.
So my point is, and I would like you to respond to this, do
we not have better leverage by having influence, by doing
business with people, to encourage them to do better in terms
of the way they treat their folks, or do we have to insist on
it being a part of the deal?
Mr. Trumka. First of all, it is important to do business
with people, but the rules are important because the rules and
the trade agreements that you have been talking about have been
resulting in a $500-billion deficit for this country each and
every year, trillions and trillions of dollars flowing out and
not coming in. That is why it is important to have the rules.
It is also important to have the rules whenever you engage them
to have the ability to help correct those things.
Now, if they are going to agree to the ILO core standards--
and, quite frankly, if we are willing to agree to the ILO core
standards, because we have not been willing to do that yet--
then you have a chance to really influence them and improve
their conduct.
But if all you do is say, all you have to do is comply with
your minimum wage and then, when they do not even comply with
their minimum wage, we do not have the ability to influence or
change it, it goes the opposite way, Senator.
They look at the United States as perpetuating that bad
treatment, not correcting it. We are better than that, and we
can do better than that if we write the right rules and we have
an agreement that we can enforce. Then we can be a positive
force for good around the world. But this trade agreement will
not do that.
Senator Isakson. Mr. Chairman, let the record show I gave
both sides a chance to make their case. Thank you, Mr.
Chairman.
The Chairman. Thank you, Senator.
Senator Brown, you are up.
Senator Brown. Thank you, Mr. Chairman. Senator Wyden,
thank you. Mr. Trumka, Mr. Donohue, good to see you both.
Mr. Trumka, a lot of people accuse you--and I might add,
accuse me--of being against trade, of being protectionist, of
being stuck in the last century, or even the one before the
last century. Did AFL oppose the idea of TPP from the
beginning?
Mr. Trumka. Absolutely not. Quite the contrary. We engaged
almost 5 years ago. We have submitted dozens and dozens, a
couple of hundred, suggested language changes to make the
agreement better. We did, and still want, to be able to support
TPP, but in its current standards it falls far short of what is
necessary.
Senator Brown. So you can see from the amendments that a
number of us will offer--there will be a lot of them, Mr.
Chairman, as you may have heard by now, on Thursday, or
Wednesday, I guess--you can see that this trade agreement, that
TPA and TPP, could be improved significantly. Would you name
two or three ideas that you have tried to constructively engage
USTR or the staff of this committee in to give me just some
ideas of where we could do much better than we are doing on
this?
Mr. Trumka. Well, with regard to TPA, first of all, you
need to ensure that Congress approves trade agreement partners
before their negotiations begin, that you create objectives
that are specific to each individual trading partner, and that
Congress and not the executive branch determines whether
congressional trade objectives have been met.
We have submitted a whole chapter on labor to make it
better, we have submitted a chapter on currency, we have
submitted a chapter on ISDS, and we have submitted a chapter on
the environment that does not include procurement rules, Buy
America, and a number of other things that we think could make
TPP not only a good agreement, but one worthy of the American
people.
Senator Brown. And little of this has been accepted?
Mr. Trumka. Well, in fact, less than three or four changes
have even been accepted by our Trade Representative to put them
across the table.
Senator Brown. I heard you said that in your testimony.
Mr. Trumka. They have not been included in our proposal,
no.
Senator Brown. Well, like you, I have tried to engage in
the process, both at a member and a staff level with the U.S.
Trade Representative. I have pushed for currency disciplines, I
have pushed for better enforcement of labor standards, for
improved state-owned enterprise language, for modified
investor-state provisions, literally more than a dozen items.
If I were anti-trade, I, like you, would not take the time, I
would not bother, I would not get my staff to put the time in
it takes in this effort.
USTR claims they have had 51 meetings. Ambassador Froman
sat where you are sitting late last week. They claim they have
had 51 meetings with me and my staff. That may be true, I do
not know. We have asked them, though, for the list of meetings,
and, true to form, they have not responded, as they so often do
not, to members of this committee, let alone the rest of the
House and Senate.
When they do meet with me, it is not to exchange ideas or
to re-think how we do things, it is to tell me why I am wrong,
that my concerns are not valid. The administration has taken
this approach that you are either with us or against us on
trade--nothing in between. I have heard your testimony through
all of this about how there is TPP, there is present law, and
there is something in between that is much more desirable that
we could get real agreement on.
I just wonder why, on trade agreements, when we have seen
what kinds of permanence they bring and how they affect all
Americans, why there is so much hostility to changing the
direction of trade policy. The American public, as you point
out, is pretty cynical about this and pretty skeptical about
Congress's learning nothing, where this TPA, with some minor
exceptions, is not much different from the TPA of 10 years ago.
It has been 13 years since Congress passed fast-track, yet the
bill we are considering today is fundamentally the same, again,
with small, minor, relatively insignificant exceptions.
I am going to continue my effort tomorrow to improve U.S.
trade policy. I think we have a real opportunity in this
amendment process. My question then for you, Mr. Trumka, the
last question, is, can you comment in sort of a general, but
substantive, way on what is at stake if we do not improve U.S.
trade policy? What happens to our country?
I have heard Mr. Donohue's vision, that the world falls
apart, more or less, if we do not engage and China takes over
the world and maybe colonizes the United States. I am not sure
where he was going with that. But would you give us your view
on what actually happens if we do not do this as written today?
Mr. Trumka. TPP is 40 percent of the world GDP, and TTIP
will be another 20 percent. That means those two agreements
will cover 60 percent of the world's economy. If it is not done
right, you will see the continuation of wage stagnation, you
will see the continuation of a growth in inequality in this
country, you will see the middle class continue to shrink and
get decimated.
You will also see, eventually, the weakening of our
economy, because you cannot continually have a massive trade
deficit every year that sucks jobs out of the country and not
remedy that in some way or another. So one way to remedy it is,
you stop buying other products, I guess. That would create a
tremendous hardship on our economy and on the American worker,
something that none of us, I think, wants to see.
Senator Brown. Thank you.
I heard somebody remark around the table--and I will close
with this, Mr. Chairman; it is not a question, just a quick
statement--that $1 billion in services trade can translate into
7,000 jobs. That is great. It is a little bit, though, like
saying the Cleveland Indians scored six runs yesterday. Yes,
well, but the Tigers scored eight.
So, when you talk about $1 billion in services, and that is
7,000 jobs, what is it when the surplus, when we are buying so
much more than we are selling--China, $300 billion a year--how
many jobs is that? I mean, President Bush the first said 13,000
jobs for every $1 billion in trade deficit, so it is a pretty
significant job loss that we continue to add to with one trade
agreement after another. I will stop there, Mr. Chairman, and
thank you for your indulgence.
The Chairman. All right.
Senator Wyden would like to make a comment, then we are
going to turn to Senator Grassley.
Senator Wyden. Thank you very much, Mr. Chairman. I passed
at the beginning because I wanted all of my Democratic
colleagues to have a chance to speak first. While Senator Brown
is here, I just want to be clear that I think he has made a
very valid point that the playbook on international trade has
to change. Trade agreements in 2015 have to be very different
than trade agreements from the 1990s. The President, to his
credit, said in the State of the Union address that past
agreements have not lived up to the hype.
So we have to make sure our trade policies are not part of
a time warp. All you have to do is recognize that 25 years ago
nobody had an iPhone, nobody was texting. China was not an
economic powerhouse. It is a different world.
I just want to tick off--and do this briefly, because I did
not ask any questions earlier, while my colleagues are still
here--what is different with respect to the legislation that
will be considered this week and, in effect, the old playbook.
The first area in which it is different, and I especially
appreciate Senator Brown focusing on this, is on trade
enforcement. Trade enforcement has to focus on protecting
American jobs, high-skill American jobs that pay good wages.
People say, why in the world would you be talking about a new
trade agreement if you are not enforcing the laws on the books?
You see that reflected in this legislation.
For example, it includes the bipartisan ENFORCE Act,
Senator Brown, colleagues on the other side, Senator Portman
and others, to go after tax cheats. It includes an upgrade on
301, something that I think our friends in Labor have been
absolutely right about. It includes a measure to have warning
bells go off earlier when our industries and our jobs are
threatened, and to go off more loudly. That is number one.
Number two, with this legislation, the United States is
going to aim higher in trade deals. In the 1990s, labor and
environment were basically an after-thought. If you had said
back in the 1990s you were going to have enforceable labor and
environmental issues, people just laughed at you. That is not
the case any longer. They are going to be enforceable. They are
going to be imbedded in the text, and, for the first time,
there will be a new provision to focus on human rights.
Third, I touched on the secrecy question. I could tell you,
having been a young Congressman in those days, the public and
lots of people in the Congress were just in the dark about what
was being debated with respect to trade. Those days are over.
The American people are basically going to be able to sit at a
town hall meeting for up to 4 months with the actual text of
the agreement so they can ask questions of their member of
Congress.
Fourth, the legislation goes further than any trade
promotion bill to protect American sovereignty. It guarantees
that trade deals cannot change U.S. law without congressional
action. It guarantees that foreign companies will have no more
rights in international tribunals than in American courts
today, no back door to let anybody skirt our laws.
Fifth, this legislation--and Chairman Hatch knows about
this, because we had a lot of spirited conversations about it--
protects Congress's ability to put the brakes on a bad deal.
This is not a green light for TPP or anything else, but it is
an opportunity for Congress to stop a bad deal in its tracks.
The last point I will make responds to why I have been in
this from the beginning. I think Senator Brown, Mr. Trumka, and
others are spot-on in talking about the middle class and how
important it is that they get a better break, because wages for
them have been stagnant for a lot of years.
Here is the way I am looking at the world, and it was
really kind of the defining judgment I made in getting into
this. In the developing world, the middle class is going to
double between now and 2025. That means there are going be a
billion middle-class consumers in the developing world, and I
want them to buy our products. I want them to buy our
computers, and our eggs, and our wine, and our cars.
In Oregon, they are buying our helicopters and our bikes.
That is the chance for the American people to get high-skill,
high-wage jobs. Let us fight here for the Oregon brand and the
American brand. I think everybody knows we are going to have a
spirited debate. We have seen some of it today, and the dust-
bowl level will go up again tomorrow.
But I want to tell Mr. Trumka and Mr. Donohue that I am
going to work very closely with both of you in the days ahead.
I am committed to doing this in a way that works for both our
middle-class families and our businesses. We can get this
right. Trade done right will be a winner for American families.
Mr. Chairman, I want to thank you for the opportunity to
wrap this up and look forward to working with you and our
colleagues tomorrow.
The Chairman. Well, thank you, Senator Wyden.
Senator Grassley, you are going to be our last questioner.
At least, I expect you to be the last questioner.
Senator Grassley. Well, since I was absent, I do not want
the witnesses, or anybody else to think I do not have an
interest in this trade issue. I had a hearing on juvenile
justice reform in the Judiciary Committee that I chair, and I
just got done with that. But I thought I ought to come by and
speak my support for moving ahead on trade agreements.
To me, it is common sense, when 95 percent of the people
live outside the United States, and we are an exporting Nation,
that we should do whatever we can do to get our products into
other countries, and particularly countries that have higher
trade barriers than what we have, and most countries do.
Leveling the playing field--and that is a phrase we use around
this Hill so many times it gets over-used--for our exports
creates jobs, and those jobs pay 15 percent above the national
average, so it seems to me that is something we need to pursue.
Common sense being that 95 percent of the people are
outside of the United States, then that 95 percent is where our
market is. So I want to compliment the chairman and the ranking
member for moving ahead on this package of bills we have, and
particularly on giving the President the authority that he
needs, and we have given it to Presidents on and off since
World War II to do what they can to level the playing field for
American exporters and the jobs that are connected with that.
I yield.
The Chairman. Thank you, Senator Grassley.
This morning, Congress received a letter signed by nearly
300 State and local chambers of commerce, manufacturing
organizations, and farm bureaus urging ``swift action to renew
Trade Promotion Authority.'' So, without objection, this letter
will be entered into the record at this point.
[The letter appears in the appendix on p. 103.]
The Chairman. Now, let me just say, I want to thank my
colleagues for their participation today. And, of course, I
want to thank our two heavy-weight witnesses for joining us
here. I have great respect for both of you and have known you
for a long time.
I want everyone to know that I recognize that there are
passionately held views on both sides of these issues and that
these debates are not easy for anyone. Nobody has had a picnic
here. You all know where I stand when it comes to trade. I want
to convince everyone to support TPA. I wish we could report a
TPA bill unanimously, but it is pretty clear we are not going
to be able to do that.
Still, Senator Wyden and I have done our best to create
both a product, and a process on this legislation, that is
bipartisan. So far, I think we have really been successful, and
I think most people would agree with that. This is important
for our country. It is important for our industry in our
country.
In the end, I think we will have members from both parties
supporting our bill. I really want to personally thank Senator
Wyden, once again, for his help on this effort. It has been a
very difficult one for him, as it has been for many of my
colleagues on the Democratic side. Mr. Trumka, you have not
helped him here today very much with your criticisms.
Mr. Trumka. Thank you, Mr. Chairman. I appreciate that.
[Laughter.]
The Chairman. Well, I expect nothing less than that from
you. I have known you a long time, and I have a lot of respect
for you.
But Senator Wyden deserves a lot of credit here. I think it
is very important that we move forward and that we let the
committee function properly. I am looking forward to an even
more lively discussion and debate tomorrow as we mark up this
bill.
Let me just say that I have tremendous respect for both of
you. Mr. Donohue, you have been around here a long time. You
are no shrinking violet, I will tell you. You handle yourself
very well, and you represent the business community about as
well as anybody I have ever seen, and I have seen a lot of
great business leaders.
Mr. Trumka, I think you represent the unions very well. You
are a tough guy, you are a smart guy. Even though we disagree
on this bill, I have been paying pretty strict attention to you
too. This is basically your administration that is doing this.
I am trying to help the President on this bill. I personally
think they are right in pushing it the way they have, but I
still have the obligation to just tell you how much I respect
and appreciate you as well.
I look forward to--we are going to have to find some things
we can work on together. We have in the past, but I think we
have to find some things to work on together. I am going to
count on you to help me to understand that, all right?
With that, let me just say that I have been really
appreciative that you both have been willing to stay this long
and to answer every question anybody has asked.
With that, we will recess until further notice. Thanks so
much.
Mr. Trumka. Thank you, Mr. Chairman.
The Chairman. You bet. Thank you.
[Whereupon, at 12:10 p.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Thomas J. Donohue, President and Chief Executive
Officer, U.S. Chamber of Commerce
April 21, 2015
Chairman Hatch, Ranking Member Wyden, and distinguished members of
the committee, my name is Tom Donohue, and I am President and Chief
Executive Officer of the U.S. Chamber of Commerce (Chamber). I am
pleased to testify today on the importance of renewing Trade Promotion
Authority (TPA). The Chamber is the world's largest business
federation, representing the interests of more than 3 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 17.4 million
Americans are unemployed, underemployed, or have given up looking for
work. Participation in the workforce stands at 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.
Nearly 40 million American jobs depend on trade, as detailed on the
coalition website www.TradeBenefitsAmerica.org. Consider the number of
jobs that depend on trade just in the states represented by senators
serving on this committee: Colorado (709,000), Delaware (123,000),
Florida (2.4 million), Georgia (1.2 million), Idaho (195,000), Indiana
(796,000), Iowa (448,000), Kansas (392,000), Maryland (790,000),
Michigan (1.2 million), Nevada (350,000), New Jersey (1.2 million), New
York (2.6 million), North Carolina (1.2 million), Ohio (1.5 million),
Oregon (484,000), Pennsylvania (1.6 million), South Carolina (559,000),
South Dakota (124,000), Texas (3 million), Utah (374,000), Virginia
(1.1 million), Washington (915,000), and Wyoming (68,000).
Another excellent resource on the benefits of trade is
www.TradeSupports Jobs.com, a website offering extensive information on
U.S. exports by state and congressional district, with detailed data on
manufactured goods and services exports, the direct jobs they support,
and the markets for which they are bound.
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. The U.S. Chamber of Commerce in February released
The Open Door of Trade: The Impressive Benefits of America's Free Trade
Agreements, a report which catalogues the success of these agreements
and makes the case for swift renewal of TPA.
Following are some of the report's highlights:
America's 20 trade agreement partners represent just 6% of the
world's population but buy nearly half of U.S. exports. By
tearing down foreign barriers to U.S. products, these
agreements have a proven ability to make big markets even out
of small economies.
U.S. exports to new trade agreement partners have grown by an
annual average of 18% in the five-year period following an
agreement's entry-into-force.
The increased trade facilitated by these trade agreements boosted
U.S. output by more than $300 billion and in turn supports an
estimated 5.4 million U.S. jobs, according to an earlier study
commissioned by the Chamber entitled Opening Markets, Creating
Jobs: Estimated U.S. Employment Effects of Trade with FTA
Partners.
Trade-related jobs also tend to pay well: For instance,
manufacturing jobs tied to exports pay wages that average 18%
higher than those that are not.
For those worried about the U.S. trade deficit, trade agreements
are clearly the solution--not the problem. The United States
has a trade surplus with its 20 trade agreement partners as a
group. This includes sizeable trade surpluses in manufactured
goods, services, and agricultural products.
U.S. manufacturers' exports to trade agreement partners have
topped $650 billion in recent years, generating revenue of
about $55,000 for each American factory worker.
U.S. agricultural exports to trade agreement partners increased by
more than 130% in the past decade and today exceed $56 billion.
Topping $700 billion last year, U.S. services exports are growing
rapidly and support millions of high-wage jobs even though the
potential for services industries to engage in international
trade is almost untapped.
Trade agreements sweep away trade barriers that are especially
tough on the 300,000 small and medium-size companies that
account for 98% of all U.S. exporters and one-third of goods
exports.
Imports play a critical role in the U.S. economy as well.
Companies' imports of intermediate goods, raw materials, and
capital goods account for more than 60% of all U.S. goods
imports and help them maintain their global competitiveness.
trade promotion authority
To get more of these benefits, Congress must approve the Bipartisan
Congressional Trade Priorities and Accountability Act of 2015 (``TPA
bill''), which will renew TPA. The U.S. Chamber strongly supports this
bill and urges Congress to approve it swiftly.
TPA is a critical tool to help Americans sell their goods and
services to the 95% of the world's customers living outside our
borders. The United States has never entered into a major trade
agreement without it. A simple form of TPA was first enacted in 1934,
but the latest iteration lapsed in 2007.
TPA is premised on the commonsense notion that the executive and
legislative branches of the federal government should work together on
trade. The Constitution gives Congress authority to regulate
international commerce, but it gives the president authority to
negotiate with foreign governments.
TPA allows 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.
While foreign governments may initiate negotiations with the United
States without TPA in place, they have historically proven leery of
making the difficult political choices associated with the final stages
of negotiations in its absence. In this sense, TPA strengthens the hand
of U.S. negotiators, helping them secure the best possible deal for
U.S. workers, farmers and companies.
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
regional trade agreements are in force around the globe today, but the
United States has agreements in place with just 20 countries. There are
more than 100 trade agreements currently under negotiation among our
trading partners.
The United States cannot afford to stand on the sidelines as
foreign governments rewrite the rules of international trade and
American companies are placed at a competitive disadvantage in market
after market. If we do, American workers, farmers and companies will
pay the price.
strong negotiating objectives
From the U.S. business community's perspective, the negotiating
objectives laid out in the TPA bill are balanced, ambitious, and well
suited for attaining trade agreements that are commercially valuable.
They reflect the evolution in U.S. trade agreements in recent years and
push the envelope to include many of the best ideas in contemporary
trade policy.
The TPA bill directs U.S. trade negotiators to seek high-standard
and comprehensive agreements. Indeed, U.S. trade agreements must be
comprehensive, avoiding exceptions or carveouts. Whenever one party in
ongoing trade negotiations seeks to exclude a given commodity or sector
from an agreement, other parties follow suit, limiting the agreement's
reach and its benefits. This is not just a matter of tariff policy: The
TPA bill admirably instructs U.S. negotiators to seek agreements that
extend their rules to all industries. This sends a positive signal to
other governments about the priority the United States ascribes to
trade agreements based on high standards and comprehensive coverage.
The Chamber applauds the clear, concise objectives in the TPA bill
that give our negotiators a mandate to achieve in our trade agreements
the same effective protection and balance that are found in U.S.
intellectual property law. It is devastating for American workers and
companies to have their ideas and ``know how'' copied and stolen, or
likewise to see our innovations shut out of overseas markets, because
we either did not have a trade agreement with a key market in place or
because that agreement lacked the strong protections we need. This bill
strikes exactly the right balance.
The TPA bill's objectives on digital trade and cross-border data
flows are another example of its modernized negotiating objectives. In
today's global economy, companies often move data across borders as
they 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-tradable'' 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, U.S. trade agreements should
prohibit restrictions on legitimate cross-border information flows and
bar local infrastructure mandates relating to data storage.
The TPA bill also directs U.S. negotiators to seek rules in future
trade agreements to ensure that private companies are not put at a
disadvantage when they compete with state-owned enterprises (SOEs) and
other national champions. U.S. negotiators are instructed to guard
against anti-competitive behavior by SOEs and ensure a level playing
field. The Chamber applauds these objectives.
The TPA bill's negotiating objectives also direct U.S. negotiators
to consider 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 national borders to hone their
competitiveness. The United States is a principal beneficiary of these
supply chains. 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.
The Chamber also supports the TPA bill's negotiating objective that
parties to a trade agreement avoid manipulating exchange rates to gain
an unfair competitive advantage. On this matter, the United States
should continue to press economies to adopt market-determined exchange
rate systems that reflect economic fundamentals, and there are several
fora for such discussions. In recent years, the G-7 economies have
affirmed that they will not target exchange rates to achieve domestic
economic objectives. G-20 members have made similar commitments to
avoid persistent exchange rate misalignments and refrain from
competitive devaluations.
The notion that trade policy mechanisms can address monetary policy
challenges elicits concern in many quarters. To cite one, it is not in
the U.S. interest to enter into an international agreement that would
handcuff U.S. monetary policy and limit the flexibility of the Federal
Reserve to respond to economic circumstances. Amid these concerns, the
Chamber believes the TPA bill's negotiating provision relating to
currency reflects a careful and reasonable balance.
As noted, the TPA bill reflects many of the best ideas in
contemporary trade policy. Negotiating objectives have been modernized
to reflect our changing economy. The careful bipartisan compromise on
labor and environmental issues included in the four most recent U.S.
trade agreements is reflected in the TPA bill--with some enhancements--
not least because it allowed those agreements to attract broad
bipartisan support. There is nothing ``fast'' about the manner in which
this bill was prepared, and it plainly reflects input from many
quarters. Given the careful balance attained in many areas, the Chamber
urges Members of Congress to forgo amendments and support this bill,
which squarely reflects the U.S. national interest.
the trans-pacific partnership
And how should TPA be used? The first priority is the Trans-Pacific
Partnership (TPP).
The booming Asia-Pacific region is a logical focus for America's
trade negotiators. Over the last two decades, the region's middle class
grew by 2 billion people, and its 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 more than $20 trillion over the next five years, and nearly
half of that growth will be in Asia.
U.S. workers, farmers and businesses need access to those lucrative
markets if they are to share in this dramatic growth. However, 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, excluding China, East Asia in 2014
purchased a smaller share of U.S. exports in 2014 than it did five
years earlier, despite a 54% increase in total U.S. merchandise exports
in that period.
One reason U.S. companies have lost market share in the Asia-
Pacific region is that some 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 often 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. However,
Asia-Pacific nations are clinching trade deals among themselves that
threaten to leave the United States on the outside looking in. The
number of trade agreements between Asian countries surged from three in
2000 to more than 50 today. Some 80 more are in the pipeline.
Meanwhile, the United States has just three trade agreements in Asia
(with Australia, Singapore and South Korea).
This challenge is growing: 16 countries are launching expedited
negotiations for 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 TPP is America's best chance to secure a level playing field
for trade in the Asia-Pacific region. 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.
One top U.S. priority is to ensure the TPP protects intellectual
property (IP), which plays a critical 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-Korea Free Trade Agreement
and provide 12 years of data protection for biologics consistent with
U.S. law.
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.
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.
The TPP has the potential to strengthen our nation's commercial,
strategic and geopolitical ties across one of the fastest growing and
most influential parts of the world. It would be an economic shot in
the arm, boosting growth and jobs across the country.
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 even more impressive.
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 in July
2013 launched the TTIP negotiations. 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 also is an opportunity to raise global standards. With a
combined GDP of more than $30 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 cultivating the digital
economy and combating trade and investment protectionism.
Indeed, 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 trade agreements 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.
Finally, the TTIP would not benefit the United States and the EU at
the expense of other nations. In fact, liberalizing transatlantic trade
would increase GDP in the rest of the world by as much as $130 billion,
according to a CEPR study.
the trade in services agreement
While it hasn't 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, covering about two-thirds
of the global market for services, has the potential to ignite economic
growth and job creation in the United States and abroad.
Services are a clear strength for the United States, which is by
far the world's largest exporter of services. U.S. services exports
reached $710 billion in 2014, and the U.S. services trade surplus
reached $232 billion. 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
2014.
Contrary to popular misconception, many jobs in services pay well.
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 about 12 million Americans.
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.
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 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 may not be making headlines anytime soon, but its
potential to drive economic growth and job creation in the United
States and beyond is significant. The American business community is
committed to working closely with U.S. negotiators, foreign governments
and Congress to press for a strong agreement that translates this
potential to reality.
the world trade organization
In addition to these negotiations, 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 benefited 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.
Renewing TPA could open the door to additional trade agreements
negotiated through the WTO. While it is not required for the critical
expansion of the Information Technology Agreement, TPA will be needed
to secure passage of the WTO's Environmental Goods Agreement now under
negotiation.
The United States and 13 other WTO Members, including China and the
28 Member States of the European Union, last year launched this 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, the Chamber strongly supports the AGOA Extension and
Enhancement Act of 2015, which would renew both the African Growth and
Opportunity Act (AGOA) and the Generalized System of Preferences (GSP)
and provide continued trade benefits for Haiti.
AGOA benefits not only the economies of sub-Saharan Africa but U.S.
companies and consumers here at home, but it will expire on September
30, 2015. 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.
GSP 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. 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.
In addition, the Chamber strongly supports efforts to modernize our
own borders and facilitate trade and travel through customs
reauthorization legislation. A bill to reauthorize U.S. Customs and
Border Protection is long overdue, as the dramatic growth of global
supply chains has made trade facilitation critical 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. Small- and medium-sized businesses would be among
the top beneficiaries.
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 urge Congress to move this
legislation forward alongside the TPA bill.
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
urgently need to renew TPA. 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.
And with all our trade agreements--old and new--we need to ensure
they are fully enforced. The trade agreements we enter into are not
worth the paper they are written on if they are not fully enforced.
The United States is home to many of the best workers and companies
in the world. We create many of the world's most innovative products.
We have also got tougher competition facing us than ever before. But
our productivity is high, and our energy costs are going down. The
facts show we can compete and win.
The Chamber looks forward to working with Congress and the
administration to advance a bold trade agenda to generate growth,
opportunity, and jobs.
Thank you very much, and I look forward to your questions.
______
(From the U.S. Chamber of Commerce, February, 11, 2015)
The Open Door of Trade: How America's FTAs Facilitate the
Exchange of Trade
By John G. Murphy
Part 2 in an occasional series
Previously: Assessing the Benefits of America's FTAs (http://
www.uschamber.com/blog/open-door-tade-assessing-benefits-america-s-
ftas)
What are the benefits of America's free trade agreement (FTAs)? With
debate over the renewal of Trade Promotion Authority (TPA) now underway
in Washington, the Chamber is publishing this series of blog posts
examining the benefits of the trade agreements that TPA makes possible.
Here is the full report on the benefits of America's free trade
agreement.
These benefits are most obvious in the booming trade we enjoy with the
20 countries with which we have entered into FTAs. While these
countries represent just 10 percent of the world economy outside the
United States, in recent years they have purchased nearly half of all
U.S. exports, according to the U.S. Department of Commerce.
It should come as no surprise that eliminating tariffs and other trade
barriers allows trade to expand. As the chart below indicates, U.S.
exports to new FTA partner countries have grown roughly three times as
rapidly on average in the five-year period following the agreement's
entry-into-force as the global rate of growth for U.S. exports.
Increase in U.S. Exports Since FTA Entry Into Force PMerchandise Exports, Millions of U.S. Dollars
----------------------------------------------------------------------------------------------------------------
U.S.Exports U.S.
Date of Year Before to FTA Exports to
FTA Partner Country Entry-into- FTA Entered Partner in FTA Partner % Increase
Force of into Force Baseline Five Years
FTA (Baseline) Year Later
----------------------------------------------------------------------------------------------------------------
Israel 9/1/1985 1985 2,579.6 3,203.0 24.2%
----------------------------------------------------------------------------------------------------------------
Canada 1/1/1989 1988 71,622.0 100,444.2 40.2%
----------------------------------------------------------------------------------------------------------------
Mexico 1/1/1994 1993 41,580.8 56,791.6 36.6%
----------------------------------------------------------------------------------------------------------------
Jordan 12/17/2001 2001 339.0 650.3 91.8%
----------------------------------------------------------------------------------------------------------------
Chile 1/1/2004 2003 2,715.0 11,857.4 336.7%
----------------------------------------------------------------------------------------------------------------
Singapore 1/1/2004 2003 16,560.2 27,853.6 68.2%
----------------------------------------------------------------------------------------------------------------
Australia 1/1/2005 2004 13,957.9 19,599.3 40.4%
----------------------------------------------------------------------------------------------------------------
Morocco 1/1/2006 2005 480.8 1,947.0 305.0%
----------------------------------------------------------------------------------------------------------------
El Salvador 3/1/2006 2005 1,854.3 2,433.1 31 .2%
----------------------------------------------------------------------------------------------------------------
Honduras 4/1/2006 2005 3,253.8 4,606.4 41 .6%
----------------------------------------------------------------------------------------------------------------
Nicaragua 4/1/2006 2005 625.5 981.3 56.9%
----------------------------------------------------------------------------------------------------------------
Guatemala 7/1/2006 2005 2,835.4 4,478.3 57.9%
----------------------------------------------------------------------------------------------------------------
Bahrain 8/1/2006 2005 350.8 1,249.6 256.2%
----------------------------------------------------------------------------------------------------------------
Dominican Republic 3/1/2007 2006 5,350.5 7,346.2 37.3%
----------------------------------------------------------------------------------------------------------------
Costa Rica 1/1/2009 2008 5,679.8 7,223.5 27.2%
----------------------------------------------------------------------------------------------------------------
Oman 1/1/2009 2008 1,382.0 1,571.3 13.7%
----------------------------------------------------------------------------------------------------------------
Peru 2/1/2009 2008 6,183.0 10,101.8 63.4%
----------------------------------------------------------------------------------------------------------------
South Korea 3/15/2012 2011 43,461.6 NA NA
----------------------------------------------------------------------------------------------------------------
Colombia 5/15/2012 2011 14,335.7 NA NA
----------------------------------------------------------------------------------------------------------------
Panama 10/31/2012 2011 8,251.6 NA NA
----------------------------------------------------------------------------------------------------------------
Average annual % change in U.S. exports for all FTAs in first five years: 18.0%
Average annual % change in U.S. exports to the world 2000-2010 (for comparison): 6.3%
----------------------------------------------------------------------------------------------------------------
Note: As the U.S.-Israel and U.S.-Jordan FTAs entered into force late in the calendar year, those years are used
as the baseline in this table.
Source: U.S. Department of Commerce.
Some FTAs have helped produce even more impressive results. U.S.
exports to Chile and Morocco quadrupled in the five years after FTAs
entered into force. This boost to U.S. export growth is especially
pronounced with more recent FTAs, which are front-loaded to eliminate
tariffs rapidly, open services markets, and eliminate non-tariff
barriers more comprehensively than earlier FTAs.
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 likely has
grown since then (see chart below).
U.S. Trade Balance With FTA Partners
------------------------------------------------------------------------
2011 2012 2013
------------------------------------------------------------------------
Merchandise $(79,918) $(70,820) $(66,612)
------------------------------------------------------------------------
Services $65,841 $70,876 $75,034
------------------------------------------------------------------------
Total $(14,077) $56 $8,422
------------------------------------------------------------------------
Source: U.S. Department of Commerce.
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.
However, exports are just one side of the trade equation: Imports
provide direct benefits to Americans as well. They mean lower prices
for American families as they try to stretch their budgets-and for
companies seeking raw materials and other inputs. In recent decades,
lower tariffs have stimulated U.S. productivity through greater
competition in the marketplace and brought greater product choices to
U.S. producers and consumers. According to the Peterson Institute for
International Economics, this has brought ``a gain in annual income of
about $10,000 per household.''
In fact, half a century of trade liberalization has made it less and
less relevant to look at international commerce through a mercantilist
lens focused solely on exports. North America offers a useful case
study: After more than two decades of free trade, officials and
business leaders in Canada, Mexico, and the United States point out
with growing frequency that workers and firms across the continent
increasingly ``make things together,'' employing ``global value
chains'' that cross national borders.
This approach leads to efficiencies that have proven vital to the
global competitiveness of North American industry. In the highly
integrated auto sector, for example, it is common for cars assembled in
the Great Lakes region to cross the U.S.-Canada border half a dozen
times as they are assembled. In turn, American auto exports increased
82 percent between 2009 and 2012, according to the International Trade
Commission, reaching an all-time high of approximately 2 million cars
and trucks in 2013. A growing share is headed to Asia, the Middle East,
and other locations: U.S.-built cars shipped to China have risen nearly
sixfold since 2009.
One study found that ``one-quarter of U.S. imports from Canada consist
of value added from the United States itself, and a huge 40 percent of
U.S. final good imports from Mexico consist of its own [U.S.] value
added.'' As Mexican officials have pointed out, ``For every dollar that
Mexico earns from exports, 50 cents are spent on American goods.''
North America's mature global value chains reduce costs for businesses
and enhance their global competitiveness, but there are other examples
where U.S. firms are operating with a host of partners in other
regions. For example, one recent study found that 70 percent of the
final retail price of apparel assembled in Asia--and sold in the United
States--is created by American innovators, designers, and retailers.
Further, even though nearly all apparel and footwear sold in the United
States is imported, these industries employ 4 million Americans.
The principal rationale for FTAs is to unleash new flows of mutually
beneficial trade between Americans and the citizens of these 20
countries--and do so in a way that is fundamentally fair. On this
score, these FTAs have been a dramatic success for the United States--
as they have been for our FTA partners.
______
Prepared Statement of Hon. Michael Froman, U.S. Trade Representative,
Executive Office of the President
April 16, 2015
Chairman Hatch, Ranking Member Wyden, Members of the Senate Finance
Committee, thank you for the opportunity to testify today.
Trade plays a vital role in supporting good jobs, spurring growth,
and strengthening the American middle class. As a result, increasing
access to foreign markets for U.S. exports through enhanced trade
opportunities has long been a bipartisan effort. Closely related to
these economic stakes is the simple fact that sustaining our strength
and influence abroad requires that we lead on trade. Our nation's
economic strength and our position in the world hinges on our ability
to lead--and to lead together.
economic importance of trade
Trade has been one of our strongest engines for prosperity and
progress. Since World War II, trade liberalization has added
significantly to our GDP, boosting average family incomes year after
year. These gains have disproportionately benefitted low-income
Americans, who spend a much greater portion of their income on highly
traded staples.
Today, the importance of trade to America's economic well-being has
never been clearer. Since 2009, U.S. exports have contributed nearly
one-third of our overall economic growth. Last year, U.S. exports
reached $2.35 trillion, a record-breaking amount that supported an
estimated 11.7 million jobs, an increase of 1.8 million jobs since
2009. With those jobs paying up to 18 percent more than jobs not
related to exports, trade policy has an important role to play in
raising wages and living standards for the middle class.
Partially as a result of our exporting success, our economy
continues to grow. Job creation is happening at the fastest rate since
the 1990s, and wages are finally starting to rise. After nearly two
decades in decline, factories are opening in this country again,
manufacturing is starting to return from overseas, and we have added
900,000 new manufacturing jobs over the last five years. Last week, we
published a report detailing how trade is benefitting all 50 states and
highlighting some of the small and medium-sized American businesses
that are competing and winning in global markets.
But we could do much better if the playing field were level. Put
simply, the United States is already an open economy, but others are
not. Our average applied tariff is only 1.4 percent, among the lowest
in the world. In contrast, our businesses face much higher tariffs, and
countless non-tariff measures abroad. Many of these imbalances are in
areas where the United States is most competitive: 50% tariffs on
machinery, 70% on autos, and up to 400% on certain agricultural
products. In a world where more than 95 percent of all customers live
outside our borders, the disadvantages our workers and businesses face
are less an inconvenience than an injustice.
advancing the trade agenda
As global markets continue to grow, so too does the opportunity for
American workers and businesses. Take Asia, whose middle class consumer
population of 525 million is expected to swell to 3.2 billion over the
next 15 years. By 2030, two-thirds of the world's middle class will
call Asia home. These countries will be the world's fastest-growing
consumers of everything from cars and cosmetics to streaming movies and
music to fresh fruit and vegetables, and their governments and
businesses will be the fastest-growing investors in everything from
infrastructure to aircraft to satellites. As they grow, the question
is, will American workers and businesses get a fair shot at serving
these markets? Will they be buying Made-in-America products or products
made elsewhere?
At the forefront of our trade agenda is TPP, which will cover 11
other countries and nearly 40 percent of the global economy. TPP will
grow our exports by more than $123 billion by 2025, according to one
estimate. These exports will support many more high-paying jobs. TPP
will level the playing field for U.S. businesses and workers by
establishing the highest standards of any trade agreement in history,
as well as the first disciplines on state-owned enterprises and on
maintaining a free and open Internet.
Equally important, TPP represents a once-in-a-generation
opportunity to play a leading role in writing the rules of the road for
the world's fastest-growing region. That's why TPP is a central pillar
of America's rebalance to Asia, as Secretary of Defense Carter recently
noted. By leading on these issues, the United States underscores our
commitment as a Pacific power to the region, deepens our alliances and
partnerships, and establishes standards that reflect our interests and
values. We can launch a race to the top, rather than be subject to a
race to the bottom that we cannot win and should not run.
The stakes become even clearer when you consider the alternatives
to American leadership on trade. In recent years, Asia-Pacific
countries have entered into over 200 trade agreements, altering the
landscape of trade and putting U.S. companies and workers at a
disadvantage.
As we speak, China and others are negotiating an agreement that
would encompass over three billion people, most of the new global
middle class. This would create a strong tidal pull for investment and
a powerful disincentive for investment in the United States. If we
allow others to carve up the markets of the future--and to do so
without raising labor and environmental standards, promoting
innovation, and ensuring fair competition and openness--our workers and
businesses will pay a steep price.
The choice we face today is clear. On the one hand, the promise of
leading on trade includes more good jobs, robust growth, and a stronger
middle class. On the other hand, the status quo is not only
counterproductive, but unsustainable. The inescapable fact is that we
cannot protect American workers by ceding our leadership and standing
by as other nations set the rules of the road. If we want to drive
production in the United States, and create good jobs here, we must
lead through a trade policy that reflects our interests and our values.
America's interests extend beyond the Asia-Pacific, of course, and
so does the importance of our leadership on trade. During my testimony
in January, I discussed in much greater depth and detail the efforts
that comprise the President's Trade Agenda, whether it is the
Transatlantic Trade and Investment Partnership we're negotiating with
the EU or the work we're undertaking in Geneva to further WTO
negotiations, eliminate tariffs on environmental goods and information
technology products and increase access for our world class services
exporters.
strengthening a bipartisan tradition
A critical tool for unlocking the benefits of trade is Trade
Promotion Authority (TPA) legislation. The long bipartisan tradition on
this issue began when President Franklin Roosevelt signed the first
trade negotiating legislation in 1934. During the eight decades since,
Congresses of both parties have revised and renewed that authority 18
different times for Democratic and Republican Presidents alike.
Under the modern form of TPA, Congress establishes legislative
procedures for the consideration and approval of trade agreements,
including setting out what objectives should be negotiated and how the
Administration will consult with it before and during negotiations.
But TPA hasn't been updated since 2002. During that time, the
global economy has changed significantly. State-owned enterprises have
increasingly tilted the playing field against our workers and
businesses by receiving unfair subsidies while competing for the same
customers. The digital economy has exploded. Congress now has the
opportunity to account for the tectonic shifts in the global economy as
well as the emerging consensus around key issues affecting trade,
including labor, the environment and innovation policies.
conclusion
With so much at stake, I look forward to continue working with this
Committee and the Congress as a whole to pass TPA and advance the
broader trade agenda, including renewing the Generalized System of
Preferences that expired in 2013 and the African Growth and Opportunity
Act well before its expiration in September. We also look forward to
renewing Trade Adjustment Assistance, which helps provide American
workers with the skills to compete in the 21st century.
Thank you again for the opportunity to testify today. I welcome
your questions.
______
Question Submitted for the Record to Hon. Michael Froman
Question Submitted by Hon. Patrick J. Toomey
Question. As we work to promote trade opportunities in Europe and
the Pacific Rim, I want to raise a significant issue relating to the
enforcement of the existing free trade agreement between the United
States and Morocco.
In 2014, the Government of Morocco enacted an export quota on
Gigartina seaweed. Gigartina is a significant source of carrageenan, a
food manufacturing input used by several U.S. companies. It is my
understanding that the export quota announced in June of 2014
significantly reduces the amount of Gigartina available to U.S.
companies, which may detract from the competiveness of our domestic
food manufacturers. Further, my office has been informed that the
government of Morocco has provided no legitimate environmental or
economic reason to impose this quota and it does not appear to be
permitted under any multilateral or bilateral trade agreement.
I respectfully request that you investigate Morocco's export quota
on Gigartina and, if necessary, seek consultations with the government
of Morocco to resolve the issue in a manner that is consistent with all
relevant WTO and FTA obligations.
Answer. Morocco's export quota on Gigartina seaweed has been and
continues to be a high priority in our bilateral engagement with
Morocco. We have raised concerns relating to the export quota with
Moroccan officials on numerous occasions, both in person and in
writing. The issue featured prominently in the U.S.-Morocco Free Trade
Agreement Joint Committee meeting in February and in a more recent
meeting between USTR and the Moroccan Ambassador in Washington in June.
We are working with affected stakeholders and continue--in close
cooperation with the Department of State, the Department of
Agriculture, and the U.S. Embassy in Morocco--to gather relevant facts
and to urge the Government of Morocco to provide information (including
appropriate studies) as to whether there is a legitimate basis for
maintaining the restrictive export quota. A letter sent in June by the
U.S. Ambassador to Morocco to relevant Moroccan authorities is the most
recent example of this interagency cooperation. The U.S. Embassy in
Rabat is also coordinating with European Union officials--whose
industry is likewise affected by the export quota--in order to
reinforce our efforts.
Our next steps in engaging the Moroccan authorities on this issue
will depend on what we learn from the Moroccans and what we learn from
affected stakeholders and our own sources about the basis for the
Moroccan government's actions with respect to the export quota.
______
Prepared Statement of Hon. Orrin G. Hatch
April 16, 2015
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
today delivered the following opening statement at a committee hearing
on Congressional trade priorities:
I would like to thank everyone for attending today's hearing on
Congress and U.S. Tariff Policy.
And, welcome to the distinguished panel of witnesses we have before
the committee today: Ambassador Froman, Secretary Lew, and Secretary
Vilsack.
Each of you gentlemen serves in key positions and makes decisions
every day on important trade issues. We look forward to your testimony
and appreciate your contributions to this debate.
My hope is that this hearing will help kick-start the first real
opportunity we've had to debate U.S. trade policy in a number of years
as we get closer to introducing and enacting legislation to renew Trade
Promotion Authority, or TPA.
Let me start by stating one simple premise: U.S. trade with other
countries is a good thing.
Trade creates new opportunities for America's workers, enhances the
standard of living for our citizens, helps our national security by
solidifying alliances with like-minded nations, advances America's
values abroad, strengthens the rule of law, and helps lift people
across the globe out of poverty.
To effectively achieve these goals, Congress must be an effective
partner with the administration.
Our nation's constitutional framework is complex. Article I of the
Constitution grants to the Congress the power to regulate commerce with
foreign nations. But, Article II grants the President the power to
conduct foreign policy.
I think most would agree that trying to negotiate an agreement
among many different parties with different priorities and vague
objectives is an inherently difficult, if not impossible, proposition.
Most would also agree that it would be even more difficult to reach an
agreement if the parties are unsure if their negotiating partners will
be able put the agreement into force.
Given those realities, it's pretty easy to understand why TPA is so
important. No potential trade partner will give our negotiators their
best offer unless they know what issues matter to us most and whether
we can deliver on the deal. Simply put, for America to be able to
succeed at the trade negotiating table and to set the rules for a fair
international marketplace, we must speak with one voice in our demands
and provide assurance that we will deliver what we promise.
Now, people may have different theories about how to best achieve
those goals, but there is only one legislative tool with a proven track
record, and that is TPA.
TPA is the most powerful tool in Congress's trade arsenal. For
decades now, robust TPA laws have ensured that Congress plays a leading
role in setting our country's trade agenda and providing our trade
negotiators with the necessary tools to reach the best deals possible.
Currently, the Obama Administration is in the midst of negotiating
some of the most ambitious trade agreements in our nation's history. I
commend them for that. But, as I've stated on a number of occasions,
those negotiations will almost certainly fail if Congress does not
renew TPA.
And, make no mistake, failure in these negotiations would have a
negative impact on our economy.
More than 96 percent of the world's consumers live outside the
United States. In order to be competitive, American businesses need to
be able to sell more American-made products and services to those
overseas customers.
Put simply, if we want to create more opportunity and high-paying
jobs here at home, we need to open more foreign markets to U.S. goods
and services. We should be doing all we can to tear down barriers to
American exports while, at the same time, laying down enforceable rules
for our trading partners so we can be sure that American workers and
job-creators are competing on a level playing field.
We need to be leading the world on trade, writing the rules and
setting the standards. If we don't, other countries--countries like
China--most certainly will.
We can address all of these concerns by passing strong TPA
legislation. Senator Wyden and I are currently working to do just that.
I want to thank Senator Wyden for his efforts to help us get as far
as we have. I also want to once again thank the three cabinet officials
who are here to share their views on the role of Congress, U.S. tariff
policy, and what our work means to our nation's international trade
agenda.
______
Prepared Statement of Hon. Orrin G. Hatch
April 16, 2015
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
today delivered the following opening statement at a committee hearing
on trade priorities following the announcement of a bipartisan,
bicameral Trade Promotion Authority bill:
Welcome back. I appreciate everyone who has returned for this
second half of our hearing on trade policy.
Ambassador Froman, thank you for agreeing to stay a little longer.
I'm pleased to announce that Ranking Member Wyden, House Ways and
Means Committee Chairman Ryan, and I have reached an agreement on
legislation to renew Trade Promotion Authority. We've also reached an
agreement on bills to address Trade Adjustment Assistance and to
reauthorize and extend some trade preference programs.
I hope that all my colleagues will take the time to carefully study
these bills. Once they do, I think they will find that we've been able
to put together some balanced and effective legislation that will help
improve the health of our economy and better serve our nation's
hardworking taxpayers.
The TPA bill contains the clearest articulation of trade priorities
in our nation's history. It includes nearly 150 ambitious, high-
standard negotiating objectives, including strong rules for
intellectual property rights and agricultural trade, as well as
protections for U.S. investment. Many of these objectives break down
barriers that American exporters face in the 21st-century economy, such
as regulatory barriers, currency manipulation, and state-owned
enterprises.
The bill contains unprecedented consultation requirements that will
ensure that Congress is an equal partner throughout the negotiations.
It also includes new transparency requirements that will help the
public know and understand what is being discussed before agreements
are signed.
And, like prior TPA bills, the procedures in our bill guarantee
that all trade agreements will get an up-or-down vote in Congress.
At the same time, we included new tools to hold the administration
accountable, including a procedure that Congress can employ if our
trade negotiators fail to consult or make progress toward meeting the
negotiating objectives.
This is a strong bill, one that builds off the success of previous
iterations of TPA to enhance our efforts to expand market access for
our exporters and job creators.
Throughout the process of crafting this legislation, I have worked
closely with my colleagues and I would just like to thank all of them
for their contributions.
I'd like to thank Senator Portman for his input on trade issues.
He's got a great background in this area and his leadership on TAA and
HCTC has been extremely important.
Senator Toomey has been a great partner on enforcement issues. The
trade bills we are looking at include the strongest language yet on
enforcement and that's really because of members like Senator Toomey
and their work.
Senator Grassley, I'd like to thank you as well for your leadership
on agriculture issues.I'd also like to say a warm thanks to Senator
Isakson who has also been a strong voice for agriculture issues. In
addition, Senator Isakson has been a leader for years on the African
Growth and Opportunity Act and I look forward to working with him to
get that renewed along with the Generalized System of Preferences.
We are lucky to have Senator Burr and Senator Scott on the
committee. Both have been strong advocates in this process for the
textiles industry, and I would like to thank them for their work.
Senator Thune has provided many creative ideas on digital trade. I
think we have been able to incorporate a lot of them here. I'd like to
thank him for his contributions.
Senator Crapo and Senator Coats have been of great assistance on
some particularly challenging agriculture issues, and I'd like to thank
them as well.
As I mentioned this morning, we intend to move expeditiously on
these bills. If we don't act now we will lose our opportunity. I
appreciate the cooperation of all our members moving forward.
______
Prepared Statement of Hon. Orrin G. Hatch
April 21, 2015
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
today delivered the following opening statement at a committee hearing
on trade priorities and The Bipartisan Congressional Trade Priorities
and Accountability Act of 2015:
I'd like to welcome everyone to the continuation of our hearing on
Congress and U.S. Tariff Policy. Today, we have a very distinguished
panel of witnesses that I hope will help us expand the ongoing
discussion of our nation's trade agenda.
As everyone here knows, last week Senator Wyden and I, along with
House Ways and Means Committee Chairman Ryan, introduced legislation to
renew Trade Promotion Authority, or TPA. Our intention is to mark up
the TPA bill--along with a handful of other trade-related bills--later
this week.
This legislation is a long time coming.
TPA expired in 2007. While talks for various trade agreements have
gone on since that time, without TPA in effect, our negotiators have
been effectively negotiating with one hand tied behind their backs
because they have not been able to assure our trading partners that the
deal they sign is the one Congress will vote on in the end.
Our legislation will fix that.
I want to thank Ranking Member Wyden for his support and assistance
thus far. We've got a long way to go, but, working together, I am
confident we can get there.
Now, some have expressed concerns about the process by which we're
moving this bill forward. For example, I've heard arguments that we're
moving too quickly, without adequate discussion or examination.
Those concerns are, in my view, unfounded.
First of all, the bill on which our current TPA legislation is
based was first introduced in January of 2014, almost a year and a half
ago. Since that time, it has been available for examination,
dissection, discussion, and comment.
Thousands of organizations weighed in on the merits of that bill,
including business associations, organized labor, think tanks, and
advocacy groups.
Many members of Congress from both parties and in both chambers are
on the record either praising or criticizing that bill. And, officials
in the Obama Administration expressed their support for it.
True enough, in our discussions, Senator Wyden, Chairman Ryan, and
I made some improvements to that original bill. But, the fundamentals
remain the same and we've been very transparent as to what the changes
have been.
Second, in the 113th Congress, the Finance Committee held nine
hearings on trade, and TPA was brought up at virtually every one of
them. I know this because, more often than not, I was the one bringing
it up.
One of those hearings was devoted specifically and entirely to TPA
and included the testimony of witnesses across the spectrum, including
one representing organized labor.
Finally, since the 114th Congress convened just about three months
ago, this committee has had three hearings in which trade and TPA was a
major topic of discussion. Today's hearing is the fourth.
In other words, this is well-covered territory for this committee.
So, while I understand and respect that there are sincerely-held
views on this topic, some of which are different than mine, any
arguments that we've been less than forthcoming and transparent with
this TPA legislation are, not to put too fine a point on it, nonsense.
I've been in the Senate a long time. And, I think I'm generally
considered to be pretty reasonable. I am certainly willing to listen to
and consider any genuine concerns that some may have about process. I
want all sides to be heard and I want a fair and open debate. That's
why we're having this additional hearing.
By all means, we should have a frank and open discussion about
these issues and I hope we will continue to do so today. But, let's not
dress up opposition to trade and TPA as concerns about process.
During our hearing last week, I made two assertions about trade.
I stated plainly that U.S. trade with foreign countries is a good
thing. And, I said that TPA is the best tool Congress has in its
arsenal to help influence and facilitate trade.
Those are pretty fundamental assertions. And, at the end of the
day, people are either going to agree with them or they won't. More
hearings and weeks of additional delays aren't going to change many
minds one way or the other on those essential issues.
With that in mind, I welcome today's hearing. Like I said, we've
got a very distinguished panel of witnesses who I think will speak to
the heart of these matters. I look forward to a spirited discussion.
For my part, I just want to make clear--if it's not clear enough
already--that I believe Congress should be working hand in hand with
the administration to break down barriers to foreign markets in order
to give our businesses and job creators a chance to compete in the
global marketplace.
The United States should be a leader in international trade. We
should be setting the standards and making the rules. We simply cannot
afford to sit on the sidelines and let other countries dictate where
the world goes on trade.
Trade is an essential element of a healthy economy. We should be
doing all we can to advance a trade agenda that works for America and
advances our interests on the world stage.
______
Letter Submitted for the Record by Hon. Orrin G. Hatch
April 22, 2015
The Honorable Mitch McConnell The Honorable Harry Reid
Majority Leader Democratic Leader
United States Senate United States Senate
Washington, DC 20510 Washington, DC 20510
The Honorable John Boehner The Honorable Nancy Pelosi
Speaker Democratic Leader
U.S. House of Representatives U.S. House of Representatives
Washington, DC 20515 Washington, DC 20515
Dear Majority Leader McConnell, Speaker Boehner, Democratic Leader
Reid, and Democratic Leader Pelosi:
We are writing to urge swift action to renew Trade Promotion
Authority (TPA) on behalf of the nearly 300 undersigned organizations.
Our chambers of commerce, manufacturing organizations, and farm bureaus
represent millions of companies, workers, farmers, and ranchers from
every sector of the economy and every state in the union.
Trade agreements negotiated and concluded under TPA help drive
economic growth and job creation here at home. They enable
manufacturers, service providers, farmers, and ranchers across the
country to reach the 95 percent of the world's customers who live
outside our borders. One in four manufacturing jobs in the United
States depends on exports, and one in every three acres of farmland is
planted for consumers overseas. More than 97 percent of the 300,000
U.S. companies that export are small and medium-sized businesses.
However, the international playing field often is tilted unfairly
against businesses and workers in the United States. While our market
generally is open, U.S. exports face significant barriers abroad. Trade
agreements tear down these barriers and create a level playing field.
They help firms in this country and the millions of workers they employ
compete successfully overseas. America's 20 existing trade agreement
partners represent just 10 percent of the global economy, but purchase
nearly half of all U.S. exports.
To expand these benefits, the United States is negotiating new
trade agreements with some of the world's largest and fastest-growing
economies, including with Europe and 11 Asia-Pacific nations. The
United States also is pursuing multilateral deals that would reduce
barriers to trade in services and environmental goods worldwide.
However, to realize the potential of these agreements for U.S. jobs,
economic growth, and competitiveness, Congress must pass Trade
Promotion Authority.
TPA is a longstanding and proven partnership between Congress and
the President that enables Congress to set negotiating objectives and
requires the executive branch to consult extensively with legislators
during negotiations. We urge you to act on this essential legislation
as soon as possible this year.
Sincerely,
Alabama Alexander City Chamber of Commerce
Birmingham Business Alliance
Manufacture Alabama
Mobile Area Chamber of Commerce
Montgomery Area Chamber of Commerce
South Baldwin Chamber of Commerce
Alaska Greater Fairbanks Chamber of Commerce
Arizona Arizona Chamber of Commerce
Arizona Farm Bureau Federation
Arizona Manufacturers Council
Buckeye Valley Chamber of Commerce
Chandler Chamber of Commerce
Gilbert Chamber of Commerce
Greater Flagstaff Chamber of Commerce
Greater Phoenix Chamber of Commerce
Mesa Chamber of Commerce
Scottsdale Area Chamber of Commerce
Tempe Chamber of Commerce
Tucson Hispanic Chamber of Commerce
Tucson Metro Chamber
Arkansas Arkansas State Chamber of Commerce/Associated
Industries of Arkansas
California California Business Roundtable
California Chamber of Commerce
California Manufacturers & Technology
Association
Camarillo Chamber of Commerce
Carlsbad Chamber of Commerce
Cerritos Regional Chamber of Commerce
Chamber of Commerce of the Santa Barbara
Region
Chambers of Commerce Alliance of Ventura &
Santa Barbara Counties
Corona Chamber of Commerce
Desert Hot Springs Chamber of Commerce &
Visitors Center
Elk Grove Chamber of Commerce
Fresno Chamber of Commerce
Fullerton Chamber of Commerce
Gateway Chambers Alliance
Greater Conejo Valley Chamber of Commerce
Huntington Beach Chamber of Commerce
Indio Chamber of Commerce
Irvine Chamber of Commerce
Irwindale Chamber of Commerce
Long Beach Area Chamber of Commerce
Los Angeles Area Chamber of Commerce
Moreno Valley Chamber of Commerce
Murrieta Chamber of Commerce
North San Diego Business Chamber
Ojai Valley Chamber of Commerce
Orange County Business Council
Oxnard Chamber of Commerce
Palm Desert Area Chamber of Commerce
Palos Verdes Peninsula Chamber of Commerce
Pasadena Chamber of Commerce & Civic
Association
Port Hueneme Chamber of Commerce
Redondo Beach Chamber of Commerce
Sacramento Metropolitan Chamber of Commerce
San Bruno Chamber of Commerce
San Diego Regional Chamber of Commerce
San Francisco Chamber of Commerce
San Gabriel Valley Economic Partnership
San Jose Silicon Valley Chamber of Commerce
Santa Clara Chamber of Commerce and Convention-
Visitors Bureau
Simi Valley Chamber of Commerce
South Bay Association of Chambers of Commerce
Southwest California Legislative Council
Torrance Area Chamber of Commerce
Valley Industry and Commerce Association
Wilmington Chamber of Commerce
Colorado Colorado Association of Commerce & Industry
Colorado Business Roundtable
Colorado Competitive Council
Denver Metro Chamber of Commerce
Metro Denver Economic Development Corporation
South Metro Denver Chamber
Connecticut Connecticut Business and Industry Association
MetroHartford Alliance
Middlesex County Chamber of Commerce
The Bridgeport Regional Business Council
Delaware Central Delaware Chamber of Commerce
Delaware State Chamber of Commerce
Florida Associated Industries of Florida
Central Pinellas Chamber of Commerce
Florida Chamber of Commerce
Gainesville Area Chamber--Advanced
Manufacturing Council
Greater Boca Raton Chamber of Commerce
Greater Miami Chamber of Commerce
JAX Chamber
West Orange Chamber of Commerce
Georgia Cobb Chamber of Commerce
Georgia Association of Manufacturers
Georgia Chamber of Commerce
Metro Atlanta Chamber of Commerce
Savannah Area Chamber of Commerce
Hawaii Chamber of Commerce Hawaii
Kauai Chamber of Commerce
Idaho Boise Metro Chamber of Commerce
Idaho Association of Commerce & Industry
Illinois Aurora Regional Chamber of Commerce
Canton Area Chamber of Commerce
Chicago Southland Chamber of Commerce
Chicagoland Chamber of Commerce
Des Plaines Chamber of Commerce and Industry
Greater Oak Brook Chamber of Commerce and
Economic Development Partnership
Hoopeston Chamber of Commerce
Illinois Chamber of Commerce
Illinois Farm Bureau Federation
Illinois Manufacturers' Association
McLean County Chamber of Commerce
Northcenter Chamber of Commerce
Rolling Meadows Chamber of Commerce
Western DuPage Chamber of Commerce
Illinois/Indiana Quad Cities Chamber of Commerce
Indiana Indiana Chamber of Commerce
Indiana Farm Bureau Federation
Indiana Manufacturers Association
Indy Chamber
Nappanee Area Chamber of Commerce
St. Joseph County Chamber of Commerce
Wabash County Chamber of Commerce
Iowa Ames Chamber of Commerce
Greater Des Moines Partnership
Iowa Association of Business and Industry
Iowa Business Council
Iowa Chamber Alliance
Iowa Farm Bureau Federation
Mason City Chamber of Commerce
Kansas Fort Scott Area Chamber of Commerce
Greater Topeka Chamber of Commerce
Kansas Farm Bureau Federation
The Kansas Chamber of Commerce
Kentucky Commerce Lexington Inc.
Greater Louisville Inc.
Kentucky Chamber of Commerce
Northern Kentucky Chamber of Commerce
Louisiana Chamber Southwest Louisiana
Committee of 100 Louisiana
Greater New Orleans, Inc.
Jeff Davis Chamber of Commerce
Louisiana Association of Business and Industry
Monroe Chamber of Commerce
Natchitoches Area Chamber of Commerce
New Orleans Chamber of Commerce
Maine Maine Chamber of Commerce
Maryland Baltimore Washington Corridor Chamber of
Commerce
Maryland Chamber of Commerce
Massachusetts Associated Industries of Massachusetts
Fall River Area Chamber of Commerce & Industry
Metro South Chamber of Commerce
United Regional Chamber of Commerce
Michigan Goodwill Industries of Southwestern Michigan
Greater Brighton Area Chamber of Commerce
Michigan Chamber of Commerce
Michigan Chemistry Council
Michigan Farm Bureau Federation
Michigan Manufacturers Association
Minnesota Dakota County Regional Chamber
Eden Prairie Chamber of Commerce
International Falls Area Chamber of Commerce
Minnesota Chamber of Commerce
Minnesota Farm Bureau Federation
St. Cloud Area Chamber of Commerce
TwinWest Chamber of Commerce
Mississippi Mississippi Manufacturers Association
The Chamber and Economic Development Center of
Washington County
Missouri Associated Industries of Missouri
Missouri Chamber of Commerce and Industry
Missouri Farm Bureau Federation
St. Joseph Chamber of Commerce
St. Louis Regional Chamber
Montana Kalispell Chamber of Commerce
Montana Chamber of Commerce
Montana Farm Bureau Federation
Montana Manufacturing Council
Nebraska Columbus Area Chamber of Commerce
Holdrege Area Chamber of Commerce
Lincoln Chamber of Commerce
Nebraska Chamber of Commerce & Industry
Nevada Carson Valley Chamber of Commerce
Las Vegas Metro Chamber of Commerce
Nevada Manufacturers Association
The Chamber of Reno, Sparks, and Northern
Nevada
New Hampshire Business & Industry Association of New
Hampshire
New Jersey Morris County Chamber of Commerce
New Jersey Business & Industry Association
New Jersey State Chamber of Commerce
Newark Regional Business Partnership
New Mexico Greater Albuquerque Chamber of Commerce
New York Albany-Colonie Regional Chamber
Buffalo Niagara Partnership
JFK Airport Customs Brokers and Freight
Forwarders Association
Manhattan Chamber of Commerce
North Country Chamber of Commerce
Partnership for New York City
Rochester Business Alliance
The Business Council of New York State
The Chamber of Schenectady County
North Carolina Cabarrus Regional Chamber of Commerce
Charlotte Chamber of Commerce
Greater Raleigh Chamber of Commerce
North Carolina Chamber
North Carolina Farm Bureau Federation
Wilmington Chamber of Commerce
North Dakota Greater North Dakota Chamber
North Dakota/Minnesota The Fargo Moorhead West Fargo Chamber of
Commerce
Ohio Ashland Area Chamber of Commerce
Columbus Chamber of Commerce
Dayton Area Chamber of Commerce
Licking County Chamber of Commerce
Lima/Allen County Chamber of Commerce
Ohio Chamber of Commerce
Ohio Farm Bureau Federation
The Ohio Manufacturers' Association
Willoughby Western Lake County Chamber of
Commerce
Oklahoma The State Chamber of Oklahoma
Tulsa Regional Chamber
Oregon Associated Oregon Industries
Beaverton Area Chamber of Commerce
Hermiston Chamber of Commerce
Klamath County Chamber of Commerce
Oregon State Chamber of Commerce
Portland Business Alliance
Wilsonville Area Chamber of Commerce
Pennsylvania Chester County Chamber of Business and
Industry
Greater Pittsburgh Chamber of Commerce
Greater Reading Chamber of Commerce & Industry
Pennsylvania Business Council
Pennsylvania Chamber of Business and Industry
Pennsylvania Farm Bureau Federation
Pennsylvania Manufacturers' Association
Schuylkill Chamber of Commerce
Rhode Island Greater Providence Chamber of Commerce
Northern Rhode Island Chamber of Commerce
Rhode Island Chamber of Commerce Coalition
South Carolina Fountain Inn Chamber of Commerce
Myrtle Beach Area Chamber of Commerce
North Myrtle Beach Chamber of Commerce
South Carolina Chamber of Commerce
South Dakota Sioux Falls Area Chamber of Commerce
South Dakota Chamber of Commerce and Industry
Tennessee Clay County Chamber of Commerce
Greater Memphis Chamber
Johnson City Chamber of Commerce
Kingsport Area Chamber of Commerce
Tennessee Chamber of Commerce & Industry
Texas Dallas Regional Chamber
Fort Worth Chamber of Commerce
Greater Beaumont Chamber of Commerce
Greater Houston Partnership
Greater Irving Las Colinas Chamber of Commerce
Lewisville Area Chamber of Commerce
Lubbock Chamber of Commerce
North Texas Commission
Port Aransas Chamber of Commerce/Tourist
Bureau
San Antonio Chamber of Commerce
Texas Association of Business
Utah Salt Lake Chamber
Utah Manufacturers Association
Vermont Associated Industries of Vermont
Vermont Chamber of Commerce
Virginia Dickenson County Chamber of Commerce
Fairfax County Chamber of Commerce
New Market Area Chamber of Commerce
Virginia Chamber of Commerce
Virginia Manufacturers Association
Washington Association of Washington Business
Bellevue Chamber of Commerce
Bonney Lake Chamber of Commerce
Economic Alliance Snohomish County
Ferndale Chamber of Commerce
Greater Pasco Area Chamber of Commerce
Greater Spokane Incorporated
Greater Yakima Chamber of Commerce
Kittitas County Chamber of Commerce
Seattle Metropolitan Chamber of Commerce
Southwest King County Chamber of Commerce
Tacoma-Pierce County Chamber
Tri-City Regional Chamber of Commerce
Washington Council on International Trade
West Virginia West Virginia Chamber of Commerce
West Virginia Manufacturers Association
Wisconsin Eau Claire Area Chamber of Commerce
Fox Cities Chamber of Commerce
Metropolitan Milwaukee Association of Commerce
Oshkosh Chamber of Commerce
Wisconsin Farm Bureau Federation
Wisconsin Manufacturers & Commerce
Wyoming Campbell County Chamber of Commerce
National American Farm Bureau Federation
Business Roundtable
National Association of Manufacturers
National Black Chamber of Commerce
U.S. Chamber of Commerce
cc: Members of the United States Congress
______
Prepared Statement of Hon. Jacob J. Lew, Secretary,
Department of the Treasury
April 16, 2015
Chairman Hatch and Ranking Member Wyden, and distinguished members
of the Committee, thank you for the opportunity to testify on Trade
Promotion Authority. Bolstering global economic growth and stability
remains a priority of the United States, and the U.S. Department of the
Treasury has been working hard over the last six years to achieve a
high-standard trade and investment agenda that raises income and spurs
growth.
Our robust trade agenda--the cornerstones of which include the
Trans-Pacific Partnership and the Transatlantic Trade and Investment
Partnership agreements--will expand opportunities for American
businesses, create high-quality jobs, and further unlock the
macroeconomic gains from expanded trade and investment.
Today, exports make up some 30 percent of global GDP, and global
per-capita incomes are over 50 percent higher than what they were 20
years ago. These macroeconomic gains are due in part to the framework
of bilateral, regional, and multilateral trade agreements that are in
place and to institutions such as the World Trade Organization that
have been developed to implement the rules-based trading system. The
rules-based trading system facilitates greater openness to trade--
boosting U.S. and global exports of goods and services and
opportunities for American workers--even as it raises the standard of
living for consumers, through greater choice and access to quality
imports.
Much has changed in the way we trade and invest in the last 30
years. The growth of the services sector, the rise of electronic
banking and commerce, and the major role of state-owned enterprises in
some of the most dynamic regions of the world--altogether, these trends
have expanded the sectors in which U.S. firms are investing and
competing. At the same time, U.S. firms continue to face market access
and fair competition challenges to operating, investing, and exporting
overseas.
Reducing trade barriers and securing reforms abroad through well-
crafted trade agreements benefit both U.S. economic competitiveness and
global economic prosperity. First, our firms and workers stand to
benefit directly as our partner countries further open their markets to
imported goods and services, including from the United States. Second,
as countries open up to trade, over time they innovate more, invest
more, and become more productive; the result is a stronger and more
stable global economy. That, too, is important for American businesses
and workers.
trade promotion authority legislation
Trade Promotion Authority (TPA) is critical to helping secure the
substantial economic gains that our ambitious trade and investment
agreements can bring, including labor and environmental standards,
consumer protections, and benefits for small and medium-sized
businesses. There are few policy measures that can do more to support
jobs and deliver sustained high-quality growth than trade agreements,
and TPA sends a strong signal to our trading partners that Congress and
the Administration speak with one voice to the rest of the world on our
priorities.
We strongly agree with Members of Congress that unfair currency
practices need to be addressed. Since day one, the President has been
clear that no country should grow its exports based on a persistently
undervalued exchange rate, and currency has been at the top of
Treasury's international agenda. We share the goal of moving major
economies to market-determined exchange rate systems that are
transparent, flexible, and reflect underlying economic fundamentals.
progress on exchange rate policies
We are working tirelessly to address currency concerns, and our
efforts through bilateral and multilateral engagement have met with
considerable success:
We have secured unprecedented commitments in the G-7 and G-20
related to exchange rate practices. Through our leadership, Japan and
other G-7 countries have publicly affirmed that they will not target
exchange rates and will use only domestic instruments to achieve
domestic economic objectives.
Likewise, G-20 members have also pledged to move more rapidly
toward more market-determined exchange rate systems and flexibility in
order to reflect underlying economic fundamentals, avoid persistent
exchange rate misalignments, not target exchange rates, and refrain
from competitive devaluations.
We have successfully pressed the IMF to bolster its surveillance of
its members' exchange rate policy obligations. As a result of our
efforts, the IMF has begun publishing an External Sector Report that
includes estimates of exchange rate misalignment for 25 major
economies, and has developed an additional tool for monitoring
countries' foreign exchange reserves.
We have made progress with China on exchange rates through the
S&ED, and continue to raise the issue regularly with our Chinese
counterparts. As part of our Strategic and Economic Dialogue (S&ED),
China has committed to reduce its foreign exchange intervention as
conditions permit--and the amount of China's currency intervention has
fallen significantly in the last year. This has contributed to a
decline in China's current account surplus from a peak of 10 percent of
GDP before this Administration took office to just 2 percent of GDP
last year. RMB has seen a real effective appreciation of nearly 30
percent since China allowed its currency to resume appreciation in mid-
2010.
We will continue to intensify our efforts on exchange rates using
the tools and channels that are most effective. We will build on our
ongoing multilateral and bilateral engagement in the G-20, IMF, and
U.S.-China Strategic and Economic Dialogue to press countries even
harder towards more market-determined exchange rates and to secure
strong commitments on currency disciplines.
We believe that more progress is needed, and Treasury will continue
to engage with Congress on how best to address currency issues in a way
that is consistent with our overall strategy of bilateral and
multilateral engagement.
______
Prepared Statement of Richard L. Trumka, President, American Federation
of Labor and Congress of Industrial Organizations (AFL-CIO)
April 21, 2015
Mr. Chairman, Senator Wyden, members of the committee, thank you
for the opportunity to speak today on behalf of the twelve and a half
million working men and women of the AFL-CIO on this important topic.
The labor movement and our allies have been advocating for a
Raising Wages economy for many years. We don't believe we can build
strong and sustainable economic growth on a foundation of stagnant
wages and disempowered workers. And a key component of a Raising Wages
economy is a new approach to trade and globalization--one that puts
good jobs, safe products, and a clean environment at the center of
global economic integration--not enhanced corporate power and profits.
The AFL-CIO has been advocating for a new trade policy for more
than two decades--we have engaged with the executive branch, as well as
with Congress, to advocate for progressively strengthening and making
more effective our labor and environmental provisions, for reforming
investment rules, for ensuring that we have found the appropriate
balance in regulatory measures and intellectual property protections,
for fair rules of origin, and for finally including meaningful currency
provisions in trade agreements, among many other issues.
Far from being ``opposed to trade on principle,'' we have supported
trade deals when warranted, such as the U.S.-Jordan trade agreement and
trade preference programs such as the African Growth and Opportunity
Act (AGOA) and the Generalized System of Preferences (GSP). We have
supported reauthorization of the
Export-Import Bank. We have engaged with policymakers in both parties
and at every level to work toward a new generation of trade policies
that will create a virtuous cycle of demand-led growth while
strengthening our democracy, protecting workers' rights globally and
promoting sustainable global economic development. Key to reforming our
trade policies is abolishing the outdated, unaccountable, undemocratic
fast track process.
For too long, decisions about trade policy have been made behind
closed doors, with excessive secrecy. The secrecy tends to serve the
policy interests of political and economic elites, not the broad
interests of the American middle class. American workers, farmers,
small and medium-sized businesses and domestic producers have paid the
price.
The stakes could not be higher. The Trans-Pacific Partnership
(TPP), now being negotiated by our government, includes twelve
countries and about 40 percent of the world economy. It is designed to
be infinitely expandable--that means that additional countries could
join in the future, subject to congressional approval and as long as
they agree to the original terms negotiated. TPP could be the last
trade agreement we negotiate, so it is especially crucial that we get
the terms right.
The idea that fast track lets Congress set the standards and goals
for the TPP is a fiction--the agreement has been under negotiation for
more than five years and is essentially complete. Congress cannot set
meaningful negotiating objectives in a fast track bill if the
administration has already negotiated most of the key provisions. And
Congress will lost crucial leverage over any few remaining provisions
by agreeing to fast track at this late date.
To update our trade and economic policies for the 21st century, we
must change the process that governs the negotiation and passage of
trade deals. Today's ``trade'' agreements are about much more than
tariffs and quotas. They affect foreign and domestic investment,
financial services, food safety, labor rights, environmental
protections, Buy American procurement policies, consumer safety, health
care, and more. These agreements put in place rules that could limit
the ability of Congress and the states to legislate in the public
interest now and for decades to come. Yet the public and Congress have
too little say in the important details of these deals.
Through fast track, past Congresses have ceded authority over trade
policy to the executive branch with virtually no strings attached.
While all fast track bills have gone through the charade of listing
``negotiating objectives,'' there have been no consequences when the
administration willfully ignores or fails to achieve any or all of
these. Fast track has failed to include meaningful accountability
mechanisms, including tools to turn off expedited consideration when
warranted. This cedes important and long-lasting decisions about our
economy to a few negotiators in a small room in the middle of the
night. This is undemocratic. It's wrong. And it has led to disastrous
policies for America's workers and producers.
America needs an entirely new trade negotiating authority, not
minor tweaks at the margin.
The Hatch-Wyden-Ryan Bipartisan Congressional Trade Priorities and
Accountability Act of 2015 (Fast Track 2015) does not represent a new
form of trade negotiating authority. It doesn't meet a single criterion
set out by the AFL-CIO in its publication ``Time for a New Track.''
Congress must not agree to fast track a fast track bill. The short
time allotted between introduction of the bill, hearings, committee
consideration, and floor action is a sign that this bill cannot stand
on its own merits. It is losing support fast. It seems that its
proponents see their only hope for passage is to rush it through before
anyone has had a chance to review it properly. The American people
deserve better.
A new and effective trade negotiating authority must:
Ensure Congress approves trade agreement partners before
negotiations begin: Congress should be able to weigh in on
whether countries (including those that suppress their wages
through allowing or engaging in serious labor and human rights
abuses) are appropriate partners to receive permanent trade
benefits. If Congress does not agree with the choice of trade
partners, it ought to be able to deny expedited consideration
to agreements that include them. Fast Track 2015 contains not a
single opportunity for Congress to reject an administration's
proposed trading partners.
Create negotiating objectives that are specific to the trade
partners involved: Even though the U.S. has amassed historic
trade deficits over the last 20 years and is currently
negotiating the TPP with partners that have histories as labor
and human rights abusers, currency manipulators, over-fishers,
or transshipment hubs, Fast Track 2015 fails to tailor
objectives to the unique situations in the eleven countries
involved.
Ensure that Congress, not the executive branch, determines whether
Congressional trade objectives have been met: Fast Track 2015
fails to include an effective accountability mechanism to
ensure that Congressional instructions are carried out, leaving
the executive branch in the position of essentially grading its
own performance. Not surprisingly, no executive branch has ever
confessed failure to meet Congress's goals. Congress should
have the final say on whether negotiating objectives have been
met. It could employ a variety of tools to help evaluate the
deal, for instance by requiring reports from the Government
Accountability Office, Congressional trade advisors, or from
all Congressional committees whose jurisdiction would be
impacted by the topics covered by the trade deal in question.
Open hearings would help shed considerable light on the
completed deals and help Congress to determine if its
objectives were fulfilled.
On the other hand, an evaluation process solely in the hands of the
committees responsible for trade policy (Finance and Ways and
Means) won't provide a reliable measurement. It is widely
conceded that neither committee is representative of the
opinions of the larger body of Congress when it comes to trade.
Ensure Congress has effective opportunities to strip expedited
consideration provisions from trade deals that fail to meet
Congressional objectives or to incorporate Congressional and
public participation: Fast track, even if it had perfect
negotiating objectives, has never provided Congress a realistic
opportunity to withdraw expedited consideration from deals that
fail to measure up. For reasons noted above, the process cannot
be left solely in the hands of the committees responsible for
trade, as Fast Track 2015 does. The rest of Congress would have
to rely on these committees to reject the trade deal first (an
extremely unlikely possibility given the makeup of the panels)
and only then attempt to strip expedited consideration from the
deal. Leaving the decision solely in the hands of these
committees provides no effective opportunity to ``strip
expedited consideration'' from a job-killing deal.
Nor should the process set impossibly high supermajority vote
thresholds, which Fast Track 2015 also does, by requiring 60
votes in the Senate to strip fast track from a bad deal when
only 51 are required to vote the deal down. If fast track
privileges can be granted to a trade agreement on a simple
majority vote, it should be possible to remove the privileges
with a simple majority vote. To be clear, the goal of this
criterion is not to subject a trade deal and its implementing
legislation to an unwieldy process. It is to ensure that bad
deals go back to the negotiating table instead of becoming bad
laws.
Increase access to U.S. trade policymaking, trade proposals, and
negotiating text for Congress, congressional staff, and the
public: Fast Track 2015 simply locks in current USTR practice,
which is unacceptable. Instead, Congress should broadly expand
the universe of those who have access to U.S. proposals and
full negotiating texts (optimally, full negotiating texts
should be available to the public). The 21st century is the
Internet age--citizens are accustomed to viewing proposed and
amended legislation on line. Trade policy should be no
different. While USTR analogizes sharing trade proposals to
showing a used car salesman one's bottom line at the outset of
negotiations, this analogy is inapt. Neither USTR, nor any
other rational negotiating partner, would put its bottom line
in its first proposal; and after the proposal has been shared
with the negotiating partner, any possible justification for
keeping it secret is moot.
Be part of a larger trade and competitiveness package that
addresses shortcomings in existing trade enforcement and
remedies and provides complementary domestic economic policies
that will help ensure that all can benefit from trade: Fast
Track 2015 contains not a single piece of domestic economic
reform to help America's working families thrive under expanded
trade. Trade is not a substitute for investing in our own
future. To work, trade deals require thoughtful complementary
policies, including upgrading our ports, airports, roads and
rail; investing in education and skills training so that
workers young and old can benefit from any new jobs that trade
creates; labor market policies that support working families;
renewal of export promotion initiatives, including the Export-
Import Bank; extending tax policies to promote advanced
manufacturing, renewable fuels, and R&D; and fully funding
well-designed and easy to use enforcement mechanisms to catch
and deter trade cheats. Enacting trade deals without upgrading
our domestic economy will only lead to more disappointing deals
that undermine jobs and wages for U.S. workers and exacerbate
the race to the bottom.
In short, the proposed fast track mechanisms are inadequate to
ensure that the major shortcomings in the TPP will be resolved
in ways that will benefit, rather than harm, working people in
the U.S. and around the Pacific Rim. Among the numerous issues,
the top four remain:
Currency: Addressing currency manipulation is probably the single
most effective action the U.S. can take to create jobs. The
fact that currency provisions continue to be absent from the
TPP is disturbing on two fronts: it is both a glaring policy
omission and a procedural concern. In the absence of existing
fast track legislation, the one trade-related issue on which
bipartisan majorities of the House and Senate have spoken
clearly is currency. Misaligned currency is an important
contributing factor to the U.S. trade imbalance with China and
other nations. The Economic Policy Institute estimates the U.S.
could add as many as 5.8 million jobs by eliminating currency
manipulation. Provisions must be included in the TPP, and they
must be enforceable. Otherwise, the U.S. will continue to bleed
jobs to China and other currency manipulators.
Investment: To ensure that the TPP does not skew benefits toward
global corporations, it should eliminate Investor-State Dispute
Settlement (ISDS). ISDS undermines democratic control, and is
currently being used to attack public health policies in
Australia and Uruguay, environmental policies in Canada and
Peru, and labor provisions in Egypt. Rather than challenge
actual takings or discriminatory policies, global firms use
ISDS to seek compensation for a violation of the nebulous right
to ``fair and equitable treatment,'' which the private
arbitrators have interpreted expansively. ISDS creates a
chilling effect on local, state, and national measures and
poses an unjustifiable risk to our democracy and economy.
Climate: Currently, U.S. trade policy could undermine both domestic
efforts to address climate and the administration's bilateral
agreement with China to cooperate on climate change and clean
energy. Unless the TPP sets the bar in line with the recent
bilateral agreement with China, it represents a missed
opportunity. Without a border adjustment--to adjust the cost of
highly polluting imports so that low-emission U.S. and high-
emissions foreign goods can fairly compete--the TPP will do
nothing to stop manufacturers from closing up shop in the U.S.
and moving to TPP countries with no carbon reduction scheme in
order to sell cheaper, dirtier goods here and around the globe,
undercutting not only our workers but our efforts to address
climate change.
Labor: The labor movement has been clear from the outset of the TPP
talks that the status quo on labor (the so-called ``May 10''
agreement) needed further strengthening. The ``May 10''
standards were a first step towards leveling the playing field
for workers, but did too little to ensure timely and effective
action. In 2011, the AFL-CIO joined with labor federations from
the majority of TPP countries to draft and submit a
comprehensive labor chapter that attempted to address past
shortcomings. To the best of our knowledge, this new model has
not been incorporated into the agreement. We have no reason to
believe that, despite being touted as including the ``highest
labor standards ever,'' the TPP will include meaningful
improvements over ``May 10.'' The problem with language such as
``highest labor standards ever'' is that the point of
comparison is so low--even after the highly touted ``Labor
Action Plan'' in Colombia, workers continue to be killed,
beaten, and threatened for exercising basic rights like
organizing with fellow workers for better wages and working
conditions.
Indeed, the TPP may be too complex to stake out a position ``for''
or ``against'' without careful consideration of its voluminous
text, a careful study of the impacts of prior, similarly
structured agreements, and broad consultations with legal
experts from a variety of points of view who have also had an
opportunity to study the texts. Such discussion, study, and
thorough evaluation seems unlikely given the current level of
secrecy surrounding the text. Moreover, it seems even less
likely to occur should Congress accede to fast track authority,
which will severely limit the time that Congress and outside
experts may study the text before a simple up-or-down vote is
required. Finally, should Congress decide that, while the TPP
contains some beneficial provisions, on balance it presents a
risk to the firms, families, and communities of the United
States, Congress may already have lost much of its leverage to
force improvements in the deal.
In sum, to get the TPP right, Congress faces consequential choices
that, for the good of the country, should not be constrained by
the misguided secrecy, speed, and unaccountability of fast
track. To best safeguard the authority over trade policy given
to Congress by the Constitution, the AFL-CIO urges Congress to
reject the outdated and undemocratic process known as fast
track and develop instead a new trade negotiating authority for
the 21st century.
______
Submitted for the Record by Richard L. Trumka
United States Senate
Washington DC 20510
January 8, 2014
President Barack Obama
The White House
1600 Pennsylvania Avenue
Washington, DC 20500
Dear Mr. President:
Following the conclusion of another round of Trans-Pacific Partnership
(TPP) negotiations, we write to reiterate our serious concern that
strong and enforceable currency disciplines have not yet been addressed
in the ongoing negotiations and may not be included in the final
agreement. A well-negotiated TPP has the potential to help American
businesses and workers, but an agreement that fails to address foreign
currency manipulation could further harm the United States economy by
leading to a permanent unfair trade relationship.
Our concern regarding the impact of foreign currency manipulation on
America's workers and our economy is not new and is shared by the vast
majority of our colleagues. In June, 230 Members of the House of
Representatives wrote to you and said ``it is imperative that the
agreement address currency manipulation.'' Then, in September, 60
Senators sent a similar letter to Secretary Lew and Ambassador Froman
asking that TPP and all future trade agreements ``include strong and
enforceable foreign currency manipulation disciplines to ensure that
these agreements meet the `high standards' our country, America's
companies, and America's workers deserve.''
Thus far, United States trade negotiators have failed to propose
currency disciplines in any TPP negotiating rounds, and our written
concerns have gone unanswered. As you know, Congress ratifies free
trade agreements, and we expect our concerns to be addressed in a
strong and effective manner. On behalf of the 290 Members of Congress
who expect foreign currency manipulation to be addressed in our trade
agreements, please update us on what is being done to address our
concerns.
As we stated before, we agree with your goal that TPP should achieve
``high standards worthy of a 21st century trade agreement.'' However,
we cannot conclude a truly ambitious trade agreement without the
inclusion of strong and enforceable currency provisions. We believe the
Administration has had adequate time not only for internal
deliberations about such provisions, but also to negotiate them with
our trading partners. Likewise, there exists significant congressional
support for including currency manipulation provisions in TPP. We look
forward to working with you to meaningfully address currency
manipulation and to make TPP a truly 21st century trade agreement.
Sincerely,
Lindsey Graham Debbie Stabenow
Rob Portman Ron Wyden
Jeff Merkley Tom Udall
Christopher Murphy Amy Klobuchar
John Boozman Charles E. Schumer
Elizabeth Warren Joe Manchin III
Al Franken Robert Menendez
John D. Rockefeller IV Heidi Heitkamp
Barbara A. Mikulski Claire McCaskill
Benjamin L. Cardin Jeanne Shaheen
Mark Begich Christopher A. Coons
Roy Blunt Carl Levin
Edward J. Markey Richard Burr
James M. Inhofe Jerry Moran
Jeff Sessions Patrick Leahy
Kirsten E. Gillibrand Daniels Coats
Saxby Chambliss James E. Risch
Robert P. Casey, Jr. John Hoeven
Jack Reed Martin Heinrich
Tom Harkin Bill Nelson
Tammy Baldwin Richard Blumenthal
Joe Donnelly David Vitter
Mark Pryor Bernard Sanders
Sheldon Whitehouse Jon Tester
Sherrod Brown Angus S. King, Jr.
Susan M. Colins Dick Durbin
Brian Schatz Mary L. Landrieu
Mazie K. Hirono Chuck Grassley
Pat Roberts Barbara Boxer
Kay R. Hagan Tom Coburn
______
Congress of the United States
Washington DC 20515
June 6, 2013
President Barack Obama
The White House
Washington, DC 20500
Dear President Obama:
As the United States continues to negotiate the Trans-Pacific
Partnership, it is imperative that the agreement address currency
manipulation. Exchange rates strongly influence trade flows, and, in
recent years, currency manipulation has contributed to the U.S. trade
deficit and cost us American jobs. Incorporating currency provisions in
the agreement will strengthen our ability to combat these unfair trade
practices and help to create a level playing field for American
workers, businesses, and farmers.
Undervalued exchange rates allow other countries to boost exports or
their products and to impede exports of ours. They also contribute to
trade imbalances and market access limitations that make it difficult
for U.S. companies to compete in foreign countries. According to the
Peterson Institute for International Economics, a minimum of 1 million
American jobs have been shipped overseas as a result of currency
manipulation alone. The consequences are not singular to the U.S.;
misaligned currencies are distorting the entire global economy.
Despite U.S. efforts to address currency manipulation at the G-20,
major currencies remain significantly undervalued. Including currency
disciplines in the TPP is consistent with and will bolster our ongoing
efforts to respond to these trade-distorting policies. It will also
raise TPP to the 21st century agreement standard set by the
Administration. More importantly, it will create a level playing field
for American businesses and workers and prevent more U.S. jobs from
being shipped overseas.
Thank you for your consideration of this letter. We look forward to
working with you to address undervalued exchange rates in the TPP
agreement.
Sincerely,
MICHAEL H. MICHAUD SAM GRAVES
Member of Congress Member of Congress
JOHN D. DINGELL RICK CRAWFORD
Member or Congress Member of Congress
SANDER M. LEVIN MARK POCAN
Member of Congress Member of Congress
JOHN CONYERS, JR. DAVID P. JOYCE
Member of Congress Member of Congress
WALTER B. JONES DANIEL LIPINSKI
Member of Congress Member of Congress
TIM RYAN MARCY KAPTUR
Member of Congress Member of Congress
GARY C. PETERS JAMES P. McGOVERN
Member of Congress Member of Congress
HOWARD COBLE BILL FOSTER
Member of Congress Member of Congress
MO BROOKS CAROL SHEA-PORTER
Member of Congress Member of Congress
DAVID LOEBSACK JANICE D. SCHAKOWSKY
Member of Congress Member of Congress
JERROLD NADLER BETTY McCOLLUM
Member of Congress Member of Congress
STEVE COHEN HENRY C. JOHNSON, JR.
Member of Congress Member of Congress
JOYCE BEATTY MICHAEL F. DOYLE
Member of Congress Member of Congress
ROSA L. DeLAURO PATRICK T. McHENRY
Member of Congress Member of Congress
MICHAEL E. CAPUANO MIKE McINTYRE
Member of Congress Member of Congress
GEORGE MILLER SCOTT H. PETERS
Member of Congress Member of Congress
PETER J. VISCLOSKY WILLIAM L. ENYART
Member of Congress Member of Congress
WILLIAM L. OWENS KEITH ELLISON
Member of Congress Member of Congress
GENE GREEN STEPHEN F. LYNCH
Member of Congress Member of Congress
CHRIS COLLINS LINDA T. SANCHEZ
Member of Congress Member of Congress
PAUL TONKO ERIC SWALWELL
Member of Congress Member of Congress
GWEN MOORE PETER WELCH
Member of Congress Member of Congress
DANIEL T. KILDEE H. MORGAN GRIFFITH
Member of Congress Member of Congress
JOHN A. YARMUTH BRUCE L. BRALEY
Member of Congress Member of Congress
DAVID N. CICILLINE NICK J. RAHALL II
Member of Congress Member of Congress
LOUISE M. SLAUGHTER PETER A. DeFAZIO
Member of Congress Member of Congress
CORRINE BROWN GREGG HARPER
Member of Congress Member of Congress
RAUL M. GRIJALVA CHRISTOPHER P. GIBSON
Member of Congress Member of Congress
EDDIE BERNICE JOHNSON KERRY L. BENTIVOLIO
Member of Congress Member of Congress
DAVID B. McKINLEY MIKE J. ROGERS
Member of Congress Member of Congress
CANDICE S. MILLER MICHAEL G. FITZPATRICK
Member of Congress Member of Congress
ELEANOR HOLMES NORTON MARCIA L. FUDGE
Member of Congress Member of Congress
ROBERT A. BRADY BRIAN HIGGINS
Member of Congress Member of Congress
DANIEL B. MAFFEI DONALD M. PAYNE, JR.
Member of Congress Member of Congress
ALCEE L. HASTINGS CHELLIE PINGREE
Member of Congress Member of Congress
BILL JOHNSON ALLYSON Y. SCHWARTZ
Member of Congress Member of Congress
PATRICK MEEHAN DONNA F. EDWARDS
Member of Congress Member of Congress
BILL HUIZENGA ANN KIRKPATRICK
Member of Congress Member of Congress
JAMES R. LANGEVIN CHERI BUSTOS
Member of Congress Member of Congress
CHARLES B. RANGEL TIM WALBERG
Member of Congress Member of Congress
JOHN LEWIS BILL PASCRELL, JR.
Member of Congress Member of Congress
BRAD SHERMAN GRACE F. NAPOLITANO
Member of Congress Member of Congress
JOSE E. SERRANO KAREN BASS
Member of Congress Member of Congress
GRACE MENG TONY CARDENAS
Member of Congress Member of Congress
JANICE HAHN BARBARA LEE
Member of Congress Member of Congress
SANFORD D. BISHOP, JR. JOE COURTNEY
Member of Congress Member of Congress
LUIS V. GUTIERREZ MARK TAKANO
Member of Congress Member of Congress
JOHN F. TIERNEY PETE P. GALLEGO
Member of Congress Member of Congress
BETO O'ROURKE ALBIO SIRES
Member of Congress Member of Congress
KURT SCHRADER TAMMY DUCKWORTH
Member of Congress Member of Congress
ADAM KINZINGER COLLIN C. PETERSON
Member of Congress Member of Congress
CHAKA FATTAH CYNTHIA M. LUMMIS
Member of Congress Member of Congress
SUSAN W. BROOKS ROB BISHOP
Member of Congress Member of Congress
JULIA BROWNLEY LLOYD DOGGETT
Member of Congress Member of Congress
ANN M. KUSTER DAVID SCOTT
Member of Congress Member of Congress
AL GREEN MARC A. VEASEY
Member of Congress Member of Congress
JOHN P. SARBANES TIMOTHY H. BISHOP
Member of Congress Member of Congress
JOE BARTON G.K. BUTTERFIELD
Member of Congress Member of Congress
MATTHEW A. CARWRIGHT RON BARBER
Member of Congress Member of Congress
ALAN GRAYSON RUSH HOLT
Member of Congress Member of Congress
SHEILA JACKSON LEE LOIS CAPPS
Member of Congress Member of Congress
C.A. DUTCH RUPPERSBERGER WILLIAM R. KEATING
Member of Congress Member of Congress
ELIJAH E. CUMMINGS TOM MARINO
Member of Congress Member of Congress
ANDRE CARSON NIKI TSONGAS
Member of Congress Member of Congress
LORETTA SANCHEZ ROBERT E. ANDREWS
Member of Congress Member of Congress
EDWARD J. MARKEY XAVIER BECERRA
Member of Congress Member of Congress
EMANUEL CLEAVER DAVID E. PRICE
Member of Congress Member of Congress
FRANK PALLONE, JR. DUNCAN HUNTER
Member of Congress Member of Congress
DANNY K. DAVIS TERRI A. SEWELL
Member of Congress Member of Congress
JOE WILSON BRADLEY S. SCHNEIDER
Member of Congress Member of Congress
JOHN GARAMENDI ROBIN L. KELLY
Member of Congress Member of Congress
RICHARD M. NOLAN YVETTE D. CLARKE
Member of Congress Member of Congress
DORIS O. MATSUI TIMOTHY J. WALZ
Member of Congress Member of Congress
JOSEPH P. KENNEDY III STEVAN A. HORSFORD
Member of Congress Member of Congress
WILLIAM LACY CLAY JIM McDERMOTT
Member of Congress Member of Congress
DON YOUNG DINA TITUS
Member of Congress Member of Congress
JUDY CHU RODNEY DAVIS
Member of Congress Member of Congress
MIKE QUIGLEY RICHARD E. NEAL
Member of Congress Member of Congress
ADAM B. SCHIFF DEREK KILMER
Member of Congress Member of Congress
BENNIE G. THOMPSON BEN RAY LUJAN
Member of Congress Member of Congress
MICHAEL G. GRIMM LUCILLE ROYBAL-ALLARD
Member of Congress Member of Congress
ELIZABETH H. ESTY TIM MURPHY
Member of Congress Member of Congress
GLENN THOMPSON JON RUNYAN
Member of Congress Member of Congress
FRED UPTON LOU BARLETTA
Member of Congress Member of Congress
MELVIN L. WATT ROBERT C. SCOTT
Member of Congress Member of Congress
ED PASTOR FREDERICA S. WILSON
Member of Congress Member of Congress
JOHN K. DELANEY RAUL RUIZ
Member of Congress Member of Congress
JERRY McNERNEY SEAN PARTICK MALONEY
Member of Congress Member of Congress
FRANK A. LoBIONDO HAKEEM S. JEFFRIES
Member of Congress Member of Congress
TULSI GABBARD SAM FARR
Member of Congress Member of Congress
JAMES A. HIMES ED WHITFIELD
Member of Congress Member of Congress
CAROLYN McCARTHY THEODORE E. DEUTCH
Member of Congress Member of Congress
JOHN SHIMKUS MARLIN A. STUTZMAN
Member of Congress Member of Congress
SUZANNE BONAMICI LAMAR SMITH
Member of Congress Member of Congress
MICHELLE LUJAN GRISHAM AMI BERA
Member of Congress Member of Congress
NITA M. LOWEY KYRSTEN SINEMA
Member of Congress Member of Congress
LOIS FRANKEL ROBERT B. ADERHOLT
Member of Congress Member of Congress
MICHAEL C. BURGESS DAN BENISHEK
Member of Congress Member of Congress
ROBERT PITTENGER LEE TERRY
Member of Congress Member of Congress
JEFF FORTENBERRY JAMES E. CLYBURN
Member of Congress Member of Congress
KEVIN YODER HENRY A. WAXMAN
Member of Congress Member of Congress
ELIOT L. ENGEL JOHN BARROW
Member of Congress Member of Congress
JUAN VARGAS CAROLYN B. MALONEY
Member of Congress Member of Congress
DIANA DEGETTE JOHN C. CARNEY, JR.
Member of Congress Member of Congress
JACKIE SPEIER PATRICK E. MURPHY
Member of Congress Member of Congress
STEVE ISRAEL KATHY CASTOR
Member of Congress Member of Congress
ED PERLMUTTER ANNA G. ESHOO
Member of Congress Member of Congress
THOMAS E. PETRI CHRIS VAN HOLLEN
Member of Congress Member of Congress
GERALD E. CONNOLLY JIM COOPER
Member of Congress Member of Congress
JIM MATHESON SUSAN A. DAVIS
Member of Congress Member of Congress
BOBBY L. RUSH ADAM SMITH
Member of Congress Member of Congress
ALAN S. LOWENTHAL RICK LARSEN
Member of Congress Member of Congress
SUZAN K. DELBENE DENNY HECK
Member of Congress Member of Congress
GLORIA NEGRETE McLEOD EARL BLUMENAUER
Member of Congress Member of Congress
JOSEPH CROWLEY JOHN B. LARSON
Member of Congress Member of Congress
______
Committee on Ways and Means
Ranking Member Sander M. Levin
April 16, 2015
The Hatch-Wyden-Ryan TPA Bill:
A Major Step Back on TPP Negotiations
The Trans-Pacific Partnership (TPP) negotiations--the most important
trade negotiations in at least 20 years--are at a critical juncture--
with many issues unresolved. TPP has the potential to raise standards
and open new markets for U.S. businesses, workers, and farmers--or to
lock in weak standards, uncompetitive practices, and a system that does
not spread the benefits of trade.
Unfortunately, the Hatch-Wyden-Ryan Trade Promotion Authority (TPA)
does not move us toward a stronger TPP agreement that will garner
broad, bipartisan support in Congress. TPP is not where it needs to be
right now, and Hatch-Ryan-Wyden does nothing to change that. On all of
the major issues in the negotiations, the negotiating objectives are
obsolete or woefully inadequate. We can't expect to get the best deal
if we are not asking for the right things.
The Hatch-Wyden-Ryan TPA gives up Congressional leverage at the exact
wrong time. Instead of pressing USTR to get a better agreement or
signaling to our negotiating partners that Congress will only accept a
strong agreement, the Hatch-Wyden-Ryan TPA puts Congress in the back
seat and greases the skids for an up-or-down vote after the fact. Real
Congressional power is not at the end of the process, it is right now
when the critical outstanding issues are being negotiated.
Below is a brief review of the major outstanding issues in TPP, and how
the Hatch-Wyden-Ryan TPA bill fails to instruct the Administration on
how each issue should be resolved.
How the TPA Bill is a Major Step Back in Improving TPP Negotiations
Currency Manipulation
Issue: Majorities in the House and the Senate have urged the
Administration to include strong and enforceable currency
obligations in the TPP, which includes a number of countries
that have manipulated their currencies in the recent past, such
as Japan. Other alleged manipulators, such as Korea and Taiwan,
have also expressed an interest in joining TPP.
Status: The Administration has not made a currency proposal in the TPP
negotiations.
TPA The Hatch-Wyden-Ryan TPA bill leaves it up to the
Administration to decide how to address currency manipulation,
and only lays out options that the President already has to
address the issue--including things like ``monitoring'' that
are already being done.
Labor Rights
Issue: Will all TPP parties meet international worker rights
standards?
Status: TPP does not yet have a mechanism to ensure compliance by TPP
parties that have labor laws and practices that fall far short
of international standards contained in the ``May 10th
Agreement'' even though TPP is expected to include the May 10th
obligation with enforceability through the basic dispute
settlement structure in TPP.\1\
---------------------------------------------------------------------------
\1\ The ``May 10th Agreement'' of 2007, as initiated by House
Democrats, incorporated for the first time in history strong and fully
enforceable labor and environmental obligations in trade agreements and
included several other important new rules, including providing a
better balance between strong intellectual property rights and access
to affordable medicines.
Vietnam presents the greatest challenge we have ever had in
ensuring compliance. Workers there are prohibited from joining
any union independent of the communist party. While the
Administration is discussing these issues with Vietnam, Members
of Congress and stakeholder advisors have not yet seen any
proposal to address these critical issues. The Administration
also has not committed to ensuring that all changes to laws and
regulations are made before Congress votes--or even before the
---------------------------------------------------------------------------
TPP agreement enters into force.
Mexico also presents considerable challenges. Employer-
dominated ``protection unions'' are prevalent, and the
arbitration boards responsible for resolving labor disputes are
inherently and structurally biased. It is not clear whether,
how, or when the Administration will resolve these and other
issues with Mexico. Without their resolution, it will not be
possible to say that the problems with NAFTA are being fixed.
TPA The Hatch-Wyden-Ryan TPA bill does not address what
Congress believes needs to be done to bring countries like
Vietnam and Mexico (as well as Malaysia and Brunei) into
compliance with international labor standards. It contains only
general language in line with the May 10th Agreement.\2\
---------------------------------------------------------------------------
\2\ The TPA bill lumps together labor and environment into one
negotiating objective.
---------------------------------------------------------------------------
Environment
Issue: Will the TPP environmental chapter ensure a level of
environmental protection at least as high as the May 10th
standard which directly incorporated seven multilateral
environmental agreements into the text of past trade
agreements?
Status: The TPP environment chapter will look very different from the
May 10th Agreement. The environment chapter covers a broad
range of subjects, ranging from shark finning, to fish
subsidies, to trade in illegally harvested plants and animals.
But the obligations themselves--the ``verbs'' used--are often
weak.
TPA The Hatch-Wyden-Ryan TPA bill simply lists the seven
multilateral environmental agreements from the May 10th
Agreement, which is not consistent with the approach taken in
TPP and is obsolete in providing instructions since the TPP is
already taking a different approach. The TPA bill also does not
address whether or how climate change issues should be handled
in TPP, an issue raised by other countries in the TPP
negotiations.
Investment and Investor-State Dispute Settlement (ISDS)
Issue: Will the TPP include an investor-state dispute settlement
(ISDS) mechanism that provides foreign companies a right of
action against other governments for infringing on the
companies' investment rights? Will the TPP include an ISDS
mechanism without incorporating any new, additional safeguards
to prevent it from being abused?
There are now more cases of private investors challenging
environmental, health, and other regulations in nations--even
nations with strong and independent judicial systems and rule
of law. Just last month, an investor won a NAFTA ISDS case in
which the government of Nova Scotia denied a permit to develop
a quarry in an environmentally sensitive area. Other investment
disputes involve ``plain packaging'' of tobacco products in
Australia aimed at protecting public health and pharmaceutical
patent requirements in Canada. This issue is receiving
heightened scrutiny among negotiators and from a broad-range of
interested parties. Some of our TPP partners do not support
ISDS or are seeking safeguards to ensure that nations preserve
their right to regulate. The Economist magazine, the Cato
Institute, and the Government of Germany (the birthplace of
ISDS) have also recently expressed concerns with ISDS.
Status: The text of the investment chapter in TPP includes ISDS and is
basically the same as the model adopted 10 years ago, even
though conditions have changed dramatically in the past 10
years, and calls for changes to or elimination of the chapter
have intensified. Despite proposals to include new safeguards
in the ISDS mechanism, the Administration has not made any
attempts to incorporate them.
TPA The Hatch-Wyden-Ryan TPA investment negotiating
objective is the same as it was 12 years ago again and is
obsolete.
Access to Medicines
Issue: Will the TPP ensure a balance between strong intellectual
property rights and access to affordable, life-saving
medicines, as provided under the May 10th Agreement?
Status: Absent some change in course, the final text is likely to
provide less access to affordable medicines than provided under
the May 10th Agreement. For example, developing countries will
likely be required to ``graduate'' to more restrictive
intellectual property rights standards before they become
developed--a clear inconsistency with May 10th. There are also
a number of concerns that the TPP agreement will restrict
access to medicines in the United States and other developed
countries (e.g., by encouraging second patents on similar
products, by having long periods of data exclusivity for
biologic medicines, by allowing drug companies to challenge
government pricing and reimbursement decisions).
TPA The Hatch-Wyden-Ryan bill includes additional language
on access to medicines that was not part of the 2002 bill,
apparently as a nod to the May 10th Agreement. But it is
unclear what this language means.
Automotive Market Access
Issue: Will the TPP finally open Japan's market to U.S. automobiles
and auto parts?
For most of the past 15 years, our trade deficit with Japan has
been second only to our deficit with China, and over two-thirds
of the current deficit is in automotive products. Japan has
long had the most closed automotive market of any
industrialized country, despite repeated efforts by U.S.
negotiators over decades to open it. At a minimum, the United
States should not open its market further to Japanese imports,
through the phase-out of tariffs, until we have time to see
whether Japan has truly opened its market.
Status: The Administration has not stated a specific period of time
for when the phase-out in U.S. tariffs for autos, trucks, and
auto parts would begin or when they would end. The parties are
also still working to address certain non-tariff barriers that
Japan utilizes to close their market.
TPA The Hatch-Wyden-Ryan TPA bill broadly states that the
United States should ``expand competitive market opportunities
for exports of goods.'' Such a broad negotiating objective
provides no guidance regarding how to truly open the Japanese
automotive market.
Rules of Origin
Issue: Will the TPP incorporate rules that ensure that the benefits
of the tariff cuts flow primarily to the parties to the
agreement and not to free-rider third parties that have not
signed up for the commitments in the TPP?
``Rules of origin'' define the extent to which inputs from
outside the TPP region (e.g., China) can be incorporated into
an end product for that product to still be entitled to
preferential/duty-free treatment under the Agreement. The rule
should be restrictive enough to ensure that the benefits of the
agreement accrue to the parties to the agreement. Some have
argued that the automotive rule of origin in TPP should be at
least as stringent as the rule in NAFTA, given that TPP
involves all three of the NAFTA countries plus nine others.
Status: There are a number of rules of origin being negotiated in the
TPP for different products, including in the sensitive textile
and apparel, agricultural, and automotive sectors. Some of the
rules are largely settled while others--including the rules for
automotive products--remain open and controversial.
TPA The Hatch-Wyden-Ryan TPA bill provides no guidance
whatsoever on any rule of origin on any product in the TPP
negotiations.
Tobacco Controls
Issue: Will the TPP safeguard countries' ability to regulate tobacco
as a matter of public health?
TPP needs to explicitly preserve the ability to regulate
tobacco. A number of recent international disputes have
challenged tobacco measures, including multiple disputes (both
WTO and ISDS) challenging Australia's plain packaging scheme
for cigarettes. A number of public health groups are concerned
about the potential of FTAs to roll back legitimate tobacco
control measures.
Status: In 2013, the Administration decided not to pursue a safe
harbor for tobacco in TPP that it had originally supported.
Instead, the Administration tabled a proposal that merely
confirms that tobacco measures may be subject to the normal
public health exception in our trade agreements--drawing
intense criticism from former mayor Bloomberg, the New York
Times editorial board, and NGOs.
TPA The Hatch-Wyden-Ryan TPA bill provides no guidance on
tobacco control measures, given the Administration the
flexibility to include whatever it wants, or nothing at all.
State-Owned Enterprises
Issue: Will the TPP impose rules on companies effectively run and
funded by their governments, so that truly private enterprises
can compete with them on a level playing field?
In today's global economy, competition is fiercer than ever.
Certain countries that rely heavily on state-controlled and
state-funded enterprises (also known as state-owned enterprises
or SOEs) are able to give those champions an enormous--and
unfair--advantage over private companies that compete against
them in the marketplace. And, in turn, those SOEs don't always
operate based on commercial considerations, but instead may
pursue state objectives such as favoring local suppliers over
U.S. suppliers.
Status: The TPP will include disciplines on SOEs that are expected in
language to go beyond anything ever included in past trade
agreements. But the extent to which an SOE provision will help
to level the playing field, will be determined by the degree to
which parties seek very broad country-specific carve-outs for
particular SOEs. As concerning, the definition of SOEs is too
narrow, allowing enterprises that are effectively controlled by
foreign governments (but where the government owns less than
50% of the shares) to circumvent the obligations.
TPA The TPA bill provides no guidance on what an acceptable
definition of an SOE is, or on what kinds of carve-outs are
acceptable.
Agricultural Market Access
Issue: Will the TPP eliminate tariffs on virtually all U.S.
agricultural exports, especially in markets that have been
traditionally sheltered from competition from trade like
Japan's and Canada's?
Status: It appears that the United States and Japan will agree that
Japan will reduce tariffs--but never eliminate them--on
hundreds of agricultural products, far more carve-outs than
under any U.S. trade agreement in the past. Canada, on the
other hand, has not put any offer on the table for dairy
products, which is causing some concern in the dairy industry.
This concern is even stronger given that the dairy industry is
not entirely pleased with the status of the Japan negotiations,
plus the fact that the industry is concerned about an increase
in dairy imports from New Zealand. Finally, the dairy industry
is also closely watching the negotiations over ``geographical
indications'' as it relates to cheeses and other dairy
products.
TPA The Hatch-Wyden-Ryan TPA bill has as its objective
``reducing or eliminating'' tariffs on agricultural products.
(Emphasis added.) Thus, even Japan's opening offer--to reduce
but never eliminate tariffs on nearly 600 products--satisfied
this objective, demonstrating this objective is meaningless.
And while former Chairman Camp said that Japanese ``exclusions
from tariff elimination translate to Congressional
opposition,'' the bill does not mention comprehensive tariff
elimination even as a negotiating objective, much less as a
requirement.
Food Safety Measures
Issue: Will the TPP safeguard the ability of regulators to block
unsafe imported food while also ensuring that U.S. agricultural
exporters are not subjected to bogus food safety measures?
Status: TPP will be the first U.S. trade agreement that will include
restrictions on the kind of measures TPP parties can take to
block food imports based on alleged safety concerns, reflecting
growing, legitimate concerns of U.S. farmers and ranchers.
We have asked the Administration to confirm that existing U.S.
laws, regulations and practices will not be impacted by these
obligations. There is also a concern that we do not have
adequate resources to monitor the safety of food imports.
TPA The Hatch-Wyden-Ryan TPA bill requires the President to
report on any changes to U.S. labor laws or practices necessary
to comply with the labor obligations in a trade agreement. It
has no similar provision regarding changes to U.S. food safety
laws or practices, nor does it ensure adequate resources to
monitor the safety of food imports.
The Basic Structure of Hatch-Wyden-Ryan is Flawed
In addition to the obsolete or weak negotiating objectives, the Hatch-
Wyden-Ryan TPA does not strengthen the role of Congress once its power
is ceded through TPA.
For example:
Hatch-Wyden-Ryan relies on the President to certify
whether his negotiators have met the negotiating objectives
that Congress set. It is unacceptable to rely upon a
President--who negotiated the agreement--to issue a statement
``asserting that the agreement makes progress in achieving''
Congressional negotiating objectives.
Hatch-Wyden-Ryan includes a provision that ``creates a
new mechanism for the removal of expedited procedures for a
trade agreement if, in the judgment of either the House or
Senate, that agreement does not meet the requirements of TPA.''
But this is authority that the House and Senate already hold.
We can always change the rules of the House. Indeed, House
Democrats did that when we removed the Bush-negotiated Colombia
Free Trade Agreement from ``fast-track'' procedures in 2008.
The so-called ``third process'' would happen after the
agreement is finalized and after the implementing legislation
is introduced further indicated how meaningless it is in
providing Congress a real role in the negotiations.
Hatch-Wyden-Ryan leaves it up to USTR ``to develop
within 120 days of enactment written guidance on enhanced
coordination with Congress'' which is particularly meaningless
given the status of TPP negotiations.
______
Prepared Statement of Hon. Tom Vilsack, Secretary,
Department of Agriculture
April 16, 2015
Mr. Chairman, members of the Committee, I am pleased to come before
you today to discuss the benefits of agricultural trade, trade
agreements, and Trade Promotion Authority (TPA) for America's farmers,
ranchers, and producers.
The Administration fully supports passage of bipartisan TPA
legislation. Securing TPA is a top USDA priority. That is why I have
been speaking publicly and sending USDA officials to roundtables around
the country to make the case for a trade agenda that merits strong
bipartisan support. TPA is a linchpin in finalizing trade agreements
that strengthen the U.S. economy through expanding exports, which are
critically important to the U.S. agricultural sector.
Fiscal years 2009 to 2014 represent the strongest six years in
history for U.S. agricultural trade, with U.S. agricultural exports
totaling $771.7 billion. Agricultural exports last fiscal year reached
$152.5 billion, the highest level on record. U.S. agricultural exports
support more than one million jobs across America. These numbers would
not be possible without the market access secured in trade agreements.
Access to export markets is vital to U.S. agriculture. Our
producers rely on and prosper from access to foreign markets. We
export:
About half of U.S. wheat, milled rice, and soybean production;
Over 60 percent of almond, walnut and pistachio production;
More than two-thirds of cotton production;
40 percent of grape production, 20 percent of cherry production
and 20 percent of apple production;
20 percent of poultry and pork production and 10 percent of beef
production.
Population growth and rising incomes--particularly in the
developing countries of the Asia-Pacific--are creating significant new
agricultural export opportunities. U.S. farmers, ranchers, and food
processors are well positioned to capitalize on growing global demand,
especially since the productivity of U.S. agriculture is growing faster
than domestic food and fiber demand. But to capitalize, we need to
break down tariff and non-tariff barriers to allow our agricultural
sector to compete on a level playing field. Eight former Secretaries of
Agriculture agree. That is why they recently wrote to you noting that
it is critical for U.S. agriculture that Congress passes a bipartisan
TPA. The former Secretaries noted how each of them worked hard to open
foreign markets and support trade agreements that help U.S. farmers,
ranchers, and producers thrive.
Despite our export successes, many other countries' markets are not
as open to American products as our markets are to theirs. Trade
agreements are the most effective way to eliminate foreign tariffs,
unscientific regulatory barriers, and bureaucratic administrative
procedures designed to block trade. Trade agreements lead to expanded
agricultural exports by promoting economic growth, removing trade
barriers and import duties, and developing mutually beneficial trade
rules.
Key to our ability to negotiate and implement market-opening
agreements has been enactment of trade negotiating authority. TPA
ensures that the United States has the credibility to conclude the best
deal possible at the negotiating table. TPA ensures common trade
agreement objectives between the President and the Congress, and
appropriate consultation prior to final Congressional approval or
disapproval of a trade agreement. TPA will signal to Trans-Pacific
Partnership (TPP) and Transatlantic Trade and Investment Partnership
(T-TIP) negotiation counterparts that Congress and the Administration
stand together on the high standards we are seeking at trade talks.
For U.S. agriculture the opportunities of TPP are clear across the
board. Here are a few examples where TPP will address tariffs and
expand market opportunities for U.S. farmers and ranchers:
Beef--Japan is the largest export market for U.S. beef, valued at
$1.6 billion in 2014. Tariffs are as high as 50 percent in some
TPP countries.
Pork--Japan was the United States' top pork market in 2014 with $2
billion in sales despite high tariffs and a complicated import
system, both of which will be addressed in TPP.
Poultry--Poultry tariffs in the TPP region are as high as 240
percent, and in 2014, the United States exported over $2.5
billion of poultry to the TPP region.
Dairy Products--TPP countries markets for dairy accounted for $3.6
billion in U.S. dairy product exports in 2014.
Fruits--Tariffs on fruits are as high as 40 percent across the TPP
region, and in 2014, the United States exported almost $3.1
billion in fresh fruits to the TPP region.
Vegetables--In 2014, the United States exported almost $5 billion
in fresh and processed vegetables to the TPP region, and
tariffs are as high as 90 percent.
Wheat--In 2014, the United States exported more than $2 billion of
wheat to the TPP region, including to Japan where the United
States is the dominant supplier.
Soybeans and Soybean Products--The TPP region is the fourth-
largest export destination for U.S. soybeans, accounting for
over $1 billion a year in sales, despite tariffs as high as 20
percent.
In addition to cutting tariffs, the TPP will include strong
sanitary and phytosanitary (SPS) provisions that will improve
transparency and scientific decision-making to provide expanded
access for U.S. products including meat, fresh fruits, and
vegetables.
Trade in the 21st century is also about America's place in the
world. The TPP is key to markets in Asia and the ability for the United
States to play a lead role in establishing the rules and terms of trade
throughout the Pacific Rim. If we don't get a trade agreement, the
world will not stand still; other countries will step in and fill the
void. They will have their own trade agreements. For those of us in
agriculture who are concerned about raising standards, reducing
barriers to trade, securing preferential access, and instituting
enforcement provisions, the question is who do you want writing the
rules of the road? I want the United States negotiating those rules.
With TPA, the United States will be able to seal the deal on high
standard agreements, like the TPP and the T-TIP, that will help
America's farmers and ranchers increase U.S. exports and compete in a
highly competitive, globalized economy. But don't just take my word for
it, I urge you to speak to your farmers, ranchers, and producers. A
group of more than 70 agricultural organizations recently sent a letter
to Congress stating that TPP can become the ``most important regional
trade negotiation ever undertaken'' but for ``TPP to become reality,
Congress needs to pass TPA.'' I am committed to working with you in
securing a bipartisan TPA.
Thank you. I look forward to your questions.
______
Prepared Statement of Hon. Ron Wyden
April 16, 2015
In several town halls I've recently held at home in Oregon, the
number one issue that came up was secrecy. That's why I felt it was
important to start the conversation on this issue as soon as possible.
If you believe in trade and you want more of it, it doesn't make sense
to have all this secrecy that makes the public cynical about what's
going on. American trade policy needs to be pulled out of the time warp
so that it works better for the middle class and delivers a new level
of transparency. This has to be about creating more red, white and blue
jobs and helping people climb the economic ladder. The same old
playbook on trade won't work for Oregonians, so I won't accept it.
As Chairman Hatch and I discussed, we are working hard on finding
common ground on modernizing our approach to trade policy. That
includes Trade Promotion Authority, Trade Adjustment Assistance,
tougher enforcement strategies and other important programs.
There are some very significant goals to accomplish. I believe it's
essential to step up our enforcement of trade laws to stop rule-
breaking countries more effectively. Enforcement should be based on
defending American jobs and promoting economic growth at home.
It's time to raise the bar on labor standards, environmental
protection, and human rights. No other country will carry the banner
and fight for those values like the United States.
It's important to solidify the support system for workers in Oregon
and across the country. Middle-class trade policies will work best when
our workforce is ready to compete and when workers have access to job
training, financial support, and health care.
And finally, it's necessary to build a better process and more
transparency in trade policy. The public has a right to know what's at
stake in trade negotiations, plain and simple. Those are some of the
priorities I'm focused on as the committee works to find common ground.
I look forward to discussing these issues with the witnesses here
today.
______
Prepared Statement of Hon. Ron Wyden
April 16, 2015
What's most important about the package I worked on with Chairmen
Hatch and Ryan, in my view, is that it builds middle-class trade
policies that will heighten transparency, expand economic opportunity,
and create good jobs here at home. Let's be clear--this legislation
will not dust off the same old playbook from decades ago. Our approach
to trade has been stuck in a time warp for too long. That old plan
doesn't work for Oregonians or for everyday Americans across the
country. This new package is a modern approach designed to help
American workers and businesses take on the challenges of the global
marketplace.
It does that by setting higher standards for trade agreements,
stepping up tough enforcement, and delivering a new level of
transparency, accountability, and oversight in trade. In sum, this
package raises the bar for trade deals, and challenges our negotiators
and other countries to meet it. If they fall short and the product
doesn't meet our standards, Congress can still hit the brakes on a bad
deal. That's something I fought to secure. And this package strengthens
the support system for American workers and helps ensure our workforce
is ready to compete. So with the remainder of my time this afternoon,
I'd like to run briefly through those highlights.
First is how this legislation will ensure American businesses and
workers--particularly in the middle class--get more out of trade. This
package includes a new tool to put the focus of trade enforcement back
where it belongs--on American jobs and growth--and make sure our
trading partners live up to their commitments. It includes new
enforcement provisions to stop foreign companies from making end-runs
around our laws. And if other countries try to break the rules, it will
include a new monitoring system to ensure that the warning bells will
go off earlier than ever before.
With this package, labor rights and environmental standards will be
brought to the core of trade agreements and backed by the threat of
sanctions, rather than left unenforced on the periphery. There will be
a new emphasis on human rights in agreements. And there will be new
priorities set to ensure information can flow freely across national
borders, which is crucial in today's digital economy. Nobody else has
the muscle or the determination to force progress on those issues like
the United States does.
Second, I want to talk about how this legislation creates a better
process and more transparency in trade policy. Under this package, the
public and their representatives in Congress will get real-time updates
on what's at stake in trade negotiations. Every member of Congress will
have full access to the text of negotiations from beginning to end. And
any trade deal will be public for 60 days before the president can sign
it.
No trade deal will be able to change U.S. law without Congressional
action. There will not be any back door for corporations to skirt U.S.
law. Foreign companies will have no more rights in international
tribunals than they have in American courts.
And with this package, there will be a new procedure to hit the
brakes on bad trade deals before they reach the Senate or House floor.
So this is not a green light for any future trade deal that comes
along.
Third, this legislation backs workers in Oregon and across the
country by providing job training and financial support and by
preserving their access to health care. Competing in the global economy
is a tough, national challenge. Taking that challenge on, it's
absolutely essential to support America's workers--especially in tough
times. That's why this package expands the Trade Adjustment Assistance
program to include not just manufacturing sector workers but service
sector workers as well, and to cover workers were hurt by competition
from any country around the world. This restores the policy to exactly
what was in place in 2013, and extends it until July 2021. It also
extends the Health Care Tax Credit.
Those three points are only some of what this legislation does. It
also includes important preference programs called the Generalized
System of Preferences and the African Growth and Opportunity Act. GSP
will last through 2017 and AGOA for a decade. It includes a five year
extension of the Haiti HOPE Act.
A full description of everything this package does to modernize
trade policy would keep us here till sundown, so I'll close by saying
this. There are booming economies around the world that have more money
to spend with every passing year. So my bottom line is, we should grow
and manufacture things here, add value to them here, and ship them to
consumers in those markets abroad. The package of legislation I've
worked on with Chairmen Hatch and Ryan will help ensure our trade
policies do that in a transparent way that strengthens the middle
class, expands economic opportunity, and creates high-skill, high-wage
jobs here at home. I look forward to discussing that opportunity with
our witnesses today.
______
Prepared Statement of Hon. Ron Wyden
April 21, 2015
My guiding principle in six months of negotiating with Chairman
Hatch and working with the members of this committee is that the
playbook for trade has to change. It's clear, in my view, that trade
agreements in 2015 must be very different than trade agreements from
the 1990s. The president himself said in the State of the Union that
previous trade deals haven't always, ``lived up to the hype.'' So our
policies can't be stuck in a time warp.
Twenty-five years ago, nobody carried around iPhones. The Internet
was not anything close to the economic engine it is today. China was
only beginning to develop into an economic powerhouse. Container ships
were smaller and the world traded less.
It's a different world today, which is why the legislation the
committee is debating this week throws out the old playbook. Here's
some of what's different with this legislation.
First, it will put the focus of enforcement back where it belongs--
on jobs and growth here in America. I hear a lot of people ask, ``Why
bother negotiating new trade deals when the existing trade laws aren't
being enforced?'' This legislation will help make sure the warning
bells go off earlier and more loudly when other countries try to break
the rules. And it will help stop other countries and companies that try
to make end-runs around our laws. It will also break down unfair trade
barriers that are preventing Made in America products from competing on
a level playing field in overseas markets.
Second, with this legislation, the U.S. is going to aim higher in
its trade deals. In the 1990s, labor rights and environmental standards
were unenforceable side-deals in trade agreements. Those side-deals had
no teeth, which meant they weren't much good from the beginning. That's
going to change today because labor and the environment will be core,
enforceable elements in trade agreements going forward. Furthermore,
there will be a new emphasis on human rights in trade deals. And
protecting an open Internet and the digital economy will be new
priorities.
Third, this legislation is going to fight the excessive secrecy
that causes people to be skeptical about trade. If you believe in trade
and want more of it, why have so much secrecy? Under this legislation,
any trade deal will be public for 60 days before the president can sign
it. Add in the time it takes to move through Congress, and that means
deals will be public for four or five months. In addition, Congress and
the public will get real-time updates on what's at stake in
negotiations. That's a new level of transparency.
Fourth, this legislation goes further than any TPA bill to protect
American sovereignty. It guarantees that trade deals cannot change U.S.
law without congressional action. And foreign companies will have no
more rights in international tribunals than they have in American
courts today. There won't be any back door that would let corporations
skirt our laws.
Finally, this legislation protects Congress' ability to hit the
brakes on a bad trade deal. This bill is not a green light for the
Trans-Pacific Partnership or any trade deal that comes before Congress.
What this legislation does is raise the bar for future trade deals and
challenge our negotiators and foreign countries to meet it. If they
fail, Congress can stop a bad deal dead in its tracks. That's an
important democratic power that I fought to protect.
I'll wrap up by saying that the global middle class will more than
double in size by 2030, with most of that growth overseas. And as I see
it, there will be a positive link between the strength of America's
middle class and the growing middle class around the world. Billions of
people, for the first time, will be looking to buy food, computers,
cars, and hundreds of other products and services. I bet everybody in
this hearing room would like to see those products and services made
and delivered by Americans.
In my view, the legislation under debate this week--and in the
weeks ahead--is all about fighting for the Oregon brand and the
American brand. This is Congress's best chance to produce middle-class
trade policies and fight for American values around the world. And I'm
looking forward to debating how best to accomplish that.
Communications
----------
Letter Submitted by the American Chemistry Council
April 21, 2015
The Honorable Orrin G. Hatch The Honorable Ron Wyden
Chairman Ranking Member
Committee on Finance Committee on Finance
U.S. Senate U.S. Senate
219 Dirksen Senate Office Building 219 Dirksen Senate Office Building
Washington, D.C. 20510 Washington, D.C. 20510
Dear Chairman Hatch and Ranking Member Wyden:
The American Chemistry Council (ACC) strongly supports current
initiatives to expand access for U.S. exports to key international
markets. We particularly support the Trans-Pacific Partnership (TPP)
and Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations
as a means to achieve these export objectives. Trade Promotion
Authority (TPA) renewal is among the most critical trade votes Congress
must undertake to realize America's ambitious trade agenda and support
expanded growth in exports. We urge Congress to renew TPA as soon as
possible.
The business of chemistry in the United States is enjoying an
unprecedented boom in competitiveness and growth, largely due to the
increased supply of low-cost natural gas, a feedstock and a power
source for chemical manufacturing. As a result of shale gas, more than
229 separate chemical manufacturing investments have been announced
since 2010, representing a cumulative capital investment of $140
billion in new chemical capacity. This new capacity will exceed U.S.
domestic demand, and will necessarily serve important export markets.
Even with the recent drop in oil prices, gross exports of chemical
products linked directly to natural gas are projected to double in the
next fifteen years, from $60 billion in 2014 to $123 billion by 2030,
according to a recent report from Nexant, Inc. However, enhanced U.S.
chemical export performance will depend on many factors, including the
U.S. pursuing the right trade policies that further strengthen the
competitive position of the U.S. industry.
TPA is critical to completing the trade agreements now being
negotiated. TPA will therefore help open markets and help ensure the
U.S. chemical industry can capitalize on its massive export potential.
The Congressional trade agenda should also include the reauthorization
of the Miscellaneous Tariff Bill (MTB). U.S. manufacturers large and
small use the MTB's tariff suspension provisions to obtain raw
materials, proprietary inputs and other products that are not available
in our nation without incurring unnecessary tariff barriers. Each day
that passes without an MTB process hurts American manufacturers'
ability to do business. In fact, the failure to pass the MTB has
essentially imposed a tax on manufacturers of $748 million and economic
losses of $1.857 billion over three years. The impacts extend to the
people and businesses that depend on manufacturing. Ramifications are
experienced throughout the supply chain, from the suppliers, to the
millions of people who are employed in manufacturing, to the local
governments that depend on the spending and tax revenue generated by
the industry. Any action to reduce barriers to domestic production and
increase the competitiveness of U.S. companies must include the
reauthorization of MTB.
For U.S. chemical manufacturers to succeed in today's global economy,
we must be able to compete effectively in international markets. For
this reason, we support an ambitious trade agenda, including TPA and
MTB, that deliver enhanced access to overseas markets and support the
competitive position of U.S. manufacturers. ACC looks forward to
working with you to ensure that an ambitious trade agenda delivers on
its promise.
Sincerely,
Michael P. Walls
Vice President
Regulatory and Technical Affairs
______
UNITED STATES SENATE
COMMITTEE ON FINANCE
HEARING ON ADVANCING CONGRESS'S TRADE AGENDA:
CONGRESS AND U.S. TARIFF POLICY
APRIL 21, 2015
STATEMENT OF THE DISTILLED SPIRITS COUNCIL
OF THE UNITED STATES, INC.
The following statement is submitted on behalf of the Distilled
Spirits Council of the United States, Inc. (Distilled Spirits Council)
for inclusion in the printed record of the Committee's hearing on
Advancing Congress's Trade Agenda and U.S. Tariff Policy. The Distilled
Spirits Council is a national trade association representing U.S.
producers, marketers and exporters of distilled spirits products. Its
member companies export spirits products to more than 130 countries
worldwide.
THE IMPORTANCE OF TRADE TO THE U.S. SPIRITS INDUSTRY
The Distilled Spirits Council and its members have a strong and
growing interest in trade, from a commercial perspective and from a
policy perspective. As a commercial matter, our members have become
increasingly reliant on exports to fuel growth. Indeed, global U.S.
spirits exports have more than doubled over the past decade, reaching
over $1.5 billion in 2014. This was the eighth consecutive year that
exports of American-made spirits exceeded $1 billion. The majority of
U.S. spirits exports are comprised of Bourbon and Tennessee Whiskey,
which are recognized in several trade agreements as distinctive
products of the United States. Exports of rum and other spirits also
make a significant contribution to the U.S. economy. As of 2012, the
distilled spirits industry supported 717,000 direct employees.
Continuing to expand exports supports current and future employment in
the industry.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Given the growing importance of export markets to the industry's
long term growth, the Distilled Spirits Council has a strong interest
in a wide range of trade policy matters and has long been a very active
supporter of market-liberalizing trade initiatives. For example, the
Distilled Spirits Council has strongly supported multilateral, regional
and bilateral trade agreements. We are active participants in the
business coalitions supporting the negotiations toward a Trans-Pacific
Partnership Agreement (TPP) and Transatlantic Trade and Investment
Partnership (TTIP), have supported Congressional approval of free trade
agreements (FTAs) the United States has concluded with various trading
partners, as well as the granting of Permanent Normal Trade Relations
(PNTR) status to China, Vietnam and Russia.
---------------------------------------------------------------------------
\1\ Source: U.S. International Trade Commission TradeDataweb.
---------------------------------------------------------------------------
THE IMPORTANCE OF RENEWING TRADE PROMOTION AUTHORITY
There is no doubt that past efforts by the United States to open
foreign markets have contributed to the impressive gains the U.S.
industry has made, and continues to make, in expanding U.S. spirits
exports. Certainly, past grants of trade promotion authority provided
previous administrations with the necessary leverage to secure
significant market access commitments from trading partners.
For example, during the Uruguay Round of GATT negotiations,
distilled spirits were included in the ``zero-for-zero'' negotiations,
in which the United States and European Union agreed to eliminate their
respective tariffs on substantially all spirits. The value of U.S.
exports to the European Union have more than tripled since the Uruguay
Round agreements entered into force in 1995, from $184 million to
$744.5 million in 2014. In addition, the implementation of FTAs has
improved access for U.S. spirits exports to several important overseas
markets, such as Australia, Canada, Mexico, Chile, Peru, Singapore,
Korea, Colombia, Panama and Central America. Since the tariffs were
eliminated under the U.S.-Australia FTA in 2005, for example, U.S.
spirits exports to Australia have grown by 70% to $131 million.
Australia now ranks as the industry's fourth largest export market
worldwide. Such trade liberalizing efforts are critical to ensure that
U.S. spirits exports are on a level playing field with domestically-
produced spirits and other imported spirits.
Despite these impressive gains, the U.S. spirits industry continues
to confront formidable trade barriers, particularly in key emerging
markets. India, for example, assesses an import tariff of 150% ad
valorem on spirits and, as a result, U.S. spirits exports to India
remain disappointingly low. In 2014, U.S. direct spirits exports to
India were valued at $3.9 million, accounting for less than 0.3% of all
U.S. spirits exports. Indeed, U.S. spirits exports to India remain far
below U.S. exports to comparable markets, particularly in light of the
fact that India ranks as the largest whiskey market in the world, both
in terms of volume (1.5 billion liters in 2013) and value ($21.6
billion in retail sales in 2013).\2\ Other emerging markets with strong
potential for U.S. spirits sales also maintain high tariffs on imports,
including Vietnam (45%), which is participating in the TPP
negotiations, Thailand (54-60%), and Brazil (20%).
---------------------------------------------------------------------------
\2\ Source: Euromonitor International Database.
Moreover , international regulatory activities affecting product
standards, labeling and certification requirements, among other non-
tariff measures, have become increasingly problematic for the U.S.
spirits industry. As a consequence, our organization devotes
considerable resources to monitoring regulatory developments,
principally through the notification procedures established under the
WTO Agreements on Technical Barriers to Trade (TBT) and Sanitary and
Phytosanitary Measures (SPS). In that connection, the Distilled Spirits
Council has submitted numerous detailed comments with respect to
proposed TBT and SPS measures that could impact trade in distilled
---------------------------------------------------------------------------
spirits.
Current and future trade negotiations offer an important vehicle to
address tariff and non-tariff barriers that impede the ability of U.S.
spirits exporters to gain a foothold in foreign markets. Specifically,
negotiations towards a TPP agreement afford an important opportunity to
open up key emerging markets, including Vietnam and Malaysia, to U.S.
spirits exports. However, TPA is essential in order to bring these
important negotiations to a successful conclusion. Failure to do so
will provide trading partners with whom the U.S. is negotiating little
incentive to make the key decisions needed to conclude strong, market-
opening agreements, thus leaving U.S. companies, including spirits
exporters, at a serious competitive disadvantage vis-a-vis our overseas
competitors.
CONCLUSION
In sum, international trade has become increasingly important to
the U.S. spirits industry, and the ability of the United States to
conclude high standard, comprehensive and trade liberalizing agreements
with key partners will help to ensure the long term viability of the
industry. TPA is absolutely vital to ensure that U.S. negotiators are
empowered to conclude the strongest possible trade agreements to
address the types of trade barriers that impede U.S. exports of
distilled spirits. The Distilled Spirits Council, therefore, strongly
supports swift congressional approval of the Bipartisan Congressional
Trade Priorities and Accountability Act of 2015, and we stand ready to
cooperate closely with Congress in seeking the prompt approval of this
legislation.
Thank you very much for your consideration.
Written Statement of:
Dr. Peter H. Cressy
President/CEO
Distilled Spirits Council of the United States, Inc.
1250 Eye Street, NW, Suite 400
Washington, DC 20005
(202) 682-8870
______
Senate Finance Committee
Congress and U.S. Tariff Policy
April 21, 2015
LeadingAge
William L. Minnix, Jr., CEO
The Honorable Paul D. Ryan, Chair
The Honorable Sander M. Levin, Ranking Member
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515
Dear Chairman Ryan and Ranking Member Levin:
On behalf of LeadingAge, I am writing about our concern over proposed
trade legislation that would offset the cost of extending trade
readjustment assistance benefits with another extension of Medicare
sequestration. This offset is simply wrong, and we urge you to remove
it from the legislation.
Over the last few years, Medicare payments to post-acute care providers
have taken a number of hits. The Affordable Care Act applies a
productivity adjustment factor to the annual Medicare payment update,
directly affecting resources necessary for good-quality care. Payments
to skilled nursing facilities were cut by 11% across-the-board in 2011.
Home health care payments are being rebased, which will substantially
reduce reimbursement to providers. Last year, Congress enacted value-
based purchasing for skilled nursing facilities, due to take effect
within a few months. And the IMPACT Act enacted last year will lead to
major revisions in post-acute care payment systems over the next few
years.
In 2015, the 2% Medicare sequestration resulted in no payment update
for most post-acute care providers, since it essentially negated the 2%
increase in provider costs that the Centers for Medicare and Medicaid
Services (CMS) had calculated. Medicare sequestration is already
scheduled to last a year longer than originally enacted because it was
used to offset the cost of restoring cost-of-living increases in
military pensions. Again, we do not argue with military pension policy,
but the offset should not have come from a program providing essential
health care coverage to seniors.
As the large baby boom cohort ages, Medicare will face growing cost
pressures. We also anticipate potential budget legislation later this
year that could have an impact on the program. If savings have to be
achieved in Medicare, they should be directed back into keeping it
financially stable for the population it is intended to serve.
Medicare must not be a piggy bank to offset the costs of legislation
unrelated to the program. Please find other means of offsetting the
costs of the trade measure soon to come before your committee.
Sincerely,
William L. Minnix, Jr.
President and CEO
About LeadingAge
The mission of LeadingAge is to expand the world of possibilities for
aging. Our membership has a service footprint of 4.5 million and
includes a community of 6,000 members representing the entire field of
aging services, including not-for-profit organizations, state partners,
and hundreds of businesses, consumer groups, foundations, and research
partners. LeadingAge is a tax-exempt charitable organization focused on
education, advocacy, and applied research.
______
Statement for the Record
National Association of Manufacturers
733 10th Street, NW, Suite 700
Washington, DC 20001
Senate Committee on Finance
Congress and U.S. Trade Policy
April 21, 2015
The National Association of Manufacturers (NAM) is pleased to
provide the following statement to the Senate Committee on Finance on
``Congress and U.S. Trade Policy.''
The NAM is the nation's largest industrial association and voice
for more than 12 million women and men who make things in America.
Manufacturing in the U.S. supports more than 17 million jobs, and in
2014, U.S. manufacturing output reached a record of nearly $2.1
trillion. It is the engine that drives the U.S. economy by creating
jobs, opportunity and prosperity. The NAM is committed to achieving a
policy agenda that helps manufacturers grow and create jobs.
Manufacturing has the biggest multiplier effect of any industry and
manufacturers in the United States perform more than three-quarters of
all private-sector R&D in the nation--driving more innovation than any
other sector.
The NAM has long championed a robust trade and investment policy to
grow manufacturing in the United States. At its core, a robust
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.
The Committee is marking-up major parts of that robust manufacturing
trade agenda on April 22. The NAM's views on Trade Promotion Authority
and the other key pieces of legislation contained in the Chairman's
Mark are contained herein. The NAM also supports action on the
``American Manufacturing Competitiveness Act of 2015'' by Senators Rob
Portman (R-OH), Claire McCaskill (D-MO), Pat Toomey (R-PA), and Richard
Burr (R-NC), that provides an important path forward on the
Miscellaneous Tariff Bill (MTB) that helps promote the competitiveness
of our country's manufacturers.
Bipartisan Congressional Trade Priorities and Accountability Act
The NAM strongly supports the Bipartisan Congressional Trade
Priorities and Accountability Act (H.R. 1890/S. 995), introduced last
week by Senate Finance Committee Chairman Orrin Hatch (R-UT), Senate
Finance Ranking Member Ron Wyden (D-OR), and House Ways and Means
Chairman Paul Ryan (R-WI). 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 consistent with the NAM's priorities.
TPA is a longstanding and proven procedural partnership between
Congress and the Executive Branch that facilitates negotiation and
approval of trade agreements that open markets for manufacturers in the
United States. As set out in the new legislation, Congress sets forth
trade negotiating objectives, increasing Congress's role in shaping
international trade negotiations.
As detailed in NAM's Trading Up with TPA report, trade agreements
negotiated under TPA deliver for manufacturers and their employees.
America's 20 existing free trade agreement partners account for less
than ten percent of the global economy but purchased nearly half of all
U.S. manufactured goods exports in 2014.
New trade agreements would give the more than 256,000 manufacturers
in the United States--and their more than 12.3 million employees--
better access to the 95 percent of the world's consumers who live
outside the United States. At $11.8 trillion, world trade in
manufactured goods is nearly three times the size of the $4.1 trillion
U.S. domestic market for manufactured goods.
In doing so, strong trade agreements negotiated under TPA would
boost U.S. manufacturers' confidence that they can compete on a level
playing field internationally. The United States has one of the most
open economies in the world. America has the lowest applied tariff of
any G-20 country according to the WTO, with more than two-thirds of all
manufacturing imports entering the United States duty-free since 2013.
But U.S. manufactured goods exports face higher tariffs, non-tariff
barriers and other unfair trade practices overseas than exports from
China, Germany, Mexico and other major economies according to the World
Economic Forum. By eliminating these discriminatory and unfair barriers
overseas, trade agreements negotiated under TPA will provide
substantially greater opportunities for businesses and their employees
in the United States.
To negotiate the type of comprehensive, high-standard and market-
opening trade agreements that have driven export growth and jobs across
the country, TPA is essential.\1\ 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.\2\ Without TPA, manufacturers in the United States have been
standing on the sidelines while other countries negotiate deals that
don't include--and disadvantage--the United States. TPA last expired in
2007, and the United States has not concluded any new agreements since
then. That is nearly eight years ago. U.S. manufacturers cannot afford
to wait any longer.
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\1\ 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.
\2\ 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.
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 needed for the World Trade Organization
Environmental Goods Agreement and Trade in Services Agreement talks and
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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.
The Bipartisan Congressional Trade Priorities Act and
Accountability of 2015 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.
The negotiating objectives also seek to ensure that U.S. property
overseas is treated fairly and in accordance with core U.S. due process
principles, subject to
Investor-State Dispute Settlement. As explained this week in a letter
from 62 business organizations representing millions of manufacturers
and businesses across the United States, ``[t]hese provisions promote
fairness and the rule of law overseas, while helping to sustain and
grow the U.S. economy.'' These provisions provide recourse against
unfair and discriminatory treatment overseas.
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 and
Accountability Act will 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 provides the type of
framework needed to secure new, market-opening trade agreements. The
NAM urges Congress and the Administration to move forward on the
Bipartisan Congressional Trade Priorities and Accountability Act as
quickly as possible. For more information, please see more information
on the NAM's website.
Other Trade Legislation
The NAM also strongly supports the following legislation being
considered by the Committee:
The retroactive extension of the Generalized System of Preferences
(GSP) program that provides duty-free treatment to non-import
sensitive products from developing countries that meet
important eligibility criteria. This important legislation,
which is contained in the AGOA Extension and Enhancement Act of
2015 (H.R. 1891), introduced by House Ways and Means Chair Ryan
and Ranking Member Sander Levin (D-MI) and Senate Finance
Committee Chairman Hatch and Ranking Member Levin, is vital for
many manufacturers that require manufacturing imports from
overseas and helps grow the global competitiveness of the U.S.
manufacturing sector.
The customs modernization provisions of the Senate Finance
Committee Chairman's Mark that will improve the operations of
Customs and Border Protection (CSP), cut red tape to prevent
delays and improve manufacturers' ability to participate more
competitively in the global economy. The Senate's proposed bill
contains many customs modernization provisions that the NAM had
sought to address problems in customs processing including on
key issues such as duty drawback modernization, exemption from
duty for container residue and protection of intellectual
property rights.
The Enforcing Orders and Reducing Customs Evasion Act (ENFORCE)
provisions of the Senate Finance Committee Chairman's Mark.
This legislation is critical to ensure the full and fair
enforcement of the trade remedy laws that help manufacturers
address government-subsidized and other unfair competition. Too
often, we hear from our manufacturers that they have spent
significant time and resources to utilize the trade remedy
rules and obtain antidumping/countervailing duty (AD/CVD)
orders only to find importers that are evading these orders.
When manufacturers request that CSP investigate these cases of
evasion, years often pass with no resolution, hindering the
ability of U.S. industry to remedy the injury they have
suffered from unfair imports. As detailed recently by the
Office of the United States Trade Representative \3\ ``the
United States has witnessed a dramatic increase in activities
expressly designed to evade the application of antidumping
duties.'' Title V of the Chairman's Mark includes an important
remedy to this problem by creating a process for CBP to review
and act to reclassify imports that have been found to be
evading trade remedy orders. This legislation provides basic
due process procedures for domestic manufacturers, including
timelines for CBP to act and the potential for judicial review.
---------------------------------------------------------------------------
\3\ ``Antidumping Duty `Evasion Services,' '' paper from the United
States to the WTO Committee on Anti-Dumping Practices, Informal Group
on Anti-Circumvention (17 Mar. 2015), accessed at http://
documents.nam.org/IEA/G-ADP-IG-W-54.pdf.
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Conclusion
In manufacturing communities across America, the gains from trade
can and should be increased. The United States achieved a record level
of $1.4 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, in addition to the extension of GSP, customs modernization
legislation and new ENFORCE provisions that will advance our global
competitiveness and the full enforcement of our trade agreements and
existing domestic trade rules.
______
National Farmers Union
20 F St. NW, Suite 300
Washington, DC 20001
TESTIMONY OF ROGER JOHNSON
PRESIDENT
NATIONAL FARMERS UNION
SUBMITTED TO THE U.S. SENATE COMMITTEE ON FINANCE
REGARDING CONGRESS AND U.S. TARIFF POLICY
APRIL 21, 2015
WASHINGTON, DC
Introduction
On behalf of family farmers, ranchers, and rural members of National
Farmers Union (NFU), thank you for the opportunity to submit testimony
regarding U.S. trade policy and Trade Promotion Authority. NFU was
organized in Point, Texas in 1902 with the mission of improving the
well-being and economic opportunity for family farmers, ranchers, and
rural communities through grassroots-driven advocacy. That mission
still drives NFU's work today. As a general farm organization, NFU
represents agricultural producers across the country and in all
segments of agriculture.
NFU, as directed by its policy adopted by delegates to its annual
convention, advocates for fair trade. NFU recognizes that international
trade is an important part of successful family farming in the U.S.,
but increasing trade is not an end unto itself. NFU policy states,
``Every future trade agreement must address differences in labor
standards, environmental standards, health standards, and the trade-
distorting effect of currency manipulation and cartelization of
agriculture markets.'' \1\
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\1\ Nat'l Farmers Union, 2015 Policy of the National Farmers Union
(2015) available at http://www.nfu.org/nfu-2015-policy/2066.
The original intent of Trade Promotion Authority (TPA) was to lay out
the procedures for notification between the executive and legislative
branch and the expedited legislative process for approval. Beyond the
procedural components of Trade Promotion Authority, and most
importantly, the legislation sets forth the objectives for any
president for negotiating trade agreements. The Trans-Pacific
Partnership negotiations are largely completed, so there is no need for
Congressionally assigned, unenforceable objectives. Objective-setting
should occur prior to the start of negotiations, not near the end.
Balancing Trade
For years, trade agreements have been touted for their ability to open
up markets for agricultural exports. Agriculture has had the good
fortune to fair relatively well in trade. Since 1960, U.S. agricultural
exports have been larger than agricultural imports, creating a surplus
in agricultural trade.\2\ This surplus is important for the overall
economy because it helps offset the massive overall trade deficit,
which totaled over $505 billion in 2014, a six percent increase from
2013. The overall trade deficit represents roughly three percent of the
U.S. Gross Domestic Product (GDP). The trade deficit causes a drag on
overall growth of the economy. With a strengthening U.S. dollar, the
deficit is likely to grow in 2015, as a strong U.S. dollar will
encourage imports and reduce exports.
---------------------------------------------------------------------------
\2\ USDA Economic Research Service available at
http://www.ers.usda.gov/topics/international-markets-trade/us-
agricultural-trade.aspx.
In the first three years of the Korea-U.S. Free Trade Agreement,
remarkably and unfortunately, U.S. agricultural exports have stagnated
at zero percent, and the overall trade deficit with Korea has increased
to $12.7 billion, an estimated 84 percent increase. After
implementation of the free trade agreement, agricultural exports have
failed to increase to Korea, despite increasing six percent overall.
When even agriculture fails to grow as a result of trade agreements,
the overall trade policy must be reevaluated. The U.S. reduced tariffs
with Korea, and as a result, more Korean products are in the U.S. than
the U.S. has shipped to Korea. The deficit has negative impacts on jobs
---------------------------------------------------------------------------
and rural communities.
The massive overall trade deficit exists despite the U.S. having free
trade agreements with 20 countries, including major trading partners
like Canada and Mexico. Because of the significant impact the trade
deficit has on the U.S. economy, all future trade agreements, such as
TPP and the Transatlantic Trade and Investment Partnership (T-TIP),
must have the explicit objective of balancing trade. NFU is
disappointed this objective was not included in the Bipartisan
Congressional Trade Priorities and Accountability Act of 2015.
Currency Manipulation
One of the major contributing factors to the massive trade deficit is
currency manipulation. Currency manipulation occurs when other
countries deliberately lower the value of their currencies relative to
the U.S. dollar to gain an unfair advantage. This uniquely American
issue, due to the role of the U.S. dollar in the global economy,
effectively acts as a subsidy on that country's exports and a tax on
U.S. exports.
One of the members of the TPP negotiations, Japan, is a major currency
manipulator. In a report by the Economic Policy Institute (EPI)
evaluating the impact of trade with Japan, EPI found that 896,600 U.S.
jobs have been lost due to the U.S.-Japan trade deficit.\3\ Currency
manipulation is the single most significant cause of the trade deficit
with Japan, which totaled $78.3 billion in 2013 for goods.
---------------------------------------------------------------------------
\3\ Economic Policy Institute, Currency Manipulation and the
896,600 U.S. Jobs Lost Due to the U.S.-Japan Trade Deficit (2015)
available at
http://www.epi.org/publication/currency-manipulation-and-the-
896600-u-s-jobs-lost-due-to-the-u-s-japan-trade-deficit/.
The issue of currency manipulation is not exclusive to countries with
which the U.S. does not have trade agreements. In fact, the latest free
trade agreement the U.S. entered into with South Korea suffers the same
issues with currency manipulation as Japan. Earlier this month, the
U.S. Treasury Department issued its semiannual report on international
economic and exchange rate policies. In its report, its harshest
criticism of currency manipulation was reserved for South Korea, not
China. The report stated, ``Korean authorities appear to intervene on
both sides of the market but, on net, they have intervened more
aggressively to resist won appreciation.'' \4\ The U.S. entered into a
free trade agreement with Korea in March of 2012. The U.S.-Korea Free
Trade Agreement (KORUS) used the same failed blueprints of previous
trade agreements and failed to include provisions to address currency
manipulation. South Korea has, and continues to be, one of the world's
major currency manipulators. Currency manipulation has the capacity to
eliminate any gains in tariff reductions that may be made in free trade
agreements. Without measures to enforce restrictions on currency
manipulation, free trade agreements fail to live up to the promises
made by their supporters.
---------------------------------------------------------------------------
\4\ U.S. Department of the Treasury, Report to Congress on
International Economic and Exchange Rate Policies (2015) available at
http://www.treasury.gov/resource-center/international/exchange-rate-
policies/Documents/2014-4-15_FX%20REPORT%20FINAL.pdf.
Currency manipulation remains a top concern of NFU, particularly in the
context of TPP. Members of the TPP negotiations are well known currency
manipulators, including Malaysia, Singapore, and Japan. With passage of
Trade Promotion Authority, Congress eliminates its capacity to ensure
that this significant trade agreement contains enforceable measures to
address currency manipulation.
Conclusion
NFU's policy book states, ``The measure of the success of a trade
agreement has to be its benefit to U.S. agriculture and specifically of
its producers' net income. Vague promises of `market access' to foreign
markets do not offset opening our border for even larger amounts of
foreign-produced goods to enter our markets. Market access does not
equal market share.''
Since TPP almost certainly contains no measures to address the trade
deficit or currency manipulation and TPA fails to address these major
concerns, NFU opposes TPA. Congress should maintain its Constitutional
authority and review the trade agreements in a transparent manner.
______
Letter Submitted by 21st Century Fox et al.
April 21, 2015
The Honorable Orrin Hatch The Honorable Paul Ryan
Chairman Chairman
Committee on Finance Committee on Ways and Means
U.S. Senate U.S. House of Representatives
219 Dirksen SOB 1101 Longworth HOB
Washington, DC 20510 Washington, DC 20515
The Honorable Ron Wyden The Honorable Sander M. Levin
Ranking Member Ranking Member
Committee on Finance Committee on Ways and Means
U.S. Senate U.S. House of Representatives
219 Dirksen SOB 1106 Longworth HOB
Washington, DC 20510 Washington, DC 20515
Dear Chairmen Hatch and Ryan and Ranking Members Wyden and Levin:
We write in strong support of the Bipartisan Congressional Trade
Priorities Act of 2015 (BCTPA). America's film and television industry
is one of the few that runs a persistent trade surplus--over $13
billion in 2013. More broadly, America's core copyright industries
(film, TV, music, publishing, and software) are among America's biggest
trade success stories. Total foreign sales (exports + licensing and
royalty revenue) of these industries exceeded $156 billion in 2013--
which is larger than total foreign sales of many other major U.S.
industries, including aerospace, chemicals, and all of agriculture.
As these numbers show, international markets are already critically
important to the U.S. movie and television industry and the two million
men and women whose jobs depend on it. On average, over 60% of film
revenue comes from overseas markets. Foreign market sales also provide
an important source of revenue supporting U.S. television productions.
Overseas markets will be increasingly important in the future.
For the U.S. movie and television industry, the intellectual property
(IP) chapters of U.S. free trade agreements (FTAs) are critical. All
over the world, a lack of adequate IP protection is an effective market
access barrier for the U.S. creative and innovative industries. Many of
our trading partners do not provide nearly the level of copyright or
other IP protections as the United States. The IP chapters help raise
standards to a basic level of protection for America's creative and
innovative industries--still significantly lower than the level
provided by U.S. law, but usually major improvements from the standards
in the absence of the FTA.
Other provisions of FTAs are also important. The Services chapters help
break down barriers to U.S. audio-visual productions such as screen
quotas, primetime limits, investment restrictions, and distribution
limits. The e-commerce and digital trade provisions are also
increasingly critical. The U.S. movie and television industry is
already one of America's biggest Internet industries and will
increasingly rely on digital distribution channels in the future.
BCTPA's objectives provide the right foundation for USTR to negotiate
strong agreements for the U.S. creative industries and the millions of
workers they employ. We urge you to move swiftly to approve the
legislation and look forward to working with you to help.
Sincerely,
21st Century Fox
NBCUniversal
Sony Pictures Entertainment Inc.
Time Warner Inc.
Viacom Inc.
The Walt Disney Company
[all]