[Joint House and Senate Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


 		NEXT STEPS IN THE ``SPECIAL RELATIONSHIP''_
 			IMPACT OF A U.S. - U.K. FREE 
                            TRADE AGREEMENT

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

                             JOINT HEARING

                               BEFORE THE

         SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE

                                AND THE

         SUBCOMMITTEE ON EUROPE, EURASIA, AND EMERGING THREATS

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            FEBRUARY 1, 2017

                               __________

                            Serial No. 115-1

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM R. KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID N. CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          AMI BERA, California
MO BROOKS, Alabama                   LOIS FRANKEL, Florida
PAUL COOK, California                TULSI GABBARD, Hawaii
SCOTT PERRY, Pennsylvania            JOAQUIN CASTRO, Texas
RON DeSANTIS, Florida                ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina         BRENDAN F. BOYLE, Pennsylvania
TED S. YOHO, Florida                 DINA TITUS, Nevada
ADAM KINZINGER, Illinois             NORMA J. TORRES, California
LEE M. ZELDIN, New York              BRADLEY SCOTT SCHNEIDER, Illinois
DANIEL M. DONOVAN, Jr., New York     THOMAS R. SUOZZI, New York
F. JAMES SENSENBRENNER, Jr.,         ADRIANO ESPAILLAT, New York
    Wisconsin                        TED LIEU, California
ANN WAGNER, Missouri
BRIAN J. MAST, Florida
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
THOMAS A. GARRETT, Jr., Virginia

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
         Subcommittee on Terrorism, Nonproliferation, and Trade

                        TED POE, Texas, Chairman
JOE WILSON, South Carolina           WILLIAM R. KEATING, Massachusetts
DARRELL E. ISSA, California          LOIS FRANKEL, Florida
PAUL COOK, California                BRENDAN F. BOYLE, Pennsylvania
SCOTT PERRY, Pennsylvania            DINA TITUS, Nevada
LEE M. ZELDIN, New York              NORMA J. TORRES, California
BRIAN J. MAST, Florida               BRADLEY SCOTT SCHNEIDER, Illinois
THOMAS A. GARRETT, Jr., Virginia

                                 ------                                

         Subcommittee on Europe, Eurasia, and Emerging Threats

                 DANA ROHRABACHER, California, Chairman
JOE WILSON, South Carolina           GREGORY W. MEEKS, New York
TED POE, Texas                       BRAD SHERMAN, California
TOM MARINO, Pennsylvania             ALBIO SIRES, New Jersey
JEFF DUNCAN, South Carolina          WILLIAM R. KEATING, Massachusetts
F. JAMES SENSENBRENNER, Jr.,         DAVID N. CICILLINE, Rhode Island
    Wisconsin                        ROBIN L. KELLY, Illinois
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Nile Gardiner, Ph.D., director, Margaret Thatcher Center for 
  Freedom, The Heritage Foundation...............................     7
Mr. Simon Lester, trade policy analyst, Herbert A. Stiefel Center 
  for Trade Policy Studies, Cato Institute.......................    15
Daniel S. Hamilton, Ph.D., executive director, Center for 
  Transatlantic Relations, Johns Hopkins School of Advanced and 
  International Studies..........................................    21

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Nile Gardiner, Ph.D.: Prepared statement.........................    10
Mr. Simon Lester: Prepared statement.............................    17
Daniel S. Hamilton, Ph.D.: Prepared statement....................    23

                                APPENDIX

Hearing notice...................................................    60
Hearing minutes..................................................    61
The Honorable Ted Poe, a Representative in Congress from the 
  State of Texas, and chairman, Subcommittee on Terrorism, 
  Nonproliferation, and Trade, the Honorable Tom Marino, a 
  Representative in Congress from the Commonwealth of 
  Pennsylvania, and the Honorable F. James Sensenbrenner, Jr., a 
  Representative in Congress from the State of Wisconsin: 
  Material submitted for the record..............................    62
The Honorable Tom Marino: Prepared statement.....................    64

 
                      NEXT STEPS IN THE ``SPECIAL
                 RELATIONSHIP''--IMPACT OF A U.S.-U.K..
                          FREE TRADE AGREEMENT

                              ----------                              


                      WEDNESDAY, FEBRUARY 1, 2017

                     House of Representatives,    

       Subcommittee on Terrorism, Nonproliferation, and Trade and

         Subcommittee on Europe, Eurasia, and Emerging Threats,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittees met, pursuant to notice, at 10:05 a.m., 
in room 2172, Rayburn House Office Building, Hon. Ted Poe 
(chairman of the Subcommittee on Terrorism, Nonproliferation, 
and Trade) presiding.
    Mr. Poe. The subcommittee will come to order. Without 
objection, all members may have 5 days to submit statements, 
questions, and extraneous materials for the record subject to 
the length limitation in the rules.
    The Chair will recognize itself for an opening statement. I 
understand this is one of the first, if not the first, hearing 
since Congress has come back into session. And I think it is 
quite appropriate that we have this hearing dealing with the 
United States and the United Kingdom.
    This past summer British citizens chose to reclaim their 
economic independence. In a landmark referendum, they decided 
to leave the European Union, take charge of their future, 
especially their economic future.
    Now in the wake of Brexit, it is important that we 
preserve, as Winston Churchill once said in 1946, ``the special 
relationship between the United States and the United 
Kingdom.'' The two nations are bound together by a shared 
history, a common language, well, maybe it is a common 
language, I am not sure being from Texas, but anyway, and a 
friendship that reaches back hundreds of years. I think the 
United States and the United Kingdom are an economic family 
separated by a bit of water.
    For over 200 years our countries have partnered 
economically to preserve peace and security worldwide. Even 
from the trenches of World War I to the mountains of 
Afghanistan, men and women in both countries have spilled blood 
together on the battlefield. Our relationship is deep and it is 
special. A trade deal represents another opportunity to deepen 
that relationship to the benefit of both countries.
    The previous administration threatened to put the United 
Kingdom at the back of the queue for a trade deal. But that 
kind of snub to our greatest ally is exactly the opposite of 
what we should be doing. A bilateral agreement will enhance the 
flow of commerce and boost the welfare of our economies. Trade 
deals that do not help the United States are going to be a 
thing of the past. A bilateral trade agreement can be 
beneficial to both of our interests.
    The United Kingdom shares many values and business 
practices with the United States, and our similarities will 
help ensure a smooth negotiation process, as neither side will 
be forced into making hard concessions. For example, because 
Britain's workers are paid about the same rate as Americans, we 
do not have to worry about American manufacturers moving 
factories to the English countryside and jobs will not be sent 
overseas. We will be able to streamline regulations and reduce 
barriers to trade. And that means more consumers for U.S. 
goods.
    Our two countries already enjoy close economic ties. No 
country receives more investment from Britain than the United 
States. And the United States is the largest investor in the 
United Kingdom.
    In my home State of Texas, the United Kingdom is the number 
one foreign direct investor. It sends over $2.5 billion a year 
to the Texas economy. And we like that. This investment has 
helped to bring more than 87,000 jobs to Texas. And Texas is a 
great place to do business. And the United Kingdom sees this.
    These kinds of gains are not limited to Texas alone. Every 
day over 1 million Americans go to work for British companies 
based in the United States. It is critical we do not turn our 
backs on trade.
    Houston is dependent on a free flow of trade. The Port of 
Houston is our economic hub. We are an export port. We make 
things, use as many as we can, and we sell the rest. About 50 
percent of the Houston economy is based on the Port of Houston.
    So trade is vital to our economy. But that does not mean 
that the United States has to give away the ranch to get a 
trade deal done. We can have free trade, and we can have fair 
trade. Fair trade for both countries. Free trade for both 
countries. We can level the playing field for American 
business, give American goods better access to consumers around 
the world, and increase jobs.
    The new administration has expressed its preference for 
bilateral deals over more cumbersome and sometimes very 
political multilateral agreements. A bilateral deal with the 
United Kingdom is a great place to start. Once the U.K. is able 
to throw off the shackles, in my opinion, of the European 
Union's restrictive trade policies, there will be better 
opportunities for growth and investment.
    A free trade deal between the United Kingdom and the United 
States will be an important symbol of our dedication of 
promoting economic freedom. Together we can come up with the 
gold standard for free trade deals. This deal could serve as a 
model for future deals or maybe even open up jobs in other 
nations.
    This hearing gives us a time opportunity to examine what 
the U.S.-U.K. trade deal might look like, and discuss how to 
move forward. I look forward to hearing from our witnesses 
about how we can achieve that goal and take the next step in 
our special relationship.
    I now recognize the ranking member on the TNT Subcommittee, 
Mr. Bill Keating from Massachusetts, for his opening statement.
    Mr. Keating. Thank you, Chairman Poe. And it is great to be 
joined by Chairman Rohrabacher and Ranking Member Meeks as 
well. This is a very timely and important foreign policy issue 
to address in our first hearing of the 115th Congress.
    Thank you as well to our witnesses for being here and 
adding to the discussion with your expertise on the topic of 
trade and our partnership with Europe.
    The United States indeed has a long and enduring special 
relationship with the United Kingdom. Our longstanding alliance 
has withstood numerous wars and conflicts, and in recent 
decades has been a critical force behind efforts to eradicate 
the threat of terrorism.
    Our trade and investment relationship with the United 
Kingdom is substantial, and both our countries benefit greatly 
from these close economic ties.
    This relationship encountered a new diplomatic landscape 
last summer when the people of Britain voted in a referendum to 
leave the European Union. This outcome was surprising to many, 
including myself. And as a close partner to both the U.K. and 
the EU, we in Congress are keenly interested in the process by 
which Britain exits the EU, and how the United States may 
continue to pursue a coherent foreign policy with these 
important partners. It is therefore also necessary to be 
careful that the politics on both sides of the Atlantic around 
Brexit and how it will unfold do not undermine the significance 
of the U.S. relationship with the EU nor of its relationship 
with Britain.
    U.S. ties with the EU in trade, and defense, intelligence, 
and across a broad range of issues has strengthened our economy 
and helped make us more secure. As a co-chair of TTIP caucus, I 
welcome the trade negotiation between the U.S. and the EU, with 
our economies representing nearly half the global GDP. And with 
the U.S. and the EU being each other's largest overall trade 
and investment partner, this agreement would support jobs, 
remove trade barriers, and improve market access for our goods 
and services.
    It would also allow the U.S. and the EU to contribute to 
setting high standards for global trade; standards that reflect 
fair treatment of workers, environmental concerns, safeguarding 
intellectual property and fair trade.
    In the challenges we face, both economic and in terms of 
security, the strategic importance of our relationship with the 
EU is undeniable. Other impacts of Brexit such as the effects 
on the longstanding efforts of the U.S. to help broker Irish 
peace and reduce division there are also of great concern.
    I have become concerned by suggestions that maintaining our 
special relationship with Britain would come at the expense of 
promoting robust transatlantic relations with the rest of 
Europe. These relationships are not mutually exclusive. The 
U.S. benefits in critical ways from each of them. Prime 
Minister May recently spoke to this point, emphasizing that a 
strong EU is positive and critical for security. And I believe 
that security includes strong economic relations.
    So I am pleased that both the European and Trade 
Subcommittees are holding this hearing today to address U.S.-
U.K. relations and the impact of a U.S.-U.K. free trade 
agreement, because the question is not a question to be 
considered in a vacuum. U.S.-U.K. ties are unique but they need 
not be exclusive. To reinforce a sentiment of Prime Minister 
May, this is not a time to turn inward.
    I yield back.
    Mr. Poe. I thank the gentleman. The Chair recognizes the 
subcommittee chairman, Mr. Dana Rohrabacher, for his opening 
statement.
    Mr. Rohrabacher. Thank you very much, Your Honor. And good 
morning. I would like to welcome all the new and returning 
members of the Europe, Eurasian Subcommittee. And I am looking 
forward to a very productive Congress.
    This is our first hearing, the joint hearing with Judge 
Poe's subcommittee as well. I am happy to be working this 
session again with Ranking Member Gregory Meeks. And we have 
had an exemplary, positive and very, very fruitful 
relationship. And again I would like to thank Chairman Poe for 
initiating this hearing.
    In the lead-up to last year's Brexit vote, there was an 
onslaught of hyperbolic language. It was almost like the 
language that we saw in our own last election as to what would 
happen if there wasn't the outcome that certain people in the 
press wanted to happen. But that language that we heard about 
Brexit regarded many forms of disaster that would result from 
Britain leaving the EU.
    Some naysayers even predicted that if England were to leave 
the EU, the confusion of the exiting, and then the confusion to 
the existing order might be of such a magnitude that America 
would be so confused that we would elect an out-of-control 
President. Okay. It is a joke.
    Mr. Poe. We got it.
    Mr. Rohrabacher. You got it. Okay. Well, last June the 
voters in the U.K. made their wishes known. And Prime Minister 
May is acting accordingly.
    From the perspective of the United States, our interests 
are served when the United Kingdom is strong and has a close 
functioning relationship with the United States, with us.
    The EU was founded on a vision of a Europe, democratic, 
united in principle, efficiently and fairly coordinated by a 
supranational Parliament and a multinational bureaucracy. Well, 
clearly the British people don't think the EU reality is what 
the original visionaries had in mind. The American presence did 
not see the original vision, however, as a slight to the United 
States. Even though we weren't invited.
    President Eisenhower welcomed the beginning of an 
integrated Europe, and Presidents like President Reagan, who I 
think I remember him saying a few words about this, supported 
what he called the European community, hoping that someday the 
Central European countries newly freed from Soviet occupation, 
which of course was our goal, would provide an opportunity for 
stability, progress, and freedom on the entire European 
continent.
    Our discussion today is not about the United States picking 
sides but about working with our most reliable Atlantic partner 
and how recent decisions affect the long-term trends there. 
Perhaps we should be looking at, as Judge Poe just mentioned, a 
new bilateral free trade agreement between the United States 
and the U.K. which could be a model for other countries as 
well.
    While I have yet to fully examine many of the specifics 
about such a deal, I am interested in hearing about that today, 
I think it makes sense to tie down a treaty that is mutually 
beneficial, that is a good deal for the British and a good deal 
for us.
    And with that said, I am looking forward to this hearing. 
Thank you, Judge Poe, for calling this hearing. And I am 
looking forward to hearing from the witnesses.
    Mr. Poe. The gentleman yields back. And the Chair will 
recognize the ranking member--started to make a doctor out of 
you--Mr. Gregory Meeks for his opening statement.
    Mr. Meeks. Thank you, Chairman Poe. And I likewise want to 
also thank Chairman Rohrabacher. We have formed a good team of 
free and open and good debate on the European Subcommittee. And 
I look forward to another exciting 115th Congress and 
continuing bilateral dialogue to further American interests 
abroad regardless of whose party is in power.
    I also want to thank Ranking Member Keating, along with 
Chairman Poe, for having this combined hearing today. And 
today's hearing is an important one, and the first in the House 
to address the Brexit vote and its consequences for 
transatlantic relations. The decision by the EU, combined with 
President Trump's victory here, has set the stage, in my 
opinion, for uncertainty.
    Even today's hearing is very theoretical and based on a 
future successful Brexit negotiation with the EU, whatever form 
that may take, because we don't know what form it will take. So 
it can only be theoretical today. Only then will we be able to 
discuss specific bilateral trade policy with the U.K.
    Now, I do think a strong relationship between the United 
States and the U.K. is certainly in both parties' interests and 
good for the world. This is first and foremost based on defense 
cooperation, intel sharing, and by extension, NATO.
    In the trade world, Prime Minister May says she wants the 
U.K. to be a champion of global trade. President Trump, 
depending on the day, is a protectionist interfering in 
business decisions at home, and threatened to tear apart trade 
deals internationally. Trade negotiations are complicated. And 
when negotiating with the U.K., I am certain we will run into 
roadblocks, for example, on health services and agriculture.
    Our cultural ties will only stretch so far when it comes to 
business, just as we have done a lot of work already dealing 
with TTIP. Furthermore, the Republican administration and Prime 
Minister May have vastly different views on the future of the 
EU and Russia.
    Whereas Mrs. May was clear in her support of a strong EU 
when she told the Republicans in Philadelphia, ``We are not 
turning our backs on the EU or in the interests and values we 
share. It remains overwhelmingly in our interest,'' she said, 
``and those of the wider world that the EU should succeed.''
    On the other hand, Mr. Trump has expressed harsh skepticism 
of the EU and NATO, symbols of our shared values. On Russia, 
Mrs. May's government has been a leader in uniting the EU in 
sanctions on Russia for its war in Ukraine. And has 
continuously encouraged support for a strong NATO presence on 
its eastern borders.
    As we all know, these views are not shared completely by 
our current administration. And this confusion will be tested 
by the Kremlin. Any olive branch to Moscow is naive and, 
frankly, I think dangerous without first assuring our friends 
and allies in the U.K. who share our ideals and commitment to 
freedom.
    In conclusion, I view the future of our special 
relationship as one that is based on mutual security, common 
ideals and values, and, finally, on economics and trade.
    Looking at a future post-Brexit trade deal with all of its 
variables is a difficult task. It may be easy to get a sound 
bite out of support from our President who may not know the 
Lipscomb Treaty, but it would be much more difficult between 
negotiators acting solely on their national interests.
    As a supporter of TTIP negotiations, I remain optimistic of 
the future of transatlantic trade and urge stronger 
transatlantic ties. The European project, after all, is a peace 
project firmly aligned with American interests and designed to 
protect our liberal democratic ideas. And I look forward to 
hearing from our witnesses about how a new U.K.-U.S. trade deal 
can help us in that goal. And I yield back.
    Mr. Poe. The gentleman yields back his time. The Chair will 
recognize any other members for 1 minute if they wish to make 
an opening statement. And the Chair will put all members on 
notice that the 1 minute will be 1 minute.
    Okay. The Chair recognizes the gentleman from California, 
Mr. Sherman, for his statement.
    Mr. Sherman. Been here 20 years. Never seen the body 
politic so strained, frayed. Chairman Royce has said this is 
the most bipartisan committee in Congress. I hope it is true.
    We have got to avoid the temptation to evaluate everything, 
even a British trade deal, through the prison of whether it is 
a vehicle to express our support or opposition to President 
Trump. I know Nigel Farage campaigned with Trump. But that is 
not a reason for Democrats to reject, the Republicans to 
support any particular trade deal. A million of the British 
people have signed a petition to exclude Donald Trump from 
their territory. That is not a reason for Democrats to support, 
or Republicans to reject a trade deal. We have got--if we want 
just a symbol, then we don't have to look at the trade deal 
except its cover.
    I suggest instead we not judge it by its cover but by the 
contents that have yet to be written and ask what is in it for 
American working families.I look forward to talking to our 
witnesses about what should be in it and evaluating it in the 
sense of jobs, not a job evaluation for the administration.
    Mr. Poe. The gentleman yields back his time. The Chair 
recognizes the gentleman from Rhode Island, Mr. Cicilline, for 
a 1-minute statement.
    Mr. Cicilline. Thank you, Mr. Chairman. I want to thank 
Chairman Rohrabacher and Ranking Member Meeks for holding this 
joint hearing. And would also like to say, as a new member of 
this subcommittee, I look forward to working with both of you.
    The United Kingdom is one of our oldest and most important 
allies. And it has always been a reliable friend in our times 
of greatest need. In Iraq and Afghanistan, more than 600 
British troops were killed during fighting alongside American 
troops.
    The United Kingdom continues to be a key partner in 
combatting global terrorism. In addition, the United Kingdom is 
a vital trading partner. The U.S. exports more than $51 billion 
in goods to the U.K. annually, including approximately $50 
million from my home State of Rhode Island in 2015.
    In June of last year, the United Kingdom became the first 
country to plan to withdraw from the European Union. This 
decision will have wide-ranging effects on international 
markets and U.S. security relationships in the U.K. and in 
Europe.
    I welcome the witnesses and look forward to hearing from 
you today about what these effects will be and how they will 
shape the special relationship between the United States and 
the United Kingdom in the years to come.
    And with that I yield back.
    Mr. Poe. I thank the gentleman from Rhode Island. Are there 
any other members that wish to make an opening statement?
    The Chair will now introduce the three witnesses that we 
have. First of all, without objection, all the witnesses' 
prepared statements will be made part of the record. I ask that 
each witness please keep your presentation to no more than 5 
minutes. After 5 minutes you may hear the sound of a gavel. 
That means stop. But we do have your statements, and they are 
part of the record.
    Mr. Nile Gardiner is director of the Heritage Foundation's 
Margaret Thatcher Center for Freedom. Prior to joining Heritage 
in 2002, he was a foreign policy researcher for former British 
Prime Minister Margaret Thatcher.
    Mr. Simon Lester is a trade policy analyst with Cato's 
Herbert Stiefel Center for Trade Policies. His research focuses 
on WTO disputes, regional trade agreements, protectionism, and 
the history of international trade law.
    Dr. Daniel Hamilton is founding director of the Center for 
Transatlantic Relations at Johns Hopkins University School of 
Advanced and International Studies. He has held a variety of 
senior positions at the United States Department of State, 
including deputy assistant secretary for European Affairs.
    Dr. Gardiner, we will start with you. You have 5 minutes.

STATEMENT OF NILE GARDINER, PH.D., DIRECTOR, MARGARET THATCHER 
          CENTER FOR FREEDOM, THE HERITAGE FOUNDATION

    Mr. Gardiner. Good morning. Thank you very much. Chairman 
Poe, Chairman Rohrabacher, and distinguished members, thank you 
for the opportunity to testify before both of your committees 
today. For reasons of time, with your permission, I will be 
summarizing parts of my written statement.
    It is fitting that today's hearing is taking place just 
days after the inauguration of a new U.S. President, and just 
months after a new British Prime Minister entered Downing 
Street. President Donald Trump and Prime Minister Theresa May 
met last Friday in Washington, and declared their intention to 
advance a U.S.-U.K. free trade agreement. The Trump presidency 
is in a strong position to revitalize the special relationship 
by working together with Congress and the Government of the 
United Kingdom.
    The Anglo-American alliance is a vital partnership that 
rests upon deep-seated cooperation in defense, trade, 
intelligence, and a host of other areas stretching from 
educational exchange to the arts. Britain's decision to leave 
the European Union should be viewed as a hugely positive 
development by Congress because it offers tremendous 
opportunities for Britain and the United States to strengthen 
that partnership.
    The Trump administration should make a U.S.-U.K. free trade 
deal a foreign policy priority. There is already strong support 
from Capitol Hill for a free trade agreement, between the 
United States and the United Kingdom, with at least five pieces 
of Congressional legislation urging such a deal. Such an 
agreement between the world's largest and fifth largest 
economies would significantly advance prosperity on both sides 
of the Atlantic. It would be a force generator for economic 
liberty through genuine bilateral free trade based upon the 
principles of sovereignty and economic freedom.
    A free trade agreement would boost both Britain's and 
America's economies while also strengthening the Anglo-American 
special relationship, for decades the engine and beating heart 
of the free world. It would also act as a model for other free 
trade agreements that Britain will likely sign with countries 
across the globe from Australia and Canada to India and 
Singapore.
    A stronger Britain on the world stage, able to act as a 
truly sovereign independent nation, is a far better partner for 
the United States. Outside of an inward-looking, declining 
European Union, Great Britain is uniquely placed to rebuild its 
military might, revitalize the NATO alliance together with the 
Americans, and stand up to the enemies of the free world.
    America has a deep interest in helping Brexit to succeed 
and in Britain flourishing outside the EU. Britain must help 
America to lead the free world with strength, resolve, and 
conviction. The special relationship is a great force for good 
in the world. And its return should be welcomed by all who 
cherish the spirit of freedom and liberty.
    President Trump should instruct the U.S. trade 
representative and the White House National Trade Council to 
fast track the pursuit of a U.S.-U.K. trade pact by putting 
forward clear negotiating objectives pursuant to congressional 
guidance that will advance the special relationship. The free 
trade deal should be implemented within 90 days after Britain 
leaves the European Union, which is expected to be by the end 
of March 2019. The overriding goal should be to sign the best 
deal possible by then.
    Under a free trade agreement, the U.S. and U.K. must make 
it easier for Americans and Britons engaged in lawful finance 
and commerce to work together. The deal should aim for the 
elimination of all tariff barriers between the U.S. and the 
U.K., two nations with highly developed economies, skilled 
workforces, and comparable wage levels. Such a deal would 
create jobs on both sides of the Atlantic and enhance 
investment opportunities.
    Talks between Washington and London on a U.S.-U.K. free 
trade deal can begin immediately. The United Kingdom has the 
full right to begin discussions on trade agreements with 
countries outside of the European Union before it formally 
exits the EU. As the Lawyers for Britain Group has pointed out, 
it is false to claim, as some European commission officials 
have done, that Britain cannot engage in such discussions as an 
EU member.
    I urge President Trump to work closely with Congress. This 
must be a joint initiative by the White House and the House of 
Representatives and Senate. A U.S.-U.K. free trade agreement 
would advance prosperity on both sides of the Atlantic, and 
will be a historic move forward that will benefit future 
generations of both Americans and Britons.
    The free trade pact should be a catalyst for advancing 
freedom to trade and for promoting economic freedom in both 
countries. It would be a powerful statement reflecting a shared 
commitment to a free and open investment environment between 
the two nations. This is a bilateral trade deal, not a 
multilateral one, which makes negotiations far simpler than 
they might otherwise be. In contrast to the hugely flawed 
proposed Transatlantic Trade and Investment Partnership, TTIP, 
between the U.S. and EU, this is not about importing 
regulations and expanding big government. It is about 
empowering individuals and freeing trade. We do not need 
hundreds of pages of fine print to move forward with such a 
deal. It should be streamlined and readily understandable to 
anyone who wishes to read it.
    In conclusion, a U.S.-U.K. FTA would be an outstanding 
example of a special relationship in practice, further bringing 
together two nations with a shared history, culture, and 
language, as well as a deep commitment to liberty. It should 
also act as a role model for future free trade agreements 
between the United States and other key allies across the 
world.
    Britain's exit from the European Union will make the 
partnership between Great Britain and the United States even 
stronger. And a free trade agreement will be at the very heart 
of that alliance. Today, in large part due to the robust 
support of Members of Congress, Britain stands at the front of 
the queue for a trade deal with the United States and not at 
the back.
    Thank you for giving me the opportunity to testify before 
you today. Britain's impending exit from the European Union has 
opened a new world of opportunity for the United Kingdom. 
Opportunities that should also be embraced by the United States 
and all who believe in liberty, sovereignty, and self-
determination. Thank you.
    [The prepared statement of Mr. Gardiner follows:]
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    Mr. Poe. Mr. Lester, 5 minutes.

STATEMENT OF MR. SIMON LESTER, TRADE POLICY ANALYST, HERBERT A. 
    STIEFEL CENTER FOR TRADE POLICY STUDIES, CATO INSTITUTE

    Mr. Lester. Good morning. Chairman Poe, Ranking Member 
Keating, Chairman Rohrabacher, Ranking Member Meeks, and 
members of both subcommittees, thank you very much for the 
opportunity to come here today and speak on this important 
topic. I will be giving a summary of my written statement.
    With the sometimes harsh rhetoric on trade during the 
recent Presidential campaign, and continuing over the past 
couple months, I and other free traders have been worried about 
the direction of U.S. trade policy. However, the positive talk 
from both Congress and the incoming administration about a 
U.S.-U.K. trade agreement has offered us some hope.
    Trade negotiations have been struggling in recent years 
with more failures than successes. Perhaps a U.S.-U.K. 
agreement is just what we need to regain some momentum for 
trade liberalization. At the same time, we need to be realistic 
about its chances. Despite much early enthusiasm for an 
agreement, there will be significant hurdles on both sides of 
the Atlantic.
    Turning first to the U.S. side, some advisers to the 
President Trump administration have talked about the 
possibility of a quick trade agreement with the U.K. However, 
just getting started will take some time. The United States has 
a model for trade agreements that has been fairly consistent 
for a decade now, with slight tweaks depending on which party 
holds power. However, given its criticism of U.S. trade policy 
during the campaign, the Trump administration is likely to re-
evaluate this model. And its revision may take a little while 
to complete. Competing views within the administration will 
need to be reconciled, and stakeholders will need to be 
consulted. I am confident that the new administration will 
reach a decision on what it wants to see in a trade agreement. 
But this process could take a few months if not more.
    But it is the U.K.'s side where the real challenges lie. 
The reason we can even have this discussion is because the U.K. 
is leaving the EU. But keep in mind, all that has happened so 
far is a referendum in which the British people voted to leave 
the EU. The formal withdrawal process has not even started yet. 
When the withdrawal process does begin, the U.K.'s limited 
government resources in this area will be strained, as it has 
relied on the European Commission to negotiate trade deals for 
decades now. This could slow down its efforts to negotiate new 
trade agreements.
    In addition, there are political and legal hurdles to the 
U.K. negotiating an agreement with the U.S. right away. Some 
argue that there are legal limits on the extent to which the 
U.K. may negotiate its own trade agreements while it is still a 
member of the EU. In my view, the U.K. actually has a fair 
amount of leeway on this. But U.S. proponents of a U.S.-U.K. 
trade agreement should be aware of the issue. Even if it does 
not act as a legal bar to U.S.-U.K. talks, it could be a 
political hurdle. The U.K. needs to establish a new economic 
relationship with the EU, its most important trading partner, 
and thus will have to take into account the views of the 
Europeans on this.
    Despite these hurdles, the size of the U.S. and U.K. 
economies and their significant trading relationship means that 
there would be great benefits from liberalizing trade between 
them. And that it is worth pursuing a deal.
    In terms of the specific content of a U.S.-U.K. trade 
agreement, the two countries are at similar development levels 
and have many shared values. That should make negotiations 
easier. There will not be the sensitivities that arise for 
trade with certain developing countries. And some of the more 
controversial trade agreement provisions may, therefore, not be 
necessary. In this regard, labor protections and special 
dispute procedures for foreign investors could be excluded, and 
this could speed up the negotiating process.
    The more issues that are included in the trade agreement, 
the longer it will take to complete the negotiations, and the 
more controversial the agreement will be. With these 
considerations in mind, the focus of a U.S.-U.K. trade 
agreement should be on eliminating tariffs, as many as 
politically possible, as well as adopting mutual recognition of 
standards and regulations so as to facilitate trade, in 
particular products and services. With the issues relating to 
domestic regulations, however, our ambitions should be modest. 
There is no need to deal with all products and services at 
once, which would take a long time and would delay completion 
of the agreement. Instead, it makes sense to select a few 
sectors, such as automobiles, pharmaceutical drugs, financial 
services, to address now, and then have a framework agreement 
under which the governments could deal with other sectors 
later.
    Overall, in my view, prospects for a timely and 
economically significant U.S.-U.K. trade deal that focuses on 
these core trade issues are good. The successful negotiation 
here would be the first positive step forward for trade 
liberalization in quite some time, and could generate momentum 
for liberalization more broadly.
    Thank you for your time, and I look forward to answering 
your questions.
    [The prepared statement of Mr. Lester follows:]
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    Mr. Poe. The gentleman yields back.
    And, Dr. Hamilton, you are recognized for 5 minutes.

  STATEMENT OF DANIEL S. HAMILTON, PH.D., EXECUTIVE DIRECTOR, 
  CENTER FOR TRANSATLANTIC RELATIONS, JOHNS HOPKINS SCHOOL OF 
               ADVANCED AND INTERNATIONAL STUDIES

    Mr. Hamilton. Thank you, Mr. Chairman, distinguished 
members of the committee, if I could also submit my testimony 
to the record.
    I would just like to indicate I have two appendices in the 
testimony that try to provide the latest data on jobs, trade, 
and investment between not only the United States and Europe, 
but most of the States here represented by members of the 
subcommittee. This is the latest data. We have an annual survey 
on the transatlantic economy. So maybe it is of some interest.
    It affirms what the members of the committee said at the 
beginning. Mr. Chairman, we estimate, if you take indirect and 
direct jobs together, it is about 1 million Texas jobs related 
to commerce with Europe. And the U.K. is the number one source 
of onshore jobs in Texas.
    Mr. Rohrabacher, and the other California delegates, about 
1.2 million California jobs directly and indirectly related to 
commerce with Europe. Again, the U.K. a major source of that.
    Mr. Keating, for Massachusetts, about 450,000 jobs in 
Massachusetts directly or indirectly related to this. And the 
U.K., again, the number one source of onshore jobs in 
Massachusetts.
    And for the Congressmen from New York, Congressman Meeks 
and others, also about 1 million jobs put together, roughly 
estimated, and again, the U.K. the number one source of onshore 
jobs.
    So the data does tell us that a trade and investment 
arrangement, when the U.K. leaves the EU, is absolutely in the 
interest of the United States and to the U.K. But my basic 
message is such an agreement will do even more for our 
economies if it is embedded in a broader North Atlantic 
initiative for jobs and growth with our closest allies. Because 
the rest of Europe also provides not only as much but actually 
more jobs, trade, and investment to each of our States.
    And we should avoid a false choice between three points of 
the transatlantic stool, if you will, between the U.S. the 
U.K., the U.S. and the EU, and the U.K. and the EU. Each of 
those stools have to be strong and sturdy when we all face 
intensified winds of global competition. We cannot afford to 
let ourselves, you know, fall in between the cracks of that or 
open up false alternatives.
    Back to those numbers again, in Texas and in New York, for 
instance, two thirds of the jobs to both of those States 
actually come from the rest of Europe. And three-quarters of 
those jobs in--I am sorry--in Massachusetts and in California 
come from the rest of Europe. So the U.K. is important, but the 
rest of Europe provides even more to all of us. We have to make 
sure we do this in a simultaneous way.
    Much of the reason why American companies are invested in 
the U.K. is because of the access it brings them to the 
European market. American companies based in the U.K. export 
more to the rest of Europe than American companies based in 
China export to the rest of the world. And so a major 
motivation of our companies is to understand how the U.K.-EU 
relationship will work and what is our position on that as we 
move forward with the U.K. itself.
    So just a bit of point on process. As Mr. Lester said, the 
U.K. has to negotiate a number of things here. And it is 
likely, frankly, that it will be about 6 years before the U.K. 
and the EU have a new type of trade agreement beyond Brexit. So 
we need to orient ourselves to a different type of time scale. 
I don't mean not starting the conversations as Dr. Gardiner 
said. I think we can explore them. I think you can in fact get 
a framework in place. But we should be attune to the dynamic 
here.
    We should understand the U.K. sells twice as much to the EU 
in goods and services as does the United States. So it will 
absolutely be looking at what this relationship will be. But 
what would be the parameters of a deal? I agree with Mr. Lester 
that it is not just about trade. Trade is not the driver of our 
relationship with the U.K. or with Europe. It is investment. 
That is what drives everything. And so it must be a broader 
arrangement than just a trade deal.
    Because actually trade tariffs across the Atlantic, 
traditional things, are pretty low. That actually is going to 
get done, somebody said, on a weekend. It is not going to be a 
tough part of it. The real advantage and where we can really 
open up opportunity is in other areas. Services. We are each 
other's most important services markets. That is where the jobs 
are. That is with sleeping giant of the transatlantic economy. 
Because there are so many barriers. It is a huge strength to 
the United States as well as the EU.
    Regulatory procedures, it is not about convincing one side 
to take the other's procedures about how can we align them and 
conform them and recognize each other.
    And the last point is to take the global system forward. We 
can pioneer standards that are not like bringing Vietnam or 
other countries up to some standards, but taking two high-
standard entities and taking the rest of the world with them by 
establishing a high bar for the way we can conduct our 
commerce. That is a broad package we can conduct with the U.K. 
But we must do something very similar with the rest of our 
allies in Europe.
    And if we can do that together in a mutually reinforcing 
way, I think we will all advance better and it will be a North 
Atlantic project in which the U.K. will continue to play a 
major and important role.
    Thank you.
    [The prepared statement of Mr. Hamilton follows:]
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                              ----------                              

    Mr. Poe. Thank you, Dr. Hamilton.
    The Chair recognizes itself for questioning for 5 minutes.
    Thank all of you for your testimony. It seems to me that, I 
agree with you, Dr. Hamilton, that just because the United 
States and the United Kingdom are working on a trade deal 
doesn't exclude the European Union on working with them from 
the U.K.'s point of view or from the United States' point of 
view.
    It just seems to me, though, also that this trade deal is 
something that we should move forward too for all of the 
reasons all of the members have said at some point. A couple of 
you mentioned that there are some issues dealing with the fact 
that the United Kingdom is still part of the European Union and 
hasn't really exited yet. There is kind of a limbo land.
    What procedures are in play to limit what we can do 
regarding the fact that Brexit is still not done yet? So what 
are some of the sticking points between the relationship 
between the United Kingdom and the European Union during this 
limbo time? Dr. Hamilton?
    Mr. Hamilton. Well, and this was mentioned, they have to 
trigger what is called article 50 of the European Treaty. So 
they have not yet done that. They anticipate doing it in March. 
It has a 2-year timeline in which they could then negotiate 
their exit, if you will. But if they all agree that the 
timeline should be extended because they are not done, they can 
do that.
    So we should orient ourselves to March 2019 as the starting 
point. It is likely the U.K. Government, at that point, would 
probably, with one bill, say all existing EU legislation that 
is now currently in the U.K. will be U.K. legislation. They can 
change it after that, but that will be the baseline.
    At the same time, the U.K. has to do three other important 
things. One, it has to give the World Trade Organization, of 
which it would then be a member, a new set of commitments on 
goods and services, tariffs, and all sorts of things like that 
that it doesn't do now because it is part of EU. That has to 
receive unanimous consent by all members of the World Trade 
Organization. Let that sink in for a minute. The EU itself 
could block that. China could block it. Russia could block it. 
Anybody disgruntled. India could block it. So that will force 
the U.K. to have also pre-negotiations with the whole set of 
countries to make sure that that moves slowly. But that is 
going to take some time.
    The second thing it must do is then negotiate a free trade 
agreement or some sort of trade and investment agreement with 
the European Union itself. That is what I mentioned. That, I 
believe, will take 6 years. And it will arrange probably for a 
transition period, then, with the EU that does not, at the 
moment, require Parliamentary approval, to sort out their 
arrangements. So as you said, it will be a little twilight 
zone, but it will I think the twilight zone will extend for 
some years.
    And then third, it has to negotiate new agreements with 
everybody else; the United States, all other non-EU countries. 
So it will be very preoccupied with how it does that. And so I 
think we should have this timeline in mind and use the timeline 
to our advantage.
    So there is nothing wrong with starting, as Dr. Gardiner 
said, these kinds of exploratory discussions to find where the 
stumbling blocks are, the problems, and the issues. One could 
even move then to almost a shadow negotiation that could set up 
and tee up a U.S.-U.K. framework so that when we would be ready 
and the U.K. is able, we could then move quickly.
    Mr. Poe. All right. Dr. Hamilton, I am going to reclaim my 
time. Let me reclaim my time.
    You have lost me on the number of years. Starting with 
March of this year, how long is it going to take before--
approximately, how long is it going to take before there could 
actually be a negotiation between the United States and the 
United Kingdom on a bilateral trade? Approximately.
    Mr. Hamilton. Formal negotiation could happen as soon as 
they leave the EU. So in 2 years. They are unlikely to want to 
finalize a deal with the United States unless they understand 
what the EU dimension is of their trade since that is actually 
their major partner.
    So my estimate told, to implement both of those, is 8 
years.
    Mr. Poe. Okay. Dr. Gardiner, do you want to weigh in on 
that?
    Turn your microphone on.
    Mr. Gardiner. Yes. I would like to respond too to that.
    Firstly, with regard to the amount of time it would take 
Britain to negotiate a trade agreement with the European Union, 
that is not going to take 6 years. I believe that deal will be 
conducted very, very swiftly. It is in the EU's interest to 
have a good trade agreement with the United Kingdom. The United 
Kingdom, of course, is a very, very powerful economy. The 
world's fifth biggest economy. It is going to overtake Germany 
by 2030 as Europe's largest economy. It is not in the EU's 
interest to delay a deal with the United Kingdom. I would 
expect that deal will be struck within this 2-year period 
before Britain exits the European Union.
    Secondly, I would point out that, you know, the United 
Kingdom can begin negotiating a trade agreement with the United 
States now. They do not have to wait before Britain exits the 
European Union. You cannot of course implement such a deal 
until Britain leaves the EU in March 2019. But you can do all 
of the discussions and negotiations ahead of Britain's exit.
    So those discussions can already begin. And there is 
nothing to stop Great Britain from doing that. So that is a 
very important----
    Mr. Poe. Thank you, Dr. Gardiner. My time has expired. 
Thank you.
    The Chair recognizes the gentleman from Massachusetts, 
ranking member, Mr. Keating.
    Mr. Keating. Thank you, Mr. Chairman. American trade with 
the U.K. represents one-fifth of the trade with the European 
Union as a whole. The other four-fifths deals with the rest of 
the European countries, including Germany, our largest EU 
trading partner. So moving ahead on this, and I think it is 
unsettled, Mr. Gardiner, whether or not legally that can be 
done. Clearly it is unsettled. I won't say one way or the 
other.
    But moving ahead bilaterally, the message it sends to the 
rest of the EU, which is 80 percent of our trade that is left, 
plus the message it sends politically, and let's face it, trade 
deals are political, is the wrong message. So I am not saying 
one excludes the other, as I said in my opening remarks. But 
there is a danger in having a prioritized bilateral agreement 
and leaving the rest of Europe by the side, including allies 
like Germany. I would like Mr. Hamilton to comment on that.
    Mr. Hamilton. Mr. Congressman, thank you. That is 
essentially my point. Many of these countries are also our 
allies. There are geostrategic issues here having to do with 
common defense as well. And the message is important. So the 
message I suggest we consider is in fact to move ahead with a 
bilateral arrangement, as I said, but to embed it in a broader 
initiative across the North Atlantic with our close allies for 
jobs and growth. That would underpin the NATO alliance. That 
would give us all more opportunities. And we would be the 
global leader setting standards for the rest of the world.
    Whether the other leg of this, is a TTIP-like thing or 
something else, that is probably not this discussion. But I 
would simply say the three points I outlined for a U.S.-U.K. 
arrangement that, besides tariffs, services, regulatory 
conformity, or a recognition, and new standards, pioneering new 
standards, is essentially the framework we could also use with 
the European Union.
    Mr. Keating. I would suggest, from my opinion, that it is 
precisely the time to be talking about this. The fact, whether 
you call it TTIP or some revision of that, this is the time to 
be talking about this, not moving ahead with one and leaving 
the other 80 percent of our allies by the wayside or giving 
that impression unintentionally. Because impressions are 
important in that regard.
    Quickly I would like to just touch on a couple of other 
points. One is how can we make sure the U.S. companies 
currently in the U.K. continue to have access to the EU single 
market for our companies that are there? I would just like any 
suggestion about how we are going to navigate that.
    And if you could, I will go to my third question because we 
are running out of time, if you could mention particularly the 
financial markets. How that could be the case?
    Mr. Hamilton. Yes, well, this is again important. The U.K.-
EU dimension of this will determine how U.S. companies based in 
the U.K. will in fact access the single market. So those 
companies are reliant on the nature of that U.K.-EU deal. And 
with all due respect to the notion that they will do this 
quickly, EU and Canada have been negotiating an agreement for 7 
years now. They have got it pretty far, but it is still not 
done. And that is just with Canada where there haven't been all 
those major types of issues. This is pulling the EU and the 
U.K. in a new way. I think it will just take longer.
    So on financial services is exactly where all of this comes 
together because the U.K. banks, financial institutions, 
anything based in the U.K. will lose, as a matter of the 
Brexit, their automatic right called passporting rights to 
provide services throughout the rest of the European Union. 
They will lose that. Many U.S. banks and financial institutions 
rely on that passporting right to do their business in the rest 
of Europe, as I mentioned. There is now a U.K. equivalents 
regime, which is different, which says the EU says any non-EU 
jurisdiction that has equivalent procedures, say in financial 
services to the EU, they will accept some of those rights.
    But it is a new regulation. It is inconsistent. It is 
uncertain whether it will continue for both the U.S. and the 
U.K. So this shows how we have to move in tandem with both 
tracks here and make sure that the U.K.-EU track also is in 
American interests. We should be actively engaged to square 
that triangle, if you will, with a view to our own interests. 
Because they are going to be massively effective.
    Mr. Keating. Thank you. And I will actually leave--I yield 
back a few seconds since we are a dual committee.
    Mr. Poe. I thank the gentleman.
    The Chair recognizes the gentleman from California, 
Chairman Rohrabacher, for his questions.
    Mr. Rohrabacher. Well, thank you very much. I noted perhaps 
in a humorous way about the disruptive nature of our new 
administration. But let me just note that many of us on this 
side of the aisle, and especially yours truly, applauds the 
disruption of the way the system worked before. And clearly 
what we have here is an affirmation by the British people that 
the system needed to be disrupted for their wellbeing. They 
made that decision.
    The EU and this getting into these large multilateral trade 
agreements was not to their benefit. That is why they voted not 
to stay in, what they--of course what appears to be, when 
people are negotiating, such bilateral agreements, what appears 
to be some sort of idealization of what could happen that is 
beneficial quite often results in what I think, the British 
people, found resulted in not a free trade but in controlled 
and regulated economic activity. Economic activity that was 
controlled and regulated by multinational bureaucrats set in 
Brussels. Or perhaps there is other places they have their 
offices as well.
    Let us note that our President, Mr. Trump, has made himself 
very clear that all this talk about free trade. And I know our 
conservative and Republican think tanks have this image in 
their mind of what free trade means. I think free trade is 
something--I have always said I believe in free trade between 
free people. And if there is ever an example of two free 
people, it has to be Britain and the United States.
    But in terms of how our free trade between us relates to 
the very other complications that you are talking about, they 
are the complications of what happens when you decide to 
organize your economic--international economic activity through 
a multilateral basis rather than a unilateral basis. And that 
is what President Trump is all about. He wants to shift away 
from the old system which gave too much power to people who are 
not involved with America's interests but perhaps a 
bureaucratic and systematic allegiance.
    And just something you said, Mr. Hamilton, struck me. So 
the WTO is going to have to approve any agreement between 
England and the United States. Is that right? What is it? Where 
does the WTO come into this?
    Mr. Hamilton. The U.K. right now has a set of commitments 
by virtue of its membership in the European Union to the WTO. 
So if it leaves the European Union, it has to show the WTO its 
new commitments. So it is the WTO. It is nothing to do with any 
negotiation with us. But if we don't know what those 
commitments are, it is hard to start a negotiation. We don't 
know what the tariffs will be in the U.K. until they do that. 
They will have to do that first.
    And within the WTO, any member of the WTO could veto that 
until the U.K. does something that everyone will agree to. So I 
am just saying I think that it will get done. I don't want to 
make too much of it, but I think it will just prolong the 
timing. That was my main point.
    Mr. Rohrabacher. So what we have now is the greatest cheat 
and the greatest undermining of the wellbeing of American 
people, the Beijing regime, the clique that runs China, now has 
some sort of veto power of what kind of agreement we are going 
to have between Britain and the United States. They will 
determine whether or not it is consistent.
    I remember when I first got here how several of us opposed 
the WTO entry in by China. We said, you know, again, free 
trade, free people. China is not in any way a free country. And 
much less in terms of their economics.
    So let us just point out again that perhaps in the long 
term President Trump may have his finger on the right 
direction--pointed in the right direction. Let's start 
emphasizing good relations and economic activity on a bilateral 
basis with free people around the world like the Brits rather 
than putting our faith in multilateral organizational trade.
    Thank you.
    Mr. Poe. The gentleman yields back his time.
    And the Chair recognizes the ranking member, Mr. Meeks, 
from New York.
    Mr. Meeks. Thank you, Mr. Chairman.
    Let me just make a quick comment. I am almost just the 
opposite of my chair. I think that the world is interconnected, 
and we are better interconnected, we are safer interconnected. 
When--one reason why that is, you just need to look at history, 
and if you look at World War II, for example, when everybody 
was looking at their own individual interest, it was war. They 
were fighting one another.
    The reason why people came together, the 
interconnectedness, is to have more of a peacetime and to have 
a better future collectively. And so to say--and to have rules 
and order. The reason you have a WTO of multilateral 
organizations, so that you can set a rules-based society so 
that you don't have something where everyone is just going at 
it free willy-nilly, because then in this internet connected 
world, where would we be, where would we go?
    So even when we are talking about Brexit and the 
possibility why I think that this--you know, I agree with Mr. 
Hamilton, you know, you can have some conversations 
understanding that it is, you know, something that is not going 
to happen for way down the road, you can be the cause of this 
happening. I think that if, in fact, there was negotiations on 
a free trade agreement, a bilateral free trade agreement with 
the U.K., that hurts the U.K. also. Because why would the EU--
in the negotiation with the U.K. and the EU, they have got to 
negotiate, and if they see that Britain is trying to say, as I 
think, Mr. Gardiner, you can tell me if I heard you correctly, 
that you basically were advocating, because in your opening 
statement, everything you said about the EU was jump off this 
sinking ship, you know, it is bad, leave it alone, that you 
were somewhat advocating for the end of the EU as we know it, 
that it is out worn its relationship or its need of being, that 
USA, forget about the EU, just focus on United Kingdom. Is that 
correct?
    Mr. Gardiner. If I could respond to that. And firstly, in 
my testimony, I made the point that Britain is far better off 
outside of the European Union. And I believe the Brexit is very 
good for the United States and for the British people because 
this is an issue of sovereignty and self-determination of 
freedom. You are not a sovereign nation if you are a member of 
the European Union. But I did not make a, you know, an 
assertion that----
    Mr. Meeks. Your exact quote, if I am not mistaken, is the 
declining EU.
    Mr. Gardiner. Yes. It is a declining EU, that is correct. 
And if other nations within the EU wish to leave the European 
Union, that is their call.
    Mr. Meeks. Well, even Prime Minister May, in her statement, 
says we need a strong EU. It seems to me that even in the 
U.K.'s best interest, as stated by the Prime Minister herself, 
that she is advocating for a strong EU, that we need a strong 
EU, that in fact we don't need a declining EU, we have got to 
make sure that it is strong.
    Mr. Gardiner. Well, that is up to European leaders to 
decide whether they are able to advance a strong European 
Union. There is no evidence at this time that the EU is 
becoming a stronger entity. It is certainly weakening, and the 
winds of change are blowing across Europe, and there is a drive 
toward sovereignty and self-determination that many EU elites 
simply do not accept.
    Mr. Meeks. Let me reclaim my time because I am running out.
    Mr.--Dr. Hamilton, let me just ask you a question. You 
mentioned that negotiations do not happen in a vacuum and that 
with the active negotiations with the WTO and Asia, the EU, 
that these all, these negotiations will be intertwined. So my 
first question would be--but all that seems like a lot to me. 
Does the U.K. even have the manpower? Because there is a lot of 
manpower, you got all of this negotiation, you got to do all 
this. Do they have--you know, I think the last time they 
negotiated a deal by themselves, I don't know when it was, to 
be quite honest with you.
    So it seems to me--my first question is, you know, do they 
have the manpower to do this? Is it--you know, can you give me 
your thoughts on that?
    Mr. Hamilton. The government is quickly trying to get up to 
speed to get a bigger bench on trade, but as you correctly 
point out, they haven't been doing this for a long, long time 
since the EU has the authority to negotiate trade deals. So I 
was asked by the State Department some time ago to go brief a 
number of them coming over to try to figure out how to do all 
of this. But you are right, this is part of the issue.
    The capacity, the sheer capacity of the U.K. to do all 
these things will be stressed. We should probably help them, to 
the extent we can. But my point again is we should be realistic 
about the timeline that will be in front of us, givenall these 
things the U.K. itself has to do, regardless of our piece of 
it. It will just take some time.
    Mr. Meeks. I am out of time.
    Mr. Poe. I thank the gentleman.
    The Chair recognizes the gentleman from California, Colonel 
Cook, for his 5 minutes.
    Mr. Cook. Thank you, Mr. Chair.
    This very illuminating hearing, I was really getting 
involved in this, and then I heard the chair talk about limbo 
time, and I thought it was a flashback when I was in college at 
Fort Lauderdale, and maybe he was there at the same time, but I 
haven't heard that expression in quite awhile.
    Anyway, some of the comments that you made there, a number 
of years ago, I was probably--had a much more favorable 
viewpoint of the EU, some of the things that happened in 
Greece, Italy, maybe the tremendous influence that Germany 
exercised. So you caught my attention, Dr. Hamilton, 
particularly about the World Trade Organization. And, you know, 
I respect a country; if the U.K. wants to leave the EU, I 
understand that.
    The problem I am hearing is, I guess it is like anything in 
this world, because it is run by you guys, which are lawyers, 
is that you better know exactly what you are getting into, 
because it might not be that easy to get out of. And I want to 
know, is that an accurate--if you have advice for us, if we 
could influence this decision, at least I am hearing is, before 
we start--and by the way, I am all for more trade with the U.K. 
I think everything that has been mentioned about the past and 
everything like that.
    But before we get into this, are there certain hidden 
things that if something goes south that--one comment, I think, 
Dr. Hamilton, you mentioned 8 years, and I know, Dr. Gardiner, 
you had a much shorter time in your argument about it.
    But the point, I am trying to get your viewpoint, Dr. 
Hamilton, maybe you will give it, is that you better have your 
eyes wide open when you get into any trading arrangements. You 
know, I am a big NATO person, support the alliance and 
everything else, but you have to know exactly what you are 
getting into, and that is my takeaway. Can you comment on that 
briefly, anybody?
    Mr. Hamilton. You had referred to me. If I could, just 
briefly, you know, on the EU, much of this, these are our 
allies, almost all of them, and they have said this is the way 
they are trying to organize the peace in Europe, and as was 
mentioned, after World War II, after a world war, the survivors 
of war decided this is--by melding their economies, it is the 
way to prevent war. The United States provided, through NATO, 
an umbrella under which they could reconcile and create this 
type of effort.
    American workers, consumers, companies all profit from that 
deep, deep relationship with the U.K. and also with the rest of 
our allies. So I think we should think about it in that, if I 
may.
    You say keep your eyes open. Here are some issues. We say 
tariffs won't be a problem, but agriculture, that is likely to 
be a problem. British farmers are about to lose the subsidies 
that they get through the common agricultural policy through 
the EU, and then they will be in a trade agreement facing U.S. 
competition. That will be a domestic political issue in the 
U.K., I can guarantee it to you. We have an issue with 
financial services on both sides of the Atlantic because the 
city of London believes that is their advantage.
    We have resisted including financial services in the same 
kind of negotiation that we have had with the EU and TTIP 
because of other kinds of concerns. We will have to address the 
financial services issue in the way that I describe because it 
is so interlinked. So there are issues. I am not saying there 
aren't, even with the U.K., but if we don't go forward with 
this kind of agreement, then we will be looking at the WTO 
baseline, which is, as I mentioned, which means tariff barriers 
to U.S. products and services that otherwise we will--wouldn't 
have if we have an agreement.
    Mr. Cook. Yeah. But my comment, you know, the takeaway from 
this is, obviously, the British people were unhappy with the 
situation. It is just like us. I understand the commitment to 
Europe, I understand the commitment to our allies and 
everything else, but it all comes back to our constituents. I 
don't represent anybody in the U.K. you know, I am worried 
about the issues in--and sometimes I think we all run the 
danger of getting out of touch with the people that we serve.
    That is--you know, I love the Brits, I love the Europeans, 
I love everybody, kumbaya. But first and foremost, you know, 
the people of the 8th Congressional District, and that is, you 
know, why I raise my hand.
    Some of the talk, as I said--and I am running out of time--
is just to convey that fear that, you know, the World Trade 
Organization, and when certain things are happening in the 
economy and we get those cards and letters, we have to read 
them and respond to them.
    I yield back.
    Mr. Poe. I thank the gentleman.
    The Chair recognizes another gentleman from California, Mr. 
Sherman.
    Mr. Sherman. Thank you.
    We have had an election. The clear message is the American 
people are on the side of trade skeptics who don't think that 
the trade deals we have entered into in the past have been 
good. And what we are going to see is a bait-and-switch, 
because now we are being told that the only problem is 
multilateral trade deals.
    Well, TTIP is a bilateral trade deal. Of course, we are a 
union of 50 States, they are a semi-union of dozens of states. 
NAFTA, which is held out to be the worst deal, you could call 
it a bilateral deal, but all the controversial provisions are 
the U.S.-Mexico provisions. If it was just a U.S.-Canada deal, 
I don't think it would be discussed much.
    So NAFTA's controversial positions are, in effect, a 
bilateral deal. The South Korea deal, which cost us as much in 
jobs as any on a pound-for-pound basis, is a bilateral deal. So 
what we are going to be told is that the Wall Street elite 
should control American trade policy to the destruction of the 
American middle class, but we should insist that they do it on 
a case-by-case country-by-country basis.
    I would submit that American workers should not compete 
with 40 cent an hour Vietnamese labor that cannot organize and 
has no freedom, whether it is part of a TPP or whether it is an 
individual deal.
    Now, I have been told that our witnesses are generally 
trade-ophiles rather than trade skeptics. Is that a 
mischaracterization of any of you? No. And so, notwithstanding 
the wave and the message, the only loud message that came from 
the American people, those who support these trade deals 
continue to dominate the discussion here in Washington.
    In looking at a trade deal, and there are some worthy of 
support, the issues that come up are investor-state, low wages, 
labor rights, environmental protection, currency manipulation, 
and balance of trade. Well, with Britain, low wages, I think, 
is one of the big problems because, in theory, a trade deal 
should equalize wages in both contracting parties. Well, 
British wages are relatively high. Labor rights, they have got 
stronger labor rights than we do.
    Are any of our witnesses familiar with American right-to-
work laws?
    I don't see any, but I will point out that the State 
Department has testified before Judge Poe and my subcommittee 
back in the day that our right-to-work laws are a violation of 
the U.N. declaration of human rights and international labor 
standards because they, in effect, make it impossible to 
organize unions. Environmental protections are strong in 
Britain, viewed on a world standard, and I haven't seen serious 
currency manipulation.
    So let's go back to investor-state. We are told, in other 
trade agreements, that we have to surrender our sovereignty and 
give giant corporations a second way to attack our 
environmental protections and consumer protections in order to 
give our corporations a fair shot when they are doing business 
abroad.
    Do our witnesses generally agree that American business can 
get a fair shake in British courts, and therefore, it is not 
necessary to have investor-state protections for American 
corporations? Dr. Hamilton, if you can just give me a yes or 
no. I have to get through the list.
    Mr. Hamilton. Yes.
    Mr. Sherman. Mr. Lester?
    Mr. Lester. Yes.
    Mr. Sherman. Dr. Gardiner?
    Mr. Gardiner. Yes.
    Mr. Sherman. Balance of trade. Would a deal with Britain 
that simply eliminated all tariffs be good or bad for reducing 
America's trade deficit? Dr. Gardiner. Or it is possible that 
it can't be estimated, but if you have an estimate, let me 
know.
    Mr. Gardiner. Well, it would be good for the trade deficit. 
It would be good for the U.S. economy.
    Mr. Sherman. I didn't ask the economy.
    Mr. Gardiner. Yeah.
    Mr. Sherman. Would it--we have the largest trade deficit in 
the history of a million life. Would a trade deal with Britain 
make that worse or better or you don't know?
    Mr. Gardiner. It would not make it worse. I think that the 
United States would benefit from such a deal.
    Mr. Sherman. Okay. Mr. Lester?
    Mr. Lester. I can't estimate it, but I also don't think 
trade deficits are bad for the economy.
    Mr. Sherman. We lose 10,000 jobs for every billion dollars 
of trade deficit. And if you are not one of those 10,000 
people, then your statement--go on, Dr. Hamilton.
    Mr. Hamilton. U.S. has a trade deficit in goods with the 
European Union and the U.K., but it has a trade surplus in 
services.
    Mr. Sherman. Yeah, and I am looking for the unified. Some 
trade skeptics only focus on goods and----
    Mr. Hamilton. And my point was----
    Mr. Sherman [continuing]. The services matter as well.
    Mr. Hamilton [continuing]. If it can open up the services 
economy across the Atlantic, the United States stands to 
benefit considerably.
    Mr. Sherman. Okay. And finally, I will point out that 
Britain has a health system that makes ObamaCare look like it 
came from the Cato Institute. And I yield back.
    Mr. Poe. The Chair recognizes the gentleman from South 
Carolina, Mr. Wilson.
    Mr. Wilson. Thank you, Judge Poe and Chairman Rohrabacher, 
for calling this very important meeting and hearing. And thank 
you for being here today. It is very meaningful to me.
    I was born into this special relationship with the U.K. I 
grew up in the most British city of North America, Charleston, 
South Carolina, and so we have always had such a great 
appreciation. And in my home State, the benefits of this have 
been immeasurable. Also, it is the birthplace of Congressman 
Greg Meeks, so I am sure he and I share the appreciation.
    And it was really the British investment Bowater that was 
the first foreign investment in our State, which then led to 
Michelin of France and Bridgestone of Japan, Continental of 
Germany, Getty of Singapore. And now South Carolina is the 
leading manufacturer and exporter of tires to any State in the 
United States.
    Additionally, we have foreign investments, working with 
Governor Carroll Campbell and the late Governor Jim Edwards, in 
BMW, and now soon Volvo and Mercedes Sprinter Benz. South 
Carolina is the leading exporter of cars of any State in the 
United States, and so trade is very important, and we love to 
see those X5s in London and anywhere else.
    But that in mind, Dr. Gardiner, the new--a trade agreement, 
would this enhance the prospects of new jobs? What would be the 
prospects?
    Mr. Gardiner. That is an excellent question, and I should 
point out that already 1 million U.S. jobs depend upon British 
investment here in the United States, and 1.25 million British 
jobs depend upon U.S. investment in the U.K. And I do believe a 
free trade agreement would be a job creator. It will advance 
prosperity on both sides of the Atlantic. There are similar 
wage levels in the U.K. and the U.S. It is not going to 
threaten American jobs.
    And also, this is a--you know, this is a bilateral trade 
deal as opposed to TTIP, which is not a bilateral trade deal, 
as one of the members suggested earlier that it was a bilateral 
deal. TTIP simply is not. It is a multilateral deal, very, very 
different to a U.S.-U.K. free trade deal. And I believe that 
encouraging more British investment in the United States will 
create a considerable number of additional jobs here in the 
U.S., and that is good for the U.S. economy. It is good for 
American workers. The American worker has nothing to fear from 
a free trade deal with the United Kingdom, but really should 
embrace it.
    Mr. Wilson. Thank you very much. And again, I am grateful. 
My home State of South Carolina has certainly benefited.
    And, Dr. Hamilton, we have such an extraordinary bilateral 
security situation and friendship, partnership with the U.K. 
Would additional trade agreements enhance our security 
relationships?
    Mr. Hamilton. I believe they would. I believe, while not an 
economic NATO, as people have said, a balanced agreement both 
with the U.K. as a strong NATO ally and our other European 
allies would be a second anchor to our alliance. It would 
reassure our allies of our commitment to NATO because we would 
again be tying our economies together in ways that we had not 
yet done. It would reassure us that those allies will be 
outward looking and open to American goods, services, and 
ideas.
    So it would be mutually reinforcing to the NATO alliance 
itself. If it creates jobs and greater prosperity on both sides 
of the Atlantic, it also allows us to afford the military 
expenses that we need to expend for NATO and help our European 
allies to step up their military contributions, which is what 
the Trump administration, I think Democratic administrations 
have all asked them to do.
    If I could just say on the nature of a U.S.-U.K. deal. It 
is not the fact of the deal that is going to bring jobs. It is 
what is going to be in it. And I agree with all the points that 
have been made, but I return to this one point, which was so 
many American companies are based in the U.K. because of the 
access they have to the rest of Europe. And if this deal is 
done to the exclusion of that access, many American companies 
are going to rethink their presence in the U.K.
    So we have to assure that as we move ahead on this 
bilateral track with the U.K., we also consider this other 
piece because it is actually so vital to all those jobs back 
here that we just discussed.
    Mr. Wilson. And other jobs, Mr. Lester, are with financial 
services. And with the Trump administration's efforts to 
eliminate or repeal Dodd-Frank, wouldn't this be beneficial to 
both of our countries to reduce regulations?
    Mr. Lester. Yes, it would. And in the TTIP, one of the 
hurdles was demands from Europe to loosen financial services 
regulation, make it easier for European financial services 
companies to operate in the U.S. And in this new context with 
the new administration, you know, sort of maybe rolling back 
Dodd-Frank a bit, that can only help our negotiations with both 
the rest of Europe and also U.K., in particular, should 
facilitate the trade deal. You know, we are sort of giving them 
what we want because we think it benefits us.
    Mr. Wilson. Thank you very much.
    Mr. Poe. The gentleman yields back his time.
    The Chair recognizes the gentleman from Rhode Island, Mr. 
Cicilline.
    Mr. Cicilline. Thank you, Mr. Chairman.
    Dr. Gardiner, if I understand your testimony, both your 
testimony and your written testimony in which you say, ``A free 
trade agreement would boost Britain and America's economies 
while also strengthen the Anglo-American special relationship, 
for decades the engine and beating heart of the free world.'' 
``A stronger Britain on the world stage, able to act as a truly 
sovereign, independent nation, is a far better partner for the 
United States.''
    That sounds to me like a very romantic view of times past 
and really disregards the current world context and is not even 
an economic argument but more of an idealogical or political 
argument. And the reason that I am questioning this is Prime 
Minister May said very clearly that it is in all of our best 
interest that the EU succeed. And she is very clear that that 
is critical to the future of the U.K. as well as the economic 
relationships.
    She is the leader of the United Kingdom. Why is she wrong 
and you are right that a declining European Union and a 
relationship between the United States and the U.K. is better 
for the U.K. and the United States?
    I mean, it seems that Dr. Hamilton's testimony about, 
thinking about this in a little more sophisticated way, of the 
U.S.-U.K., the U.K.-the EU and the U.S.-EU, particularly when 
these economies are all integrated and related and people's 
interest in markets are so dependent on each other's access to 
those markets, it seems like a kind of America first idea of 
just U.K. and U.S. over here, sort of disregarding the reality 
of these economic relationships. And why shouldn't we, as a 
matter of trade policy, be looking at engaging in these 
conversations simultaneously to maximize the benefits to 
American jobs, American workers, and the growth of the American 
economy?
    What is the basis for your claim that we are better off 
just having Britain and the U.S. do a trade agreement? I mean, 
it doesn't seem like that--that doesn't make common sense to 
me, let alone be supported by any kind of economic analysis. I 
mean, is it simply, is it, sir, this yearning for those days of 
old?
    Mr. Gardiner. Well, firstly, thank you very much for all 
your questions and to respond to them. First, this is not a 
romanticized view. The special relationship is a reality. It 
has been a reality for over 70 years. It is the engine of the 
free world. And when U.S. and British Forces fight together on 
the battlefield, as they have done on countless occasions 
defending the cause of freedom, that really does matter.
    So I think that it is a tremendous reality. It is a very, 
very powerful force. And clearly, for the British people, they 
decided they were better off outside of the European Union. And 
with the--with the new British Brexit approach, Britain is 
going to be an even more outward looking nation that is going 
to work together with its allies and confront the enemies of 
freedom. And I think that, you know, this is not a romanticized 
view. This is the reality.
    As for the future of the European Union--and Theresa May 
rightly pointed out that it is good to have a strong Europe for 
the United Kingdom, but, you know, the reality is within the 
European Union, there is deep-seeded discontent. You do have 
European leaders who seem to be deeply out of touch with a lot 
of their own electorates. European countries cannot control 
their own borders, and many of the rules that govern the 
European Union simply, you know, are unrealistic in this day 
and age with the rise of Islamist terrorism in Europe, the 
tremendous threats that we face across the world. And I think 
that, you know, Europe needs to adapt to the new realities. And 
the British people, their desire for freedom is shared by, you 
know, tens of millions of people across the EU as well.
    Mr. Cicilline. Thank you, Doctor.
    Dr. Hamilton, could you speak to this? You know, I am not 
sure that the new administration takes the same view as Prime 
Minister May, the same view that all the Prime Ministers have 
taken about the importance of the success of the European 
Union.
    Could you speak to what the benefits of that are as well as 
the dangers to the United States and the U.K. or to our 
interest if the EU fails and what we might do as Members of 
Congress to support the strength of the EU?
    Mr. Hamilton. Thank you. Well, as I said also about my 
question about trade, it is not the fact of the EU, per se, 
that is an American interest. It is what kind of EU, and how 
does it relate to the interest we actually do have.
    You know, since the end of the Cold War and even before, 
Ronald Reagan, George Bush, every--both Bushes, and the 
Democratic Presidents have held the vision of a Europe whole 
and free. That has animated our policies toward Europe for a 
long time.
    If we are facing or actively engaged in creating a Europe 
that is fractured and anxious, I would argue that is not an 
American interest and it will shortchange the American economy 
as well. It will mean a Europe that is beset by various 
nationalisms. That has not proven to be a good thing for 
America in our history. It is likely to be a Europe that is 
closed, in fact, then to American goods, services, and ideas, 
not one that is open. It is likely to be a Europe that at some 
point would come under the influence of a country or a group of 
countries hostile to the United States. We have experienced 
that in our history. Also not good for us. And if it is a 
fractured Europe, it is not going to be a partner. It is not 
going to be an ally. It is going to be a squabbling set of 
countries that will get us into trouble and draw blood and 
treasure away from all the other issues we have to deal with.
    So if the EU can work toward the kind of Europe that I just 
identified, the opposite of all of that, we should support it. 
If it does things that don't do that, we should object. We 
should be--have a very clear-eyed view of our own interests 
regarding the European Union or NATO or our bilateral 
relationships. But at the moment, the kind of EU that is there 
is the one we need to deal with, and we need to see that we can 
work with it to steer it in this direction of a Europe that is 
whole, free, confident partner of the United States.
    Mr. Poe. The gentleman's time has expired.
    Thank you, Dr. Hamilton.
    The Chair recognizes the gentlelady from Nevada, Ms. Titus.
    Ms. Titus. Thank you, Mr. Chairman. It is a pleasure to be 
on this committee.
    I have two questions. One is more politically oriented, and 
the other, policy. My political question is, is it not possible 
that those who are pushing this so-called special agreement 
between the U.S. and the U.K. now aren't just using this as a 
stalking horse to improve England's or the U.K.'s position in 
the Brexit negotiations?
    And then my policy question has to do with you, Dr. 
Hamilton. You mentioned a lot about the service side of this, 
and I think that is very important, but most of the focus has 
been on financial services. I represent Las Vegas, so the 
tourist side of services is very important to our economy. If 
you look at the figures, just last year, over 5 million people 
came from the U.K. as tourists to the United States, 400,000 of 
those came to Las Vegas. They are our third largest visitor 
source after Canada and Mexico.
    So I wonder if anybody is talking about the tourist aspects 
of any kind of special agreement and realizing that we can't 
wait 8 years for this to be looked at. And there is some very 
big issues. You look at the fact that the U.K. is part of the 
Visa Waiver Program. How does that continue? You look at policy 
toward refugees, policy toward immigrants, travelers, business 
travelers. I would just ask if anybody is investigating that or 
recognizing the importance of it, after you answer my political 
question.
    Mr. Gardiner. If I could answer your first question, which 
is an excellent question about the Brexit negotiations with the 
European Union, how the U.S.-U.K., you know, free trade 
agreement impacts that.
    I would point out firstly that Britain is already in trade 
discussions with a wide range of countries stretching from 
Australia, Canada, New Zealand, to India, and even South Korea 
with regard to free trade agreements. So of course, the United 
States free trade deal is the most important deal for the 
United Kingdom, but they are in discussions with many, many 
other countries. And I don't think that, you know, this is, you 
know, politically motivated, vis--vis, the Brexit negotiations 
with the European Union, which are an entirely different 
course.
    And I think that, you know, if Britain was not in the 
European Union and had not been tied to the EU for the last 
four decades plus, Britain would already have signed a free 
trade agreement with the United States a very, very long time 
ago. And it is astonishing in this day and age that European 
countries are not able to negotiate their own free trade deals. 
There are countries that are part of the European Union, 28 
countries, that do not have that freedom unless they leave the 
European Union. And that kind of centralized political power 
being asserted by Brussels is really a, you know, slap in the 
face for national sovereignty. And that was a big reason why 
the British people decided to exit the European Union, to 
exit--in order to implement that freedom to negotiate their own 
free trade agreements.
    Ms. Titus. Okay. Thank you.
    Mr. Hamilton. Madam, if I may, on your--the other part, on 
services. So there are, of course, a variety of services. 
Services are where all the jobs are across the Atlantic, and 
they are highly protected on both sides of the Atlantic. So 
instead of the goods tariffs, we should focus on services, 
including on people flows. And you are right, it is unclear 
exactly what the arrangements will be if the U.K. leaves the 
EU. We have to sort that out. I don't think it will be a 
problem, but I think we will need to sort it out.
    But let me show you where we could move ahead. The digital 
economy. U.S. and Europe are the leaders in the digital 
economy. We are most linked with each other. And the U.S. And 
the U.K., in terms of e-commerce, are each other's most 
important partners in the world. Seventy percent of e-commerce 
buyers in the U.K. go to American sites to buy, and 49 percent 
of American consumers go to British sites to buy things. And 
yet the digital world is still in flux.
    So it is about making sure we have high standards, we can 
set that pace because we are so deeply interlinked, and the 
digital economy is becoming the economy. So this would be, I 
think, very considerable.
    Services are about qualifications. If an architect wants to 
work here or in the U.K., do we recognize those qualifications, 
legal qualifications? When I mention about mutual recognition, 
it might be to try to break down some barriers there that would 
facilitate the flow of highly professionalized services.
    So these are the kinds of things that I think a U.S.-U.K. 
deal could actually set the pace on, but it needs to be done, 
as I keep saying, in some sort of balance with how we are going 
to work with the rest of our European allies.
    Ms. Titus. Never mind the tourism issue with the gaming 
issue, which is very important in Nevada, now you have got 
another complication.
    Thank you, Mr. Chairman.
    Mr. Poe. The lady yields back her time.
    The Chair recognizes Mr. Rooney from Florida for his 
questions. Perfect timing.
    Mr. Rooney. Thank you, Mr. Chairman.
    Mr. Poe. Microphone.
    Mr. Rooney. Yeah. Thank you, Mr. Chairman.
    Mr. Lester, I would like to ask you a question. I would 
like to thank you for taking time to testify.
    If a U.S.-U.K. trade agreement is going to be a gold 
standard, what are the building blocks we should look for that 
we can use to build future trade agreements on?
    Mr. Lester. This is a great question because one thing that 
we really need to talk about is what is the model of trade 
agreement that we are using? We spent the last decade with the 
same model, and it has worked well in some cases, you know, a 
few years ago, but lately we have been stuck. You know, we had 
the TPP and we had the TTIP following the same model, and we 
didn't get them done, and, you know, that is a problem.
    And so the question is, if we do the same thing in the 
U.S.-U.K. trade agreement or any other bilateral trade 
agreement that we take on in the next couple of years, do they 
not get done? Do we spend the next 4 years negotiating 
something and then we don't have anything at the end of it? And 
that would be a huge problem if we go down that road.
    So the question is what should be in this trade agreement? 
What are the building blocks?
    And as much as people like to say tariffs are low, I would 
just like to point out some of them are high. There are these 
tariff peaks and tariffs are still a burden. They are taxes on 
trade, and we should do our best to get rid of as many as 
possible. So I think that is one of the--it has always been at 
the core of trade agreements and it should be at the core of 
trade agreements, get rid of as many tariffs as politically 
possible.
    Beyond that, we talked a lot about regulations. Mr. 
Hamilton talked a lot about this already. And so there is this 
ambition out there in trade agreements that we are going to 
deal with all the regulatory trade barriers. And I am 
sympathetic and I would like to see it happen, but I think we 
should use caution and not try to overstate it.
    We are probably not going to be able to have harmonized 
regulations between the U.S. and U.K., and I don't think we 
necessarily should. But there are more limited things we can 
do, and again, Mr. Hamilton has alluded to this. We can have 
mutual recognition. You know, sort of an accountant who is 
licensed to work in the U.S. Aren't they--you know, shouldn't 
they also be qualified to work in the U.K.? Can't we have some 
certification program to make that easier? So I think mutual 
recognition of certain products and services should be a core 
part of trade agreements.
    So, now, beyond those tariffs and dealing with regulatory 
barriers, we have a lot of other issues that have traditionally 
been in trade agreements. Intellectual property and labor and 
the environment have been there for awhile. With the TPP, we 
brought in things like e-commerce and state-owned enterprises. 
All of this complicates the negotiation, and we just need to 
think carefully about what makes the most sense in the context 
of each specific negotiation.
    So, you know, when we are talking about a U.S.-U.K. 
agreement, what should be in there, and, you know, how can that 
serve as a model for other agreements? You know, my personal 
preference is to focus on something like e-commerce. You know, 
a lot of our trade agreements, you know, haven't really adapted 
to the modern era of digital trade, so I think there is more we 
can do on e-commerce. But I do think we need to think carefully 
about what are all the elements that should be in there, what 
maybe could be excluded from the U.K. to get a trade agreement 
done more quickly and not go down the road of the TPP or TTIP 
where at the end of the day we don't have it.
    Mr. Rooney. Thank you.
    I would also like to ask Dr. Gardiner a question here. I 
have got a little more time. Thank you for taking time to be 
here. As a banker and investor, I am especially concerned--and 
knowing London's preeminent position in the financial world, I 
am concerned about the asymmetries between the horrendous Dodd-
Frank regulations and the free market capitalism of London, 
how, in this trade agreement process, can we resolve that, and 
do you have any advice for us what the Congress might do to 
reduce that asymmetry?
    Mr. Gardiner. That is a very good--that is a very good 
question. And it should be pointed out the city of London is 
far bigger in terms of its financial clout than all of the 
other major European Union financial centers combined. And the 
city of London has prospered extremely well outside of the 
European single currency and I believe will continue to prosper 
outside of the European Union. And you do raise, you know, an 
important question about asymmetry, and that is going to be, I 
think, a very, you know, significant issue in terms of the 
negotiations.
    In my view, I believe that on both sides it is in the 
interest of the U.S. and British negotiators to ensure that 
U.S. investment can flow through the city of London and, 
similarly, for British investment to flow into New York and 
other U.S. financial centers. This is a tremendous creator of 
jobs and prosperity in the United States and also for the 
British people as well. There is a great deal at stake, and 
London and New York are the world's two largest financial 
centers, and no center in Europe can even compare to either of 
those. And it is in both sides interest to ensure that there 
are no barriers in place to doing--conducting deals between the 
two most important financial centers in the world.
    Mr. Rooney. Thank you. I yield back, sir.
    Mr. Poe. I thank the gentleman.
    The Chair recognizes the gentleman from Pennsylvania, Mr. 
Boyle.
    Mr. Boyle. Thank you. And I thank the chairman and the 
ranking members of the subcommittees for holding this important 
hearing today.
    I first wrote to Chairman Royce and Ranking Member Engel 
back in April, some 9 months ago requesting a hearing on what 
was then the possibility of Brexit. This is about 2 months 
before the--yeah, 2 months before the vote at that point, 
because I was concerned that many people in this town and on 
this side of the Atlantic were not taking the threat of a 
potential Brexit vote very seriously. And since late June, when 
that vote was made, I have been pushing for a hearing, because 
it will have great effect, not just on the U.K. and the EU, but 
also, of course, on the United States.
    While I respect the right of the British voters to, of 
course, peacefully determine their own future as it relates to 
Europe and the rest of the world, and I look forward to 
maintaining the strong relationship that the U.S. and the U.K. 
currently enjoy, I do find Brexit deeply concerning for a 
number of reasons.
    First, there is the question that some of my colleagues 
have mentioned on the future of the European Union itself. 
After centuries and centuries of warfare, the last 70 years 
that we have seen in Europe is the greatest time of peace and 
prosperity in the history of the continent. The European Union 
has played a incredibly important role in that integration, and 
anything that would threaten that is a threat not only to 
Europe, but frankly, the peace and prosperity that this country 
has enjoyed over that same period of time.
    Second, Brexit does affect the U.K.'s overall influence 
within the EU. This is an issue, obviously, for the U.K., but 
it is also an issue for the United States. There are times in 
the 1980s, and especially when Tony Blair was prime minister, 
when the U.K.'s influence within the EU was able to benefit the 
U.S. and U.S. foreign policy interests. Will that now be 
jeopardized as the U.K. takes a step back from being a member 
of Europe?
    Third, and the issue that hasn't been raised at all here 
today, I believe that it is a responsibility of the United 
States as one of the three guarantors of the Good Friday 
Agreement to make sure that there is nothing about Brexit that 
threatens the Good Friday Agreement.
    The exit of the U.K. from the EU potentially threatens the 
commitment of the U.K. to human rights, brings in to question 
funding for peace-building initiatives in Northern Ireland, of 
which the European Union has been a major contributor, and the 
common travel area between Ireland and Northern Ireland. There 
simply cannot be any backsliding into the bad old days of 
border checkpoints.
    So my question is to Mr. Hamilton. Given the outsized role 
that immigration and open borders had in fueling the Brexit 
vote and the potential tough line the EU will take in 
negotiations, how can the U.K. really negotiate a, 
quote, deg. ``no hard border'' on that which is their only land 
border that exists between the EU and the U.K.?
    Mr. Hamilton. Thank you. Well, that is one more issue that 
will have to be resolved. It is unclear, I think, particularly 
to people in Ireland, about the impact of Brexit on their 
border and on this common travel space. Prime Minister May has 
said while it is a clean Brexit, as she said, they do want some 
sort of more porous arrangements between Northern Ireland and 
Ireland. How that will work is very unclear, given the British 
Government's attitude to really checking flows of people. So I 
think it is just one more detail that is unresolved.
    Again, back to, as you said, we have a stake in some of 
this because of the role we played in bringing peace to that 
region, but we also have an economic stake. Ireland is also a 
major base for American companies exporting not only to Europe 
but to the rest of the world. American companies based in 
Ireland export more into world than, you know, companies in 
Mexico do. I mean, it is a major base. And if that is again 
unsettled, it is an interest that we have to look to.
    So our interest is to make sure these things progress in 
some mutually reinforcing way that advance our own interests. 
That means we have to play an active role, not dictating to the 
other parties what should happen, but to make sure that our 
interests are made clear and we are seen as defending the 
rights of the American workers and consumers and companies. And 
the U.K.-Ireland relationship is one more unsettled issue that 
we have a very strong stake in.
    Mr. Poe. I thank the gentleman.
    The Chair recognizes the gentleman from California, Mr. 
Issa. I wasn't going to put you in Colorado yet, but----
    Mr. Issa. Well, you know, last night I was honored to be 
with a gentleman from Colorado who is going to be our next 
Supreme Court justice, so I feel very Colorado right now. Of 
course, I am from the 9th Circuit, so I'm jealous of the 10th 
Circuit at times too.
    Dr. Gardiner, in the last round of questioning, things 
devolved into British or England versus Ireland, but I want to 
bring you back to the U.S. versus Great Britain as there are 
opportunities. One of the reasons that the transatlantic trade 
deal was never going to happen is they waited on agricultural 
issues till the end.
    Can you tell me, in your opinion, and Mr. Lester, you may 
be able to do too, how much better, easier, or more possible if 
Great Britain leaves--when Great Britain leaves the European 
Union, will it be for us to resolve some of the perennial 
issues of GMOs and other aspects that often make it impossible 
for U.S. agricultural products to have a fair opportunity to 
enter those markets?
    Mr. Gardiner. Thank you for your question, Congressman. 
That is a great question to ask.
    I would say, you know, firstly, that with regard to TTIP 
that you mentioned earlier, there were major problems in terms 
of U.S.-EU discussions because of the EU's common agricultural 
policy, which some in Britain would describe as a vast 
protectionist racket basically.
    Mr. Issa. That, we can agree on both sides of the aisle.
    Mr. Gardiner. Yes. And you know, the common agricultural 
policy really is a disastrous policy, in my view. And once 
Britain leaves the European Union, it will not be subject to 
the common agricultural policy. That may impact some British 
farmers, but the common agricultural policy largely serves the 
interest of French farmers actually, rather than British 
farmers.
    The agricultural sector in the United Kingdom is relatively 
small. About 80 percent of the U.K. economy is service 
oriented. Agriculture will be an issue, but I believe that the 
British Government will be advancing really, you know, the 
elimination of all tariff barriers. They will be looking not to 
have a system of subsidies in place for farmers as it currently 
is with regard to the European Union.
    So I do believe there will be a lot of areas of common 
interest there. There will be, of course, frank detailed 
discussions on this that may be difficult at times, but I think 
the barriers involved in those discussions are far, far less 
significant than they are with regard to the TTIP.
    Mr. Issa. Well, in following up on that, and Mr. Lester may 
be able to weigh in too, there are always two agricultural 
issues. There is the agricultural principal products, meat, 
poultry, and so on, but there is also the enhanced technologies 
the United States leads the world in, in enhancing the yield 
for farmers.
    How would you contrast where you think Great Britain would 
be on a willingness--and this is a democracy's question--a 
willingness to begin looking at technologies that enhance 
yield? Because one of the reasons for the disparity between 
Great Britain's production and the U.S. production is historic 
land. It is a smaller, rockier environment, but it is also the 
fact that the seed and other technologies are not accepted 
sometimes in the European continent that are used commonly here 
to increase yield.
    Mr. Lester. It is hard to say anything definitive about it 
because the U.K. hasn't had to make these decisions in a long 
time. It has all been outsourced to the European commission, to 
the EU institutions to do this. And so we are left with, you 
know, sort of looking at what U.K. consumers have said, 
consumer groups, what their farm groups say and try to 
speculate about it.
    I agree with Dr. Gardiner. It would be better dealing with 
the U.K. than it has been dealing with the EU, but how much 
better? I mean, you know, to get into specifics, can we sell 
hormone-treated beef in the U.K.? You know, can we sell all 
these--as you point out, there is advanced technology products, 
GMOs. Can we sell those in the U.K.? Will we be able to?
    I think there is a better chance. I would like to see this 
process go forward. I am hopeful. But I recognize that, you 
know, throughout Europe, there are--there are concerns that 
people express, some legitimate, some not, some just purely 
protectionist, and so I think there is no way to know until we 
try. Let's give it a shot. Let's make our best arguments for 
why these products are safe. Let's see what they say.
    I do think we have to be careful. If it is the U.S. 
Government pushing this view on the U.K., there will be people 
there who react badly.
    Mr. Issa. Sure.
    Mr. Lester. So I think there is a way to do it where, you 
know, the companies come forward with evidence: Here is our 
products and here is why they are safe, and I think that can 
help.
    Mr. Issa. And that may be ultimately what we talk about in 
a process to get to those approvals. But let me close with one 
question.
    Intellectual property. We have tried to harmonize 
intellectual property, including copyright and others, in the 
last agreement and around the world, and we failed. Quite 
frankly, in some cases, we are less progressive than Europe.
    How do you see the smaller bilateral agreement giving us 
the ability to harmonize on patent, trademark, and copyright?
    Mr. Lester. Well, it is harder to harmonize because we do 
it on a bilateral basis, you are doing it, you know, one-on-
one, and you might end up with 20 agreements that say slightly 
different things, depending on who you are negotiating with. So 
I think that is a definite harm, a definite problem with taking 
a bilateral approach. At the same time, maybe we have more 
leverage and so we can push a little bit harder on specific 
issues.
    Mr. Issa. Well, let me just give you an example. If 
terrestrial radio play in the United Kingdom, the Beatles or 
the Beach Boys or anybody gets a royalty. In the United States, 
they don't. In a harmonized world where we are trying to bring 
that together, is that, for example, something that could be on 
the table that would be much more difficult when you are 
looking at 22 nations or whatever number?
    Mr. Lester. That is right. First of all, everything is on 
the table, but, yes, if we have specific interests in common 
with the U.K. on these issues, we can use that as a model. We 
can put that--we can set a precedent in the U.S.-U.K. trade 
agreement to say, look, this is now binding international law. 
We have it in the text here. Now let's try to push it on to 
other countries to do. We can certainly take that approach with 
that issue or other similar ones.
    Mr. Issa. Excellent. Thank you, Mr. Chairman.
    Mr. Poe. The gentleman yields back.
    The Chair recognizes the gentlelady from Florida, Ms. 
Frankel.
    Ms. Frankel. Thank you, Mr. Poe. Thank you, gentlemen.
    So let me just start by saying, I hope that Brexit was not 
just a extreme nationalistic reaction with unintended 
consequences of gigantic proportions because this is not just a 
simple divorce. The way I am looking at this, there is a lot of 
children and a lot of property out there, right?
    So--and it sounds very complicated with a lot of moving 
parts, so but getting away from the politics, my first question 
is what do you see in terms of the new gateway? If Great 
Britain is divorcing itself from the European Union, and so 
much of our business has to do with the--what is the current 
situation, do you--what country, if any, or countries do you 
see as becoming the new gateway?
    Mr. Gardiner. If I could respond to your question.
    Ms. Frankel. Yes.
    Mr. Gardiner. And I think that, you know, regardless of, 
you know, Brexit, U.S. investment will continue to flow into 
Great Britain. Great Britain will continue to be the gateway 
for U.S. companies operating in Europe. In fact, I would argue 
actually that, you know, with the strength of the British 
economy, Britain is the fastest growing economy in the G7, and 
the economic outlook actually for Brexit, Britain is extremely 
positive. That is good news for U.S. companies and investors.
    And just as Britain thrived outside of the European single 
currency, many warned at that time that Britain would lose a 
lot of U.S. business, for example, by staying out of the euro, 
but quite the opposite happened, actually. And I think that you 
will see U.S. companies continuing to invest in a major way in 
the United Kingdom. After all, there is $5 trillion worth of 
U.S. corporate assets in the United Kingdom. That is 22 percent 
of all U.S. overseas corporate assets. I expect that to grow in 
the coming years.
    Ms. Frankel. Do you gentlemen agree?
    Mr. Lester. I would--I mean, I agree in the sense that, 
yes, there will still be continued investment in the U.K. But 
if your question is, if U.S. companies want to participate in 
the single market, want to be part of the single market, where 
else in the EU might they invest in order to be able to do 
that? Just off the top of my head, I mean, Ireland is a prime 
candidate, and I know a lot of U.S. companies, you know, set up 
operations there.
    You also look at maybe places like Germany, because it is 
so big, or the Netherlands, but I think it is a great question. 
It is not something I had thought about before. I don't know 
if--you know, a lot of what we are talking about today is kind 
of speculative so, you know, those are sort of my initial 
speculations.
    Mr. Hamilton. This relates back to the point that the terms 
between the U.K. and the EU will affect U.S. corporate 
decisions. So the U.K. is the gateway to the rest of Europe for 
many companies. American companies and our trade negotiators 
will want to know how open is that gateway, how wide is it, how 
strong is it going forward before they want to make their own 
investment decisions? I agree there will continue to be U.S. 
flows, but again, this is not an exclusive thing.
    U.S. investment in the Netherlands is greater than in 
Britain. Ireland, as I mention, is another--the next biggest 
investment location. If the gateway is cracked and if it is not 
so open and it is not very wide, then they will make other 
decisions. There are already many alternatives. On the 
financial services, I think you will look to other centers like 
Frankfurt, which is the heart of the eurozone to benefit from 
U.S. corporate decisions.
    So it is very speculative, as was said. But again, I come 
back to the basic point. We cannot look at this in some 
exclusive bilateral way. There are many other factors that will 
affect the position and the future of U.S. corporate presence 
in Europe and in the U.K.
    Ms. Frankel. So let me--I see we only have 37 seconds, so 
maybe you can--I think I am the only one left, right?
    Mr. Poe. Yes, you are.
    Ms. Frankel. I am between them and lunch here.
    One of the--so just following from that, Dr. Hamilton, what 
are some practical consequences for American businesses as we 
wait for a decision? What is some action?
    Mr. Hamilton. Business usually doesn't like uncertainty or 
volatility. So I agree, if we can have some discussions 
bilaterally with the U.K., I think that helps. I think if we 
can have other discussions with the EU colleagues, that helps. 
And we need to understand the state of the U.K.-EU discussions 
to be able to provide some sort of sense of orientation.
    My point is this will go on for a number of years. It is 
not something we can resolve easily now. And we should 
understand that, as you said, Brexit has set forth now a whole 
series of interconnected pieces of a puzzle, and we should be 
very clear about U.S. interests on all of those pieces going 
forward and that each piece of that stool, as I said, the 
transatlantic stool have to be strong and sturdy. That is the 
fundamental U.S. interest going forward, to convey some 
reassurance, not only to our allies, but also to our own 
companies and workers.
    Ms. Frankel. Thank you.
    I yield back. Thank you, Mr. Chair
    Mr. Poe. I thank the lady from Florida.
    Without objection, a letter from the Software and 
Information Industry Association supporting the bilateral 
agreement between the U.K. and the U.S. will be admitted into 
the record for all purposes.
    I want to thank all the witnesses for being here. I think 
it has been a very informative discussion. I am just glad I am 
not involved in trying to make an agreement between anybody 
now, but thank you for your expertise. And this subcommittee is 
adjourned.
    [Whereupon, at 11:58 p.m., the subcommittees were 
adjourned.]

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