[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                 CALL TO ACTION: PRIVATE-SECTOR INVESTMENT 
                  IN THE NORTHERN TRIANGLE AND ITS IMPACT 
                  ON HOMELAND SECURITY

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         OVERSIGHT, MANAGEMENT,
                           AND ACCOUNTABILITY

                                 OF THE

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 17, 2022

                               __________

                           Serial No. 117-45

                               __________

       Printed for the use of the Committee on Homeland Security
                                     

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        Available via the World Wide Web: http://www.govinfo.gov

                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
47-553 PDF                 WASHINGTON : 2022                     
          
-----------------------------------------------------------------------------------   

                     COMMITTEE ON HOMELAND SECURITY

               Bennie G. Thompson, Mississippi, Chairman
Sheila Jackson Lee, Texas            John Katko, New York
James R. Langevin, Rhode Island      Michael T. McCaul, Texas
Donald M. Payne, Jr., New Jersey     Clay Higgins, Louisiana
J. Luis Correa, California           Michael Guest, Mississippi
Elissa Slotkin, Michigan             Dan Bishop, North Carolina
Emanuel Cleaver, Missouri            Jefferson Van Drew, New Jersey
Al Green, Texas                      Ralph Norman, South Carolina
Yvette D. Clarke, New York           Mariannette Miller-Meeks, Iowa
Eric Swalwell, California            Diana Harshbarger, Tennessee
Dina Titus, Nevada                   Andrew S. Clyde, Georgia
Bonnie Watson Coleman, New Jersey    Carlos A. Gimenez, Florida
Kathleen M. Rice, New York           Jake LaTurner, Kansas
Val Butler Demings, Florida          Peter Meijer, Michigan
Nanette Diaz Barragan, California    Kat Cammack, Florida
Josh Gottheimer, New Jersey          August Pfluger, Texas
Elaine G. Luria, Virginia            Andrew R. Garbarino, New York
Tom Malinowski, New Jersey
Ritchie Torres, New York
                       Hope Goins, Staff Director
                 Daniel Kroese, Minority Staff Director
                          Natalie Nixon, Clerk
                              
                              ------                                

       SUBCOMMITTEE ON OVERSIGHT, MANAGEMENT, AND ACCOUNTABILITY

                  J. Luis Correa, California, Chairman
Dina Titus, Nevada                   Peter Meijer, Michigan, Ranking 
Donald M. Payne, Jr., New Jersey         Member
Ritchie Torres, New York             Dan Bishop, North Carolina
Bennie G. Thompson, Mississippi (ex  Diana Harshbarger, Tennessee
    officio)                         John Katko, New York (ex officio)
                Lisa Canini, Subcommittee Staff Director
         Eric Heighberger, Minority Subcommittee Staff Director
                  Geremiah Lofton, Subcommittee Clerk
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               Statements

The Honorable J. Luis Correa, a Representative in Congress From 
  the State of California, and Chairman, Subcommittee on 
  Oversight, Management, and Accountability:
  Oral Statement.................................................     1
  Prepared Statement.............................................     3
The Honorable Peter Meijer, a Representative in Congress From the 
  State of Michigan, and Ranking Member, Subcommittee on 
  Oversight, Management, and Accountability:
  Oral Statement.................................................     3
  Prepared Statement.............................................     5
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Chairman, Committee on 
  Homeland Security:
  Prepared Statement.............................................     6

                               Witnesses

Mr. Anderson Warlick, Chairman and CEO, Parkdale Mills:
  Oral Statement.................................................     7
  Prepared Statement.............................................    10
Mr. Dan Christenson, Senior Director of Government Affairs, 
  PepsiCo, Inc.:
  Oral Statement.................................................    17
Ms. Paula Uribe, Director, Government Affairs, PepsiCo, Inc.:
  Prepared Statement.............................................    19
Ms. Maria Nelly Rivas, Vice President, Government Relations for 
  Latin America, Cargill:
  Oral Statement.................................................    21
  Prepared Statement.............................................    23
Mr. Daniel F. Runde, Senior Vice President and William A. 
  Schreyer Chair, Center for Strategic and International Studies:
  Oral Statement.................................................    24
  Prepared Statement.............................................    27

                             For The Record

The Honorable J. Luis Correa, a Representative in Congress From 
  the State of California, and Chairman, Subcommittee on 
  Oversight, Management, and Accountability:
  Statement From Kate Behncken, Vice President and Lead of 
    Microsoft Philanthropies, Microsoft Corporation..............    42

                                Appendix

Questions From Chairman J. Luis Correa for Anderson (Andy) 
  Warlick........................................................    45

 
CALL TO ACTION: PRIVATE-SECTOR INVESTMENT IN THE NORTHERN TRIANGLE AND 
                    ITS IMPACT ON HOMELAND SECURITY

                              ----------                              


                      Thursday, February 17, 2022

             U.S. House of Representatives,
                    Committee on Homeland Security,
                    Subcommittee on Oversight, Management, 
                                        and Accountability,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:03 p.m. via 
Webex, Hon. J. Luis Correa (Chairman of the subcommittee) 
presiding.
    Present: Representatives Correa, Titus, Meijer, and 
Harshbarger.
    Mr. Correa. Good afternoon, everyone. The Committee on 
Oversight of Homeland will now come to order--actually, 
information committee hearing. I want to thank all of our 
guests for being here today. This is a very most important 
issue, which is the Triangle and economic growth in the 
Triangle areas in Central America.
    Without objection, the Chair is authorized to declare the 
subcommittee in recess at any time.
    I want to thank again everybody for being here today.
    What is this committee hearing about? We are essentially 
responding to irregular migration at the U.S. Southern Border. 
This is one of the big issues that we have been focused on in 
DHS, and, as you know, Department of Homeland Security is a key 
player in the National security. We are looking beyond our 
borders to help our southern neighbors stabilize their local 
economies.
    Over the last year, this subcommittee has had a number of 
opportunities to dive deeply into the complex issues that 
result in migration north from this region of Central America. 
We have heard from a variety of Government and non-Government 
experts who are working hard to understand and combat the root 
causes of migration. Of course, this is no easy task.
    The Northern Triangle countries of Guatemala, Honduras, and 
El Salvador are facing enormous economic pressures, as well as 
some political challenges, as well as social challenges. This 
subcommittee has held hearings to examine how COVID-19, the 
pandemic, and climate change have also impacted these countries 
already battered by other challenges.
    We have also explored how weak governing systems have all 
too frequently allowed corrupt actors to divert aid money 
intended to help support development to other areas. We have 
also looked at how transnational criminal organizations exploit 
vulnerable communities, especially those who seek a better life 
in the United States.
    One message, though, has come out loud and clear: We cannot 
expect migrants to stop making the dangerous journey to the 
United States until they have hope and opportunity for a better 
life at home. Building this hope will take time and a lot of 
energy and collaboration from the private and public sectors, 
not only domestically, that is, in the Triangle, but in the 
United States as well.
    Although DHS and the U.S. Government have committed 
significant resources toward helping the Northern Triangle 
governments increase their security and improve customs 
enforcement, there is only so much the U.S. Government can do 
to help create jobs and support local economic development.
    We learned also that simply sending money, sending aid 
money to these governments, will not create meaningful and 
sustainable change that is required in Central America to 
create good-paying jobs. This is an area that is best suited 
for the private sector. Essentially creating a partnership with 
the private sector, we can come up with new opportunities for 
the region to begin to stabilize this area.
    Recognizing this fact, Vice President Harris called upon 
companies to support efforts to increase economic development 
and investment in the Northern Triangle. With the launch of the 
Call to Action last May, the Vice President secured commitments 
from several major companies and organizations who collectively 
pledged to invest about $1.2 billion in the region.
    These investments will be made in a number of areas, 
including development of sustainable agricultural practices, 
bringing internet access to millions of homes and banking 
services to individuals across the region.
    However, just as critical will be a number of new 
employment opportunities that these investments must bring 
forth, therefore reducing poverty and giving people the hope 
that they need for upward mobility and sustainability in their 
local regions. Increasing access to long-term employment will 
remove one of the most common causes of migration to the United 
States.
    Today, I am pleased to welcome three companies who answered 
the Vice President's Call to Action, and I look forward to 
hearing directly from these private-sector partners about their 
plans and how these investments will create much-needed change 
in the Northern Triangle.
    I am also looking forward to hearing about any challenges 
that you may face and how the U.S. Government can be an 
effective partner with you to move forward.
    As General Patton used to say, ``Lead, follow, or get out 
of the way.'' We want to play partners with you. We want to 
make sure we increase your probability of success in Central 
America.
    Creating a long and lasting change will be difficult, but 
we are lucky to have partners such as all of you to help lend a 
little hope and opportunity that will make America a good 
partner to our neighbors south of the border.
    With that, I thank you again for joining us today.
    [The statement of Chairman Correa follows:]
                  Statement of Chairman J. Luis Correa
                           February 17, 2022
    Responding to irregular migration at the U.S. Southern Border 
remains one of the key areas of focus for several Department of 
Homeland Security components. DHS is a key player in our National 
security. It is looking beyond our borders to help our southern 
neighbors stabilize their local economies.
    Over the last year, this subcommittee has had the opportunity to 
dive deeply into these issues. We have heard from a variety of 
Governmental and non-Governmental experts who are working hard to 
understand and combat the root causes of migration. It is certainly no 
easy task. The Northern Triangle countries of Guatemala, Honduras, and 
El Salvador face enormous economic, political, and social challenges.
    This committee has held hearings to examine how the COVID-19 
pandemic and climate change have significantly impacted these 
countries' already battered economies. How weak governing systems have 
too frequently allowed corrupt actors to divert aid money intended to 
help support development. And how transnational criminal organizations 
exploit vulnerable communities, particularly those who seek a better 
life in the United States.
    One message has rung out loud and clear: We cannot expect migrants 
to stop making the dangerous journey to the United States until they 
have hope in a better life at home. Building this hope will take time 
and collaboration across the public and private sectors. Although DHS 
and the U.S. Government have committed significant resources toward 
helping the Northern Triangle governments bolster their security and 
improve customs enforcement, there is only so much the U.S. Government 
can do to help create jobs and support economic development.
    We have learned that simply sending aid money to these governments 
will not create the meaningful and sustained change that is required. 
However, this is an area where our private-sector partners can help 
create some unique new opportunities for the people of this region. 
Recognizing this, Vice President Harris has called upon companies to 
support efforts to increase economic development in the Northern 
Triangle.
    With the launch of this Call to Action last May, the Vice President 
secured commitments from several major companies and organizations who 
collectively pledged to invest over $1.2 billion in the region. These 
investments will be made in a variety of sectors including the 
development of sustainable agricultural practices, bringing internet 
access to millions of homes, and banking services to individuals across 
the region.
    Just as critical will be the number of new employment opportunities 
these investments will bring, helping to reduce poverty and giving 
people hope in upward mobility. Increasing access to long-term 
employment will remove one of the most common causes of migration to 
the United States.
    Today I am pleased to welcome 3 companies who answered the Vice 
President's Call to Action. I look forward to hearing directly from 
these private-sector partners about their plans and how these 
investments will create much-needed change in the Northern Triangle 
region.
    I also look forward to hearing about any challenges they face and 
how the U.S. Government can be an effective partner in this effort. 
Creating long-lasting change is difficult, but we are lucky to have 
partners such as these to help lend a little of the hope and 
opportunity that makes America a good partner to our neighbors in the 
south.

    Mr. Correa. What I would like to do as Chair is recognize 
the Ranking Member, the gentleman from Michigan, Mr. Peter 
Meijer, for an opening statement.
    Welcome, Mr. Meijer.
    Mr. Meijer. Thank you very much, Mr. Chairman.
    Thank you to all of our witnesses who are participating and 
who have joined us here today.
    I think there is a lot of partisan rancor around the 
border, and we come from different perspectives there.
    But when it comes to how we can counter those irregular 
migration patterns, I think we speak largely with one voice on 
wanting to make sure that, especially in the Northern Triangle 
and in Central America, we are doing everything that we can to 
promote stability, to promote some degree of economic 
sustainability, so that we can make sure that we are 
strengthened by our neighbors and we are countering some of the 
corruption, some of the transnational criminal organizations, 
and some of the other challenges that we have seen in those 
areas.
    So I am very excited that we are able to speak here today, 
and excited to be able to address this excellent group. We have 
a number of folks here, and I am really excited to be hearing 
from those stakeholders on the variety of migrant push factors. 
The private sector is obviously leading the way in many areas 
with this Call to Action.
    When Vice President Harris put out this Call to Action for 
the business and social enterprises it was aiming to provide 
for a more stable economic environment for development in the 
region to stem the migration problems. I certainly agree that a 
more economically and politically stable environment will curb 
migration and I commend the private-sector entities here who 
have pledged to assist this effort, as well as those who have 
been working in the Northern Triangle for years prior to this 
formalized announcement.
    While important, private-sector investment only yields 
results in the long term. There are immediate steps that this 
administration can take to stop the on-going crisis, including 
addressing the significant pull factors for illegal immigration 
as well as the gaping security vulnerabilities along the 
Southern Border.
    Since President Biden entered office a little over a year 
ago, more than 2 million migrants have been encountered at the 
Southwest Border, which is more people than those residing in 
all but the 4 most populous cities in the United States.
    On Day 1, this administration halted the construction of 
the border wall, implemented catch-and-release policies 
allowing migrants to flow into American communities in the 
midst of this pandemic, pulled back on fully utilizing Title 42 
public health authorities, undermined the Remain in Mexico 
policy, hamstrung our border and immigration agents, and 
facilitated the travel of illegal immigrants across the United 
States, even following arrest warrants to serve as valid forms 
of identification. In December 2021, a record-breaking 178,000 
migrant encounters occurred along the Southwest Border.
    We had a resolution of inquiry introduced earlier this week 
following our concerns around how the Biden administration has 
handled the border crisis, because I certainly feel that the 
American people deserve complete transparency into the 
decisions made, which have encouraged illegal border crossings, 
aided criminal activity, and increased the flow of dangerous 
drugs like fentanyl into the United States.
    So despite my frustrations with the administration's 
handling of the border crisis, I am sincerely interested in 
hearing from our witnesses here today and learning about the 
plans for investment in the Northern Triangle, both what has 
already occurred and what is coming down the pike, and what 
their most significant concerns and challenges are regarding 
the success of these plans.
    We have certainly seen initiatives tried in the past, and 
we want to make sure that we learn from those mistakes and not 
repeat them.
    I once again emphasize these outcomes will not materialize 
for many years. So while we are focusing on those longer-term 
targets, we cannot be distracted from the more pressing 
challenges we are seeing today, because responsible governance 
requires us to take a comprehensive approach. We can and should 
invest in long-term regional solutions, but we must also act 
now to solve the crisis at our border.
    So with that, Mr. Chairman, I yield back, and I look 
forward to speaking with our experts assembled here today.
    [The statement of Ranking Member Meijer follows:]
                Statement of Ranking Member Peter Meijer
    Thank you, Chairman Correa, for holding this important hearing 
today, and thank you to our witnesses for joining us to share their 
unique perspective on an extremely complicated issue.
    We are convened today for the fourth hearing this subcommittee has 
held on the topic of illegal immigration at our Southern Border. We 
have heard from stakeholders on a variety of migrant push factors and 
today we will hear from private-sector witnesses on their economic 
investment initiatives in the Northern Triangle.
    Regrettably, instead of putting effort toward securing the border, 
the Biden administration chooses to focus entirely on the ``root 
causes'' of illegal immigration from Central America. As part of this 
effort, Vice President Harris has announced a Call to Action for 
businesses and social enterprises to commit to investments in these 
countries. This initiative aims to provide a more stable economic 
environment for development in the region and to stem its emigration 
problems. I agree that a more economically and politically stable 
environment would help curb migration from these countries, and I would 
like to commend the private-sector entities that have pledged to assist 
in this effort, as well as those that have been working in the Northern 
Triangle for years prior to this formalized announcement.
    While important, private-sector investment only yields results in 
the long term. There are immediate steps this administration can take 
to stop the on-going crisis, including addressing the significant pull 
factors for illegal immigration, as well as the gaping security 
vulnerabilities along the Southern Border.
    Since President Biden entered office a little over a year ago, more 
than 2 million migrants have been encountered at the Southwest Border. 
That is more people than those residing in all but the 4 most populous 
cities in the United States.
    On Day 1, this administration:
   Halted the construction of the border wall,
   Implemented catch-and-release policies that allowed migrants 
        to flow into American communities in the midst of a deadly 
        pandemic,
   Pulled back on fully utilizing Title 42 public health 
        authorities,
   Undermined the Remain in Mexico Policy,
   Hamstrung our border and immigration agents, and
   Facilitated the travel of illegal immigrants all across the 
        United States, even allowing arrest warrants to serve as valid 
        forms of identification.
    In December 2021 alone, a record-breaking 178,000 migrants were 
encountered at the Southwest Border. This year is on track to be just 
as disastrous as 2021 for border security, if not worse. Immediate 
action must be taken to prevent this outcome.
    Earlier this week, I introduced a Resolution of Inquiry on the 
Biden administration's mishandling of the border crisis. The American 
people deserve complete transparency into the decisions made that have 
encouraged illegal border crossings, aided criminal activity, increased 
the flow of dangerous drugs like fentanyl into the United States, and 
endangered the lives of migrants and children making a perilous journey 
to the Southwest Border.
    The porous Southern Border has also increased our homeland's 
vulnerability to terrorist threats. We know that CBP has encountered 
known and suspected terrorists at the Southern Border within the past 
year. Just last week, I joined my Republican colleagues from Michigan 
in demanding answers from DHS regarding a specific case of an 
individual who reportedly was encountered crossing the border and 
flagged on the FBI's terrorist watch list, only to be later released 
into Michigan despite opposition to release from both FBI and ICE 
agents involved in the case.
    In November 2021, the U.S. Border Patrol's Del Rio Sector alone 
apprehended individuals from over 60 different countries after they 
illegally crossed our border. In December, the migrants coming from the 
Northern Triangle were outnumbered by those coming from more distant 
countries. This trend shows the Biden administration's flawed approach 
to the overall problem. With more migrants coming to the Southern 
Border from further away, it is clear that pull factors are a major 
driver of this crisis, and just addressing the root causes in the 
Northern Triangle is not an adequate solution.
    I, along with my 29 Republican colleagues who cosponsored this 
resolution, urge the Majority to join us in demanding transparency from 
this administration. There is no more hiding from this crisis.
    Despite my frustrations with the administration's handling of the 
border crisis, I am sincerely interested in hearing from our witnesses 
today. I would like to learn more about their investment plans for the 
Northern Triangle, and what their most significant concerns and 
challenges are regarding the success of these plans. Congress must hear 
about these private-sector initiatives to inform our policy making and 
ensure the best possible outcome for not only the people living in the 
Northern Triangle, but Americans and our National interests as well.
    I once again emphasize that these outcomes will not materialize for 
many years, even with the Government and private sector acting in 
lockstep. Responsible governance requires us to take a more 
comprehensive approach, to address push and pull factors 
simultaneously, rather than one after the other. We can and should 
invest in longer-term, regional solutions but we must also act now to 
solve the crisis at our border to ensure the safety and security of all 
Americans.
    Thank you again, Mr. Chairman, and I yield back.

    Mr. Correa. Thank you, Mr. Ranking Member.
    Members are reminded that the committee will operate 
according to the guidelines laid out by the Chairman and 
Ranking Member in their February 3 colloquy regarding remote 
procedures. Without objection, Members not on the subcommittee 
will be permitted to sit and ask questions of the witnesses. 
Members may also submit statements for the record.
    [The statement of Chairman Thompson follows:]
                Statement of Chairman Bennie G. Thompson
                           February 17, 2022
    We are here today to acknowledge the investments committed by the 
private sector to the Northern Triangle in response to Vice President 
Harris's Call to Action. I want to thank Chairman Correa and Ranking 
Member Meijer for holding today's hearing, as we continue to support 
the Vice President's efforts addressing the conditions in Central 
America that push migrants to the U.S. Southern Border.
    The COVID-19 pandemic and extreme weather conditions have 
exacerbated the root causes of migration--which include corruption, 
violence, and poverty in El Salvador, Guatemala, and Honduras. These 
communities have been faced with difficult decisions to either flee 
their homes or stay in harm's way. To remain at home is to endure an 
environment where there is limited economic opportunity to meet 
essential needs, including food and shelter.
    Nearly 1 million Salvadorans, 3.1 million Hondurans, and 3.7 
million Guatemalans are contending with crisis or emergency levels of 
food insecurity. Sustainable, long-term development of the region will 
require a significant commitment of resources. Last March, my 
colleagues and I passed the American Rescue Plan Act, which provided 
$10.8 billion to respond to COVID-19 globally, including in Central 
America.
    The Biden administration's 2022 budget request includes almost $861 
million to Central America to address the root causes of irregular 
migration. However, U.S. backing alone will not be enough to achieve 
sustainable outcomes. As Vice President Harris has renewed engagement 
with Central America, she has called on the private sector to make 
commitments to support inclusive economic growth in the Northern 
Triangle by launching the Call to Action.
    The Call to Action aims to generate new commitments from businesses 
and organizations to address the root causes of migration. Increasing 
collaboration with companies that advance economic opportunity and 
address urgent climate, education, and health challenges in Central 
America sends a signal of hope to the region. Private-sector investment 
through the Call to Action has the potential to outlasts shifts in 
policy and Government aid between administrations.
    Over time, promoting economic opportunity in the Northern Triangle 
will reduce the motivations for migrations to make the often-dangerous 
journey to the U.S. border. Although motives vary by individual, 
socioeconomic, and security conditions are decision drivers of economic 
migrants and asylum seekers.
    The Call to Action is one component of the administration's 
comprehensive, long-term strategy to address barriers to investing in 
the region. Together, the Government and private sector can tackle 
obstacles to promoting economic opportunity and supporting long-term 
development.
    I look forward to hearing more from our witnesses today on the 
investments their companies are making to bring hope and stability to 
those in Central America and, in turn, strengthen homeland security.

    Mr. Correa. Now I welcome our panel of witnesses.
    First, we have Mr. Anderson ``Andy'' Warlick. Mr. Warlick 
is chairman and CEO of Parkdale Mills, a textile manufacturer 
that generates $2 billion in sales a year, has 5,000 employees 
and plants located in the United States as well as 
internationally. His company leads the world in spun yarn with 
automation, sustainable practices, and new technology.
    Our second witness is Mr. Dan Christenson. He is senior 
director of government affairs at PepsiCo. Before his role 
leading to PepsiCo's policy engagement, he served as deputy 
chief of staff for policy for the U.S. Department of 
Agriculture from 2011 to 2016. Before that, Mr. Christenson 
served several years as a senior professional staff member on 
the U.S. Senate Agriculture Committee.
    Our third witness is Ms. Maria Nelly Rivas. Ms. Rivas 
serves as the vice president of government relations for Latin 
America at Cargill and is a member of Cargill's Central 
American business leadership. She has extensive leadership 
experience in business, international development, and 
government. She has previously served as the Latin America 
regional coordinator at the U.N. World Tourism Organization and 
is assistant resident representative at the U.N. Development 
Programme in Managua.
    Our final witness will be Mr. Daniel Runde. Mr. Runde 
serves as senior vice president and William Schreyer Chair in 
Global Analysis at the Center for Strategic and International 
Studies. His work centers around U.S. leadership building a 
more democratic and prosperous world. Before joining CSIS, Mr. 
Runde held leadership roles at the U.S. Agency for 
International Development and the World Bank Group.
    Without objections, the witnesses' full statements will be 
inserted into the record.
    Now I ask each witness to summarize his or her statement in 
5 minutes, beginning with Mr. Warlick.
    Welcome, sir.

STATEMENT OF ANDERSON WARLICK, CHAIRMAN AND CEO, PARKDALE MILLS

    Mr. Warlick. Thank you, Chairman Correa and Ranking Member 
Meijer. Thank you for the opportunity to testify on a subject 
that is so important to the U.S. textile industry, our workers, 
and our Western Hemisphere trading partners.
    My name is Andy Warlick, and I am chairman and chief 
executive officer of Parkdale. We are headquartered in 
Gastonia, North Carolina. We are one of the world's leading 
manufacturers of spun yarns and cotton consumer products. We 
operate 34 operations in the United States, Latin America, and 
Europe, and 24 of those locations are in 8 different States 
here in the United States.
    Textile and apparel production is one of the most 
consequential employers both in the United States and the 
Northern Triangle. The U.S. industry success is tied to the 
success of Central America and our Western Hemisphere partners. 
It supports $12.5 billion in two-way trade with the CAFTR-DR 
region and supports more than a million textile and apparel 
workers.
    Over 79 percent of what we make at Parkdale in yarn is 
exported and sent to the Northern Triangle countries. It is 
further processed into fabrics and finished apparel and sent 
back to the United States market, duty-free, under the rules of 
origin. Those exports also use U.S. cotton that is farmed in 18 
different States.
    Supply chains from China have broken down because of a 
combination of factors during COVID: Freight issues, forced 
labor concerns in Xinjiang, labor shortages. Rising economic 
tensions between the United States and China have led many 
brands and retailers to recalibrate their sourcing 
methodologies in order to mitigate risk.
    This today is a historic opportunity to both onshore and 
nearshore this critical production chain, and our company and 
our industry stand ready to help. If we seize this opportunity 
together, we will harness significant further economic 
development in the United States and in the region, and we can 
achieve economic opportunity for all of the workers.
    When our industry invests, it creates high-wage-paying jobs 
in the United States and the CAFTA region. It also creates more 
stability. We create supply chains that are quicker, more 
reliable and transparent, and they are free of forced labor, 
like the abhorrent practices that we have seen documented in 
Xinjiang.
    It is also a supply chain in which a container coming from 
Central America versus China cuts greenhouse gas emissions by 
70 to 80 percent.
    We need to build on this momentum going forward. That is 
why Parkdale is investing $150 million to build a new yarn 
spinning facility in Honduras and support and expand our 
operations in Hillsville, Virginia. I was pleased to announce 
our new investment with Vice President Harris at a White House 
roundtable in December.
    We are deeply committed to the region in this investment 
because of the yarn forward rule of origin. We know of hundreds 
of millions of dollars of textile and apparel investment that 
will be made in the United States and Central America region 
this year as a result of two things: Sourcing shifts and the 
yarn forward rule of origin that drives and supports these 
investments.
    I believe we could double exports out of the region. This 
is not just the art of the possible. It is achievable if we do 
it together.
    Right now, the region only represents 7 percent--7 
percent--of what is shipped into the United States. The other 
93 percent mainly comes from China and Asia. If we doubled it 
to just 14 percent, it would create 2.2 million jobs and $6 
billion in new investment, and that is according to an 
independent study that was conducted by Werner International.
    This would not only help mitigate the environmental 
concerns linked to high levels of greenhouse gas emissions in 
the Asian supply chain, but it would also address the forced 
labor crisis in Xinjiang and help blunt China's global 
dominance in these industries.
    As outlined in my written submission, China's predatory 
trade behavior has a far-reaching adverse impact across the 
U.S. textile industry and Central America region. We need 
Congress to continue to be aggressive on Chinese predatory 
trade practices that are undermining investment in our industry 
and also in the region.
    I would urge Congress to oppose any proposals that weaken 
U.S.-CAFTA-DR rules of origin or concepts around adding more of 
these so-called flexibilities to the agreement. All of these 
are red herrings that would undermine critical investment, not 
just in the United States, but mainly in the region, and give 
back-door access to China and other countries that are not 
party to the agreement, while chilling local investment.
    As the CAFTA-DR Textile and Apparel Industry Association 
wrote to Congress, it will exacerbate the immigration crisis 
and dismantle current and future investments.
    We need Congress' continued support to stand with the U.S. 
textile manufacturing workers and those in the region, which 
has built a strong co-production platform. Now is the time to 
unlock more investments and further bolster this critical co-
production chain.
    We know of, as a part of this recalibration of the supply 
chain, hundreds of millions of dollars in investment are going 
to be announced very soon. We believe a comprehensive 
manufacturing plan for the United States, Northern Triangle, an 
entire hemisphere, is ripe. We need targeted, high-impact 
investments and competitive loans to upgrade infrastructure to 
help reshore and nearshore critical production chains. We need 
low-interest loans or loan guarantees for expansion in our 
sector.
    Several other key recommendations are outlined in my 
written testimony, including better coordination among Federal 
lending agencies, incentives for greenhouse gas emission 
reductions in the supply chain, investment-based tax 
incentives, bolstering trade enforcement tools to counter 
predatory trade practices, and also closing the de minimus 
loophole that allows shipments from China to come into the U.S. 
duty-free and keeping China's 301 penalty tariffs in place on 
finished textiles and apparel products.
    We can't act in a vacuum. Our supply chains are 
interconnected with the region, and future job and economic 
growth depends on a strategic plan.
    The region is responding to the new market opportunities. 
It has seen significant, significant growth over the last year, 
and the U.S. textile industry is recovering from the pandemic. 
Production is coming back strong, and the trajectory is even 
stronger.
    Parkdale and our entire industry are excited about the 
abundant opportunities available. Our investments will create a 
ripple effect that unlocks the door to future investments. 
Hundreds of millions of dollars in investments are coming into 
the region this year on top of billions in existing investments 
that are there.
    The tide is starting to turn, and we can seize on this 
moment together and bring manufacturing back to the Western 
Hemisphere from China and other Asian countries.
    I would like to invite Members of the committee to come 
down and tour Parkdale's state-of-the-art facilities and see 
first-hand how your policies and onshoring and nearshoring 
efforts contribute not only to our growth but to the health and 
expansion of the entire U.S. textile industry.
    I want to thank you for the opportunity to testify today. I 
would be happy at some point to entertain any questions. But 
thank you for allowing me the opportunities.
    [The prepared statement of Mr. Warlick follows:]
                 Prepared Statement of Anderson Warlick
                           February 17, 2022
    Chairman Correa and Ranking Member Meijer, thank you for the 
opportunity to testify on this subject that is so important to the U.S. 
textile industry, our workers, and our Western Hemisphere trading 
partners.
    My name is Anderson Warlick, and I am chairman and CEO of Parkdale 
Mills, which is headquartered in Gastonia, North Carolina. We are one 
of the world's leading manufacturers of spun yarns, with significant 
operations in the United States and Western Hemisphere.
    As an industry leader for over 100 years, Parkdale produces 900 
million pounds of yarns annually, enough yarn to produce 1.56 billion 
T-shirts every year. Our company is the largest domestic consumer of 
U.S. cotton, using 755 million pounds of U.S.-grown cotton per year, 
accounting for approximately 60 percent of total U.S. cotton 
consumption. Parkdale currently has 34 operations in the United States, 
Latin America, and Europe. In the United States, Parkdale operates 24 
locations in 8 different States. Our company exports 99 percent of our 
yarn to Western Hemisphere countries, with 78 percent of our exports 
going to the Northern Triangle countries. Those exports support 4,000 
jobs in the United States and have a substantial impact on employment 
in the region. We estimate that for every single yarn job created, 
there are 20 more direct and indirect jobs created throughout the 
supply chain. This demonstrates the incredibly strong textile and 
apparel co-production chain between the United States and the Western 
Hemisphere. These industries in Central America and the United States 
are partners in our own success.
    Parkdale also worked hand-in-hand with our Central American 
customers to retool production lines, literally overnight, to 
manufacture personal protective equipment (PPE) for the U.S. 
Government. Since the onset of the COVID-19 pandemic, Parkdale has 
become one of the Federal Government's largest domestic suppliers of 
PPE products, producing over 450 million testing swabs, more than 100 
million face masks, and over 60 million level-1 isolation gowns.
    Over nearly a decade, our company has made significant capital 
investments totaling $500 million, creating more than 1,500 jobs. We 
believe in constantly investing in our operations and people and have a 
relentless commitment to providing innovative and cost-effective 
solutions to our customers.
            the biden-harris administration's call to action
    As a company that has fully embraced U.S. trade policy that 
supports and strengthens our strategic National interests and 
relationships in the Western Hemisphere, Parkdale commends this 
committee, Congress more generally, and the administration for a 
renewed focus on the tremendous opportunities available in the Northern 
Triangle and the additional policies needed to help U.S. companies take 
full advantage.
    To be clear, the main reason that we have a domestic textile 
industry is because we have created a strong co-production arrangement 
in this hemisphere through the development of strategic free trade 
agreements (FTAs) that provide tangible incentives to make capital 
investments and manufacture products throughout North America, Central 
America, and the Caribbean. The success of Parkdale's operations in the 
United States is entirely dependent upon the success of our supply 
chains domestically and throughout the region. The key driver for this 
relationship is the prevalence of the strong rules of origin that 
underpin our FTAs and support these investments and jobs. If those 
rules of origin were undermined in any way, it would have a significant 
ripple impact on employment and lead to further instability and 
migration from the hemisphere.
    When we became aware of the administration's Call to Action last 
year, Parkdale was immediately supportive. We recognize the serious 
problems posed, both in the United States and in Northern Triangle 
countries, by increased levels of outward migration from Central 
America. Our hemispheric trade platform requires a dependable business 
environment and stable workforce throughout the production chain. 
Sufficient economic and employment opportunities must exist for workers 
both at home and abroad, and this is one of the root causes of outward 
migration that must be addressed.
    In addition, the Call to Action was issued at a critical economic 
moment: The on-going coronavirus pandemic has disrupted global supply 
chains, prompting governments and businesses to examine the risks 
inherent in outsourcing all, or even a significant amount, of our 
manufacturing to China and other Asian countries. This reflection 
should lead all of us to commit to the hard work of re-shoring 
industries of all kinds to the United States and Western Hemisphere.
    The need to recalibrate our supply chains is made even more 
apparent by the recent focus on China's history of unfair and 
exploitative trade practices that succeed at the expense of U.S. 
workers and our trading partners in the Dominican Republic-Central 
America Free Trade Agreement (CAFTA-DR) region. Perhaps no other sector 
has suffered more at the hands of Chinese trade practices than the U.S. 
textile and apparel industries. As Congress holds China accountable for 
its exploitation and genocide of the Uyghur Muslim population in 
China's Xinjiang Uyghur Autonomous Region (XUAR), sourcing apparel from 
Asia has rightly become more problematic due to its inherent link to 
forced labor utilized throughout the region's supply chains, including 
cotton production. The best alternative to China's forced labor apparel 
is this hemisphere's supply chains.
                opportunities for the northern triangle
    In December, I joined executives from PepsiCo, Cargill, and other 
major corporations at a White House roundtable hosted by Vice President 
Harris to announce Parkdale's $150 million investment in a new yarn 
spinning facility in Honduras. Importantly, this investment will also 
enhance and support the production at Parkdale's textile manufacturing 
facility in Hillsville, Virginia. Our new investment will support 
approximately 500 employees at each location and also increase indirect 
job growth in Honduras and the United States, and particularly in the 
U.S. cotton industry across 18 States. This investment will help our 
customers shift sourcing for 1 million pounds of yarn per week away 
from supply chains in Asia and China, enhance U.S.-CAFTA-DR co-
production resilience, and increase our product offerings in the 
region. The reason this investment is possible is because of the CAFTA-
DR agreement's rule of origin for textiles and apparel, known as the 
yarn forward rule of origin, and the administration's continued support 
for this critical provision.
    We believe Parkdale's investment is just the first of several 
announcements that will unlock hundreds of millions of dollars in 
additional yarn and fabric investment in both the CAFTA-DR region and 
the United States in the coming months. This is a pivotal time for 
nearshoring and onshoring these critical production chains amid a 
global supply chain crisis that is forcing importers to shift their 
sourcing away from elongated Asian supply chains to the Western 
Hemisphere and United States. We welcome the opportunity to be a 
solution to brands and retailers seeking to recalibrate their supply 
chains long-term and believe we have a historic opportunity, if done 
right, to further strengthen the industry in both the United States and 
Central America.
    Parkdale's investment is geared toward helping bring textile supply 
chains out of Asia to the region and supporting jobs in the United 
States and the region. The textile and apparel co-production chain that 
we share with the region is one of the most essential supply chains for 
employment and economic development in the United States and the CAFTA-
DR region. This co-production chain currently supports over 1 million 
combined jobs and $12.5 billion in two-way trade.
    Within the CAFTA-DR region, the most vibrant and lucrative textile 
relationship exists between the three countries of the Northern 
Triangle: Guatemala, Honduras, and El Salvador. These countries receive 
two-thirds of all U.S. textile exports to the CAFTA-DR region and 78 
percent of U.S. spun yarn exports for further processing. In return, 70 
percent of CAFTA-DR textile and apparel exports to the United States 
come from the countries of the Northern Triangle. For every $1 of U.S. 
textile exports to the region, we receive approximately $3.44 in 
apparel imports from the Northern Triangle.
    CAFTA-DR is a bilateral free trade agreement that creates jobs and 
value through preferential market access for a completely vertical 
regional production chain, from base fibers through finished apparel 
and other textile goods. Since the adoption of the trade agreement, 
investments in U.S. textile production to supply the CAFTA-DR market 
with textile inputs has led to billions of dollars of investment in 
both the United States and the region with further bold investments to 
be announced soon.
    However, favorable factors create an environment for us to take 
even greater advantage of these opportunities. For example, doubling 
textile and apparel exports from the region is achievable with your 
support, and now is the time to recalibrate these supply chains 
permanently. A newly-released report from Werner International 
conservatively estimates that merely doubling apparel exports from the 
region to the United States would result in an additional $6 billion in 
new investment in the United States and CAFTA-DR region.
    The study also concluded that a commitment by brands and retailers 
to double sourcing from CAFTA-DR to the United States under the current 
yarn forward rules would result in an additional 180,000 U.S. textile 
jobs and 2.17 million jobs in the CAFTA-DR region. This includes direct 
and indirect job creation. Having a stronger, more resilient textile 
and apparel supply chain in the hemisphere ensures increased stability 
throughout the entire supply chain, including cut and sew jobs. It is 
because of that stability that the United States and regional 
industries were able to pivot overnight to making life-saving PPE.
    Further, we can save on our greenhouse gas emissions by shifting 
sourcing from Asia and China to Central America and the hemisphere. By 
simply shipping a container from Central America instead of China, we 
are able to cut greenhouse gas emissions significantly. On average, 
apparel exported from China produces 51.8 kgs of CO2 per 
ton, compared to 18.1 kgs of CO2 from the CAFTA-DR region.
    With additional policy support from Capitol Hill, we see a once-in-
a-generation opportunity to onshore and nearshore these critical co-
production chains--and both the United States textile industry and that 
of the region stand ready to be active partners.
             china, cafta-dr and the u.s. textile industry
    Some argue that CAFTA-DR has not been as successful as its 
signatories had hoped for when it went into force. This argument 
underpins requests to the administration and Congress to fundamentally 
alter the agreement's rules of origin in favor of expanding access to 
third-party textile inputs from China and other low-cost Asian 
producers. This strategy would open a backdoor into CAFTA-DR for 
textile inputs from China and other third-party countries to 
supercharge end-stage apparel assembly in the Northern Triangle. These 
Trojan horse concepts would chill Parkdale's investments in the United 
States and the region, undermine new opportunities in CAFTA-DR, and 
cede the future for this supply chain to Asia and China. It would 
dismantle employment in Central America, the United States, and every 
free trade agreement in our hemisphere--including the newly-
renegotiated United States-Mexico-Canada Agreement (USMCA)--and have a 
profound impact on trade preference partners like Haiti, where apparel 
production is the predominant employment sector. Simply put, it would 
be a disaster.
    To assess some of the headwinds our collective industries have 
faced, we need to review the broader factors that contributed to our 
current environment, including China's historical and on-going 
predatory trade practices and the failure to hold China accountable for 
how these pervasive unfair trade practices have undermined industry 
both in the United States and in the Northern Triangle.
China's Rise to Dominance in Global Textile and Apparel Production
    To better understand CAFTA-DR's historical performance in 
production and exports to the United States, we must place CAFTA-DR 
within the context of the broader global trade environment over recent 
decades. In short, CAFTA-DR came on-line at a time when market access 
and other expected economic benefits were being aggressively captured 
by China by any means necessary.
    Starting in the mid-1990's, China emerged as a large-scale 
predatory force benefiting from virtually limitless government programs 
intended to ensure that China's textile industry dominated world 
markets and displaced foreign competitors and workers. China leveraged 
the Asian financial crisis of the late 1990's to steeply devalue its 
currency and slash prices for textile and apparel exports by 30-80 
percent virtually overnight. China paired its persistent currency 
devaluation with heavy industrial subsidies to its state-owned 
factories which has shrouded market forces, undervalued the true cost 
of its products, and displaced virtually all competitors.
    These economic factors were compounded by a series of U.S. policy 
decisions that devasted U.S. textile and apparel manufacturing and our 
partners' operations in the Western Hemisphere. These trade 
liberalization policies included allowing China's non-market economy to 
join the WTO and entering into permanent normal trade relations with 
the non-market economy of Vietnam. Arrangements at the WTO that limited 
overproduction and dumping of textiles and apparel were also phased 
out, creating an opportunity to fill rising global demand for apparel 
with cheap, government-subsidized product from China and its Asian 
supply chain partners.
    This led to a sharp decline in U.S. textile and apparel output and 
employment, with far-reaching implications for our trade and preference 
program partners in the Western Hemisphere. Despite an unprecedented 
increase in global apparel consumption from 1997-2009, U.S. textile and 
apparel production declined by 61 percent, employment decreased by a 
staggering 69 percent, exports fell by 15 percent, and the U.S. trade 
deficit for textile and apparel products increased by 82 percent. At 
the same time, Chinese textile and apparel exports have exploded, 
making China the dominant player in the global market. From 1992-2016, 
Chinese textile and apparel exports to the world grew by a staggering 
910 percent, skyrocketing from $26.4 billion to $266.3 billion.\1\ In 
fact, China's share of the world's textile and apparel trade 
quadrupled, growing from 9.5 percent in 1992 to 38.3 percent in 2016.
---------------------------------------------------------------------------
    \1\ World Integrated Trade Solution (WITS).
---------------------------------------------------------------------------
Unfair Trade Practices
    Further fueling China's dominant global position in the textile and 
apparel sector is the fact that many key competitors in China are 
state-owned enterprises, including companies owned by the People's 
Liberation Army. Moreover, China is the world's leading purveyor of 
illegal trade practices designed to unfairly bolster a blatantly 
export-oriented economy. These predatory practices take many forms, 
from macroeconomic policies that grant across-the-board advantages to 
their manufacturers to industry-specific programs intended to dominate 
global markets in targeted areas.
    China's abuses include the exploitation and genocide of an 
estimated 800,000 to 1.8 million Uyghur Muslims in the XUAR, where 
forced labor camps are an integral part of cotton, textile, and apparel 
production. The country also actively ignores its duty to maintain any 
environmental standards in manufacturing, while pollution and workplace 
safety hazards are rampant.\2\ China also continues to massively 
undervalue its products to maintain its dominant position in the 
market, slashing prices on its apparel exports by 17.3 percent between 
2020 and 2021 at a time when consumer prices rose by 4.2 percent.\3\
---------------------------------------------------------------------------
    \2\ See: https://chinadialog.net/en/pollution/6283-the-denim-
capital-of-the-world-so-polluted-you-can-t-give-the-houses-away/ and 
https://www.dailymail.co.uk/news/article-2994650/Secret-footage-shows-
factory-workers-China-use-controversial-method-linked-dozens-deaths-
make-jeans-Abercrombie-Fitch-American-Eagle-Outfitters.html.
    \3\ BLS CPI Summary; September 14, 2021.
---------------------------------------------------------------------------
Impact on U.S. Trade Partners in the Western Hemisphere
    Of course, all this economic chicanery has had an adverse impact 
not only on U.S. manufacturers and workers, but also directly on our 
valued political and economic allies in the Western Hemisphere, 
contributing to economic instability and outward migration. Despite 
promises of preferred access to our consumer market through free trade 
agreements, our trading partners find themselves at a distinct 
disadvantage to China's aggressive trade tactics.
    As the United States was poised to finalize CAFTA-DR and enable the 
region to compete for the U.S. consumer apparel market against a rising 
China, the major developments noted above--China's adoption of 
deplorable trade and economic tactics, and the liberalization of trade 
policy--served to directly counteract that opportunity. To be clear, 
these events directly impacted investment, sourcing, and production 
decisions in the CAFTA-DR region, which was not equipped to compete 
with the aggressive, predatory policies, and practices employed by the 
Chinese Communist Party.
    Despite those enormous challenges, the CAFTA-DR agreement has been 
a strong and critical co-production chain for all our sectors. We see 
tremendous opportunity right now to invest in the CAFTA-DR co-
production chain and strengthen our economic partnerships. Ironically, 
as we are trying to recalibrate supply chains, some would ask you to 
consider a wholesale reassessment of CAFTA-DR.
    These harmful changes are disguised as adding ``flexibilities'' 
with an eye toward allowing Chinese textiles and other third-party 
inputs to displace American and Central American-Dominican Republic 
textiles, artificially driving down the cost of sourcing from the 
Western Hemisphere. This would be a grave error that would reward 
China's often illegal trade practices and undermine existing and future 
investment--relegating the region to low-cost apparel assembly with no 
incentive to expand into more advanced manufacturing or product 
offerings and contributing to further rounds of migration.
             why cafta-dr? the yarn forward rule of origin
    Apparel production in CAFTA-DR has been a success despite the 
headwinds from China's increased access to our market during the 
agreement's existence. This is due to a host of reasons, chief among 
them being the various benefits U.S. and regional producers receive 
from the agreement including high standards for workers and the 
environment, customs enforcement mechanisms, and reciprocal market 
access for all regional goods.
    However, the most important element of the CAFTA-DR agreement and 
all other U.S. FTAs is the yarn forward rule of origin. This unique 
investment-based rule for textiles and apparel ensures that the 
signatory countries benefit from investments made in capital-intensive 
yarn and fabric production, capturing that important value-add from 
third-party countries like China. Under this model, every stage of 
manufacturing from yarn formation through apparel assembly must take 
place within a CAFTA-DR signatory country to receive duty benefits. 
This construct is responsible for creating a massive regional market 
for U.S. textile exports in the Western Hemisphere resulting in $35 
billion in annual two-way trade and supporting 2 million direct jobs. 
In the United States, the U.S. Department of Labor estimates that each 
textile job supports 3 additional jobs in the communities where they 
are located.
    Would additional ``flexibilities'' that displace U.S. and regional 
textiles in favor of Chinese or other third-party textiles actually 
support even more manufacturing jobs, investment, and production than 
CAFTA-DR's existing rules support? The recent report from Werner 
International referenced earlier examines these exact questions, and 
unsurprisingly a fair analysis of these potential changes demonstrates 
that the opposite would be true.
    Under weaker rules that would permit Chinese and other Asian 
textiles into the CAFTA-DR production chain, we would see a 
catastrophic loss of employment and investment both in the United 
States and in Northern Triangle countries. For the United States, we 
would expect to see the loss of billions of dollars in exports to the 
CAFTA-DR region, and the loss of over 307,000 U.S. jobs in the short- 
to medium-term as Chinese products are substituted for American ones. 
As customers for American textiles decline, we would also lose vital 
warm industrial base capacity for mission-critical military 
procurement--creating a National security threat. Further, a severe 
contraction of U.S. textile manufacturing would cause U.S. cotton 
farmers to lose their sole domestic customer, devastating the market 
for American cotton. These U.S. manufacturing and farm jobs would be 
lost forever to China's dominant position in the hemisphere.
    The impact these proposed changes would have on the region would be 
even more stark. Valuable upstream textile manufacturing would be 
displaced by imports of cheaper Asian products, resulting in a loss of 
verticalization and over 247,000 jobs in Central America's textile and 
apparel industries. The dominoes would fall beyond CAFTA-DR as other 
hemispheric players, such as Haiti and Mexico, will suffer catastrophic 
losses in terms of sales to the U.S. market as they will be forced to 
compete with CAFTA-DR apparel made with subsidized, low-cost textile 
inputs from China and other third-country suppliers. Non-U.S. job 
losses would extend throughout the entire hemisphere to over 373,000 
workers, likely driving additional rounds of outward migration as 
displaced workers look for viable employment opportunities elsewhere.
    Ironically, rather than re-shoring these supply chains closer to 
the United States, changes to CAFTA-DR's rule of origin for textiles 
and apparel would cement the region's reliance on foreign supply chains 
for apparel production. China and other third parties will monopolize 
yarn and fabric sales to the CAFTA-DR region, freezing out current and 
future investment in verticalization and cementing the region as a low-
cost hub for assembling apparel exclusively from Asian textiles--while 
also severely destabilizing regional apparel assembly. This would 
ignore critical U.S. goals associated with nearshoring supply lines, 
increasing environmental sustainability, and ensuring that goods 
produced under abhorrent labor practices do not enter the United 
States.
                            recommendations
    As an industry, we believe that keeping a laser focus on China is 
the critical issue of our time from an economic and National security 
perspective. We urge Members of Congress to consider creating a 
framework that places a strong Western Hemisphere front and center in 
our approach to international trade, placing these priorities above the 
lowest common denominator policy goals of unrestricted trade flows and 
low retail prices. Marginal, and likely only temporary, benefits for 
U.S. consumers simply do not justify further incentivizing the worst 
global labor, production, and trade practices at the expense of workers 
in the United States and Northern Triangle.
Apply Increased Pressure on International Apparel Sourcing Decisions
    As mentioned previously, factors putting increased pressure on 
international apparel sourcing decisions include pandemic-caused supply 
chain disruptions, limited freight capacity, increased shipping costs 
from Asia, and U.S. Customs and Border Protection (CBP) actions banning 
cotton products from China's XUAR. These factors alone are shifting 
significant business to this region, with CAFTA-DR on course to have 
one of its best years ever in textile and apparel exports to the United 
States. In fact, key CAFTA-DR suppliers are outpacing even major Asian 
exporters as the U.S. textile and apparel market recovers from a 
downturn in 2020 due to the pandemic. For the first 9 months of 2021, 
compared to the same period in 2020, we note that regional exports of 
apparel to the United States are up significantly:\4\
---------------------------------------------------------------------------
    \4\ U.S. Department of Commerce; OTEXA Major Shippers Report.
---------------------------------------------------------------------------
   Honduras: up 56.3 percent
   El Salvador: up 54.9 percent
   Nicaragua: up 45.7 percent
   Guatemala: up 38.7 percent
   Dominican Republic: up 33.2 percent.
    Over the same 9-month period, China and Vietnam have seen smaller 
gains of 25 percent and 15 percent, respectively.\5\ Any changes to 
CAFTA-DR's rules of origin will have a significant adverse impact on 
the region's recovery versus Asia.
---------------------------------------------------------------------------
    \5\ Ibid.
---------------------------------------------------------------------------
Uphold Pre-existing Free Trade Agreements
    This important regional momentum would be upended by weakening 
rules to allow backdoor duty-free access for Asian and other inputs 
through CAFTA-DR and dismantle all current and planned textile 
investment. We need to maintain the strong yarn forward rule and other 
mechanisms meant to uphold the integrity of this rule of origin and 
reject efforts to liberalize our FTA and preference programs. Failure 
to do so would create a race to the bottom on pricing, cutting corners, 
and abandoning the high standards our FTAs have established up to this 
point.
    Both U.S. and regional textile and apparel manufacturers are hungry 
to increase regional supply chains, production capacity, and 
employment. This is a win-win opportunity for U.S. and regional workers 
alike. As the U.S. Government is cracking down on these unfair 
practices, we are witnessing new efforts to fundamentally alter our 
FTAs and preference program structure with calls to liberalize rules of 
origin to permit cheap textiles from China and its supply chain 
partners to creep into the Western Hemisphere and displace America from 
the center of our own trade platform.
Develop Incentives to Mobilize Stronger Western Hemisphere Co-
        Production Chains
    One of our best strategies to counter China's trade practices and 
dominance in our sector is to lean into the regional trade alliances we 
have forged in the Western Hemisphere and make these nearshore supply 
chains as competitive as possible. We need to prioritize reshoring and 
nearshoring and create an equitable industrial plan to ensure the 
systematic growth of this and other critical sectors. China does this 
routinely, relying on predatory measures to construct their industrial 
policy--the United States and region will be left behind if we don't 
create our own industrial plan that includes critical investments and 
robust trade enforcement.
    Further, we should develop incentives to help mobilize stronger co-
production chains in the United States and Northern Triangle. This 
includes continuing to push back publicly on Trojan horse concepts to 
undermine the Western Hemisphere with ``flexibilities'' to substitute 
Asian yarns and fabrics and other third-party inputs for those from the 
United States. Notably, officials from the U.S. Trade Representative's 
Office and the Vice President's office recently convened an industry 
roundtable and released a statement signaling that the administration 
values the U.S.-Central American textile and apparel supply chain and 
is committed to maintaining CAFTA-DR's rules of origin to allow future 
investments and benefits to accrue to the CAFTA-DR signatories.\6\ 
Congress must also remain steadfast on the critical importance of the 
yarn forward rule and reject any attempts to undermine or dismantle the 
CAFTA-DR rule of origin with these so-called flexibilities. This 
position is further supported by CECATEC-RD, the association 
representing the region's textile and apparel supply chain. Congress 
reaffirmed support for the yarn forward rule through its recent 
approval of the USMCA. Similarly, Congress should now firmly dismiss 
calls to dismantle the successful CAFTA-DR rule of origin.
---------------------------------------------------------------------------
    \6\ See: https://ustr.gov/about-us/policy-offices/press-office/
press-releases/2021/october/ustr-roundtable-highlights-united-states-
central-america-supply chain-textiles-and-apparel.
---------------------------------------------------------------------------
    It is also important for Congress to send a strong signal to 
retailers that the U.S. and Western Hemisphere supply chains are ready 
and open for business. This serves as an opportunity to gain long-term 
commitments from retailers that will unlock further domestic and 
regional investments to bolster this critical production chain. In 
addition, it will help grow jobs in both the United States and the 
region, while also nearshoring more production; help address the 
migration crisis; and assist us in addressing the urgent issue of 
climate change. There are several critical policies outlined below on 
how Congress could help this co-production chain further.
    The U.S. textile industry has invested heavily in important carbon-
reducing technologies with vastly different sustainable footprints than 
Asia. Our industry is a world leader in clean energy, water reduction 
and recirculation, recycled product, and safer chemical technology to 
further drive innovation and sustainability. Sourcing closer to home, 
utilizing inputs from the United States and the co-production chain 
with the region, is critical to helping reduce dependence on an 
unsustainable Asian supply chain and its alarming global carbon 
footprint.
    While the U.S. textile industry would staunchly oppose any rewrite 
of CAFTA-DR textile origin concepts that would erode these rules, we 
want to partner with Congress, the administration, and our regional 
allies in a concerted effort to stimulate and expand the economies of 
Western Hemisphere countries. Parkdale and other U.S. textile companies 
have direct investment experience throughout the hemisphere, and we are 
intimately familiar with the region's strengths and weaknesses. Many 
fundamental problems that plague the region are not unique to our 
industry and are instead systemic challenges.
    While some of these issues may be difficult to resolve in the short 
term, a comprehensive infrastructure plan for the Northern Triangle 
with targeted, high-impact investments and competitive loans to upgrade 
regional power grids, roads, and local ports would pay immediate 
dividends. These improvements would help to mitigate unnecessary cost 
factors associated with frequent production disruptions due to power 
outages and product delivery complications tied to clogged highways and 
inefficient regional ports. These unnecessary cost factors greatly 
diminish the region's ability to compete with other textile and apparel 
players in the hemisphere, not to mention dominant Asian suppliers, who 
are all vying for increased access to the U.S. market.
    We believe now is the time to further partner with the 
administration and Congress to unlock more investments and further 
bolster this supply chain. We believe this requires the creation of a 
comprehensive manufacturing plan to expand both onshoring and 
nearshoring this supply chain. The opportunities are ripe if we seize 
this moment.
    There are several other initiatives that could be pursued to 
improve the competitive position of the CAFTA-DR region, including the 
Northern Triangle countries that are experiencing high rates of 
immigration to the United States, such as:
   Working directly with U.S.-based textile companies to 
        leverage further investment in the region to ensure it won't 
        undermine U.S. employment/production through low-interest 
        loans, no interest loans, loan guarantees and other financial 
        incentives.
   Better coordination among lending agencies of the Federal 
        Government, like USAID, IDB, DFC, Export-Import Bank, etc., to 
        ensure targeted, strategic investment in this sector. Lending 
        and funding agencies should work directly with U.S. industry 
        who are seeking to expand necessary capacity in the region--
        without putting U.S. jobs at risk--as retailers look to 
        diversify out of China/Asia. Regrettably, much of the financing 
        that has previously been allocated to the region has been 
        segregated and not impactful for upscaling necessary strategic 
        investments in this sector.
   Allocate funding for textile and apparel workforce training 
        in the United States and the region.
   Streamline H-2B processes to ensure more co-production and 
        training opportunities in the United States.
   Provide tax incentives to help companies invest in new 
        equipment, processes, and R&D.
   Collaborate with industry to identify necessary industrial 
        expansion allocations to bolster this critical sector and 
        appropriate necessary funding. This industry is the critical 
        feedstock for the medical supply chain and our military. It 
        must be prioritized for funding allocations.
   Provide employment tax credits for domestic manufacturers.
   Create onshore and nearshore tax incentives for U.S. 
        companies that invest in the United States and in the region 
        and deploy tax penalties for offshoring production to Asia.
   Ensure trade stability in the region by not pursuing 
        programs and policies that would undermine the critical co-
        production/employment benefits.
   Provide incentives for greenhouse gas emission reductions in 
        the supply chain, including freight and manufacturing.
   Bolster trade enforcement tools for our sector to counter 
        predatory trade practices.
   Close the de minimis loophole that allows for duty-free 
        shipments from China to come to the United States through e-
        commerce platforms--closing this loophole is addressed in the 
        House's America COMPETES Act and I strongly urge its inclusion 
        in the final China bill.
   Keep China's 301 penalty tariffs in place on finished 
        textile and apparel products and hold China accountable to the 
        commitments it has made.
   Effectively enforce the Xinjiang cotton ban and provide CBP 
        the necessary resources to effectively enforce illegal 
        transshipment that has undermined textile investment in the 
        CAFTA-DR region and our other FTA regions.
   Block any efforts to expand GSP for textile and apparel 
        products which would undermine this co-production chain.
    A strong and viable Western Hemisphere supply chain for textile and 
apparel products devoid of abhorrent human rights abuses is one of our 
best counters to China's global influence.
                               conclusion
    In conclusion, Parkdale is excited about the new opportunities 
available to us and other U.S. companies to lean into U.S. economic and 
trade relationships in the Northern Triangle. Current factors have 
combined to create a singular environment extremely favorable to 
bringing manufacturing back to the Western Hemisphere from China and 
other Asian countries.
    For far too long we have permitted China to set the global agenda, 
undermining U.S. values and ideals and harming our workers and trading 
partners in the Western Hemisphere. With Congress's help, we can 
empower U.S. companies to commit sourcing and capital investments to 
the region, hold China accountable for its unfair trade practices that 
undermine U.S. and regional competitiveness, and enable the Northern 
Triangle countries to fully realize the benefits available to them 
under CAFTA-DR. Working hand-in-hand with the governments and 
industries of the Northern Triangle, we can address our shared 
challenges, leading to increased economic opportunity throughout the 
region and mitigating the underlying causes of outward migration.
    I thank you for the opportunity to testify today and the 
committee's attention to these critical issues.

    Mr. Correa. Mr. Warlick, thank you very much for your 
testimony. We are going to take you up on your invitation to 
visit your operation in Central America.
    Mr. Warlick. We would be honored.
    Mr. Correa. Now I would like to recognize Mr. Christenson 
to summarize his statement in 5 minutes.
    Sir, welcome.

  STATEMENT OF DAN CHRISTENSON, SENIOR DIRECTOR OF GOVERNMENT 
                     AFFAIRS, PEPSICO, INC.

    Mr. Christenson. Thank you, Mr. Chairman, and good 
afternoon. Thank you to you and to the Ranking Member and to 
the Members of the subcommittee for inviting PepsiCo to testify 
before you today.
    My name is not Paula Uribe, as the written testimony would 
suggest. I am Dan Christenson, senior director of government 
affairs, based here in Washington, DC, and filling in for Paula 
this afternoon. Unfortunately, she had a family emergency to 
attend to in Colombia and could not be here today. So she sends 
her regrets. We really appreciate the committee's 
understanding.
    So it is an honor to speak before this subcommittee about 
PepsiCo's commitment to both the United States and Latin 
America. But before I give you the highlights of our 
investments in the Northern Triangle, let me share some 
background on PepsiCo.
    We are the largest food and beverage company in the United 
States and have a presence in over 200 countries with a 
portfolio of brands that people know and love around the world.
    A testament to this loyalty is the fact that over 95 
percent of U.S. households have at least one of our products in 
their kitchen.
    Together with our franchise bottlers, we employ and support 
the jobs of nearly 120,000 Americans across the country. That 
number increases to nearly 500,000 when you consider PepsiCo's 
broader impacts. So, in total, our operations contribute 
approximately $37.9 billion to the Nation's GDP.
    At the heart of the success of our business strategy is 
PepsiCo Positive, our corporate sustainability mission, which 
will serve as an end-to-end transformation of our business, 
from how we source our ingredients and make our products, to 
how we engage people to make better choices for themselves and 
the planet.
    Turning to our efforts in Latin America, PepsiCo has been 
in the Latin American and Caribbean region for over a hundred 
years. PepsiCo Latin America includes all of our foods and 
beverages businesses in that region, comprising 34 emerging and 
developing markets. Altogether, our Latin America business 
generated $7.6 billion in net revenue last year.
    We have deep roots in the region, with approximately 138 
manufacturing facilities, as well as a large distribution 
network, including more than 24,000 routes that together 
generate more than 77,000 direct jobs and even more indirect 
jobs.
    In the Northern Triangle, we invested more than $70 million 
in Guatemala during 2019 and 2020. This investment included the 
development of a new LEED-certified Mixing Center in Villa 
Nueva just outside of Guatemala City.
    Additionally, as we announced in December, we expect to 
invest at least $190 million in the region in the next 3 years. 
This will be a regional hub for us, built around a strong 
network of manufacturing plants, distribution centers, and 
sales routes.
    These regional investments are aligned with our global 
Positive agenda, which will include spreading regenerative 
farming practices across 7 million acres globally by 2030, 
becoming net water positive by 2030, and achieving net-zero 
emissions by 2040.
    Also central to our Pep Positive agenda is our commitment 
to providing meaningful jobs and career growth. These 
investments will drive and sustain jobs that enable people in 
the region to build successful lives in their own communities.
    In the Northern Triangle, we support over 4,000 families 
directly and several thousand families indirectly. These 
numbers will only grow as our presence continues to expand. We 
expect to increase direct employment by 3 percent annually over 
the next 3 years. Additionally, our bottler CBC supports over 
3,000 direct jobs and over 11,000 indirect jobs just in 
Guatemala.
    In this region, our wages are 15 percent above the average 
salaries, the turnover rate is only 7 percent in Guatemala, and 
women make up 75 percent of managerial positions and more than 
25 percent of our overall work force.
    As part of our Pep Positive framework, our Guatemala 
business, alongside our global foundation, will train farmers 
in the region around the efficient use of water and 
fertilizers.
    We are also working to improve gender equality in the 
region. For example, women represent 30 percent of our regional 
executive committee for Central America, which is significantly 
higher than the median.
    This agenda extends to our partnership with organizations 
like CARE International to reduce childhood malnourishment in 
the region. Our initiative with CARE works in parallel to a 
capacity-building program to improve nutrition and hygiene at 
the community level that has benefited over 2,000 children in 
2021 alone.
    In closing, I thank you again for the chance to speak to 
you today and would like to take the opportunity to invite the 
Chairman, the Ranking Member, and all the honorable Members of 
this subcommittee to come see our operation in Guatemala or any 
other country in the Latin American region. It would be an 
honor to host you.
    With that, I would be happy to take any questions that I 
can.
    [The prepared statement of Ms. Uribe follows:]
   Prepared Statement of Paula Uribe, Director, Government Affairs, 
                                PepsiCo
                           February 17, 2022
    Good afternoon, thank you Chairman Correa, Ranking Member Meijer, 
and Members of the subcommittee for inviting PepsiCo to testify before 
you today. My name is Paula Uribe, and I am director of government 
affairs at PepsiCo, based in Washington, DC.
    It is an honor to speak before this committee about PepsiCo's 
commitment to both the United States and the Latin American region.
    Today, I will discuss PepsiCo's current and future investments in 
the Northern Triangle, which we announced in December of last year.
    First, some background on PepsiCo.
    PepsiCo is the largest food and beverage company in the United 
States and the second-largest globally, with a presence in over 200 
countries. While we're proud to serve almost every corner of the globe, 
we're equally proud of our roots as an American-born company. Our 
portfolio of brands includes Pepsi-Cola and Frito-Lay, as well as 
Aquafina, Gatorade, and Quaker Oats.
    Our business directly contributes to America's prosperity. Together 
with our franchise bottlers, we employ and support the jobs of nearly 
120,000 Americans across all 50 States and the District of Columbia. 
That number increases to nearly 500,000 when you consider PepsiCo's 
broader impact. In addition, we spend $2.2 billion annually on 
agriculture. We source over 5 million metric tons of potatoes, grains, 
fruits, vegetable oil, and more in the United States, from growers of 
all sizes.
    In total, PepsiCo's system-wide operations contribute approximately 
$37.9 billion to the Nation's GDP.
    We have 81 manufacturing sites, and over 1,000 distribution centers 
and other facilities in the United States, including in your 
Congressional districts.
    I'm proud to share that PepsiCo is deeply committed to 
sustainability initiatives that are at the heart of our recently 
launched global business strategy, PepsiCo Positive (pep+), which will 
transform our business operations: From how we source our ingredients 
and make our products, to how we leverage the power of our brands to 
help take sustainability mainstream and engage people to make better 
choices for themselves and the planet.
    PepsiCo has been named a Global Top Employer by the Top Employers 
Institute for the second consecutive year, in addition to receiving 
2022 Top Employer status in 32 countries and regions around the world, 
including 5 countries in Latin America (Brazil, Mexico, Chile, 
Colombia, and Guatemala).
    I will now share with you PepsiCo's efforts in Latin America.
    PepsiCo has been in the Latin American and Caribbean region for 
over 100 years. PepsiCo Latin America includes all our foods and 
beverages businesses in that region, comprising 34 emerging and 
developing markets. Our business units include snacks, beverages, 
cookies & crackers, and nutrition.
    Our business in Latin America generated $7.6 billion dollars in net 
revenue last year.
    We are a company with deep roots in the Latin America region; we 
have approximately 138 plants, including our 13 major bottling 
partners' plants. In addition, we have a large distribution network, 
including more than 24,000 routes and generating more than 77,000 
direct jobs and millions of indirect jobs.
    PepsiCo is committed to our local communities in the Northern 
Triangle.
    Despite the COVID-19 crisis, we invested more than $70 million USD 
in Guatemala during 2019 and 2020. This investment included the 
development of a new Mixing Center in Villa Nueva, just outside of 
Guatemala City, which has just been LEED (Leadership in Energy and 
Environmental Design) certified. As you may know, LEED is the most 
widely-used green building rating system in the world and is a 
recognition of PepsiCo's commitment to building healthy, highly 
efficient, and cost-saving green operations around the world, 
particularly in regions suffering the extreme effects of climate 
change.
    Additionally, as we announced in December, we expect to invest at 
least $190 million USD in the Northern Triangle in the next 3 years 
through improvements to our infrastructure, and in ways aligned with 
our pep+ corporate sustainability agenda.
    The Northern Triangle will be a regional hub for us, built around a 
strong network of manufacturing plants, distribution centers, and sales 
routes both for internal and external markets.
    Our regional investments are aligned with our pep+ corporate 
sustainability agenda, through which we strive for positive action for 
the planet and people. Pep+ is focused on 3 pillars: Positive 
agriculture, positive value chain, and positive choices.
    This includes spreading regenerative farming practices across 7 
million acres globally; becoming net water positive by 2030 by reducing 
absolute water use and replenishing watersheds; and achieving net-zero 
emissions by 2040 by increasing the use of renewable energy.
    Another relevant piece of our Pep+ agenda is our commitment to 
providing meaningful jobs and growth opportunities for our people in 
the region and empowering them to enhance their well-being and make a 
positive impact at work, at home and in their local communities.
    We expect these investments to drive and sustain jobs, to offer the 
opportunity for people in the Northern Triangle to build successful 
lives in their own communities. We are working to provide opportunities 
and good environments in their home communities.
    In the Northern Triangle we support over 4,000 families directly 
and several thousands of families indirectly. The number of families 
PepsiCo supports will only grow as our presence continues to expand; we 
expect to increase direct employment by 3 percent, annually. 
Additionally, our bottler CBC supports over 3,000 direct jobs and over 
11,000 indirect jobs, just in Guatemala.
    I want to share some facts about employment in these countries:
   Our wages are 15 percent above the average salaries.
   Turnover rate is of 7 percent, in Guatemala. Our employees 
        want to have a job at PepsiCo until retirement.
   Women make up 75 percent of managerial positions and more 
        than 25 percent of our overall workforce.
    We have been named Top Employer in Guatemala for the first time in 
2022, an award that acknowledges the company's commitment to developing 
our talent, fostering diversity, and nurturing an inclusive and 
flexible working environment.
    This is also the case for our entire value chain. For every direct 
job, we create 2.5 indirect ones there, therefore, we generate 
additional 10,000 jobs that also benefit from our unique approach to 
growth.
    As part of our contribution to the agricultural sector, we work 
with producers to transfer technology and best practices and guarantee 
buying 100 percent of their harvest.
    We work alongside local and global foundations and other partners, 
including the Inter-American Development Bank, to train and support 
female farmers in the region, with a joint investment of over $700,000 
USD.
    These are just a few examples of how a PepsiCo job is a job that 
can really change the economic trajectory of entire generations.
    As part of our pep+ framework, our Guatemala business, alongside 
our global Foundation, will train farmers in Suchitepez, Peten and 
Izabal around the efficient use of water and fertilizers to reduce the 
environmental impact of their activities.
    Additionally, through the Next Gen Agro Fund, in alliance with 
Inter-American Development Bank, we promote sustainable agricultural 
practices and gender inclusion in the countryside, thereby encouraging 
solutions that strengthen the resilience of rural communities.
    We are also working to increase technological access, including 
through programs to increase connectivity and implement digital 
processes, such as for those related to customs and obtaining permits.
    Moreover, we are working to improve gender equality in the region. 
For example, women represent 30 percent of our regional Executive 
Committee for Central America, which is significantly higher than the 
median.
    As part of our Brands with Purpose agenda, we are also partnering 
to reduce childhood malnourishment. Alongside CARE International, we 
recently launched the program Quaker Qrece, a holistic intervention in 
Guatemala comprised of a specialized food product that helps children 
with low to moderate malnourishment to overcome this condition, in 
parallel to a capacity-building program to improve nutrition and 
hygiene at the community level. It has benefited 2,200 kids in 2021 
alone.
    Finally, I thank you again for the chance to speak to you today and 
would like to take the opportunity to invite Chairman Correa, Ranking 
Member Meijer, and all the honorable Members of this subcommittee to 
come see our operation in Guatemala and/or any other country in the 
Latin American region. It would be an honor to host you.

    Mr. Correa. Mr. Christenson, we will also take you up on 
your offer to visit your operation.
    Mr. Christenson. Excellent.
    Mr. Correa. A hundred years in Central America. That is 
impressive.
    Thank you for your testimony.
    I now recognize Ms. Rivas to summarize her statement in 5 
minutes.
    Welcome now.

  STATEMENT OF MARIA NELLY RIVAS, VICE PRESIDENT, GOVERNMENT 
              RELATIONS FOR LATIN AMERICA, CARGILL

    Ms. Rivas. Thank you, Chairman Correa and Ranking Member 
Meijer and Members of the subcommittee, for inviting Cargill to 
testify today. As a Central American, I am proud to share the 
story of our work in the region and to discuss the $160 million 
in new investments we announced in December.
    Cargill is a Minnesota-based food and agriculture company, 
but we have deep roots in Central America and have been active 
in the community for 52 years. We are committed to the long-
term success of the region.
    We at Cargill believe that every culture can be part of the 
solution to many of the challenges we face today, including 
food insecurity and the lack of economic opportunity. We 
believe this to be especially true in Central America and the 
Northern Triangle.
    Our 10,000 employees in Central America--one-third of whom 
are in the Northern Triangle--work with farmers and customers 
every day to feed and nourish people and animals. I am proud to 
say that nearly half of our production facilities are led by 
women.
    Through both our business and philanthropic investments, we 
strive to improve farmer livelihoods and nourish those in the 
region. It is part of who we are and it is how we do business.
    In the region, we produce and deliver chicken and other 
protein products that serve as staples in local households. We 
also produce and deliver animal nutrition products that help 
livestock farmers care for their animals. Our distribution 
network reaches thousands of small neighborhood shops, farm 
stores, schools, and other places where people get food and 
feed.
    I would like to share one example of the work we do with 
partners like USAID, CARE, the World Food Programme, and others 
to improve food security, nutrition, and farmer livelihoods.
    Melissa is a wife and mother of 3 in San Marcos, Honduras. 
When her husband lost his job because of the pandemic, Cargill 
and CARE helped Melissa start a business out of her house 
selling roasted chicken.
    Now that business has grown. She takes orders through a 
cell phone to bring food into her community, and she is the 
main source of income for her family. She is also helping put 
her oldest daughter through school.
    I have seen many women like Melissa grow their business and 
become leaders in their towns. In supporting them, we support 
families, we support schools, and we support entire 
communities.
    These farmers and small businesses carry the greatest 
potential to improve economic and food security.
    As I mentioned before, we at Cargill believe that every 
culture can be part of the solution. We have seen the positive 
impact when partners across the private sector, civil society, 
and governments work together. By working across borders, 
sectors, and industries we can achieve more.
    We welcome the administration's efforts to bring us 
together and do just this in the Northern Triangle. It makes 
strategic sense to our business and supports our customers and 
communities.
    In December, as part of our long-term strategy, we 
announced our plans to invest an additional $150 million over 
the next 5 years to expand our operations in Honduras, 
Guatemala, and El Salvador. We expect this investment to create 
more than 400 direct new jobs, as well as additional jobs 
across the larger value chain.
    We are also committing an additional $10 million over the 
next 3 years, doubling our historic contributions to fund 
programs that support farmers, entrepreneurs, and local 
communities. Together, these investments will help farmers and 
small businesses grow and diversify their income, strengthen 
school feeding programs, and generate more trade within Central 
America and the Caribbean.
    While we as companies can and must do our part, we are also 
encouraged to see the administration and this committee 
recognize that there is a role for governments to play. To 
truly remove barriers to job creation, governments in the 
region--supported by the United States and the private sector--
need to take actions that will benefit workers and employers.
    In closing, Chairman Correa and Ranking Member Meijer, we 
believe every culture can be part of the solution to creating 
greater economic opportunity in the Northern Triangle.
    Cargill is committed. We stand ready to share more than 50 
years of local insight to unlock growth and potential in the 
region.
    Thank you to the subcommittee for your attention to this 
effort. We welcome the opportunity to host you in the region. I 
look forward to your questions and exchange this afternoon. 
Thank you.
    [The prepared statement of Ms. Rivas follows:]
                Prepared Statement of Maria Nelly Rivas
                           February 17, 2022
    Thank you, Chairman Correa and Ranking Member Meijer, for inviting 
Cargill to testify today. As a Central American, I am proud to share 
the story of our work in the region and to discuss the $160 million 
dollars in new investments we announced in December.
    Cargill is a Minnesota-based food and agriculture company, but we 
have deep roots in Central America and have been active in the local 
community for 52 years. We are committed to the long-term success of 
the region.
    We at Cargill believe that agriculture can be part of the solution 
to many of the challenges we face today, including food insecurity and 
lack of economic opportunity. We believe this to be especially true in 
Central America and the Northern Triangle.
    Our 10,000 employees across the region--one-third of whom are in 
the Northern Triangle--work with farmers and customers every day to 
feed and nourish people and animals. I'm proud to say that nearly half 
of our production facilities are led by women. Through both our 
business and philanthropic investments, we strive to improve farmer 
livelihoods and nourish those in the region. It's part of who we are 
and it's how we do business.
    In the region, we produce and deliver chicken and other protein 
products that serve as staples in local households. We also produce and 
deliver animal nutrition products that help livestock farmers care for 
their animals. Our distribution network reaches thousands of small 
neighborhood shops, farm stores, schools, and other places where people 
get food and feed.
    We also have a long history of working with partners like USAID, 
CARE, and the World Food Program to improve food security, nutrition, 
and farmer livelihoods in the region. I'd like to share two examples, 
of many, which exemplify this work.
    Melissa is a wife and mother of three in Honduras. When her husband 
lost his job because of the pandemic, Cargill and CARE helped Melissa 
begin a small business selling roasted chicken out of her home. By 
providing her with technical assistance, business training, and supply 
vouchers, her business has grown. Today, she takes orders through her 
cell phone to bring food into her community, and she is the main source 
of income for her family. She is also helping put her oldest daughter 
through school.
    Albertina is a community leader in Guatemala who saw an opportunity 
to provide animal protein to her local village, since she and her 
neighbors had to walk 6 kilometers to the nearest urban center to get 
it. With technical assistance, training, and inputs like animal feed 
from Cargill and Heifer International, Albertina started her own pig 
farm, adding animal protein to their existing crops. Not only is she 
providing new sources of nutrition and income for her own family, she 
also helps lead a project teaching other families to do the same, 
strengthening the productive and entrepreneurial capacity of the whole 
community.
    I have seen many women like Melissa and Albertina grow their 
businesses and become leaders in their villages. In supporting them, we 
support families, schools, and entire communities, while also 
contributing to women's empowerment. It is these farmers and small 
businesses who carry the greatest potential to improve economic and 
food security.
                     cargill's commitments & impact
    As I mentioned earlier, we at Cargill believe that agriculture can 
be part of the solution. We have also seen the positive impact when 
partners across the private sector, civil society, and governments work 
together. We welcome the administration's efforts to do just this in 
the Northern Triangle. By working across borders, sectors, and 
industries we can achieve more. It makes strategic sense to our 
business and supports our customers and communities.
    In December, as part of our long-term strategy in the region, we 
announced our plans to invest an additional $150 million over the next 
5 years to expand our operations in Honduras, Guatemala, and El 
Salvador. We expect this investment to create approximately 400 new 
jobs, as well as additional jobs across the larger value chain.
    We also committed an additional $10 million over 3 years, doubling 
our historic contributions, to fund programs that support farmers and 
entrepreneurs, improve community nutrition, and expand school meal 
programs.
    Together, these investments will help farmers and small businesses 
grow and diversify their income, strengthen school feeding programs, 
and generate more trade within Central America and the Caribbean.
                    recommendations for governments
    While we as companies can and must do our part, we are also 
encouraged to see the administration and this committee recognize that 
there is an important role for governments to play.
    To truly remove barriers to job creation, governments in the 
region--supported by the United States and the private sector--need to 
take actions that will benefit workers and employers.
    We believe a focus on developing greater regional integration, 
improving transparency and rule of law, and expanding critical 
infrastructure would have a significant positive effect on investment 
in the Northern Triangle.
   REGIONAL INTEGRATION.--Food needs to move. Today it can be 
        difficult to move food and other goods across borders within 
        the region. By improving regional integration and facilitating 
        intra-regional trade, we can build a stronger market and 
        improve food security.
   TRANSPARENCY & RULE OF LAW.--Efforts to digitalize trade and 
        investment processes will help businesses grow and will improve 
        government transparency. Open markets that enable 
        predictability and certainty are critical to attracting and 
        supporting long-term investment.
   INFRASTRUCTURE.--Greater resources and collaboration are 
        needed to expand and upgrade critical infrastructure--such as 
        ports, electricity, waterways, and broadband access. This would 
        improve the region's competitiveness and enable greater 
        investment and growth.
    We encourage local governments and the U.S. Government to support 
these 3 priority areas, which we believe will improve the region's 
business climate and promote job creation.
                                closing
    In closing, we believe agriculture can be part of the solution to 
creating greater economic opportunity in the Northern Triangle. Cargill 
is committed and stands ready to share our more than 50 years of local 
insight to unlock growth and potential in the region.
    Thank you to the subcommittee for your attention to this effort.

    Mr. Correa. Thank you, Ms. Rivas, for your testimony.
    Now I would like to recognize our last witness, Mr. Runde, 
to summarize his statement in 5 minutes.
    Welcome, sir.

STATEMENT OF DANIEL F. RUNDE, SENIOR VICE PRESIDENT AND WILLIAM 
   A. SCHREYER CHAIR, CENTER FOR STRATEGIC AND INTERNATIONAL 
                            STUDIES

    Mr. Runde. Thank you. Chairman Correa, Ranking Member 
Meijer, it is a distinct pleasure to testify before both of you 
and in front of this very distinguished subcommittee. Thank you 
for asking me to do this.
    The best social program is a decent job. Most people do not 
want to leave where they grew up. The U.S. Government should 
take advantage of the potential for nearshoring in Central 
America. The COVID-19 pandemic has provided an opportunity for 
the reorienting and nearshoring of U.S. international commerce.
    A different future is possible for Central America. For 
example, policies pursued in El Salvador in the late 1990's and 
early 2000's serve as an effective example. The Salvadoran 
Government's National Reconstruction Plan of 1992 to 1997 
culminated in El Salvador achieving investment-grade bond 
status in 1998.
    By the early 2000's, El Salvador outperformed Chile, 
Argentina, South Korea, and Germany in the Index of Economic 
Freedom, which measures ten indicators, including rule of law, 
government spending, and market openness.
    As a result, migration from El Salvador to the United 
States was lower, and the economy was strong and growing. Job 
creation drove growth and decreased immigration, and poverty 
fell from 40 percent of the population in 1996 to 20 percent in 
2000.
    There are many positive lessons from this previous era in 
El Salvador.
    Studies have shown that when countries reach the threshold 
of $8,000 GDP per capita, that migration largely halts. Mexico 
surpassed this level of $8,000 of GDP per capita in 2005, which 
correlates with the beginning of major decreases in Mexican-
U.S. migration.
    In 2020, Guatemala reported a GDP per capita around $4,600, 
while El Salvador recorded a GDP per capita of $3,800, and 
Honduras $2,400. The goal is to get these 3 countries to $8,000 
per capita as quickly as possible.
    I am a big proponent of foreign assistance. The reality is 
that all the foreign assistance, all spigots from all over the 
world, as a percentage of GDP to these Central American 
countries is very small, reaching at most maybe 3 percent of 
the GDP.
    Foreign aid can help, but it needs to be focused, and it 
needs to work in partnership with others, especially the 
private sector.
    The Biden administration has taken a good step by convening 
the Partnership for Central America. PCA convenes a cadre of 
America's finest companies, including some that have been 
testifying here today, and it is an excellent start.
    PCA is also in the process of inviting key local companies 
to join the partnership, and this is very important.
    Engaging the U.S. private sector is a critical initial 
step, but this must be done in conjunction with engagement of 
the local private sector in Central America. One of the fastest 
potential tracks to achieve these aims would be to engage local 
companies in U.S. multinational company supply chains.
    Without painting too broad a brush, I would argue that most 
who follow Central America closely in Washington have expressed 
a negative bias toward the local private sector in Central 
America due to fears of corrupt actors. I think we need to 
collectively rethink this bias.
    In this context, I want to raise a new organization, HUGE, 
H-U-G-E, which stands for Honduras, United States, Guatemala, 
and El Salvador. HUGE convenes many leading local private-
sector companies and a growing number of very fine 
multinational companies.
    The association promotes strategic investments in the 
Northern Triangle, taking advantage of competitive advantages 
in these countries. Over the next 5 years, HUGE aims to 
facilitate $10 billion or more in investments among Honduras, 
the United States, Guatemala, and El Salvador.
    So what can the United States do?
    So, first, we have got to answer the mail on COVID-19. The 
great ideas at this hearing will be academic unless we address 
the challenges brought on by COVID-19. The United States and 
our partners need to do more to solve Central America's COVID-
19 problem.
    Second, let's help close the digital divide accelerated by 
COVID-19 in Central America. We ought to be using our foreign 
assistance and other instruments to close this digital divide 
that has been uncovered, exacerbated, or accelerated by COVID-
19 in Central America. Either we are going to do it or the 
Chinese Communist Party and Huawei is going to do it. It is as 
simple as that.
    Third, let's be frank, let's get right with Guatemala. Of 
the 3 countries, probably Guatemala is the most reliable ally. 
If we want any progress, we need a better diplomatic 
relationship with Guatemala. So a simple thing to do would be 
to get right with the Giammattei administration. I am happy to 
talk about this.
    Fourth, it is time to revisit and revise CAFTA-DR. It has 
been more than 15 years since CAFTA-DR entered into force. The 
region looks very different today. We have had USMCA. We ought 
to be looking at things like intellectual property and digital 
economy positions for CAFTA-DR. We ought to update CAFTA-DR to 
the USMCA standards as part of a nearshoring strategy.
    Fifth, let's partner with Mexico and repurpose the North 
American Development Bank to help Central America. This is a 
very actionable thing for Congress to do. Mexico wants to do 
it. We ought to allow the NAD Bank to operate on southern 
Mexico's border with Guatemala and in the Northern Triangle. 
This is something Congress could easily do.
    Sixth, the United States should support a capital increase 
for the Inter-American Development Bank under the right 
conditions. The IDB's annual meeting is coming up next month. 
The United States could announce they are supporting a capital 
increase that has a large private sector component to it. It 
could be part of a larger positive hemispheric agenda that 
could be announced in June when the Biden administration hosts 
its Summit of the Americas in Los Angeles.
    Seventh--and I will stop here--the United States should 
allocate foreign aid to support economic growth and good 
governance and use foreign aid to lubricate shifts in global 
supply chains toward Central America.
    The United States, correctly, is going to be investing 
billions of dollars over the next several years in the region. 
USAID should spend monies and provide expertise to support pro-
growth economic policy reforms. It should also spend monies on 
improving governance and security.
    Then the United States should use foreign aid to lubricate 
global supply chains toward Central America. The fancy terms 
are things called trade capacity building or trade 
facilitation.
    There is no magic bullet, nor an out-of-the-box solution to 
the problems of Central America. The problems are solvable, but 
they require sustained attention from the United States.
    I congratulate you, Congressman, for hosting a series of 
hearings on an on-going basis on this. Thank you for doing 
that. It is important.
    Political will in these countries and ultimately strong and 
inclusive economic growth to go with strengthened governance. 
Economic growth is possible in Central America's poorest 
countries, but we cannot manage or solve the challenges of 
Central America without the private sector, and especially the 
local private sector.
    Thank you.
    [The prepared statement of Mr. Runde follows:]
                 Prepared Statement of Daniel F. Runde
                      Thursday, February 17, 2022
    Chairman Correa, Ranking Member Meijer, and distinguished Members 
of the House Homeland Security Oversight, Management, and 
Accountability Subcommittee, I am grateful for the opportunity to 
appear before you today to testify on the importance of private-sector 
investment in the Northern Triangle and its impact on homeland 
security.
    My name is Dan Runde, I am a senior vice president at the Center 
for Strategic and International Studies and direct our Americas 
Program. Among other past roles, I ran the Global Development Alliance 
public-private partnership initiative at USAID during the Bush 
administration. I recently agreed to serve as an advisor to the 
Partnership for Central America (PCA), convened by Vice President 
Harris.
           brief overview of issues in the northern triangle
    The Northern Triangle of Central America (NTCA) has experienced 
overwhelming economic, political, and security challenges in recent 
years.\1\ These include a combination of political challenges, drug-
financed criminal gangs that generate high rates of violence, and not 
enough jobs in the formal economy. All the problems in Central America 
have had international repercussions, including an ongoing migration 
crisis at the U.S.-Mexican border.
---------------------------------------------------------------------------
    \1\ Daniel F. Runde & Mark L. Schneider, ``A New Social Contract 
for the Northern Triangle,'' CSIS, May 8, 2019, https://www.csis.org/
analysis/new-social-contract-northern-triangle.
---------------------------------------------------------------------------
    The best social program is a decent job. The best magnet to curb 
migration are economic hopes in one's own country. Most people do not 
want to leave where they grew up. Lack of economic opportunity and 
insecurities push them to leave. The high rate of informal employment 
in the Northern Triangle (77% on average) is the most notable factor 
contributing to the push for migration.\2\ Creating attractive 
investment conditions that contribute to the rule of law in Central 
America is in the best interest of the United States--by creating 
economic and trade opportunities that benefit people in the region and 
here at home. Increasing trade with NTCA countries can help foster 
better economic opportunities in those countries, thus slowing the 
outflow of migrants. International trade can offer consumers lower 
price goods as well as augment productivity and increase average 
income. Such trade can spur innovation within the United States and 
knowledge and technology exchanges with Central America.\3\
---------------------------------------------------------------------------
    \2\ Conor M. Savoy & T. Andrew Sady-Kennedy, ``Economic Opportunity 
in the Northern Triangle'' CSIS, September 20, 2021, https://
www.csis.org/analysis/economic-opportunity-northern-triangle.
    \3\ ``Stronger Open Trade Policies Enable Economic Growth for 
All,'' World Bank, April 3, 2018, https://www.worldbank.org/en/results/
2018/04/03/stronger-open-trade-policies-enables-economic-growth-for-
all#:?:text=Trade%20is%20central%20to%20ending,more%20affordable%20- 
goods%20and%20'services.
---------------------------------------------------------------------------
    The United States remains a major partner for the 3 countries in 
the Northern Triangle, with annual funding for the Central America 
strategy reaching $505.9 million in fiscal year 2021 (although this is 
a decrease from the $750 million provided in fiscal year 2017).\4\ 
Overall, from fiscal year 2016 to fiscal year 2021 the U.S. Congress 
appropriated over $3.6 billion to carry out the U.S. Strategy for 
Engagement in Central America.\5\
---------------------------------------------------------------------------
    \4\ ``U.S. Strategy for Engagement in Central America: An 
Overview,'' Congressional Research Service, February 16, 2021, https://
sgp.fas.org/crs/row/IF10371.pdf.
    \5\ Ibid.
---------------------------------------------------------------------------
    The U.S. Government should take advantage of the potential for 
near-shoring in Central America. The Covid-19 pandemic has provided an 
opportunity for the reorienting and nearshoring of U.S. international 
commerce.\6\ While re-centering U.S. supply chains in the Americas 
would be a positive for multinational firms, it would be transformative 
for Latin America. Studies have shown that moving even $1 billion of 
U.S. textile trade with China to the Northern Triangle would create 
hundreds of thousands of manufacturing jobs for workers.\7\
---------------------------------------------------------------------------
    \6\ Juan Jose Daboub & Daniel F. Runde, ``Turning the Covid-19 
Crisis into an Opportunity for the Central American Textile Sector,'' 
CSIS, June 17, 2020, https://www.csis.org/analysis/turning-covid-19-
crisis-opportunity-central-american-textile-sector.
    \7\ Ibid.
---------------------------------------------------------------------------
    A different future is also possible. For example, policies pursued 
in El Salvador in the late 1990's and early 2000's serve as an 
effective example. The Salvadoran government's National Reconstruction 
Plan (NRP) of 1992 to 1997 culminated in El Salvador achieving 
investment-grade bond status in 1998.\8\ By the early 2000's, El 
Salvador outperformed Chile, Argentina, South Korea, and Germany in the 
Index of Economic Freedom, which measures 10 indicators including rule 
of law, government spending, and market openness.\9\ As a result, 
immigration from El Salvador to the United States was low, and the 
economy was strong and growing.\10\ Job creation drove growth, 
decreased emigration, and poverty fell from 40% of the population in 
1996 to 20% in 2000.\11\ There many positive lessons from this previous 
era in El Salvador.
---------------------------------------------------------------------------
    \8\ Christina Perkins & Erin Nealer, ``Achieving Growth and 
Security in the Northern Triangle of Central America,'' CSIS, https://
csis-website-prod.s3.amazonaws.com/s3fs-public/publication/
161201_Perkins_NorthernTriangle_Web.pdf.
    \9\ Ibid.
    \10\ Ibid.
    \11\ Ibid.
---------------------------------------------------------------------------
 improving conditions and catalyzing private-sector investment in ntca
    Studies have shown that when countries reach the threshold of 
$8,000 GDP per capita, migration largely halts. Mexico surpassed this 
level of GDP per capita in 2005, which correlates with the beginning of 
major decreases in Mexican-U.S. migration.\12\ Though obviously 
significant, GDP per capita alone does not seem to be a compelling 
enough factor to slow migration. Other economic factors include 
increased trade and employment.\13\ In 2020, Guatemala reported per 
capita GDP at $4,600, while El Salvador recorded $3,800, and Honduras 
$2,400.\14\ It is interesting to note that the 3 countries of El 
Salvador, Guatemala, and Honduras provide $18 billion per year of trade 
with the United States, accounting for 53% of Central American trade 
with the United States, and producing 48% of Central America's GDP.\15\
---------------------------------------------------------------------------
    \12\ Erol K. Yayboke & Carmen Garcia Gallego, ``Out of the Shadows: 
Shining a Light on Irregular Migration,'' CSIS, August 2019, https://
csis-website-prod.s3.amazonaws.com/s3fs-public/publication/
190826_RundeYaybokeGallego_IrregularMigrations.pdf.
    \13\ Ibid.
    \14\ ``GDP per capita (current US$)--Latin America & Caribbean,'' 
World Bank, https://data.worldbank.org/indicator/
NY.GDP.PCAP.CD?locations=ZJ.
    \15\ ``About HUGE,'' HUGE, https://think-huge.org/about/.
---------------------------------------------------------------------------
    While I am a strong proponent of foreign assistance, the reality is 
that all foreign assistance (from the United States, the multilaterals, 
and others) as a%age of GDP in NTCA countries is very small, reaching 
at most less than 3% when one adds up all spigots of assistance from 
all official donors. Ultimately, dealing with the governance issues, 
confronting the security issues, and enacting pro-growth economic 
policies are the most important thigs to attract private investment. 
However, foreign assistance can help with these big challenges. Foreign 
assistance is an important catalyst and can fund things that others 
cannot: Economic reforms that encourage investments, anti-corruption 
programs, support for judicial reform and other governance programming. 
Foreign aid is important, but it needs to be focused and it needs to 
work in partnership with others. It should work particularly closely 
with the private sector.
    The Biden administration has taken a good step by convening the 
Partnership for Central America (PCA). PCA convenes a cadre of 
America's best companies, and it is an excellent start. Since May 2021, 
the Partnership for Central America has grown from 12 founding members 
to 75 companies and secured $1.25B in foreign investment. In just 9 
months, these projects are delivering significant results in digital 
access and financial inclusion with significant and scaled impacts 
forthcoming.
    Engaging the U.S. private sector is a critical initial step, but 
this must be done in conjunction with engagement of the local private 
sector in NTCA countries. One of the fastest potential tracks to 
achieve these aims would be to engage local companies in U.S. 
multinational company supply chains.
    Without painting with too broad a brush, I would argue that most 
who follow Central America closely in Washington have typically 
expressed a negative bias toward the local private sector in Central 
America due to fears of ``corrupt actors.'' I think we need to 
collectively rethink this bias in Washington against the local private 
sector in Central America. I don't want to be misunderstood: There are 
some bad actors in the local private sector in Central America just as 
there are bad actors everywhere, but we have to partner with the local 
private sector because they have been there the longest and largely 
make their lives and their livelihoods in the region.
    In this context I want to raise a new organization: HUGE, which 
stands for Honduras, United States, Guatemala, and El Salvador. HUGE 
convenes many leading local private sector companies and a growing 
number of multinational companies. The association promotes strategic 
investments in the Northern Triangle, taking advantage of competitive 
advantages in these countries.\16\ Over the next 5 years, HUGE aims to 
facilitate $10 billion or more in investments between Honduras, the 
United States, Guatemala, and El Salvador.\17\ HUGE's members and the 
association adhere to the highest ethical, social, and environmental 
standards. Thus, HUGE gives strong evidence that it is possible to 
conduct business responsibly and profitably in the NTCA linked with 
partners in the United States. This is encouraging to other companies 
looking to move supply chains from China to the Americas, which is one 
of the primary initiatives of HUGE.
---------------------------------------------------------------------------
    \16\ Ibid.
    \17\ ``Think HUGE,'' HUGE, https://think-huge.org/.
---------------------------------------------------------------------------
                   what can the united states ``do''?
    The overarching goal for the U.S. Government must be to support 
policies that create an attractive environment for private-sector 
investment in the Northern Triangle.
    So, what can the United States ``do''?
First, answer the mail on COVID-19
    The great ideas at this hearing will be a bit academic until we 
address the challenges brought by COVID-19. We must first address the 
need for vaccines in the region and the economic downturn resulting 
from the pandemic. A failure to address the vaccine shortage in 
countries like Guatemala leaves the country open to the influence of 
malign actors like China. Guatemala recognizes Taiwan. Unfortunately, 
Guatemala has a lower vaccination rate for a bunch of complex reasons 
that result in it waiting for non-Chinese vaccines. El Salvador 
recognizes the Mainland, and in return, China gave El Salvador 
approximately 1.5 million vaccine doses, which is significant even if 
they these vaccines are sub-par.\18\ There are large-scale vaccine 
campaigns on the border of El Salvador and Guatemala. The Guatemalan 
press says, ``if we only recognized the Mainland, we would get more 
vaccines.'' The United States can fix this by getting more vaccines to 
Guatemala. This same dynamic has played out in the Dominican Republic, 
which had initial plans to exclude Huawei from its telecom system. 
After receiving 20 million doses from China when it couldn't get 
Western vaccines for complicated reasons, the DR reversed its position 
and allowed Huawei to participate in its telecommunications market. The 
United States and our partners need to do more to solve Central 
America's COVID-19 problem.
---------------------------------------------------------------------------
    \18\ ``China, U.S. to send COVID-19 vaccine doses to El Salvador,'' 
Reuters, July 2, 2021, https://www.reuters.com/world/americas/us-
sending-15-mln-doses-modernas-covid-19-vaccine-el-salvador-2021-07-02/.
---------------------------------------------------------------------------
Second, help close the digital divide accelerated by COVID-19 in 
        Central America
    Additionally, the United States needs to focus greater development 
assistance on closing the digital divide in Central America. The 
digital divide has been exposed, accelerated, and exacerbated by COVID-
19. There are several barriers to increasing investment in broadband 
and other digital infrastructure including rural access, regulatory 
issues, and access to electricity. We have a number of soft power tools 
to help bring the digital economy of the future to more people in the 
region, helping to close the education gap, develop a more vibrant 
workforce, attract more private investment and jobs, and stem Northern 
migration. Either the United States and our allies will help close the 
digital divide in Central America or the Chinese Communist Party and 
Huawei will.
Third, let's get ``right'' with Guatemala
    Of the three countries, arguably Guatemala is the most reliable 
ally. If we want any progress, we need a develop a better relationship 
with Guatemala. Vice President Harris visited Guatemala. For reasons I 
do not understand, the Biden administration did not invite Guatemala to 
the Summit for Democracy. I would note that the Biden administration 
invited Pakistan (who declined) and India (who attended) while not 
inviting Guatemala. So, a simple thing would be to ``get right'' with 
the Giammattei administration. At the same time, we are mistreating 
Guatemala, a country that has been a good partner to us, I find it 
interesting that we are putting so much attention on the new Honduran 
government. Honduras has a new government that will either be: A 
reasonable social democracy or an authoritarian government along the 
lines of Venezuela or Nicaragua. I hope Honduras is a reasonable 
democracy. I just think we should pay as much attention to countries 
who are reliable partners.
Fourth, it's time to revisit and revise CAFTA-DR
    It has now been more than 15 years since CAFTA-DR first entered 
into force. The region looks very different today than it did in then. 
We should modernize intellectual property and digital economy 
provisions in CAFTA-DR, and we should bring the trade agreement up to 
standards comparable to those of the USMCA.
Fifth, let's partner with Mexico and others to repurpose the North 
        American Development Bank to help Central America
    The United States should expand the mandate of the Northern 
American Development Bank (NADB) to include Southern Mexico and the 
Northern Triangle. Mexico has expressed openness to pursuing such an 
expanded mandate. With a new authorization from Congress and a modest 
sum from the U.S. taxpayers, the NADB could help. The NADB could be 
considered as an avenue for a potential partnership between Mexico, the 
United States, and Canada to work in Central America.
Sixth, Mexico could be a more important trading partner to Central 
        America
    The level of trade between Mexico and Central America is unusually 
low. President ``AMLO'' of Mexico has expressed concern about the lack 
of development in Central America and Southern Mexico.
    In 2019, Mexico exported $2.2B \19\ to Guatemala (making it the 
Mexico's 15th largest export destination out of 151 countries), $915M 
\20\ to El Salvador (29th), and $775M \21\ to Honduras (33d). These 
numbers should be seen in the context of Mexico's trade with countries 
like Colombia, farther away, to which Mexico exported $3.7B in 2019, 
making the country Mexico's 12th largest export destination, and 
second-highest destination in Latin America after Brazil.\22\ There 
must be ways to address this.
---------------------------------------------------------------------------
    \19\ ``Mexico/Guatemala,'' OEC, https://oec.world/en/profile/
bilateral-country/mex/partner/
gtm#:?:text=Bilateral%20Trade%20by%20Products,%23permalink%20to%20'secti
on&text=In%- 
202019%2C%20Mexico%20exported%20%242.15B%20to%20Guatemala.,The%20main%20
- 
products&text=Beer%20(%2467M).,During%20the%20last%2024%20years%20the%20
- exports%20of%20Mexico%20to,exported%20%24571M%20to%20Mexico.
    \20\ ``Mexico/El Salvador,'' OEC, https://oec.world/en/profile/
bilateral-country/mex/partner/
slv#:?:text=Bilateral%20Trade%20by%20Products,%23permalink%20to%20'secti
on&text=In%- 
202019%2C%20Mexico%20exported%20%24916M%20to%20El%20Salvador.,The%20main
%20- 
products&text=(%2435.7M).,During%20the%20last%2024%20years%20the%20expor
ts%20- of%20Mexico%20to,exported%20%24159M%20to%20Mexico.
    \21\ ``Mexico/Honduras,'' OEC, https://oec.world/en/profile/
bilateral-country/mex/partner/
hnd#:?:text=Mexico%2DHonduras%20In%202019%2C%20Mexico,Toilet%20Paper%20(
%2433.1M).
    \22\ ``Mexico Exports By Country,'' Trading Economics, https://
tradingeconomics.com/mexico/exports-by-country.
---------------------------------------------------------------------------
Seventh, the United States should support a capital increase at the 
        Inter-American Development Bank under the right conditions
    Given the upcoming annual Inter-American Development Bank (IDB) 
shareholders meeting scheduled for next month, the United States should 
announce support for a capital increase for the IDB.\23\ The IDB hopes 
to increase sovereign lending to governments in the region from $12 
billion to $20 billion per year to respond to the historic needs of the 
region.\24\ The IDB has a significant private-sector lending arm that 
would also expand with a capital increase. With 30% of the shares, the 
United States essentially holds a veto.\25\ A capital increase, 
announced next month in Uruguay, could be a great component to a 
larger, positive hemispheric agenda that should be announced in June at 
the U.S.-hosted Summit of the Americas.\26\
---------------------------------------------------------------------------
    \23\ Daniel F. Runde, ``Decision time for the future of the IDB,'' 
The Hill, February 10, 2022, https://thehill.com/opinion/finance/
593629-decision-time-for-the-future-of-the-idb.
    \24\ Ibid.
    \25\ Ibid.
    \26\ Ibid.
---------------------------------------------------------------------------
    In return for a capital increase, the United States should insist 
on several things. Among other things, the IDB could allocate some 
grant monies for the Northern Triangle, fortifying the Biden 
administration's ``Root Cause Strategy.''\27\ Most important, the IDB 
should offer membership to Taiwan. As a member of both the World Trade 
Organization and the Asian Development Bank, there is little reason for 
Taiwan to be excluded from the IDB. Other new potential IDB 
shareholders should include India and Australia, Singapore, and the 
Gulf states.
---------------------------------------------------------------------------
    \27\ Ibid.
---------------------------------------------------------------------------
Eighth, the United States should allocate foreign aid to support 
        economic growth, good governance and ``lubricate'' shifts in 
        global supply chains toward Central America
    The United States will be spending billions over the next couple of 
years in the region. USAID can spend monies and provide expertise to 
support pro-growth economic policy reforms. USAID is currently 
providing $48 million over 3 years to increase economic opportunity in 
Guatemala.\28\ This funding aims to increase such opportunities by 
supporting private-sector entrepreneurs and innovators seeking 
technology-driven solutions to challenges in the region. USAID should 
expand these kinds of initiatives to other Central American countries. 
USAID also will spend monies on improving governance and security. 
Improving these issues are key to encouraging the private sector to 
invest. Also, the COVID-19 pandemic has provided an unprecedented 
opportunity for the United States to use foreign aid to ``lubricate'' 
global supply chains toward Central America, especially the Northern 
Triangle. Monies that are described as ``trade capacity building'' and 
``trade facilitation'' come to mind.
---------------------------------------------------------------------------
    \28\ ``FACT SHEET: U.S.-Guatemala Cooperation,'' White House, June 
7, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/
2021/06/07/fact-sheet-u-s-guatemala-cooperation/.
---------------------------------------------------------------------------
    Our foreign assistance should be done more intentionally in 
partnership with the private sector.
    Perhaps USAID might consider that 30% of its monies be leveraged by 
the private sector. USAID and other 150 account agencies to do more co-
creation with the private sector, especially on initiatives that foster 
trade, connect local companies to U.S. supply chains, and help close 
the digital divide.
Ninth, the DFC, EXIM and USTDA (and maybe MCC?) have important roles to 
        play
    The DFC should be providing credit insurance to the private sector 
to lend in Central America. There is a lot of investment money for the 
larger region but less for Central America. There are a limited number 
of bankable projects in Central America which means that the DFC needs 
to work closely with USAID and others to provide technical assistance 
to make projects ``bankable'' for the DFC. If the DFC does not have 
``deal maker'' based in Central America, they should.
    EX-IM has a role to play as well.
    USTDA is the best-kept secret in the U.S. Government and can make 
contributions in Central America by accelerating and catalyzing 
investments in the digital, ``hard'' infrastructure, and energy 
sectors.
    Given the attention from the Biden administration, does a new 
government in Honduras merit another look from the MCC? If the Biden 
administration wanted to ``get right'' with Guatemala, would a new 
partnership with the MCC be a way to signal that?
Tenth, leverage the flow of remittances to Central America
    Remittances are crucial to the economic health of Central America, 
have a much greater impact than foreign aid, and remittances to the 
region are 15 times higher than all forms official development 
assistance.\29\ Therefore, the United States should support policies 
and innovations that leverage remittances.
---------------------------------------------------------------------------
    \29\ REMITTANCES IN CENTRAL AMERICA: THE ROLE OF CABEI,'' CABEI, 
2021, https://www.bcie.org/fileadmin/user_upload/
Remittances_in_Central_America_the_Role_- of_CABEI.pdf.
---------------------------------------------------------------------------
                               conclusion
    In conclusion, there is neither a ``magic bullet'' nor an ``out of 
the box'' solution to the problems of the Northern Triangle. Most of 
the solutions are relatively straightforward but politically hard and 
involve a mixture of economic, development, political, and security 
reforms. The problems of the region are, in fact, solvable, but they 
require sustained attention from the United States, political will in 
these countries, including cooperation from elites in these societies, 
and ultimately strong and inclusive economic growth to go with 
strengthened governance. However, this growth can only come about with 
real citizen security, reduced gang violence, and a new social contract 
that brings together all sectors of society and government.\30\
---------------------------------------------------------------------------
    \30\ Daniel F. Runde & Mark L. Schneider, ``A New Social Contract 
for the Northern Triangle,'' CSIS, May 8, 2019, https://www.csis.org/
analysis/new-social-contract-northern-triangle.
---------------------------------------------------------------------------
    Mass migration from the Northern Triangle to the United States will 
significantly decline when:
   GNP per capita reaches around $8,000, which is slightly over 
        double the current GNP per capita;
   Transnational crime, drug trafficking, and gang violence and 
        activity are significantly reduced;
   The social contract is reset and basic needs such as jobs, 
        education, health, infrastructure, and power are reliably 
        delivered.
    Economic growth is possible in Central America's poorest countries, 
but we cannot manage or ``solve'' the challenges of Central America 
without the private sector and especially the local private sector.

    Mr. Correa. Thank you very much.
    I thank all the witnesses for your testimony.
    I will remind the subcommittee that each one of us will 
have 5 minutes to question the panel. I will recognize myself 
for 5 minutes of questions.
    First of all, Mr. Runde, I totally agree with you, with 
your thoughts. I also agree with our Ranking Member, Mr. 
Meijer, when he talks about challenges that we have.
    Bigger picture, though, I look at the United States, we are 
always managing by crisis. In my years in Congress, you are 
always running from one issue to the other, always putting out 
fires.
    We have essentially ignored Central America, Latin America 
for 50 years. We only look when there is a little bit of smoke, 
and then by then there is a big fire and things get out of 
control.
    We are going to continue in this country, I presume, to 
operate crisis management. So what we need to do is try to 
figure out how to continue to focus right now on Central 
America.
    We talk about wide-spread violence, fragile democratic 
institutions, poverty, inequality, big issues that are going to 
take a long time to fix.
    Yet, what I want to do today is start by asking all of you, 
what can we do as a Government, as a legislative body, to make 
sure that you are successful? In my opinion, this $1.2 billion 
that has been committed to be invested in Central America will 
make a splash if the results are spectacular.
    So what do we do? Do we get out of the way? Do we help you? 
What are the things that we can do to make sure that you are 
successful right now?
    I will start out with Mr. Warlick from Parkdale.
    Mr. Warlick. Well, thank you very much.
    But I think there are several things. One of the things, 
this opportunity that we have right now to reshore as we talk 
about some of the issues with the supply chains breaking down, 
this is one of the greatest opportunities to industrialize the 
region.
    I would ask that we do everything we can to protect that, 
make this region first among any equal, give this region the 
trade preferences, and help keep it from predatory practices 
that have damaged a lot of manufacturing in the Western 
Hemisphere.
    Mr. Correa. Let me interrupt you, Mr. Warlick. As you know, 
we were looking at some legislation dealing with the rules of 
origin, products in CAFTA, and your industry had some concerns.
    My issue is I want you to make products that Americans want 
to buy. We need to have some of those synthetic materials, 
either American-made or Central American.
    How fast can we get you up and running so that we can 
continue to nearshore, get this stuff from the Americas?
    Mr. Warlick. Well, these investments are coming in now, and 
those synthetic products are already made here. In fact, we own 
a synthetic--we just bought a synthetic manufacturing plant 
that is brand-new right there in San Pedro Sula, Honduras.
    So that investment is going into the region. There is more 
investment going into El Salvador right now for that polyester 
that you are talking about.
    The problem you have if you open up the agreement, then 
what it does is it allows people to dump product in from China 
and other places which undermines----
    Mr. Correa. Mr. Warlick, I don't want to open up the 
agreement. What I want to do is help you get up and running as 
quickly as possible. What can I do as the Government to help 
you get there?
    Mr. Warlick. Well, I think right now the region has grown. 
I mean, if you look at the capacities this year, we are up in 
some cases 53 percent in some of these countries.
    So adding capacity is what we are all trying to do right 
now, because we recognize that there will be people that want 
to nearshore, so we have to build this production.
    But that goes back to talking about financing, talking 
about working together with the different agencies to be able 
to help look at these projects, and some infrastructure.
    Daniel talked a little bit about that. There needs to be 
some coordination in the region on infrastructure, and there 
needs to be coordination between the countries in that region, 
whether it is on their borders, and paperwork going back and 
forth on products, going from one country to the next, coming 
to the United States. That needs to be streamlined.
    So things like that, that the United States can lead in, 
would be very, very helpful.
    Mr. Correa. Are there infrastructure issues? Are the ports 
sufficient for you? Railroad lines? Are those issues or not for 
you?
    Mr. Warlick. Those are issues. The ports are very, very 
small. The rail is nonexistent. Then there is always a 
challenge on energy, the energy grid there.
    But we are investing privately in some of these things, and 
the private sector is investing in some of these things, 
particularly with energy.
    So, yes, there are infrastructure issues.
    Mr. Correa. Thank you.
    I am running out of time, so I will conclude there and 
recognize our Ranking Member for his line of questions.
    Welcome, sir.
    Mr. Meijer. Thank you, Mr. Chairman.
    Thank you to all of our witnesses here today for sharing 
your remarks earlier.
    We certainly have a very comprehensive list of expertise in 
the region, heavily weighted toward the private sector, which I 
think we agree is where a lot of those economic opportunities 
can be born.
    But I also appreciate Mr. Runde's experience at CSIS and 
experience in policy, focusing on U.S. economic and diplomatic 
engagement.
    On that note, Mr. Runde, you are currently involved with 
Vice President Harris' Call to Action, the initiative we were 
speaking of earlier, but in that advisory capacity.
    Could you please speak a little bit more about your role 
and what that initiative truly involves?
    Mr. Runde. Well, I think it is a great start. I think that 
Vice President Harris convening some of America's leading 
companies has been a really good start.
    I was asked recently, about a month ago, to join. I have a 
background working at USAID. I worked in investment banking and 
commercial banking. I have had a lot of experience around 
private enterprise and also the role of government and the 
private sector working together.
    I have just recently signed on as an adviser to them. So I 
haven't had a chance to do much in terms of on a day-to-day 
basis. But I agreed to do it because I really respect the team 
that they have pulled together. I respect what the Vice 
President is trying to do. I have great respect for all the 
companies that have been convened.
    I know there are a number of things that they are looking 
at in terms of--there are a couple of things that they are in.
    One is that PCA is in the process of finalizing a rule of 
law pledge, so that we don't just have more business, but we 
have better business.
    But also I know that PCA is fleshing out a large-scale 
concept on farmer insurance for the 2 million small farms 
across all 3 countries.
    Then, finally, I just want to flag something else. There is 
an important role for companies through large-scale civic 
service programs which could inspire tens of thousands of young 
people across the population.
    So the Howard G. Buffett Foundation and Glass Wing 
International launched something called the Central AmeriCorps 
Initiative to harness the power of young people in the region 
to increase rootedness and work to improve their home 
communities.
    So these are things associated with PCA. So I am quite 
optimistic about it. I thought it was very important. I think 
it has gotten a lot of attention to the region.
    I think, a little bit to Congressman Correa's standpoint, 
that we have an ADD relationship with the region. I think we 
need to bring in various stakeholders, for you to bring in the 
American private sector. Having someone of the prominence of 
Vice President Harris drawing, putting a spotlight on American 
business, and bringing in--beginning to bring in local 
businesses is very important.
    I actually, frankly, think this series of 4 hearings that 
Chair Correa has convened, along with you, Congressman Meijer, 
actually I want to just congratulate you and thank you for 
doing this.
    We don't spend enough time, or we have sporadic kind of 
one-off things. It is clear that you all are taking a very 
thoughtful and serious approach to this. So I just want to 
applaud your service on this and just say thank you for 
continue doing a sustained attention on this.
    So we need sustained attention. PCA is part of that. But, 
ultimately, the problems of the Northern Triangle, of these 3 
countries, is going to require sustained attention over 
multiple administrations. We need to make a 10- or 15-year 
commitment to the region. The problem is we have kind-of 10-
week or 15-week.
    So I just think this sort of effort that the Congress is 
doing by convening a series of hearings is very, very 
important. The efforts that Vice President Harris is doing are 
important, as well as other initiatives, such as HUGE.
    Mr. Meijer. Thank you, Dan.
    I think the Chairman and I agree strongly on just the 
challenges of that attention span component, but also making 
sure that we are thinking longer-term down the road. We have 
problems today, but we can also be working to mitigate the 
problems down the line.
    I guess one of the things that comes up and becomes a 
challenge in mediating between those two are political changes 
and leadership changes within the region and within the 
Northern Triangle.
    On that question, are you at all concerned with the recent 
change in power in Honduras and how that may impact the Call to 
Action's goal addressing some of those root challenges?
    Mr. Runde. Yes. Thank you for that.
    So, first, let me just reiterate that our best partner in 
the region is Guatemala. I thought it was a missed--I am going 
to put it this way--I thought it was a missed opportunity that 
we did not invite the Guatemalans to the Democracy Summit. We 
invited India, and we invited Pakistan. Pakistan took a flyer 
and said no, and India came.
    So there are lots of country in the world we have issues 
with that were invited to the Summit for Democracy. So I am 
sure someone can explain to me why Guatemala wasn't invited, 
but I thought that was a blooper. So I think we ought to get 
right with Guatemala.
    In terms of Honduras, I thought it was quite significant 
that Vice President Harris led the delegation for the swearing-
in of Xiomara Castro.
    So I think there are sort-of two directions that Honduras 
could go. It could go in the direction of a responsible social 
democracy, progressive social democracy, and that would be my 
hope, at least under her administration, or it could go in some 
worse direction.
    So I understand why the Biden-Harris administration is 
investing so much effort in Honduras. We are going to have to 
work with Xiomara Castro for the next 4 years.
    I was really pleased to see that the U.S. Senate, I 
believe--I don't want to say they have confirmed yet. We have 
an ambassador who had a hearing, I think last week, to 
represent Honduras. I think it is the first time we have had an 
ambassador, a sitting Ambassador to Honduras.
    So one thing we could do is confirm a qualified person, 
like this very qualified senior foreign service officer that we 
are going to be sending to Honduras.
    So I think engagement of Honduras is good. I think we need 
to be cautious, trust but verify. But I think we have extended 
our--and I think we need to--we do have to engage with the 
Honduran government. I think our best partner is Guatemala. We 
should trust but verify with Honduras.
    Mr. Meijer. Thank you, Dan.
    With that, Mr. Chairman, I yield back.
    Mr. Correa. Thank you, Mr. Ranking Member.
    I would now like to recognize Ms. Titus for 5 minutes of 
questions.
    Welcome, Congress Member Titus.
    Ms. Titus. Well, thank you, Mr. Chairman. Thank you holding 
this hearing.
    I serve on the subcommittee of Foreign Affairs for the 
Asian and South Pacific, and we had some conversation there 
about expanding the Development Finance Corporation so that you 
could take in some of those island countries.
    I wonder if the countries that we are talking about in the 
Northern Triangle already qualify for that assistance. Even if 
they do, are there ways that we might change or expand or 
encourage more participation by that group to help finance some 
of these investments that we need in this area?
    Anybody?
    Mr. Runde. I am happy to take this, Chair Correa, but I 
want to see if the other witnesses want to comment on this 
first before I do.
    Mr. Correa. Anybody want a stab at it? Or, Mr. Runde.
    Ms. Rivas. Hi. Hello.
    Mr. Correa. Well, go ahead.
    Ms. Rivas. Yes. So I think that your question--and thank 
you, Congresswoman, for the question--is relevant to one of the 
key challenges that has been mentioned here, and that is the 
need for infrastructure. The question was asked. It is one of 
the 3 main challenges we have identified for growth in the 
region and for actually realizing these investments and to be 
able to invest more.
    So energy, ports, roads, and resources that can be directed 
to that. But not only that, but those resources should also be 
along working on digitalization, bringing response into the 
systems, and making sure that those investments that 
organizations like the Development Finance Corporation and 
others can make in the region also work to improve trade within 
Central America.
    I just wanted to bring that to your attention as well.
    Thank you.
    Ms. Titus. Well, that reminds me of another point. As the 
Chairman said, we have ignored this area for so long. When we 
step back, it creates a power vacuum and China moves in.
    We see China's Belt and Road has expanded much beyond their 
neighborhood. They are building the port in Lima. So I am sure 
maybe y'all see some investment of China in this infrastructure 
if we are not there to help with things like this finance 
corporation.
    Anybody?
    Mr. Runde. Congresswoman, Amen. Thank you so much for 
flagging this. Absolutely.
    If we leave a void, China is going to fill that vacuum, 
whether it is digital infrastructure, whether it is hard 
infrastructure, whether it is vaccines, whether it is values. 
They have the ability now, they have enough mass and enough 
ability to fill in ways 20 years ago they couldn't.
    So you are seeing this. In Central America you are seeing 
this. El Salvador used to recognize Taiwan. They flipped to the 
mainland.
    The Chinese are using vaccine diplomacy. So the level of 
vaccination that Guatemala has is half of what El Salvador has 
because China has given El Salvador their crappy vaccine.
    So they have sort-of 60 percent, mas o menos, levels of 
vaccination, maybe a little bit higher, and Guatemala is less, 
because for a whole bunch of complicated reasons they have got 
to go to the back of the line to get the top-shelf stuff from 
us. There are a lot of asks on the top-shelf stuff. It is a 
longer conversation.
    But the point is--and so they have had China and El 
Salvador doing large-scale vaccine campaigns on the El 
Salvador-Guatemala border. So the Guatemala press says, well, 
if we would only--it is like in the Bible with that, the Devil 
tempting Christ. It is like if you would only recognize the 
mainland, you could get all these crappy vaccines.
    So we need to respond across a series of vacuums. One of 
them absolutely is digital; another one is hard infrastructure.
    You are seeing this in ports and energy. I agree with Mr. 
Warlick's comment about having a regional approach to energy 
and infrastructure.
    The DFC is an important instrument, it is not enough, but 
it is an important instrument. There are a number of--there is 
lots of monies for green projects, but less for sort-of other 
kinds of activities.
    So I think one of the things we need to think about is 
making sure we have enough technical assistance for the 
Development Finance Corporation. That is in essence sort-of 
like expertise to kind-of make projects what they call 
bankable, or to kind-of fix projects up to make them more 
attractive or to make them attractive to the private sector.
    So sometimes it is about technical assistance, and 
sometimes it is about making sure that we have people that can 
kind-of generate deals.
    We need to enable an alternative to China. We don't have to 
meet China dollar for dollar. We are not going to meet China 
dollar for dollar through the DFC. The DFC is an important 
instrument. It needs to work with things like AID.
    We could put the Inter-American Development Bank on 
steroids. We could put the North American Development Bank and 
repurpose it to focus on those 3 countries as well as the U.S.-
Mexican border, the southern Mexican border.
    We could also be using instruments like the U.S. EXIM Bank, 
USTDA, and also the MCC, the Millennium Challenge Corporation. 
We have a new, very fine leader of the Millennium Challenge 
Corporation confirmed by the Senate.
    We ought to maybe perhaps take a look at--another look at 
Honduras or Guatemala for Millennium Challenge Corporation 
investments.
    Over.
    Ms. Titus. Thank you.
    Thank you, Mr. Chairman.
    Mr. Correa. Thank you, Ms. Titus.
    Again, I will recognize Mrs. Harshbarger for 5 minutes of 
questions.
    Welcome, ma'am.
    Mrs. Harshbarger. Thank you, Chairman.
    Thank you, witnesses, for being here.
    Mr. Warlick, Parkdale employs 455 full-time employees at 
your Mountain City facility, which is in my district. I want 
you to know I visited that facility, and it was top-notch. I 
learned so much about what you do. Those workers are dedicated 
and it is a wonderful facility. Just letting you know that. It 
is a wonderful place.
    I learned a lot reading your testimony, sir, that your 
company is the largest domestic consumer of U.S. cotton--of 
U.S.-grown cotton per year, which is amazing, 755 million 
pounds.
    I have also learned that you have become one of the Federal 
Government's largest domestic suppliers of PPE products in the 
country, and that is great because we need allied countries, 
like the Triangle countries, instead of depending on China for 
PPE.
    I have been in the pharmacy world for 35 years, and we saw 
nothing greater than what we needed to survive during the 
pandemic, our medications, our PPE products, come from an 
adversarial nation. So it is wonderful that you are stepping up 
to do that, sir.
    Also in your testimony you talked about the newly-announced 
investment in Honduras, and it won't only create new jobs in 
that country, but will also help support Parkdale's 
manufacturing jobs here in the United States.
    In your testimony you said, ``The success of Parkdale's 
operations in the U.S. is entirely dependent upon the success 
of our supply chains domestically and throughout the region,'' 
which I totally agree with.
    If you would, explain in a little more detail how your U.S. 
facilities and workers, included in my district, benefit from a 
strong co-production chain between the United States and 
Central America, sir?
    Mr. Warlick. Well, thank you very much, and I appreciate 
those kind words. We are so excited to be in Tennessee. That is 
a wonderful place to operate and a wonderful group of people 
that we have there. I was delighted that you got to go through 
that operation.
    The co-production chain that we have is critical because 78 
to 79 percent of what we make is exported to that region to 
support customers there that are knitting fabrics or weaving 
fabrics and having them cut and sewn and they come back to the 
United States.
    So this co-production chain is very, very important for the 
U.S. textile industry, because most of the textile industry, 70 
to 80 percent, is exported there. The rest would probably be 
going into the NAFTA region.
    But it is critical. That is what enables us to buy that 
much U.S. cotton and convert it here and then ship those yarn 
cones on containers to Central America.
    We also have factories in Central America that help 
subsidize that capacity as well, and the new plant will do just 
that. We will be upgrading some of our operations in the United 
States, putting in some more robots, some more robotic 
factories. And will also be investing in Central America to be 
nearby to be able to be a quicker response, have warehousing 
facilities there to support our domestic locations.
    Mrs. Harshbarger. Well, I have said this all along, if we 
can't produce it here in our country, we need to go to allied 
countries, and especially those who need help, in order to be 
more self-sufficient in everything, not just what you do, but 
in everything.
    So I loved touring that facility. When I saw the automation 
and some of the robotics that you had and how they spin that, 
to me, it was simply--it was--I mean, it was art, basically, 
when you look at that. They gave me some products to bring home 
just to see what they did.
    It is a wonderful facility. I would tell any of my 
colleagues to go tour one of your facilities. I would love to 
go on a codel over there to see how these things work.
    Mr. Warlick. We would love to have you. One of the most 
impressive things I have heard from you and the Chairman is the 
fact that there is a recognition that maybe we have 
underinvested in this area, because it is in our backyard, 
these are our neighbors.
    Let's think about these are Americans. These are 
Americans--North America, Central America--these are Americans 
here. I am glad to hear that we should be viewing this area as 
first among any equal as far as development and building up.
    So thank you for your interest.
    Mrs. Harshbarger. Well, no worries. I will see you shortly, 
again, I am sure.
    With that, I yield back, sir.
    Mr. Correa. Mrs. Harshbarger, great questions. I just want 
to say we are planning to put together a codel. The states keep 
shifting on us. But we do want to go in and ask the questions 
of these wonderful people and tour.
    I think Mr. Warlick is absolutely correct. These are 
Americans. If you think of the remittances of the folks from 
that area that live in the United States that send money back 
on a periodic basis, that is a great revenue stream for those 
countries.
    A lot of folks live, like I say, with one foot in the 
United States and one foot in Central America. So we do have to 
focus on these issues. But like I mentioned earlier, just 
trying to get beyond management by crisis.
    So if I can, that is our first round of questions. Are you 
folks OK if we go for a second round of questions?
    Mr. Ranking Member, are you OK with that?
    Our witnesses?
    So if I can, then, let me ask all of you. Pepsi, you have 
got a hundred years of history. Cargill, you have got, I think 
you said, 50 years of history. All of you there have knowledge 
about how things are working where the rubber meets the road.
    Do you feel like we, as a Government, reach out and hear 
your opinions and we are making policy in Central America?
    Mr. Christenson.
    Mr. Christenson. Sure, yes. I mean, thank you for the 
question, Mr. Correa.
    I would say, in general, and I will lead into this by 
trying to answer your last question, too, I think, in general, 
we are a Fortune 50 company, and so when we look to invest and 
build, I mean, we look to do that within the resources of our 
own company.
    I would say in the region what we hear from the business on 
the ground is that, yes, there are challenges. I mean, we are 
still committed to continue expanding. All the commitments that 
we made, we plan to honor.
    But security issues and, I think, the lack of legal 
certainty, those, I think, just as a practical matter, those 
increase the cost of doing business, and those can represent a 
barrier to further investment. I think, again, over the last 3 
years what we hear from our business there, that they have 
noticed a significant increase in activities that can be a 
deterrent.
    So I would say we have taken the steps of engaging 
extensively with the local Northern Triangle governments. 
Fundamentally what we need there is----
    Mr. Correa. Mr. Christenson, let me interrupt you.
    Mr. Christenson. Yes.
    Mr. Correa. You said you have issues. The security issue, 
the violence issue, that is a tough one. I will put that one 
aside for a moment.
    But let's focus on maybe one that we can help with, which 
is a certainty of investment in the area, the rule of law and 
predictability, so to speak, when it comes to your investments, 
and figuring out the business climate that you will be 
operating in and under.
    Can we as a Government reach out and help you clear that 
road, not to impose on anybody's sovereignty, but to say, these 
are American investors under possibly a rule of treaty, a 
something? Can we come up with an understanding, government to 
government, that this is the way we will respect your 
investment by your country's entities in our area?
    Is that something we can do? Can we do something?
    Mr. Christenson. Right. Something that we hear from our 
businesses certainly in the region having the U.S. Government 
echoing our voice with the regional governments. We would love 
to work with you on what form that takes. That could certainly 
be helpful. So, yes, Mr. Correa, we would love to work with you 
on that.
    Mr. Correa. Again, Mr. Christenson, and I will tell all of 
you that 2 years ago when I went to Central America I committed 
to going back in 6 months and it has been 2 years. All of us 
know that in the middle of that we got COVID, we have all kinds 
of crises.
    But I do hope we focus in and make a long-term commitment. 
It is not about Central America; it is about the United States 
and making sure we have stable economies south of us.
    Any other? Some of the witnesses, can you care to comment 
on that? Is there anything the Government can do to help you in 
terms of stability, predictability of your investments in 
Central America?
    Ms. Rivas. Chairman Correa, you call out issues that are 
key for certainty, predictability. I think that technical 
assistance was mentioned before that could be transferred to 
governments. I think policy. In terms of policy, we work with 
local chambers to bring the messages to the local governments, 
but we also link to the U.S. Chamber to bring those messages to 
the United States as well.
    So I think the partnership itself and one of the reasons, 
and I think Mr. Runde mentioned this as to why he has been part 
of this, is because we see this potential to bring together the 
U.S. Government, our concerns, the issues we have identified, 
and work with the local governments.
    We have, as it was mentioned by my colleague from Pepsi, we 
work with the local governments, we bring our expertise, we 
bring our concerns, we bring examples, but actually supporting 
them with experiences and with the assistance and the 
investment.
    But as I mentioned before, investment in infrastructure, 
but also investment in digital tools and investment in bringing 
more transparency to the system. It could be as simple as 
defining, what is the key process for a value chain? How do you 
make that digital? How do you create a system? How do we all, 
businesses and the different institutions, have access to that 
and try it out and put it to work?
    We have some pilots, but I think the partnership is also 
about scaling these pilots that have shown some good results in 
the region.
    Mr. Correa. Thank you.
    Mr. Warlick or Mr. Runde.
    Mr. Warlick. Thank you, Mr. Chairman.
    What I would say is we appreciate, our industry appreciates 
the efforts by the administration and also USTR in giving us 
certainty on the rules of origin, because it just unlocked $900 
million worth of investments there that are going to be 
critical for the reindustrialization of the area.
    So thank you very much for that.
    Mr. Correa. OK.
    Mr. Runde.
    OK. I think my 5 minutes are up.
    Anybody else up for 5 minutes of questions?
    Going once? Going twice?
    I would like to thank our witnesses today for your 
testimony, and Members for your questions, and the witnesses 
for answering.
    Ms. Titus, did you have some questions?
    Ms. Titus. Well, thank you, Mr. Chairman.
    I would just say, as we continue to look at development in 
this area, we should keep in mind the Vice President's call for 
including women in the development and employment 
opportunities.
    We see little microeconomies sometimes. It is usually in 
the area of handicrafts where women get together and do weaving 
or whatever. You see them in imported shops here. But I think 
there are broader opportunities.
    We know women are agents of change, whether we are talking 
about fighting corruption in government or making investments 
at the local level or with campesinos who have no land of their 
own. So let's always remember to focus on them going forward, 
too.
    I thank you, Mr. Chairman, for having this hearing.
    Mr. Correa. Thank you very much.
    I just want to warn the witnesses I will probably be 
calling on you to talk a little bit more as we prepare our trip 
to Central America.
    Mr. Warlick, again, thank you very much for your policy 
recommendations and thoughts because, as you know, those are 
some of the issues that we were looking at just recently and we 
will continue to look at.
    Mr. Warlick. Thank you, sir.
    Mr. Correa. I want to, again, thank all of you.
    Before adjourning, I ask for unanimous consent to submit a 
statement letter to the record from Microsoft on their 
investments in response to the Call to Action effort.
    Without objection, so admitted.
    [The information follows:]
  Statement From Kate Behncken, Vice President and Lead of Microsoft 
                 Philanthropies, Microsoft Corporation
                           February 17, 2022
    Chairman Correa and Ranking Member Meijer, thank you for the 
opportunity to submit a statement for the record as you consider 
private-sector investments in the Northern Triangle.
    Microsoft has a long-standing presence in the Northern Triangle, 
first opening an office in Guatemala in 1995 and soon following with 
operations in El Salvador and Honduras. Through our presence and work 
in this area, Microsoft has developed a deeper understanding and 
perspective of regional dynamics. We are committed to promoting 
economic opportunity in these countries through increasing broadband 
access and providing digital skilling. As a key part of this work, in 
July 2021 Microsoft, working with numerous other companies, and through 
the Partnership for Central America, joined together to answer Vice 
President Harris' call to action to promote economic opportunity and 
address urgent challenges in the region.
    Having access to affordable high-speed internet and the skills 
necessary to unlock the power of connectivity is critical to 
participating in the global digital economy. The past 2 years have made 
clear that broadband and skills are vital to education, productivity, 
collaboration, and communication around the world. Broadband can play 
an influential role in invigorating the economy and building a brighter 
future for people in the region. Unfortunately, these countries fall 
short of the regional benchmark for broadband: Broadband penetration in 
El Salvador is 57 percent, Guatemala is 41 percent, and Honduras is 37 
percent. The broadband gap, or digital divide, disproportionately 
impacts rural areas where fiber and mobile wireless networks are less 
prevalent due to smaller populations and lower density. This lack of 
broadband access in rural areas exacerbates the challenges inherent in 
fostering local economic empowerment, 21st-Century skilling, and 
inclusive access to on-line information, services, and solutions.
    The Microsoft Airband Initiative works in tandem with regional 
partners to close the digital divide and bring high-speed internet 
connectivity to unconnected communities world-wide. Through these 
partnerships, we are on track to catalyze broadband access for 4 
million people by 2024 and to date 1.5 million people now live within 
the footprint of new networks being established through our work with 
regional partners. And broadband access is just the first step: 
Microsoft has expanded its collaboration with New Sun Road and USAID to 
establish solar-powered digital community centers to provide broadband, 
digital skills, devices, educational experiences, and mentorship to 
women and young people in rural and high-migration areas. Eleven of 
these community hubs are managed by women from the local communities 
are already operational in rural Guatemala. We are committed to having 
20 community hubs up and running in the country by July 2022.
    It is also vital that people learn digital skills so they can 
leverage connectivity whether for education, work, entrepreneurship, or 
other opportunities. Microsoft launched a global skilling initiative in 
2020 to help people around the world get access to digital skills 
needed for jobs of today and tomorrow. Through this initiative we have 
reached more than 53,000 people in El Salvador, Guatemala, and Honduras 
with top learning paths in customer service and IT support.
    Building on this global skilling initiative, Microsoft will commit 
to training over 100,000 people in the next 3 years, equipping them 
with soft, technical, and digital skills needed for in-demand roles. We 
deliver this training, both on-line and in-person, through our 
partnerships with regional nonprofits. Our goal is to build 
partnerships with other companies so together we can develop a scalable 
model to train 1 million people in the region by 2026.
    Microsoft will continue its commitment to help communities in the 
Northern Triangle gain access to jobs and economic opportunities to 
earn a living and thrive. We continue to partner with other private-
sector entities, non-profits, and the Government to achieve these 
important goals.
    Thank you for seeking Microsoft's views regarding economic 
development in the Northern Triangle and we look forward to discussing 
this important matter with the subcommittee in the future.

    Mr. Correa. Members of the committee will have additional--
if they have additional questions, we ask that you respond, 
submit them to our witnesses, and the witnesses to please 
respond expeditiously in writing to those questions.
    The Chair reminds Members that the committee record will 
remain open for 10 days.
    Without objection, this committee stands adjourned.
    Thank you very much.
    [Whereupon, at 3:14 p.m., the subcommittee was adjourned.]

                            A P P E N D I X

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      Questions From Chairman J. Luis Correa for Anderson Warlick
    Question 1a. Through Vice President Harris's Call to Action, 
Parkdale Mills announced that it is investing $150 million to build a 
new yarn spinning facility in Honduras to support the region and expand 
operations in Virginia.
    When will those investments be fully implemented?
    Answer. We are near completion in our Hillsville VA location and 
under construction in Honduras. We expect Phase 1 will be complete in 
the 4th quarter of 2022, and Phase 2 will be complete in the 2nd 
quarter of 2023.
    Question 1b. What types of yarns will be produced by those 
facilities?
    Answer. Our new investments will be suitable for cotton, cotton/
synthetic, and synthetic short staple yarns. Our equipment will be able 
to spin cotton, polyester, nylon, acrylic, rayon, Tencel, and support 
our advanced material initiatives.
    Question 1c. What percentage of yarn produced by those facilities 
will be for apparel?
    Answer. The yarns we are currently producing in Hillsville VA are 
for apparel end uses and we expect the same for Honduras. The equipment 
specifications would allow us to service a wide range of markets.
    Question 1d. Will the yarn produced by those facilities be 
available on the market for purchase?
    Answer. Yes.
    Question 2a. In your testimony, you mention that nearshoring and 
onshoring are critical production chains amid a global supply chain 
crisis and that Parkdale Mills welcomes the opportunity to be a 
solution to brands and retailers seeking to recalibrate their supply 
chains.
    Please describe any partnerships you have with U.S.-based brands 
and retailers in the Northern Triangle.
    Answer. Parkdale has long-standing relationships with many 
recognized manufacturers and brands in the NT. These partnerships 
operate under contracts of varying lengths of time and terms. We do not 
have any contracts with retailers at the moment. Over the years, we 
have met with many retailers and brands and in the past very few have 
wanted to manage their supply chain back to the yarn source.
    Question 2b. Would you be open to expanding your partnerships to 
support a shift in production to the Western Hemisphere and the United 
States?
    Answer. We are encouraged by the shift in demand coming to the WH 
and Parkdale is very open to the expansion of our current plans.

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