[Senate Hearing 117-647]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-647

                      THE STRATEGIC BENEFITS OF A
    MULTILATERAL APPROACH TO TRADE POLICY IN THE ASIA-PACIFIC REGION

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

                                HEARING

                               BEFORE THE

       SUBCOMMITTEE ON INTERNATIONAL TRADE, CUSTOMS, AND GLOBAL 
                            COMPETITIVENESS

                                 OF THE

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION
                               __________

                             JUNE 22, 2021
                               __________


                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                     
                                     

            Printed for the use of the Committee on Finance

                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
51-818-PDF                 WASHINGTON : 2023   


                          COMMITTEE ON FINANCE

                      RON WYDEN, Oregon, Chairman

DEBBIE STABENOW, Michigan            MIKE CRAPO, Idaho
MARIA CANTWELL, Washington           CHUCK GRASSLEY, Iowa
ROBERT MENENDEZ, New Jersey          JOHN CORNYN, Texas
THOMAS R. CARPER, Delaware           JOHN THUNE, South Dakota
BENJAMIN L. CARDIN, Maryland         RICHARD BURR, North Carolina
SHERROD BROWN, Ohio                  ROB PORTMAN, Ohio
MICHAEL F. BENNET, Colorado          PATRICK J. TOOMEY, Pennsylvania
ROBERT P. CASEY, Jr., Pennsylvania   TIM SCOTT, South Carolina
MARK R. WARNER, Virginia             BILL CASSIDY, Louisiana
SHELDON WHITEHOUSE, Rhode Island     JAMES LANKFORD, Oklahoma
MAGGIE HASSAN, New Hampshire         STEVE DAINES, Montana
CATHERINE CORTEZ MASTO, Nevada       TODD YOUNG, Indiana
ELIZABETH WARREN, Massachusetts      BEN SASSE, Nebraska
                                     JOHN BARRASSO, Wyoming

                    Joshua Sheinkman, Staff Director

                Gregg Richard, Republican Staff Director

                                 ______

                 Subcommittee on International Trade, 
                  Customs, and Global Competitiveness

                  THOMAS R. CARPER, Delaware, Chairman

RON WYDEN, Oregon                    JOHN CORNYN, Texas
DEBBIE STABENOW, Michigan            CHUCK GRASSLEY, Iowa
ROBERT MENENDEZ, New Jersey          JOHN THUNE, South Dakota
BENJAMIN L. CARDIN, Maryland         ROB PORTMAN, Ohio
SHERROD BROWN, Ohio                  PATRICK J. TOOMEY, Pennsylvania
MICHAEL F. BENNET, Colorado          TIM SCOTT, South Carolina
ROBERT P. CASEY, Jr., Pennsylvania   STEVE DAINES, Montana
MARK R. WARNER, Virginia             TODD YOUNG, Indiana
CATHERINE CORTEZ MASTO, Nevada       BEN SASSE, Nebraska
                                     JOHN BARRASSO, Wyoming

                                  (II)


                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Carper, Hon. Thomas R., a U.S. Senator from Delaware, chairman, 
  Subcommittee on International Trade, Customs, and Global 
  Competitiveness, Committee on Finance..........................     1
Cornyn, Hon. John, a U.S. Senator from Texas.....................     3
Brown, Hon. Sherrod, a U.S. Senator from Ohio....................     5

                               WITNESSES

Cutler, Wendy, vice president, Asia Society Policy Institute, 
  Washington, DC.................................................     7
Allan, Donald, Jr., president and chief financial officer, 
  Stanley Black & Decker, New Britain, CT........................     8
Petri, Peter A., Ph.D., Carl J. Shapiro professor of 
  international finance, Brandeis University; nonresident senior 
  fellow, Brookings Institution; and visiting fellow, Peterson 
  Institute for International Economics, Boston, MA..............    10
Cunningham, Hon. James B., nonresident senior fellow, The 
  Atlantic Council; former U.S. Ambassador to Afghanistan, 
  Israel, and the United Nations; former Consul General of the 
  United States in Hong Kong; and board chair, Committee for 
  Freedom in Hong Kong, Elizabethtown, NY........................    11

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Allan, Donald, Jr.:
    Testimony....................................................     8
    Prepared statement...........................................    33
Brown, Hon. Sherrod:
    Opening statement............................................     5
    Submissions for the record...................................    36
Carper, Hon. Thomas R.:
    Opening statement............................................     1
    Prepared statement...........................................    58
Cornyn, Hon. John:
    Opening statement............................................     3
    Prepared statement...........................................    59
Cunningham, Hon. James B.:
    Testimony....................................................    11
    Prepared statement...........................................    61
Cutler, Wendy:
    Testimony....................................................     7
    Prepared statement...........................................    63
Petri, Peter A., Ph.D.:
    Testimony....................................................    10
    Prepared statement...........................................    67

                             Communications

American Farm Bureau Federation..................................    73
Center for Fiscal Equity.........................................    74

                                 (III)

 
                      THE STRATEGIC BENEFITS OF A
                     MULTILATERAL APPROACH TO TRADE
                   POLICY IN THE ASIA-PACIFIC REGION

                              ----------                              


                         TUESDAY, JUNE 22, 2021

                           U.S. Senate,    
           Subcommittee on International Trade,    
               Customs, and Global Competitiveness,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 2:50 p.m., 
via Webex, in Room SD-215, Dirksen Senate Office Building, Hon. 
Thomas R. Carper (chairman of the subcommittee) presiding.
    Present: Senators Brown, Bennet, Casey, Cortez Masto, 
Grassley, Cornyn, Thune, Toomey, Daines, Young, and Sasse.
    Also present: Democratic staff: Brian Papp, Staff Director 
for Senator Carper; and Naomi Zeigler, Legislative Aide for 
Senator Carper. Republican staff: Andrew Cooper, Legislative 
Assistant for Senator Cornyn.

OPENING STATEMENT OF HON. THOMAS R. CARPER. A U.S. SENATOR FROM 
   DELAWARE, CHAIRMAN, SUBCOMMITTEE ON INTERNATIONAL TRADE, 
   CUSTOMS, AND GLOBAL COMPETITIVENESS, COMMITTEE ON FINANCE

    Senator Carper. I will call to order the first hearing in 
the 117th Congress of the Senate Finance Subcommittee on 
International Trade, Customs, and Global Competitiveness.
    I want to thank our witnesses for your willingness to 
testify before us in person--Wendy, and those who are joining 
us virtually. I want to especially thank Ranking Member John 
Cornyn and his staff for working with our staff and with me to 
pull together a hearing that examines a vital topic: our trade 
policy in the Asia-Pacific area.
    For 7 months, Senator Cornyn and I worked on the 
subcommittee on a push for the U.S. to get its seat back at the 
table when it comes to trade in the Asia-Pacific region. And 
one of his first acts as President that former President Trump 
made was what many of us regard as a misguided and short-
sighted decision to withdraw from the Trans-Pacific 
Partnership, TPP, agreement.
    I will be the first to admit that the TPP agreement was not 
perfect. It left a lot to be desired, especially with regard to 
labor provisions, and with regards to environmental provisions. 
The negotiations on the TPP began some 13 years ago and were 
just concluded just over 5 years ago. So much has changed since 
then, including the overwhelming bipartisan support of the 
USMCA, United States-Mexico-Canada Agreement, which had some of 
the strongest labor and environmental protections ever included 
in a U.S. trade deal.
    And Senator Brown and I were talking, Senator Cornyn, just 
before the committee began, about some ideas for future 
hearings, and we talked about maybe our interest in doing some 
kind of oversight on how the USMCA is being implemented, 
particularly with respect to provisions like the environment 
and the labor provisions.
    But we also have, in terms of changes, a new U.S. Trade 
Representative, Katherine Tai, whom some of us remember from 
our negotiations on the USMCA, especially on the environmental 
pieces. She was confirmed, you will recall, on a 98-0 vote, 
which does not happen every day. And she is the one who is 
working to ensure that our trade policies benefit all Americans 
and leave no one behind.
    With a new administration and a new leadership at the helm 
of USTR, we have a key opportunity to work on a bipartisan 
basis to put the U.S. in a far better position on the global 
stage. Today's hearing will help us understand the state of 
play on the ground and help us begin to consider how we can 
once again forge multilateral trade partnerships in the region.
    The Asia-Pacific is home to some of the fastest-growing, 
largest, and most dynamic economies on the planet. With 60 
percent of the world's population and more than one-third of 
the world's gross domestic product, Asia is a region of the 
world we simply cannot ignore.
    Further, since the U.S. left the TPP, our trading partners 
have not been idle. New agreements have been formed that have 
furthered Asia-Pacific economic integration. For example, the 
Regional Comprehensive Economic Partnership, called the RCEP, 
signed just last year, brings 15--15--Asia-Pacific nations, 
including China, together. And together they account for about 
30 percent of the world's population, and 30 percent of the 
world's GDP.
    The RCEP--again, that is the Regional Comprehensive 
Economic Partnership--is less comprehensive than other free 
trade agreements, lacking key provisions on labor and the 
environment, as well as state-owned enterprises and other key 
issues for us here in the United States.
    However, the sheer size of its membership, and its 
potential to restructure trade patterns and supply chains in 
Asia, shows just how active this region has been in forging 
multilateral trade deals without the U.S.--without the U.S.
    And further, the TPP did not die a quiet death after the 
U.S. withdrew from that agreement. Eleven remaining TPP 
signatories signed a new Comprehensive and Progressive 
Agreement for Trans-Pacific Partnership, CPTPP. So it is a 
comprehensive and progressive agreement on a trans-Pacific 
partnership. This is essentially a modified TPP among the 
remaining TPP parties after our departure.
    Recent reporting reveals that China is quietly, but 
deliberately, seeking to join this successor to the TPP. Recent 
reporting reveals that China is quietly but deliberately 
seeking to join the successor to the Trans-Pacific Partnership, 
and that should set off alarm bells for all of us.
    Regardless of the merits or the demerits of the Trans-
Pacific Partnership, the fact was that the agreement allowed 
the U.S. to have a seat at the table and actively help write 
the rules of trade in this dynamic region of the world.
    Questions remain about China's ability to join this 
agreement. However, as I like to say, if you are not at the 
table, you may well end up on the menu. We need to take China's 
interest seriously and begin the hard work on developing a 
comprehensive policy towards reengagement with our allies in 
this part of the world.
    Simply put, we find ourselves at a crossroad with an 
excellent opportunity to reengage in the region and weigh the 
benefits for U.S. interests--and reassert U.S. leadership in 
the region.
    This hearing today will focus on the broad context of 
current U.S. trade policy in the Asia-Pacific region. We will 
hear from experts who can provide us with the current state of 
play, as well as lessons learned from prior U.S. multilateral 
trade actions. We will also explore how the U.S. can consider 
reengaging in the region, given the emergence of several 
multilateral trade agreements in the past few years.
    I will close with this. Any proposal for reengagement in 
the region must be based on input from key U.S. stakeholders. 
That includes labor. That includes the environment, business 
community, civil society groups throughout our country, and it 
certainly includes Congress.
    This hearing will allow us to begin those conversations by 
setting the table for the dynamics that exist in that bright 
region of the world and to explore ways in which the United 
States can start to lead again.
    Once more, let me thank our ranking member, John Cornyn, 
and the witnesses appearing before us today, and especially 
welcome Sherrod Brown in joining us too. And I am sure we will 
have other members of the subcommittee who will drift in as 
they vote on the floor and find some time on their schedules to 
join us.
    With that, let me turn it over to Senator Cornyn, again 
with my thanks, for his opening statement. Senator Cornyn?
    [The prepared statement of Senator Carper appears in the 
appendix.]

            OPENING STATEMENT OF HON. JOHN CORNYN, 
                   A U.S. SENATOR FROM TEXAS

    Senator Cornyn. Thank you, Chairman Carper, for organizing 
this hearing on such an important and timely topic. And thank 
you to our witnesses for appearing in person and virtually.
    This subcommittee continues its work exploring the 
geopolitical benefits and consequences of America's trade 
policy--and in particular, our foreign adversaries such as 
Russia and China.
    The topic is U.S. trade policy in the Asia-Pacific. It is 
not a new topic nor a partisan one. But it should be at the 
forefront of our conversation about the ever-evolving economic, 
authoritarian, and human rights threat posed by countries like 
China. Our government must take a balanced, innovative approach 
to this competition, for we cannot rely on the paradigms of the 
past to build that approach. After all, we know China does not 
play by the rules.
    First, our national security must come first. We have to 
identify smart, democratic measures that take into account the 
unfair trade practices, the human rights, and censorship abuses 
deployed by our adversaries while making targeted investments 
in trade relations with our allies that abide by rules based on 
international trading systems.
    I have been proud to work with our colleagues on both sides 
of the aisle to craft legislation with these goals in mind. One 
example is the SECRETS Act, which I recently introduced with 
Senator Coons and Senator Young. This legislation would prevent 
the importation of specific products that contain intellectual 
property stolen via economic espionage.
    There is also the SPEECH Act, which I authored with the 
Senator from Pennsylvania, Senator Casey, and was passed by the 
Senate. This would require the U.S. to review items for export 
control that could be used for human rights abuse and 
censorship by foreign governments such as China in Hong Kong, 
Tibet, Taiwan, and the Uyghur region.
    The bill Senator Casey and I introduced, called The 
National Critical Capabilities Defense Act, would safeguard our 
critical supply chains to ensure we are not caught flat-footed 
in the event of a public health crisis or natural disaster, or 
a national security emergency. And the CHIPS for America Act, 
along with the FABS Act that we recently introduced--which was 
modeled after the original provision that Senator Warner and I 
introduced--would bring semiconductor manufacturing 
capabilities back home and eliminate that vulnerable supply 
chain.
    In addition to these efforts, we need to work to strengthen 
the international rules-based trading system and our 
relationships with nations that abide by them. For example, we 
can reauthorize programs like the Generalized System of 
Preferences and codify an exclusion process for section 301 
tariffs to transition critical supply chains away from foreign 
adversaries, as was done in the Crapo amendment to the U.S. 
Innovation and Competition Act.
    And we can support critical reforms of the World Trade 
Organization. Most importantly, we can open new markets and 
reduce tariffs for nations that follow the rules, through U.S. 
accession to a multilateral trade agreement in the Asia-
Pacific.
    The U.S. needs a seat at the table in the Asia-Pacific, 
along with India, the UK, Taiwan, and other nations in the 
Comprehensive and Progressive Trans-Pacific Partnership, also 
known as the CPTPP. This is our most effective weapon to 
confront China's sharp power, to speak up against its accession 
to the agreement, and to counter the Regional Comprehensive 
Economic Partnership or the RCEP.
    Next week, Trade Promotion Authority designed for the now-
named CPTPP, will expire. That is hard to say, Mr. Chairman--
CPTPP. The Trade Promotion Authority will expire. The U.S. 
withdrawal from the TPP, as Senator Carper and I have opined in 
a joint op-ed in The Washington Post recently, was a missed 
opportunity for national security, free enterprise, and 
international trade.
    I, along with 24 of my Republican colleagues in 2018, said 
as much when the previous administration withdrew from the 
agreement in favor of bilateral trade deals.
    In 2019, the U.S. turned around and signed onto a regional 
multilateral and landmark trade deal with the USMCA that can 
serve as a model for our engagement in the Asia-Pacific. So I 
look forward to learning from each of our witnesses today as we 
examine the best path forward.
    Ms. Cutler has a wealth of knowledge in international trade 
policy and law, and was present for previous negotiations 
during TPP.
    Dr. Petri can help us quantify the economic growth we 
missed by withdrawing from that agreement, and what we might 
gain going forward.
    Ambassador Cunningham has represented the United States 
around the world, including Hong Kong, where he saw China's 
claims in the early 2000s to become a responsible partner. He 
has also seen the China of today that ignores the rule of law 
in the name of national security when it locks up, censors, and 
steals from press freedom advocates like Jimmy Lai.
    Mr. Allan, on behalf of his 55,000 employees, can provide 
us with a firsthand account of the importance of a diversified 
supply chain, and how we can make targeted investments to 
strengthen manufacturing here at home, including through the 
opening of a new facility in Fort Worth, TX.
    So, thank you all for being here today, and thanks to my 
friend, Senator Carper, for making this possible. I look 
forward to exploring this topic.
    [The prepared statement of Senator Cornyn appears in the 
appendix.]
    Senator Carper. Thank you very much, Senator Cornyn. I'm 
happy to be your wing man on this subcommittee and in other 
ways. Speaking of wing men, there is another one to my right, 
and I would like to say that I think Senator Brown has a 
unanimous consent request, and I am happy to yield to you.

           OPENING STATEMENT OF HON. SHERROD BROWN, 
                    A U.S. SENATOR FROM OHIO

    Senator Brown. Thank you. And I will not take a full 5 
minutes, because it is not my place. You are the chair and the 
ranking member.
    Ms. Cutler, thank you, and other witnesses. I appreciate 
Senator Cornyn's comments about USMCA, and I think the Brown-
Wyden language we got in, which Chairman Carper helped us with, 
makes that a much more worker-oriented update of the North 
American Free Trade Agreement.
    I just have two unanimous consent requests. The first one, 
Mr. Chairman, is I would ask unanimous consent to submit 
Ambassador Tai's speech at the AFL-CIO on the worker-centered 
trade agenda.
    Senator Carper. Without objection.
    [The speech appears in the appendix beginning on p. 36.]
    Senator Brown. And we share the goals of the worker-
centered trade policy. We actually need to listen to workers 
better than probably all of us do, so that--and I think we see 
a very different day in trade policy.
    I also ask unanimous consent to submit--I had opposed the 
Trans-Pacific Partnership deal in 2015. The chairman and I have 
talked about that. I ask unanimous consent to submit two 
reports: one by the AFL-CIO and a statement by the Steelworkers 
on the effects the TPP would have on workers.
    Senator Carper. Without objection.
    [The reports appear in the appendix beginning on p. 41.]
    Senator Brown. And the last statement: Senator Portman and 
I passed bipartisan legislation through the full committee, the 
Level the Playing Field Act. We are now working on Playing 
Field 2.0 to strengthen U.S. trade remedy laws. I am hopeful 
that this subcommittee can play a role in advancing Senator 
Portman's--who, as Ms. Cutler knows, was a former U.S. Trade 
Rep--his and my legislation, to move it forward. So thanks for 
the time, Mr. Chairman.
    Senator Carper. Thanks so much. Thanks for your good work 
on the labor provisions, especially, with USMCA. I am happy to 
work with you and thank you for working with us on the 
environmental piece. Thanks.
    All right, I am going to go ahead and introduce our 
witnesses: Wendy Cutler, Donald Allan, and Peter Petri. And I 
heard--Dr. Petri, I have heard four different pronunciations of 
your name. I have heard ``Pee-tree,'' I have heard ``Pe-try,'' 
I have heard--you name it, I have heard it. So, Mr. Peter A. 
Petri--Doctor, rather. How do you pronounce your last name?
    Dr. Petri. Mr. Chairman, you had it just right. So thank 
you.
    Senator Carper. Well, I said it four different ways, so 
which one?
    Dr. Petri. Pet-tree is probably the easiest.
    Senator Carper. Petri; okay, that's good. That is what I 
thought; great. Dr. Petri it is. And, Mr. Cunningham, I cannot 
screw up yours.
    All right, let me introduce our witnesses. I am going to 
introduce Wendy Cutler and ask her to go ahead with her 
comments, her statement. And then we will turn to our other 
witnesses and ask them, after we have introduced them 
initially, to give us their statements. But first, Wendy 
Cutler, who is vice president of the Asia Society Policy 
Institute. Take 30 seconds and tell us about the Institute, 
please. This does not count into your time.
    Ms. Cutler. It's a relatively new think tank, part of the 
Asia Society, focusing on the pressing issues facing the Asia-
Pacific region.
    Senator Carper. Great. Thank you. The role of Ms. Cutler 
focuses on highlighting pressing and emerging matters in the 
Asian trade landscape, and on leading initiatives to address 
challenges that are related to trade, investment, and 
innovation, as well as women's empowerment in Asia.
    Ms. Cutler previously served nearly 3 decades--is that 
right?--3 decades as a negotiator in the Office of the U.S. 
Trade Representative. Ms. Cutler, the floor is yours. Please 
proceed.

          STATEMENT OF WENDY CUTLER, VICE PRESIDENT, 
         ASIA SOCIETY POLICY INSTITUTE, WASHINGTON, DC

    Ms. Cutler. Thank you, Chairman Carper, Ranking Member 
Cornyn, and Senator Brown. I am pleased for the opportunity to 
testify today. As the largest and fastest-growing region in the 
world, the Asia-Pacific offers the United States an enormous 
economic opportunity that will help drive American prosperity 
and innovation for years to come. But without long and 
sustained economic engagement in the region, the United States 
risks not only foregoing this opportunity but becoming 
increasingly marginalized as the region forges a new future 
without us.
    As you mentioned in your opening statement, the regional 
play has shifted significantly in recent years with the CPTPP 
and RCEP. Following the U.S. exit from the TPP, members 
regrouped and concluded the CPTPP. But interestingly enough, 
they kept the overwhelming majority of the agreement's 
provisions intact. And while a number of economies have 
expressed interest in joining, the United Kingdom is the first 
country to formally express interest.
    But China has also expressed interest, and Xi Jinping 
publicly stated last November that China will favorably 
consider joining the CPTPP. Statements like this are not made 
lightly and must be taken seriously. Chinese officials are now 
consulting with TPP members, and these discussions are 
happening in real time and all over the region. And the longer 
we are on the sidelines of these conversations, the less 
influence the United States will be able to exert.
    Compared to the CPTPP, RCEP is a low-standard agreement, 
but we need to pay attention to it as well. With its 
ministerial meetings and committee structure, RCEP will become 
an important venue for developing rules on emerging issues, 
setting another table without a U.S. seat.
    As we consider how we might reengage on trade in the 
region, I would like to offer a few observations.
    First, the United States was successful in defining the 
topics and shaping the rules that comprised the final TPP 
agreement, and we can play a similar role in future 
negotiations.
    Second, agreements like the TPP are in essence trusted 
supply chain agreements. By bringing together like-minded 
countries committed to high-standard rules and the elimination 
of barriers, such agreements encourage the development of 
resilient supply chains between the parties.
    And third, negotiating a comprehensive agreement with a 
group of countries is complex and often takes longer than other 
negotiations. As talks proceed, initial negotiating objectives 
can be overtaken by changing public sentiment. Such was the 
case with the TPP. So, looking ahead, I think we should 
consider building in a mid-term review to reassess U.S. 
negotiating objectives and make necessary adjustments that 
align more closely with possible shifts in stakeholder and 
congressional views.
    Importantly, the Biden administration is conducting a 
detailed review of our existing agreements, consulting widely 
and developing a new approach on trade focused on improving the 
livelihood of U.S. workers. This work is critical but will take 
time--but time is not on our side in Asia. As each day passes, 
our regional trading partners are strengthening their economic 
ties with China, including agreements among themselves, and 
drawing closer to each other. Meanwhile, China is moving full 
steam ahead to fill the vacuum that we have left.
    So this leads me to a concluding recommendation. And that 
is, even if the United States may not currently be ready to 
consider a comprehensive negotiation, we should not put our 
entire regional rule-making trade agenda on hold. Rather, we 
should pursue narrower deals in sectors that would deliver 
concrete benefits to U.S. workers and firms while regaining our 
voice in regional rule setting.
    A digital trade agreement with like-minded partners could 
be an excellent candidate. It could benefit our workers and 
firms, particularly SMEs; promote our democratic values of 
openness and fairness; reverse digital protectionism; and serve 
as a building block for a broader agreement, such as an updated 
CPTPP down the road. Of course, there are other negotiating 
topics worth considering, but we need to get our seats back at 
the table in this critical region.
    Thank you.
    [The prepared statement of Ms. Cutler appears in the 
appendix.]
    Senator Carper. Thank you very much for a clear and cogent 
presentation.
    Next up is Donald Allan, Jr. Mr. Allan, you are recognized. 
Again, thank you so much for joining us. Mr. Allan is the 
president and the chief financial officer for Stanley Black & 
Decker. Mr. Allan leads the strategy and implementation of 
Stanley Black & Decker's operating model; chairs oversight of 
its global operations and supply chain; and oversees the 
Stanley security business, the Outdoor Products Group, and Asia 
Tools and Storage.
    Mr. Allan, welcome. You have the floor.

 STATEMENT OF DONALD ALLAN, JR., PRESIDENT AND CHIEF FINANCIAL 
        OFFICER, STANLEY BLACK & DECKER, NEW BRITAIN, CT

    Mr. Allan. Good afternoon, Chairman Carper, Ranking Member 
Cornyn, members of the subcommittee, and fellow panelists. As 
mentioned, I am Don Allan, president and chief financial 
officer for Stanley Black & Decker. I lead our global 
operations organization, which is the heart of our 
manufacturing and supply chain.
    In the U.S. we employ over 17,000 people, and more than 
55,000 globally. The majority of our colleagues are in 
manufacturing jobs, designing and making the world's leading 
tools, security, technological, and industrial products and 
solutions.
    We have over 2,000 manufacturing and operations jobs open 
in the U.S. right now. Demand is strong, and we are hiring. Our 
hiring and investment in the U.S. are a manifestation of our 
commitment, made about 10 years ago, to move supply chains and 
manufacturing closer to our customers.
    Stanley Black & Decker was founded in 1843 in New Britain, 
CT, and we are still headquartered there today. We are guided 
by our purpose, which is ``for those who make the world,'' 
because we are in business to help those who use our products 
to do better, safer, and more significant work.
    As a leading global corporation, we believe we have the 
privilege and responsibility to help solve the world's biggest 
challenges through socially oriented innovations, such as 
building the workforce of the future, addressing environmental 
concerns, and racial equity. We are committed to address gender 
parity and racial equity in our company. And we are partnering 
with nonprofit organizations like the Thurgood Marshall College 
Fund and the Business Higher Education Fund to make 
manufacturing jobs more accessible to underserved communities 
and people looking for new careers due to world disruption.
    We are the largest power tool manufacturer in the world, 
and we are the only company manufacturing power tools at scale 
in the United States. Roughly 60 percent of our tools and 
storage sales are to U.S. customers, and for the last 10 years 
we have been moving our operations and supply chain closer to 
these customers so we can serve them with the right product at 
the right time, and at the right price.
    We are building new factories, adding U.S. manufacturing 
and jobs, and increasing our impacts on local economies and 
communities where we operate. In October 2021, Stanley Black & 
Decker will cut the ribbon on a new facility in Fort Worth, TX 
that will be the new home of Craftsman hand tool manufacturing 
in the U.S., employing about 500 people initially. We bought 
the Craftsman brand in early 2017 and then committed to 
bringing the manufacturing of the famous Craftsman hand tools 
back to the U.S., which the brand's prior owner had let go to 
China decades ago.
    This year, we are making good on that commitment. We 
believe a strategic U.S. trade agenda is critical to ensuring 
U.S. competitiveness, expanding access to new markets, and 
ensuring a robust and inclusive economic recovery.
    For the topic of this hearing, we believe the U.S. should 
remain engaged in the Asia-Pacific region and develop a 
strategy that enhances regional partnerships, supports 
strategic supply chains across those partnerships, and promotes 
high standards in trade. Strengthening commercial and 
diplomatic ties with countries including South Korea, Japan, 
India, and other allies will ensure that no one country is 
over-relied upon for serving the world, and particularly the 
U.S. market.
    Strategic U.S. engagement will also strengthen rules-based 
trade across the region, including the disciplined use of 
subsidies, preventing currency manipulation, maintaining secure 
supply chains and critical infrastructure, and improving market 
access for U.S. companies.
    The U.S. trade agenda should also reconsider the section 
301 tariff regime that currently applies to China, particularly 
on those inputs used to support U.S. manufacturing. The 301 
tariffs have been a tax and a burden on U.S. manufacturing by 
increasing costs of inputs that reduce competitiveness of U.S. 
operations. We applaud the Senate's support of the provisions 
of the United States Innovation and Competition Act that 
reauthorize section 301 tariff exclusions and create a new 
exclusion process that can be effectively and transparently 
administered by USTR.
    Thank you again for the opportunity to testify before the 
committee today, and I would be happy to answer questions later 
on. Thank you.
    [The prepared statement of Mr. Allan appears in the 
appendix.]
    Senator Carper. Thank you so much, Mr. Allan.
    Our next witness is Dr. Peter Petri. Dr. Petri is the Carl 
J. Shapiro professor of international finance at the Brandeis 
International Business School. Dr. Petri is also nonresident 
senior fellow at the Brookings Institution. And Dr. Petri has 
published widely on trade and technology in the Asia-Pacific 
region and has served as a consultant for the World Bank, the 
World Trade Organization, and other governmental organizations.
    Dr. Petri, you have the floor. Welcome, and thank you.

 STATEMENT OF PETER A. PETRI, Ph.D., CARL J. SHAPIRO PROFESSOR 
  OF INTERNATIONAL FINANCE, BRANDEIS UNIVERSITY; NONRESIDENT 
  SENIOR FELLOW, BROOKINGS INSTITUTION; AND VISITING FELLOW, 
   PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS, BOSTON, MA

    Dr. Petri. Thank you, Chairman Carper, Ranking Member 
Cornyn, and distinguished members of the subcommittee.
    As a research economist, I have long specialized in Asia-
Pacific trade, working on Asia-Pacific trade agreements and 
their effect on the United States. Over the past decade, the 
results of this work have frequently informed policy 
discussions on the TPP, and on the new CPTPP and RCEP 
agreements, and I will mention some of those results here and 
in my written testimony.
    I have been at this for over 50 years, and I have been awed 
by the large investments that the United States has made in the 
Asia-Pacific region, at times at tremendous cost. The U.S. has 
made the region safer, and it has helped it gain access to 
world markets.
    Even 5 years ago we were on the job--and I think my fellow 
panelist Wendy can speak particularly well to this issue--
spearheading the new high-quality TPP trade agreement. In the 
wise words of former Secretary of State Jim Baker, we refused 
to draw a line down the middle of the Pacific.
    Yet today our ties with East Asia are weakening. China has 
become an indisputable and challenging force. It is now the 
largest trading partner of all 11 of East Asia's larger 
economies. U.S. policies in the meantime have tilted toward 
protectionism.
    The concerns of America's middle class are real and very 
important. But they call for investments to make our workers 
more competitive, and not further trade barriers.
    We walked away from our leadership role in the Asia-Pacific 
economy. Not only did we abandon the TPP agreement, but we also 
attended only three of the last 11 East Asian leaders' summits. 
These are consequential trends. Intra-Asian economic ties are 
overtaking trans-Pacific talks. Colleagues and I estimate that 
U.S. income will be reduced by these policies over time.
    Meanwhile, East Asia is repairing the damage with two major 
new agreements that my fellow panelists have already mentioned, 
the CPTPP and the RCEP. While the trade war will cost the world 
economy around $500 billion annually, the new East Asian 
agreements will more than make up for these losses.
    According to our recent estimates, the RCEP is actually 
worth more than the CPTPP, although this would change if the 
United States were to join the CPTPP. For the United States, 
however, the trade war's effects will not be offset. They will 
be amplified by the new agreements. As now structured, the 
CPTPP and RCEP create preferences for regional trade at the 
expense of trade with outsiders--which would now include the 
United States.
    They especially strengthen Asian manufacturing. For 
example, the RCEP is the first agreement that will connect 
China, Japan, and South Korea through mutual preferences. So I 
applaud the chairman and the ranking member for considering 
U.S. membership in the CPTPP. This would increase U.S. income. 
It would align and advance U.S. economic and strategic 
interests.
    And make no mistake, the CPTPP will grow. Nine countries 
are already in line for membership, amplifying these strategic 
benefits. We must also acknowledge that the politics of trade 
in the United States remain very divided.
    Fortunately, our government--not least including you, our 
distinguished Senators--are laser-focused on innovation, 
competitiveness, infrastructure, and human capital. If these 
tools materialize, they will give our workers the resources and 
the confidence to compete anywhere.
    In addition, we cannot neglect the challenge of developing 
stronger political foundations for trade policies that benefit 
Americans, both abroad and at home. This cannot be an 
afterthought. It will not be easy work. At home, we must 
empower and incentivize American communities broadly and 
inclusively, especially the businesses and workforces of our 
future, to embrace Asia-Pacific opportunities and to help draft 
a truly national strategy for future Asia-Pacific ties.
    Thank you, Mr. Chairman.
    [The prepared statement of Dr. Petri appears in the 
appendix.]
    Senator Carper. Dr. Petri, thank you very much. Thanks for 
joining us, and thanks for your testimony and for your insight.
    The last witness for us today is Ambassador James 
Cunningham. Ambassador Cunningham is, as some of us know, 
nonresident senior fellow at the Atlantic Council, and a former 
U.S. Ambassador to Afghanistan, Israel, and the United Nations. 
Ambassador Cunningham also served as a former Consul General of 
the United States in Hong Kong, and currently serves as the 
board chair of the Committee for Freedom in Hong Kong.
    Ambassador Cunningham, we are delighted you have joined us. 
You have the floor. Please proceed.

   STATEMENT OF HON. JAMES B. CUNNINGHAM, NONRESIDENT SENIOR 
    FELLOW, THE ATLANTIC COUNCIL; FORMER U.S. AMBASSADOR TO 
  AFGHANISTAN, ISRAEL, AND THE UNITED NATIONS; FORMER CONSUL 
  GENERAL OF THE UNITED STATES IN HONG KONG; AND BOARD CHAIR, 
     COMMITTEE FOR FREEDOM IN HONG KONG, ELIZABETHTOWN, NY

    Ambassador Cunningham. Thank you very much, Chairman Carper 
and Ranking Member Cornyn, for the invitation to meet with you 
and other members of the subcommittee.
    The United States is uniquely both a European and Asian 
power. Asia is vital for American economic and security 
interests. We are in a long-term competition with China over 
influence in the world, and over the values which will dominate 
this century.
    The restoration of U.S. engagement in a multilateral 
approach to trade policy in the Indo-Pacific region is 
fundamental to success in that competition. Whether our 
relationship with China is confrontational or not, competition 
with China for influence in almost every realm is inescapable. 
Multilateral engagement in Asia, whether regarding trade, 
diplomacy, or security, reinforces our capacity to counter 
Chinese influence and pursue our vision of Asia's future. That 
vision is based on liberal democratic values and fair, open 
trade. Chinese General Secretary Xi Jinping has a quite 
different vision based on authoritarian control. The contest 
between these two visions is the defining theme of our age.
    China's voice is increasingly more aggressive, with so-
called ``wolf warrior'' behavior becoming the norm as China 
disregards Deng Xiaoping's advice to bide time and hide 
capacity. China's message is that it and its authoritarian 
model are on the rise, and the West and its values are in 
decline.
    China is using economic punishment or enticement to exploit 
the openness of our society. It rejects or seeks to rewrite 
international norms and the rules-based framework from which it 
has benefited. This is all very dangerous and now more widely 
understood than even a few years ago. When I arrived in Hong 
Kong in 2005, there was wide discussion of encouraging China's 
peaceful rise as a responsible stakeholder. It was hoped that 
Hong Kong, where China had committed to the one-country/two 
systems framework, could serve as a model for how China might 
evolve as it became more prosperous.
    China has taken quite another direction. Fearful of any 
threat to its authority, the Chinese Communist Party is using 
the national security law it imposed on Hong Kong last year to 
dismantle the one country/two systems framework it had 
committed to preserve. Democracy, freedom of the press, and 
rule of law are being crushed. Private property is being 
seized. Journalists and prodemocracy figures like Jimmy Lai are 
jailed indefinitely without bail.
    Hong Kong is now holding political prisoners, and 
intimidation is the rule of the day. Today's Hong Kong 
unfortunately embodies the clash between authoritarian and 
liberal values. Beijing did not need to gut the high degree of 
autonomy it had promised in order to maintain stability.
    At the recent summit meetings of the G7, NATO, and the EU, 
leaders addressed Chinese behavior, human rights abuses in 
Xinjiang and Hong Kong, stability around----
    Senator Carper. We seem to have lost you there. Can you 
hear me?
    Ambassador Cunningham. Can you hear me now?
    Senator Carper. We lost you for about 15 seconds. Can you 
just back up about 15 seconds, please?
    Ambassador Cunningham. Yes. The three summit statements 
demonstrated clearly how the international ground has shifted. 
Multilateral cohesion will be required to advance a strategy in 
the Pacific based on shared values and interests.
    Partnerships on trade, security, and diplomacy with our 
Pacific and Asian friends, including Taiwan where possible, 
will bolster efforts to curb Chinese behavior and strengthen 
America's hand in the conflict of values.
    Bilateral relationships in trade or otherwise are 
inefficient in developing the shared purpose that competing 
with China demands. China seeks to divide, intimidate, and 
entice those confronting the systemic challenges it poses. The 
power of America's global alliances is a unique instrument, one 
unavailable to China. We must be sure to use it.
    That is the strategic optic through which the 
administration and the Congress should urgently be looking at 
our trading arrangements in the Pacific. The strategic value of 
a broad multilateral approach to linking American and Pacific 
economies, and to building prosperity in a U.S.-Pacific 
partnership based on fundamentally shared aspirations, is 
immense and we should not lose the opportunity. Thank you.
    [The prepared statement of Ambassador Cunningham appears in 
the appendix.]
    Senator Carper. Thank you, sir. Thank you all. Those were 
wonderful testimonies.
    I am going to ask a question for the whole panel, but 
before I do that I want to just look--Senator Cornyn, I am 
looking at a list of those who have joined us virtually or in 
person. And the line-up is, I speak, then after myself is 
Senator Cornyn. Senator Brown was here, and he would be next if 
he rejoins us. Then Senator Grassley, Senator Bennet, Senator 
Thune, Senator Casey, Senator Toomey, Senator Cortez Masto, 
Senator Daines, and Senator Sasse.
    We start off with a question of my own. The question is for 
the whole panel. I am going to go through and ask you all the 
same question. Where do you sense, in one or two areas--and I 
am going to ask you, Wendy, to take no more than a minute--
where do you see a consensus between the four of your 
testimonies, the most important points? Where do you see the 
consensus for us to take home?
    Ms. Cutler. I think we have all sent a clear message how 
important the Asia-Pacific is to the United States, and the 
importance of the United States reengaging on trade in the 
region, but keeping in mind that we have domestic issues with 
respect to trade, and particularly workers' views on trade that 
we need to respect, and we need to incorporate. And in any 
trade agreement going forward, we need to work on a bipartisan 
basis to show our trading partners that we are serious about 
trade, and that in concluding the agreement we can bring it 
into effect.
    Senator Carper. Thank you.
    Dr. Petri, where do you sense that there is, amongst the 
four of you, a broad agreement on a particularly important 
issue? Take maybe a minute for that.
    Dr. Petri. I would agree largely with Wendy Cutler. But I 
would add that I think we agree on the fact that the trends as 
we see them are not favorable to the United States, and we need 
to take action. The action that I also support is membership in 
the CPTPP trade agreement. Finally, as Wendy already 
emphasized, we need to pay attention to building broad, 
inclusive support for this agreement across major communities 
of American society. That is a challenge, but it is a very 
important one. Thank you.
    Senator Carper. Yes; thank you, sir.
    Dr. Allan, please.
    Dr. Allan. Senator, I would agree with the statements made 
by the previous two panelists. I really do believe that we do 
need to engage in the Asia-Pacific region, and it will benefit 
our U.S. competitiveness in multiple ways. And sitting down and 
working out an agreement with the CPTPP countries, and perhaps 
enhancing some of the language around labor and environmental 
commitments similar to what was developed with the USMCA in a 
bipartisan way, could be a very effective path forward. And I 
think all statements were circling around that topic over the 
last several minutes.
    Senator Carper. All right; thank you.
    Ambassador Cunningham, the same question, please.
    Ambassador Cunningham. I think what we have seen is that 
all of us agree quite clearly that we are in a competition with 
China, whether we like it or not, and the nature of that 
competition can vary, but it is there and needs to be 
addressed.
    I am not an expert at all in trade matters, and clearly the 
TPP had flaws, but it was, in my view, a valuable strategic 
instrument that we need to find a way to recapture. I do not 
know myself how to do that, but I know that it needs to be done 
because we need that kind of instrument. We need a political, 
security, and economic partnership in the Asia-Pacific region. 
That kind of partnership is the strongest and the best way to 
reassert American influence and to curb China's aggressive 
behavior.
    Senator Carper. Okay; thank you. I want to turn to Ms. 
Cutler for this next question on the importance of engaging 
shareholders early and engaging them often.
    Ms. Cutler, last September the Asian Society Policy 
Institute put out a report, I believe it was called 
``Reengaging the Asia-Pacific on Trade: a TPP Roadmap for the 
Next U.S. Administration.'' I firmly believe that any proposal 
for U.S. reengagement in the region must be based on input from 
labor, from environment, from business, and society groups 
throughout our country, as well as Congress.
    And my question for you, Ms. Cutler: can you take a moment 
to explain one of your recommendations in the report, which was 
to institute a mid-term review for U.S. trade deals going 
forward?
    [Pause.]
    Senator Carper. Please speak loudly. We cannot hear you. 
You were there just for a moment.
    Ms. Cutler. Hello?
    Senator Carper. Hello? You had us from ``hello.''
    Ms. Cutler. The idea behind the mid-term review is that 
sometimes these multilateral negotiations take a long time. And 
while we work initially to set negotiating objectives with 
Congress, with input from stakeholders, 2 years into a 
negotiation, public sentiment may have changed. And indeed, 
that happened with TPP.
    And so what I am suggesting is, if negotiations go on for 
more than a year or so, perhaps we should take a step back and 
institute a formal mid-term review with congressional and 
stakeholder input, and adjust our negotiating objectives and 
proposals, all in an effort to build domestic support for a 
negotiated outcome that negotiators can bring home and work 
with Congress and stakeholders to put it into effect.
    Senator Carper. Good. I am glad we heard that explanation, 
every word. Thanks.
    Senator Cornyn?
    Senator Cornyn. Well, Ms. Cutler, I was intrigued by your 
commentary with regard to the change in maybe Congress's 
attitude toward these trade agreements over the years. And I am 
intrigued by your suggestion that, rather than the 
administration just deciding to negotiate something and 
presenting it as a fait accompli to Congress, that there be a 
process in place that could develop some consensus so that the 
chances of success would ultimately be better. Is there a model 
that has been used in the past for that that you would 
recommend?
    Ms. Cutler. Well, there clearly--in TPA there are detailed 
consultation provisions between Congress and the executive 
branch. I think what I am suggesting is something that would go 
even further than that but specifically apply to the kind of 
longer negotiations that take a while. In other words, what TPA 
talked more about was setting initial negotiating objectives. 
The administration would consult and then bring home the 
agreement.
    With a mid-term review, perhaps some of the negotiating 
objectives could be adjusted if indeed the public sentiment and 
views on trade, and views on trade agreements, have changed 
significantly. That is what happened during the TPP. The 
negotiation went on for 5 years. We had initial negotiating 
objectives. We had TPA towards the end. And when we brought the 
deal back home, it did not receive the support needed to bring 
it over the finish line.
    Senator Cornyn. And as you note, Trade Promotion Authority 
expires very soon. Is that something you would recommend that 
Congress take up and try to reauthorize as a starting point? Or 
do you think it is premature to do that?
    Ms. Cutler. Well, I think hopefully, eventually we will 
need it. Right now, the administration does not seem focused on 
negotiating new trade agreements. But I think TPA is a useful 
tool, not only to set negotiating objectives, but really to set 
the table in terms of congressional-executive branch 
consultation.
    Senator Cornyn. It seems to me like, when it comes to 
China, that Congress is of two minds. One is, we obviously 
recognize the competitive nature of our relationship with 
China, as reflected by the bill we passed just a few weeks ago. 
And a point was made by one of our colleagues in his maiden 
speech to the Senate--I think it was Senator Romney--actually 
that has kind of stuck with me. He said the one thing that the 
U.S. has that China does not is friends.
    And rather than engage bilaterally, just one on one, with 
some of these trading partners, or with other countries, it 
strikes me that there is strength in numbers. And that is 
another reason to commend this CPTPP and efforts to pursue our 
involvement there.
    But speaking to that issue, Ambassador Cunningham, 
obviously our relationship with China is more than just an 
economic concern. It is a geopolitical concern. It is a 
national security concern as well. Could you talk about the 
role of some of these multilateral trade agreements that would 
complement things like the Quad, which is our cooperation with 
Japan, Australia, and India, when it comes to things like the 
freedom of navigation in the South China Sea? Do you have a 
view about that?
    Ambassador Cunningham. Yes, sir, Senator.
    So I look at the framework that we want to construct in the 
Indo-Pacific region to advance our interests and our values, 
which thankfully are values that are shared by many countries 
in the region. I view this as kind of a fabric that is being 
woven with many strands. And those strands involve all the 
things that involve international life in the region. They 
involve cultural exchange. They involve security. They involve 
political and diplomatic cooperation. They involve trade and 
economics.
    We are much stronger and much better able to ensure our 
national interest, as well as the interests of the American 
economy and the American worker, when that fabric is as 
carefully aligned and oriented in the same direction as 
possible, again based on a common set of interests and values 
that are shared. And it strikes me as wasteful if we do not 
take advantage of the opportunity that exists to build on those 
common aspirations and values.
    I know reaching trade agreements is a particularly 
difficult area which takes a lot of time, but finding where to 
begin building that framework, that fabric, I think is a 
particularly important challenge. Because, as I noted and 
others have said, this competition is already underway. And 
China has, whatever else one thinks about China's future 
possibilities--and they have many serious problems--China has a 
pretty clear goal of where it wants to go. And it will move in 
that direction.
    Senator Cornyn. Thank you. My time has expired.
    Senator Carper. Thanks, Senator Cornyn.
    Next on our list is Senator Brown. He was on and maybe 
dropped off, but Senator Brown was next. If he is still with 
us, please say so.
    [No response.]
    Senator Carper. If not, please join us later.
    Senator Grassley is next in line. If he is still with us, 
please say so.
    [No response.]
    Senator Carper. Senator Bennet was after him, and then 
Senator Thune.
    Senator Thune, I understand you may be waiting to be 
recognized. Are you there?
    Senator Thune. Yes, sir. Thank you, Mr. Chairman and 
Ranking Member Cornyn, for holding this very timely hearing.
    In the last few years, China has actively worked to shape 
trade rules in Asia with economic initiatives and massive 
spending on cross-border infrastructure through the Belt and 
Road Initiative and other projects.
    With our Nation's withdrawal from the Trans-Pacific 
Partnership, the field opened for China to assume greater trade 
leadership in Asia. And it has not hesitated. China last year 
joined the Regional Comprehensive Economic Partnership, the 
world's largest free trade block, and it now aspires to join 
the trade deal that America helped craft but ultimately 
withdrew from, the TPP. All the while, China is becoming more 
aggressive militarily in the East China Sea.
    Ms. Cutler, why is a strong American engagement in Asia 
critical for U.S. leadership abroad, and also for our economy 
at home? And then I would direct a question to Mr. Allan. And 
that is, would reentering the TPP boost job growth at home and 
help America compete economically with China?
    Ms. Cutler?
    Ms. Cutler. Well, I think it is critical because, if we are 
not capable of negotiating these agreements and setting the 
rules, China is filling that vacuum. And China is the largest 
trading partner for most countries in the region and is 
becoming a more important driver of growth for these countries.
    So, we are losing our influence. We are losing our ability 
to write the rules for new technology. And frankly, we are 
losing out with respect to preferences that are given to 
products of foreign countries, but not of the United States. So 
it is a real lose/lose proposition for the United States to be 
on the outside looking in.
    Senator Thune. Mr. Allan, would reentering the TPP be good 
for jobs at home and help us compete economically?
    Mr. Allan. I believe that if we have a mutually agreed upon 
arrangement, as I mentioned earlier, associated with maybe 
something with CPTPP that has some labor standards and 
environmental standards in it consistent with USMCA, many that 
I mentioned earlier, that would make us more competitive in the 
United States.
    I also think we have to seriously think about what I 
mentioned in my statement around section 301 tariffs that are 
hurting the U.S. manufacturers that assemble or manufacture 
products here in the United States. Certain components that 
come from China have a tariff of 25 percent on them, and 
someone can assemble or manufacture a full product in China and 
send it to the United States and not have a tax on it.
    So there are inconsistencies that also have to be dealt 
with associated with those particular tariffs. But I do think, 
Senator, overall, some type of bipartisan agreement would be 
very beneficial to attracting more U.S. manufacturing over 
time.
    Senator Thune. I recently introduced an amendment to call 
on the WTO to reform its special and differential treatment 
rules so that globally competitive countries like China, with 
the world's second largest economy, can no longer self-
designate as a developing country to gain unfair trade 
advantages.
    China declaring as a developing country at the WTO 
misidentifies its economic standing and undermines countries 
that are truly developing, and corrodes trust in the WTO 
itself.
    Ms. Cutler, do you agree that the WTO should reform its 
special and differential treatment rules so that major 
economies can no longer self-designate as a developing country? 
Maybe share your thoughts on that.
    Ms. Cutler. I strongly agree that those rules need to be 
changed. It is ludicrous that countries like China can self-
designate themselves as developing countries and take 
exceptions and expect special treatment and special breaks from 
negotiations and agreements that are in place and underway.
    At a minimum, I would hope that China would say for ongoing 
and future negotiations, ``We are no longer going to self-
designate ourselves as a developing country. We are going to 
take on the same responsibilities and commitments as other 
countries as the second largest economy, and soon to be the 
largest economy in the world.''
    Senator Thune. Very quickly, Ms. Cutler, Ambassador 
Cunningham; we have not seen a TPA renewal proposal yet. What 
does that mean? And if the administration is not going to 
actively lead in trade in the Asia-Pacific, what type of 
message does it send in terms of American interests and 
willpower to remain a leader in the global economy?
    Ms. Cutler. I would hope that, with time, we will see a TPA 
bill. I think there is a lot of reflection that needs to be 
given on the contents of that bill. And I think as we develop 
our negotiating agenda, then the necessity for TPA will become 
more apparent.
    I think there are certain negotiations, however, in 
narrower sectoral areas where we could proceed with a 
negotiation, perhaps without TPA, but with close consultation 
with Congress, such as agreements that would not require the 
United States to change its laws but to bring other countries 
in line with our laws and regulations.
    Senator Thune. Okay. Thank you. My time has expired, Mr. 
Chairman. I would love to hear from Mr. Cunningham on that, but 
we can get that for the record if necessary.
    Senator Carper. Go ahead, Mr. Cunningham; just briefly 
respond if you would, please.
    Mr. Cunningham. As I said earlier, I am not an expert in 
trade itself. But to the extent that we need to take the steps 
now to prepare for things that we need to do, or should do in 
the trade area in the future, I think that is a good path to 
follow.
    We are going to have to do this in one way or another 
whether we like it or not. As Ms. Cutler said, we are in the 
process of setting new rules in the region. If we do not 
actively participate in that, we will be disadvantaged for 
sure.
    Senator Thune. Thank you. Thank you, Mr. Chairman.
    Senator Carper. You bet. Thank you, Senator.
    Next, I think we have in the queue Senator Casey. I do not 
know if he is still on the line. Senator Casey, are you there?
    [No response.]
    Senator Carper. If not, Senator Toomey. I believe Senator 
Toomey has joined us. Senator Toomey?
    Senator Toomey. Yes, I am here. Can you hear me, Mr. 
Chairman?
    Senator Carper. Yes, we can. Please proceed.
    Senator Toomey. Thank you very much.
    Let me pose a question to Dr. Petri. Dr. Petri, you 
proposed that pursuing a comprehensive multilateral FTA might 
be the best way to both strengthen strategic economic ties and 
to benefit U.S. workers and consumers.
    As you know, there is a narrative that free trade 
agreements are harmful to workers because labor-intensive 
sectors will just move to the lower labor cost countries, and 
therefore they tend to drag down wages and be harmful to 
American workers.
    It is my understanding that your research has focused 
significantly on this question of the effects of comprehensive 
trade agreements on workers. What has that research shown? What 
is your conclusion on that?
    Dr. Petri. Thank you, Senator. A very important question. I 
think there is no question that a comprehensive trade agreement 
like the CPTPP, and as the TPP did before, has to have strong 
labor provisions that recognize the rights and the input of 
labor in the way they are structured.
    Now, the effects of trade agreements are complicated. And 
the idea that low-wage countries will force wages down through 
trade is early trade theory, but it is not reflected in many 
modern areas of trade analysis.
    In the models that we use, the productivity of a firm has a 
lot to do with who gets to trade, and who benefits from trade. 
All of the workers and firms that are productive relative to 
those that are not so productive will benefit. In fact, overall 
wages for both skilled and unskilled workers in those firms 
would tend to rise in the United States as a result of the 
CPTPP agreement.
    So deeper analysis suggests that there is no reason to 
expect that competition with low-wage countries will force our 
wages down.
    Senator Toomey. I think that is important. And of course, 
our workers are also consumers, and consumers certainly benefit 
from the competition that the trade brings.
    A quick question for Ms. Cutler. I think you and I both 
agree that a comprehensive FTA is preferable to the narrower 
agreements, but it might be more pragmatic in the short term to 
pursue the narrower sectoral trade agreements.
    If we were to pursue that route, is there anything in 
particular we ought to do to try to ensure that smaller 
sectoral agreements do not undermine support for joining more 
comprehensive FTAs in the future?
    Ms. Cutler. First, I think we are in agreement. I do not 
think a multilateral TPP-like agreement is a realistic 
proposition now. So the question is, do we wait and put 
everything on hold, or are we pragmatic, and we find out what 
we can do to get back in the region? And that is why I am 
advocating these narrower sectoral deals.
    I think such deals could serve as building blocks towards a 
larger comprehensive deal. They do not have to be kind of one-
off deals. And perhaps if we do pursue a narrower sectoral deal 
and we learn that we can benefit from such deals and grow 
closer to our trading partners and provide market access and 
set the rules, then perhaps then we would be ready to move to 
another topic, and another topic.
    So I think we could look at this approach as a possible 
building block approach towards a comprehensive agreement.
    Senator Toomey. I think that is a great point.
    Ambassador Cunningham, I introduced a resolution in the 
Senate expressing that the U.S. should begin negotiations to 
enter into a comprehensive trade agreement with Taiwan. I think 
it is a big opportunity for us and would be mutually beneficial 
at a number of levels. And it would be important both 
economically, but also for national security purposes.
    Would you comment a little bit on the benefits that you 
think we would derive from a free trade agreement with Taiwan?
    Ambassador Cunningham. I actually had the opportunity to 
discuss this a couple of years ago during a visit in Taiwan. I 
think it is a good idea for the United States and for the 
Taiwanese. The people I spoke to, a couple, when I was in 
Taiwan talking about this, I urged them to find ways to 
overcome their internal political opposition regarding the free 
trade agreement with the United States, which I believe is 
greatly in Taiwan's interests.
    Taiwan is an important piece of that fabric that I was 
talking about a little while ago in the Pacific region, but it 
is a unique piece. We and others will have difficulty 
integrating it into a multilateral framework such as I 
discussed. But to the extent that we can do so, it benefits 
Taiwan and the region by allowing all of us to make greater use 
of the resources and the knowledge and capacity that Taiwan 
has. And it also puts it more firmly in an international 
framework that will, I think, promote stability around Taiwan 
and in the Taiwan Straits over time.
    Senator Toomey. Great. Thank you. Thank you, Mr. Chairman.
    Senator Carper. We thank you, Senator Toomey.
    Next, I think Senator Cortez Masto may be waiting to join 
us remotely. Senator Cortez Masto, are you there?
    Senator Cortez Masto. I am here. Thank you, Mr. Chairman.
    Senator Carper. Welcome aboard.
    Senator Cortez Masto. Thank you. And thank you to the 
panelists today.
    Ambassador Cunningham, let me start with you just for 
clarification. Do you think that reengaging in the existing 
multilateral framework such as the CPTPP and the RCEP would be 
sufficient enough alone to meet our expectations going forward 
in terms of labor, environment, and digital protection?
    Ambassador Cunningham. If it were possible to do that 
expeditiously, that might be the case. But as Ms. Cutler has 
explained, these things take time. And time has also moved on 
since we moved through and negotiated the original TPP.
    I am kind of intrigued by the idea of sectoral 
arrangements. And I wonder--I hope, maybe not--that one could 
use that as a vehicle for reengaging the broader multilateral 
arena. I do not think that has to be mutually exclusive, to 
have a long-term goal of a multilateral, broad framework that 
incorporates all of the values and protections that we would 
want while you are working on things that are more easily and 
rapidly achievable, which at least get one back into the game.
    Senator Cortez Masto. Well, I appreciate that. And I am 
glad my colleague, Senator Toomey, had Ms. Cutler expand on it, 
because I was not sure what she meant by pursing narrower 
deals. And thank you for that, because, Ms. Cutler, what I 
understand you are saying is going smaller, with what Senator 
Toomey recognizes as sectoral agreements. You said that they 
could be the building blocks to move forward.
    But do you mean building blocks to stay within that sector 
or adding additional sectors, which then changes the whole 
agreement? How do you envision that happening, particularly 
with a negotiation and various partners at the table?
    Ms. Cutler. In my mind, it means adding additional sectors. 
We start with one. We start with two. And then, over time, we 
negotiate in different areas and then create that momentum that 
hopefully will lead you at some point to a larger, broader 
agreement.
    Senator Cortez Masto. Thank you. And I appreciate that.
    One issue that remains prominent in all of these 
agreements--and this is one of the reasons why I think the TPP 
did not move forward--is the issue to make sure that we are 
addressing labor issues. But one of them is forced labor, and 
it remains a prominent issue.
    But I also understand--and we touched on this in this 
committee, I think it was in March. If there is collaboration 
among both public and private entities to combat the issue of 
forced labor, and there is a working arrangement--for example, 
the Cotton Campaign, along with other NGOs and partners, helped 
to lead Uzbekistan in prohibiting forced labor from being used 
to harvest cotton.
    So is there a role--and I guess my question to you, Ms. 
Cutler, is, how can the global community work better together 
in collaboration to inform and protect against these kinds of 
practices, and specifically in the Asia-Pacific region?
    Ms. Cutler. I think the key is working with our allies and 
partners, and not just condemning practices but agreeing on 
joint actions to restrict the importation of products that use 
forced labor.
    Senator Cortez Masto. Well, I guess my question is, is 
there a role for a public-private partnership in trade?
    Ms. Cutler. Absolutely. I think it is very important that 
the private sector be involved as well, through tracing inputs 
and products that are using forced labor, which is extremely 
difficult and complex. And I think bringing the private-sector 
experience and challenges to the public sector and jointly 
trying to find a solution would move the process forward.
    Senator Cortez Masto. Thank you. And let me, Ms. Cutler, 
touch on one other issue. China is committed to expanding its 
global reach through increasing trade and foreign investment 
around the world. We know that. Senator Casey and I have 
introduced the Women's Economic Empowerment and Trade Act to 
ensure countries receiving trade preference under GSP 
strengthen standards on worker rights and the rights of women.
    So do you see the ability of increasing GSP requirements to 
help raise the bar of equal rights and protections and pressure 
China to do the same as it seeks to expand its access to 
markets in those countries?
    Ms. Cutler. I am not sure if I understand your question, 
because China is not a beneficiary of the GSP program.
    Senator Cortez Masto. Right. It is not now. And as we look 
to engage, is there a role that GSPs can play? That is my 
question.
    Ms. Cutler. Given all the tariffs we have on China, it is 
hard for me to see that we will be in a situation where we are 
going to be offering them duty-free access or doing positive 
things. I think at this point we need to get to the table with 
them and kind of level the playing field before we start 
offering duty-free access or the care you are suggesting.
    Senator Cortez Masto. Okay. So we are not even there yet is 
what you are saying, and we may not ever get there with China 
when it comes to duty-free tariffs? Is that right?
    Ms. Cutler. It is hard for me to see that, yes.
    Senator Cortez Masto. Okay; that is helpful to know. Thank 
you.
    Senator Carper. Thank you, Senator Cortez Masto.
    We have several other colleagues, I think, in the queue. 
Senator Daines, followed by Senator Sasse and Senator Young. We 
will start with Senator Daines.
    Senator Daines, are you there?
    Senator Daines. Yes, I am here. Thanks, Senator Carper.
    Senator Carper. You are recognized. Please proceed.
    Senator Daines. Thanks.
    Ninety-five percent of the world's consumers live outside 
the United States. Trade is essential for my home State of 
Montana, essential for our jobs and for our economic growth. 
And working with our allies, I believe, is critical to reducing 
unfair barriers to trade and assuring that our farmers, our 
ranchers, and our small businesses are able to compete on a 
level playing field around the world. This is especially true 
given China's growing economic and geopolitical influence, and 
it is essential that we work with our allies and partners in 
the Asia-Pacific region.
    During my time in the Senate, I have called on both 
President Trump and President Biden to reengage with the Trans-
Pacific Partnership, both for economic benefits as well as part 
of a really more holistic strategy to China.
    The question for Ms. Cutler: if the U.S. were to actively 
reengage with the TPP, are there specific areas you think the 
U.S. should improve or amend to better reflect the challenges 
we face today?
    Ms. Cutler. I mean, if we were to consider returning to the 
CPTPP, I think it would be critical for the United States to 
seek updates and seek revisions. I think it would be important 
that we prioritize the number of changes we would seek, because 
we need to keep in mind that we would be asking to come into an 
agreement in place among other countries. With that said, 
certain chapters come to mind, many based on where public 
sentiment is now and the accomplishments of the USMCA.
    But I think, in particular, the chapters on labor and the 
environment would need to be revised and updated, but I also 
think that revisions and updates may be needed and called for 
in other chapters as well. Furthermore, I think there may be 
certain provisions that we initially wanted in the original TPP 
that maybe are not so important anymore. So there may be areas 
where we would be seeking to delete obligations from the 
agreement as well. And some of those might be welcomed by other 
countries.
    Senator Daines. Thank you.
    I want to follow up too with a question about India. I 
believe that India, as we are looking short- and long-term, 
will play an even larger role, and the U.S. should work to 
expand our economic ties and consider entering formal 
negotiations with India, which presents an enormous opportunity 
certainly for U.S. farmers. In Montana, we are the Nation's 
leading pulse crop producer now--a big opportunity there.
    In addition to that, I think the strategic, the regional, 
and the geopolitical significance of India is a counterweight 
to China's growing influence. What opportunities and challenges 
might you see with regard to India, whether we thought of that 
on a bilateral basis or multilateral?
    Ms. Cutler. I guess that is for me?
    Senator Daines. That is. I am sorry, Ms. Cutler; that is 
for you, yes.
    Ms. Cutler. Look, when it comes to India, I could not agree 
with you more that there are enormous opportunities there. But 
I need to be quite honest: there are enormous challenges as 
well, particularly on the trade front.
    There is so much potential there, but throughout my long 
career at USTR, just a lot of disappointment. And I need to 
bring to the subcommittee's attention that India was a member 
of RCEP for many years, with the other 15 Asian countries. And 
then a year before the agreement was signed, it withdrew its 
participation. And that is because, in my view, India faces a 
lot of domestic opposition to trade liberalization and is not 
ready to take those steps to open its market yet.
    Senator Daines. I appreciate that blunt assessment. Is 
there any reason to be optimistic that that might change going 
forward?
    Ms. Cutler. Look, I am an optimistic person, and I think, 
perhaps when I look at India's participation in the Quad 
discussions now, that leaves me some optimism going forward. 
But I would also note that in a recent Quad leaders meeting, 
trade was conspicuously absent from the announcements. And I 
think that has more to do with India and less to do with the 
United States, Australia, and Japan.
    Senator Daines. Next is for Dr. Petri, as well as Ms. 
Cutler, about China not being transparent in how it is meeting 
IT commitments in the Phase One agreement. What can the U.S. do 
to better work with our allies to enforce IT protections in 
China?
    Dr. Petri, why don't you start there and give Ms. Cutler 
the final word?
    Dr. Petri. This is going to be a very, very difficult 
problem for the United States to solve. We need to work with 
partners, most importantly. And we are not members of a trade 
agreement, either bilateral or multilateral, aside from the 
Phase One deal, which could impose additional pressure upon 
China to alter its policies.
    So it will depend to a large extent on where China decides 
to go. It was, for a while, beginning to implement some 
improvements in its IT policies. It has stopped now. And it is 
unclear where it is going to go, and we do not have leverage at 
this point.
    We would have some leverage if we built a network of major 
trade agreements among like-minded partners like those in the 
CPTPP in the Asia-Pacific region.
    Senator Daines. All right. I am out of time here, so I am 
going to turn it back to the chairman. Thank you.
    Senator Carper. Thank you. Thanks very much for joining us 
with those questions.
    Senator Sasse is next on the list, if he is able to join 
us. Senator Sasse, are you there?
    [No response.]
    Senator Carper. Okay; Senator Young would be next. Senator 
Young, are you there?
    Senator Young. I am, Mr. Chairman. Thank you. And I want to 
thank our expert witnesses for sharing a comprehensive outlook 
on the Asia-Pacific region today.
    As we all know, China's influence is especially strong with 
its regional neighbors. But it is also growing rapidly across 
the globe and hitting very close to U.S. soil. Developing 
countries become saddled with debt from China in exchange for 
an economic lifeline. But this reliance comes with significant 
strings attached. Censorship and public proclamations 
supporting Chinese positions are one example. Lax IT 
protections and poor enforcement of trade secret laws are 
another example.
    One of the worst-case scenarios for this parasitic 
relationship is Cambodia. Cambodia has seemingly surrendered 
large amounts of coastline to Chinese military activities and 
is using political propaganda to extol the Chinese and to 
lambaste Americans, all in exchange for buildings, roads, and 
bridges.
    This question is for Ambassador Cunningham. Ambassador, am 
I wrong to be concerned with the level of Chinese involvement 
in the countries in the Asia-Pacific region?
    Ambassador Cunningham. Thank you, Senator. No, not at all. 
Obviously, China is going to have a relationship with its 
neighbors, and with countries around the world, and that is 
entirely fitting. It is how it uses that relationship and where 
it uses its economic power of punishment or enticement, that I 
think we and our partners need to be worried about.
    So to go back to my theme, we collectively are in a much 
better position to contest that kind of Chinese influence when 
a broad array of countries are concerned about it, and are 
willing to express that concern and to act on it.
    A number of countries around the world have been enticed or 
intimidated by China into arrangements and agreements, some of 
which they have come to regret. And we should have a forum 
collectively where we can talk to people who share our values 
about the dangers of that behavior, and about how we can 
effectively help other countries repair damage where we 
resisted in the first place--even as we have to keep in mind 
that China has a legitimate interest of its own in 
relationships, economic and otherwise, with its neighbors.
    It is where they go off the road that I think we need to be 
alert and can be helpful in helping others and strengthening 
our own values-based framework.
    Senator Young. Well, that sounds right to me. I mean, it is 
an incredibly populous country--that is, China--and growing at 
a rapid rate. We would expect them to play a significant role 
in the region, and no one is suggesting that they should not. 
It is the rules of the road, as it were, that they are 
following, or failing to follow, as they pursue their 
interests.
    Mr. Ambassador, in what ways would you say the United 
States is poised to build better trade relationships with 
countries in the Asia-Pacific region? And what are the chief 
barriers to improving such relationships?
    Ambassador Cunningham. The foremost instrument that we have 
is engagement, pure and simple, engagement on things that 
countries in the region want to work with us on. We have an 
attraction for partnerships, for all of the difficulties that 
occur in relations between large countries and smaller 
countries. We have attractions in our relationships that the 
Chinese do not have and will not have for the foreseeable 
future. People want to work with us, basically, and they become 
alarmed when we are not engaged or when we are not available, 
or when we walk away from things that we have agreed to.
    Senator Young. So it is our value system. And that value 
system--what I am hearing is, that value system allows the 
United States to establish deeper relationships, including 
commercial relationships, with others around the world. Is that 
accurate?
    Ambassador Cunningham. That is exactly right, Senator, and 
that is the strength that China cannot replicate.
    Senator Young. And would you assess that our values and our 
way of life will be undermined and could be in various ways 
threatened moving forward if we fail to leverage our values in 
the deeper commercial relationships with allies and partners in 
the Asia-
Pacific region?
    Ambassador Cunningham. Our values and our vision of how 
societies ought to be organized are already being contested by 
China and by some other countries. And that contest is going to 
continue. It is long-term. The Chinese look and act long-term, 
and we need to learn how to do the same thing, in the 
understanding that we have a stronger base, actually, if we 
will take advantage of it.
    Senator Young. Thank you so much for your service and your 
appearance before the committee today.
    Senator Carper. I second that emotion.
    All right. Senator Cornyn has a couple of more questions 
and then may want to offer any closing statements, and then I 
have a few questions and a closing thought or two as well.
    Senator Cornyn?
    Senator Cornyn. Ms. Cutler, I believe I heard you say that 
trade agreements are trusted supply chain agreements. Did you 
say that? And could you explain what you mean by that? I 
thought that was an interesting characterization.
    Ms. Cutler. Sure. That is what I said, and I truly believe 
that. There is so much talk about creating trusted supply 
chains, and that is what these regional trade agreements are 
about. So, getting rid of barriers, you are letting trade move 
freely between the countries. There are strong trade 
facilitation provisions and you have set common rules of origin 
and other common rules. So by definition, it is a group of 
like-minded countries coming together, encouraging their trade 
to take place within this block.
    Now is it sufficient, given some of the supply chain 
challenges we are facing now? Perhaps not. And if we were to 
rejoin the CPTPP, for example, would we want to seek a separate 
chapter on supply chains? Or would we want to include annexes 
with supply chain agreements with respect to specific products 
like semiconductors or batteries, and just have a handful of 
those countries involved?
    There are a lot of possibilities, but I think once you 
start thinking of these trade agreements along these lines, you 
will see there is not much difference between this notion of 
trusted supply chains and regional trade agreements. There is a 
lot of overlap,
    Senator Cornyn. Well, that is an interesting way to frame 
it. I had not thought about that before, so thank you. You 
know, for myself, I think I learned a lot about COVID-19 and 
supply chains. And the example that I have pointed out to 
others is that when I talked to my Governor in Texas when 
COVID-19 hit our shores, he said, ``There are two things I 
need. I need testing, and I need PPE.'' And the more I looked 
into it, the more I realized that almost all of the PPE was 
manufactured in China. And why was that? Well, because it was 
the cheapest place to produce it, and then for us to export it.
    So it seems to me that one of our lessons--and I looked to 
semiconductors and had a hard time sleeping at night, realizing 
that 90 percent of the semiconductors in the world come from 
Asia; 63 percent from Taiwan alone. And recognizing that, 
whether it is a natural disaster, or another pandemic, or a 
military conflict--Heaven forbid--in the region which would cut 
us off from access to those advanced semiconductors made by 
Taiwan Semiconductor, for example, the economic shock, not to 
mention the national security threat to the United States, is 
unacceptable. So that is the reason why we have moved forward 
in that area to incentivize more manufacturing of 
semiconductors here on our shores.
    Mr. Allan, I might ask you, just as a large company, I am 
sure you have very complex or involved supply chain issues. I 
know there must be a number of reasons, financial and business 
reasons, to diversify your supply chain.
    Could you talk a little bit about what you, what Black & 
Decker does, or what similar companies do to diversify their 
supply chain and how you view this issue? Is this an issue that 
you think has significance, and is it something we ought to be 
paying more attention to? How would you characterize that?
    Mr. Allan. Thank you, Senator. I do believe very strongly 
that diversifying the supply chain for companies like mine is 
incredibly important. And it is something that we at Stanley 
Black & Decker have been focused on for over 10 years now, as 
we continue to migrate as much manufacturing closer to our 
customers, whether those are customers in the United States, or 
customers in the European region, or other parts of the world. 
And that is a strategy that is important to not only the 
success of Stanley Black & Decker, but also the success of our 
customers.
    And as a result, we have been working on that 
diversification over the last decade. And as we went through 
the pandemic, we recognized the value of that situation where 
we were able to continue to navigate a very difficult set of 
circumstances and move product to different locations 
logistically, whether that was cross-country or just within the 
United States in many examples.
    And so that diversification ultimately allowed the company 
to be stronger. And I do think having strong trade agreements 
with key countries around the globe--and in this particular 
case we are talking about the Asia-Pacific region--really 
facilitates the opportunity for that diversification, while it 
also facilitates the opportunity to increase manufacturing here 
in the United States.
    Senator Cornyn. Well, as I have said, I think the pandemic 
taught us a lot of lessons that we need to pay heed to, one of 
which to me seems like we cannot depend on a country that does 
not play by the rules as a reliable or trusted supply chain 
provider. And I think the framework Ms. Cutler has suggested--
we are thinking about those trade agreements as a trusted 
supply chain agreement--is just another way to characterize 
what trade agreements are. It would be pretty obvious to us 
that if we could not have a supply chain agreement, or a trade 
agreement with a country like China, then maybe that ought to 
be a signal to us that we should not enter into those 
agreements, and we ought to be looking for other friends and 
allies.
    For example, I think Senator Daines and Ms. Cutler talked 
about India. India comes from a similar history as the United 
States, both as former colonies of the United Kingdom, and one 
of the inheritances we have, both countries, is the rule of 
law. And like I said, when China does not play by the rules, I 
think it is an opportunity for us to think about how we would 
move those supply chains to trusted partners and think of that 
in terms of one of the goals of these trade agreements.
    So, Mr. Chairman, thank you for organizing this hearing. I 
think it has been very helpful for a number of reasons, and I 
hope we have provoked some thinking that will be productive in 
the future. But it seems to me that we all agree, in Congress 
certainly, on what China presents, and the importance of our 
engagement in the region. And I thank you for organizing the 
hearing.
    Senator Carper. We are happy to work on it with you and 
your staff.
    I have a couple of questions, and then I will offer a 
closing statement. Anything else you would like to say in terms 
of closing, Senator Cornyn? Anything else?
    [No response.]
    Senator Carper. Okay.
    A couple of questions, if I can. One of the things I was 
going to ask you to do is for you just to talk, continue to 
talk to folks who might be watching this, who say this is just 
a lot of acronyms, and for whom it does not make a whole lot of 
sense.
    Every now and then I am reminded of the advice I got from 
an old Methodist minister in southern Delaware--Seaford, DE--
who once said to me when I was becoming the Governor of 
Delaware, he said, ``Governor Tom,'' he said, ``the main thing 
is to keep the main thing the main thing.'' That is what he 
said. And I was not sure what he meant by that, but eventually 
I figured it out.
    And the last thing I will ask you to do is just to take a 
minute and talk to us about the main thing, as we call it a 
day.
    I have two questions, though; one would be to Ms. Cutler. 
As you know, the Trans-Pacific Partnership contained a digital 
trade chapter that would have opened markets for our goods and 
services in 11 other countries in the Asia-Pacific rim. In 
fact, several of the provisions within this chapter were 
adopted and included in the USMCA and the U.S.-Japan Digital 
Trade Agreement.
    In the last year, the coronavirus pandemic has shown just 
how much Americans rely on the Internet for work, for 
education, for health, for commerce, and a lot more. In order 
to remain competitive in the digital economy, I believe we need 
to be strategic and to work cooperatively with our allies to 
ensure fairness, transparency, and openness in our e-commerce 
and data roles. This is especially true in the Asia-Pacific 
region. Of course, several of the TPP countries have formed 
their own digital trade agreements and are trying to engage on 
e-commerce matters with their neighbors.
    This question is for Ms. Cutler. In your view, what can the 
U.S. learn from these recent digital trade agreements? And what 
should the U.S. do to constructively reengage with our allies 
on digital trade matters? Ms. Cutler?
    Ms. Cutler. Well, the United States, as you noted, has a 
strong interest in remaining at the table, shaping the rules on 
digital trade and digital technologies. Our small and medium-
sized enterprises rely on these tools to survive and trade, and 
I think a digital trade agreement would offer benefits to our 
workers and our middle class, including exploring issues like 
digital inclusiveness, as well as democratic values of fairness 
and transparency.
    So I think there is a lot we can gain from this. Other 
countries in the region, as you mentioned, are forging their 
own deals on digital. We have a very strong digital chapter in 
the USMCA which was worked on and approved by Congress.
    So I think we are well-positioned to enter into a 
conversation with our regional partners and help shape those 
rules, today's rules, but also to provide a forum for shaping 
the rules regarding new technologies. Other countries in the 
region are setting those tables right now. As you said, we do 
not want to be on the menu, we want to be at the table.
    Senator Carper. Yes.
    My last question, if I could, would go to Ambassador 
Cunningham. As a senior member and former chairman of the 
Homeland Security and Governmental Affairs Committee, I have 
had a keen interest in the intersection between trade and 
national security. Over the past several years, the U.S. has 
been subject to a variety of state-sponsored cyberattacks, as 
we know all too well, not only on government agencies but on 
our universities and domestic companies.
    Not only do these cyberattacks undermine confidence in 
digital trade, they also pose a grave national security threat. 
I am heartened by the inclusion of cybersecurity provisions in 
recent trade agreements like the USMCA and the U.S.-Japan 
Digital Trade Agreement.
    My question, Ambassador Cunningham, is this: could you 
speak to the opportunities that trade agreements present to 
strengthen both our economy and our national security posture? 
What actions should the U.S. take to cooperate with our allies 
on this issue, Ambassador Cunningham?
    Ambassador Cunningham. Thank you. So I think that is a very 
interesting question. Obviously, cybersecurity is a priority 
for all of us in the West, and particularly when it comes to 
protecting our infrastructure and our own security apparatus, 
and our economy and our intellectual property, for that matter.
    So we have a shared interest, it seems to me, quite 
regardless of anything that China or Russia or anybody else 
does. We have a shared interest, among our trading partners and 
our close allies, in cooperating and promoting cybersecurity 
and establishing rules of the road for how we protect ourselves 
and how we might act in defense of ourselves when we are 
attacked.
    This is a very hot-button issue, of course, at the moment. 
But I think it should be ingrained in our discussions about 
trade and economics going forward, as well as being handled 
internally by each of the governments concerned.
    Senator Carper. Thank you. All right.
    Before I conclude, I mentioned--I told the story about 
Pastor Reynolds down in Seaford, DE, at the Methodist church 
and how he said to me, as I was about to become Governor some 
years ago, to keep the main thing the main thing. And for folks 
around the country who might be listening in this afternoon and 
watching us, some people may say, ``Well, that is just a lot of 
gobbledy gook.'' That is a lot of acronyms and does not make 
much sense or have a whole lot of relevance for them in their 
lives. And maybe you could just explain why it does have 
relevance, and maybe share with us sort of what is the main 
thing here that they should take away, please? Wendy, I will 
ask you to lead off if you would, followed by Mr. Allan, and 
Dr. Petri, and then Ambassador Cunningham.
    Wendy?
    Ms. Cutler. The Asia-Pacific region is growing quickly and 
offers enormous economic opportunity and is really vital to the 
future of American health, jobs, and innovation. And so we need 
to be engaged. We need to be working with these countries. If 
we are not, others will fill the vacuum, like China.
    Senator Carper. That is good. Thank you.
    Mr. Allan, please?
    Mr. Allan. I would agree with what Ms. Cutler just said. I 
do believe that the United States needs to have a significant 
role in the Asia-Pacific region. This is one of the fastest-
growing regions in the world, as she mentioned. The growth 
opportunity is significant for the U.S. economy as well, as 
many manufacturers over time can begin to provide products into 
that market that could potentially be manufactured here in the 
United States. And so it creates an opportunity for our country 
going forward to have strong trade agreements with a very large 
part of the world that is growing at a significant pace, or 
somebody else might step in and do it on our behalf.
    Senator Carper. Thank you, sir.
    And Dr. Petri, please?
    Dr. Petri. Thank you, Mr. Chairman. We have talked a lot 
over the last couple of hours about the growing challenges to 
the United States, and indeed our partners and allies, in the 
Asia-Pacific from China.
    We need to better align our economic relationships with the 
national security issues and the national security objectives 
that these challenges represent. And most importantly, I want 
to add that our friends want us to be there in the region. 
Japan has worked very hard to leave an open space for the 
United States to reenter the new CPTPP agreement, and Japan has 
many partners that would equally welcome the United States to 
come back.
    So these are measures that we should take for our own 
interests, but we will be welcomed with wide arms when we 
resume our rightful place in regional economic decision-making. 
Thank you.
    Senator Carper. That is an encouraging note to close on.
    And finally, Ambassador Cunningham, please, the main thing.
    Ambassador Cunningham. I think the main thing is that we 
have a huge advantage in values and innovation to bring to the 
table in Asia and elsewhere, and, as Dr. Petri just said, our 
allies want our involvement and engagement.
    Also, competition is good, if you are prepared for it. And 
the competition is taking place. China is moving ahead in Asia, 
whether or not we are--whatever we do. And we need to be 
prepared for that, and we need to respond. And I am actually 
quite optimistic that we can get this right.
    Senator Carper. A long time ago, I was a naval flight 
officer, and my squadron was oftentimes deployed during the 
Vietnam War to the South China Sea, to the Western Pacific, and 
even into the Indian Ocean, and the areas where the Chinese had 
been pushing other countries around, and almost blocking the 
movement of our aircraft, our ships, and others in the region. 
There is a fair amount of adversity in that part of the world, 
and we are hearing about that. But I am also reminded of the 
words of Albert Einstein. I have never been able to get him to 
come to testify at a hearing, but if I did and we were talking 
about the kind of adversity we deal with, I would ask his 
thoughts, and then he would say, ``In adversity lies 
opportunity.''
    A lot of people remember quotes from Einstein. One of the 
most famous ones is that the definition of insanity is to keep 
doing the same thing over and over again, expecting different 
results.
    I love ``in adversity lies opportunity.'' And in testimony 
and an earlier conversation that we had, I think I heard you 
say that you were an optimist by nature. And this is probably a 
good area for us to be optimistic; not blindly optimistic, but 
this is, I think, definitely a glass half-full. We have to be 
smart about it.
    I think the testimony of these witnesses today has made us 
a little smarter. As my dad used to say to my sister and me, he 
would say that we need to take our smart pills. We were kids, 
and maybe with your help we are taking a few extra smart pills 
to go home with.
    So with that, I want to thank Senator Cornyn and his staff. 
I want to thank majority staff here too, who are sitting over 
my right shoulder, and to thank all of you for all your work in 
helping us pull together a great panel of witnesses that will 
enable us to learn something that is really important.
    This is our first hearing in this Congress, and it is an 
important one. And it is one that I think has put us off on a 
very good start. We have been talking here today about the next 
hearings that we want to hold, and you have helped us clarify 
that in our minds, and for that we are grateful.
    But we thank you for appearing here today and for lending 
your expertise to this discussion, and making it relevant in 
the lives of all of us in this country.
    And for Senators who wish to submit questions for the 
record, those questions are due 7 days from today. That is 7 
days from today. Our witnesses will have 45 days to respond to 
any questions for the record. We would appreciate your doing 
so. If you want to respond more quickly, you are welcome to do 
that as well.
    And with that, this hearing is adjourned. Thank you all so 
much.
    [Whereupon, at 4:33 p.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


        Prepared Statement of Donald Allan, Jr., President and 
            Chief Financial Officer, Stanley Black & Decker
    Chairman Carper, Ranking Member Cornyn, and members of the Senate 
Finance Committee, thank you for the opportunity to testify as a 
witness for this hearing. As President and Chief Financial Officer for 
Stanley Black & Decker, I lead our global operations organization, 
which is the heart of our manufacturing and supply chain operations.

    I.  Stanley Black & Decker Is a Purpose-Driven, World Leading 
Manufacturer and Significant Global and National Employer.

        World Leader: A global manufacturer of hand and power tools, 
infrastructure and industrial equipment, and creator of security 
solutions. Homes, buildings, and infrastructure projects are built and 
maintained with our tools and our heavy equipment and attachments. 
Valuables are protected and health care is provided to people by our 
security systems and solutions, and vehicles and industrial equipment 
are constructed with our engineered fastening solutions.

        1843: Stanley Black & Decker has a long history having been 
founded in New Britain, CT in 1843. We are still headquartered minutes 
away from where Frederick Stanley founded his bolt manufactory.

        Purpose: We are a purpose-driven organization guided by our 
Purpose which is ``For Those Who Make the World'' because we are in 
business to help those who use our products and solutions to do better, 
safer, more significant work. The pandemic reminded us that Those Who 
Make the World are indeed our key stakeholders--our employees and 
communities, our suppliers, and our customers--and they are the 
stakeholders that 55,000 of us serve, every day. I always delight in 
speaking with Those Who Make the World because they take such pride in 
the things they build--like schools, hospitals, hotels, bridges, farms, 
ranches, or when they fix an 18-wheeler to drive goods across the 
country. These are the people who led the way in our fight against 
COVID.

        Those Who Make the World/Critical Infrastructure: These are 
the people we live for, and in the face of rapid technological and 
societal change, traditional public institutions like governments, 
schools, and civic organizations cannot keep pace. But, public trust in 
corporations is significantly higher than these institutions. We 
believe that our stakeholders have high expectations of our company and 
we intend to meet them leveraging the agility, innovation, imagination 
that we utilized to help the company and our stakeholders survive the 
pandemic. We will continue to stand with those who demand justice, and 
to serve as constructive partners with those seeking to address 
climate, diversity, racial justice, and other social challengesfacing 
our stakeholders.

        Our Societal Role/ESG: We believe, as a leading global 
corporation, that we have a societal role. With this greater role, we 
have the privilege and responsibility to help solve the world's biggest 
challenges through socially oriented innovations, such as building the 
workforce of the future, addressing environmental concerns, and racial 
equity.

        Employer: Worldwide, we employ over 55,000 people, with over 
17,000 people in the U.S. Nearly 40,000 of these colleagues are 
employed in manufacturing-related jobs, and thousands more are in 
engineering and design to create and innovate the world's leading 
tools.

        Made in USA: We are hiring in the U.S.--we currently have over 
2,000 manufacturing and operations jobs open in the U.S. Demand is 
strong, and we are expanding our U.S. operations. Not only are we the 
largest hand and power tool manufacturer in the world, we are the only 
company manufacturing power tools at scale in the United States. Our 
increased investments, manufacturing and growth in the U.S. is a 
manifestation of the commitment we made nearly 10 years ago to move our 
supply chains and operations closer to our customers. For several 
years, on an ongoing basis, we have been increasing production in the 
U.S., building new factories, adding jobs, and contributing to local 
economies and communities where we operate.

        Committed to DEI and Creating Black Talent Pipeline: On behalf 
of Stanley Black & Decker, I applaud Congress and the President making 
Juneteenth a Federal holiday. This year, Stanley Black & Decker 
employees had a companywide day off on Friday, June 18th, as a ``Day of 
Hope and Healing'' that leads into Juneteenth and honors George Floyd 
and those who have lost their lives or have been victims of violence. 
The company encouraged employees to use the day to reflect on the hard 
work that lies ahead to make our society a better, safer, and more just 
place to live.

         The addition of Juneteenth as an ongoing, company holiday 
starting in 2022 continues Stanley Black & Decker's efforts to confront 
racism and social injustice throughout our communities and across the 
world.

        In June 2020, following the tragic death of George Floyd, we 
strengthened our commitment to increase minority talent within our 
company, at all levels. We are partnering with several non-profit 
organizations, like the Thurgood Marshall College Fund, to develop 
diverse talent pipelines, and others that are partnering on developing 
skills credentials to make manufacturing jobs more accessible to 
broader and diverse candidates and particularly those displaced by 
COVID.

    II.  Need for Congressional Engagement and Trade Strategy to 
Maintain U.S. Competitiveness.

    We are expanding our manufacturing in the U.S. to better meet 
demands of our customers and end-users across the country, and in 
fulfillment of our commitment to move our supply chain and 
manufacturing operations closer to our customer set forth nearly 10 
years ago. In this period of recovery from the impacts of the COVID 
pandemic, we believe a strategic U.S. trade agenda is critical to 
ensuring a robust and inclusive economic recovery. The agenda should 
support job creation in the U.S., expand access to new markets, and 
ensure global competitiveness of U.S. manufacturing. The United States 
should remain engaged in the Asia- Pacific region to enhance regional 
partnerships, support strategic supply chains across those 
partnerships, and promote high standards in trade.

    Strengthening commercial and diplomatic ties with countries 
including South Korea, Japan, India, and other allies would ensure that 
no one country is over-relied on for serving the world, and 
particularly the U.S. market. Strategic U.S. engagement would also 
strengthen rules-based trade across the region including the 
disciplined use of subsidies, preventing of currency manipulation, 
maintaining secure supply chains and critical infrastructure, and 
improving market access for U.S. companies.

    The U.S. trade agenda should also reconsider the section 301 tariff 
regime on products of China, particularly those that are inputs used to 
support U.S. manufacturing. We appreciate the members of this 
committee, other members of Congress, and the administration exploring 
options to reassess the trade relationship with China. We applaud the 
administration's ``top-to- bottom'' review of the 301-tariff policy as 
a thoughtful approach to the commercial relationship and we look 
forward to the conclusion of the review. We also applaud the Senate's 
support of the provisions of the United States Innovation and 
Competition Act that reauthorize the section 301 tariff exclusions and 
create a new exclusion process that can be more fairly and 
transparently administered by USTR.

    The section 301 tariffs have created competitive barriers for U.S. 
companies, thereby creating an advantage for our competitors in other 
countries, who can continue to sell products into the United States and 
invest in innovation unencumbered by these extra taxes. The tariffs 
must also be better managed to not impede or discourage investments in 
U.S. manufacturing. Increasing high-value manufacturing presence in the 
United States will necessarily rely on importing at least some inputs. 
The 25-percent tariffs on these inputs have effectively become a 25-
percent tax on U.S. manufacturing. The Senate has helpfully recognized 
that this is an unsustainable policy and that funds currently being 
used to pay tariffs would be better spent on investing in new U.S. 
facilities, manufacturing, and competitiveness.

    III.  Supply Chain Resiliency and Agility Are Critical to Meeting 
Customer Demands.

    Over the past 16 months or so, through the height of the COVID 
crisis, we had 3 key priorities that we focused on and continue to 
focus on: (1) Keeping our employees safe; (2) Maintaining our 
operational continuity; and (3) Doing our part to stop the spread and 
impact of the virus in our communities.

    We are still living these priorities in the U.S. and across the 
world, and we are currently focused on ``strongly encouraging'' our 
employees to be vaccinated--we have run 30 on-site or near-site 
vaccination drives for our employees, we have conducted robust safety 
and vaccine communications featuring senior leaders, influencers, 
medical professionals and in several languages and some specifically 
for communities of color.

    Across the U.S. and throughout the world, the COVID crisis brought 
into relief several critical aspects of ensuring supply chain 
resiliency:

        Global Over-Reliance on China: There was a stark over-reliance 
on Chinese supply chains by all kinds of industries and companies 
making access to critical care products difficult. Now in the recovery 
from COVID, there are shortages in the U.S. of many foundational 
products for technological development including batteries and semi-
conductors.

        The Importance of Localization to Enhance Competitiveness and 
Meet Customer Demands: Global supply chains led to over-reliance on 
shipping goods across the world, and while the trade network still 
makes that possible, it is not preferable for companies like ours with 
capability to manufacture at scale in the United States. Congress 
should support and incentivize companies to move operations to the 
U.S., and at the same time, ensure a competitive landscape for 
manufacturing in the U.S. underpinned by a comprehensive trade 
strategy, a reassessment of the tariff regime, and sustained support 
for 
demand-driven workforce development programs.

    IV.  Stanley Black & Decker Is Expanding Operations in the United 
States, Closer to our Customers.

    Roughly 60 percent of our Tools and Storage sales are to U.S. 
customers, and about 10 years ago we committed to moving our supply 
chain and manufacturing operations closer to these customers so we can 
serve them with the right product, at the right time, at the right 
price. Some of the recent and forthcoming highlights of our increased 
operations and manufacturing investment and growth in the U.S. include 
the following facilities and locations:

        Ft. Worth, TX: In October 2021, Stanley Black & Decker will 
cut the ribbon on a new facility in Ft. Worth, TX that will be the new 
home of Craftsman in the United States. We bought the Craftsman brand 
in late 2016 and then committed to bringing the manufacturing of the 
famous Craftsman hand tools back to the U.S., which the brand's prior 
owner had let go to China decades ago. This year, we make good on that 
commitment, and will be hiring up to 500 people to run the facility. 
With Craftsman as a brand that is 99 percent sold in the U.S., it makes 
sense to move that manufacturing closer to our primary customers.

        Jackson, TN: In Jackson, TN, where we make DeWalt-branded 
pancake air compressors, we have recently expanded the facility to meet 
U.S.-customer demand for these products through manufacturing right 
here in the U.S., and also to create metal housings for export. 
Investments in this facility have led to roughly doubling the number of 
employees in that facility since 2015 to about 900 employees today, and 
we currently have over 100 jobs open at that site.

        Fort Mill, SC: Similarly, in Ft. Mill, SC, we opened a new 
power tool manufacturing facility in 2018 to make high-end cordless 
DeWalt drills and impact drivers, and in turn grew our manufacturing 
workforce by several hundred employees in the past 3 years.

        Mission, TX: In 2018, we opened our Mission, TX manufacturing 
facility to make power tools that has grown to 450 employees in the 
past 3 years.

    These expansions have significantly increased our cordless power 
tool production in the U.S. over the past several years and are 
representative of the kinds of growth and investments that have 
resulted in growing our U.S. manufacturing workforce by 40 percent 
since 2015. We are moving our supply chain and operations back to the 
U.S. to serve U.S. demand and could accelerate this growth if the 
section 301 tariffs related to China were removed.

    V.  Adopting Advanced Manufacturing Processes Is Critical to 
Establishing Competitiveness of U.S. Manufacturing.

    A key driver of enhancing the competitiveness of U.S. manufacturing 
is the shift to advanced manufacturing which requires both a 
technological and a human-
workforce transformation. New technologies and the infusion of data 
into the manufacturing process makes manufacturing more efficient, 
greener, and more responsive to customer demands. Contrary to the 
perception that advanced manufacturing replaces jobs, our experience 
has been that in facilities where we have adopted advanced 
manufacturing--including each of those mentioned by name above--those 
facilities have increased production and the number employees, 
significantly.

    VI.  With the Advanced Manufacturing Transformation Comes the 
Responsibility to Skill, Upskill, and Reskill the Workforce in our 
Facilities and our Communities.

    Introducing and implementing technologies in manufacturing does 
require new skill sets for our employees. In accordance with our 
commitment to our employees as a key stakeholder, we are taking on the 
role of upskilling and reskilling our employees, and skilling the next 
generation of the workforce to meet these needs. In particular, we 
coordinate with non-profit partners, governments, technical schools, 
and teachers to create skilling programs that equip students and mid-
career employees, and those looking for new careers, with the skills 
they need to thrive in the 21st-century economy. In Jackson, TN, we 
work with the local public-school system for high school students to 
train in advanced manufacturing for half their school day and provide 
classroom space on site for traditional learning in the other half of 
their day. In Connecticut, we recently created a digital skilling 
credential with the help of non-profit partners and the CT College of 
Technology to prepare post-secondary students with digital skills. In 
many locations we are taking these learnings to our supplier and 
customer communities. Congress should proceed with supporting 
demand-driven workforce development policies that will support the 
skilling of the next generation of the manufacturing workforce, 
allowing businesses to lead the way in creating workforce pathways and 
skilling that meets the needs of those businesses.

    It has been a pleasure to provide you with Stanley Black & Decker's 
perspectives on how trade and related policies can support increased 
U.S. manufacturing, an inclusive, jobs-led economic rebound from COVID, 
and how businesses can lead in playing a societal role to aid with 
adaptation and coping with rapid change. We welcome the opportunity to 
continue to work with you on these or other issues before the Congress.

                                 ______
                                 
                   Submitted by Hon. Sherrod Brown, 
                        a U.S. Senator From Ohio

            Office of the United States Trade Representative

_______________________________________________________________________

June 10, 2021

    Remarks of Ambassador Katherine Tai Outlining the Biden-Harris 
           Administration's ``Worker-Centered Trade Policy''

WASHINGTON--United States Trade Representative Katherine Tai today 
delivered remarks and participated in an AFL-CIO town hall to lay out 
her vision for a 
worker-centered trade policy that supports the Biden-Harris 
administration's Build Back Better agenda. In her remarks, Ambassador 
Tai explains why workers must be at the table early on, and throughout 
the negotiating process and she describes how the policy will help the 
economy grow from the bottom up and the middle out.

The full text of her prepared remarks is below.

Thank you, President Trumka, for that very kind introduction. You have 
been a fearless champion for working people throughout your life, and I 
am grateful for your leadership.

I also want to recognize AFL-CIO Secretary Treasurer Liz Shuler, 
another fierce advocate for workers, and the other union leaders and 
members of the AFL-CIO Executive Council who are here today in the room 
and via zoom.

Also, I want to thank the union members who have joined us as well. 
This speech is for you.

The past 15 months have been hard for all of us, but especially hard 
for front-line workers. Nearly 600,000 Americans have lost their lives 
to COVID-19, including union members who paid the ultimate price for 
showing up to work.

Ending the pandemic is President Biden's top priority, and thanks to 
his leadership, we are making progress. The majority of American adults 
have received at least one shot, and we are pushing to get more 
Americans vaccinated as quickly as possible. The pandemic isn't over 
for any of us until it's over for all of us.

That's why we will share 80 million vaccine doses with other countries 
by the end of this month, and yesterday the United States announced it 
will purchase and donate 500 million Pfizer vaccine doses to help the 
rest of the world with its vaccination efforts. And in May, we declared 
our support for a waiver of intellectual property protections under the 
TRIPS Agreement for COVID-19 vaccines.

President Biden understands that our economy cannot fully recover until 
we defeat the virus, but there are signs of improvement. We are on 
track for the fastest economic growth in 40 years, and in our first 5 
months, the Biden-Harris administration oversaw the creation of a 
record 2 million jobs--that's more than any other administration, ever. 
Real wages are finally going up, the unemployment rate is coming down, 
and the number of initial weekly jobless claims has been cut in half.

But there is more to do.

Build Back Better starts by growing the economy from the bottom up and 
the middle out and putting workers at the center of our economic plans.

Workers and worker power are fundamental to those ideas, and that's why 
the Protecting the Right to Organize Act--the PRO Act--needs to become 
law. We can't rebuild an economy that works for everyone without 
empowering workers and giving them a voice to secure the better wages, 
benefits, and working conditions they deserve.

This is particularly true for workers of color, who have the dual 
burden of fighting for workers' rights and for racial justice. They 
need the support of organized labor, and the Senate needs to send that 
bill to the President's desk so he can sign it into law.

We also need to enact President Biden's American Jobs Plan and the 
American Families Plan to invest in our future.

The President has been clear that trade policy will play a critical 
role in carrying out his vision for an economy where, as he puts it, 
``everyone is cut in on the deal.'' And that is why I'm here today: to 
talk about your important role in the Biden-
Harris administration's pursuit of a worker-centered trade policy.

We know that trade is essential to a functioning global economy. It is 
clear, however, that the past promises made to workers on trade were 
not met. Certain sectors of the economy have done well. But far too 
many communities and workers were left behind. The consequences for 
families when factories closed and jobs were sent overseas were real. 
And they were real for the workers who lost their jobs to unfairly 
traded imports, too. This created a trust gap with the public about 
free trade.

This wasn't because of trade agreements alone. Recent tax policy 
favored corporations over workers. Tax cuts for the wealthiest 
individuals and corporations never trickled down. President Biden knows 
this, which is why he wants them to pay their fair share.

In the United States, real wages have stagnated for decades, and the 
wealth gap--particularly between Black and White workers--has widened 
significantly. CEOs now make on average 320 times more than their 
employees. And the percent of workers in unions--a good indicator of 
higher wages and job stability--is half of what it was 40 years ago.

This inequality isn't fair or sustainable. It didn't happen overnight. 
It is the result of a long pursuit of tax, trade, labor, and other 
policies that encouraged a race to the bottom.

President Biden is leading us on a new path. He wants an economic 
policy, including a trade policy, that delivers shared prosperity for 
all Americans, not just profits for corporations.

We want to make trade a force for good that encourages a race to the 
top.

The first step to achieving this goal is creating a more inclusive 
process. In order to understand how trade affects workers, we want to 
come meet with, listen to, and learn from them.

By bringing workers from all backgrounds and experiences to the table, 
we will create inclusive trade policy that advances economic security 
and racial and gender equity. We want to lift up women, communities of 
color, and rural America--people that have been systematically excluded 
or overlooked.

Last week I joined Senator Sherrod Brown and some of his constituents 
in Ohio for a virtual roundtable. We talked about their priorities and 
the changes we can make to trade policy that will help their businesses 
and towns. I hope to have many more conversations like this in the 
weeks and months to come.

Our goal is to improve worker representation in trade policy in the 
United States and in multilateral organizations. The WTO, for example, 
doesn't adequately hear from workers, and we want to change that. We'll 
keep asking for this in other international organizations, such as APEC 
and the OECD too.

We know that when workers have a seat at the table in their workplace, 
wages go up, retirement benefits go up, workplaces are safer, and 
discrimination and harassment get addressed. We want trade to deliver 
the same results.

The USMCA agreement is a good example of what can happen when labor is 
at the table. It's not perfect, but because we collaborated closely 
with President Trumka and many of the union leaders here today, we 
negotiated a better deal for American workers.

Because of our partnership, the USMCA now includes:

    -  The strongest labor and environmental standards in any agreement 
ever;
    -  A new rapid response mechanism that allows us to quickly take 
action at a specific factory where workers are being denied their 
rights to freedom of association and collective bargaining; and
    -  Critical changes to the intellectual property provisions 
designed to increase access to affordable medicine for regular people.

Unlike previous trade agreements, USMCA passed with overwhelming 
bipartisan support. It is proof that consulting--really listening and 
working with workers, the labor movement, and a broad range of 
stakeholders--leads to more pro-worker, more meaningful, and more 
popular policy.

Less than a year after USMCA went into effect, we're already using its 
labor enforcement tools. Last month, we asked Mexico to investigate 
whether workers at a GM facility in Silao were denied their rights 
during a contract ratification.

This was the first time that the new rapid response tool was used by 
the U.S. government. It was also the first time in history that the 
United States proactively initiated labor enforcement in a trade 
agreement.

The AFL-CIO recently filed a rapid response petition alleging workers' 
rights had been violated at an auto parts manufacturer. Yesterday, we 
asked Mexico to review the allegations--the second time we've taken 
this step in the last month.

Under previous agreements, labor petitions could--and did--languish for 
years without a response from the administration. But we have acted 
quickly.

These enforcement actions matter. The rapid response mechanism will 
help to protect the rights of workers, particularly those in low-wage 
industries who are vulnerable to exploitation. Because when we fight 
for workers overseas, we are fighting for workers here at home.

And we'll do that across the board. Enforcing all of our trade rules is 
a priority for the Biden-Harris administration. Those who work hard and 
play by the rules, you deserve to have the government on your side when 
faced with illegal and unfair trade practices.

We must apply the same principles at the WTO. Despite a preamble that 
says ``trade . . . should be done with a commitment to raising living 
standards and ensuring full employment,'' the WTO's rules actually 
don't include any labor standards, and workers are often an 
afterthought. This needs to change.

The United States recently submitted a proposal to ensure that fighting 
forced labor is included in any agreement the WTO reaches to prohibit 
harmful fisheries subsidies. We know that forced labor is a serious 
problem in the fisheries sector, particularly on distant water fishing 
vessels. I hope WTO members will commit to a high-standards, meaningful 
agreement that includes our common-sense provision and that will 
contribute to tackling this problem.

This is not just an economic issue. This is a moral imperative, and I 
ask all of you to help us to build support for our effort. The WTO must 
show in these negotiations that it can improve the lives of regular 
people and that it is capable of responding to crises and tackling 
difficult matters, particularly when it comes to worker abuse.

If the WTO is to be relevant and a force for good, it must be 
revitalized and modernized. We must take bold steps to fix its 
negotiating function, commit to greater transparency, and reform the 
dispute settlement process.

Under the Biden-Harris administration, we will bring dignity of work--
and the empowerment of workers--to the WTO.

I am excited to work with Dr. Ngozi Okonjo-Iweala, the new Director 
General. With her leadership, and if WTO members choose to meet this 
moment, the commitments of that preamble may finally come true.

Whether we're negotiating issues at the WTO, or in other settings, we 
will be more successful if we partner with our allies.

The President promised that he would focus on rebuilding the American 
economy and the American middle class before he enters into any new 
trade deals, and that's exactly what he is doing. But he also knows 
that the world won't wait.

That's why we will also reengage with our friends, trading partners, 
and multilateral institutions to promote democracy, labor rights, and 
economic security. We know in the past other goals--including important 
national security and foreign policy concerns--have sometimes drowned 
out workers' voices in trade discussions and weakened our focus on 
serving American workers' best interests.

This time we're putting foreign policy and trade to work for the middle 
class. That means working with allies on a shared agenda that will lift 
up workers, increase economic security, and strengthen democracy around 
the world.

And we're already seeing results. We are close to an agreement on a 
global minimum tax, thanks to recent progress with G7 and G20 partners. 
And just last month, the G7 Trade Ministers made a historic commitment 
to work together to protect individuals from forced labor, including 
mitigating the risks of forced labor in global supply chains.

We're also working with allies to make our supply chains less 
vulnerable and more resilient. We need to diversify our international 
suppliers and reduce geographic concentration risk. For too long, the 
United States has taken certain features of global markets as 
inevitable--especially the fear that companies and capital will flee to 
wherever wages, taxes and regulations are lowest. The pandemic laid 
bare the challenge of this approach. And we need to fix it.

And crucially, by working with allied democracies on trade enforcement, 
we will more effectively respond to the policies of autocratic, non-
market economies that hurt our ability to compete. We will increase our 
leverage so that we can achieve more for American workers. That's why I 
am leading a Trade Task Force as part of the President's Supply Chain 
Resilience effort: to propose unilateral and multilateral enforcement 
actions against unfair foreign trade practices that have eroded 
critical supply chains.

Next week, I will join the President on his trip to Brussels and meet 
with my European counterparts. We'll participate in intense 
negotiations to resolve the 16-year old Boeing/Airbus disputes and to 
find a path forward on products like steel and aluminum. These talks 
will give us a chance, first and foremost, to champion the rights and 
interests of our workers in those industries, while also creating new 
standards to combat the harmful industrial policies of China and other 
countries that undermine our ability to compete.

From my conversations so far, I am optimistic that we will be 
successful.

Finally, a worker-centered trade policy means addressing the damage 
that U.S. workers and industries have sustained from competing with 
trading partners that do not allow workers to exercise their 
internationally recognized labor rights.

This includes standing up against worker abuse and promoting and 
supporting those rights that move us toward dignified work and shared 
prosperity: the right to organize and to collectively bargain. USTR 
will utilize the full range of trade tools and work with our allies to 
protect labor rights, including the elimination of forced labor and the 
worst forms of child labor, especially forced child labor. We must also 
achieve greater accountability from those in the business community 
that profit from this exploitation.

We will be more effective if our trading partners also commit to 
promoting, protecting, and enforcing internationally recognized 
workers' rights as part of their trade policies. And we will lead the 
way on this issue as a core American value.

Together with our allies, we must create high-standard trade agreements 
that empower workers and prevent other countries from violating labor 
rights to gain an unfair advantage in the global market. And we must 
aggressively enforce them.

We know we can't do this work alone. In addition to bringing workers to 
the table and partnering with our allies, we need to consult closely 
with the business community.

American companies have the know-how and expertise that we will need to 
identify market access opportunities, respond to unfair trade 
practices, and build strategic and resilient supply chains, all at the 
same time.

We want to partner with U.S. companies to send products stamped with 
Made in America to all corners of the world and to invest in American 
workers and communities. This is part of the Biden-Harris 
administration's pledge to Build Back Better.

A worker-centered trade policy seeks to expand opportunities for 
businesses by expanding economic security for workers here at home. I 
hope American companies of all sizes will join us in this effort. We 
need their ideas, experience, energy, and partnership.

At the beginning, I said this speech was for the workers who took the 
time out of their busy day to listen in.

You are the sweat, the muscle, and the brains behind American 
ingenuity, perseverance, and competitiveness. You are the backbone of 
our economy and our democracy. You are the guiding light of trade 
policy for the Biden-Harris administration.

When I go to Europe next week, it will be to encourage other allied 
democracies to pursue a worker-centered trade policy too and to work 
with us to set a high-
standard alternative to state-directed economies that do not promote 
the rights of workers and to combat forced labor, the worst 
illustration of the race to the bottom.

I'll be asking them to join me in making global trade policy a force 
for good that raises wages and increases economic security.

The more we invest in our workers at home and abroad, the stronger 
democracy will be worldwide. And by partnering with our allied 
democracies, we will more effectively respond to the threats of 
autocratic, nonmarket countries whose policies undercut our workers.

We've shown in our first few months--through USMCA enforcement, our WTO 
forced labor proposal, and many other actions--that we can craft a 
worker-centered trade policy if we partner with you.

It is still early days, and we have far more to do. But I have 
confidence that we will build off of these early efforts. By working 
together, we will achieve a trade policy that prioritizes the dignity 
of work and workers, that promotes shared prosperity and racially 
inclusive, equitable economic growth here at home and abroad.

Thank you.

                                 ______
                                 

                      A GOLD STANDARD FOR WORKERS?

    The State of Labor Rights in Trans-Pacific Partnership Countries

                                AFL-CIO

                              introduction
    This report seeks to shed light on the state of labor rights and 
commitments among the Trans-Pacific Partnership (TPP) partner 
countries. Respect for labor rights is at the core of increasing jobs, 
raising wages and creating broadly shared prosperity. The Obama 
administration had promised that the TPP would be a 21st-century 
agreement, a ``gold standard,'' that would promote and respect labor 
rights, and raise wages for U.S. workers and workers across the Pacific 
Rim. Unfortunately, the grim conditions facing workers in TPP partner 
countries were not effectively addressed in the TPP text or consistency 
plans. Many commitments to improve labor rights remain vague, and the 
proposed enforcement scheme relies on the discretion of the next 
administration. The failure of the TPP to incorporate needed 
improvements to labor commitments that already have proved themselves 
inadequate in previous agreements belies the agreement's stated 
commitment to workers. It is clear that, as currently drafted, the TPP 
would increase corporate profits and skew benefits to economic elites, 
while leaving workers to bear the brunt of the TPP's shortcomings, 
including lost jobs, lower wages and continued repression of worker 
rights.

    The majority of this analysis is based on the submission of the 
Labor Advisory Committee for Trade Negotiations and Trade Policy (LAC), 
a body consisting of U.S. trade union leaders with a statutory 
responsibility to provide advice to U.S. trade negotiators. The LAC had 
the statutory duty to respond to three questions concerning the TPP:

    1.  Is the Trans-Pacific Partnership in the economic interests of 
the United States?

    2.  Does the TPP achieve the applicable overall and principal 
negotiating objectives?

    3.  Does the TPP provide equity and reciprocity for labor 
interests?

    On all three of these crucial questions, the LAC concluded that the 
TPP fell short. Overall, the LAC found the TPP is likely to harm U.S. 
manufacturing interests, cost good jobs, suppress wages, and threaten 
our democracy and economic security interests, while doing little to 
improve conditions for workers in the United States and overseas.

    Before dealing with the question of labor conditions in the TPP 
countries, it is important to dispel some of the arguments that the 
supporters of the Trans-Pacific Partnership advance regarding the labor 
rights provisions in the text of the TPP.
``Enforceable'' Labor Rights Provisions
    The TPP's supporters note that the TPP's labor provisions are 
``enforceable.''

    This is the wrong measuring stick. The correct measurement is 
whether there are sufficient provisions to provide confidence that they 
will be enforced. The United States has never imposed trade sanctions 
or even a fine as a response to labor violations by FTA partner 
countries. It has only attempted dispute settlement once, against 
Guatemala. The Guatemala case has been ongoing since 2008 and workers 
have yet to experience any measurable improvements as a result.\1\ 
Despite receiving numerous specific recommendations, informed by 
experience, on how to turn theoretical enforceability into actual 
enforcement, the United States Trade Representative (USTR) failed to 
incorporate these recommendations. For example:
---------------------------------------------------------------------------
    \1\ As of February 1, 2016, a panel report from the first hearing 
(held in June 2015) has not even been published. Publication of the 
report is far from the end of the process. The case seems likely to 
drag on for years.

      The TPP fails to require parties to advance to the next stage in 
the dispute settlement process when an earlier stage proves ineffective 
(Article 19.15). This failure means that future labor submissions are 
---------------------------------------------------------------------------
likely to languish as the Guatemala case has.

      The TPP fails to include deadlines for its public submission 
process that would require parties to advance TPP submissions they 
receive in atimely manner (Article 19.9). This failure means that 
parties will be able to use ``administrative delays'' to indefinitely 
defer acting on such submissions, as happened with the Honduras case, 
in which the petitioners waited for an initial report for 2\1/2\ years, 
and formal consultations have still not commenced.

      The TPP fails to clarify the obligations of the parties with 
respect to International Labor Organization (ILO) standards (Article 
19.3). This vagueness as to what the obligation regarding freedom of 
association and other fundamental labor rights mean makes it less 
likely the labor obligations will be enforced effectively.

      The TPP fails to include measureable benchmarks or an 
independent evaluation to determine whether the consistency plans for 
Vietnam, Brunei and Malaysia are met. This failure means the 
determination that a consistency plan has been fulfilled and the TPP is 
ready for entry into force is wholly discretionary. The decision will 
be subject to immense commercial pressures to prematurely declare 
fulfillment. Such pressure was brought to bear regarding the Colombia 
Labor Action Plan (LAP), which also contained positive objectives, but 
lacked benchmarking criteria or an independent evaluation mechanism. As 
a result, success was declared prematurely, and Colombia has been out 
of compliance with its labor obligations since Day One of the 
agreement. This premature certification of compliance with the LAP 
apparently has deterred the U.S. government from self-initiating labor 
consultations with Colombia even though workers continue to be 
subjected to threats and violence, up to and including murder, in order 
to discourage them from the free exercise of their fundamental labor 
rights. There is no reason to expect a different outcome from the TPP 
plans.

      The TPP contains different dispute settlement mechanisms for 
foreign investors and working people (Chapters 9 and 19). Foreign 
investors can bring cases against TPP parties on their own, without 
having to petition their own government to do so. Working people must 
petition their governments, and then engage in years-long campaigns to 
attempt to move the cases through the arduous process. The negotiators 
demonstrated they know how to create effective dispute settlement 
mechanisms when they want to (Article 9). Thus, we conclude the failure 
to equalize the dispute settlement procedures available to workers was 
purposeful.

    The TPP's supporters say the labor chapter responded to all of 
labor's concerns.

    This is a spurious claim--one that easily can be disproved.\2\ As 
detailed in the section above, a number of important labor 
recommendations were wholly ignored. Those proposals that were not 
wholly ignored were included in a weakened form that would undermine 
their effectiveness.
---------------------------------------------------------------------------
    \2\ See ``Report on the Impacts of the Trans-Pacific Partnership'' 
by The Labor Advisory Committee on Trade Negotiations and Trade Policy, 
December 2, 2015, especially Chapter V and Annex 1.

    After providing high levels of engagement at the initial stages of 
the TPP negotiations, USTR moved in the opposite direction. Between 
February 21, 2012, and July 2015, the USTR and the Department of Labor 
(DOL) provided no updated texts of the labor chapter (and the same was 
true for many chapters of interest to working people). Furthermore, the 
LAC was never allowed to review the text or substance of the draft 
labor consistency plans for Vietnam, Malaysia and Brunei, despite 
numerous requests. Given that these arrangements are focused on these 
countries' labor and employment laws, the unwillingness of U.S. 
negotiators to share draft text of these arrangements with its labor 
advisers (who have security clearances) is indicative of the 
indifference USTR generally displayed toward its consultation process 
with the LAC throughout TPP negotiations. The gaps in labor rights 
coverage and lack of accountability mechanisms in the TPP exemplify the 
outcome of such an approach. The LAC could have offered advice that 
would have plugged holes and strengthened weak spots, but we were not 
provided an opportunity to do so, despite our role pursuant to the 
---------------------------------------------------------------------------
Trade Act of 1974.

    The TPP's supporters say it is much stronger than the May 10th 
labor chapter.

    USTR argues the TPP labor chapter greatly improves on language 
developed in 2007 known as the ``May 10th'' agreement on labor, which 
included ``enforceable'' language requiring countries to adopt and 
maintain in their laws, and to practice five basic internationally 
recognized labor principles as stated in the ILO Declaration on 
Fundamental Principles and Rights at Work. Yet the changes are minor 
and provide little value to workers (for example, TPP parties must set 
a minimum wage, but there is no level below which that wage cannot go). 
As the AFL-CIO noted at the time, the May 10th agreement, though an 
important step forward from previous FTAs, was ``by no means a complete 
fix appropriate for any country or any situation.''\3\
---------------------------------------------------------------------------
    \3\ Letter from Bill Samuel, director, Department of Legislation, 
AFL-CIO, to Congress. Available at: www.massaflcio.org/sites/
massaflcio.org/files/PERUlettertoHouse.907.pdf.

    Because both the May 10th agreement and earlier labor provisions 
have been weakly enforced,\4\ the labor movement worked hard to develop 
proposals, provide recommendations and engage positively with USTR to 
reform labor texts that had proved ineffective, even when dealing with 
countries with less severe labor and human rights issues than Vietnam 
and Malaysia. Rather than trying a new model, the TPP incorporates 
without improvement numerous provisions, including the discretion to 
indefinitely delay acting on labor rights violations, already known to 
be ineffective. Because employers in our trading partner countries will 
continue to abuse workplace rights, workers throughout the TPP region 
will continue to make lower wages and will have fewer benefits and more 
dangerous workplaces than they otherwise might. An injury to a worker 
in Vietnam will indeed affect his or her American counterpart by 
driving down wages and working conditions.
---------------------------------------------------------------------------
    \4\ Government Accountability Office (GAO), ``Free Trade 
Agreements: U.S. Partners Are Addressing Labor Commitments, But More 
Monitoring and Enforcement Are Needed,'' November 2014. Available at: 
www.gao.gov/assets/670/666787.pdf; GAO, ``Four Free Trade Agreements 
GAO Reviewed Have Resulted in Commercial Benefits, but Challenges on 
Labor and Environment Remain,'' July 2009. Available at: www.gao.gov/
products/GAO-09-439.

    TPP supporters say the TPP would, for the first time, require 
parties to have laws concerning ``acceptable conditions of work with 
respect to minimum wages, hours of work and occupational safety and 
---------------------------------------------------------------------------
health.''

    Unfortunately, because the TPP sets no minimum standards for these 
laws, this provision is not as valuable as it might first appear. The 
TPP explicitly provides that these obligations will be satisfied ``as 
determined by'' each country (Article 19.3.2). As a result, a TPP 
country can set a minimum wage of a pennyan hour, or allow shifts of 20 
hours per day with no overtime pay, or require workers to provide their 
own safety gear--and yet be fully compliant with the TPP. Thus, this 
provision adds little in terms of meaningful new protections for 
workers in TPP countries.

    TPP supporters say it requires TPP countries to combat trade in 
goods made with forced labor.

    Rather than requiring countries to prohibit or even combat trade in 
goods made with forced labor, the TPP requires parties only to 
``discourage'' trade in such goods ``through initiatives it considers 
appropriate'' (Article 19.6). This language ensures a TPP party can 
judge for itself whether it is ``discouraging'' such trade. A TPP 
country not inclined to do much might, for example, put up a poster 
alerting customs employees that trade in goods made with forced labor 
should be discouraged. The provision allows parties to judge for 
themselves whether their initiatives are adequate, and even contains a 
footnote noting the provision provides no authorization to discourage 
trade in goods made with forced labor if such activities would violate 
obligations made in other trade deals. Thus, this provision provides no 
assurances that workers would be protected from forced or compulsory 
labor, including forced or compulsory child labor--and explicitly 
prioritizes trade obligations over obligations to protect human rights.

    TPP supporters say the TPP obligates parties not to waive or 
derogate from statutes or regulations implementing minimum wages, hours 
of work, and occupational safety and health in a special trade zone or 
customs area.

    This is yet another provision that adds little for workers. As 
explained above, a TPP party's laws need not set meaningful standards 
regarding minimum wages, hours of work, and occupational safety and 
health. While preventing TPP parties from reducing these standards 
through waiver or derogation is a laudable goal, this particular 
obligation only applies ``in a special trade or customs area, such as 
an export processing zone or foreign trade zone, in the Party's 
territory.'' Thus, it leaves the vast majority of TPP workers without 
this protection. The AFL-CIO had requested that parties not be allowed 
to waive or derogate from laws regarding acceptable conditions of work 
for any worker--as such a commitment would have been useful. Limiting 
the reach of this provision to special zones only limits its 
usefulness.

    The TPP's supporters say it requires countries to eliminate 
discrimination in employment.

    Unfortunately, the text of the TPP itself is vague regarding what 
types of discrimination are prohibited, even though a number of TPP 
countries have entrenched in practice (and in some cases in law) 
discrimination against disfavored groups. For example, Vietnam's 
consistency plan only requires Vietnam to prohibit discrimination on 
the basis of color, race and national extraction. It fails to mention 
religion, political opinion, LGBT status or immigration status.\5\ 
These glaring omissions leave open the strong possibility that these 
other bases of discrimination will be used as a pretext to discourage 
unions and deter workers from exercising their rights. Similarly, the 
Malaysia consistency plan fails to address discrimination on the basis 
of LGBT or immigration status, even though discrimination on these 
grounds is pervasive throughout Malaysia. Likewise, the Brunei 
consistency plan fails to address LGBT or immigration status even 
though it enacted a Sharia legal code during the TPP negotiations that 
includes the death penalty for illicit sexual relations.\6\ Moreover, 
neither the TPP text nor the consistency plans address basic human 
rights, including freedom of expression. Without even basic protections 
for such freedoms, it seems insincere to argue that governments that 
have engaged in years of repression against free and independent labor 
unions will not resort to other legal means at their disposal to 
continue to undermine workplace rights. These glaring omissions mean 
that workers who should be protected likely will continue to face major 
threats and discrimination that the TPP, on its face, will be unable to 
address.
---------------------------------------------------------------------------
    \5\ While gender also is not mentioned in the Vietnam consistency 
plan, Vietnam already has strong gender equity laws.
    \6\ Quratul-Ain Bandial and Bandar Seri Begawan, ``A New Era for 
Brunei,'' The Brunei Times, April 30, 2014. Available at: 
www.bt.com.bn/ frontpage/2014/04/30/new-era-brunei.

    TPP supporters argue that the TPP is ``one of the best tools we 
have to fight forced labor and human trafficking'' in Malaysia.\7\
---------------------------------------------------------------------------
    \7\ https://medium.com/the-trans-pacific-partnership/frequently-
asked-questions-on-the-trans-pacific-partnership-
eddc8d87ac73#.rn5kzfxr8.

    Similar promises were made about the Colombia trade deal. The 
``strong labor provisions'' of that trade deal were supposed to provide 
leverage to raise standards for a country with notoriously abusive 
labor practices, which had reduced labor density to 1 percent through a 
campaign of terror against labor leaders and activists. Unfortunately, 
because the Colombia trade deal went into effect before it had complied 
in both law and practice with its labor obligations, the promised 
leverage was lost. Now, even though threats and violence against trade 
unionists have increased since the deal's entry into force, the United 
Stateshas failed to respond. The commercial pressure to keep trade 
flowing freely has superseded efforts to protect workers so they can 
act collectively to raise their wages and conditions of work. Likewise, 
the TPP includes Malaysia, a country with a notoriously bad record on 
human trafficking and forced labor. To deal with this, labor unions 
suggested new protections for migrant workers that would have obligated 
all TPP countries to prohibit certain practices by employers and labor 
recruiters that are linked to forced labor and human trafficking. We 
also recommended a clause making clear that migrant workers are 
entitled to the same rights and remedies as all other workers. Both of 
these recommendations were soundly rejected. Since the trafficking 
provisions in the Malaysia consistency plan apply only to Malaysia and 
have no independent evaluation mechanism, it is unlikely the TPP will 
prove effective at addressing trafficking and forced labor.
         analysis of labor conditions in tpp partner countries
    The TPP includes countries with entrenched labor and human rights 
abuses that are unlikely to be solved during a short implementation 
period.\8\
---------------------------------------------------------------------------
    \8\ It is important to note the United States is also out of 
compliance in a number of ways with fundamental labor rights. As Human 
Rights Watch put it, ``Freedom of association is a right under severe, 
often buckling pressure when workers in the United States try to 
exercise it.'' Particularly egregious examples include restrictions and 
in some cases even prohibitions on the rights of freedom of association 
and collective bargaining for many public employees (at the Federal, 
State and local levels), child labor in the agricultural sector, many 
prison labor systems, and the lack of a Federal regime sufficient to 
deter private-sector employers from routinely interfering with the 
right to freedom of association.

    The following summary of the labor and human rights practices of 
other TPP countries is broken down into three categories: countries 
with critical labor rights violations, countries with serious concerns 
and selected labor rights violations in partner countries. 
Holistically, each partner country is assessed on the basis of its 
adherence to the ILO's five fundamental labor rights: the right to 
freedom of association, the right to collectively bargain, the 
abolition of forced or compulsory labor, the abolition of child labor 
and nondiscrimination. This report also will consider how the TPP and, 
in some cases, U.S.-negotiated labor consistency plans (side agreements 
for Vietnam, Malaysia and Brunei) would impact the situation for 
workers in the future. It will conclude with recommendations for a 
worker-centered trade policy.
I. Countries With Critical Labor Rights Violations (Out of Compliance)
Mexico

    The human and labor rights situation in Mexico is rapidly 
deteriorating. Mexico currently fails to adopt and implement laws that 
protect the ILO's core labor standards. Indeed, the Department of State 
(DOS) Mexico 2014 Human Rights Report concludes that:

    The government did not consistently protect worker rights in 
practice. Its general failure to enforce labor and other laws left 
workers without much recourse with regard to violations of freedom of 
association, working conditions, or other problems.\9\
---------------------------------------------------------------------------
    \9\ DOS, DRL, ``Country Reports on Human Rights Practices for 2014: 
Mexico,'' 2014. Available at: www.state.gov/j/drl/rls/hrrpt/
humanrightsreport/index.htm#wrapper.

    The use of ``protection contracts'' (agreements masquerading as 
collective bargaining agreements (CBAs) signed between an employer and 
an employer-
dominated union, often without the knowledge of the workers) is the 
most serious threat to freedom of association and collective bargaining 
in Mexico. Today, there are estimated to be tens of thousands of 
protection contracts and tens of thousands of workplaces in Mexico 
covering millions of workers. In thousands of workplaces, workers are 
governed by contracts they have never ratified, were never consulted 
---------------------------------------------------------------------------
on, and in many cases have never seen.

    When workers attempt to bring complaints about protection 
contracts, these complaints are heard by Mexico's Conciliation and 
Arbitration Boards (CABs), which are politically biased and 
corrupt.\10\ Instead of ensuring workers can exercise their rights 
under Mexican and international law, the CABs, the labor authorities 
and sometimes privately hired or public police forces have interfered 
with workers' freedom of association. This situation presents itself at 
the worksites of many multinational companies, including Atento, 
Excellon, Honda, PKC and Teksid.\11\ In the agricultural sector, child 
labor, forced labor and inhumane working conditions exist on farms that 
export fresh produce into the United States, which then is sold at 
major retailers, including Walmart and Safeway.\12\ The recent 
mobilizations in Baja California for better wages in the agricultural 
sector and the right to form independent unions were met with police 
repression.\13\
---------------------------------------------------------------------------
    \10\ Graciela Bensusan and Arturo Alcalde, ``El sistema de justicia 
laboral en Mexico: situacion actual y perspectivas'' (June 2013). 
Available at: www.fesmex.org/common/Documentos/Libros/
Paper_AP_Justicia_Laboral_Bensusan-Alcalde_Jun2013.pdf. U.S. National 
Administrative Office, public review of submission 9703 (Itapsa) 
(evidence ``raises questions about the impartiality of the CAB and the 
fairness, equitableness and transparency of its proceedings and 
decisions); public review of submission 9702 (Han Young); Julie M. 
Wilson, ``Mexican Arbitral Corruption and the North American Agreement 
on Labor Cooperation: A Case Study.'' Swords and Ploughshares: A 
Journal of International Affairs 12, no. 1 (Spring 2003): 61-77; Adam 
Bookman and Jeffrey K. Staton, ``A Political Narrative of Mexican 
Labour Arbitration Boards and Legal Strategies.'' Paper prepared for 
presentation at the Conference on the Scientific Study of Judicial 
Politics. Texas A&M. October 21-23. Political Science Working Paper 
#375. It has been suggested that the boards can be made more efficient 
by adopting oral procedures. See Instituto Mexicano para la 
Competitividad, Por una mejor justicia laboral (2014). However, it has 
been reported that in some labor boards the recordings of these 
proceedings are being used to bring criminal complaints against workers 
and their attorneys. Manuel Fuentes Muniz, La justicia 
laboral de embudo, July 1, 2014. Available at: http://
manuelfuentesmuniz.blogspot.com/2014/07/la-justicia-laboral-de-embudo-
la-silla.html.
    \11\ Sindicato Mexicano de Electricistas, Public Communication 
under the North American Agreement on Labor Cooperation (November 4, 
2011): 5-6. Available at: www.dol.gov/ilab/submissions/pdf/
MexicoSubmission2011.pdf.
    \12\ Marosi, Richard, ``Product of Mexico,'' Los Angeles Times, 
December 7, 2014. Available at: http://graphics.latimes.com/product-of-
mexico-camps/.
    \13\ Binkowski, Brooke, ``Arrests as Mexico farming wage strike 
turns violent,'' Al Jazeera, May 12, 2015. Available at: 
www.aljazeera.com/news/2015/05/150512051555205.html.

    The union certification process is designed to limit worker 
representation. For example, a requirement known as toma de nota has 
been used by the labor authorities as a tool to deny union office to 
leaders who are politically disfavored under the guise of an elections 
certification process. Labor authorities also have denied legal 
registration to independent unions on seemingly arbitrary or technical 
grounds. They continue to assert that unions may represent only workers 
in specific industries, and that the state may restrict a union to a 
specific ``radius of action'' (radio de accion).\14\
---------------------------------------------------------------------------
    \14\ See Secretaria Auxiliar de Conflictos Colectivos, Junta 
Especial Numero Quince, Expediente Numero: IV-54J2012.

    The magnitude of these problems has been well documented in public 
reports, submissions under the North American Agreement on Labor 
Cooperation (NAALC),\15\ reports of the ILO Committee on Freedom of 
Association,\16\ academic investigations \17\ and recent case 
studies.\18\ Although Mexico and the United States have had more than 
20 years to work on bringing Mexican labor law and practice up to 
minimum international standards through the NAALC process, labor abuses 
in many cases are worse now than before the North American Free Trade 
Agreement (NAFTA), and these abuses appear to be concentrated in supply 
chains that feed U.S. markets.
---------------------------------------------------------------------------
    \15\ See U.S. National Administrative Office, public reports of 
review for public submissions 940003 (Sony), 2003-01 (Puebla), 2005-03 
(Hidalgo), 9702 (Han Young), 9703 (Itapsa).
    \16\ See, e.g., ILO CFA cases 2115, 2207, 2282, 2308, 2346, 2347, 
2393.
    \17\ Jose Alfonso Bouzas Ortiz (Coordinador) EVALUACION DE LA 
CONTRATACION COLECTIVA EN EL DISTRITO FEDERAL, Friedrich Ebert 
Foundation, 2009. Available at: www.democraciaylibertadsindical.org.mx/
media_files/LIBRO_BOUZAS.pdf. Carlos de Buen Unna, ``Collective 
bargaining agreements for employer protection (`protection contracts') 
in Mexico,'' Friedrich Ebert Foundation, 2011. Available at: 
www.democraciaylibertadsindical.org.mx/media_files/
Paper_Charles_De_Buen.pdf. Chris Tilly and Jose Luis Alvarez Galvan, 
``Lousy Jobs, Invisible Unions: The Mexican Retail Sector in the Age of 
Globalization.'' International Labor and Working-Class History 70 
(2006), pp. 1-25.
    \18\ See, e.g., Worker Rights Consortium, Violations of 
International Labor Standards at Arneses Y Accesorios De Mexico, S.A. 
DE C.V. (PKC GROUP), June 18, 2013. Available at: http://
workersrights.org/Freports/
WRC%20Findings%20and%20Recommendations%20re%20Arneses%
20y%20Accesorios%20de%20Mexico%2006.18.13.pdf. Centro de Reflexion y 
Accion Laboral, ``After the Reform: Fifth report about the labor 
conditions of Mexico's electronics industry,'' August 2013. Available 
at: www.fomento.org.mx/novedades/Informe2013-ingles.pdf.

    In short, NAFTA has contributed to labor abuses, not improvements. 
NAFTA also contributed to massive displacement of Mexican 
campesinos.\19\ Some of these workers searched for promised new jobs in 
the maquiladoras. Many others migrated north to the United States, 
either through irregular channels or by utilizing often-exploitative 
labor recruitment firms and guest worker visa programs. As documented 
in a 2011 NAALC petition, migrant workers in the United States are 
subject to a range of labor rights violations.\20\ Meanwhile, companies 
have shifted manufacturing work to Mexico for decades to take advantage 
of displaced campesinos and other impoverished workers who lack the 
most basic workplace protections.
---------------------------------------------------------------------------
    \19\ M. Angeles Villarreal, ``NAFTA and the Mexican Economy,'' 
Congressional Research Service, June 3, 2010.
    \20\ Petition on Labor Law Matters Arising in the United States 
submitted to the National Administrative Office (NAO) of Mexico under 
the NAALC, ``Regarding the Failure of the U.S. Government to 
Effectively Enforce its Domestic Labor Laws, Promote Compliance with 
Minimum Employment Standards, and Protect Migrant Workers,'' September 
19, 2011.

    There is currently a crisis of violence and impunity taking place 
in Mexico that raises doubts about whether the Mexican government can 
and will fulfill its obligations under the TPP. The disappearance last 
year of 43 students, now declared dead, from the teachers' college in 
Ayotzinapa, Guerrero, by local police and criminal gangs widely 
believed to be responsible, is a horrific example of violence, 
corruption and dissolution of the rule of law. More than 22,000 persons 
have been disappeared since 2007, including more than 5,000 in 2014 
alone.\21\ These crimes rarely are investigated and almost never 
prosecuted, allowing public security forces--the same that have 
sporadically engaged in violent worker repression over the years--to 
operate with impunity.
---------------------------------------------------------------------------
    \21\ ``Law and Order in Mexico,'' The New York Times, November 11, 
2014. Available at: www.nytimes.com/2014/11/12/opinion/murder-in-
mexico.html?_r=0. ``Mexico's Disappeared,'' Human Rights Watch, 
February 20, 2013. Available at: www.hrw.org/reports/2013/02/20/
mexicos-disappeared-0.

    There is nothing in the TPP's labor chapter that would ensure 
Mexico's history of worker abuse and exploitation will be remedied. No 
provisions were added to the enforcement section to ensure monitoring 
and enforcement of the labor obligations will be deliberate, 
consistent, timely, vigilant, effective or automatic. There is not even 
a ``consistency plan'' for Mexico despite the U.S. Government's 
extensive knowledge of the problems--problems that not only impoverish 
Mexico's workers, but also act as an inducement to transfer production 
out of the United States. The TPP fails to even include any specific 
protections for equal rights and remedies for migrant workers, or 
specific prohibitions against exploitive or fraudulent international 
labor recruitment, which labor union presidents had recommended 
---------------------------------------------------------------------------
strongly.

    In December 2015 in Cancun, Mexico, President Pena Nieto announced 
he would send new labor law reform proposals to Congress early this 
year, but to date there is no clear process to include independent 
unions and civil society in developing these proposals.

    The president of Mexico also sent ILO Convention 98 on the right to 
organize and collective bargaining to the Senate for ratification, and 
the labor secretary has announced a new inspection protocol that 
supposedly would verify whether workers understand their contracts, but 
workers still would lack the right to geta copy of their contract, 
which reinforces the current protection contract model.

    On January 20, 2016, the Mexican Supreme Court ruled the government 
can cap back pay at 1 year in lawsuits over unjust firings, although on 
average these cases take more than 3 years to resolve. This ruling 
creates a perverse incentive to fire workers who attempt to organize 
democratic unions.

    Despite public statements promising to address worker rights 
issues, the Mexican government has failed to address systemic worker 
rights violations. The government continues to fail to eliminate the 
CABs and replace them with independent labor judges, create 
transparency in the union contracts and certification,or ensure that 
union democracy is protected through improved election and 
certification processes. Labor rights must be enforced, not be just 
potentially enforceable, to have an impact on the ground. As currently 
written, the TPP fails to meet this benchmark, and would reward Mexico 
with more trade benefits before the government makes fundamental and 
structural changes to its labor system to bring it into compliance with 
international labor law.

Vietnam

    Vietnam has an authoritarian government that limits political 
rights, civil liberties and freedom of association. The government 
maintains a prohibition on independent human rights organizations and 
other civil society groups. Without the freedom to exercise fundamental 
labor rights, labor abuses in Vietnam are pervasive, artificially 
suppressing wages, stifling the ability of Vietnamese workers to escape 
poverty, and putting U.S. and other workers at a disadvantage in the 
global market. Labor provisions in the TPP and the labor consistency 
plan do not appear to be carefully crafted to effectively mitigate this 
urgent problem or empower workers to improve conditions.

    The Vietnamese government currently restricts union activity 
outside the official unions affiliated with the Communist Party's 
Vietnam General Confederation of Labor (VGCL), which actually controls 
the union registration process.\22\ Workplace-level VGCL unions 
generally have management serving in leadership positions, and when 
that is not the case, workers cannot meet as the union without 
management present.\23\ This effectively bars the possibility of 
establishing independent trade unions in Vietnam. Further, there is no 
right to strike in Vietnam. Wildcat strikes and industrial actions 
outside VGCL unions have led to government retaliation, including 
prosecution and imprisonment.
---------------------------------------------------------------------------
    \22\ U.S. DOS, ``Vietnam 2014 Human Rights Report,'' 2014. 
Available at: www.state.gov/documents/organization/236702.pdf.
    \23\ ITUC, ``Survey of Violations of Trade Union Rights: Vietnam,'' 
2014. Available at: http://survey.ituc-csi.org/
Vietnam.html?lang=en#tabs-3.

    Government repression of civil liberties further undermines 
industrial relations in Vietnam. Corruption in the judicial system and 
widespread law enforcement abuse, including arbitrary killings, stifles 
whistleblowers and labor activists, as well as human rights 
defenders.\24\ The government blocks access to politically sensitive 
websites and monitors the Internet for the organization of unauthorized 
demonstrations.\25\
---------------------------------------------------------------------------
    \24\ Human Rights Watch, ``World Report 2015: Vietnam,'' 2015. 
Available at: https://www.hrw.org/world-report/2015/country-chapters/
vietnam.
    \25\ DOS, ``Vietnam 2014 Human Rights Report,'' 2014.

    Vietnam has significant problems with forced labor and child labor. 
The U.S. DOL finds that child labor is prevalent in the production of 
bricks and garments. Forced labor and human trafficking also is 
prevalent in the garment sector and in the informal economy.\26\ 
Vietnam is the second-largest source of apparel and textile imports to 
the United States, totaling just under $10 billion in value \27\ and 
employing more than 2 million workers.\28\ Many of the clothes contain 
textiles produced in small workshops subcontracted to larger factories. 
These workshops frequently use child labor, including forced labor 
involving the trafficking of children from rural areas into cities.\29\
---------------------------------------------------------------------------
    \26\ DOL ILAB, ``List of Goods Produced by Child Labor or Forced 
Labor: Vietnam,'' 2014. Available at: www.dol.gov/ilab/reports/child-
labor/list-of-goods/countries/?q=Vietnam. Office to Monitor and Combat 
Trafficking in Persons, 2015 Trafficking in Persons Report, 
``Vietnam.'' Available at: www.state.gov/documents/organization/
243562.pdf; scroll down to Vietnam report, page 362.
    \27\ ITA, Office of Textiles and Apparel, ``Major Shippers Report: 
U.S. General Imports By Country,'' September 2015. Available at: http:/
/otexa.trade.gov/msrcty/v5520.htm.
    \28\ Worker Rights Consortium, ``Made in Vietnam,'' May 2013. 
Available at: www.workers
rights.org/linkeddocs/WRC_Vietnam_Briefing_Paper.pdf.
    \29\ Ibid.

    The government of Vietnam also actively imposes compulsory labor on 
drug offenders. In these work centers styled as drug treatment centers, 
detainees are harassed and physically abused when they do not meet 
their daily factory quotas in so-called ``labor therapy.'' An estimated 
309,000 people were detained in Vietnam's drug detention centers from 
2000 to 2010. The detainees receive little or no pay for their 
work.\30\
---------------------------------------------------------------------------
    \30\ Human Rights Watch, ``World Report 2015: Vietnam,'' Adeline 
Zensius, ``Forced Labor in Vietnam: A Violation of ILO Convention 29,'' 
International Labor Rights Forum, December 2011. Available at: http://
laborrightsblog.typepad.com/international_labor_right/2011/09/forced-
labor-in-vietnam-a-violation-of-ilo-convention-
29-.html#sthash.FJEFKvw8.dpuf.

    The labor consistency plan with Vietnam offers many improvements on 
paper, but few of them are likely to be actualized given that full TPP 
membership and market access will be granted after ratification and 
before changes are made. The plan contains a number of other 
shortcomings. It allows Vietnam to give ``independent'' unions 
``mandatory political obligations and responsibilities'' so long as 
they are not ``inconsistent with labor rights as stated in the ILO 
Declaration.'' It is inconsistent with the concept of free and 
independent unions to allow the government to saddle them with 
``political obligations'' of any kind. The plan calls for a prohibition 
on discrimination, but does not include religion, political opinion, 
immigration status and sexual orientation/gender expression as 
protected categories. Despite important language clarifying the right 
to strike, the right of unions to independently manage their own 
affairs and elect their own leadership, and to create independent 
federations, it is not clear that penalties for employer violation of 
---------------------------------------------------------------------------
these rights will be established.

    Further, the plan provides a free pass to Vietnam to deny the right 
to freedom of association above the enterprise level for at least the 
first 5 years after the TPP's entry into force. The potential penalty 
is only a delay of future tariff reductions. However, by Year Six of 
the agreement, Vietnam already will enjoy the bulk of the tariff 
reductions required by the TPP, including significant market access in 
the all-important garment sector. By providing a grace period, the 
agreement gives away important leverage that could improve the 
situation now.

    The market opening benefits of the TPP should not apply to Vietnam 
unless and until Vietnam comes into full compliance with fundamental 
labor rights. Anything less essentially will create a permanent ceiling 
on labor and human rights in Vietnam, stunting Vietnamese wage growth, 
suppressing Vietnamese demand and continuing to allow social dumping on 
world markets.

Malaysia

    Malaysia has grave problems with every one of the five fundamental 
labor rights. Particularly troubling is its profound failures to 
protect workers from forced labor and human trafficking. The DOL 
reports that forced labor is prominent in the electronics and garment 
industries, and the palm oil sector, which also uses child labor.\31\ 
The majority of the victims of forced labor in Malaysia are among the 
country's 4 million migrant workers--40 percent of the overall 
workforce.\32\ The government of Malaysia's failure to uphold labor 
rights, or even basic human dignity, puts the products of forced labor 
into the hands of U.S. consumers, and forces U.S. workers to compete 
with a workforce with few rights and protections.\33\ Under current 
conditions, it is difficult, if not impossible, to imagine these 
workers moving into the middle class and becoming a significant market 
for U.S. exports.
---------------------------------------------------------------------------
    \31\ DOL ILAB, ``List of Goods Produced by Child Labor or Forced 
Labor: Malaysia,'' 2014. Available at: www.dol.gov/ilab/reports/child-
labor/list-of-goods/countries/?q=Malaysia.
    \32\ ``Immigration in Malaysia: Assessment of its Economic Effects, 
and a Review of the Policy and System,'' The World Bank: Human 
Development Social Protection and Labor Unit East Asia and Pacific 
Region, 2013. Available at: http://psu.um.edu.my/images/psu/doc/
Recommended
%20Reading/Immigration%20in%20Malaysia.pdf.
    \33\ Verite, ``Forced Labor in the Production of Electronic Goods 
in Malaysia: A Comprehensive Study of Scope and Characteristics,'' 
2014. Available at: https://www.verite.org/research/
electronicsmalaysia.

    Freedom of association is strictly limited, as there are many legal 
restrictions on industrial action and police permission is required for 
public gatherings of more than five people.\34\ Collective bargaining 
also is restricted, especially for migrants and public-sector workers. 
Employers use provisions that allow for multiple unions at the 
enterprise level to set up company-dominated unions and erode the 
bargaining power of representative unions. Trade union leaders and 
workers report that employers regularly terminate or penalize workers 
for expressing their political opinions or highlighting alleged 
wrongdoings by employers. These practices contribute to the overall 
level of exploitation, suppressing wages and driving demand down.
---------------------------------------------------------------------------
    \34\ ITUC, ``Survey of Violations of Trade Union Rights: 
Malaysia,'' 2015. Available at: http://survey.ituc-csi.org/
Malaysia.html?lang=en#tabs-2.

    Migrants to Malaysia face a range of abuses related to their 
recruitment and placement, and often are threatened with deportation 
for speaking out. Migrant workers in agriculture, construction, 
textiles and electronics, and domestic workers throughout Malaysia, are 
subjected to restrictions on movement, deceit and fraud in wages, 
document confiscation, and debts by recruitment agents or employers. 
Migrants also are limited in their ability to improve these conditions. 
While the Malaysian Employment Act of 1955 guarantees all workers, 
including migrant workers, the right to join a trade union, employers 
and government authorities discourage union activity among migrants, 
and work contracts and subcontracting procedures often undermine worker 
agency.\35\
---------------------------------------------------------------------------
    \35\ Human Rights Watch, ``U.S./Malaysia: Letter to Secretary Kerry 
on Trafficking in Persons in Malaysia,'' July 31, 2015. Available at: 
https://www.hrw.org/news/2015/07/31/us/malaysia-letter-secretary-kerry-
trafficking-persons-malaysia. Kosh Raj Koirala, ``Malaysia flouts own 
law on migrants' trade union rights,'' Nepal Republic Media, June 26, 
2015. Available at: www.myrepublica.com/politics/story/23544/plight-of-
nepalis-in-malaysia-flouting-own-law-malaysia-prevents-migrants-
joining-trade-union.html#sthash.txEWzuIN.dpuf.

    Some of the most recognizable electronics brands operate or source 
components from Malaysia, including Intel, Advanced Micro Devices, Dell 
and Flextronics.\36\ Verite interviewed more than 500 workers and found 
that approximately 28 percent of electronics workers toiled in 
conditions of forced labor. Additionally, 73 percent of workers 
reported violations that put them at risk for forced labor, such as 
outsourcing, debt from recruitment fees, constrained movement, 
isolation and document retention.\37\
---------------------------------------------------------------------------
    \36\ Malaysia Investment Development Authority, ``Top 10 U.S. 
Companies in Malaysia,'' 2012. Available at: www.mida.gov.my/env3/
uploads/events/TIMUSA29042012/02Top10USCompa
nies.pdf.
    \37\ Verite, ``Forced Labor in the Production of Electronic Goods 
in Malaysia.''

    In May 2015, Malaysian police uncovered 139 makeshift graves in the 
jungle alongside abandoned cages used to detain migrant workers--an 
operation so massive many believe local officials were complicit.\38\ 
Not long after, the U.S. State Department made the disastrous and 
apparently political decision to upgrade Malaysia in its annual 
Trafficking in Persons Report from Tier 3 to the Tier 2 watch list--
removing the country from the threat of trade restrictions underthe TPP 
or other sanctions tied to Tier 3 status.\39\ The situation in Malaysia 
has not improved: forced labor, human trafficking and exploitation 
remain pervasive.
---------------------------------------------------------------------------
    \38\ Wang Kelian, ``Malaysia finds 139 graves in `cruel' jungle 
trafficking camps,'' Reuters, May 25, 2014. Available at: 
www.reuters.com/article/us-asia-migrants-idUSKBN0OA06W20150525
#lbtiVKhvKl33D1cQ.97. Ambiga Sreenevasan, ``Malaysia's deadly 
connection,'' MalayMail, July 24, 2014. Available at: 
www.themalaymailonline.com/what-you-think/article/malaysias-deadly-
connection-ambiga-sreenevasan.
    \39\ Office to Monitor and Combat Trafficking in Persons, 2015 
Trafficking in Persons Report, ``Malaysia.'' Available at: 
www.state.gov/j/tip/rls/tiprpt/countries/2015/243485.htm.

    Fundamental reforms must be taken in terms of Malaysia's labor, 
immigration and industrial policies before workers will be able to 
escape the cycle of exploitation and vulnerability that often leads to 
labor abuses and trafficking. Despite Malaysia's notorious failure to 
combat human trafficking and protect the rights of migrant workers, the 
TPP fails to even include any specific protections for equal treatment 
for migrant workers or against exploitive or fraudulent international 
---------------------------------------------------------------------------
labor recruitment.

    The TPP labor provisions and the Malaysia consistency plan have 
some helpful provisions. For example, the consistency plan calls on 
Malaysia to amend its laws to limit the ability of labor officials to 
deny trade union registration and affiliation; make it illegal to 
retain a worker's passport; expand the right to strike; and allow 
migrant workers improved trade union rights. However, despite these 
provisions, they do not appear sufficient to ensure working people in 
Malaysia will be able to exercise their fundamental labor rights.

    The plan does not clearly call for an expansion of the right to 
bargain collectively in all sectors, nor does it appear to hold 
employers fully accountable for abuses in subcontracting and 
recruitment processes--major factors in the perpetuation of forced 
labor. Improved rules regarding access to justice, recruitment fees, 
targeted labor enforcement in industries known to be problematic and 
victim services still could be lacking even under the agreement. Nor 
does the agreement address basic human rights, including the right to 
free assembly and lack of civil rights for LGBT persons. As such, 
employers and government officials still may attack workers for their 
advocacy, while claiming to be using a different section of Malaysia's 
legal code to do so.

    All workers in Malaysia must be broadly empowered to improve wages 
and working conditions. The consistency plan fails to meet this 
benchmark and lacks any specific measurements or criteria to evaluate 
the implementation and enforcement of the required reforms. Given that 
Malaysia could be rewarded with greater market access under the Trans-
Pacific Partnership without having to first enforce the changes it 
promises to make on paper, there will be little incentive for the 
government to end exploitative working conditions or the brutality of 
forced labor after entry into force.

Brunei

    The human and labor rights situation in Brunei is dire. Under the 
Sultan of Brunei, whose family has ruled for more than six centuries, 
the country adheres to a strict penal code based on Sharia law, which 
mandates flogging, dismemberment and death by stoning for crimes such 
as adultery, alcohol consumption and homosexuality. Despite widespread 
calls from U.S. labor, LGBT and human rights groups to exclude Brunei 
from the TPP, it appears the agreement and the consistency plan situate 
the U.S. and Brunei governments to enter into a permanent trading 
relationship without ensuring that working families can exercise their 
fundamental human and labor rights in Brunei.

    Freedom of speech in Brunei is severely limited, and the 
legislature has a limited role.\40\ It is difficult, if not impossible, 
to imagine freedom of association will exist where the right to free 
speech does not accompany it. Under the Internal Security Act, 
activists deemed to be anti-government can be detained without trial 
indefinitely, renewable for 2-year periods.\41\ Harsh punishment 
stifles worker activism, and there is a nationwide prohibition on 
collective bargaining.
---------------------------------------------------------------------------
    \40\ U.S. Department of State (hereinafter DOS), ``Brunei 2014 
Human Rights Report,'' 2014. Available at: www.state.gov/documents/
organization/236638.pdf.
    \41\ Amnesty International, ``Amnesty International Report 2014/15: 
Brunei Darussalam,'' 2015. Available at: https://www.amnesty.org/en/
countries/asia-and-the-pacific/brunei-darussalam/report-brunei/.

    Workers, and migrant workers in particular, have few protections 
for their basic rights. The government prohibits strikes. The law does 
not provide for reinstatement for dismissal related to union activity. 
The government can refuse to register trade unions.\42\ Government 
permission is required for holding a public meeting involving more than 
10 people, and the police can break up any unofficial meeting of more 
than five people if they regard it as liable to disturb the peace.\43\
---------------------------------------------------------------------------
    \42\ U.N. Human Rights Council, ``Report of the Working Group on 
the Universal Periodic Review Brunei Darussalam,'' July 7, 2014. 
Available at: www.upr-info.org/sites/default/files/document/
brunei_darussalam/session_19_-_april_2014/a_hrc_27_11_e.pdf.
    \43\ DOS, ``Brunei 2014 Human Rights Report''; ITUC, ``2010 Annual 
Survey of violations of trade union rights--Brunei Darussalam,'' March 
3, 2010. Available at: http://survey.ituc-csi.org/Brunei-
Darussalam.html?lang=en#tabs-2.

    Many of the 85,000 migrant workers in Brunei face labor 
exploitation and trafficking related to debt bondage from labor 
recruitment fees, wage theft, passport confiscation, abuse and 
confinement. Immigration law allows for prison sentences and caning for 
workers who overstay their visas, fall into irregular status, or work 
or change employers without a permit.\44\ This traps migrant workers in 
abusive employment and impedes access to justice and compensation if a 
migrant worker chooses to leave an exploitative employment 
relationship.
---------------------------------------------------------------------------
    \44\ U.S. DOS, ``Brunei 2014 Human Rights Report,'' 2014.

    The labor consistency plan with Brunei is wholly inadequate to deal 
with the serious problems indicated above. For example, it calls for an 
end to document confiscation and ``an outreach program to inform and 
educate stakeholders,'' but does not address excessive recruitment fees 
or the criminalization of migrant workers. While it requires that 
employment discrimination be made unlawful, it fails to include LGBT 
workers within this new protection. Moreover, it fails to provide for 
labor courts or other structures free from the political influence of 
---------------------------------------------------------------------------
the sultan.

    The labor side letter fails to include any specific benchmarks to 
evaluate the implementation and enforcement of the required legal and 
regulatory changes. The letter includes no independent evaluation 
mechanism, which means that partial and ineffective fulfillment of the 
plan's elements or changes on paper could be substituted for actual 
changes in workers' lives. In short, the Brunei side letter seems 
likely to be partially implemented on paper, but likely will continue 
to leave workers without the ability to freely exercise their 
fundamental rights.\45\
---------------------------------------------------------------------------
    \45\ For a thorough explanation of the need for labor provisions in 
trade agreements that incorporate robust monitoring and enforcement 
mechanisms, as well as measurable benchmarks for change instead of a 
rigid focus on rules to the exclusion of implementation, see Barenberg, 
Mark, ``Sustaining Workers' Bargaining Power in an Age of 
Globalization: Institutions for the meaningful enforcement of 
international labor rights,'' EPI Briefing Paper No. 246, October 9, 
2009.
---------------------------------------------------------------------------
II. Countries of Serious Concern
Chile \46\
---------------------------------------------------------------------------
    \46\ ITUC, ``Survey of Violations of Trade Union Rights: Chile,'' 
2015. Available at: http://survey.ituc-csi.org/Chile.html.

    Today, 25 years after the end of the Pinochet regime, workers 
confront a profound lack of legal guarantees and effective protection 
by the state. The current labor legislation remains largely the same 
and thus perpetuates the destructive legacy of the past. As a result, 
there has been a steep decline in the rate of unionization--from 30 
percent in 1973 to only 8 percent today. Today, Chile has among the 
lowest unionization rates among all OECD members. While the current 
government has formulated amendments to address some of the issues 
---------------------------------------------------------------------------
described below, the legislation has yet to pass.

    Freedom of association is restricted, particularly in the public 
sector. Police, military personnel and civil servants of the judiciary 
are prohibited from joining a union. Temporary workers also have no 
right to organize. The constitution also provides that the holding of a 
trade union office is incompatible withactive membership in a political 
party, and that the law shall lay down related sanctions (Political 
Constitution, Art. 23). In addition, broad powers are granted to the 
Directorate of Labor for supervision of union accounts, and financial 
and property transactions.

    Collective bargaining also is restricted in a number of ways. 
Industry-wide agreements that set minimum standards for wages and 
working conditions for all workers once were common, but since largely 
have disappeared as the law does not require bargaining above the 
enterprise level. In addition, workers without permanent contracts and 
other temporary workers are excluded from collective negotiations, a 
serious problem as employers are shifting to short-term contracts even 
for work that in reality is full time. The law also permits groups of 
workers to submit draft collective agreements, even when there are 
unions present, undermining the role of unions as a bargaining 
representative.

    Finally, Chile also circumscribes the right to strike. According to 
the Labor Code, a strike must be agreed to by an absolute majority of 
the company's employees (Sections 372 and 373) and must be carried out 
within three days of the decision to call the strike (374). No strike 
action may be taken by workers if they are deemed to provide services 
of a public utility, or it would present a serious threat to health, 
the country's economy or national security. This goes beyond the 
``essential services'' strike restrictions acceptable under ILO 
guidance. Section 254 of the Penal Code provides for criminal penalties 
in the event of the interruption of public services or public utilities 
or dereliction of duty by public employees, and Act No. 12927 
authorizes the imprisonment of anyone involved in the interruption or 
collective suspension, stoppage, or strike in public services or public 
utilities. Section 381 provides for the possibility of hiring 
replacement workers during a strike. Agricultural workers are not 
guaranteed the right to strike.

Peru

    Since the U.S.-Peru free trade agreement (FTA) came into force, 
Peru has reduced protections for workers and weakened mechanisms to 
enforce labor legislation. Peruvian unions report there are low levels 
of public investment to eliminate child labor and forced labor, promote 
equality and nondiscrimination in employment, and to ensure the right 
to organize and collectively bargain. Labor rights, generally, and 
rights in export sectors, in particular, have been eroded by a 
disproportionate increase in temporary employment.

    According to the DOS, Peru does not fully comply with the minimum 
standards for the elimination of trafficking. Peruvian workers are 
exploited in conditions of forced labor, primarily in informal gold 
mining, logging, agriculture, brick making and domestic service. Many 
of these victims are indigenous, ruralor migrant workers who face 
deceptive recruitment, debt bondage, restricted freedom of movement or 
inability to leave, withholding or nonpayment of wages, and threats and 
use of physical violence. Forced child labor occurs in begging, street 
vending and criminal activities.\47\ The DOL also has found significant 
instances of child labor in the production of bricks, coca, fireworks, 
fish, gold and timber.\48\
---------------------------------------------------------------------------
    \47\ Office to Monitor and Combat Trafficking in Persons, 2015 
Trafficking in Persons Report, ``Peru.'' Available at: www.state.gov/
documents/organization/243561.pdf; scroll down to Peru report, page 
277.
    \48\ DOL ILAB, ``List of Goods Produced by Child Labor or Forced 
Labor: Peru,'' 2014. Available at: www.dol.gov/ilab/reports/child-
labor/list-of-goods/countries/?q=Peru.

    Last year, the Peruvian government passed a series of laws to roll 
back health, safety and environmental regulations--purportedly ``to 
create a more friendly environment, to reduce the impediments to 
investment.'' Despite the fact that regressive laws likely violated 
trade commitments, the government turned back 2011 improvements to 
occupational health and safety and inspections processes. It also 
weakened enforcement mechanisms, fines and mandated action plans.\49\
---------------------------------------------------------------------------
    \49\ ``Paquetazo laboral viola tres TLC,'' Diario Uno, July 13, 
2014. Available at: http://diariouno.pe/columna/paquetazo-laboral-
viola-tres-tlc/?fb_action_ids=10203308215938885&fb_
action_types=og.likes%20. ``Moody's: Peru crecera hacia un 6% para el 
2016, asegura ministro Castilla,'' America Noticias, February 7, 2014. 
Available at: www.americatv.com.pe/noticias/actualidad/miguel-castilla-
sobre-informe-moodys-peru-crecera-hacia-6-2016-n143824.

    Further, it has been well documented by national and international 
organizations, including the ILO and the UN Office of the High 
Commissioner for Human Rights (OHCHR), that the Peruvian government is 
not enforcing its own labor laws in the sectors of garments, textiles 
and agricultural product exports, which together employ hundreds of 
thousands of workers who produce billions of dollars of goods for the 
U.S. market.\50\ In the textile and garment industry, the Law for the 
Promotion of Non-Traditional Exports (Law No. 22342)--designed to 
encourage investment by allowing workers to be hired under an 
indefinite number of short-term contracts--has been a major obstacle to 
the promotion of labor rights. The largest textile and garment 
companies are the major beneficiaries of the law, and the 30 largest 
companies account for more than 70 percent of the contracts covered by 
these regulations. Employers can issue contracts as short as 15 days 
and renew the contract every 2 weeks for as long as 15 years. The law 
allows employers to discriminate against trade unionists by firing them 
under the pretext of not renewing their contract because of ``economic 
circumstances.''
---------------------------------------------------------------------------
    \50\ See Report Number 357 of the Committee on Freedom of 
Association (CFA), June 2010, case 2675; Office of the United Nations 
High Commissioner for Human Rights (OHCHR), ITUC submission to the URP. 
Available at: http://lib.ohchr.org/HRBodies/UPR/Documents/Session2/PE/
CSI_PER_UPR_S2_2008_InternationalTradeUnionConfederation_uprsubmission.p
df.

    As documented in a recent submission to the Office of Trade and 
Labor Affairs (OTLA) on the failure of the government of Peru to comply 
with labor standards under the FTA, employers routinely have abused 
their power to renew short-term contracts of their workers when they 
are trying to constitute or become members of a union, making them 
permanent victims of firings for this purpose.\51\ This is the second 
submission regarding Peru's labor practices in less than a decade, 
while many also have requested U.S. action on Peru's violation of its 
environmental obligations as well.\52\ The lack of robust action by the 
USTR to enforce the first ``May 10th'' agreement sends the wrong 
message to TPP parties: that despite the ``historic'' nature of the 
obligations, these obligations are unlikely to be enforced.
---------------------------------------------------------------------------
    \51\ ``Public Presentation to the Office of Trade and Labor Issues 
(OTLA) Under Chapters 17 (Labor) and 21 (Dispute Settlement) of the 
Trade Promotion Agreement Between the U.S. and Peru,'' July 23, 2015.
    \52\ See: USTR, ``Review of 2012 EIA Petition Regarding Bigleaf 
Mahogany and Spanish Cedar Exports,'' 2013. Available at: https://
ustr.gov/sites/default/files/EIA%20Review%20Summary.
pdf. Environmental Investigation Agency, ``Implementation and 
Enforcement Failures in the U.S.-Peru Free Trade Agreement (FTA) Allows 
Illegal Logging Crisis to Continue,'' June 2015. Available at: http://
eia-global.org/images/uploads/Implementation_and_Enforcement_Failures
_in_the_US-
Peru_Free_Trade_Agreement_(FTA)_Allows_Illegal_Logging_Crisis_to_Continu
e.pdf.

    The TPP Labor Chapter does not make significant and meaningful 
improvements to substantive labor provisions of the U.S.-Peru FTA and 
offers no improvements to the enforcement mechanisms. This, combined 
with 20 years of lackluster labor enforcement by the U.S. government, 
makes it clear that TPP will do little to improve working conditions or 
raise wages in Peru. Because Peru is currently in violation of the 
U.S.-Peru FTA, Peru will be in clear violation from the moment the TPP 
enters into force unless both governments take immediate actions to 
---------------------------------------------------------------------------
secure Peru's compliance.

Singapore \53\
---------------------------------------------------------------------------
    \53\ ITUC, ``Survey of Violations of Trade Union Rights: 
Singapore,'' 2015. Available at: http://survey.ituc-csi.org/
Singapore.html.

    Substantial legal limitations on freedom of association, collective 
bargaining and the right to strike exist in Singapore. The Registrar of 
Trade Unions has wide-
ranging powers to refuse to register a union or cancel registration. 
The parliament may impose restrictions on the formation of a union on 
the grounds of security, public order or morality. The registrar has 
the right to refuse the rule change if she or he deems it either 
---------------------------------------------------------------------------
unlawful or ``oppressive or unreasonable.''

    The Trade Unions Act limits what unions can spend their funds on 
and prohibits payments to political parties or the use of funds for 
political purposes. Although the Trade Unions Act prohibits government 
employees from joining trade unions, the law gives the president of 
Singapore the right to make exceptionsto this provision. The 
Amalgamated Union of Public Employees (AUPE) was granted such an 
exemption, and its scope of representation now covers all public-sector 
employees except the most senior civil servants.

    Migrant workers particularly are limited in exercising their 
rights. The Trade Unions Act bars any person ``who is not a citizen of 
Singapore'' from serving as a national or branch officer of a trade 
union unless prior written approval is received from the minister. The 
act also stipulates that a foreign national cannot be hired as an 
employee of a trade union without prior written agreement from the 
minister. Similarly, a foreign national is forbidden to serve as a 
trustee of a trade union without the minister's written permission.

    As in other countries with existing serious rights violations, the 
United States failed to secure a labor consistency plan with Singapore. 
The TPP, as in other countries, will come into force, offering 
Singapore enhanced benefits, before any changes are required.
III. Selected Labor Rights Concerns in Other TPP Countries
Freedom of Association and the Right to Collective Bargaining

    In Japan, all national and local public employees and some 
employees of private companies or state-run companies that provide 
essential services such as electricity are banned from striking. 
Dismissal and fines or imprisonment for up to 3 years can be imposed if 
a trade union leader is convicted of inciting a strike action in the 
public sector--this limitation for public-sector workers is a serious 
violation of the ILO forced labor convention (C. 105), which remains 
unratified by Japan.\54\
---------------------------------------------------------------------------
    \54\ ITUC, ``Survey of Violations of Trade Union Rights: Japan,'' 
2015. Available at: http://survey.ituc-csi.org/Japan.html.

    New Zealand's employment law allowing employers in the film and 
video game production industry to classify workers as contractors, 
denying them rights to collective bargaining and minimum labor 
standards, was introduced specifically to attract investment to that 
industry at the demand of Warner Brothers.\55\
---------------------------------------------------------------------------
    \55\ www.theguardian.com/business/2010/oct/31/warner-bros-new-
zealand-hobbit-film.

    In March 2015, changes to New Zealand's Employment Relations 2000 
came into force. Key changes to collective bargaining allow employers 
to end negotiation more easily, weaken good faith negotiations, remove 
protections for new workers and make collective bargaining more 
difficult. The changes specifically allow employers to opt out of 
multiemployer negotiations without providing reasons or being subject 
to industrial action.\56\
---------------------------------------------------------------------------
    \56\ ITUC, ``Survey of Violations of Trade Union Rights: New 
Zealand,'' 2015. Available at: http://survey.ituc-csi.org/New-
Zealand.html.

    In Australia, there are a number of legal obstacles with regard to 
freedom of association and the right to collectively bargain. The Fair 
Work Act of 2009 imposes a number of restrictions related to trade 
union rights to elect representatives and to draw up their constitution 
and rules. Any person who has been convicted of a prescribed offense at 
any time is prohibited from holding trade union office, and individuals 
in vocational placement cannot join a registered union in connection 
with their work on that vocational placement. A 2015 amendment to the 
act further restricts freedom of association and the right to 
collectively bargain, in particular by setting an expiry date for 
negotiations in greenfield workplaces, after which an employer's 
``draft agreement'' will be treated as a collective bargaining 
agreement when, in truth, the workers never agreed to it. Due to the 
act, a representative trade union also may be just one of a number of 
bargaining representatives taking part in the negotiations, which 
reduces the power of collective bargaining.\57\
---------------------------------------------------------------------------
    \57\ ITUC, ``Survey of Violations of Trade Union Rights: 
Australia,'' 2015. Available at: http://survey.ituc-csi.org/
Australia.html.

    In Canada, federal labor law applies only to approximately 10 
percent of workers; in workplaces and occupations that are not 
federally regulated, provincial and territorial governments are 
responsible for labor laws. This translates into a number of categories 
of workers being prohibited or limited from forming or joining a union 
or holding a union office, due to their professional designation or 
sector (such as in the medical professions or in agriculture). In the 
public sector, the government of Canada gave itself the exclusive right 
to define what constitutes an essential service, and to unilaterally 
designate its employees as essential. If 80 percent or more of the 
bargaining unit is designated as essential, strikes are prohibited.\58\
---------------------------------------------------------------------------
    \58\ ITUC, ``Survey of Violations of Trade Union Rights: Canada,'' 
2015. Available at: http://survey.ituc-csi.org/Canada.html.

---------------------------------------------------------------------------
Forced Labor and Child Labor

    New Zealand has no minimum age of employment.

    In Australia, forced and compulsory labor are explicitly prohibited 
by law; however, there have been a few reports of temporary workers in 
such sectors as agriculture, cleaning, construction, hospitality, 
manufacturing and domestic service being subject to forced labor. There 
also are numerous instances of foreign workers on temporary work visas 
being underpaid, exploited and denied their rights under Australian 
law.

    Canada prohibits all forms of forced labor, and the government 
enforces the law. Some reports indicated that child labor occurred, 
especially in the agricultural sector. In British Columbia, children as 
young as 12 years old can work legally in any industry; a letter from 
the parent is all that is required, and the province places no 
legislative or regulatory restrictions on the occupations, tasks or 
time of day a child can work. There is some evidence of forced labor 
trafficking of workers from Eastern Europe, Asia, Latin America and 
Africa who are subjected to forced labor in agriculture, construction, 
restaurants, hospitality, food processing plants and as domestic 
workers.

Discrimination

    Japan mandates equal pay for men and women. However, the Japanese 
Trade Union Confederation (JTUC-RENGO) reports many cases of 
discrimination against union members or activists as well as gender 
discrimination in wages and working conditions.

    Canada prohibits discrimination with respect to employment or 
occupation on the basis of race, gender, etc. However, the Public 
Service Equitable Compensation Act makes it a criminal offense for a 
union to encourage or assist any employee in filing or proceeding with 
a pay equity complaint. Unions are subject to summary conviction and 
fined up to $50,000 if they assist their members in any way in 
advancing pay equity complaints.
                    conclusions and recommendations
    The TPP, as currently written, is troubling in numerous ways. Of 
course, the agreement covers not just traditional trade issues, such as 
tariffs and quotas,but sets rules that will limit our democracy and how 
our government can regulate in the public interest. The TPP creates new 
and expansive legal rights for foreign investors--including their very 
own private legal system that is outside the reach of U.S. courts. The 
current labor chapter, even with improved language, does not represent 
a counterbalance to the protections and privileges gained by 
corporations. In the TPP, the interests of workers and the promotion of 
their rights are embedded in a failed model.

    The labor movement has now had years of experience with labor 
rights language in trade agreements. As documented by the Government 
Accountability Office, the U.S. government does little to actively 
monitor or enforce commitments made in the labor chapter.\59\ Unlike 
corporations that are able to unilaterally access dispute settlement 
mechanisms, workers do not have the power to initiate complaints and 
must petition their governments to advocate on their behalf. For 
workers denied their rights, trying to convince another government to 
initiate a complaint focused on the rights of foreign workers has 
resulted in an unworkable process. The fact is no worker in the global 
economy has won the right to form an independent union and to bargain 
collectively as a result of the enforcement of a worker rights 
provision in a trade agreement. There has never been a single monetary 
fine or tariff penalty imposed for labor violations in any U.S. trade 
agreement.
---------------------------------------------------------------------------
    \59\ Government Accountability Office (GAO), ``Free Trade 
Agreements: U.S. Partners Are Addressing Labor Commitments, but More 
Monitoring and Enforcement Are Needed,'' November 2014. Available at: 
www.gao.gov/assets/670/666787.pdf. GAO, ``Four Free Trade Agreements 
GAO Reviewed Have Resulted in Commercial Benefits, but Challenges on 
Labor and Environment Remain,'' July 2009. Available at: www.gao.gov/
products/GAO-09-439.

    To make matters worse, as outlined above, the United States seeks 
to enter into the TPP with a number of Pacific Rim nations with 
troubling anti-worker practices. USTR gave away crucial negotiating 
leverage by not insisting that trade benefits be contingent on 
adherence and promotion of the core labor standards. To let the TPP 
enter into force without full compliance with all labor commitments 
from all 12 countries undermines the entire agreement. It sends the 
message that promises to comply--in any area--are sufficient. If the 
TPP is going to have beneficial effects, promises and changes on paper 
---------------------------------------------------------------------------
are not enough.

    Nor does the TPP rebalance the playing field in ways beneficial for 
workers in the United States or globally. The chapters setting out 
rules for services, financial services, food safety and other 
regulations put some economic decision making a step further from 
democratic control, encircling domestic decision making within the 
neoliberal, deregulatory, Washington consensus indefinitely. This means 
that when political winds blow in the opposite direction, seeking more 
activist policies regarding Wall Street or food safety or government 
purchasing, foreign countries and foreign companies will be empowered 
to challenge those policies. Even if the labor promises of the TPP's 
authors were to come to fruition, the labor chapter alone would not 
create an equity of benefits for workers. The rules included in the 
other chapters enshrine an inequitable ``you're on your own'' economic 
model that places all of the downside risk of trade on working people 
without setting up adequate countermeasures that ensure future economic 
growth will be sustainable and inclusive.

    As it currently stands, the TPP fails workers. The AFL-CIO and 
global labor movement stand in opposition to the agreement. To be 
effective at creating shared prosperity and inclusive growth, the TPP 
must be renegotiated to include protections for workers, as well as the 
environment and other public interest issues, that are as strong as all 
other protections in the agreement--including those for investors. 
Moreover, the other chapters must be renegotiated to include rules that 
promote rather than inhibit progressive economic policies that correct 
market failures, ensure adequate government investment in 
infrastructure and human development, and provide certainty for 
workers, not just global businesses. The AFL-CIO urges Congress to only 
support a people-centered trade approach that will guarantee the 
benefits of trade can improve the working and living lives of millions 
of workers and their families in the United States and throughout TPP 
countries. Further, we stand ready to work with Congress and the 
administration to renegotiate the TPP so that it works for people who 
work.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                 

         Report on the Impacts of the Trans-Pacific Parnership

By The Labor Advisory Committee on Trade Negotiations and Trade Policy 
                               (AFL-CIO)

                           December 2, 2015 *
---------------------------------------------------------------------------

    * See https://aflcio.org/sites/default/files/2017-11/LAC%20Report--
Final%2012-2-15%20As%
20Adopted.pdf.

                                 ______
                                 
 The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, 
    Allied Industrial, and Service Workers International Union (USW)

                        Statement for the record

                             June 22, 2021

    The United Steel, Paper and Forestry, Rubber, Manufacturing, 
Energy, Allied Industrial, and Service Workers International Union 
(USW) is North America's largest industrial union representing 1.2 
million active and retired members. We welcome the opportunity to 
comment and submit this statement on the subject of today's hearing.

    The union questions the title of this hearing given the significant 
challenges multilateral trade negotiations have yet to overcome since 
the U.S. started entering into modern trade agreements. The failure of 
multilateral agreements to significantly address income inequality 
among signatory countries coincides with the failure to address labor, 
migration, and environmental standards in a manner that ensures fair 
economic competition and a high rule of law.\1\ Unfortunately the title 
of the hearing, ``Strategic Benefits of a Multilateral Approach to 
Trade Policy in the Asia-Pacific Region,'' shows a clear bias towards 
the status quo, with the chairs of the hearing having openly called for 
reengagement into the Trans-Pacific Partnership (TPP) in a public op-ed 
\2\ and failed to include any representatives of workers on the hearing 
agenda.
---------------------------------------------------------------------------
    \1\ https://cepr.net/images/stories/reports/nafta-mexico-update-
2017-03.pdf?v=2.
    \2\ https://www.washingtonpost.com/opinions/2021/06/13/dont-cede-
asia-pacific-china-us-must-learn-its-tpp-mistake/.

    Supporters of the TPP say that it represents 40 percent of the 
world's economic activity (GDP), but they fail to mention that the 
U.S., and the members of the TPP with whom the U.S. already has a trade 
agreement with, constitute 80 percent of that 40 percent. The other 
five countries represent the other 20 percent, with Japan alone being 
17.7 percent of that total.\3\
---------------------------------------------------------------------------
    \3\ https://www.industryweek.com/the-economy/trade/article/
22008116/how-could-the-transpacific-partnership-affect-you-or-your-
business.

    Some say that a strategic benefit of multilateral negotiations, if 
there is even a need for one, is to better account for the blanket 
inadequacies that continue to plague free trade agreement (FTA) 
negotiations. For example, proponents of the TPP have recently 
highlighted that the People's Republic of China is starting talks on 
technical details of the CPTPP pact, the follow-up to the agreement 
after the U.S. made the decision to withdraw from the pact.\4\ This 
effort to have China dock onto the FTA will be a multiyear process but 
ultimately one that the labor and environmental communities have 
highlighted as a sign of the serious deficiencies of the agreement. The 
TPP contained a ``docking agreement'' which was highlighted by 
opponents of this inadequate free trade agreement as a means to reduce 
debate and governmental process for trade negotiations and to fast 
track new entrants.\5\ The notion that China could even be a potential 
member of the CPTPP highlights its serious limitations.
---------------------------------------------------------------------------
    \4\ https://www.bloomberg.com/news/articles/2021-05-17/china-steps-
up-efforts-to-join-trade-pact-created-to-exclude-it.
    \5\ https://www.citizenstrade.org/ctc/trade-policies/tpp-potential-
trade-policy-problems/.

    There was extensive work done in the 114th Congress to highlight 
the inadequacies of the TPP as negotiated, and many of those provisions 
remain in the CPTPP. The Rules of Origin (ROO), which guide the amount 
of content a product must contain from the trade party countries to 
qualify for duty free status, were significantly less than what has 
been recently negotiated in USMCA. At the time of U.S. negotiations, 
the TPP created a ROO that a car can enter the United States duty free 
with just 45 percent content from TPP countries. And that 45 percent 
figure does not count the additional flexibilities provided in a 
special appendix. There was analysis that indicated, depending on the 
methodology used, that an automobile would need as little as 37 percent 
trade partner content.\6\ The AFL-CIO also provided extensive comments 
on the inadequacies of the TPP that are just as relevant to the 
conversation today.\7\
---------------------------------------------------------------------------
    \6\ https://waysandmeans.house.gov/sites/
democrats.waysandmeans.house.gov/files/documents/
TPP%20Issue%20Analysis%20-%20Autos.pdf.
    \7\ https://aflcio.org/reports/report-impacts-tpp.

    Future trade agreements in the Asia-Pacific will also need to 
better address China's growth of state enterprises in ASEAN and CPTPP 
countries using the Belt and Road Initiative. For example, Guangxi 
Beibu Gulf International Port Group Company Ltd., a large-scale wholly 
state-owned enterprise directly under the management of Guangxi Zhuang 
autonomous regional government, has recently signed an agreement to 
jointly operate the Muara port, Brunei's largest port.\8\ Investments 
by large state enterprises that create uncompetitive advantages for 
domestic producers will need to be better accounted for before entering 
into any future trade negotiations in the region. Even the business 
members of the Advisory Committee on Trade Policy and Negotiations 
(ACTPN), an advisory group to the Obama administration, highlighted the 
serious problems with the TPP's provisions on SOEs that would allow for 
all previously provided subsidies to be grandfathered in and that could 
limit claims of injury in certain cases only if they lasted a year or 
more.
---------------------------------------------------------------------------
    \8\ http://www.xinhuanet.com/english/2020-12/22/c_139611431.htm.

    Of particular interest to the USW is the well documented issue of 
Chinese foreign direct investment in the Asia-Pacific region which will 
lead to increased steel capacity in the region that would contribute 
further to global overcapacity and potentially harm U.S. producers. The 
South East Asia Iron and Steel Institute (SEAISI) documented in 2020 
that Chinese-led steel sector investments are pouring over 61 million 
tons of additional steel capacity into the region in the near 
future.\9\ For perspective, the current projected capacity increases 
are almost two thirds U.S. annual production. It is likely that this 
additional capacity will lead to increased import pressures for U.S. 
producers. As the largest union in key industries such as steel, 
rubber, glass, and paper, we believe policy makers should do everything 
in their power to ensure strong domestic supply chains and not allow 
trade agreements to be a vehicle for Chinese state supported or 
subsidized commodities flooding our market.
---------------------------------------------------------------------------
    \9\ https://www.oecd.org/industry/ind/Item_5_SEAISI_March_2020.pdf.

    Additional upgrades to our trade enforcement regime to respond to 
twenty-first century trade distortions should be prioritized before 
renewing any FTA discussions. Legislation like S. 1187--Eliminating 
Global Market Distortions to Protect American Jobs Act of 2021--must 
take Finance committee priority before pursuing a traditional and 
flawed trade agreement model that has significantly underperformed on 
improving wages, hours and working conditions for workers in all 
countries.\10\
---------------------------------------------------------------------------
    \10\ https://www.congress.gov/bill/117th-congress/senate-bill/1187/
text?r=2&s=1.

    Ignoring the lessons of trade negotiations during the United 
States-Mexico-
Canada Agreement (USMCA) would also be a dramatic policy failure by 
Congress. Supply chains must be better monitored for labor and 
environmental violations and multinational companies must be held 
accountable for labor and environmental violations. Improved ROO 
provisions in USMCA also ensure that the automobile supply chain 
remains in the USMCA zone and develops wage standards for the first 
---------------------------------------------------------------------------
time.

    These are just some of the serious flaws in the TPP that generated 
the opposition of both Democratic and Republican Presidential 
candidates in 2016. There was broad bipartisan opposition, recognizing 
that the flawed, failed policies of the past should be abandoned.

    The Biden administration has committed to creating a more ``worker-
centered'' trade policy.\11\ The USW plans to work closely with the 
administration and urges Congress to do the same to ensure the current 
discussion creates an environment where trade policy puts workers' 
rights, environmental sustainability and democratic norms ahead of 
tariff cuts and special protections for investors like the Investor 
State Dispute Settlement (ISDS).
---------------------------------------------------------------------------
    \11\ https://ustr.gov/about-us/policy-offices/press-office/press-
releases/2021/june/remarks-ambassador-katherine-tai-outlining-biden-
harris-administrations-worker-centered-trade-policy.

    There is a path forward. But it has to be a different path. Workers 
need trade policies that create growth and broadly shared opportunity, 
sustainable development, and consumer and health protections. The TPP 
---------------------------------------------------------------------------
fails to measure up on any of those metrics.

                                 ______
                                 
             Prepared Statement of Hon. Thomas R. Carper, 
                      a U.S. Senator From Delaware
    Good afternoon. It's my pleasure to call to order the first hearing 
of the 117th Congress of the Senate Finance Subcommittee on 
International Trade, Customs, and Global Competitiveness. Thank you to 
our witnesses for your willingness to testify today, and thank you to 
our ranking member, Senator Cornyn, and his staff for working with my 
staff and me to pull together a hearing that examines a vital topic, 
and that is our trade policy in the Asia-Pacific.

    For several months, Senator Cornyn and I have worked on this 
subcommittee to push for the United States to get its seat back at the 
table when it comes to trade in the Asia-Pacific region. In one of his 
first acts as President, former President Trump made what many of us 
regard as a misguided and short-sighted decision to withdraw from the 
Trans-Pacific Partnership, or TPP, agreement.

    Now, I will be the first to admit that the TPP agreement was not 
perfect. It left a lot to be desired, especially with regard to labor 
and environmental protections. Negotiations on the TPP began some 13 
years ago and were concluded just over 5 years ago. So much has changed 
since then, including the overwhelmingly bipartisan passage of the 
United States-Mexico-Canada Agreement, or USMCA, which had some of the 
strongest labor and environmental protections ever included in a U.S. 
trade deal.

    Further, we have a new U.S. Trade Representative, Katherine Tai, 
confirmed on a 98-0 vote, who is working to ensure that our trade 
policies benefit all Americans and leave no one behind. With a new 
administration and new leadership at the helm of USTR, we have a key 
opportunity to work on a bipartisan basis to put the United States in a 
far better position on the global stage. Today's hearing will help us 
understand the current state of play on the ground and help us begin to 
consider how we can once again forge multilateral trade partnerships in 
the region.

    The Asia-Pacific is home to some of the fastest-growing, largest, 
and most dynamic economies in the world. With 60 percent of the world's 
population and more than one-third of the world's gross domestic 
product, Asia is a region of the world we simply cannot ignore. 
Further, and since the U.S. left the TPP, our trading partners have not 
been idle. New agreements have been formed that have furthered Asia-
Pacific economic integration.

    For example, the Regional Comprehensive Economic Partnership (or 
RCEP) signed just last year, brings 15 Asian-Pacific nations, including 
China, together, accounting for about 30 percent of the world's 
population and 30 percent of the world's GDP. The RCEP is less 
comprehensive than other free trade agreements, lacking key provisions 
on labor and the environment, state-owned enterprises, and other key 
issues for the United States.

    However, the sheer size of its membership and its potential to 
restructure trade patterns and supply chains in Asia show just how 
active this region has been in forging multilateral trade deals without 
the United States. And further, the TPP did not die a quiet death after 
the United States withdrew from the agreement. The 11 remaining TPP 
signatories signed a new Comprehensive and Progressive Agreement on 
Trans-Pacific Partnership, or CPTPP. This is essentially a modified TPP 
among the remaining TPP parties.

    Recent reporting reveals that China is quietly, but deliberately, 
seeking to join this successor to the TPP. That should set off alarm 
bells for all of us. Regardless of the merits or demerits of the TPP, 
the fact was that the agreement allowed the United States to have a 
seat at the table and actively help write the rules for trade in this 
dynamic region of the world.

    Questions remain about China's ability to join this agreement. 
However, as I like to say, ``If you aren't at the table, you may well 
end up on the menu.'' We need to take China's interest seriously and 
begin the hard work of developing a comprehensive policy toward 
reengagement with our allies in this part of the world. Simply put, we 
find ourselves at a crossroads, with an excellent opportunity to 
reengage in the region in a way that benefits U.S. interests and 
reasserts U.S. leadership in the region.

    This hearing will focus on the broad context of current U.S. trade 
policy in the Asia-Pacific region. We will hear from experts who can 
provide us with the current state of play, as well as lessons learned 
from prior U.S. multilateral trade actions. We will also explore how 
the United States can consider reengaging in the region given the 
emergence of several multilateral trade agreements in the last several 
years.

    I'd like to close with this. Any proposal for reengagement in the 
region must be based on input from key U.S. stakeholders, including 
labor, environment, business, and civil society groups throughout our 
country, as well as Congress. This hearing will allow us to begin those 
conversations by setting the table for the dynamics that exist in that 
vital region of the world and by exploring ways in which the United 
States can start to lead again. Once more, let me thank our ranking 
member and the witnesses appearing before us today, and with that, I'd 
like to turn it over to Senator Cornyn for his opening statement.

                                 ______
                                 
                Prepared Statement of Hon. John Cornyn, 
                       a U.S. Senator From Texas
    Thank you, Chairman Carper, for organizing this hearing on such an 
important and timely topic, and thank you to our witnesses for 
appearing in person and virtually.

    This subcommittee continues its work, exploring the geopolitical 
benefits and consequences of America's trade policy, and in particular, 
our foreign adversaries such as Russia and China. The topic of U.S. 
trade policy is the Asia-Pacific. It's not a new topic, nor a partisan 
one. But it should be at the forefront of our conversation about the 
ever-evolving economic, authoritarian, and human rights threat posed by 
countries like China.

    Our government must take a balanced and innovative approach to this 
competition. But we cannot rely on the paradigms of the past to build 
that approach. After all, we know China does not play by the rules.

    First, our national security must come first. We have to identify 
smart, democratic measures that take into account the unfair trade 
practices, the human rights, and censorship abuses deployed by our 
adversaries, while making targeted investments in trade relations with 
our allies that abide by a rules-based international trading system.

    I've been proud to work with our colleagues on both sides of the 
aisle to craft legislation with these goals in mind. One example is the 
SECRETS Act, which I recently introduced with Senator Coons and Senator 
Young. This legislation would prevent the importation of specific 
products that contain intellectual properties stolen via economic 
espionage.

    There's also the SPEECH Act, which I authored with the Senator from 
Pennsylvania, Senator Casey, and was passed by the Senate. This will 
require the U.S. to review items for export control that could be used 
for human rights abuse and censorship by foreign governments such as 
China in Hong Kong, Tibet, Taiwan, and the Uighur region.

    The bill Senator Casey and I introduced, called the National 
Critical Capabilities Defense Act, would safeguard our critical supply 
chains to ensure we aren't caught flat-footed in the event of a public 
health crisis or natural disaster, or national security emergency. And 
the CHIPS for America Act, along with the FABS Act that was recently 
introduced, which was modeled after the original provision that Senator 
Warner and I introduced, would bring semiconductor manufacturing 
capabilities back home and eliminate that vulnerable supply chain.

    In addition to these efforts, we need to work to strengthen the 
international rules-based trading system and our relationships with 
nations that abide by it. For example, we can reauthorize programs like 
the Generalized System of Preferences and codify an exclusion process 
for section 301 tariffs to transition critical supply chains away from 
foreign adversaries, as was done in the Crapo amendment to the U.S. 
Innovation and Competition Act.

    And we can support critical reforms at the World Trade 
Organization. Most importantly, we can open new markets and reduce 
tariffs for nations that follow the rules, through U.S. accession to a 
multilateral trade agreement in the Asia-Pacific.

    The U.S. needs a seat at the table in the Asia-Pacific along with 
India, the U.K., Taiwan, and other nations in the Comprehensive and 
Progressive Trans-Pacific Partnership, also known as the CPTPP. This is 
our most effective weapon to confront China's sharp power, to speak up 
against its accession to the agreement, and to counter the Regional 
Comprehensive Economic Partnership or the RCEP.

    Next week, Trade Promotion Authority designed for the now-named 
CPTPP, will expire. The U.S. withdrawal from the TPP, as Senator Carper 
and I have opined in a joint op-ed in The Washington Post recently, was 
a missed opportunity for national security, free enterprise, and 
international trade.

    I, along with 24 of my Republican colleagues in 2018, said as much 
when the previous administration withdrew from the agreement in favor 
of bilateral trade deals. In 2019, the U.S. turned around and signed 
into a regional multilateral and landmark trade deal with the USMCA 
that can serve as a model for our engagement in the Asia-Pacific.

    So I look forward to learning from each of our witnesses today as 
we examine the best path forward. Ms. Cutler has a wealth of knowledge 
in international trade policy and law and was present for previous 
negotiations during TPP.

    Dr. Petri can help us quantify the economic growth we missed by 
withdrawing from that agreement and what we might gain going forward.

    Ambassador Cunningham has represented the United States around the 
world, including Hong Kong, where he saw China's claims in the early 
2000s to become a responsible partner. He's also seen the China of 
today that ignores the rule of law in the name of national security 
when it locks up, censors, and steals from press freedom advocates like 
Jimmy Lai.

    Mr. Allan, on behalf of his 55,000 employees, can provide us with 
the firsthand account of the importance of a diversified supply chain 
and how we can make targeted investments to strengthen manufacturing 
here at home, including through the opening of a new facility in Fort 
Worth, TX.

    So thank you all for being here today. And thanks to my friend, 
Chairman Carper, for making this possible. I look forward to exploring 
this topic.

                                 ______
                                 
  Prepared Statement of Hon. James B. Cunningham, Nonresident Senior 
 Fellow, The Atlantic Council; Former U.S. Ambassador to Afghanistan, 
  Israel, and the United Nations; Former Consul General of the United 
  States in Hong Kong; and Board Chair, Committee for Freedom in Hong 
                                  Kong
    Chairman Carper, Ranking Member Cornyn, thank you for the 
invitation to meet with you and the other members of the subcommittee 
to discuss the strategic and security context for the very important 
issue before you today.

    The United States is uniquely both a European and Asian power. Asia 
is vital to American economic and security interests. The United States 
and its allies and partners are in a long term competition with China 
over influence in the world, and over the values which dominate this 
century. The restoration of U.S. engagement and a multilateral approach 
to trade policy in the Indo-Pacific region, as you have both advocated, 
is in my view fundamental to success in that competition.

    Whether our relationship with China is confrontational or not, the 
competition with China for influence in almost every realm is underway 
and will persist. Our ability to engage multilaterally in Asia, whether 
regarding trade, diplomacy or security, is key to building and 
reinforcing our capacity, together with partners, to counter Chinese 
influence and to pursue our vision of Asia's future. That vision is 
based on political freedom, opportunity, prosperity, respect for the 
individual and, of course, open and productive trade and investment. 
The Chinese Communist Party and General Secretary Xi Jinping have of 
course a quite different vision, based on authoritarian control, 
assertion of Chinese ``rights'' and the restoration of Chinese primacy 
in Asia, intimidation, and subordination of the citizen to the State. 
The contest between these different models among and within nations is 
the defining theme of our age.

    China is already fully engaged in this competition in the Indo-
Pacific region, and increasingly around the world and in the 
international system of organizations on which the international 
community relies. Increasingly, its voice is also more confrontational 
and aggressive, with ``wolf warrior'' behavior and rhetoric becoming 
the norm as China under Xi Jinping disregards the famous advice of Deng 
Xiaoping to bide time and hide capacities. As China's outspoken 
ambassador to France recently explained in an interview on a Chinese 
website, ``our style has changed, you need to get used to our new style 
. . . (this is) a protracted war that will last through the entire 
duration of the great rejuvenation of the Chinese nation.'' The message 
is that China and its authoritarian model are on the rise, and the West 
and its values are in decline.

    In practice, China's rise has meant using the tools at its 
disposal, particularly economic punishments or enticements, to exploit 
the openness of our societies and universities, to control or shape 
information not only for its own citizens but abroad, and to blunt 
efforts over the past decade around the world to promote political 
reform. China is moving to rewrite or reject international rules and 
norms from which China itself benefitted as we attempted to integrate 
it into frameworks based on those rules and norms. It is working to 
reshape international institutions and dynamics in ways inimical to 
U.S. interests but much more toBeijing's liking. It has used its new-
found power to bully its neighbors in the South China Sea. It declared 
``restoration'' of sacred Chinese sovereignty over a large disputed 
portion of the South China Sea, and rejected out of hand the ruling of 
the relevant international maritime tribunal in the Hague that China's 
claim in baseless. Despite commitments not to do so, China has 
militarized artificial islands in the disputed area. The Chinese claim, 
in contravention of international law, and the militarization of the 
Sea in defense of Chinese sovereignty, is a threat to its neighbors and 
to the international community, given competing claims to the natural 
resources in the area and the vital trade sea lanes which pass through 
or near the zone.

    This is all very dangerous, and now more widely understood than 
even a few years ago. When I first arrived in Hong Kong is 2005 as 
Consul General, the Chinese were trying to assuage fears about China's 
rise, and the talk in and outside China was about how to manage it 
peacefully, how to lead it to become ``a responsible stakeholder'' in 
the rules-based, liberal system in which the U.S. and many other 
countries hoped to integrate China. There was hope that Hong Kong, 
where China had committed to the ``one country, two systems'' framework 
agreed with the UK, might serve as a model for how the rest of China 
might evolve and liberalize, become more democratic and free, as it 
became more prosperous and engaged with more liberal, democratic 
nations.

    Sadly, under Xi Jinping, China has taken quite another direction. 
Fearful of any threat to its authority, the Chinese Communist Party, 
under the National Security Law Beijing imposed on Hong Kong last year, 
is dismantling the one country, two systems framework it had committed 
to preserve. Pro-democracy figures are being jailed, freedom of the 
press and rule of law are being crushed. Private property and assets 
are being seized. Under the NSL, journalists and pro-democracy figures 
like media mogul Jimmy Lai are being held indefinitely without bail. 
Hong Kong is now holding political prisoners, and intimidation is the 
rule of the day as Hong Kong security authorities advise the media and 
populace ``not to invite suspicion.''

    Today's Hong Kong embodies the clash between authoritarian and 
liberal values. Beijing did not need to seize control of Hong Kong and 
gut the ``high degree of autonomy'' it had promised in order to return 
stability to the city. That it chose to do so out of fear and perhaps 
impatience serves as a reminder of how easily Beijing can eschew 
political dialogue, ignore its commitments and dismiss the regard of 
the international community.

    Around the world, governments have become alarmed at the issues 
posed by China's assertions of power and right in the South China Sea, 
efforts to dominate its neighbors and Taiwan, pursuit of unfair trade 
and business practices including theft of intellectual property, and by 
its subversion of democracy, human rights and freedom of information. 
In the past week or so unprecedented statements emerging from President 
Biden's meetings with the G7, NATO and the EU expressed concern about 
Chinese behavior, human rights abuses in Xinjian and Hong Kong, 
stability around Taiwan, and the competition of values. The NATO Allies 
concluded that ``China's stated ambitions and assertive behavior 
present systemic challenges to the rules- based international order and 
to areas relevant to Alliance security.'' The three statements 
demonstrated clearly how the international ground has shifted in 
response to Chinese assertions of power and indifference to 
international opinion. As importantly, the tenor of the discussions 
demonstrated that China has failed to divide the U.S. and Europe.

    That is precisely the sort of multilateral cohesion we need to 
pursue a strategy in the Pacific based on shared values and interests. 
Partnerships where possible on trade, security and diplomacy with our 
Pacific and Asian friends will lend mutual support to the efforts of 
the U.S. and all our partners to curb Chinese behavior. It will help 
America to strengthen its hand in the conflict of values, and to 
persuade Beijing that its behavior is unacceptable and even counter- 
productive. To the extent possible, Taiwan should be included in, or 
connected to, such partnerships. It has much to contribute, and its 
participation in a network partnerships will help promote stability in 
the region. As a Chinese democracy Taiwan shares our values and serves 
as a reminder that a different model of how to organize a successful 
Chinese society exists.

    Alliances and partnerships make America stronger and more 
effective. Bilateral relationships, in trade or otherwise, no matter 
how positive, are ill suited to the task of strengthening an 
international regime bases on our values. They are inefficient in 
developing and coordinating a program of joint, shared purpose. A 
network of bilateral ties does not easily serve to reinforce cohesion 
and common understanding and purpose. China will attempt to divide and 
intimidate and entice those seeking to confront the systemic challenges 
it poses. The power of America's partnerships and alliances is one of 
the strongest instruments available to the U.S., even uniquely so. 
China has no ability to lead such a partnership, except where it can 
link up to other autocratic or proto-autocratic states. Its power rests 
on its economic prowess, and its authoritarian model, not on the 
attraction of its ideas. Its weaknesses, and the many challenges its 
leaders face--in its economy, demography, environment, corruption and 
political legitimacy--are daunting. Its strengths are not to be 
overestimated. Beijing needs, or will need, interaction with and 
support from the United States and its partners that it for now seems 
prepared to do without.

    That is the optic through which I suggest the administration, as 
well as the Congress, should be looking at our trading arrangements in 
the Pacific. I'm sure the TPP had its flaws, and understand that some 
opposed it on principle. But the strategic value of a broad 
multilateral approach to linking American and Pacific economies, and to 
strengthening and building prosperity in a U.S.-Pacific partnership 
based on fundamentally shared values and aspirations, is immense.

                                 ______
                                 
          Prepared Statement of Wendy Cutler, Vice President, 
                     Asia Society Policy Institute
    Chairman Carper, Ranking Member Cornyn, distinguished members of 
the subcommittee, thank you for the opportunity to appear before you 
today to share my thoughts on the strategic benefits of a multilateral 
approach to trade policy in the Indo-Pacific region.

    As this subcommittee knows well, the Indo-Pacific region is home to 
some of the world's largest, dynamic, and fastest-growing economies in 
the world, as well as the most innovative companies. According to the 
Asian Development Bank, the region's share of global GDP will exceed 50 
percent by 2050. The region accounts for over one-third of global goods 
trade, up from 25 percent a decade ago. Moreover, Asia is home to a 
large and growing middle class, which is projected to account for over 
two-thirds of the world's total middle-class population by the end of 
this decade. In short, the region offers the United States enormous 
economic opportunities that will drive global economic growth--and 
American prosperity--for years to come. Without strong economic 
engagement in the region, however, the United States risks not only 
foregoing these opportunities, but becoming increasingly marginalized 
as the region forges a new future without us.

    While addressing the China challenge has understandably become an 
important rallying point in Washington to focus U.S. efforts regarding 
Asia, a comprehensive U.S. policy towards China will only succeed if 
accompanied by a broader Asia strategy. And an Asia strategy has the 
best chance of success with a robust trade pillar.
                      the regional trade landscape
    The trade landscape in the Indo-Pacific region has shifted 
significantly over the past 4 years. The U.S.-China trade dispute, the 
COVID pandemic and its associated economic impacts, supply chain 
disruptions, logistics challenges, and growing export and import 
restrictions have had dramatic impacts on trade in the region. 
Nevertheless, regional trade remains strong halfway into 2021, with the 
WTO predicting an eight percent growth in global goods trade this year, 
with much of it fueled by the region.

    The other important regional development, and the one on which I 
would like to focus today, is the ongoing efforts among the Indo-
Pacific economies to strike trade agreements among themselves. This 
makes the Indo-Pacific not only the center of global trade, but a hub 
of activity for trade negotiations. By not being a part of these deals, 
the United States loses its seat at the table to help write the rules 
to govern trade for the years ahead, and loses is competitiveness in 
these growing markets while parties to these agreements gain 
preferential market access.

    At the forefront of this movement are two multi-party regional 
agreements,--the Comprehensive and Progressive Agreement for Trans-
Pacific Partnership, or CPTPP, and the Regional Comprehensive Economic 
Partnership, or RCEP. The CPTPP entered into force approximately 2\1/2\ 
years ago after Japan rallied other countries to proceed with the 
agreement despite U.S. withdrawal. RCEP was signed in November 2020, 
and is expected to become effective in early 2022.

    But that's not the whole story. Beyond these two deals, countries 
across the region have also moved ahead with numerous bilateral trade 
agreements, including with some partners outside the Indo-Pacific. Just 
last week Australia and the United Kingdom announced the conclusion of 
a free trade agreement (FTA) ``in principle.'' Over the past couple of 
years, the Indonesia-Australia Comprehensive Economic Partnership 
Agreement and the EU-Vietnam FTA came into force; China concluded FTA 
negotiations with Cambodia; New Zealand and China updated and expanded 
coverage of their existing agreement; and South Korea and Indonesia are 
now working in their respective capitals to bring their recently 
concluded FTA into force.

    There are multiple factors driving this stepped-up activity. They 
include the desire of regional partners to grow their economies, 
strengthen supply chain resiliency, create jobs, attract foreign direct 
investment, promote innovation, and diversify their trading partners. 
Regardless of their political systems or level of development, nearly 
all countries in the region see economic growth and innovation as a 
critical measure of societal success, and have witnessed firsthand the 
lifting out of poverty of millions of citizens in the short span of one 
or two generations--most made possible by expanding trade and 
investment opportunities across the region and the world. In short, our 
regional partners see trade expansion as a path worth pursuing.

    Yet, even with all of this activity, our partners would still like 
to see the United States return to the negotiating scene to help craft 
agreements that shape the rules of the road on trade and investment for 
the coming years, and keep the United States fully engaged in the 
economic fabric of this dynamic region. While these countries strongly 
welcome recent U.S. engagement on security, climate change, and health, 
they note the conspicuous absence of trade initiatives, a significant 
gap in their eyes. Without an active trade agenda for the region, our 
partners view U.S. regional engagement as incomplete and unresponsive 
to one of the key levers that will promote and sustain U.S. integration 
and influence in the region.
                                 cptpp
    In particular, the CPTPP members have made it clear that they would 
welcome the United States back to this pivotal regional agreement. 
These countries have not stood still since the United States announced 
its withdrawal from TPP in January 2017. While the U.S. exit initially 
threw the agreement into disarray, the eleven remaining countries 
regrouped under the leadership of Japan and signed the CPTPP just 14 
months later. Surprisingly and importantly, they kept the overwhelming 
majority of the agreement intact, suspending only 22 of the thousands 
of provisions from the original TPP.

    Despite this impressive success in resuscitating what looked like a 
moribund agreement, the CPTPP countries have not achieved comparable 
success so far in attracting new members. A number of economies have 
expressed varying degrees of interest in joining, including Indonesia, 
the Philippines, South Korea, Taiwan, and Thailand but none have made 
the leap to submitting a formal application. However, this changed 
earlier this month when the CPTPP partners launched the formal 
accession process for the United Kingdom. Given its high-standard trade 
agreements already in place with a number of CPTPP members, UK 
accession is expected to go smoothly, which could help pave the way for 
others to follow.

    China has also expressed its interest, with Xi Jinping publicly 
stating last November that China will ``favorably'' consider joining 
the CPTPP. It's unclear what China's true intentions and motivations 
may be. But, statements like this are not made lightly and must be 
taken seriously. Chinese officials are now taking a deep dive into the 
specifics of the agreement's provisions, while they consult with 
certain CPTPP members to further their understanding of what the rules 
would mean in practical terms for Beijing and take the temperature on 
possible support for a Chinese bid to join.

    Indeed, China would have difficulties in adhering to certain CPTPP 
rules, particularly with respect to obligations on state-owned 
enterprises, digital trade, labor standards, and intellectual property 
protection. But, that's not necessarily a reason to dismiss the 
prospect of Chinese accession. Let's keep in mind that China is the 
number one trading partner for most countries in the region, with trade 
and investment flows growing steadily, and supply chains strengthening 
in some key sectors.

    While China is Japan's top trading partner, Japanese officials, in 
their capacity as chair of the CPTPP this year, have sent signals that 
China's accession would have to be on the same terms and at the same 
high standards as for any other country. Other CPTPP members may be 
more flexible, believing that this would be an opportunity for further 
market-opening and reform by Beijing, while increasing their access to 
the large and growing Chinese market. What is key for Washington to 
keep in mind is that these discussions are happening in real time in 
capitals all over the region. The longer we are on the sidelines of 
these conversations, the less influence the United States will be able 
to exert in this process and in the region more broadly.
                                  rcep
    The United States should also pay close attention to developments 
surrounding RCEP. Each of the fifteen RCEP members is now seeking 
domestic approval of the pact, which is expected to go into effect in 
early 2022. Four countries--China, Japan, Singapore, and Thailand--have 
already ratified the agreement and others are expected to follow in the 
months ahead.

    RCEP is a low-standard agreement when compared to CPTPP. Rules on 
labor, environment, and state-owned enterprise are noticeably absent. 
The text is full of exceptions, long transition periods, weak 
enforcement mechanisms, and product exclusions for tariff reductions, 
leading some to dismiss its economic significance. But doing so would 
be a mistake. With common rules of origin and harmonized paperwork for 
customs purposes, this agreement will result in more economic 
integration among its members, as well as the further strengthening of 
regional supply chains. Moreover, with its ministerial meetings, 
committee structure, and the establishment of a Secretariat, RCEP will 
become a forum for its members to set rules on emerging issues and 
strengthen preferential market access commitments.

    While joining RCEP is not a realistic nor desirable prospect for 
the United States, it is an important milestone that should be factored 
into U.S. thinking as we shape our trade strategy in the region and 
consider the timing of new initiatives. America's key trading partners 
and allies in the region take the RCEP seriously--so should we.
          important takeaways from past regional negotiations
    As the administration and Congress consider how the United States 
can most effectively reengage on trade in the Indo-Pacific, I commend 
the subcommittee's interest in seeking a deeper understanding of what 
lessons can be learned from our past work on trade agreements and how 
they can inform our next steps.
                                  tpp
    In light of my firsthand experience as a senior U.S. negotiator in 
the TPP negotiations, I would like to share the following observations 
of this multiparty negotiation which I believe are relevant to this 
exercise.

    First, it's important to recognize that the United States was 
successful in defining the topics and shaping the rules that comprised 
the final TPP agreement. There is every indication that while the slate 
is not as clean as it was previously, we could still play a similar 
role in future negotiations. In such areas as e-commerce, state-owned 
enterprises, intellectual property protection and industrial and 
agricultural standards, the detailed TPP provisions, and now CPTPP 
provisions, were largely based on U.S. proposals. In fact, throughout 
the negotiation the U.S. objective was largely to bring other 
countries' trade regimes more in line with U.S. standards and norms. 
The U.S. success in this endeavor was evidenced by how few laws and 
regulations Washington would have needed to change to become part of 
the agreement, especially when compared to the other members.

    Second, multiparty deals like the TPP by definition generate bigger 
bang for the buck as more countries agree to a common set of ambitious 
rules while providing access to their individual markets. The economic 
gains of a single negotiation can be multiplied by the number of 
parties to the agreement, and are then augmented by the additional 
benefits that flow from the outcome of constructing a regional 
framework. Furthermore, these benefits can grow as new, qualified 
members join the grouping.

    Third, with the recent and urgent focus on supply chain resiliency, 
agreements like TPP should be viewed as ``trusted'' supply chain 
agreements. By bringing together like-minded countries committed to 
high-standard rules and eliminating barriers among them, such 
agreements encourage the development of resilient supply chains between 
the parties. They can provide a strong foundation for more detailed 
supply chain arrangements around specific strategic and essential 
products of concern.

    Fourth, a multicountry agreement like TPP provides some important 
sources of negotiating leverage that are distinct from bilateral 
initiatives. During the course of the TPP negotiations, U.S. 
negotiators were able to capitalize on other countries' concessions to 
gain support from third-country members for U.S. negotiating requests. 
For example, once Japan joined the talks and offered new and valuable 
agricultural market access to the group, others were more amenable to 
moving in areas of importance to the United States, including 
intellectual property protection and state-owned enterprises. We also 
found that building a coalition of TPP members in support of a 
particular U.S. proposal sometimes made it easier for the outlier 
country to gain traction at home if it could show that it was 
responding to requests from a group of countries, and not just U.S. 
pressure.

    One final thought to share on such multicountry agreements: 
negotiating a comprehensive agreement with a diverse group of countries 
is unquestionably more complex and usually takes more time than a 
bilateral negotiation. This is borne out by looking at the multiyear 
time frames for the TPP, RCEP, and WTO negotiations. As talks proceed, 
sometimes initial negotiating objectives can be overtaken by changing 
public sentiment about the deal itself, or concerning specific chapters 
or provisions. Such was the case with TPP. Looking ahead, we should 
consider building in a mid-term review--perhaps at the 2-year mark of 
negotiations--to take a step back and reassess U.S. negotiating 
objectives and make necessary adjustments that align more closely with 
possible shifts in stakeholder and congressional views. Certain trading 
partners may view this as an unhelpful ploy by Washington to move the 
goalposts in the negotiations. However, a mid-term review, with 
congressional and stakeholder input, could help build needed domestic 
support and ensure that the negotiated outcomes are in line with public 
sentiment.
                                 usmca
    There are also important takeaways from the USMCA negotiations that 
should be considered carefully as Washington develops its trade 
strategy for the Indo-
Pacific region. First and foremost, the USMCA clearly demonstrated to 
skeptics in the United States and abroad that trade agreements can 
garner strong bipartisan congressional support if they are able to 
successfully address and balance the priorities and concerns of 
different stakeholders and congressional members. It also underscored 
how critical consultation and cooperation between the executive and 
legislative branches are in bringing negotiated deals into force. This 
collaboration should be a model for future negotiations, even if it 
builds extra time into the process.

    One of the best kept secrets of USMCA was how this agreement 
borrowed heavily from the TPP, keeping its provisions alive and 
relevant in such areas as digital trade, intellectual property 
protection, and agricultural standards (SPS). Moreover, USMCA 
incorporated new features, including enforceable currency provisions, 
stronger enforcement tools for labor and the environment, and stricter 
rules of origin to ensure that the economic benefits of the agreement 
are directed to its members and not to outsiders. These new provisions 
paved the way for many earlier congressional opponents of trade 
agreements to rally behind the deal.

    A word of caution, however. Before concluding that the USMCA should 
be the model or the floor for future trade agreements, particularly in 
the Indo-Pacific region, we should be mindful that the United States 
had unique negotiating leverage with Canada and Mexico. Both neighbors 
are highly dependent on the U.S. market with approximately 75 percent 
of their exports destined for the United States. This contrasts with 
the Indo-Pacific where the United States is just one of several major 
trading partners and where China is and will continue to be the largest 
trading partner for the overwhelming majority of countries in the 
region. Second, President Trump's threat to withdraw from the original 
NAFTA agreement resulted in unprecedented flexibility among American 
stakeholders who feared the commercial fallout that would transpire 
from uprooting 25 year-old trilateral supply chains that had developed 
under NAFTA--a flexibility that may not be repeated in negotiations of 
new trade agreements. Finally, Mexican political developments allowed 
the United States to play the negotiating clock skillfully with Mexico, 
and then use that factor to build pressure on Canada.
                       where does this leave us?
    Each negotiation tends to have its own set of shared objectives, 
unique challenges, and sources of leverage. What works for one country 
or region may not be easily transferable to another. Thus, while it's 
important to develop a template, it's equally critical to build in 
flexibilities.

    The TPP and the USMCA negotiations offer valuable lessons and 
insights that are important to keep in mind as the United States shapes 
its trade strategy for the Indo-Pacific region. Both are comprehensive 
trade agreements that cover dozens of topics, updating provisions of 
earlier agreements and including new features.

    In shaping its worker-centered trade policy, the Biden 
administration has indicated that it will conduct a detailed review of 
our existing FTAs, consult widely, and develop a new template that 
responds to the concerns and priorities of U.S. workers, and the U.S. 
middle class more generally.

    This internal work will take time--it is a painstaking but 
necessary process to develop concrete proposals, consult with a wide 
array of stakeholders, many new to the trade arena, and build domestic 
support. But time is not on our side in the Indo-Pacific region if we 
want to play a leading and impactful role in shaping the new rules, 
standards, and norms for regional trade and investment. As each month 
passes, most regional economies are concluding new trade agreements, 
strengthening their economic ties with China, and integrating further 
among themselves. Meanwhile, China's efforts to fill the vacuum that 
we've created are moving ahead full steam.
  conclusion: pursue narrower, sectoral trade agreements in the indo-
                                pacific
    This leads me to a concluding recommendation. Just because the 
United States may not currently be ready to enter into a comprehensive 
trade agreement with Indo-Pacific partners, this should not mean that 
our entire rule-making trade agenda for the region be placed on hold. 
Rather, we should pursue narrower deals in sectors that deliver 
concrete benefits to U.S. workers and firms, while positioning the 
United States at the forefront of writing the rules that will govern 
trade for the years to come.

    A digital trade agreement with like-minded regional partners would 
be an excellent candidate for such a focused approach. Such an 
agreement would help promote digital inclusiveness, provide small and 
medium-sized enterprises the digital tools they need to participate and 
flourish in the international marketplace, and reverse the emerging 
trend of digital protectionism. It could provide a forum to promote 
shared democratic values of openness, transparency and fairness. 
Moreover, such an initiative would put the United States squarely back 
at the regional negotiating table and could serve as a building block 
for a broader agreement, such as a revised and updated TPP, down the 
road. Finally, the rules of the road for digital technologies are still 
being written, and absent U.S. participation, these rules may work 
against our interests. Indeed, we are already seeing this--a case in 
point being the broad exception provided in the RCEP e-commerce chapter 
where data obligations can essentially be ignored if a party decides 
for itself to do so. To prevent such provisions from becoming the 
regional norm and spreading to other agreements, U.S. leadership is 
critical.

    Needless to say, there are other subjects that could also be a 
useful focus for regional sectoral agreements, and I urge the 
subcommittee to give this more thought. But what's clear and was so 
well stated in a recent op-ed by the chairman and ranking member, the 
first and most important step is to ``get our seat back at the table'' 
in this critical region. Our future economic growth, competitiveness, 
and influence depend on it.

                                 ______
                                 
    Prepared Statement of Peter A. Petri,\1\ Ph.D., Carl J. Shapiro 
 Professor of International Finance, Brandeis University; Nonresident 
  Senior Fellow, Brookings Institution; and Visiting Fellow, Peterson 
                 Institute for International Economics
---------------------------------------------------------------------------
    \1\ Carl J. Shapiro professor of international finance, Brandeis 
University; nonresident senior fellow, Brookings Institution; and 
visiting fellow, Peterson Institute for International Economics.
---------------------------------------------------------------------------
    Chairman Carper, Ranking Member Cornyn, distinguished members of 
the subcommittee, thank you for this opportunity to testify, and thank 
you especially for addressing a critical challenge--the need for a 
multilateral approach to trade policy in the Asia-Pacific region.

    As a researcher specializing in international trade, I have studied 
this region's development and relationships with the United States for 
nearly 50 years. Over the last decade, in collaboration with Professor 
Michael Plummer of Johns Hopkins University and other colleagues, I 
also undertook extensive studies of actual and proposed trade 
agreements in the Asia Pacific, and their variants with additional 
members. These multilateral agreements are summarized in Table 1; I 
will report some results from our research below.\2\
---------------------------------------------------------------------------
    \2\ Most results reported in this testimony will appear shortly in 
Cyn-Young Park, Peter A. Petri, and Michael Plummer, ``The Economic 
Effects of the Regional Comprehensive Economic Partnership and Recent 
Trade Policy Developments in Asia and the Pacific,'' Asian Development 
Bank Working Paper (forthcoming). Our earlier publications on Asia-
Pacific trade agreements are listed and linked on: http://
asiapacifictrade.org/.

    As you know, the United States has long supported East Asia's 
political stability and access to world markets, at times at great 
cost. The region translated this support--through remarkable national 
success stories--into unprecedented prosperity and poverty reduction. 
The United States stayed on the job, promoting further progress through 
regional agreements and institutions as recently as 5 years ago. In the 
words of former Secretary of State James Baker, we refused to draw ``a 
line down the middle of the Pacific.''\3\
---------------------------------------------------------------------------
    \3\ James A. Baker III, The Politics of Diplomacy. New York: Putnam 
and Sons, 1995.

    So it's disappointing to see U.S. economic ties with the Asia-
Pacific weaken in recent years. While the United States has retained, 
and indeed intensified, its focus on Indo-Pacific security, it withdrew 
political support for deeper economic integration across the Pacific 
and in East Asia itself, and reduced its participation in Asia's 
multilateral institutions. Its disengagement is striking relative to 
---------------------------------------------------------------------------
increased efforts by other countries, not least China.

    The new decade offers a chance to review our engagement in the 
Asia-Pacific. In the past, the United States played an important role 
in the region's multilateral mechanisms. It should do so again. 
America's efforts to enhance the competitiveness of our economy will 
hopefully build confidence and resources for launching new trade 
initiatives. The U.S. economy is complementary to Asian economies, and 
the United States is respected in Asia for its historical role and 
economic prospects. It is uniquely positioned to benefit from the 
dynamism and prosperity of the Asia-
Pacific, the fastest growing world region in the last half century.


 Table 1. Multilateral trade agreements in the Asia-Pacific P(actual and
                                proposed)
------------------------------------------------------------------------
   Acronym          TPP           CPTPP           RCEP         RCEP16
------------------------------------------------------------------------
Formal name    Trans-Pacific  Comprehensive  Regional       As RCEP
                Partnership    and            Comprehensiv
                               Progressive    e Economic
                               Agreement      Partnership
                               for Trans-
                               Pacific
                               Partnership
------------------------------------------------------------------------
Members        Australia,     As TPP,        Australia,     As RCEP,
                Brunei,        except         Brunei,        except with
                Canada,        without        Cambodia,      India
                Chile,         United         China,
                Japan,         States         Indonesia,
                Malaysia,                     Japan, Laos,
                Mexico, New                   Malaysia,
                Zealand,                      Myanmar, New
                Peru,                         Zealand,
                Singapore,                    Philippines,
                Vietnam                       Singapore,
                                              South Korea,
                                              Thailand,
                                              Vietnam
------------------------------------------------------------------------
Year in force  Abandoned      2018           Expected 2022  Unknown
------------------------------------------------------------------------
Description    High-quality,  Uses TPP text  Unusually      As RCEP
                comprehensiv   but suspends   diverse
                e agreement    22             membership,
                with           provisions     lower-
                innovative     including      quality
                provisions     some on        agreement,
                on digital     investment     favorable
                economy and    dispute        rules of
                intellectual   resolution     origin, no
                property       and            labor or
                               intellectual   environment
                               property       chapters
------------------------------------------------------------------------
Source: author.

                       fraying tans-pacific ties
    To help assess multilateral cooperation across the Pacific, 
consider five factors that currently shape these connections. Each of 
these trends has recently contributed to the erosion of tans-Pacific 
ties and limits what the United States might achieve in future Asia-
Pacific agreements. But the list should not be read pessimistically. 
Appropriate U.S. policies can change some factors and find better ways 
to accommodate those beyond our control.

        China's growing economic influence in East Asia. In the decade 
ending in 2019, Chinese trade with East Asian partners excluding China 
expanded by 7.0 percent annually, compared to 5.6 percent for the 
United States.\4\ China is now the largest trading partner of all 11 
major East Asian countries,\5\ and the United States is among the top 
two partners of only 3 countries (Japan, Korea, and Vietnam). These 
economic interests explain why East Asian countries prefer regional 
arrangements that are potentially open to China, but also incentivize 
it to conform to clear international standards.
---------------------------------------------------------------------------
    \4\ Trade is measured as imports plus exports. Comparisons for the 
decade ending in 2020 are available but are distorted by the effects of 
COVID-19. Data are from the World Bank's WITS data base, extracted June 
20, 2021.
    \5\ These are Australia, Cambodia, Indonesia, Japan, South Korea, 
Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam.

        Concerns about trade policy in the United States. The TPP, 
which the United States abandoned in 2017, met many objectives for 
healthy Asia-Pacific relationships: it was a large, high-quality, 
innovative, multilateral arrangement. The U.S. withdrawal was a flawed 
decision, but in fact the politics of the TPP had turned very divisive 
by the time the agreement was signed. Opposition emerged across various 
political lines, fueled by the frustrations of American workers whose 
wages were not rising sufficiently fast, and who could not find 
alternatives to disappearing manufacturing jobs. Trade barriers emerged 
as plausible (though ultimately ineffective) remedies for unacceptable 
trends. In fact, our research suggests that agreements like the TPP can 
benefit workers by expanding markets for productive firms, causing 
wages to rise faster than profits, and thus also create additional 
jobs.\6\ New trade initiatives will require political support, and 
current U.S. policy innovations should give workers skills and 
confidence to pursue opportunities through trade.
---------------------------------------------------------------------------
    \6\ A close review of the TPP's labor market effects suggests 
positive implications, including increases in the returns to labor 
compared to capital (Peter Petri and Michael Plummer, ``Economics of 
the Trans-Pacific Partnership: Distributional Impact,'' VoxEU, 30 April 
2016, https://voxeu.org/article/economics-tpp-winners-and-losers). 
Also, we recently added endogeneous labor supply mechanisms to our 
model, which project job gains from agreements like the TPP that 
increase real wages (Park, Petri, and Plummer, forthcoming, op. cit.).

        Declining U.S. role in East Asia's cooperative mechanisms. The 
key inter-
governmental mechanisms operating in East Asia include the Association 
of Southeast Asian Nations (ASEAN), the 18-member East Asian Summit, 
which includes ASEAN, the United States and other partners, and the 21-
member Asia Pacific Economic Cooperation forum (APEC). Each conducts 
annual leaders' summits, arranged to minimize related travel, and 
offers opportunities for high-level dialogue. Although U.S. presidents 
played important roles in these institutions in the past, during his 
term President Trump participated in only one of four ASEAN meetings, 
none of four East Asian Summits, and two of three APEC meetings. These 
---------------------------------------------------------------------------
are tables where the United States should be present.

        Growing East Asian confidence in leading economic integration. 
Filling the vacuum left by America's absence, East Asia reoriented its 
economic integration efforts toward regional and other partners, 
including Europe and even Russia. The 11 signatories of the TPP 
remaining after the exit of the United States, led by Japan, concluded 
a replacement agreement within 1 year after losing their dominant 
partner. That breakthrough served to accelerate the negotiations on 
RCEP, which were concluded in 2020. RCEP is a large agreement with an 
unusually diverse membership, spanning countries that differ widely in 
population and development. The United States should welcome and 
support these trends in collaboration with Asian partners.

        Deepening intra-Asian, rather than trans-Pacific, economic 
ties. Over time, intra-Asian business ties and agreements are becoming 
more important than trans-Pacific relationships. When the TPP was in 
negotiation, we estimated that its global benefits would be 72 percent 
larger than those offered by RCEP (then expected to include India), 
because the TPP provided a more modern and rigorous template.\7\ In 
contrast, we now estimate that RCEP (without India) would be 40 percent 
more valuable than the CPTPP, which has become smaller and less 
productive without the United States. Moreover, the CPTPP is now also 
likely to add other East Asian economies.
---------------------------------------------------------------------------
    \7\ Peter A. Petri, Michael G. Plummer, Shujiro Urata, and Fan 
Zhai, ``Going it Alone in the Asia-Pacific: Regional Trade Agreements 
Without the United States,'' Peterson Institute for International 
Economics, Working Paper 17-10, October 2017.

    Compared to the final years of the TPP negotiations, the East Asian 
economy has greater regional focus. The United States remains an 
important partner, but trends argue for recognizing East Asia's 
maturing economy. The return of the United States to meaningful 
regional agreements would be welcomed, for the large opportunities 
provided by U.S. markets and technology, and for diversifying regional 
risks. Many countries, moreover, also want sustained U.S. engagement as 
a foundation for a rules-based regional system and political stability.
              consequences of east asia ``going it alone''
    In recent research, colleagues and I have applied quantitative 
models to examine the consequences of these trends, including the shift 
from trans-Pacific to East Asia-centered trade agreements. We use a 
state-of-the-art computable general equilibrium (CGE) model, similar to 
those used by other researchers including the U.S. International Trade 
Commission. The model is not designed to make forecasts--rather, it 
answers ``what if'' questions about the effects of new policies such as 
trade agreements. It produces aggregate results, say, on changes in 
national real incomes, as well as detailed results, say, on bilateral 
trade flows of motor vehicles. We analyze these changes for the world 
economy divided into 19 sectors in 29 regions, over the 2015-2030 
period.

    We recently applied the model to examine four key trade policy 
developments: the U.S.-China trade war, the implementation of the CPTPP 
agreement, and the ramp-up of the new RCEP agreement (without Indian 
membership), and a potential RCEP16 agreement that would also include 
India. We represented these policy changes with announced details when 
available, say on tariffs, and with judgments about the effects of 
unquantified measures, say import, export, and investment restrictions 
applied to U.S.-China trade.

    The results suggest large changes in real incomes as illustrated in 
Figures 1 and 2 below. These figures track the incremental effects of 
the policy scenarios. Each starts at zero on the left (the dotted line 
near the top) and then successively adds bars to show the effects of 
the trade war and the trade agreements.

    Figure 1 shows global real income effects. The trade war has a 
large negative effect, reducing world incomes by $514 billion dollars 
(all values mentioned are annual estimates for 2030, representing also 
similar effects in later years). The trade agreements all have positive 
effects, each increasing global incomes from the levels reached under 
previous scenarios. Thus, the CPTPP will increase world incomes 
annually by $188 billion, RCEP by a further $263 billion, and RCEP16--
RCEP with the addition of India--by a final $90 billion. Together, the 
three agreements are projected to add $541 billion to world incomes, 
enough to end up above zero, that is, to offset the costs of the U.S.-
China trade war. However, these costs are not fully offset in all 
countries, including especially in China and the United States.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Figure 2 shows the effects of the same scenarios for real 
income in the United States. These follow a different pattern: the 
trade war and the new regional trade agreements all have negative or 
insignificant income effects (negative bars are shown in red). To be 
sure, U.S. losses are not large--for example, they represent less than 
10 percent of the global losses associated with the trade war, with 
China bearing a far larger share--but the four scenarios together 
reduce U.S. incomes by $45 billion annually. These losses reflect trade 
lost due to the new trade barriers introduced by the trade war as well 
as new preferences that America's competitors receive (but U.S. 
producers don't) under the CPTPP and RCEP.

    Moreover, the direct losses from the CPTPP agreement shown in 
Figure 2 do not include what the United States would leave on the table 
by not benefiting from joining the CPTPP. If the United States did 
join, it would get preferential market access within the agreement--for 
example, U.S. exports would be subject to lower tariffs. In a 2016 
study we estimated these gains at $131 billion annually.\8\ We have not 
reestimated them since, but changes in our model suggest that updated 
results would be perhaps 25 percent larger. In other words, benefits 
foregone by not joining the CPTPP would be several times as large as 
direct U.S. losses estimated above.
---------------------------------------------------------------------------
    \8\ Peter A. Petri and Michael G. Plummer, ``The Economic Effects 
of the Trans-Pacific Partnership: New Estimates.'' Assessing the Trans-
Pacific Partnership, Volume 1: Market Access and Sectoral Issues. Ed. 
Kimberly Ann Elliott et al. Washington, DC: Peterson Institute for 
International Economics, 2016, 6-30.

    More granular analysis shows that, all else equal, each of the four 
policy scenarios--the trade war and the new East Asian agreements--will 
reduce America's Asia-Pacific economic ties. This is because the trade 
war has raised barriers to U.S.-China trade, and because the new 
agreements will offer advantages to imports from partners that are 
members, over imports from the United States. In addition, the new 
agreements, especially RCEP, will create incentives for regional supply 
chains, enhancing East Asia's competitiveness in manufacturing. RCEP is 
the first trade agreement among China, Japan, and South Korea, reducing 
barriers among their firms and with producers in other RCEP countries. 
RCEP's rules-of-origin provisions will be especially useful for 
---------------------------------------------------------------------------
incentivizing such regionwide collaborations.

    It would be tempting to see East Asia's trade agreements as beggar-
thy-neighbor initiatives, or as concessions to a powerful China. But 
their evident goal is economic integration; they will create far 
greater gains for members than losses for outsiders like the United 
States. As a member of RCEP, China is likely become its biggest 
beneficiary, given its outsized economic role. But perhaps because this 
was expected, China did not appear to dominate the negotiations, 
according to key ASEAN officials.\9\ The negotiations demanded 
exceptional patience; they were repeatedly stuck on the sensitivities 
of one or more smaller countries.
---------------------------------------------------------------------------
    \9\ ASEAN Secretary General Lim Jock Hoi and others close to the 
negotiations have widely argued this point. See for example Lim's 
description of the signing of RCEP as ``a historic event as it 
underpins Asean's role in leading a multilateral trade agreement of 
this magnitude, despite global and regional challenges and 8 years of 
negotiations'' (The National, ``The RCEP trade deal proves Asia need 
not be led by the U.S. or China,'' November 17, 2020).
---------------------------------------------------------------------------
                    building on america's strengths
    For better or worse, East Asia is now following policies more 
focused on the region's own integration than on trans-Pacific 
relations. One reason is that its trans-Pacific options have narrowed. 
Reversing, or at least slowing, this trend will require U.S. actions: 
increasing the priority of America's economic ties with East Asian 
partners, and participating more fully in regional mechanisms of 
cooperation, such as ASEAN, APEC and the East Asia Summit.

    From an economic perspective, the United States can best address 
these challenges by joining the CPTPP agreement, or an appropriate 
successor agreement. This would raise U.S. incomes and send the clear 
message that America's commitments to the region are aligned across our 
economic and security interests. This will enhance the credibility of 
both pillars of the relationship.

    Moreover, the value of the CPTPP is bound to expand through the 
``domino effect''--as new members join, benefits increase for current 
members as well as further entrants. The United Kingdom is already 
negotiating membership, while China, Colombia, Indonesia, the 
Philippines, South Korea, Taiwan, and Thailand have all expressed 
interest in joining. Nothing would accelerate the domino effect more 
than U.S. entry. An expanding CPTPP would amplify strategic benefits 
for the United States.

    Still, in my view, America's withdrawal from the TPP will not be 
quickly reversed. U.S. political divisions on trade remain acute. In 
the short term, the U.S. government is unlikely to prioritize relations 
with East Asia above other challenges at home and abroad. Nevertheless, 
promising signs are on the horizon: the U.S. economy is recovering 
rapidly from the COVID-19 crisis and Congress is engaging with 
difficult economic issues. With the American Rescue Plan and a Senate 
version of the United States Innovation and Competition Act behind it, 
Congress is poised to tackle legislation on infrastructure and human 
capital. Each of these bills establishes clear links between America's 
prosperity and security and its international competitiveness. If 
successful, they will enhance U.S. leverage and give workers and 
businesses the tools to embrace international challenges.

    As the United States gains confidence in its economic recovery, 
opportunities in the Asia-Pacific will again come into sharper focus. 
In the meantime, much needs to be done to build support, abroad and at 
home, for future agreements. Abroad, the United States could initiate 
agendas on shared policy challenges in APEC, ASEAN, and the East Asia 
Summit, to explore zones for potential collaboration. It could scale up 
contributions to East Asia's people, through investments in public 
goods and initiatives centered on America's remarkable assets in 
education, science, and culture. At home, it could encourage diverse 
communities--in business, technology, health care and other sectors--to 
reinvigorate partnerships across the Pacific, and to develop joint 
strategies for renewed trans-Pacific engagement. Clear definitions of 
America's long-term interests, based on wide political foundations, 
will be essential for renewing Asia-Pacific ties.

                                 ______
                                 

                             Communications

                              ----------                              


                    American Farm Bureau Federation

                 600 Maryland Avenue, SW, Suite 1000 W

                          Washington, DC 20024

                            p. 202-406-3600

                            f. 202-406-3606

                          https://www.fb.org/

The American Farm Bureau Federation, the nation's largest general farm 
organization, submits this statement for the hearing on the benefits of 
a multilateral approach to trade policy in the Asia-Pacific region. 
Trade is critically important to the current welfare and future 
prosperity of U.S. farmers and ranchers, who depend on growing and 
stable export markets for the success of their businesses.

 Comprehensive and Progressive Agreement for Trans-Pacific Partnership 
                    (CPTPP)

The Asia-Pacific region is critical to the growth for U.S. agricultural 
exports. Several countries in the region are currently good markets for 
America's farmers and ranchers and the strong economies and growing 
populations of many others have great potential. Removing existing 
tariff barriers and achieving common standards across the region will 
increase the opportunities for providing our products to these 
customers.

American farmers and ranchers will benefit from the opportunities that 
exist in the Asia-Pacific region. We support efforts to re-engage with 
the countries involved in the CPTPP in a manner that will yield real 
gains. While we have trade agreements with certain CPTPP nations 
(Australia, Canada, Chile, Mexico, Peru, Singapore), we have no trade 
agreements with Brunei, Malaysia, New Zealand and Vietnam.

Farm Bureau supported the Trans-Pacific Partnership Agreement and 
supports the entry of the U.S. into the CPTPP. The goal of this 
multilateral approach is to improve trade conditions in the Asia/
Pacific region and boost economic activity for all participating 
countries.

Eliminating or reducing tariff barriers is always an objective of trade 
negotiations. Achieving this across the Asia/Pacific region will 
immediately impact U.S. agricultural exports in a positive way. 
Improving sanitary standards to ensure a science-based approach across 
this region will eliminate and reduce barriers and improve efficiencies 
in trade.

U.S.-Japan Trade Agreement

The U.S.-Japan Trade Agreement went into effect on Jan. 1, 2020, 
putting tariffs applied to U.S. products on par with those applied to 
the products of the other countries with a trade agreement with Japan. 
Tariffs are being reduced or eliminated on a variety of U.S. 
agricultural exports to Japan. The U.S. and Japan must continue to work 
on the remaining issues, such as sanitary/phytosanitary rules, and 
address tariffs for rice and some dairy products. These issues can be 
covered through the CPTPP.

U.S.-Mexico-Canada Agreement

The USMCA went into force on July 1, 2020. The implementation of 
expanded access for U.S. dairy products in Canada through the new 
tariff-rate quotas is very troubling to our dairy producers and needs 
to be resolved. Concerns about agricultural trade with Mexico include 
the approval process for biotech products, dairy product labeling and 
the country's ban on glyphosate beginning in 2024. As members of the 
CPTPP, Canada and Mexico are an important part of trade in the Asia/
Pacific region and are also valued U.S. trading partners.

U.S.-U.K. negotiations

Five rounds of comprehensive negotiations have been completed between 
the U.S. and the U.K. With the negotiations on food safety focused on 
U.S. standards for chicken, beef and pork, the U.K. needs to recognize 
the United States' science-based approach. We support continuing the 
negotiations toward a trade agreement with the United Kingdom. The U.K. 
is also beginning the process of joining the CPTPP.

U.S.-China Phase 1 Agreement

The U.S.-China Phase 1 Agreement has and will continue to result in 
real progress toward a mutually beneficial trade relationship. We are 
already seeing positive results for agricultural trade and substantial 
progress in the removal of barriers that impact the competitiveness of 
U.S. products in this important market.

In the Phase 1 Agreement, China committed to increase purchases of U.S. 
agricultural products by $32 billion over two years. Working from the 
2017 baseline of $24 billion, China has agreed to purchase no less than 
an additional $12.5 billion of U.S. farm and ranch goods in calendar 
year 2020 and no less than $19.5 billion in calendar year 2021. Over 
the first two years of the agreement, China is expected to purchase a 
total of $80 billion of U.S. agricultural products. For 2020, China 
purchased over $27 billion of U.S. agricultural products.

Chinese purchases of soybeans, corn, wheat, sorghum, beef, pork and 
other products are strongly improving, driving up demand--and prices 
received by U.S. farmers--for these goods.

Longstanding barriers to the export of U.S. beef, pork, poultry and 
other products have been or are being resolved, pursuant to the 
Agreement. An improved process for biotechnology product approvals by 
China is also included. As these barriers go down, the opportunity for 
increased U.S. commodity sales goes up.

China has also expressed interest in being a part of the CPTPP.

Trade Promotion Authority

The current Bipartisan Congressional Trade Priorities and 
Accountability Act of 2015 (Trade Promotion Authority) ends on July 1, 
2021. Farm Bureau recognizes the crucial importance of Trade Promotion 
Authority and supports its extension or reauthorization. The 
negotiating objectives set by Congress, the consultation requirements 
of the Administration with Congress and the voting procedures 
established under TPA are important to the successful negotiation and 
conclusion of trade discussions.

Conclusion

As Congress considers discussions with the nations that are our most 
important export destinations and those that have the potential to grow 
in importance, we ask you to seize all opportunities to expand 
agricultural exports to the benefit of U.S. farmers and ranchers.

                                 ______
                                 
                        Center for Fiscal Equity

                      14448 Parkvale Road, Suite 6

                          Rockville, MD 20853

                      [email protected]

                    Statement of Michael G. Bindner

Chairman Carper and the Ranking Member Cornyn, thank you for the 
opportunity to submit these comments for the record to the Subcommittee 
on International Trade, Customs, and Global Competitiveness of the 
Committee on Finance. Out-side-box thinking is important in this area, 
which is why I solicit comments. Please look beyond what the invited 
witnesses mention.

The foundational question must be this. What strategy is the nation 
pursuing?

Are we putting consumers ahead of the interest of workers, both here 
and abroad?

Are we acting in the public interest or in the interest of commercial 
concerns? How are we balancing these two concerns?

What is the impact of our relationships on the environment, not only on 
warming but on the basic questions of pollution? Stopping the warming 
of polluted air and water still leaves us with polluted air and water.

Most importantly, how are donors affecting how we approach these 
questions? Who is donating to member political and to ``public 
information'' campaigns?

Any actions the Subcommittee or the Special Trade Representative take 
must consider these matters.

The next issue is tax policy. The easiest form of multilateralism is to 
comply with the rest of the world on taxing imported and exported 
goods. This means enacting a border-adjustable value-added tax. Goods 
that come in are taxed while goods that go out are not. The current 
system puts consumers over workers, encourages the exploitation of 
overseas workers and constitutes an unconstitutional export tax. See 
attachment one for our usual analysis of this issue.

The remaining issues concern China.

The first is bilateral and multilateral. How are we responding to the 
first set of questions in this relationship, particularly in regard to 
workers and large firms. Intellectual property is also a concern, 
although given the growth of the Chinese technical sector, perhaps the 
Chinese have more to lose than we do. On artificial intelligence, we 
are falling behind. Perhaps we need to send more American students to 
Chinese universities (although they should be armed with questions and 
answers about our political system).

Authoritarian regimes see the protection of the ruling party in one of 
two ways. One is simply the preservation of political and social power. 
The other option is that the ruling party is committed to its ideals 
and fear that outside influences will threaten the nation's way of 
life. We can catch more flies with honey, so gently educating Chinese 
leadership should be tried. If they were to see how the nation can be 
improved by losing an election, perhaps they will be amenable to a 
change in tactics.

A multilateral approach is helpful here. Of course, many of our 
partners may not be paragons of Democracy. Of late, neither is the 
United States. Our own problems are a teachable moment. No society is 
perfect. The nation can use our current struggles as an example that 
democracy is not an end, it is a process. Our difficulties with a vocal 
authoritarian movement supporting an authoritarian former president can 
be used as a teaching moment. The Chinese leadership will not need much 
convincing on how bad an authoritarian leader can be, given the last 
four years.

This dovetails nicely to the question of the Uighurs. Much discussion 
has occurred on this front over the last few years. Our analysis of 
this issue has been shared with Congress on more than one occasion, 
including the need to look inward on the issue of slavery--and not 
merely at our past sins. See our second attachment. We can also add our 
support of tyranny throughout our history and the Native American 
genocide. Again, our flawed past and how we are overcoming it may be 
our best narrative in dealing with our future and China's.

Multinationalism on this issue should cast a wide net. It might even be 
an occasion to make peace with recent enemies, especially the Islamic 
Republic of Iran. Including them in a coalition of conscience regarding 
the Chinese Turkmen (as well as in dealing with the Taliban) would be a 
powerful statement. This is an opportunity that rarely presents itself. 
A united front on this issue threatens the Chinese plans for a Belt 
Road. We can use that to help the Uyghurs.

The Belt Road takes us to our last destination, containing Chinese 
hegemony. The Trans-Pacific Partnership was designed to counter 
emerging Chinese power. Now the Belt Road projects are in full swing 
and our biggest tool is no more. While I share the concerns of many 
regarding the power of industry in enforcing such agreements, some of 
these concerns are allayed by the recently negotiated U.S.-Mexico-
Canada Agreement. The gains for workers and the environment should be 
migrated to all such agreements and the TPP process should be reopened.

The final question is to examine who really killed the TPP and why. Was 
this a case of an inept presidential candidate running amok or did he 
gain personally from raising the issue? Was it merely sparring between 
the major campaigns that killed the agreement or were there more 
organized interests behind the scuttling of the agreement?

This matter demands investigation. The intelligence community needs to 
follow the money (assuming it has not done so already). The Public 
Integrity Section of the FBI must take part. Even the Federal Election 
Commission has a role in this (okay, stop laughing). The death of the 
TPP and the rise of the Belt Road are too much of a coincidence not to 
take a second look. Our democracy needs this question answered, even 
though many are not asking it. The Subcommittee must.

Thank you for the opportunity to address the committee. We are, of 
course, available for direct testimony or to answer questions by 
members and staff.

Attachment One--Trade Policy and Value-Added Taxes

Consumption taxes could have a big impact on workers, industry and 
consumers. Enacting an I-VAT is far superior to a tariff. The more 
government costs are loaded onto an I-VAT the better.

If the employer portion of Old-Age and Survivors Insurance, as well as 
all of disability and hospital insurance are decoupled from income and 
credited equally and personal retirement accounts are not used, there 
is no reason not to load them onto an I-VAT. This tax is zero rated at 
export and fully burdens imports.

Seen another way, to not put as much taxation into VAT as possible is 
to enact an unconstitutional export tax. Adopting an I-VAT is superior 
to it's weak sister, the Destination Based Cash Flow Tax that was 
contemplated for inclusion in the TCJA. It would have run afoul of WTO 
rules on taxing corporate income. I-VAT, which taxes both labor and 
profit, does not.

The second tax applicable to trade is a Subtraction VAT or S-VAT. This 
tax is designed to benefit the families of workers through direct 
subsidies, such as an enlarged child tax credit, or indirect subsidies 
used by employers to provide health insurance or tuition reimbursement, 
even including direct medical care and elementary school tuition. As 
such, S-VAT cannot be border adjustable. Doing so would take away 
needed family benefits. As such, it is really part of compensation. 
While we could run all compensation through the public sector.

The S-VAT could have a huge impact on long term trade policy, probably 
much more than trade treaties, if one of the deductions from the tax is 
purchase of employer voting stock (in equal dollar amounts for each 
worker). Over a fairly short period of time, much of American industry, 
if not employee-owned outright (and there are other policies to 
accelerate this, like ESOP conversion) will give workers enough of a 
share to greatly impact wages, management hiring and compensation and 
dealing with overseas subsidiaries and the supply chain--as well as 
impacting certain legal provisions that limit the fiduciary impact of 
management decision to improving short-term profitability (at least 
that is the excuse managers give for not privileging job retention).

Employee-owners will find it in their own interest to give their 
overseas subsidiaries and their supply chain's employees the same deal 
that they get as far as employee-ownership plus an equivalent standard 
of living. The same pay is not necessary, currency markets will adjust 
once worker standards of living rise.

Over time, ownership will change the economies of the nations we trade 
with, as working in employee-owned companies will become the market 
preference and force other firms to adopt similar policies (in much the 
same way that, even without a tax benefit for purchasing stock, 
employee-owned companies that become more democratic or even more 
socialistic, will force all other employers to adopt similar measures 
to compete for the best workers and professionals).

In the long run, trade will no longer be an issue. Internal company 
dynamics will replace the need for trade agreements as capitalists lose 
the ability to pit the interest of one nation's workers against the 
others. This approach is also the most effective way to deal with the 
advance of robotics. If the workers own the robots, wages are swapped 
for profits with the profits going where they will enhance consumption 
without such devices as a guaranteed income.

Attachment Two--Fighting Forced Labor, March 18, 2021

. . . The other issue with China, as well as south Asia and the global 
south, is defacto slavery. Boycotting the products of slavery worked in 
fighting the Confederacy. The mass migration of slaves had more of an 
impact. A boycott of Xinjiang cotton and tomatoes is problematic during 
a pandemic, but generally it cannot succeed as a stand-alone action. 
Even though it may hurt in the short run, we should still do it.

To make a boycott work, we cannot do it alone. At minimum, Islamic 
nations must join in as well and start linking the cause of the Uygurs 
to the New Silk Road. The ethnic Turkmen range from modern Turkey to 
Xinjiang, so a little solidarity on their part could go a long way. If 
we do go this route, the whole effort to interfere in Iran must end. We 
cannot be with South Asian Muslims on some things and expect solidarity 
with them on others.

On the moral front, I am not sure we have room to talk. We hold 
migrants in stark conditions prior to deportation. If you doubt it, 
visit Lewisburg Federal Prison. Also stop in the Federal Prison 
Industries factory while you are there. Visit any food processing plant 
with large immigrant workforces (send people undercover) and see how 
many workers were trafficked and how local law enforcement reacts when 
they decide they want to leave. Examine the plight of sex workers in 
the United States and see how many of their pimps have arrangements 
with local police.

Our best weapon is our example. As long as slavery exists in the United 
States, our moral voice is compromised. Again, I am not saying to 
ignore this situation. I am saying to go ``All In'' to really fight 
slavery. Also, call it slavery. On the same subject, examine the 
Chinese treatment of peasant workers at their factories. There is a 
two-level society, and American consumers benefit from this. Our 
commitment to abolishing slavery cannot live only in the fringes.

This is not to say that loopholes cannot be closed, although we must 
stop our own unfair trade practices as well. American food should not 
show up in countries just before harvest when doing so depresses the 
price of local agricultural products. Poverty begets slavery. Making 
others poor is an invitation to exploitation.

Poor farmers can either be individual or tenant farmers who are 
essentially peons. The drive for lower food prices for American 
consumers comes at a human cost. This is especially true when only one 
buyer dominates the market, as is sometimes the case for export to 
America (if not often). Poor factory workers never have access to 
collective bargaining. This factor also drives down wages in American 
factories--often those with immigrant labor bearing the brunt of bad 
working conditions, poor wages and lax enforcement. The major 
difference is that being blacklisted in the United States for 
attempting to organize is rarely deadly, as it can sometimes be 
overseas.

Improved enforcement takes money and the willingness to accept higher 
food prices. More inspectors with more authority are needed at home and 
abroad. Government or third party inspection is vital to make sure work 
is safe, fairly compensated and able to organize. We cannot expect 
worker protection in China or Guatemala if we do not insist on it in 
North Carolina and Alabama.

                                  [all]