[Senate Hearing 117-798]
[From the U.S. Government Publishing Office]


                                                          S. Hrg. 117-798

                      THE PROMISE AND CHALLENGE OF
                       STRATEGIC TRADE ENGAGEMENT
                       IN THE INDO-PACIFIC REGION

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

                                HEARING

                               BEFORE THE

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 15, 2022

                               __________
                               

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                     
                                     

            Printed for the use of the Committee on Finance


                              ________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
54-364 PDF                  WASHINGTON : 2024                    
          
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                          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

                                  (II)


                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee 
  on Finance.....................................................     1
Crapo, Hon. Mike, a U.S. Senator from Idaho......................     3

                               WITNESSES

Lauritsen, Sharon Bomer, principal, AgTrade Strategies LLC, 
  Washington, DC.................................................     5
Llanso, Emma, director, Free Expression Project, Center for 
  Democracy and Technology, Washington, DC.......................     7
Shaw, Kelly Ann, former Deputy Assistant to the President for 
  International Economic Affairs (2018-2019); and partner, Hogan 
  Lovells, Washington, DC........................................     9
Wessel, Michael, staff chair, Labor Advisory Committee for Trade 
  Negotiations and Trade Policy; and president, The Wessel Group 
  Inc., Washington, DC...........................................    11

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Crapo, Hon. Mike:
    Opening statement............................................     3
    Prepared statement...........................................    47
Lauritsen, Sharon Bomer:
    Testimony....................................................     5
    Prepared statement...........................................    48
    Responses to questions from committee members................    51
Llanso, Emma:
    Testimony....................................................     7
    Prepared statement...........................................    52
Shaw, Kelly Ann:
    Testimony....................................................     9
    Prepared statement...........................................    63
    Responses to questions from committee members................    65
Wessel, Michael:
    Testimony....................................................    11
    Prepared statement...........................................    67
    Responses to questions from committee members................    74
Wyden, Hon. Ron:
    Opening statement............................................     1
    Prepared statement...........................................    76

                             Communications

Center for Fiscal Equity.........................................    79
E-Merchants Trade Council, Inc...................................    80

                                 (III)

 
                      THE PROMISE AND CHALLENGE OF
                       STRATEGIC TRADE ENGAGEMENT
                       IN THE INDO-PACIFIC REGION

                              ----------                              


                        TUESDAY, MARCH 15, 2022

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10 a.m., 
via Webex, in Room SD-215, Dirksen Senate Office Building, Hon. 
Ron Wyden (chairman of the committee) presiding.
    Present: Senators Cantwell, Menendez, Carper, Cardin, 
Brown, Bennet, Warner, Hassan, Cortez Masto, Warren, Crapo, 
Grassley, Cornyn, Thune, Portman, Cassidy, Lankford, Daines, 
Young, and Barrasso.
    Also present: Democratic staff: Sally Laing, Chief 
International Trade Counsel; and Joshua Sheinkman, Staff 
Director. Republican staff: James Guiliano, Policy Advisor; 
John O'Hara, Trade Policy Director and Counsel; Mayur Patel, 
Chief International Trade Counsel; and Gregg Richard, Staff 
Director.

   OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM 
             OREGON, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The Finance Committee will come to order. The 
committee meets this morning to discuss the challenges and 
opportunities in stepping up our economic ties with countries 
in Asia and the Pacific.
    The Indo-Pacific region accounts for half of the world's 
population. It is full of like-minded democracies and growing 
economies. As one of the gateways to the Pacific, Oregon has a 
lot to gain from this opportunity. One in five jobs in Oregon 
is trade-related, and those jobs often pay better than do non-
trade jobs.
    When you look across the Pacific, there are big markets for 
everything, from Oregon blueberries and alfalfa, to 
manufactured goods, to services. Raising environmental 
standards and ensuring robust labor rights in the region could 
also give us the opportunity to level the playing field for 
American workers.
    Last fall the Biden administration kicked off an effort to 
develop a wide-ranging economic framework with several 
countries in the region. There is a long way to go before any 
such framework comes together, so today's hearing gives the 
committee an opportunity to discuss key issues and priorities 
at the outset of the process.
    First, the United States must fight, and fight hard, for a 
free and open Internet. The U.S. sees the Internet as a venue 
for free speech and commerce. Authoritarian governments like 
China's do not. The competition between those two visions is a 
fight we have to win. Otherwise, Americans get hit with a one-
two punch. First, authoritarian regimes block our exports, and 
then they export their censorship laws to us.
    The most significant example is the Chinese Government and 
its Great Firewall. When the Internet began to take off decades 
ago, Americans were the first out of the gate, launching 
companies with big, innovative ideas. The Chinese Government 
decided it could not compete on that level. Instead, it blocked 
our firms, ripped off our ideas, and started clone companies 
under tight censorship rules. As those Chinese tech firms have 
grown, the reach of their censorship has grown also, with 
repressive effects on the American people.
    The Chinese Government is still not a part of the Indo-
Pacific discussions, nor should it be. Even still, winning the 
fight for a free and open Internet requires the United States 
to push for digital rules that lock in freedom and openness 
with our allies at each opportunity. We know--and Senator Crapo 
and I have talked about this--there is bipartisan interest in 
fighting this censorship. So our committee is going to watchdog 
this issue very, very closely in the days ahead.
    Second, our country has to raise the bar on labor rights. 
Democrats in Congress fought to make sure that the recent USMCA 
would be the strongest agreement in history when it comes to 
worker protections. We have to build on that progress, with 
enforceable labor obligations that fit the region and the task. 
That includes combating the scourge of forced labor, which has 
been a priority for the committee. The truth is, forced labor 
and economic oppression overall are part of the Chinese 
economic model. It is not only morally repugnant, it is a 
threat to American workers and jobs.
    Senator Brown and I closed a major loophole in our forced 
labor law in 2015. Now we have to make sure that the law is 
fully enforced. While the United States continues to fight 
against forced labor in China, it's also essential to prevent a 
race to the bottom on labor rights in other countries also.
    Labor rights and environmental protections often go hand in 
hand. For example, there is a big need for strong new rules on 
subsidized fisheries. In some parts of the world, highly 
subsidized and poorly regulated fleets are abusing workers and 
massively overfishing. It is not sustainable. Everybody loses, 
including the abused workers and Oregon fishing families who 
should never have to compete with forced labor.
    Third, in all areas of trade policy, we believe here that 
sunshine is the best disinfectant. In 2015, this committee 
raised the bar for transparency in trade negotiations, because 
the American people expect it. That means consultations with 
Congress and access to the text of any agreement before it is 
signed. Senator Crapo and I have talked about this. We are 
Westerners, and for years we go home, we have town hall 
meetings, and people would ask about trade agreements, and 
nobody in the Congress knew what was in them. So we have to 
make sure that the public has access to texts of agreements 
before they are signed.
    These new discussions in the Indo-Pacific region have to 
meet that transparency standard.
    Let me close on one final and very important point. While 
the committee meets for this hearing, there is a horrible war 
happening about 5,000 miles to the east. The events of the last 
few weeks show the importance of our economic alliances, as 
well as the power they generate for the United States and our 
friends around the world.
    In this unprovoked, unjustifiable war, Vladimir Putin has 
killed thousands of Ukrainians, displaced millions, and 
decimated cities. Our country has marshaled the collective 
strength of our economic allies to hit Russia with the most 
severe economic sanctions in history. Russia's economy is now 
in free fall. The country is isolated. Vladimir Putin is the 
head of a pariah state.
    This is proof that strong economic alliances add up to a 
whole lot more than ``soft'' power. The United States is 
putting that power to work, punishing Russia's government and 
helping in the fight for democracy. The more economic allies 
America has, the better.
    We thank our witnesses for joining the committee today. 
There are lots of issues for us to discuss, major challenges 
ahead, and let me recognize my friend, Senator Crapo.
    [The prepared statement of Chairman Wyden appears in the 
appendix.]

             OPENING STATEMENT OF HON. MIKE CRAPO, 
                   A U.S. SENATOR FROM IDAHO

    Senator Crapo. Thank you very much, Mr. Chairman.
    First of all, I appreciate your holding this hearing today, 
and we are in agreement on the importance of strengthening our 
economic and trade ties, particularly in the Indo-Pacific area, 
but also across the world. Vibrant economic and trade links are 
an essential part of building confidence, trust, and 
cooperation in different areas of the world and at different 
levels of geo-political engagement.
    Putin's invasion of Ukraine makes it abundantly clear that 
the United States must increase its focus on strategic trade 
engagement and, as part of that, reestablish its leadership on 
trade relations in the Indo-Pacific region.
    For the first time, in January of 2022, the United States 
exported more liquefied natural gas, LNG, to Europe than Russia 
did. Although there is much more we can do to expedite U.S. 
energy exports, our increased trade strengthened our allies' 
ability to withstand Russian aggression.
    Critically, the Department of Energy must still sign off on 
any LNG export to any country with which we lack a free trade 
agreement, causing uncertainty for many of our partners. This 
is just one example of why we need more trade agreements with 
our partners--and the Indo-Pacific is one region, maybe ``the'' 
one region, where we need them ASAP.
    The Indo-Pacific is a dynamic region, perhaps the key to 
U.S. economic prosperity. Over two-thirds of all global 
economic growth in the last 5 years took place in the Indo-
Pacific. The GDP of just the 11 countries in the Comprehensive 
and Progressive Trans-
Pacific Partnership, or what we call the CPTPP, is over $10 
trillion.
    Regrettably, we are losing ground in the Indo-Pacific. 
Behind me are two maps comparing whether China or the United 
States is the more important trade partner for a particular 
country. The 2002 map shows the United States as the more 
significant trading partner for most Indo-Pacific countries. 
The 2018 map shows the relationship turned upside down, in 
China's favor.
    Even more regrettably, the situation with China in the 
Indo-
Pacific region is likely to become worse--if not entrenched--
unless we change course. The Biden administration failed to 
initiate any new trade negotiations last year, but China helped 
finalize the trade agreement that it backs. Known as the 
Regional Comprehensive Economic Partnership, or RCEP, it lacks 
any disciplines on state-owned enterprises, labor, or the 
environment, and worse, it essentially endorses China's limited 
intellectual property protections. With RCEP having only 
entered into force this January, China is already better 
positioned than the United States in most of our Asian 
partners' markets.
    On top of that, China is now pushing to join CPTPP, which 
would leave the United States even further behind in the Indo-
Pacific region. To reestablish the U.S. economic momentum right 
now, the Biden administration must reverse course and chart an 
ambitious trade policy.
    Although the administration announced that it seeks to 
pursue an Indo-Pacific Economic Framework, or IPEF, it 
unfortunately indicated that this framework will not include 
any market access component. Certain aspects of what I am 
hearing about IPEF are troubling--including the notion that it 
could be used to advance the tax deal the administration 
negotiated at the OECD that would make the U.S. less 
competitive, even before Congress agrees to accept such an 
outcome for the United States.
    The administration's present position of leaving out a 
market access outcome makes no sense. Economically, our 
workers, businesses, and farmers will lose out on important 
opportunities if we stay on the sidelines. America's leading 
innovators will also be undermined if we do not lay down a 
foundation for a strong intellectual property rights system. In 
fact, one way to redress the economic impact of the 
administration's current misguided inflationary policies is to 
promote market access.
    Export-oriented jobs typically pay 16 percent more on 
average in the manufacturing industries and 15.5 percent on 
average in the services industries. We must strategically 
deepen our trade ties to ensure we and our allies have secure 
access to energy, critical minerals, and sensitive 
technologies. We must also develop rules for digital trade that 
enshrine openness and freedom. If we do not write the rules, 
China will.
    Accordingly, this hearing is an excellent opportunity for 
the Finance Committee to help chart the course that the United 
States must take to have a strategic and sensible trade policy 
in the Indo-Pacific.
    Mr. Chairman, once again I thank you for organizing this 
hearing, and I look forward to hearing the testimony from our 
witnesses.
    [The prepared statement of Senator Crapo appears in the 
appendix.]
    The Chairman. Thank you, Senator Crapo. And I know this is 
another area where we have an opportunity to bring this 
committee together and proceed in a bipartisan way.
    Ms. Sharon Bomer Lauritsen of Washington is the founder of 
AgTrade Strategies LLC, a specialty consulting service on U.S. 
agriculture trade policies, focusing on expanding exports of 
American agricultural products, food, and beverages. And she 
has extensive experience in government as well.
    Ms. Emma Llanso from Washington is director of the Center 
for Democracy and Technology's Free Expression Project, where 
she has been doing good work to promote law and policy that 
promotes Internet freedom.
    Ms. Kelly Ann Shaw of Washington is a partner at Hogan 
Lovells; a lecturer at Columbia Law School; and she has deep 
knowledge of international trade, investment, economic law, and 
policy drawn from her service at the White House, the Ways and 
Means Committee, and the U.S. Trade Representative's office.
    And Mike Wessel, who is well-known to this committee, is 
president of the Wessel Group, a public affairs consulting 
program, and advisor to the USTR and the Department of Labor. 
He also serves as an original member of the U.S. China Economic 
and Security Review Commission, and we have known each other 
for many years, going back to his days on the staff of House 
Democratic leader Richard Gephart.
    So we have a terrific panel.
    Let's start with you, Ms. Lauritsen.

    STATEMENT OF SHARON BOMER LAURITSEN, PRINCIPAL, AGTRADE 
                 STRATEGIES LLC, WASHINGTON, DC

    Ms. Lauritsen. Chairman Wyden, Ranking Minority Member 
Crapo, and distinguished members of the committee, thank you 
for the opportunity to appear before you today to share my 
thoughts on the challenges and opportunities for America's 
farmers and ranchers in the Indo-Pacific region. I appreciate 
you making my full written statement part of the record.
    One key element to enhancing the sustainability of American 
farms and ranches is investing time, energy, and ambition to 
negotiate new trade agreements to increase our competitiveness 
and open export markets. And there is no better place than to 
focus on the Indo-Pacific region.
    But the unfair barriers to U.S. agricultural exports in the 
region are many--both regulatory and tariff. Even if non-tariff 
barriers are resolved, U.S. agricultural exports, including to 
countries such as China, Thailand, and Vietnam, are often at a 
disadvantage when our products face higher tariffs in countries 
that already have preferential tariff agreements with U.S. 
competitors.
    We know that preferential trade agreements benefit our 
farmers and ranchers. One quick example: U.S. agricultural 
exports to South Korea have increased 54 percent with 
implementation of our FTA in 2012. We are celebrating its 10-
year anniversary this week.
    The administration's recently announced Indo-Pacific 
Economic Framework provides an opportunity to create a fair and 
level playing field for our exports in the region. But to have 
meaningful impact for fair and resilient trade for U.S. food 
and agricultural products, I believe the following elements 
need to be considered for what I call IPEF.
    First, the administration has already identified science-
based agricultural regulation as one pillar of IPEF. We need 
disciplines to ensure food, animal, and plant health and safety 
measures, known as SPS, and those in the standards area like 
labeling, known as TBT, are backed by science or international 
standards and are not disguised protectionism. Consideration, 
however, should be given to providing least-developed countries 
assistance to meet SPS and TBT-plus rules. Another element of 
this pillar would be to gain commitments from trading partners 
to not create new unwarranted trade barriers in the future.
    Second, establishing strong SPS, TBT, and other rules such 
as import licensing, however, is not enough. Using IPEF to 
actually resolve unwarranted, nontariff barriers is important 
up front so that U.S. farmers and ranchers can actually realize 
improved trading conditions in the near term.
    Third, many of the Indo-Pacific countries have high most-
favored nation agricultural tariffs compared to the U.S. 
average applied tariff of about 5 percent. I recognize the 
legal limits that the administration may have in negotiating 
U.S. tariffs without Trade Promotion Authority. But even if 
Congress does not pass TPA in the near term, opportunities 
exist to negotiate with our trading partners to lower MFN 
tariffs, including to U.S. levels, to help level the playing 
field.
    Fourth, IPEF can define a common vision on agricultural 
sustainability, sustainable food systems, and food security. 
And to advance sustainability, supporting the use of new 
agricultural technologies with appropriate regulatory systems 
would be of benefit to farmers throughout the Indo-Pacific 
region.
    Fifth, international trade is obviously one element in 
building stronger foreign relations in the Indo-Pacific region. 
IPEF should bring as many countries together as possible, since 
the more inclusive the IPEF is, the stronger our economic ties 
and foreign policy objectives will be in the region.
    And finally, sixth, our traditional congressionally 
approved FTAs have dispute settlement mechanisms built into 
them. To have any meaningful or real results, IPEF provisions 
also need to be enforceable, and of course USTR will then need 
to do the follow-on work to enforce them.
    With more than 20 percent of agricultural production being 
exported, our rural communities in all 50 States depend on 
finding strong, stable, and predictable markets. The U.S. trade 
agreements do just that, and I believe that with creative 
thinking and ambition, the IPEF can also have economically 
meaningful results for a sustainable future.
    Thank you.
    [The prepared statement of Ms. Lauritsen appears in the 
appendix.]
    The Chairman. Thank you very much.
    Ms. Llanso?

 STATEMENT OF EMMA LLANSO, DIRECTOR, FREE EXPRESSION PROJECT, 
      CENTER FOR DEMOCRACY AND TECHNOLOGY, WASHINGTON, DC

    Ms. Llanso. Chairman Wyden, Ranking Member Crapo, and 
members of the committee, thank you for the opportunity to 
testify before you today. My name is Emma Llanso, and I am the 
director of the Free Expression Project at the Center for 
Democracy and Technology, a nonpartisan, nonprofit 501(c)(3) 
charitable organization dedicated to advancing civil rights and 
civil liberties in the digital world.
    At CDT, I have worked for more than 12 years to promote law 
and policy that support Internet users' rights to freedom of 
expression, access to information, and privacy in the U.S., 
Europe, and around the world. So I am grateful for the 
committee's focus on the promises and challenges in the digital 
sphere that will arise as the United States pursues closer 
trade relationships in the Indo-
Pacific.
    Over half of the world's young population lives in the 
Indo-Pacific region, and the region accounts for a little over 
half of the world's Internet users. Internet use in the Indo-
Pacific region is expected to grow to up to 3.1 billion users 
by 2023. As Chairman Wyden noted, there is an urgent need to 
counter the authoritarian model of Internet regulation promoted 
by the Chinese Government.
    China's use of Internet shutdowns, its decades-long project 
to build a Great Firewall that blocks outside information 
sources, and its mass and discriminatory surveillance of its 
population threaten human rights and impede the development of 
an open digital economy. A lack of respect for human rights and 
weak rule of law in China means that it is extremely difficult 
for U.S. companies to operate responsibly in the country, which 
has only further cemented the Chinese Government's grip on its 
domestic communications network.
    The past 3 weeks have also provided a stark example of the 
threats to human rights from digital authoritarianism in the 
context of the Russian Government's invasion of Ukraine. The 
Russian Government has blocked access to social media services 
that dare to attach fact checks to state propaganda, and has 
passed a new ``fake news'' law that prohibits anyone from 
knowingly disseminating false information about Russia's 
military--which includes referring to its actions in Ukraine as 
``an invasion.''
    As a result, many media outlets have left the country, and 
many online service providers have shuttered their services or 
are blocking access by Russian users, leaving the Russian 
people with few information alternatives to state propaganda 
and strengthening the government's control.
    Unfortunately, there are an alarming number of recent laws 
and legislative proposals across the Indo-Pacific region that 
also seek to control speech and access to information, 
subjecting Internet users to surveillance, and giving state 
authorities control over Internet infrastructure. The Indian 
Government has imposed more Internet shutdowns than any country 
in the world, with 109 shutdowns recorded in 2020 alone, often 
in response to military crackdowns or protests. And the 2021 
Information Technology Rules in India put employees at risk of 
being jailed if companies do not respond promptly to take-down 
orders.
    The IT rules are likely to serve as a model for other 
legislation in the region. Bangladesh, for example, has already 
proposed similar guidelines, and Myanmar is currently 
preventing the staff of telecom provider Telenor from leaving 
the country while it considers the sale of the company.
    The U.S. has the opportunity, including through the Indo-
Pacific Economic Framework discussions, to promote an 
alternative model of Internet regulation and advancement of 
rights respecting a multi-stakeholder approach to Internet 
governance that ensures the participation of civil society and 
technical experts in the development of technology policy, and 
that prioritizes maintaining an open, interconnected Internet 
in the region and worldwide.
    It is vital that the U.S. promote the rule of law and seek 
commitments to uphold international human rights, which are 
essential at countering digital censorship and surveillance 
practices, and which in turn benefit the economy. Online 
service providers and other businesses need the legal certainty 
that comes from the rule of law in order to operate globally. 
And, when national regulations comply with international human 
rights' obligations, they both protect people's rights and 
bring economic benefits by more closely harmonizing regulations 
across borders.
    To be clear, this does not mean that the U.S. Government 
should go easy on U.S. tech companies, or that they should 
challenge every regulation passed by another country as a trade 
barrier. In order to be a credible leader on Internet policy 
issues worldwide, the U.S. must get its own house in order, 
including by passing comprehensive Federal privacy legislation, 
reforming its intelligence surveillance practices, and by 
addressing competition and concentration within the tech 
industry.
    For the U.S. to successfully promote the free flow of data 
and to reject overly restrictive national data protection or 
intermediary liability laws that can serve as vehicles for 
censorship and surveillance, the U.S. must model a rights-
respecting vision for the Internet. And other nations must be 
able to have confidence that, for example, their citizens' data 
will be protected from government and corporate abuses when 
sent to the U.S.
    Globally, the U.S. should seek to build on existing 
commitments to digital rights, including through the Freedom 
Online Coalition, which was launched 11 years ago and which the 
U.S. was a founding member of. The U.S. should seek additional 
commitments from governments in the region to refrain from 
imposing Internet shutdowns or general monitoring obligations, 
to reject extra-legal censorship, to limit the use of 
surveillance technologies, and to ensure access to end-to-end 
encrypted services.
    The U.S. should also promote opportunities for shared 
learning across governments and with the involvement of human 
rights advocates, technical experts, and other civil society 
representatives, especially around emerging issues such as 
artificial intelligence. The IPEF process should coordinate 
with a variety of such learning and information-sharing forums 
that already exist across the U.S. Government, including the EU 
Technology Trade Council, and the Freedom Online Coalition. And 
the IPEF process could develop cooperation mechanisms on 
specific topics between the U.S. and governments in the 
region--for example, supporting increased information sharing 
on ransomware and other emerging cyber-threats modeled after 
the U.S.-EU joint initiative on ransomware.
    In short, there are a great many opportunities to defend 
human rights through engagement on digital trade issues, and a 
powerful need for the United States to advance a vision for how 
to do so.
    Thank you for the opportunity to speak before you today, 
and I look forward to your questions.
    [The prepared statement of Ms. Llanso appears in the 
appendix.]
    The Chairman. Thank you very much.
    Let's go on to Ms. Shaw.

  STATEMENT OF KELLY ANN SHAW, FORMER DEPUTY ASSISTANT TO THE 
 PRESIDENT FOR INTERNATIONAL ECONOMIC AFFAIRS (2018-2019); AND 
             PARTNER, HOGAN LOVELLS, WASHINGTON, DC

    Ms. Shaw. Mr. Chairman, Ranking Member Crapo, distinguished 
members of the committee, thank you for the opportunity to 
discuss U.S. trade and economic engagement in the Indo-Pacific, 
which is the world's most dynamic region.
    Prior to my current role in private practice, I was 
privileged to spend a decade in government service, negotiating 
with our trading partners in the Indo-Pacific. So, while I draw 
upon these experiences, the testimony I provide this morning is 
solely my own.
    How we structure and nurture our economic relationships in 
Asia today will go far in determining whether the United States 
remains the world's leading economic power. But the stakes are 
about more than just whether the United States will continue to 
be number one. Democracy itself is under threat, not just in 
Europe, but in Latin America, Africa, Asia, and the Pacific. 
The rise of autocracy and state capitalism threatens our 
economic values and freedoms every bit as much as the political 
freedoms that undergird successful democracies.
    Historically, trade has been one of our most important 
tools for pushing back against authoritarianism. The United 
States led in creating a postwar global trading system that, 
for many years, helped drive U.S. jobs and growth and widen the 
circle of freedom and prosperity.
    Now, at a critical moment when democracy is under threat, 
we have retreated from our leadership role and abandoned our 
longstanding view that countries that trade together are less 
likely to go to war against each other. Trade is a difficult 
issue for democracy, but rather than take the lead in defining 
a new approach for today's challenges--one that strengthens 
U.S. manufacturing, unleashes innovation, protects our workers, 
and advances our values abroad--the United States has given up 
saying anything at all. We have become mired in our own 
domestic politics.
    As a result, today the United States has no meaningful 
offensive trade strategy. In no place is this current lack of 
strategy and leadership vacuum more dangerous to long-term U.S. 
strategic, economic, and commercial interests than in the Indo-
Pacific.
    The Indo-Pacific is our backyard, filled with military 
allies and important trading partners. Two-way trade with the 
region totals upward of $1.75 trillion. But when it comes to 
our economic vision, the concept of a free and open Indo-
Pacific has turned into something we say, rather than something 
we do.
    This year, as the ranking member pointed out, the largest 
trade agreement in history, RCEP, encompassing one-third of 
global GDP, 15 Indo-Pacific countries, 53 percent of world 
exports, and 2.3 billion people, entered into force with China, 
and not the United States, at its helm. Moving forward, Beijing 
and not Washington will have outsize influence in setting 
future standards and regulations for Asia and the Pacific. 
Lower tariffs, common rules of origin, and eased customs 
procedures will help China lock in regional supply chains, 
attract new foreign investment, and expand its Belt and Road 
Initiative.
    U.S. manufacturers, workers, and farmers all stand to lose 
from the deal. And if China manages to accede to the other 
major regional trading bloc, the CPTPP, the results for U.S. 
economic interests will be catastrophic.
    Multilateralism will not save us. The World Trade 
Organization is on the brink of irrelevance, after 2 decades of 
atrophy. Regionalism, and regional trade rules, are now king. 
Even before RCEP, more than 50 percent of global trade occurred 
outside the WTO system through more than 300 bilateral and 
regional trade agreements. Seventy-five percent of the EU's 
trade, for example, is governed under these preferential 
agreements, which means the world is moving on without us.
    The recently announced Indo-Pacific Economic Framework is a 
modest step in the right direction but risks turning into 
another failed exercise. Few details have been announced 
regarding participating countries, the scope of modular 
commitments, or how the project will be more robust than CPTPP 
without any significant trade components.
    It is difficult to imagine IPEF having a meaningful impact 
on long-term U.S. economic interests without enforceable 
commitments on market access, rules of origin, technical 
barriers to trade, services, IP investment, or state-owned 
enterprises, to name a few. A trade pillar focused exclusively 
on digital trade, forced labor, or trade facilitation is not 
enough to extract meaningful concessions from our trading 
partners or shape the region moving forward.
    Congress should push the administration to broaden its 
ambition so that we are setting rules, not merely making 
suggestions. Instead of starting from scratch, the United 
States should also seriously consider rejoining the CPTPP, and 
to do so quickly. Despite some of the deep fundamental flaws of 
its predecessor, the TPP, many of the provisions in the 
original deal were groundbreaking. It would be straightforward 
enough for the United States to return to the negotiating table 
to harvest the provisions that work, jettison those that do 
not, and ultimately keep China out of the deal.
    To conclude, we need a trade strategy for the Indo-Pacific 
that works for Americans and works for democracy--one that 
serves both our economic and commercial interests, as well as 
our strategic ones. Above all, we need to be bold, and we need 
to act quickly.
    Thank you.
    [The prepared statement of Ms. Shaw appears in the 
appendix.]
    The Chairman. Thank you very much.
    Let's go to Mr. Wessel. He is out in cyberspace somewhere, 
I believe.

   STATEMENT OF MICHAEL WESSEL, STAFF CHAIR, LABOR ADVISORY 
    COMMITTEE FOR TRADE NEGOTIATIONS AND TRADE POLICY; AND 
        PRESIDENT, THE WESSEL GROUP INC., WASHINGTON, DC

    Mr. Wessel. I am, and am now unmuted.
    Mr. Chairman, Ranking Member Crapo, members of the 
committee, it is an honor to be here. It is an honor to be here 
before you today.
    My name is Michael Wessel, and I am here on behalf of 
organized labor, as the staff chair of the Labor Advisory 
Committee for Trade Negotiations and Trade Policy. Labor 
appreciates the seat you are providing at the committee's 
table. A disclaimer, however: my comments are my own.
    While some are posturing that we need to advance the IPEF 
as a way of being engaged in the region, we already are 
engaged. We have free trade agreements with three countries, 
and a separate trade agreement with Japan.
    We engage in hundreds of billions of dollars in trade with 
the region. Last year, we had a trade deficit of $33 billion 
with India, more than $60 billion with Japan, and $90 billion 
with Vietnam. We have more than $1 trillion in foreign direct 
investment in the Indo-Pacific. So, the real question is not 
whether we should be engaged, but what the future architecture 
of that economic engagement should be.
    Others want to know what the impact of the IPEF will be on 
them and their families. They want--they deserve--a better idea 
of how the IPEF will advance rather than undermine their 
economic interests.
    Let me focus quickly on three issues: workers' rights and 
corporate accountability, digital trade, and resilient supply 
chains.
    The number one concern for organized labor is how workers' 
rights will be protected, enforced, and promoted in the region. 
Workers' rights are key to ensuring that trade will promote 
growth and opportunity for workers, rather than driving a race 
to the bottom.
    Administration officials have indicated that workers' 
rights will be part of the IPEF, but how broad that coverage 
is, what standards will be applied, and what enforcement 
mechanisms will be included, is an open question. This, coupled 
with enforceable corporate accountability measures, must cut 
across all of the separate modules in the IPEF.
    On digital trade, there are highly complex issues that will 
require enormous study and evaluation. Rushing about new 
digital trade measures could have serious adverse consequences 
for U.S. economic and national security interests. Congress 
must be broadly engaged, along with other stakeholders, in 
assessing what the road ahead should look like. Digital trade 
is a worker issue. More and more jobs are susceptible to 
outsourcing over digital platforms. Digital platforms are being 
used to surveil workers. They are vehicles for 
misclassification, and they are jeopardizing their privacy and 
security.
    Creative artists see their very livelihood under attack, 
and their livelihoods depend even more on strong safeguards. 
One website in the Philippines advertised that it provides 
health-care business services for savings of up to 75 percent 
over what a U.S. employer would have to pay. Yes, that is 
already happening. But a digital trade agreement can accelerate 
that offshoring, or with proper enforceable workers' rights, 
corporate accountability, and other measures, it can help 
rebalance the playing field.
    Digital trade cannot be the only component of the IPEF and 
should not be part of an early harvest strategy. Digital trade 
is a real focus of organized labor.
    Supply chains are no longer just discussed in board rooms, 
but at kitchen tables as well. Our citizens have had to 
confront where to get COVID tests, PPE, toilet paper, and other 
goods. Auto workers wonder where the semiconductors will come 
from so that they can return to their jobs. Other assembly 
lines have been slowed or idled by other supply chain 
bottlenecks. What will a resilient supply chain module in the 
IPEF mean for them?
    For many workers, the best supply chain is one that is here 
in America. We know that we live in a global marketplace where 
we buy and sell products around the world--preferably, we would 
sell more, a lot more. Resilient supply chains must be about 
more than simply shifting supplies from China into other 
countries in the Indo-Pacific. That will have only limited 
benefits and will continue our reliance and dependence on 
others for our products.
    Any approach on supply chains must support the efforts of 
this and the last President to address our critical needs.
    Mr. Chairman, Ranking Member Crapo, organized labor 
supports international engagement and strengthening our 
relations around the globe. Engaging in the world is an 
imperative. Foreign policy, however, has been more a driver of 
trade agreements than the economic results they produce. The 
public rejects that approach.
    A properly designed IPEF, along with other provisions in 
the broader Indo-Pacific strategy, can truly be a course for 
progress. That must be our goal. We look forward to working 
with the committee and the Congress in the coming days.
    Thank you.
    [The prepared statement of Mr. Wessel appears in the 
appendix.]
    The Chairman. Thank you, Mr. Wessel. We have appreciated 
all your assistance.
    Also, for people who are paying attention to this 
discussion right now, they are being introduced to some new 
acronyms, some new lingo in the foreign policy and trade area. 
An Indo-Pacific Economic Framework is what we are talking about 
when you hear Senators talking about IPEF.
    Okay, let's go now to you, Ms. Llanso, because China keeps 
building the Great Firewall higher and higher and higher each 
year. And in doing so, they suppress political dissent, which 
is really a human rights disaster, and it is no coincidence 
that the same laws that crush free speech in China also prevent 
American companies from competing fairly in the largest country 
on earth. And I think what is ominous is this repressive model 
is starting to spread like dominoes throughout the Indo-Pacific 
region.
    So we obviously want to push back against censorship in 
China and elsewhere, and we also want to begin to flesh out the 
trade rules of the road as relates to the digital sector. The 
Internet is the shipping lane of the 21st century, as we have 
come to define it here in this committee. So my first question 
to you, Ms. Llanso, is, we want to get other countries, 
particularly ones that might be interested in joining this 
Indo-Pacific Economic Framework--perhaps India, Vietnam, and 
others--to join with us. Because, if we have a bigger 
coalition, we are stronger in pressing back against China's 
censorship. How do we go about doing that?
    Ms. Llanso. Thank you very much for the question, Senator 
Wyden. I think it is going to involve a mix of various 
strategies.
    I think one of the most important things to do in the Indo-
Pacific region is to understand what are some of the 
motivations behind some of the more concerning tactics that we 
have seen, or concerning elements of the legal frameworks. For 
example, in my testimony I talk a lot about this issue of 
personnel localization, or local presence rules. These are 
proliferating across the region for various reasons.
    By requiring local presence in a country, it gives that 
nation jurisdiction over a U.S. tech company. That can be 
abused in certain ways. And we have certainly seen it be abused 
in China, for example, to threaten to jail or fine employees 
who are in country in order to make a company comply with 
censorship demands or provide access to user data. But there 
are also reasons, for example legitimate law enforcement needs 
to access user data, or concerns about the security and privacy 
of user data if U.S. tech companies are not confined by the 
laws in a particular country.
    So that is where I think the United States could really 
kind of look at addressing those underlying impacts, including 
through whatever updates are needed to the laws in the United 
States, which I do hope include passing Federal privacy 
legislation and updating the U.S. foreign surveillance laws.
    Being able to kind of come to the table willing to talk 
about addressing those core needs will also give room to the 
U.S. to set some really clear bright lines around human rights 
and the rule of law in the region, to reject issues like 
Internet shutdowns or general monitoring and filtering 
obligations in the country, and to push for limits to 
surveillance laws.
    The Chairman. I know we are going to call on you frequently 
in this area, particularly because of your work focusing on the 
intersection of human rights and technology that is especially 
important right now. I recently got asked by the press what the 
importance of encryption is because I kept talking about it in 
the context of Ukraine and Russia, and I said, ``Let me be 
really blunt about this. Encryption there is literally a matter 
of life and death. It is just that simple. If you do not 
protect people's data with strong encryption, you can have a 
threat to their lives.'' So, thank you for your good work.
    A question for you, Mr. Wessel, as I wrap up my first 
round. What do you think the lessons are, Mr. Wessel, as it 
relates to what we learned with the USMCA, the U.S.-Canada-
Mexico Agreement, as it related to protecting workers? And we 
want to make sure that workers are protected on both sides of 
the ocean. We want to make sure that we use the innovative 
steps that we have recently put together with respect to worker 
protection and see if there are some lessons learned for going 
forward in the Indo-Pacific region.
    You were instrumental in working with us on what came to be 
known--and I am proud to be associated with Senator Brown on 
this--as the Brown-Wyden rapid response mechanism to respond to 
labor violations at the facility level in Mexico. What are the 
lessons from USMCA that we can employ to protect workers, both 
in the Indo-Pacific region and our workers who are counting on 
those good-paying jobs?
    Mr. Wessel. Thank you for the question, and thank you for 
your leadership, along with Senator Brown and others, in 
bringing us the rapid response mechanism. It was an innovative 
and ground-breaking approach in terms of labor rights 
enforcement, coupled with what the USMCA had as part of its 
definition of what the rights should be to be enforced. It 
ensured for the first time 
facility-level enforcement mechanisms, replacing essentially 
state-to-state, so that we knew that the bad actors would pay 
the price for any abuses of labor rights.
    There has been an evolution, as you know, of labor rights 
over the last 40 years, from simple unilateral approaches to 
enforce your own laws, to new standards. The USMCA was 
groundbreaking in terms of its labor chapter. We need to 
include a similar concept in any IPEF that defines the rights, 
and couple it with an enforcement mechanism that is accessible, 
timely, and as much as possible, facility-specific.
    The Chairman. Thank you again for your innovative thinking 
on this, and we will be working with you, I know.
    Senator Crapo?
    Senator Crapo. Thank you very much, Mr. Chairman.
    Ms. Llanso, I am not going to ask you a question because 
Senator Wyden really covered the issue. I just want to 
highlight that the points you raise show how critical it is 
that we deal with our digital policy globally in an effective 
way. This is not just an issue of freedom and human rights, it 
is an issue of economics and trade and, frankly, national 
security. So I just want to highlight that I agree with your 
testimony.
    I want to go first to Ms. Lauritsen. You already answered 
this question, but I want to ask it again and ask you to just 
briefly restate your position here, because it is so important.
    I am glad that the administration's proposed IPEF may 
include what it describes as ``binding rules,'' particularly if 
they extend to the digital trade and agriculture market access 
and so forth. But to ensure that our free trade agreement rules 
are binding, because we can enforce them through dispute 
settlement provisions, is key, in my opinion.
    Are binding rules possible in IPEF if it lacks a dispute 
resolution mechanism?
    Ms. Lauritsen. I guess what I would suggest in response, 
Senator, is that there are different types of dispute 
resolution mechanisms. Clearly, having something that is 
binding, such as what Congress has already approved in USMCA, 
is very helpful. But other mechanisms can also be through 
mediation, or actually forcing your trade and your agriculture 
officials to sit down and hash out how to fix particular 
problems. But clearly, having a binding agreement is critical 
in the end if all else fails.
    Senator Crapo. I agree with you, because we can force them 
to hash it out, which they do very well and very long, and they 
never get to a resolution sometimes.
    Ms. Shaw, could I ask you, quickly, to answer the same 
question? Because I have another question for you.
    Ms. Shaw. Sure. Absolutely. And thank you, Senator. You 
need a stick. And there are a lot of different ways to organize 
an enforceable mechanism. But at the end of the day, you need a 
stick. And traditionally we have done that through the threat 
of removing preferential market access, or through tariffs. It 
is difficult to see, absent that, what could really enforce the 
agreement, but it is important not only to ensure that other 
countries abide by the rules that they negotiated but also to 
incentivize investment by the private sector to make sure that 
industry has sufficient certainty that those rules will remain 
in place.
    Senator Crapo. All right; thank you very much. And, Ms. 
Shaw, your expertise is quite unique. You were a former 
negotiator at the Trans-Pacific Partnership talks, also a key 
Trump administration official with responsibility for managing 
the U.S. economic relationship with China.
    TPP is now claimed to be outdated with respect to China 
because it was negotiated during the Obama administration--so 
long ago.
    Every witness, as I understood your testimony, agreed that 
we have to get engaged. We have to get off the sidelines and 
back in the game. But it is not clear that there is agreement 
among the witnesses as to what that engagement should look 
like.
    We have the IPEF--and we have heard some discussion about 
that--which appears to be the current approach that the 
administration is pursuing. We have the TPP, or maybe now it is 
the CPTPP. It is kind of unclear whether that is one or two 
different things. But I was always discouraged that we stepped 
off to the sidelines and did not get back to reengage.
    So my question to you is, given that we need to be engaged 
and get off the sidelines, what is the vehicle? What do we need 
to do?
    Ms. Shaw. Thank you for the question. If IPEF is a modest 
step forward, joining CPTPP would be a giant leap. But that 
still does not get us all the way. There is a lot of work to be 
done.
    First and foremost, we need strong enforceable commitments 
on trade. We are losing with respect to market access in China, 
the European Union, and other countries that are out there 
negotiating the rules without us. CPTPP is a flawed agreement. 
There is a reason why it did not have the votes in Congress. 
There is a reason why both major presidential candidates came 
out against it. But with that said, it is fixable.
    As I noted in my opening remarks, there were a lot of 
provisions that were groundbreaking, specifically for the 
region--provisions on telecommunications, on services and, at 
the time, provisions on labor and the environment as well. But 
we can go further. And negotiating strong provisions on SOEs, 
labor, environment, going further in agriculture and market 
access, are things that we can do because our CPTPP partners 
would be open to doing that. But I think we need to do so, and 
we need to do so quickly before the opportunity closes.
    Senator Crapo. Well, thank you. I appreciate it, and I 
agree with your answer. As I noted in my introductory remarks, 
China is seeking to join. They see it. Even though they just 
got their broader agreement agreed to in January, they 
understand where the game is and are getting engaged. I think 
the United States needs to do the same.
    The Chairman. Thank you, Senator Crapo, and I know we are 
going to be working together on these issues.
    Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman. I thank you and 
I thank Senator Crapo, and if anything, I see a Northwest 
delegation here who should know, and does know, how important 
trade is. And I definitely think we think about it a little 
differently maybe than some parts of the world. I get so 
challenged sometimes talking about it. I just say, ``You need 
to know that we were trading with China before Lewis and Clark 
showed up.''
    So that means we are going to want to continue to open 
market access. And when you think about the Northwest economy, 
whether it is apples or airplanes or software, more than 50 
percent of each of those markets are, you know, international 
trade--or I should say wheat is 90 percent.
    Okay, so my question is--I agreed with a lot that you said, 
Ms. Shaw, because dissecting trade as an avenue against 
authoritarianism is something I care immensely about. It took a 
20-year-old staffer on my team to just say ``trade changes 
culture.'' Like, yes, of course, but I think people somehow 
have forgotten that trade changes culture. And part of what we 
are trying to do is open up and have more stable democracies 
around the world. And that is why we engage in trade.
    So I agree with you that we need to use our leadership. If 
you are not there--I remember a trip to Egypt and the change 
after the riots that took place, and we said to the embassy, 
``Let's go talk about wheat,'' because this was all about the 
price of bread. And they said, ``Oh, no, no, no, let's not.'' I 
said, ``What do you mean?'' ``Oh well, we have already lost too 
much market share to the Canadians. They do not want to hear 
from us.''
    So, losing market share is an irreplaceable problem, and if 
you are not at the table, you are not in the current 
negotiations. Losing market share is not just losing imports or 
our exports, it is losing, ultimately, in the competitive game
    So my one thing is that--you know, I know your past role in 
the administration--I would characterize the Trump 
administration's as a tariff-first approach, and I felt very 
challenged by that, given the impacts that we saw. We had 
apples face a 70-percent tariff. India used to be the second-
largest export market for Washington apples before the Trump 
administration's trade war. And now there is a huge decrease 
from last year.
    What should the U.S. be doing to end retaliatory tariffs in 
India and elsewhere in the Indo-Pacific?
    Ms. Shaw. Well, thank you so much for the question, 
Senator, and I should say I was born and raised in the great 
State of Washington, so I think you will find my views on trade 
are quite similar to yours, just given the importance of trade 
that I saw growing up.
    The first step is to be engaged. It is difficult to extract 
meaningful concessions from our trading partners unless we are 
at the table talking to them about these issues. And 
unfortunately, there was retaliation imposed as a result of 
some of the trade actions that we took.
    But at this point in time, we need to talk about how we can 
advance our mutual interests. So I would encourage the 
administration to be as bold as possible, and Congress, in your 
role, to continue instructing them in what we need to move 
forward on these issues. But certainly, we have a number of 
challenges related to India. It is the world's largest 
democracy and a partner that we want to work with strategically 
in the region. So we are just going to have to roll up our 
sleeves and figure it out.
    Senator Cantwell. Do you think we should get rid of these 
retaliatory tariffs?
    Ms. Shaw. In terms of India's tariffs on us, or----
    Senator Cantwell. The fact that--yes--the fact that--
listen, I think what you have learned when you grow up in the 
Northwest is that if you start this fight, it is going to have 
consequences. And so, we are in disputes on the solar stuff, 
and it is 10 years later--10 years later, and nothing has 
happened. So, we basically slowed things down.
    So I do agree with your viewpoint, which is, if you want to 
define the debate, you have to be in the debate. And I 
personally believe we should be defining this debate all over 
the place. If you are in the debate, you can say, this is what 
countries need to do on the digital side. This is what you need 
to do if you want to adhere to democracy. This is what you want 
to do if you want to adhere to improving and enforcing as we 
did with Mexico, building capacity so you actually have 
enforcement of the laws; not just agreements, but actual 
enforcement. So I just think right now that we have to end 
these retaliatory tariffs. The retaliatory tariff issue is 
costing us, to say nothing of the supply chain problems that we 
have.
    So farmers are really taking it right squarely on the nose, 
and we need to help.
    Ms. Shaw. I certainly agree with that. Our struggles with 
India are longstanding and deep. They have a lot of challenges 
in terms of the broader landscape of trade issues. But we are 
going to have to figure out a way to use the leverage we have 
to get them to peel back some of the trade barriers they impose 
against us.
    But I agree with you. I think they are a strategic partner, 
and I think we need to be at the table.
    Senator Cantwell. Thank you, Mr. Chairman.
    The Chairman. Well said, as always, Senator Cantwell.
    The next three are Senator Grassley, Senator Menendez, and 
Senator Cornyn.
    Senator Grassley?
    Senator Grassley. Thank you, Mr. Chairman, and thank you 
for bringing some trade issues to this committee, because it is 
not being discussed much in this town at all, and I am 
disappointed in that.
    So I am going to start with Ms. Lauritsen. The Indo-Pacific 
strategy mentions several ways to improve trade in this region, 
yet agriculture was not mentioned once. I have serious 
concerns----
    [Cell phone rings.]
    Senator Grassley. I'd better put this on quiet.
    I have serious concerns about U.S. agriculture producers 
being left behind in this economic framework. We also see this 
administration falling behind on confirming nominees to key 
trading posts. USTR still does not have a Chief Agricultural 
Negotiator, and USDA does not have an Under Secretary for Trade 
and Foreign Affairs.
    Considering your experience at both USDA and USTR, can you 
tell me what the administration is losing by not having Senate-
confirmed leadership in these positions?
    Ms. Lauritsen. Well, thank you, Senator, and I agree with 
your sentiments. I was a civil servant heading up the 
Agriculture Office at USTR, and I can assure you that having 
your political and 
Senate-confirmed bosses in place is important in order to have 
agriculture be part of the discussion among the political and 
the White House engagement.
    So, I think it is extremely important. It is important also 
to be able to engage with other countries, because many 
agriculture issues are going to be political. So you need a 
political person there to push, to drive, to lead, and to have 
the vision to move forward. And this is one of those areas in 
IPEF where making sure you have a strong agriculture voice at 
the political level within the administration will be important 
to make sure it gets included as a part of any negotiation.
    Senator Grassley. Also for you: one of my top concerns is 
seeing China take serious action to expand its foothold in the 
Indo-Pacific region. You noted in your testimony that other 
countries are not standing still, and the U.S. farmers are 
losing market share.
    Do you feel that the Indo-Pacific Economic Framework is the 
best vehicle for increasing our engagement in the Indo-Pacific 
region?
    Ms. Lauritsen. Thank you, Senator. Well, in full 
disclosure, I was one of the negotiators of the Trans-Pacific 
Partnership. So I feel that that agreement and the CPTPP would 
be particularly important and possibly easier to benefit 
American farmers and ranchers.
    I recognize there are a whole bunch of other issues that 
make it difficult, but that might be an important vehicle that 
might be able to be achieved more quickly if there was a 
political will on the part of the United States. Absent that, 
and absent any other bilateral trade agreement negotiations, 
IPEF could be an important vehicle, provided it has the right 
provisions, the right level of ambition to actually open up 
export markets for American food and agricultural products.
    Senator Grassley. And also for you: a few weeks ago, 
Ambassador Tai made a comment about setting standards that 
promote fair and open competition with respect to our ag 
producers when developing the Indo-Pacific framework. I 
appreciate those comments, but we need more concrete 
clarification about how the administration is working to 
involve the agricultural industry in the process.
    So for you: what would your advice be to Ambassador Tai 
regarding non-tariff trade barriers like burdensome regulatory 
requirements and geographical indication barriers to the sale 
of U.S. exports?
    Ms. Lauritsen. So, I am a firm believer, Senator, in a two-
pronged approach. One is building the strong rules. USMCA has a 
set of very strong rules when it comes to sanitary and 
phytosanitary barriers. But the other is actually to get the 
regulators and the trade negotiators at the table with the 
political will to find the resolution and open up those 
markets. They need to be handled in tandem to have real results 
for our exporters.
    Senator Grassley. My next question is the last one. The 
government of India has a goal of 20-percent ethanol-blending 
gasoline by 2025. E-20 is set to be rolled out starting April 
20, 2023. This is an aggressive timeline for a country with 
over a billion people.
    As noted in your testimony, India currently restricts 
ethanol imports. How can the United States best engage with 
India so that they can meet their air quality and climate goals 
through U.S.-
produced ethanol?
    Ms. Lauritsen. Thank you, Senator. And that is actually an 
issue that I worked on while I was at the U.S. Trade 
Representative's office, and I engaged proactively with India. 
And we were actually making progress. But then the pandemic 
occurred and the change of administrations, so things slowed 
down.
    So I do think there is opportunity--again if you are at the 
table and actively negotiating and engaging--to be able to open 
up that India market, particularly for ethanol for fuel use.
    The Chairman. Thank you, Senator Grassley.
    Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman.
    Even as the United States is currently focused on the 
tragedy unfolding in Ukraine, it is clear that one of the most 
pressing challenges facing the United States in the 21st 
century remains what has rightly been termed strategic 
competition with China. And while we still may have aspirations 
for a more constructive future with China, I think we have to 
be clear-eyed and focused as we contemplate the sort of 
regional and global architecture inimical to our interests and 
our values that Beijing is currently seeking to construct, and 
the steps that we have to take to invest in our economy and to 
safeguard our interests and the values of our allies and 
partners.
    And I think we also must be equally clear-eyed that much of 
our strategic competition with China is not just in traditional 
geopolitical or geostrategic spheres, but competition in 
geoeconomic dimensions of national power shaped by new and 
emerging technologies like artificial intelligence, quantum 
computing, and geonomics, among others.
    So, success in this new realm of competition will require 
the United States to work with like-minded partners to assure 
that the economic and commercial map of the Indo-Pacific is 
connected, free, and open, and that the United States is 
engaged.
    So the administration's IPEF proposal to me represents a 
good first step in that direction, but that's just it: I think 
it is a first step. What should a robust and durable regional 
economic architecture, one that is underpinned by high-quality, 
high-standard agreements on labor, the environment, 
intellectual property, and rule of law, look like?
    I met with all of the ASEAN ambassadors last week, and they 
all say, ``This is nice, but if you want to have a real 
presence here, then we are looking for a more robust 
aspirational effort.''
    So, can you address that question? It is open to any of you 
who wish to answer.
    Mr. Wessel. Senator, I would be happy to take that 
question, and I appreciate it, and appreciate all the work of 
you and your staff on so many issues.
    As I look at recent events in Ukraine, with China's actions 
in Hong Kong, their course of tactics and threats to Taiwan as 
well, I think we all can understand that many of the countries 
in the Indo-Pacific are not embracing China's vision of what 
their hegemonic control of the region should be.
    That does not mean we should not be engaged. As I said 
earlier, we are engaged. The question is, moving forward, what 
are the standards? And how do we engage?
    I think the USMCA showed that, with real discussions with 
labor and other stakeholders across the board that go to the 
fine details of any approach, we can work things out. It does 
not mean it is going to be perfect, but we can reach a broad 
consensus.
    So I am optimistic. I do not believe that countries like 
Vietnam, India, et cetera are looking to China as being the 
leader. We are engaged. We must continue that engagement, and 
we must stay deep in it.
    Senator Menendez. Ms. Shaw, did I see you leaning in to 
answer?
    Ms. Shaw. Yes, I am happy to unless you have another 
question. On this, I could not agree more with your point, sir. 
The 10 ASEAN countries together comprise the fifth largest 
economy in the world. And China is their number one trading 
partner.
    The RCEP agreement that we talked about earlier further 
entrenches a China-ASEAN supply chain. And we do not seem to be 
doing much about it. I agree with you that IPEF is a modest 
first step, but the question is, what else are we going to do?
    I would support the CPTPP as the obvious next step, but 
that is not going to get us all the way. We need strong rules 
that are comprehensive, that cover the waterfront of our trade 
and economic relationships, and we need to offer an alternative 
to China, not just in terms of markets but also with respect to 
values. And having real rules where we have skin in the game is 
what is really going to move the ball, and that is what is 
really going to get countries interested in this IPEF exercise.
    Senator Menendez. Yes, 600 million people, and the fifth 
largest economy in the world. It seems to me we should do much 
better.
    But lastly, Taiwan is a key trading partner of the United 
States, one with which we have a strategic relationship that is 
intimately intertwined with our economic security, particularly 
as it relates to trade in semiconductors.
    Could you comment on the role Taiwan plays in regional 
trade and economic relations? And would not excluding Taiwan 
represent a missed opportunity, both for the vision we have for 
Taiwan and also for the sort of regional trade and economic 
architecture we are seeking to build?
    [No response.]
    Senator Menendez. I did not think my questions were that 
difficult. Anybody want to answer that?
    [No response.]
    Senator Menendez. Shall I direct my question, then, so that 
I can get an answer? Ms. Lauritsen, I see you are smiling, so I 
am going to give you a shot.
    Ms. Lauritsen. That is a huge foreign policy issue, so I 
wanted to keep to my lane in food and agriculture. You know, 
Taiwan is a very important export market for U.S. with 
agricultural goods, but obviously there are huge foreign policy 
issues that are, I will say, well above my pay grade--even when 
I worked for the government--that need to be delicately 
balanced.
    Senator Menendez. But even if we set aside the foreign 
policy elements, as a regional trading element, it is a 
powerhouse in that regard, is it not, Ms. Shaw?
    Ms. Shaw. We have managed to figure out a trading 
relationship with Taiwan in the context of the World Trade 
Organization. I think that there are ways to move forward that 
do not necessarily beg the question of defining our 
relationship with China. Taiwan is clearly a red line for 
China, so I agree with my fellow witnesses at the witness table 
that we need to take into consideration broader issues if we 
are going to move forward in deepening relationships with 
Taiwan.
    But I agree. They are a strategically important partner 
economically, and I think we can figure out a way forward in 
the context of this broader IPEF action.
    Senator Menendez. Thank you, Mr. Chairman.
    The Chairman. I thank my colleague. It is good to have the 
chairman of the Senate Foreign Relations Committee, who looks 
at these issues. And I thought that last comment to Chairman 
Menendez was very instructive. We have to find a way that works 
in both countries, and I am one who is committed to doing that 
and working with my friend to do it.
    Okay. Let's see; our next Senator will be Senator Cornyn.
    Senator Cornyn. Well, thank you, Mr. Chairman. This is a 
very important topic, and I appreciate the witnesses joining us 
today. I am glad to see the Biden administration taking some 
first positive steps toward trade agreements in the Indo-
Pacific, but looking back on TPP, Senator Carper--who is the 
chairman of the Trade Subcommittee--and I as the ranking 
member, have written and spoken a number of times at a hearing 
on the importance of reengaging in the region, and expressing 
some regret that we did not take the issue more seriously when 
TPP was on the table.
    I think that was a missed opportunity for us, and here we 
are today having Trade Promotion Authority expiring. It seems 
to me that that would be a first logical step for Congress to 
take, if we are actually serious about trade in the Indo-
Pacific.
    One of the challenges with the economic framework that has 
been announced by the administration is, of course, it depends 
on who is President, and it will change perhaps with the 
politics changing with each change of the executive. And so it 
seems to me that trying to figure out how we can move toward a 
more permanent, or a more stable, relationship by reengaging 
with the prospect of a possible trade agreement, would be very, 
very important.
    And I appreciate the comments made by Senator Menendez. I 
do not know how we can look at this issue through a soda straw 
and just look at the economic aspects of it and not consider 
the national security imperative that is involved.
    China is at the top of everybody's list here in Washington, 
DC, as it should be, and we are playing catch-up.
    But, Ms. Shaw, would you just comment on the desirability 
of us actually passing Trade Promotion Authority as a 
prerequisite to reengaging with the possibility of another 
trade agreement in the Indo-Pacific?
    Ms. Shaw. Yes; thank you for the question. I mean, clearly, 
to be effective in the region, we are going to need to 
negotiate the types of commitments that require congressional 
authority.
    So for that reason alone, I think it is certainly a step in 
the right direction, and it is a positive sign to our trading 
partners that we are serious about this type of engagement. I 
guess my question would be, if Congress were to give the 
administration Trade Promotion Authority, is it something that, 
at this point, the administration would be willing to use? I am 
not sure the answer to that is ``yes.''
    Senator Cornyn. Well, I know that one of the issues that 
continues to come up, and the chairman raised it as well, is he 
and Senator Brown championed some labor-related provisions in 
the USMCA, and, Mr. Wessel, I might ask you as the Chair of the 
Labor Advisory Committee to USTR----
    Last year at a hearing on the USMCA, I asked a labor 
representative what it would take for labor to get behind a 
multilateral regional comprehensive trade agreement in the Asia 
Pacific. And the response was, ``We are a long way from 
there.''
    Could you provide maybe some more detail for what it would 
take to get labor on board?
    Mr. Wessel. I would be happy to, and thank you for your 
question. In my prepared testimony, I identify a number of 
provisions in the TPP that labor thought were deficient, from a 
rule of origin that would have allowed China, for example, to 
provide two-thirds of the products in an auto assembled by 
other countries in the TPP region, and have that considered for 
preferential status, to the SOE provisions where labor and the 
business community jointly in the ACTPN report indicated that 
the provisions were deficient by grandfathering all subsidies 
prior to entering into force, as well as having an injury test 
that, in most situations, required injury to occur for a year 
or more.
    For many industries--agriculture, commodities, steel, et 
cetera--contracts are often done on a spot basis, so the injury 
is periodic and not continuous. And the result was, the ability 
to fight SOEs under those provisions would have been very 
limited.
    In the labor area, not only were the rights deficient, but 
the consistency plans were inadequate. In Vietnam it would have 
allowed them to have a 5-cent-an-hour minimum wage, but qualify 
as if they have a minimum wage. So, the substantive concerns 
that labor had about the TPP were very deep. It was not a 
question of whether we should be engaged or whether we should 
have a trade agreement, but what its provisions were.
    Senator Cornyn. Thank you. My time is up.
    The Chairman. I thank my colleague.
    Our next four will be Senator Carper, Senator Portman, 
Senator Cardin, and Senator Cassidy. And I believe Senator 
Carper is on the line?
    Senator Carper. Yes, he is proudly on the line.
    Mr. Chairman, you're a fellow who has played a lot of 
basketball in his day, and the University of Delaware--actually 
we have had some women's sports teams that became quite good 
over the years, and we have had some great football teams and 
basketball teams as well. But this is the first time in 
Delaware history where both our men's and our women's 
basketball teams made it to the NCAA tournament.
    So we have a witness, and I think it is Ms. Llanso--Ms. 
Llanso, are you a Fightin' Blue Hen?
    Ms. Llanso. I am. Let's go, Blue Hens.
    Senator Carper. Friday afternoon, the men's team goes to 
Pittsburgh to play Villanova, and actually it will be a little 
challenging. I think we are taking on Maryland at College Park 
on Sunday afternoon as well. So we will see how it ends up. We 
are just proud that they have made it this far.
    I want to welcome our other witnesses, those who are Blue 
Hens and those who aspire to be Fightin' Blue Hens. There are 
three topics I would like to cover today. One is effective 
tools for economic engagement with our allies. Two is with 
digital trade in the Indo-Pacific. And third is achieving 
environmental goals through trade.
    We will start with effective tools for economic engagement 
with our allies. And this would be, I think, for Ms. Shaw. 
First, I am grateful for all of your presence with us today. I 
have long advocated for multilateral economic cooperation, 
especially in the Indo-Pacific region. I am proud that today's 
hearing builds on the bipartisan work of Senator Cornyn and I--
he just spoke about it--as leaders of the Trade Subcommittee of 
this committee, including holding a hearing last summer on 
opportunities for engagement in the Indo-Pacific. This 
framework also provides an opportunity to work cooperatively 
with many of our like-minded allies in order to advance our 
shared values and combat the rise of China. However, this 
framework is not expected to include tariff reduction or 
expanded market access, which typically serve as incentives for 
greater cooperation during multilateral negotiations.
    My question to you, Ms. Shaw, is this: absent increased 
market access, what tools should U.S. policymakers consider to 
incentivize our partners to join this effort and adopt robust 
standards as part of the Indo-Pacific Economic Framework?
    Ms. Shaw. Well, thank you so much for the question. I think 
you will find that my answer is pretty straightforward. We need 
market access to be on the table in order to incentivize our 
trading partners to make substantive commitments in these 
areas.
    It is hard to imagine what incentives they would have 
unless there is more skin in the game. So I think, as a first 
step, Congress should really impress upon the administration to 
expand their scope--and to the extent they are not considering 
market access, to reevaluate that strategy.
    Senator Carper. Well, that was pretty straightforward; 
thank you.
    My second question would go to Ms. Llanso and Mr. Wessel, 
and it deals again with digital trade in the Indo-Pacific. The 
Indo-
Pacific Economic Framework presents an important opportunity to 
establish digital trade rules, to uplift workers, and to expand 
economic opportunity for women, for people of color, and 
individuals from lower-income backgrounds, as well as the rest 
of us.
    I am eager to work with the Biden administration and our 
allies to advance policy that supports the free flow of data 
that connects small businesses to global markets and ensures 
that digital technologies abide by robust cybersecurity and 
consumer protection standards.
    The question, again for Ms. Llanso and Mr. Wessel: what 
lesson can be taken from digital trade standards in existing 
multilateral agreements such as the USMCA and U.S.-Japan 
agreement, and what kind of digital rules would best support 
U.S. workers and businesses?
    Ms. Llanso, please?
    Ms. Llanso. Yes. Thank you, Senator. We absolutely need to 
be pursuing commitments from nations in the region to limit the 
use of surveillance technologies, both through domestic 
legislation protecting, for example, workers' rights, ensuring 
that workers are not surveilled by bossware or other kinds of 
monitoring technologies, but also to focus on the limit on 
export controls and to ensure that spyware and other privacy-
invasive technologies are not able to be kind of exported and 
shared around the world.
    Senator Carper. Thank you.
    Mr. Wessel, the same question.
    Mr. Wessel. A very broad question, and clearly a digital 
component of the IPEF can have benefits for workers, for 
democracy, and many other interests. But it also can undermine 
them.
    When we look, for example, at section 512--you mentioned 
previous trade agreements. As the Patent Office, I believe 
said, the Copyright Office, it is unbalanced and is in need of 
being updated. And the Senate Judiciary Committee is looking at 
that.
    When we look at the rights of creative artists, of which $2 
billion of their income is at risk every year, we need to make 
sure that we have the enforcement mechanisms that ensure that 
there is not wage theft.
    But there are many other provisions, and it was mentioned 
by the chairman earlier about the Arab Spring and the power of 
the Internet to help spread democracy. It can also be used for 
ill purposes, as we have seen with surveillance, with the Great 
Firewall, et cetera. So this is a deep issue that we look 
forward to working with you and your colleagues on to find the 
right balance to move forward.
    Senator Carper. All right; thanks.
    Mr. Chairman, my time has expired, but if you do not mind, 
I would just like to take 15 seconds to just state my third 
question for the record. What opportunities exist to promote 
environmental conservation sustainability as we engage with our 
allies in the Indo-Pacific region? And that would be a question 
for the record.
    Again, thank you all very much for joining us today. And I 
will say, Ms. Llanso, in closing, Go Blue.
    Thank you.
    Mr. Wessel. Senator Carper, I should also point out that 
two of my sons are Blue Hens, so it is in the family.
    Senator Carper. Oh, that is great. They must have picked 
the right father and mother.
    The Chairman. Thank you, Senator Carper. As a general 
proposition, anybody who gets me involved in a basketball 
discussion is going to generate a lot of time, so we will have 
to pass on that.
    Senator Portman?
    Senator Portman. Thank you, Mr. Chairman. First, I want to 
thank you and Senator Crapo for holding this hearing. It is 
really important. And I want to start with just three quick 
thoughts about where we are in terms of Indo-Pacific trade.
    One is, we have to recognize the importance of opening up 
foreign markets. That is sort of an obvious advantage of trade. 
Trade jobs pay about 16 percent more on average; 90 percent of 
consumers live outside of the United States. We need to make 
things in this country in order to take advantage of that, but 
that should be the objective.
    The second is, I find it surprising that after passing 
USMCA with such an overwhelming bipartisan vote, the conclusion 
of a lot of people is that we should stop expanding trade at 
all. And if you look at the campaign that President Biden ran, 
one thing he said was, let's stop FTAs. That has always been 
very confusing to me. The Indo-Pacific Economic Framework, as 
was said earlier, does not include any new market access for 
U.S. exporters. I mean, I don't get that. Senator Carper just 
talked about that. It disappoints me because, after decades and 
decades of debate, we finally developed what I thought was a 
pretty good paradigm and found consensus between industry and 
labor, ag, and others, and it is a template that we should be 
using to move forward and improve our competitiveness. Instead, 
we are ceding market share to China. And Mr. Wessel 
acknowledged this in his testimony. We need to be engaged in 
the region, not just writing it off, and engaged in terms of 
opening up new market access.
    Third, when we talk about expanding trade, there is always 
a tendency to default to TPP. So it is either you are for the 
Trans-Pacific Partnership or nothing. And we have to remember 
that that was not very popular on a bipartisan basis. It had 
some flaws, including its impact on the manufacturing sector 
here in this country. I think what we should be doing 
immediately is getting Japan into the fold. Japan is by far the 
largest economy in the TPP group that we do not already have a 
trade agreement with. We have trade agreements with most of 
them, but not Japan. So we ought to deepen the existing ties 
with Japan and get a trade agreement done, which requires TPA, 
which is another reason it is important that we sort of look 
beyond this notion that somehow trade is not a good thing, but 
rather that it is something that helps our American workers.
    Lastly, we need to be blunt about the elephant in the room, 
which is China. In 2002, America was the top trading partner of 
these Indo-Pacific nations. We were number one. Today, it is 
China, by far.
    And, Ms. Shaw, I heard your comment on that, but they are 
the most dominant trading partner, and that should be a wake-up 
call to us to embrace a new path forward, one that allows us, 
again, to have better market access for our products and, like 
USMCA, has enforceable labor and environmental rules to guard 
against offshoring.
    There are a couple of things that some of us have proposed 
that I want to ask you about quickly, that take us down that 
track.
    One is to do something with regard to the WTO. Right now, 
too often agreements get stalled because one country or another 
objects. Often it is China. And so it works by consensus, and 
that means it does not work very well. Senator Cruz and I have 
introduced legislation called The Trading System Preservation 
Act, which gives authority to USTR to pursue sector-specific 
trade agreements with allies which do not have an MFN or a 
most-
favored nation requirement. In other words, we should find 
like-minded countries that want to come up with an agreement 
with us and move forward with those agreements. And we should 
not, certainly, allow China to be able to free ride on the 
global trading system, or be empowered to act as a spoiler to 
prevent these agreements from going forward. The Government 
Procurement Agreement with the WTO would be an example of that.
    So, we will start with you, Ms. Shaw. Do you support 
sector-
specific plurilateral agreements without MFN as an effective 
way to open markets with allies, and to put pressure on China?
    Ms. Shaw. Thank you for the question. I do, and thank you 
for your leadership, along with Senator Cruz, on that piece of 
legislation.
    I think countries are going to continue to negotiate with 
or without the WTO. So to make clear that the view from the 
U.S. Congress is that we should be pursuing plurilateral 
agreements is the right message to be sending to Geneva and our 
trading partners around the world.
    But what I would say about plurilateral and sector-specific 
agreements is that we should not be limiting ourselves to a 
single sector, or a single topic to discuss. We should be 
negotiating across a broad range of plurilaterals so that we 
have the opportunity to make important trades across difficult 
issue areas. That is how we make progress. And I realize I am 
talking to a former USTR about negotiations, and I definitely 
defer to your experience, but I do not see how we can make 
significant progress just taking one issue at a time. I think 
we need a coalition of the willing to go deep on a certain set 
of issues that really reflect the challenges we are facing 
today.
    Senator Portman. Yes, I think that is a good observation, 
because there are tradeoffs between different sectors, and our 
legislation would not be limited just to one specific sector, 
but it would be this notion that we do not have to have 
everybody on board, because that is what has blocked progress 
of all kinds. I think of environmental goods. Why can't we come 
up with an agreement on that? Because one, or in this case, two 
countries object. Well, let's get the rest of us together and 
maybe do some tradeoffs with some other areas and move forward 
to expand opportunities for trade and market openings.
    The other bill that we have been working on is called 
Leveling the Playing Field 2.0. A number of the members of this 
committee are cosponsors to that legislation. Senator Brown and 
I are the original cosponsors. And basically what it says is, 
the reality is that with Belt and Road in particular, and with 
transshipments, that China continues to game the international 
trading system, and we need to be responsive to that. That is 
the real world.
    So that legislation has new tools to combat some of these 
trade abuses. We now have 172 business trade associations and 
ag groups and unions that have endorsed the bill. It has a lot 
of support here on both sides of the aisle, including with 
Republicans, and it also passed the House as part of the 
COMPETES Act.
    Mr. Wessel, maybe you could comment on that legislation. Do 
you agree that the Leveling the Playing Field Act 2.0 will help 
combat China's unfair trade practices and improve our economic 
situation in the Indo-Pacific area?
    Mr. Wessel. I couldn't speak more highly of both the bill 
that you and Senator Brown put together, and your work over 
time--and the importance of Leveling the Playing Field 2.0 as a 
component of whatever legislation comes out of the conference 
on COMPETES and USICA. Giving workers the tools to defend their 
rights when they are injured by unfair foreign trade is vital. 
There are too many areas right now where they have no tools, 
and they are victims. Your legislation will help put an end to 
that.
    Senator Portman. Great; thank you.
    Mr. Chairman, I appreciate the time.
    The Chairman. Very good.
    We are next with Senator Cardin.
    Senator Cardin. Well, thank you, Mr. Chairman. And we thank 
all of our witnesses. It is very helpful to have a former USTR 
on our committee, and I really do want to acknowledge that 
Senator Portman has always reached out to try to find 
bipartisan ways to advance all agendas, including in trade. So 
we appreciate your willingness to try to find common areas so 
we can advance trade in this country.
    I want to start with an observation, and then ask Mr. 
Wessel what we can expect in regard to this framework to 
advance good governance.
    In the last Trade Promotion Authority, we put as one of the 
principal objectives good governance and anti-corruption, and 
the USTR took that seriously. In the initial negotiations on 
the TPP, because that was evolving, there was a strong chapter 
on anti-
corruption and governance.
    Now we are not a party to TPP, but some of the countries 
that are are part of this framework discussion. So, Mr. Wessel, 
I would like to get from you--recognizing this is the 
framework, it is not really the market access--what can we 
reasonably expect to be able to achieve to advance our good 
governance, anti-corruption agenda that Congress has clearly 
shown a direct interest in in any trade discussions? What can 
we expect in this framework?
    Mr. Wessel. Well, I am optimistic about what we can 
achieve. If you look at some of the other components of the 
overall Indo-
Pacific strategy--which include infrastructure, 
decarbonization, and many other components--good governance, 
anti-corruption is a real opportunity for making some advances.
    We have all seen the China model as it relates to Belt and 
Road debt traps and their approaches there, et cetera. The 
public in many of these countries is desperate for anti-
corruption measures. And with many of the provisions--the 
carrots that are in what President Biden is seeking to 
achieve--anti-corruption provisions should be part of that.
    Senator Cardin. So, without having a formal access 
agreement, how do you enforce any of those understandings in 
the framework? Could you just enlighten me how we could advance 
these issues and have some degree of confidence that it is not 
just language, and not just verbal commitments, but actually we 
have made progress in being able to achieve these objectives?
    Mr. Wessel. When one looks at what the administration is 
talking about in terms of infrastructure, alternatives to the 
AIIB, and other engagement in the region, I think there are 
real incentives to have enforceable standards around good 
governance and anti-corruption. There will be other provisions, 
of course, where there are carrots, some sticks, maybe sharp 
carrots as I like to say, and I think there are ways of 
ensuring that there are enforcement measures because there will 
be preferential approaches within the overall Indo-Pacific 
strategy.
    Senator Cardin. Thank you.
    Ms. Shaw, I want to get to a separate subject. The USMCA 
included a separate chapter on small business, which was very 
much appreciated by the small business community. I chair the 
Small Business Committee, and I have been pushing for similar 
sensitivities as we go into all trade discussions.
    So in regard to this framework, could you just give us a 
strategy as to how we can be sensitive to the needs of smaller 
companies?
    Ms. Shaw. Yes; thank you so much. Small and medium-sized 
enterprises face unique challenges, and it is important that we 
take steps to increase their opportunities in the Indo-Pacific 
region, as well as safeguard their interest in the project.
    One way that we can address some of these issues is through 
trade facilitation, easing some of the Customs burden, cutting 
red tape, making it easier for our businesses that need 
critical inputs to be able to get them and to be able to get 
them quickly. But I think that just generally improving the 
terms of trade, and again being as bold as possible about 
expanding the type of economic opportunities in the Indo-
Pacific, is going to go a long way to unleashing growth and 
opening up jobs and opportunities for some of our small and 
medium-sized companies.
    Senator Cardin. There is no question, innovation is so much 
focused in smaller companies, and there can be intimidation 
issues. So I think some of the areas that you are talking about 
are very, very important.
    We also saw that the size of transactions may also be a 
factor. We can make special rules that will assist those 
smaller and 
middle-sized companies in not having to deal with some of the 
challenges that are created under trade agreements.
    So I thank you for that. I hope that you will all stay 
engaged as this moves forward. It is an area that we are a 
little bit confused about, because we do not know exactly what 
rules are going to be applied in regard to congressional 
engagement or private-sector engagement, but I think it is 
important that we all stay involved, because we know that we 
have to increase our presence in the Indo-Pacific area.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Cardin.
    We are now at Senator Cassidy.
    Senator Cassidy. Thank you.
    I will address my first question to Ms. Shaw and Mr. 
Wessel.
    So we have put these negotiations in, in which we seek to 
have a decarbonization of an economy, and we seek to have some 
sort of labor standards so that our folks are not competing 
against slave labor. That is good.
    But the cost of compliance, or the cost of not using slave 
labor, increases your costs relative to a product made in 
China, for example. I spoke to one fellow. A company he was 
formerly with made the decision to put their new manufacturing 
plant in China because they did not enforce their 
SOx and NOx scrubbers. The return on 
investment would be 18 percent there, as opposed to 8 percent 
elsewhere, where they would have to turn on SOx and 
NOx scrubbers.
    In a sense, these requirements incentivize the movement of 
industry to China where they do not enforce these standards.
    So my point is, how do we avoid a race to the bottom? Or 
should there be some sort of offset, border offset, for using 
slave labor, or for polluting the common areas of the ocean and 
of the sky which elsewhere we are attempting to regulate down?
    Put differently, if we negotiate a trade agreement which 
China is not a part of, and in which the participants must have 
the cost of compliance with labor and environmental 
regulations, are we not just building in an advantage for 
China?
    Ms. Shaw, you first, please.
    Ms. Shaw. Sure. Having diverse and resilient supply chains 
is critical. Part of the challenge that you are talking about 
is that, wherever it is cheaper to produce is where companies 
will go. But that is not the most effective way to do business.
    We have to incentivize companies to do business in a strong 
and resilient Indo-Pacific region, but we do have high labor 
standards. We do have high environmental----
    Senator Cassidy. I was going to say, how do you incentivize 
it when there is a higher cost of doing business where you have 
those standards, and a lower cost where you do not?
    Ms. Shaw. Market access. You give preferential trade 
treatment, lower duties, if you meet certain standards and 
comply with certain provisions of the trade.
    Senator Cassidy. So, implicit in what you just said is that 
there should be an elevated duty on those who do not meet some 
standard when it comes to the environment, labor, or perhaps 
other factors.
    Ms. Shaw. Or a lower duty for those who do.
    Senator Cassidy. Okay.
    And, Mr. Wessel?
    Mr. Wessel. I think there are--first of all, thank you for 
the question. I think in terms of carbon intensity, there is a 
path forward. The U.S. and the EU, as part of their 232 
arrangement, included a provision on a global arrangement to 
deal with carbon intensity as one component. And I think one of 
the things that is on the table there is a border adjustment 
measure that would address the lax environmental enforcement by 
China and other countries in terms of what they are exporting.
    For each ton of steel, as I understand it, China has three 
times more carbon intensity per ton than the U.S. We cannot 
allow that to be a competitive advantage, and we need to deal 
with that with border measures. I expect, as part of IPEF and 
the Indo-Pacific strategy, that carbon intensity can be dealt 
with in a similar way.
    For the question of forced labor, similarly we can have 
border measures. We do have some with the Uyghur Forced Labor 
Prevention Act, which is now going through the regulatory 
scrub. We have seen countries across the globe condemn China's 
actions in Xinjiang, calling them genocide, and we need to find 
a way to make sure that that is not a competitive advantage and 
is dealt with effectively among allied nations.
    Senator Cassidy. Would you suggest that if we were going to 
have a trade agreement with other countries in which we expect 
them to comply with standards such as this, that part of that 
trade agreement would have to have a border adjustment of some 
sort for these factors we are discussing, to avoid that 
incentivization of companies to move to China?
    Mr. Wessel. I think, in terms of carbon intensity, that is 
going to be on the table. In terms of forced labor, I think we 
need to trace supply chains to make sure that those products 
either directly or--for example, polysilicon being utilized in 
solar arrays, et cetera--that those products do not make their 
way into the U.S. By doing that, we create the incentive for 
the Indo-Pac countries and others to disengage from Chinese 
supply chains that spoil the environment and abuse workers' 
rights.
    Senator Cassidy. I see. So wherever that supply chain 
flowed through, if you just wanted to take it to a third 
country, you would somehow defeat that initiative.
    Let me take a little--Ms. Lauritsen, may I ask you a quick 
question, please? I've got a lot of shrimpers, and they are 
competing against what they allege is dumped shrimp coming from 
India.
    Now I think your testimony points out that India has really 
high import tariffs, and yet we bless them with pretty low 
import tariffs on our side--if you will, tilt the playing 
field. How do I go back to my shrimpers and defend that?
    Ms. Lauritsen. It is always a challenge, right? And India 
is a particularly protectionist market when it comes to food, 
seafood, and agricultural products. But this is where, 
actually, negotiating on tariffs and market access to level the 
playing field would be particularly important, either directly 
and bilaterally with India, or through the IPEF. That is how 
you deal with it.
    Obviously, the U.S. already has countervailing duties and 
antidumping laws which can help on the import side, but again I 
would propose that having that balanced playing field in both 
markets can be a benefit.
    Senator Cassidy. I yield back.
    Thank you, Mr. Chairman.
    The Chairman. I thank my colleague.
    Senator Hassan is next, and she has been very patient 
indeed.
    Senator Hassan. Well, thank you very much, Mr. Chair and 
Ranking Member Crapo, for holding this hearing. Thank you to 
all of the witnesses. We really appreciate your expertise and 
your being here.
    Mr. Wessel, I have a number of questions for you. So let me 
start by asking you a question about supply chain resiliency. 
As you know, the pandemic has laid bare vulnerabilities in our 
supply chain and highlighted the importance of making 
strategically critical goods here at home. And I have also 
heard from Granite Staters, including Gray Chynoweth, who is 
the CEO of a company called Minim. These Granite Staters have 
been impacted by both new and longstanding supply chain issues.
    That is why I am working on legislation to help us bring 
American manufacturing back in critical sectors such as 
semiconductors, biotechnology, and military technology. In 
addition to these efforts, Mr. Wessel, how can the U.S. ensure 
that the Indo-Pacific Economic Framework increases our supply 
chain resiliency?
    Mr. Wessel. As you just pointed out--and thank you for all 
your work on this issue--in critical supply chain areas we must 
ensure first that we can make those products here in the U.S. 
where we can. Second, where we cannot, we must do so with 
allied countries that share our views and refuse to weaponize 
supply chains, as we have seen with China. I think that can be 
a component of the IPEF agreement.
    But investing in our own economy, making sure that we can 
meet our critical needs, and working with our allies to make 
sure that we share the burden of providing those products 
globally to democratic nations, is key.
    Senator Hassan. Thank you.
    This is also a question to you, Mr. Wessel. I am working on 
a bipartisan basis to promote research and development 
investment in the United States, including through bipartisan 
tax legislation with Senator Young.
    According to a recent report by the U.S.-China Commission, 
between the years--if I've got the years right--2001 and 2017, 
U.S. companies increased their R&D investments in China at a 
faster rate than their R&D investments in domestic operations 
in the United States.
    So how can the Indo-Pacific Economic Framework balance 
promoting domestic R&D and strengthening ties with our allies 
in the Indo-Pacific region?
    Mr. Wessel. Well, thank you for the question. And again, 
that goes back to your first point, which is, first we must 
make sure that we have the environment here in the U.S. to 
support R&D.
    It is not only work like you are doing on the tax code, but 
also the provisions that are in America COMPETES and USICA that 
will ensure that we have the R&D base here that we need to make 
sure that it is not under attack by countries like China that 
engage in massive espionage.
    There are also cooperative things we can do with our 
partners in the Indo-Pacific. India, for example, is a major 
producer of active pharmaceutical ingredients and utilizing 
them in formularies, et cetera. We need to make sure that there 
is a balanced R&D strategy but, first and foremost, do what we 
can to have the core, the basic, and the forward-looking R&D 
being done here.
    Senator Hassan. Thank you. And I want to follow up on 
something you just referenced, which is how we go about 
protecting our intellectual property.
    In addition to increasing R&D, protecting that intellectual 
property produced by U.S. R&D is obviously vital for promoting 
domestic innovation. That is why, as a part of any new 
agreement, we have to address the vulnerability of U.S. 
businesses to IP theft posed by policies like data localization 
requirements that require U.S. companies to store data abroad.
    What are the vulnerabilities to IP theft that U.S. 
businesses face in the Indo-Pacific? And how could a new 
economic framework address these vulnerabilities?
    Mr. Wessel. Thank you. IP is the lifeblood for workers here 
in the U.S. Labor led on the patent reform legislation a number 
of years ago because, if U.S. producers of IP and innovation do 
not have confidence in their ability to get the proper rate of 
return, they are going to either do the R&D elsewhere, or they 
are going to license it to countries like China that will then 
undermine our long-term industrial base.
    We need strong IP protections in any agreement. We need to 
make sure that there are no coercive measures, performance 
requirements, and other provisions that other nations in the 
IPEF can use to force U.S. companies to share their IP 
unwillingly.
    Senator Hassan. Thank you very much.
    And thank you, Mr. Chair. I yield back.
    The Chairman. I thank my colleague.
    Let's see. Next would be Senator Young.
    Senator Young. Thank you, Mr. Chairman.
    Ms. Shaw, thank you for sharing your important perspective 
at this critical hearing today on trade in the Indo-Pacific 
region.
    I have been a constant advocate that the United States 
should be proactive with pursuing meaningful trade negotiations 
in the Indo-Pacific region, as it is an issue of national 
security. In my view, trade and national security are 
inextricably linked.
    China's move to initiate their own trade agreement in the 
region, followed by action in joining the CPTPP, should be an 
important signal to Ambassador Tai that the U.S. cannot 
continue passive engagement in the region.
    Ms. Shaw, can you share with us some of the concerning 
actions by China to increase its influence in the region, for 
instance, how economic coercion or foreign direct investment 
from China will further undermine our economy?
    Ms. Shaw. Thank you so much for the question. I would need 
more than the remaining 4 minutes to catalogue all of the ways 
that China is continuing to advance its interests in the region 
to the detriment of our producers, our farmers, and our 
workers. But I will say, you have highlighted one step, which 
is the negotiation of Chinese trade agreements, including the 
largest trade agreement in history, and its application to the 
CPTPP. China is also currently negotiating a trade deal with 
South Korea and Japan, two important export markets for the 
United States, and two important national security and military 
allies. So there is a lot of concerning activity on the trade 
front.
    In terms of foreign direct investment, China's foreign 
direct investment in the region, to put it simply, displaces 
ours. In terms of economic coercion, that is unfortunately a 
tool that they have used and continue to use. They have in some 
ways weaponized their economy to pursue political goals and to 
exert pressure and pain on countries that simply do not agree 
with them. Australia and Lithuania are two recent examples.
    So this is very concerning. And it is very much the reason 
why the United States needs to lean in, needs to press in, and 
frankly needs to give the region a real alternative.
    Senator Young. Yes, I think that was a great summary in 
about 90 seconds about why this is indeed a national security 
issue.
    Do you see, Ms. Shaw, the need for urgency by the United 
States as it approaches trade policy with partners in the Indo-
Pacific region, particularly with ensuring that the Indo-
Pacific Economic Framework is an effective and useful tool to 
bolster our relationships?
    Ms. Shaw. Yes, absolutely. I mean, to be frank, we should 
be negotiating right now. The economic framework has not yet 
been launched, and it is not clear when that is going to 
happen, although the administration has indicated by the spring 
or summer.
    Six months from now we will still have an opportunity to 
engage. Three years from now, we will not. The time is now.
    Senator Young. Well, I agree with you. I do not see the 
same level of urgency, quite candidly, from the administration. 
And I will do everything I can to support them should they lean 
into this important national security issue.
    Ms. Llanso, I am encouraged that the administration is 
prioritizing digital trade by designating a module dedicated to 
digital trade in the Indo-Pacific Economic Framework. 
Discriminatory digital trade practices stunt our economic 
growth and cause financial distress when countries, 
specifically China, require forced transfer of intellectual 
property in exchange for market access.
    I am working on a digital trade resolution to complement 
the administration's strong efforts to promote integrity in 
digital trade. This will be a valuable tool in tandem with the 
digital trade initiative present in the Indo-Pacific Economic 
Framework.
    Ms. Llanso, do you see value in congressional actions 
supporting the administration's digital trade efforts? And more 
broadly, how important is it for Congress and the executive to 
be united when confronting the increasing challenge in 
addressing digital trade barriers?
    Ms. Llanso. Thank you, Senator. I think it is absolutely 
important for Congress to be in coordination with the 
administration, and for both sides to be operating in tandem in 
the region.
    The issues of security, both of intellectual property and 
of individual users' data in the region, are very heightened. 
And so, whatever can be done to ensure that not only are there 
important principles being advanced through the IPEF, but also 
to make sure that there are real guarantees for the safety and 
security of data throughout the region, is critically 
important.
    Senator Young. Very good.
    Lastly, I would like to turn to an important position which 
the administration has not yet nominated someone to fill. It is 
the Under Secretary of Agriculture for Trade in Foreign 
Agricultural Affairs.
    As our witnesses know, this post was previously held by Ted 
McKinney, who made significant strides to increase market 
access for American agriculture. Additionally, the Chief 
Agricultural Trade Negotiator nominee has been named but not 
considered by this committee.
    With input prices skyrocketing due to inflation, it is 
absolutely critical that Hoosier farmers have adequate demand 
from our global trading partners and that we continue to 
explore new market opportunities. So I would just like to, in 
this public forum, emphasize the importance to me, to the 
people of Indiana, and really to the country, to ensure that 
someone is nominated to that Under Secretary post.
    With that, I will yield back to the chair.
    The Chairman. I thank our friend and look forward to 
working with him.
    Let's see. Senator Cortez Masto, I think, is next. I know 
she has a busy morning.
    Senator Cortez Masto. I am here. Thank you----
    The Chairman. Oh, there she is. Senator Cortez Masto, the 
time is yours.
    Senator Cortez Masto. This has been an interesting 
discussion today. I really appreciate you all being here.
    Mr. Wessel, let me start with you, because you touched on 
it very briefly, but I want you to expand a little bit more on 
where we are in talking about digital trade. As you well know, 
Nevada is the entertainment capital of the world. We have so 
many creative artists there, and they are a major economic 
driver. But my concern is, as we enter into these new 
agreements and these trade agreements, what should we be doing 
to really look out for the protection of creative artists? And 
what are the complexities surrounding that as we look to 
addressing digital trade in any framework as we move forward.
    Can you touch on that a little bit more?
    Mr. Wessel. I would be happy to. And thank you for your 
question. My colleagues in the creative industries--there are 
12 unions. As I understand it, there is more than $2 billion of 
income each year, which they rely on via the Internet in terms 
of residuals, other payments, et cetera. So this is critical. 
And for many of the content workers, it is the difference 
between food on the table or not.
    I think we have to update the provisions and look at them 
very carefully. I mentioned section 512 and section 230. As the 
Patent and Trademark Office recently indicated, for section 
512, it is unbalanced. The Senate Judiciary Committee is 
looking at that. I think we need to take a step back before we 
proceed in the digital area, have discussions among you and 
your colleagues, as well as stakeholders and labor and 
otherwise, to make sure that we have a balanced approach that 
ensures there will not be wage and compensation theft, while 
also promoting many of the other benefits of a digital economy.
    Senator Cortez Masto. I agree, and thank you. I think it is 
so important they are at the table. Their content is really 
their livelihood, and they should be adequately compensated and 
protected for that content. So thank you, because I do think it 
is important that they are at the table as we are discussing 
trade.
    Let me jump to another area that is important for Nevada as 
well, and that is really our agricultural industry that we have 
in Nevada. And we so appreciate Senator Grassley's comments 
earlier involving agriculture and making sure that it does not 
get left behind in any framework.
    Ms. Lauritsen, let me ask you this. Nevada's largest 
agricultural industry here--we export our beef, dairy feed, and 
livestock. South Korea and Japan both buy more of these from 
Nevada ranchers than China does, which missed the purchase 
commitment of $80 billion for the years 2020 and 2021. I know 
you talked a little bit about some of the needed protections, 
and you had a whole list of them.
    Can I ask you, for purposes of protecting ag, including my 
ranchers and dairy farmers, is there anything in that specific 
list that we should prioritize over something else? Or can you 
touch a little bit on, in general, which one is the most 
important thing that we should be addressing in any future 
framework to protect our agricultural industries across this 
country?
    Ms. Lauritsen [off microphone].
    Senator Cortez Masto. Oh, there you go. If you could start 
over, I could not hear the first part.
    Ms. Lauritsen. I am sorry, Senator, I should know better, 
having lived my life with microphones in negotiations. Thank 
you for the question.
    And in terms of, particularly the interests of your 
exporters, looking at the sanitary and phytosanitary barriers 
that we have in Asia--there are a number of phytosanitary 
restrictions on wheat exports, for example. But in the case of 
beef, you are also then looking at tariff differences, where 
Australia has a better tariff going into Vietnam than the U.S.
    So looking at those types of really concrete barriers to 
our exports, and trying to get that level playing field, I 
think is going to be critically important for your ranchers and 
your farmers.
    Senator Cortez Masto. Thank you. I appreciate that. Again, 
thank you for this great conversation today.
    Mr. Chairman, I yield back.
    The Chairman. I thank my colleague from Nevada.
    Next is Senator Barrasso.
    Senator Barrasso. Thanks so much, Mr. Chairman, to you and 
to Senator Crapo for holding this hearing. Thank you all for 
being here today.
    Ms. Shaw, as we take a look at this tragic, unprovoked war 
in Ukraine that is continuing to shock the world, we are seeing 
more nations realize really how energy security is tied to 
national security. Russia has demonstrated its willingness to 
use energy as a weapon. Countries around the globe are 
scrambling to find new energy supplies to replace Russian oil 
and coal and gas and nuclear fuel.
    America can and should fill that void that Russia is now 
creating. So, as I look at the priorities this administration 
has laid out in the Indo-Pacific Economic Framework, I do not 
see anything that resembles a strategy to help our allies in 
the regions be more energy secure.
    In Wyoming, we have an abundance of coal, oil, natural gas, 
uranium, all of it. And I believe the U.S. can provide our 
allies in the region reliable, affordable, and secure energy 
resources.
    So this framework fails to address market access in any 
way, and focuses instead on climate change and decarbonization 
of the energy sector. I believe it is a huge mistake.
    So how can we counter China's influence in the region if we 
do not aggressively export American energy to our allies?
    Ms. Shaw. Thank you so much for the question. This may not 
surprise you, but I completely agree with you. I think that the 
framework, as it has been outlined and proposed, is a modest 
step, but it is certainly not something that, in its current 
form, is going to really move the dial.
    I think we need to work closely with our allies where we 
have a competitive advantage. We have a national security 
interest, and I think energy is a prime sector where we should 
be focusing our interests and our energies. But beyond that, we 
need to take on market access.
    We need to look at a broader scope of economic activity 
between the United States and half the world's population. We 
should not limit it to very specific and narrow issues.
    Senator Barrasso. If I could go to the issue of trade--and 
in the last question in responding to Senator Young, I think 
you talked about trade, and you said, I think, the time is now, 
Ms. Shaw. So the Indo-Pacific region is critically important 
for American economic security and national security. So I 
think, since backing out of the TPP, the U.S., in my view, has 
been on the sidelines with respect to trade. China, on the 
other hand, has been very aggressive in its efforts to expand 
trade and their influence in the region.
    So--and then I am going to turn to the other two witnesses 
as well--given China's aggressive efforts in the Indo-Pacific 
region, just how far behind have we fallen? And how quickly can 
we move to counter China?
    Ms. Shaw. When it comes to trade, we are woefully behind. 
The trouble with TPP was that it was a flawed agreement. So, 
while it was the right national security play, it was not the 
right economic play. But the world has changed a lot since 2016 
when we withdrew, and the national security arguments for 
moving forward in a renegotiated CPTPP, or something like that, 
are much stronger. And I think that there are incredibly strong 
economic arguments for doing so as well. The further China goes 
in terms of strengthening its own supply chains in the region, 
the further behind we are.
    So economically, we are starting from behind, and we really 
desperately need to move ahead.
    Senator Barrasso. Let me ask the other witnesses.
    Ms. Llanso. Thank you. Yes, I think, unfortunately, we are 
somewhat behind on advancing the open Internet and digital 
freedom perspective that has been so beneficial to the United 
States' economy and to so much of the world economy.
    China has made significant inroads in advancing its 
authoritarian model of Internet governance, and so I think the 
United States really needs to show a vision for how an open 
Internet really leads to more economic benefit and protection 
of human rights as a counter to that.
    Senator Barrasso. Thanks.
    Ms. Lauritsen?
    Ms. Lauritsen. Thank you for that. And already agricultural 
exporters are falling behind in the Indo-Pacific region. For 
example, in Vietnam for beef and pork, or in Japan also for 
beef and pork issues--and wheat, and a whole bunch of other 
agricultural products--we are at a tariff disadvantage. While 
we have high-quality products, we also have inputs that are 
costly. So we really need to be able to get to the table to 
negotiate lower tariffs and compete.
    Senator Barrasso. Well, following up on that, you know in 
Wyoming we produce some of the highest quality beef in the 
world. And the Indo-Pacific region is critical for our beef 
export market, and opportunities in Japan, Taiwan, among 
others, continue to be major growth markets for Wyoming beef. 
In fact, Wyoming even opened our own international trade office 
in Taipei a couple of years ago. So there continues to be great 
opportunity for Wyoming beef around the world.
    So how do we expand opportunities for Wyoming ranchers and 
farmers in the region if we are not actively pursuing increased 
market access?
    Ms. Lauritsen. Well, I guess that is why I would answer 
that by saying we need to be pursuing improved market access. 
We also--I think a couple of Senators have talked about the 
need for an Under Secretary of Trade at USDA to actually go 
around the world and sell and promote the high-quality, cost-
effective U.S. products.
    So, a lot more can be done in this area with boots on the 
ground meeting, and talking, and negotiating with our trading 
partners.
    Senator Barrasso. Mr. Chairman, I see my time has expired.
    The Chairman. Thank you, Senator Barrasso.
    Senator Warren?
    Mr. Wessel. Mr. Chairman, if I just might have the 
opportunity to quickly respond to the Senator's question, 
because I think America has stood up to China over the last 
number of years, both through the Trump and now the Biden 
administration, and President Biden's approach, which is to 
invest in our economy, to strengthen America before we go back 
into the trade field in a major way, I think is the right thing 
to do, to both ensure that we go from a position of strength 
but that we know Americans support, workers support our trade 
policies.
    So I do not think we are behind. I think we actually have 
given an example to the world of China's predatory and 
protectionist actions. They more and more agree with us. They 
are cooperating. We need to strengthen our economy and then 
move forward.
    The Chairman. All right.
    Senator Warren?
    Senator Warren. Thank you, Mr. Chairman.
    For too long, U.S. trade agreements have sold out American 
workers for corporate profits, and in particular the Trans-
Pacific Partnership would have helped offshore American jobs to 
countries that use child labor and deny workers the right to 
organize.
    So I am glad that the United States withdrew from TPP, and 
I am glad that the current U.S. Trade Representative, Katherine 
Tai, is committed to a worker-centric trade policy. But 
corporate lobbyists would like nothing better than to turn back 
the clock to the old failed trade policies.
    The administration recently announced plans to negotiate a 
new Indo-Pacific Economic Framework led by USTR and the 
Commerce Department. Now corporations are heralding this as a 
new trade deal that will be the second coming of TPP. And 
comments from Commerce Secretary Gina Raimondo raised real 
questions about whether she is putting workers first, or 
instead trying to help out giant corporations.
    Secretary Raimondo has bragged that this new agreement will 
be, and I quote, ``even more robust than the traditional free 
trade agreements.''
    Mr. Wessel, you chair a committee that advises the U.S. 
Government on labor issues in trade agreements. So I know you 
agree that the goal of U.S. trade negotiators should be to 
protect and create good American jobs.
    Would modeling this new framework on old, failed trade 
deals like TPP accomplish this goal?
    Mr. Wessel. TPP was unacceptable and is not the model for 
moving forward.
    Senator Warren. Well, I agree with you on this.
    Secretary Raimondo has also boasted that this new trade 
deal will be, quote, ``flexible and inclusive, allowing 
countries like Vietnam and Malaysia to sign up for some parts 
of the agreement but not others.''
    Now, Mr. Wessel, if this new trade deal is inclusive for 
countries that mistreat their workers, and flexible by allowing 
them to opt out of the requirements to improve their labor 
standards, is that going to help American workers?
    Mr. Wessel. It is only going to promote offshoring. And 
what we have said is, there should be no cherry-picking labor 
rights, and corporate accountability must apply to all modules.
    Senator Warren. I agree with you, Mr. Wessel. And now the 
Commerce Department has just put out a request for comments on 
its plans to negotiate key parts of this deal, including 
building on supply chain resiliency. But while Commerce lists 
nine priority issue areas, there is zero--zero--mention of 
workers' rights and worker protection.
    This is puzzling. I am pretty sure that workers are at the 
heart of our supply chain, making critical products from cans 
to food. So, Mr. Wessel, the U.S. clearly needs to build more 
resilient supply chains, but should we be locking ourselves 
into overseas supply chains rooted in places that use forced 
labor and suppress unions without any guard rails to raising 
their labor standards?
    Mr. Wessel. We need guard rails. We need to make sure that 
our critical needs are met here first. Resiliency to support 
our allies is fine, but again we need to make sure that our 
needs here are supported. I believe President Biden is leading 
in that direction.
    Senator Warren. Thank you very much. I appreciate that.
    You know, I have real concerns about this new Indo-Pacific 
Economic Framework, and I am calling on the administration to 
carefully consider its approach. It would be a huge mistake to 
listen to corporate lobbyists and negotiate a new trade deal 
that mimics TPP and that undercuts American workers. The Biden 
administration has promised to put workers at the center of its 
trade policy, and I want to hold them to that commitment.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Warren.
    Let's see. Senator Bennet, Senator Scott, and Senator Thune 
is here.
    Senator Thune?
    Senator Thune. Thank you, Mr. Chairman. And thanks for 
holding what I think is a very timely hearing. And before I ask 
questions, I just want to underscore the vital importance of 
having a Chief Ag Negotiator at USTR. Farmers, ranchers, and 
producers in South Dakota and across the country deserve the 
best representation possible on the global stage.
    The Biden administration has had more than a year to 
advance a Chief Ag Negotiator. If the administration is serious 
about helping American agriculture and American workers, it 
needs to stop dragging its feet and make filling this position 
a top priority.
    In year 2 of the Biden administration, the Indo-Pacific 
trade strategy appears, unfortunately, hollow. Trade Promotion 
Authority has lapsed. There have been non-meaningful market 
access initiatives in the region, and America's exporters are 
losing ground to competitors.
    Meanwhile, China recently joined the Regional Comprehensive 
Economic Partnership, the world's largest free-trade block, and 
now aspires to join the trade deal that America helped craft, 
but ultimately withdrew from, the TPP, or what is now known as 
the CPTPP. Without coincidence, of course, China is also 
becoming more aggressive militarily in the East and South China 
Seas.
    Ms. Shaw, if this lack of meaningful U.S. trade action 
persists, what impact will it have on our Nation's strategic 
and economic interests in the Indo-Pacific over the next 5 to 
10 years?
    Ms. Shaw. Thank you for the question. The results would be 
catastrophic, particularly if China does join the other 
regional trade agreement, the CPTPP. Part of the challenge that 
we are facing is that, while on the one hand we are spending 
trillions of dollars investing in the United States in some of 
our most critical sectors, if we are not doing anything 
offensively on the trade side, what we are doing here 
domestically is going to be inherently less competitive in 
third-country markets, and specifically the Indo-Pacific where 
we have strong national security interests and strong economic 
ones.
    We are ignoring half of the equation. And I think it is 
critical, both for our national security interests as well as 
our economic ones, that we come up with a comprehensive and 
offensive trade strategy. At the moment, we just do not seem to 
have one.
    Senator Thune. How would losing out on market access in the 
region impact American jobs here at home?
    Ms. Shaw. If American goods are less competitive, and 95 
percent of the world's customers live outside our borders, at 
some point we are not going to have anyone to sell our goods 
to. And that is really the problem.
    Senator Thune. So the Indo-Pacific Economic Framework is, 
arguably perhaps, a step in the right direction, but the 
proposal clearly does not seriously counter China or offer 
durable advancement of U.S. economic interests.
    In the IPEF, tangible benefits are off the table. Market 
access and enforceable commitments are not prioritized. And the 
process does not go to Congress for approval or review. A trade 
pillar on digital trade, forced labor, and trade facilitation 
is hardly a grand strategy.
    So, Ms. Shaw, let me ask again--I know you have covered 
some of this ground already--but how can the framework be most 
improved? And let me ask a follow-up so you can just--are there 
other trade initiatives in the region, such as CPTPP, that the 
U.S. should pursue instead of, or in tandem with, this one?
    Ms. Shaw. Thank you for the question. My strong view is 
that we should be pursuing a renegotiated and completely 
revamped CPTPP. Our CPTPP partners want us to be part of that 
agreement, and at the moment we have leverage to make the 
necessary changes that not only would advantage our national 
security interests, but would also advantage our economic 
interests. I think it is imperative that we put market access 
on the table, that we are tackling services, intellectual 
property, that we are moving forward in advancing the rules for 
state-owned enterprises. This is about the future of U.S. 
markets. And as I noted at the beginning of my comments, if all 
we are doing is investing here at home and not opening up 
export opportunities, we are missing the second half of that 
puzzle, and we are just going to be shooting ourselves in the 
foot long-term as we lose out on third-country market access 
opportunities.
    Senator Thune. Thank you.
    So using the Indo-Pacific Economic Framework to resolve 
nontariff barriers has the potential to help U.S. farmers and 
ranchers, especially as it relates to export markets for foods 
with common names such as parmesan and asiago. It can also help 
blunt the EU from gaining protection for geographical 
indications through trade negotiations.
    Ms. Lauritsen, how could the administration best preserve 
the rights of American food and beverage producers and reduce 
foreign tariffs in the framework?
    Ms. Lauritsen. Thank you, Senator. In my view, it is 
critical that the IPEF include market access to create 
incentives, to actually reach market-opening deals, and to 
achieve the types of things that you have just mentioned, 
commitments that protect the ability of us to sell cheeses with 
common names or getting agricultural biotechnology regulations 
that work for our corn and soybean exports.
    You need real, tangible results. You need incentives, and 
you need political will. And that really happens when there is 
an economic incentive in a negotiation to try and reach those 
deals.
    Senator Thune. Mr. Chairman, my time has expired. Thank 
you.
    The Chairman. I thank my friend from South Dakota. These 
are very important issues, and we look forward to working with 
him as we have done so often in the past on trade issues.
    I think Senator Daines is next.
    Senator Daines. Mr. Chairman, thank you, and thanks to the 
panelists today.
    I think it has been said a couple of times, but it is worth 
reemphasizing: 95 percent of the world's consumers live outside 
of the United States. Because of that, trade is essential, 
certainly for a State like Montana, as well as the entire 
country. It is about jobs, economic growth, the future. It is 
about kids and grandkids and access to these markets.
    I think I am one of the few Senators who actually spent a 
fair amount of time working on the ground in China, launching 
American brands once upon a time, so I saw this up close and 
personal.
    It is also important that we work with our allies to reduce 
unfair barriers to trade and ensure that our farmers and our 
ranchers and small businesses are able to compete on a level 
playing field at home and around the world, especially given 
China's growing economic and geopolitical influence. It is 
essential that we work with our allies and partners across the 
Asia-Pacific region.
    Last year, I traveled to India towards the end of the year 
and met with Commerce Minister Goyal. We were advocating then 
to reduce tariffs on Montana and U.S. ag, and we saw firsthand 
some of their leading technology companies. It is clear that 
India, I believe, is going to play an even larger role in the 
region for years to come, and that the U.S. should work to 
expand economic ties and consider formal negotiations with 
India, which presents an enormous opportunity for growth. It is 
the only other country that has a billion-plus in their 
population.
    As we think about our farmers long-term, especially 
Montana's pulse crop farmers--Montana is the leading producer 
of pulse crops in the United States, and India is the leading 
consumer in the world. We can think about other businesses that 
we can engage in with India, in addition to just the strategic 
regional and geopolitical influence of India as a counterweight 
to China's growing influence.
    Ms. Lauritsen, in your testimony you highlight India's high 
agricultural tariffs. How should the U.S. approach India and 
its many challenging and longstanding market access issues, 
whether it be on a bilateral or a multilateral basis?
    Ms. Lauritsen. Thank you, Senator, for that question. And 
in the last couple of years of my tenure at USTR, I actually 
was negotiating with India to try and actually accomplish those 
very things. They are tough negotiators. They protect their 
farmers vigorously. But there are opportunities. First of all, 
they have retaliatory tariffs still imposed on some of our food 
and agricultural products as a result of the 232 steel and 
aluminum restrictions. That hurts our exports, including on 
pulses. But there are opportunities, I think, to engage with 
them. It is likely kind of transactional, but you do not get 
anywhere if you do not sit down at the table and actually work 
through the issues to try and lower their tariffs--even to our 
levels would be a huge benefit to our exporters.
    We have a number of phytosanitary issues on wheat that 
could be resolved, for example. Or agricultural biotechnology, 
ethanol--there is a long list. But you have to be at the table, 
and you have to have political will and economic incentives to 
achieve it.
    Senator Daines. Thank you.
    I have been sitting here listening, and I know TPP has come 
up a fair amount back and forth. During my time in the Senate, 
I have been a supporter. In fact, I called on both President 
Trump and President Biden to reengage with the Trans-Pacific 
Partnership. In fact, if you remember, it was President Obama 
who was an advocate of TPP, working more with Republican 
Senators then. It was a unique kind of coalition to try to move 
forward on TPP. I think it is important, both for economic 
benefits as well as a more holistic strategy, to think about 
countering China.
    Ms. Lauritsen, how has withdrawing from TPP impacted U.S. 
ag exports and access to markets in the region?
    Ms. Lauritsen. So, because we are not a part of CPTPP, we 
are at an economic disadvantage for many products. While we 
have a partial agreement with Japan, we did not succeed in 
negotiating elimination of all tariffs going into Japan. So 
that needs to be done, and we are losing market share.
    With Vietnam, we also are at a significant disadvantage; 
for example, beef and pork in particular. So not being a 
partner, we are at a tariff disadvantage. Foreign buyers are 
going to buy based on price, and it is important that we have 
lower tariffs so that we can compete against Europe, compete 
against Australia and New Zealand and other countries.
    Senator Daines. Thank you.
    I have time for one more question. Ms. Llanso, you 
highlight many concerns about increasing digital 
authoritarianism around the world, particularly China and its 
model of Internet regulation. China is in the process of 
testing a digital yuan. While most countries that are looking 
at digital currencies are concerned about privacy implications, 
China's motivation stems in part from the desire to gain 
insight into the financial lives of its citizens.
    The question is, how could a push by the Chinese Government 
to spread the digital yuan outside of its own borders threaten 
human rights in neighboring countries around the world?
    Ms. Llanso. Yes, that is an excellent question, Senator 
Daines. I think the reach of China to be able to surveil the 
financial transactions and interactions of people across the 
region would only grow with the push to spread the digital yuan 
beyond its borders. And it just highlights the issue of the 
really important needs of security and privacy technologies for 
all financial transactions that happen in the region, including 
strong encryption and abilities to resist that kind of 
surveillance and censorship.
    Senator Daines. Thanks. My time is up.
    Mr. Chairman, thank you.
    The Chairman. Thank you. Before my colleague leaves, I want 
to thank him for wrapping up his questions with that focus on 
digital currency and encryption. I did that as well. And for 
those who are not aware, Senator Daines and I have worked 
together often on these issues, and I know we will be applying 
some of what we have learned to the Indo-Pacific issue as well, 
and I thank my colleague.
    All right; Senator Brown?
    Senator Brown. Thank you, Mr. Chairman. I am glad to see 
labor here for the discussion. This is a different President 
and a different chair of the committee, and I thank you for 
putting labor at the center of all of this.
    We want--and my question will be for Mr. Wessel--we want a 
worker-centered trade approach that creates good jobs and 
raises wages; that rebuilds our industrial base; that looks out 
for workers' health and safety, and the safety and cleanliness 
of our planet; and that improves labor rights worldwide, 
something we have not seen in the past in this committee or in 
an administration in my memory.
    We unite in wanting--and I appreciate Ms. Llanso's comments 
about that--we unite in wanting to counter China's labor and 
human rights abuses, and its cheating in the global economy. 
This committee, this administration, has put the world on 
notice. No more Trans-Pacific Partnership that ignores labor 
rights, as we saw in the last two administrations. Trade with 
the United States may be possible and will be encouraged, but 
under very different rules from the past. The rules in any 
agreement matter. They matter for union steelworkers in eastern 
Ohio, they matter for solar energy companies in northwest Ohio.
    I have asked the administration--and this was a great 
success, a bipartisan success, if you will--in the 
infrastructure bill for an equally robust Made in America 
economic framework. It includes infrastructure investments that 
we are about to implement.
    So my question, Mr. Wessel, is, speak to what you would 
like to see the administration implement before, during, and 
after any trade agreement that we pass.
    Mr. Wessel. Thank you for your question, and thank you for 
your leadership on these issues. First of all, going to your 
point, this President has said that before he engages in new 
trade negotiations, he is going to build back the U.S. economy. 
And that is what he is trying to do. He did it with the 
infrastructure plan that is now being rolled out. He has been 
working with the Congress on the legislation that is now going 
through both the House and the Senate and is ready for 
conference. Hopefully, it includes the provision that you and 
Senator Portman authored, Leveling the Playing Field 2.0. But 
we first have to rebuild our economy to make sure that we are 
approaching all of this from a position of strength.
    Second, we need to have a better idea of what the 
administration wants to achieve with IPEF. It is still ill-
defined, and Congress, along with other stakeholders, have to 
be at the table, and they need to be real partners in all of 
this.
    And then, whatever provisions we are able to achieve--
hopefully with your help, Senator Wyden's, and the rest of the 
committee--they have to be properly implemented, monitored, and 
enforced. Too often we sign agreements and then move on to the 
next one, without ensuring that we achieve the results that had 
been expected.
    Senator Brown. Thank you, Mr. Wessel.
    Talk for a moment about labor enforcement. I thank Chair 
Wyden for mentioning it earlier in his comments. I am thankful 
to be associated with the chair on Brown-Wyden under the USMCA 
and the difference--we took another corporate trade agreement 
and dramatically changed the USMCA with Brown-Wyden and what 
that will mean.
    We have seen two elections in Mexico where workers voted 
overwhelmingly for independent unions, not the company unions 
in the past that we saw in Mexico and that we see around the 
world. These two elections--the construct we built is going to 
help workers on both sides of the border in the long run.
    Our approach on trade policy in the Asia-Pacific region 
requires that same buy-in from the people who make this country 
work.
    So, Mr. Wessel, what guidance would you recommend to ensure 
that labor provisions included in the Indo-Pacific Economic 
Framework are actually enforceable, as they have been in 
Mexico?
    Mr. Wessel. Again, thank you--not only thank you for your 
question, but for the leadership that you and Chairman Wyden 
had on putting together the rapid response mechanism that is 
having a fundamental impact on labor rights in Mexico.
    You mentioned the two cases. Subsequent to that, the 
workers at the Mazda facility rejected a protection contract 
that their protection union was trying to force on them. So it 
is a model going forward.
    But that model was also built on all the work that you and 
so many others engaged in to make sure that the standards that 
are being enforced are worthy of all of our efforts. And that 
is a critical issue for the Indo-Pacific. We saw inadequate 
labor consistency plans in the TPP. Vietnam was a perfect 
example. So we must not only have the right standards, and we 
must push forward, but we need efforts like yours and Senator 
Wyden's to promote the right kind of enforcement mechanisms, 
and engage in new implementation monitoring and enforcement 
efforts that support workers around the globe.
    Senator Brown. Thank you, Mr. Wessel. And thanks to the 
whole panel.
    Mr. Chairman, thank you.
    The Chairman. I thank my colleague. And what is striking, 
and it is so fitting that Senator Brown is--I am going to ask 
you one more question, but Senator Brown is officially ending 
the first round. We know that different parts of the country 
for a lot of years had differences of opinion. In other words, 
the Midwest looked at these issues differently than the Pacific 
Northwest did. And what Senator Brown has been willing to do is 
to make, in a very transparent way, specific ideas that could 
bring the two regions together.
    In my part of the world, where our backyard is practically 
the Pacific region that we are talking about, people care 
deeply about this issue, and they know that a lot of trade jobs 
pay better. But as Senator Brown has said, it does not matter 
unless you have strong trade enforcement.
    So before you came, Senator Brown, Mike Wessel said we are 
going to try to bring the same kind of approach to enforcement 
to this new area. Now it is different. It is a different kind 
of issue. Each one of these trade debates is different. But the 
principle you brought to this committee, which is that trade 
enforcement is important to workers in every nook and cranny of 
this country, is one I do not think we are going to turn our 
back on, and I thank you for it.
    All right, let's wrap up with one question with respect to 
climate, if I might. And I think I am going to ask you about 
this, Ms. Lauritsen, because I know you have had an interest in 
these issues. And it strikes me that the new approach we are 
talking about with respect to the Indo-Pacific is one that 
would give us a kind of less structured, perhaps more nimble 
approach where we could really get at this climate issue that 
is forgotten in too many instances.
    I mean, climate and reducing carbon is front and center to 
the quality of life and livability in our country and in the 
Indo-Pacific region. And it seems to me the project is an 
opportunity to pull solar panel production away from China's 
Uyghur region and bring an innovative approach to climate.
    So I think for my last question, tell me what you think of 
that. Are there opportunities here to make real progress with 
respect to tackling climate change that are born out of the 
fact that you do not have quite so much of the bureaucratic 
kind of set of requirements that almost tie our hands when what 
we really need is fresh thinking? What do you think?
    Ms. Lauritsen. Well, Senator, I actually agree with you. I 
do think that this provides an opportunity, because the more 
you get other countries on board with even general philosophies 
but also bringing that concreteness to actual practices--you 
know, in the area I know of farming, it is promoting resilient 
agriculture, being able to promote technologies that can help 
alleviate drought, whatever it might be, reducing the use of 
greenhouse gas emissions on the farm.
    This is an opportunity, but again, you have to be at the 
table, and you have to have the incentives to bring these other 
countries along. They may not be ready to sign on the dotted 
line right away, but you bring them along. You work with them. 
You help them. And that is an important way forward.
    The Chairman. The three of you have been very valuable, and 
we thank Mike Wessel, who is, I think, still listening online. 
And I am just going to leave with one thought, and you all will 
be liberated to get some lunch and go on about your business.
    We have talked about big issues, hugely important issues 
relating to freedom and censorship in digital trade. We 
obviously keep coming back to more good-paying jobs in a 
variety of sectors, and that involves a whole host of 
questions, supply chain issues obviously being front and 
center. And then we basically closed on the issue of climate, 
and that perhaps the kind of structure for this upcoming Indo-
Pacific discussion may make it easier to tackle climate change. 
And this committee is very proud of the fact that we basically 
passed legislation to transform the Federal tax code. In this 
committee, we took provisions on energy and threw them in the 
garbage can and said, for the future, we are going to tie 
reducing carbon emissions to tax savings.
    So we are capable of looking at these issues in a different 
way, and you have given us a lot of good ideas. The key to 
getting it done, though, in my view--and you three touched on 
it with Mike Wessel as well--is having more open and 
transparent discussions.
    I do not know if you all followed it, but the China 
legislation was really up against it for a number of days when 
we were trying to find a path forward on a bipartisan bill. The 
Majority Leader, Senator Young, Senator Crapo, and I spent a 
lot of time talking with both sides of our dais with respect to 
the trade provisions. And when we got down to trying to advance 
the legislation, we offered a bipartisan amendment that had an 
enormous amount of debate among the members of this committee, 
and it won 91 to 4. And then the legislation was on its way, 
and we are getting ready to work with the House, and I think it 
is going to be a bipartisan bill in the end.
    And it really stems from the fact that we had the chance in 
this committee to talk about various ways to craft legislation 
in the hugely important area of trade that you are talking 
about today. And thank you for giving us a lot of good ideas 
for going forward. I think everybody understands trade debates 
are not for the faint-hearted. People have really strong views, 
and they often come in with a great interest in keeping their 
view and defeating the other person's view.
    Senator Brown just talked about how we broke new ground in 
terms of labor enforcement. We can break new ground on climate. 
You three and Mike Wessel have given us a lot of good ways to 
proceed. We thank you.
    And with that, the Finance Committee is adjourned.
    [Whereupon, at 12:37 p.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


                Prepared Statement of Hon. Mike Crapo, 
                       a U.S. Senator From Idaho
    Thank you, Mr. Chairman. First of all, thank you for holding this 
hearing today. We are in agreement on the importance of strengthening 
our economic and trade ties, particularly in the Indo-Pacific area, but 
also across the globe.

    Vibrant economic and trade links are an essential part of building 
confidence, trust, and cooperation in different areas of the world and 
at different levels of geo-political engagement. Putin's invasion of 
Ukraine makes it abundantly clear that the United States must increase 
its focus on strategic trade engagement and, as part of that, 
reestablish its leadership on trade relations in the Indo-Pacific 
region.

    For the first time, in January of 2022, the United States exported 
more liquefied natural gas (LNG) to Europe than Russia. Although there 
is much more we can do to expedite U.S. energy exports, our increased 
trade strengthened our allies' ability to withstand Russian aggression.

    Critically, the Department of Energy must still sign off on any LNG 
export to any country with which we lack a free trade agreement, 
causing uncertainty for many of our partners. This is just one example 
of why we need more trade agreements with our partners--and the Indo-
Pacific is the one region where we need them ASAP.

    The Indo-Pacific is a dynamic region, perhaps the key to U.S. 
economic prosperity. Over two-thirds of all global economic growth in 
the last 5 years took place in the Indo-Pacific. The GDP of just the 11 
countries in the Comprehensive and Progressive Trans-Pacific 
Partnership (CPTPP) is over $10 trillion.

    Regrettably, we are losing ground in the Indo-Pacific. Behind me 
are two maps comparing whether China or the United States is the more 
important trade partner for a particular country. The 2002 map shows 
the United States as the more significant trading partner for most 
Indo-Pacific countries. The 2018 map shows the relationship turned 
upside down, in China's favor.

    Even more regrettably, the situation with China in the Indo-Pacific 
region is likely to become worse--if not entrenched--unless we change 
course. The Biden administration failed to initiate any new trade 
negotiations last year, but China helped finalize the trade agreement 
it backs. Known as the Regional Comprehensive Economic Partnership, 
RCEP, it lacks any disciplines on state-owned enterprises, labor, or 
the environment, and worse, it essentially endorses China's limited 
intellectual property protections. With RCEP having only entered into 
force this January, China is already better positioned than the United 
States in most of our Asian partners' markets.

    On top of that, China is now pushing to join CPTPP, which would 
leave the United States even further behind in the Indo-Pacific region. 
To reestablish U.S. economic momentum right now, the Biden 
administration must reverse course and chart an ambitious trade policy.

    Although the administration announced that it seeks to pursue an 
Indo-Pacific Economic Framework, or IPEF, it unfortunately indicated 
that this framework will not include any market access component. 
Certain aspects of what I am hearing about IPEF are troubling--
including the notion that it could be used to advance the tax deal the 
administration negotiated at the OECD that would make the U.S. less 
competitive, even before Congress agrees to accept such an outcome for 
the United States.

    The administration's present position of leaving out a market 
access outcome makes no sense. Economically, our workers, businesses, 
and farmers will lose out on important opportunities if we stay on the 
sidelines. America's leading innovators will also be undermined if we 
do not lay down a foundation for strong intellectual property rights. 
In fact, one way to redress the economic impact of the administration's 
current misguided inflationary policies is to promote market access.

    Export-oriented jobs typically pay 16 percent more on average in 
the manufacturing industries and 15.5 percent on average in the 
services industries. We must strategically deepen our trade ties to 
ensure we and our allies have secure access to energy, critical 
minerals, and sensitive technologies. We must also develop rules for 
digital trade that enshrine openness and freedom. If we do not write 
the rules, China will.

    Accordingly, this hearing is an excellent opportunity for the 
Finance Committee to help chart the course the United States must take 
to have a strategic and sensible trade policy in the Indo-Pacific.

    Mr. Chairman, thank you for organizing this hearing. I look forward 
to the testimony from our witnesses.

                                 ______
                                 
       Prepared Statement of Sharon Bomer Lauritsen, Principal, 
                         AgTrade Strategies LLC
    Chairman Wyden, Ranking Member Crapo, and distinguished members of 
the committee, thank you for the opportunity to appear before you today 
to share my thoughts on the challenges and opportunities for America's 
farmers and ranchers in the Indo-Pacific region. Key to enhancing the 
sustainability of American farms and ranches is investing time, energy 
and ambition to negotiate new trade agreements to increase our 
competitiveness and open export markets in the Indo-Pacific, and 
particularly Asia.

    As we witnessed in 2018 when U.S. agricultural exports to a major 
market were severely disrupted, not only farmers, ranchers, businesses, 
and their workers were hurt, but taxpayers as well when the government 
provided support for those businesses to stay afloat. In 2017 before 
the trade war, nearly 14 percent of U.S. agricultural exports were 
concentrated in China. Despite calls at that time to diversity U.S. 
export markets, last year in 2021, we were up to nearly 19 percent or 
$33 billion of U.S. agricultural exports concentrated in China. 
Clearly, China is and will remain a critically important export market 
for U.S. food and agriculture. But, to enhance market stability and 
resiliency in our food systems, we need to diversify our agricultural 
export markets. And there is no better place than to focus on the Indo-
Pacific region.

    With growing populations and fast-growing economies, Indo-Pacific 
economies are attractive markets for the types of food and agricultural 
products that the United States produces--whether it be apples, corn, 
soy, ethanol, cotton, rice, potatoes, wheat, beef, pork, poultry, 
dairy, or the thousands of other products grown on America's farms and 
ranches and produced in our food manufacturing facilities. But the 
unfair barriers to U.S. agricultural exports in the region are many. 
Just a few examples are:

        Indonesia's import restrictions on feed corn and apples;
        Thailand's ban on imports of U.S. fresh and frozen pork;
        India's restrictions on ethanol and products derived from 
agricultural biotechnology;
        Vietnam's animal feed certification requirements and its 
longstanding ban on certain offal; and
        The Philippines restrictive sanitary and phytosanitary 
measures for a range of products.

    The barriers, however, are also tariff-related. For example,

        Thailand's average bound agricultural tariff is 39.1 percent 
and its applied tariff in 2021 was 29.3 percent;
        Vietnam's average bound agricultural tariff is 18.8 percent 
and its applied tariff is 16.5 percent; and
        India has one of, if not the highest average bound 
agricultural tariffs in the world at 113 percent and its applied tariff 
is 34 percent.

    Even if non-tariff barriers are resolved, U.S. agricultural exports 
are also often challenged with being competitive in certain markets, 
because our products face higher tariffs in countries that already have 
preferential tariff agreements with U.S. competitors, such as 
Australia, New Zealand, or the European Union.

    We know that preferential trade agreements benefit our farmers and 
ranchers. Thanks to our free trade agreements, Canada and Mexico have 
long been two of our three largest export markets. U.S. food and 
agricultural exports to Australia increased 156 percent since 
implementation of our FTA in 2005. U.S. agricultural exports to 
Singapore increased nearly 400 percent since implementation of that FTA 
in 2004. More recently, U.S. agricultural exports to South Korea have 
increased 54 percent since 2012, and that FTA is still in the process 
of phasing out tariffs.

    Let's compare those growth numbers to overall U.S. agricultural 
export growth over the past 10 years of 24 percent--both to the world 
as well as to 15 non-FTA countries in the Indo-Pacific region,\1\ and 
that is with a banner export year in 2021. The difference in U.S. 
agricultural export growth rates between countries with U.S. FTAs and 
those without is unmistakable.
---------------------------------------------------------------------------
    \1\ Brunei, Burma, Cambodia, India, Indonesia, Japan, Laos, 
Malaysia, Mongolia, New Zealand, Philippines, Singapore, Taiwan, 
Thailand, and Vietnam. Source: USDA/GATS.

    Other countries are not standing still. Countries with which U.S. 
farmers and ranchers compete have proactive policies to negotiate free 
trade agreements. The European Union is negotiating with the 
Philippines, Indonesia, and Australia. Australia already has agreements 
with ASEAN countries and is trying to negotiate with India. 
Importantly, the Regional Comprehensive Economic Partnership is being 
implemented by 10 countries in the region, although it may not be as 
comprehensive as some of the United States' trade agreements. On top of 
that, the Comprehensive and Progressive Trans-Pacific Partnership 
(CPTPP), to which the United States is not a party currently, is 
lowering tariffs among eight countries. These preferential tariff 
agreements put America's farmers, ranchers, agribusinesses, and their 
---------------------------------------------------------------------------
workers at a competitive disadvantage in these growing markets.

    The administration's recently announced Indo-Pacific Economic 
Framework (IPEF) provides an opportunity to create a fair and level 
playing field for our exports in the region. At this time, however, 
little public information is available as to what is really envisioned 
by the administration. USTR's recent Federal Register notice identifies 
agriculture as part of the IPEF, but unfortunately emphasizes that it 
is not seeking to address tariff barriers at this time. In USTR's 2022 
Trade Policy Agenda issued earlier this month, the administration 
provides very general concepts for IPEF, for example: (1) sustainable 
food systems and science-based agricultural regulation; (2) 
transparency and good regulatory practices; and (3) trade facilitation. 
Science-based agricultural regulation, transparency, good regulatory 
practices, and trade facilitation are standard approaches in U.S. trade 
negotiations, but will they really open new markets for America's 
farmers and ranchers?

    To have a meaningful impact for fair and resilient trade for U.S. 
food and agricultural products, the following elements should be 
considered for IPEF:

    (1) Enhanced Sanitary and Phytosanitary (SPS) and Technical 
Barriers to Trade (TBT) Rules: Several of the Indo-Pacific countries 
have already signed onto the SPS- and TBT-plus rules of the CPTPP, 
which are similar to the SPS and TBT provisions of the U.S.-Mexico-
Canada Agreement. Since the administration has already identified 
science-based agricultural regulation as one pillar of IPEF, basing 
IPEF commitments on CPTPP or USMCA is logical. Some least developed 
countries may need additional assistance to build their SPS and TBT 
regulatory infrastructure, but having a harmonized approach for strong, 
science-based and transparent food safety, plant health and animal 
health rules can greatly facilitate trade.

    Another element of this pillar could be to gain commitments from 
trading partners to not create new unwarranted trade barriers in the 
future. U.S. negotiators have been successful in getting countries to 
agree to recognize the U.S. food safety system, for example, and to 
accept U.S. Department of Agriculture export certificates. These types 
of specific commitments help to provide a predictable business 
environment and facilitate trade into the future.

    (2) Resolving Actual Non-Tariff Barriers: Establishing strong SPS, 
TBT and other rules, such as transparent and functioning import 
licensing practices, however, is not enough. Using IPEF to actually 
resolve unwarranted non-tariff barriers is important up front so that 
U.S. farmers and ranchers can actually realize improved trading 
conditions in the near term. U.S. negotiators have been successful 
using trade agreement negotiations to resolve long standing barriers. 
For example, the United States negotiated with Australia to open its 
market to U.S. cooked and processed pork in 2005, now about a $200 
million market. Mexico eliminated all of its BSE-related barriers to 
U.S. beef in 2012, when it wanted to join the Trans-
Pacific Partnership.

    A couple of examples of the types of barriers that need focused 
negotiations are non-functioning dairy facility registration systems in 
Indonesia, and burdensome and restrictive import licensing regimes in 
several southeast Asian countries. In addition, negotiating permanent 
access in our export markets for U.S. foods with common names (e.g., 
asiago, parmesan) would help blunt the EU gaining protection for a 
large number of geographical indications through its trade 
negotiations. While the U.S. Department of Agriculture, the Office of 
the U.S. Trade Representative, and U.S. regulatory agencies work every 
day to resolve barriers, prioritizing this work during a trade 
agreement negotiation, where incentives and leverage may exist, can 
reap real results.

    (3) Reduce Agricultural Tariffs: As noted above, many of the Indo-
Pacific countries have high most-favored nation (MFN) agricultural 
tariffs, compared to the U.S. average agricultural applied tariff of 
about 5 percent. As U.S. competitors gain preferential tariff access in 
export markets, U.S. exporters lose out. For example, Vietnam has a 10-
percent tariff on U.S. apples, but a zero tariff on New Zealand apples 
since 2019. U.S. apple exports have dropped 40 percent to Vietnam, 
while New Zealand apple exports to Vietnam have increased 76 percent. 
U.S. french fries face a tariff of 12 percent into Vietnam, and yet EU 
fries will face no tariffs by 2025. I recognize the legal limits that 
the administration may have in negotiating U.S. tariffs without Trade 
Promotion Authority (TPA), but even if Congress does not pass TPA in 
the near term, opportunities exist to negotiate for our trading 
partners to lower MFN tariffs or to lower tariffs to U.S. levels. 
Vietnam, for example, recently temporarily lowered its MFN applied 
tariffs for pork, corn, and wheat to align the tariffs affecting U.S. 
products with those provided preferentially to other countries. In 
2020, with that temporary tariff reduction, U.S. pork exports increased 
191 percent over 2019. When the tariff reduction lapsed, U.S. pork 
exports decreased 74 percent in 2021, losing sales to the European 
Union and Russia, which have FTAs with Vietnam.

    In addition to MFN and applied tariff barriers, U.S. exports of 
almonds, walnuts, apples, chickpeas, and lentils still face retaliatory 
tariffs imposed by India in 2019 due to U.S. section 232 tariffs. 
Exempting agricultural products from a dispute unrelated to agriculture 
would provide welcomed relief to U.S. agricultural exporters.

    (4) Common vision on agricultural sustainability, sustainable food 
systems, and food security. International trade is integral to 
supporting agricultural sustainability, sustainable food systems, and 
food security. Secretary of Agriculture Tom Vilsack is taking important 
steps in framing these issues and building coalitions internationally 
for a common approach. IPEF can be an important forum to build on this 
work and support food and agricultural trade among countries. Aligning 
like-minded countries in these areas can also support science-based 
decision making in the Codex Alimentarius Commission, World 
Organization for Animal Health, and the International Plant Protection 
Convention. To advance sustainability, supporting the use of new 
agricultural technologies with appropriate regulatory systems would be 
of benefit to farmers throughout the Indo-Pacific region. For example, 
several countries in the Indo-Pacific region have either no functioning 
regulatory approval system for products derived from agricultural 
biotechnology or have cumbersome and slow systems. With the advent of 
gene editing in the past several years, ensuring that countries allow 
the import of these new crops becomes increasingly critical for a 
sustainable and resilient trading system.

    (5) Inclusion of as many countries as possible: International trade 
is one element in building stronger foreign relations in the Indo-
Pacific region. If countries want to be a part of the broader Indo-
Pacific strategy, they then should also be a part of the IPEF. If a 
country is concerned about meeting the obligations of SPS-plus rules, 
for example, negotiators can be creative to find ways to bring them 
along. IPEF should bring as many countries together as possible, since 
the more inclusive the IPEF is, the stronger our economic ties and 
foreign policy objectives will be in the region.

    (6) Enforcement: An agreement is only as good as it is implemented 
and enforced. For IPEF to have any meaning or real results, provisions 
need to be enforceable. Enforcement should emphasize bilateral dialogue 
to resolve disagreements, but timely and straight forward dispute 
settlement mechanisms, including mediation, should be a part of any 
agreement. Of course, USTR will then need to do the follow-on work to 
actually enforce the agreement.

    I have traveled to nearly every U.S. State and am always awed by 
the breadth and scope of American agriculture. With more than 20 
percent of American production being exported, our rural communities in 
all 50 States depend on finding strong, stable, and predictable 
markets. U.S. trade agreements do just that, and I believe that with 
creative thinking and ambition the Indo-Pacific Economic Framework can 
also have economically meaningful results for a sustainable future.

    Thank you.

                                 ______
                                 
      Questions Submitted for the Record to Sharon Bomer Lauritsen
                 Questions Submitted by Hon. Mike Crapo
    Question. Asia is a key export destination of the success of 
Idaho's farmers, particularly our dairy, wheat and potato farmers. 
Oddly, U.S. French fries face a tariff of 12 percent into Vietnam, and 
yet EU-produced fries will face no tariffs by 2025. In short, producers 
in Idaho are losing ground because the U.S. is simply not negotiating 
trade agreements, and I imagine the rest of the country is losing as 
well.

    Can we achieve successful agricultural market access in the Indo-
Pacific region without addressing foreign tariffs?

    Idaho's farmers are also well aware that protectionist measures 
disguised as food safety measures are a major impediment to 
agricultural trade.

    Do you think it makes sense to impose WTO obligations that ensure 
such measures are based on science, in regional trade agreements, to a 
framework like the IPEF?

    Answer. To achieve meaningful market access, U.S. agricultural 
exports need to be competitive in export markets, importantly in terms 
of price. Key to competing on price is the cost of tariffs. While a 
market may be opened with the elimination of a non-tariff barrier, if a 
U.S. exporter is at a price disadvantage because of unequal tariffs 
with his or her competitors, the U.S. exporter will not achieve 
successful market access. With Indo-Pacific countries increasingly 
entering into preferential tariff agreements with U.S. competitors, to 
compete in the Indo-Pacific region and achieve successful market 
access, the United States therefore would need to address high foreign 
tariffs facing U.S. food and agricultural exporters.

    While countries likely to be involved in the Indo-Pacific Economic 
Framework are all members of the World Trade Organization and already 
obligated to abide by its agreements, particularly the WTO SPS 
Agreement and TBT Agreement, it does make sense to include such 
obligations as well as enhancements and elaboration of those WTO 
obligations in regional trade agreements. The WTO SPS and TBT 
Agreements were written and agreed to nearly 30 years ago, and 
governments and the private sector have learned how those agreements 
have worked, and where they could be improved. Regional trade 
agreements provide that opportunity to make such improvements as the 
United States achieved in the United States-Mexico-
Canada Agreement. In fact, several countries in the Indo-Pacific region 
have already agreed to SPS and TBT ``plus'' commitments in the 
Comprehensive and Progressive Trans-Pacific Partnership.

    Question. Inasmuch as the administration's proposed IPEF may 
include what it describes as ``binding rules'' is positive, 
particularly if those rules extend to digital trade and agricultural 
market access. The U.S. ensures that its free trade agreement rules are 
binding because it enforces the rules through dispute settlement 
provisions and application of tariff suspension benefits.

    Are ``binding'' rules possible in an IPEF, if it lacks a dispute 
settlement mechanism?

    Answer. Without the ability to resolve disputes and enforce a trade 
agreement, ``binding'' rules would not then seem to be actually 
binding. Dispute resolution or dispute settlement can certainly take 
different forms, but if rules are to be binding some sort of dispute 
settlement mechanism is needed. It also requires governments to 
actually use the mechanism to resolve the disputes.

                                 ______
                                 
              Question Submitted by Hon. Thomas R. Carper
    Question. As the chairman of the Committee on Environment and 
Public Works, I have a keen interest in the link between trade policy 
and the environment. Building a strong economy can--and should--include 
protecting our environment and addressing climate change. That is why I 
believe it is crucial for us to include robust environmental standards 
in our trade agreements.

    What opportunities exist to promote environmental conservation and 
sustainability as we engage with our allies in the Indo-Pacific region?

    Answer. From an agricultural perspective, international trade is a 
one key element to enhancing sustainability. For example, crops should 
be grown where they are least resource intensive and then be able to be 
imported and exported without unnecessary trade barriers. I believe 
that environmental conservation and sustainability specifically can be 
promoted with allies in the Indo-Pacific region. First, depending on 
the partner country, this could come in the form of research 
cooperation; technical assistance to promote production best practices; 
sharing of tools to implement improvements for water and energy usage, 
food security, or reduced greenhouse gas emissions; and supporting 
profitability in farm income. Second, trade agreements, whether 
bilateral or multilateral, should allow for a farmer's voluntary use of 
conservation programs and prohibit discrimination based on how 
sustainability and conservation objectives are achieved. Third, the 
United States could also look to build support in the Indo-Pacific 
region for conservation and sustainability objectives that are then 
carried into plurilateral and multilateral discussions, supporting 
widely accepted principles that measures affecting trade should be 
based on scientific evidence, linked to legitimate objectives, and be 
no more trade restrictive than necessary. A fourth element in 
agricultural production would be acceptance of new technologies that 
improve conservation and sustainability and ensuring Indo-Pacific 
countries have science-based, transparent and functioning regulatory 
systems to allow technology adoption.

                                 ______
                                 
                Question Submitted by Hon. Bill Cassidy
    Question. You mentioned in your testimony that India has amongst 
the highest bound tariffs of any country in the world. I agree that 
there is a huge need for new market access into these countries and 
it's difficult for the U.S. to offer much in the way of tariff relief 
for imported products without TPA. So looking at what agricultural 
products Louisianans would like to ship more of to the Indo-Pacific 
region, rice and seafood come to mind. Unfortunately, both of those 
sectors are also historically and culturally sensitive within the Indo-
Pacific markets. If the administration chooses to pursue market access 
as part of the Indo-Pacific talks, do you think there's likely to be 
positive outcomes for those Louisiana commodities?

    Answer. Negotiations to open export markets for import sensitive 
agricultural products are never easy; but with an assertive trade 
policy that achieves improved market access through elimination or 
reduced tariffs for all products--both import and export--positive 
outcomes can be achieved, including for products such as rice and 
seafood. Getting such improved access, however, is likely to only be 
achieved in a comprehensive trade agreement, if the other country gets 
important benefits in return, such as improved tariff market access 
into the United States, which would require Trade Promotion Authority 
being approved by Congress.

                                 ______
                                 
             Prepared Statement of Emma Llanso, Director, 
      Free Expression Project, Center for Democracy and Technology
    Chairman Wyden, Ranking Member Crapo, and members of the committee, 
thank you for the opportunity to testify before you today about the 
opportunities for advancing digital rights and fostering robust digital 
economies through strategic trade engagements in the Indo-Pacific 
region. My name is Emma Llanso, and I am the director of the Free 
Expression Project at the Center for Democracy and Technology (CDT), 
where I have worked for more than 12 years to promote law and policy 
that support Internet users' rights to freedom of expression, access to 
information, and privacy in the U.S., Europe, and around the world.

    CDT is a nonpartisan nonprofit 501(c)(3) charitable organization 
dedicated to advancing civil rights and civil liberties in the digital 
world. Headquartered since 1994 in Washington, DC, and with a growing 
office in Brussels, Belgium, CDT works to ensure that human rights and 
civil liberties are at the forefront of policy debates around the 
Internet and emerging technologies, and to advance policy solutions 
that sustain an open, interconnected Internet that supports people's 
enjoyment of their human rights.

    So I am grateful for the committee's focus on the promises and 
challenges in the digital sphere that will arise as the United States 
pursues closer trade relations in the Indo-Pacific. Over half of the 
world's young population lives in the Indo-Pacific region, which makes 
up 60 percent of the global GDP and nearly two-thirds of global 
economic growth.\1\ It accounts for a little over half of the world's 
Internet users,\2\ and Internet use in the Indo-Pacific Region is 
expected to grow to up to 3.1 billion users by 2023.\3\
---------------------------------------------------------------------------
    \1\ White House, Indo-Pacific Strategy of the United States 4-5 
(February 2022), https://perma.cc/7PSM-QDY2.
    \2\ Trisha Ray et al., The Digital Indo-Pacific: Regional 
Connectivity and Resilience, QuadTech Network at 1 (February 2021), 
https://perma.cc/BPL6-9WW6.
    \3\ Cisco, Annual Internet Report 3 (2020), https://perma.cc/9TJA-
MJ6Z.

    There is an urgent need to counter the authoritarian model of 
Internet regulation promoted by the Chinese Government, which threatens 
human rights and impedes the development of an open digital economy. 
Indeed, there are an alarming number of recent laws and legislative 
proposals across the Indo-Pacific region that seek to control speech 
and access to information, subject Internet users to surveillance, and 
---------------------------------------------------------------------------
give state authorities control over Internet infrastructure.

    The U.S. has the opportunity, including through the Indo-Pacific 
Economic Framework (IPEF) discussions, to promote a rights-respecting, 
multistakeholder approach to Internet governance that ensures the 
participation of civil society and technical experts in the development 
of technology policy and prioritizes maintaining an open, 
interconnected Internet in the region and worldwide. It should promote 
the rule of law and seek commitments to uphold international human 
rights, which are vital to countering digital censorship and 
surveillance practices, and which in turn benefits the economy. Online 
service providers and other businesses need the legal certainty that 
comes from the rule of law in order to operate globally. When national 
regulations comply with international human rights obligations, they 
both protect people's rights and bring economic benefits by more 
closely harmonizing regulations across borders. The U.S. should build 
on existing commitments to digital rights, including through the 
Freedom Online Coalition,\4\ and secure additional commitments to 
refrain from imposing Internet shutdowns, reject extralegal censorship, 
limit the use of surveillance technologies, and ensure access to end-
to-end encrypted services.
---------------------------------------------------------------------------
    \4\ See Freedom Online Coalition (last visited March 12, 2022), 
https://perma.cc/27Z8-PLXK.

    The U.S. should also promote opportunities for shared learning 
across governments, and with the involvement of human rights advocates, 
technical experts, and other civil society representatives, especially 
around emerging issues, including artificial intelligence. The IPEF 
process should coordinate with the variety of such learning and 
information-sharing forums that already exist across the U.S. 
Government, including the EU Technology Trade Council and the Freedom 
---------------------------------------------------------------------------
Online Coalition.

    Finally, the U.S. should recognize that nations sometimes have 
legitimate concerns that may impel them to adopt laws that threaten 
human rights, such as data and personnel localization mandates and 
requirements to undermine encryption. For the U.S. to successfully 
promote the free flow of data, and reject overly restrictive national 
data protection laws that can serve as vehicles for censorship and 
surveillance, other nations must be able to have confidence that, for 
example, their citizens' data will be protected from corporate and 
government abuses when sent to the U.S.
                  countering digital authoritarianism
    This committee is already familiar with the threat of digital 
authoritarianism presented by China's model of Internet regulation. 
China's Government uses a variety of technical and legal practices to 
exert control over the Internet and the Chinese populace.\5\ China 
engages in direct digital censorship, including through Internet 
shutdowns and through its decades-long project to build a ``Great 
Firewall'' that blocks outside information sources and enables the 
Chinese Government to impose strict domestic censorship policies. China 
also censors information through indirect means, including obligations 
for technology companies to store data within the country, to enable 
government access to user data.\6\ Such requirements discourage foreign 
service providers from making information available in the country, and 
the threat of surveillance can exert a chilling effect on users. The 
Chinese Government is notorious for its mass and discriminatory 
surveillance of the population, particularly of the Uyghur community in 
Xinjiang province.\7\ A lack of respect for human rights and weak rule 
of law in China mean that it is extremely difficult for U.S. companies 
to operate responsibly in the country,\8\ which has only further 
cemented the Chinese Government's grip on its domestic communications 
network.
---------------------------------------------------------------------------
    \5\ See United States International Trade Commission, Foreign 
Censorship, Part 1: Policies and Practices Affecting U.S. Businesses 
(February 2022), hereinafter ``U.S. ITC report,'' https://perma.cc/
W7KK-XGBK.
    \6\ Id. at 51.
    \7\ Human Rights Watch, China's Algorithms of Repression: Reverse 
Engineering a Xinjiang Police Mass Surveillance App (May 1, 2019), 
https://perma.cc/MG86-67B3.
    \8\ Global Network Initiative, The Operation of the GNI Principles 
when Local Law Conflicts with Internationally Recognized Human Rights 
(last visited March 13, 2022), https://perma.cc/5JJA-NZ6C.

    Unfortunately, the past 3 weeks have provided a stark example of 
the threats to human rights from digital authoritarianism, in the 
context of the Russian Government's invasion of Ukraine. Bolstered by 
laws that give the government broad censorship and surveillance powers 
and that require foreign tech firms to locate personnel and data within 
the country, the Russian Government has sought total control of the 
Russian people's access to information about the war the government is 
conducting.\9\ The Russian Government has throttled and ultimately 
blocked access to social media services that dared to attach fact-
checks to state propaganda,\10\ and has passed a new ``fake news'' law 
that prohibits anyone from ``knowingly disseminating false 
information'' about Russia's military, which is understood to include 
referring to its actions in Ukraine as an ``invasion.''\11\ As a 
result, many media outlets have left the country, for fear of the 
safety of their personnel on the ground, and many online service 
providers have shuttered their services or are blocking access by 
Russian users, leaving the Russian people with few information 
alternatives to state propaganda and strengthening the government's 
control.\12\
---------------------------------------------------------------------------
    \9\ Human Rights Watch, Russia: Growing Internet Isolation, 
Control, Censorship Authorities Regulate Infrastructure, Block Content 
(June 18, 2020), https://perma.cc/P7E7-SZAR.
    \10\ Dan Milmo, Russia blocks access to Facebook and Twitter, The 
Guardian (March 4, 2022).
    \11\ Ann M. Simmons and Alexandra Bruell, Russia Targets Media 
Outlets With ``Fake News'' Law, Blocks Facebook, Wall Street Journal 
(March 5, 2022), https://perma.cc/Z9B3-9ENL.
    \12\ Guy Faulconbridge, Russia fights back in information war with 
jail warning, Reuters (March 4, 2022); Rebecca MacKinnon, The Invasion 
of Ukraine Is Horrific. Cutting the Russian People off From the 
Internet Could Make It Worse, Tech Policy Press (March 10, 2022), 
https://perma.cc/D2MV-H6PZ.

    Troublingly, these authoritarian tactics are already finding 
purchase in other nations, including in the Indo-Pacific region. The 
recent U.S. International Trade Commission report, ``Foreign Censorship 
Policies and Practices that Affect U.S. Businesses'' describes some of 
the growing digital censorship practices in India, Vietnam and 
Indonesia, among other countries.\13\ It is vital that the U.S. work 
with these nations and other leaders in the region to advance an 
affirmative vision for Internet governance grounded in an open, 
interoperable Internet free from digital censorship.
---------------------------------------------------------------------------
    \13\ U.S. ITC report, supra n. 5.
---------------------------------------------------------------------------
                  digital censorship takes many forms
    ``Digital censorship'' is direct or indirect state action that 
seeks to prevent or suppress online communication, or to punish online 
speakers, through laws, policies, or practices that are inconsistent 
with states' international human rights obligations. Digital censorship 
impedes both individuals' freedom of expression and their ability to 
receive information. Some forms are direct and overt, such as Internet 
shutdowns or laws prohibiting certain content. Other forms of 
government suppression of expression and information online are 
indirect, such as government pressure on content moderation processes 
through methods contrary to the rule of law and mandates to locate 
personnel in-country to increase the government's leverage over private 
companies. In this section, I discuss several forms of digital 
censorship and their economic consequences, including examples from the 
region (with country names in bold), as well as alternative, rights-
respecting approaches that the U.S. Government could promote.
Internet Shutdowns
    A free, open, interconnected, and interoperable Internet 
contributes to the enjoyment of human rights and freedoms by people 
around the world, including the rights to opinion and expression, 
assembly and association, public participation, privacy, and religious 
freedom and belief. Internet access is an essential prerequisite to 
full enjoyment of those rights in the digital age. However, as CDT and 
other human rights groups have noted, there is a disturbing trend of 
governments disrupting ICT services to calm unrest or thwart perceived 
threats.\14\ State-sponsored network disruptions have grown from a few 
dozen in the years between 2008 and 2014 to 155 in 2020 alone.\15\ 
According to UN Special Rapporteur Clement Voule, Internet shutdowns 
are now `` `lasting longer' and `becoming harder to detect.' ''\16\
---------------------------------------------------------------------------
    \14\ Michael Grimes and Emily Barabas, Network Shutdowns, Ctr. for 
Democracy and Tech. (September 11, 2014), https://perma.cc/GT5Z-H5A7.
    \15\ Id.; Access Now, #KeepItOn (last visited March 13, 2022), 
https://perma.cc/5DGJ-7L3Y.
    \16\ United Nations, Internet shutdowns now ``entrenched'' in 
certain regions, rights council hears, UN News (July 1, 2021), 
hereinafter ``UN News,'' https://perma.cc/PSN7-53MW.

    In China, the government uses Internet shutdowns to stifle dissent 
and control the flow of information to its people, often justified by 
claims of national security concerns.\17\ In 2009, China shut down the 
Internet in Xinjiang, which had a population of 22 million people, for 
10 months in response to ethnic violence in the regional capital;\18\ 
shutdowns have subsequently continued sporadically in that region.\19\ 
More recently, China has also engaged in Internet shutdowns ``to limit 
information related to the COVID-19 pandemic.''\20\
---------------------------------------------------------------------------
    \17\ Freedom House, Freedom on the Net 2021--China (2021), https://
perma.cc/ZL3C-JAHG.
    \18\ Id.
    \19\ U.S. ITC report, supra n. 5, at 46.
    \20\ U.S. ITC report, supra n. 5, at 47.

    When governments act directly or coercively to interrupt wireless 
service, they are enacting a ``prior restraint'' on speech which in 
turn inevitably suppresses many innocent speakers' ability to 
communicate; this has been especially effective in countries which have 
few Internet providers, leaving them technically more vulnerable to 
such shutdowns.\21\ Military conflicts and protests are often the 
impetus behind Internet shutdowns, including within the Indo-Pacific 
region. The Indian Government has imposed more Internet shutdowns than 
any other country in the world, ``with 121 shutdowns in 2019 and 109 
shutdowns recorded in 2020,'' often in response to protests or military 
crackdowns, such as in the Jammu and Kashmir regions.\22\ In Myanmar, 
intermittent shutdowns and disruptions began following a military 
takeover in 2021, depriving residents of access to the outside world 
and to information about rights abuses.\23\ The Indonesian Government 
has also repeatedly shut down the Internet in regions of the country 
because of protests.\24\ In Bangladesh, authorities imposed an 
``Internet blackout'' on a refugee camp that lasted 355 days, in 
response to a demonstration by the refugees.\25\
---------------------------------------------------------------------------
    \21\ Emma Llanso, CDT to FCC: Wireless Shutdowns Are Never the 
Right Choice, Ctr. for Democracy and Tech. (May 1, 2012), https://
perma.cc/V53Z-KAX6.
    \22\ U.S. ITC report, supra n. 5, at 46; Adrian Shabaz and Allie 
Funk, Information Isolation: Censoring the COVID-19 Outbreak, Freedom 
House (2020), https://perma.cc/FFL9-S7KM; Software Freedom Law Center, 
Internet Shutdowns (2022), https://perma.cc/ASS5-QSV3.
    \23\ Access Now, Update: Internet access, censorship, and the 
Myanmar coup (February 16, 2022), https://perma.cc/MSX3-YPCA.
    \24\ Access Now, Court rules the Internet shutdowns in Papua and 
West Papua were illegal (June 3, 2020), https://perma.cc/4RWK-AN92; 
Natalia Krapiva et al., Indonesians seek justice after Internet 
shutdown, Access Now (May 13, 2020), https://perma.cc/CM2H-QMN8.
    \25\ UN News, supra n. 16.

    Internet shutdowns demonstrate extreme vulnerability of mobile and 
Internet access companies to governmental pressure. These shutdowns 
harm human rights, and they are all the more concerning during the 
COVID-19 pandemic, because they ``limit[] people's ability to obtain 
timely information about the pandemic or use digital tools to access 
health care, education, and other necessary services.''\26\
---------------------------------------------------------------------------
    \26\ Shabaz and Funk, supra n. 22.

    In addition, Internet shutdowns have lasting economic effects, 
resulting from a myriad of impacts. Experts estimate that these costs 
add up to billions of dollars each year. For example, a report by 
Brookings conservatively estimated that the global economy lost $2.4 
billion as a result of Internet shutdowns in 2015.\27\ According to 
this analysis, India alone lost nearly $1 billion in 2015 because of 
its repeated Internet shutdowns.\28\ More recently, a report based on 
the NetBlocks Cost of Shutdown Tool--which estimates the economic 
impact of an Internet disruption, mobile data outage or app restriction 
using indicators from the World Bank, ITU, Eurostat and U.S. Census 
\29\--estimated that Internet shutdowns cost the economy $5.45 billion 
in 2021 and has already cost the economy $1.2 billion in 2022.\30\
---------------------------------------------------------------------------
    \27\ Darrell M. West, Internet shutdowns cost countries $2.4 
billion last year, Ctr. for Tech. Innovation at Brookings (October 
2016), https://perma.cc/5N9L-GXLV.
    \28\ Id.
    \29\ NetBlocks, Cost of Shutdown Tool (2022), https://perma.cc/
JZN4-KN33.
    \30\ Samuel Woodhams and Simon Migliano, Government Internet 
Shutdowns Have Cost Over $18 Billion Since 2019, Top10VPN (March 9, 
2022), https://perma.cc/R6KR-EPXA.
---------------------------------------------------------------------------
Requiring Online Service Providers to Determine the Legality of Speech
    Intermediary liability laws, which establish whether and in what 
circumstances online service providers (or ``intermediaries'') face 
liability for hosting, transmitting, or otherwise enabling access to 
illegal user-generated content, are another tool that governments can 
use for direct or indirect digital censorship. Intermediary liability 
frameworks may take the form of broad, unconditional shields from 
liability \31\ or conditional notice-and-action regimes that specify 
requirements intermediaries must meet upon being notified of illegal 
content, in order to maintain their statutory safe harbor from 
liability.\32\
---------------------------------------------------------------------------
    \31\ See, e.g., 47 U.S.C. Sec. 230.
    \32\ See, e.g., 17 U.S.C. Sec. 512; European Union, Directive on 
Electronic Commerce, Directive 2000/31/EC.

    There is currently considerable debate about the optimal contours 
of intermediary liability frameworks in the U.S. and many other 
countries around the world.\33\ However, intermediary liability 
frameworks that require or incentivize intermediaries to censor online 
content that is not illegal pose significant risk to freedom of 
expression. Some intermediary liability laws require private companies, 
rather than courts, to make determinations about whether specific user-
generated content is illegal. These laws may also allow non-judicial 
authorities to declare content illegal, which circumvents the rule of 
law and international human rights standards.\34\ One of the most 
notorious examples of this is the Chinese model, in which 
intermediaries are provided with extensive lists of prohibited content 
and required to actively police their services for it.\35\
---------------------------------------------------------------------------
    \33\ The European Union, for example, is revising its intermediary 
liability laws in the forthcoming Digital Services Act, though the core 
notice-and-action framework of the E-Commerce Directive will persist.
    \34\ See David Kaye, Report of the Special Rapporteur on the 
promotion and protection of the right to freedom of opinion and 
expression, Human Rights Council of the United Nations 19 (August 17, 
2018) (finding that governments should only restrict access to or 
remove content pursuant to the order of an impartial judicial body in 
order to remain consistent with international human rights principles), 
https://perma.cc/N3LV-ZEBU.
    \35\ Freedom House, Freedom on the Net 2020--China B2 (October 
2020), https://perma.cc/29SK-7XWU.

    Nevertheless, many governments around the world--including in the 
Indo-Pacific region--have adopted or proposed regulations that would 
require service providers to evaluate whether content is illegal after 
receiving a notification from an average user, or require providers to 
remove content pursuant to an order from a non-
judicial government agency--or risk facing liability for the content 
themselves. Such laws will result in the erroneous removal of lawful 
speech. Users and non-judicial government agencies may accidentally 
misuse or purposely abuse notices by reporting content that is not 
actually illegal, spurring intermediaries to remove content rather than 
---------------------------------------------------------------------------
risk facing liability for it.

    For example, in India, the 2021 Information Technology 
(Intermediary Guidelines and Digital Media Ethics Code) Rules (the 
Indian Intermediary Rules) require online services to remove illegal 
content within 36 hours of receiving an order from a government 
agency--not necessarily a judge.\36\ Online services must also remove 
certain categories of content, including sexually explicit material, 
within 24 hours of receiving a complaint from any user about the 
material.\37\ The Indian Intermediary Rules are stringent and could 
lead to jail time for employees of online services who fail to comply 
with requests to take down illegal content.\38\ CDT has warned that the 
rules ``open[] the door for . . . authorities to seek the removal of 
speech for political or other inappropriate reasons--and the Indian 
government already has demonstrated it will walk through that 
door.''\39\ The Indian Intermediary Rules are likely to serve a model 
for other legislation in the region; Bangladesh, for example, has 
already proposed similar guidelines.\40\
---------------------------------------------------------------------------
    \36\ Information Technology (Intermediary Guidelines and Digital 
Media Ethics Code) Rules, 2021, Rule 3(1)(d), hereinafter ``2021 Indian 
Intermediary Rules.''
    \37\ Id., Rule 3(2)(b).
    \38\ Namrata Maheshwari and Emma Llanso, Part 1: New Intermediary 
Rules in India Imperil Free Expression, Privacy and Security, Ctr. for 
Democracy and Tech. (May 25, 2021), https://perma.cc/WLZ4-D4DK; see 
also Global Network Initiative, GNI Analysis: Information Technology 
Rules Put Rights at Risk in India (March 30, 2021), https://perma.cc/
W2TG-B8M5 (explaining that failure to comply with the new intermediary 
rules can lead to a loss of safe harbor protections under the IT Act 
and ultimately result in prison terms of up to 7 years for employees 
based in India).
    \39\ Maheshwari and Llanso, supra n. 38.
    \40\ Mitaksh, Bangladesh Releases Draft Rules to Regulate OTT 
Platforms, Modeled [sic] on India's IT Rules, MediaNama (February 9, 
2022), https://perma.cc/83WP-86YP.

    Some countries have used concerns about online disinformation or 
so-called ``fake news,'' coupled with intermediary liability regimes 
that do not require a court order determining the illegality of speech, 
to require intermediaries to remove user-
generated content. For example, in Singapore, the Protection from 
Online Falsehoods and Manipulation Act (POFMA) ``permits a single 
government minister to declare that information posted online is 
`false,' and to order the content's `correction' or removal if deemed 
to be in the public interest.''\41\ Companies that refuse to comply 
face steep fines, and individuals who violate the law can be 
jailed.\42\ According to Human Rights Watch, ``As of mid-2020, the 
government had invoked POFMA more than 50 times, primarily against 
people or publications that criticized the government or its 
policies.''\43\ After one instance in which government officials 
ordered Facebook to block access to a blog post critical of the 
government's response to the COVID-19 pandemic, the company argued that 
the order was ``disproportionate and contradict[s] the government's 
claim that POFMA would not be used as a censorship tool.''\44\
---------------------------------------------------------------------------
    \41\ Human Rights Watch, Singapore: ``Fake News'' Law Curtails 
Speech (January 13, 2021), hereinafter ``HRW, Singapore,'' https://
perma.cc/9P6L-TZB6.
    \42\ Ashley Westerman, ``Fake News'' Law Goes Into Effect in 
Singapore, Worrying Free Speech Advocates, NPR (October 2, 2019), 
https://perma.cc/2TJU-8HWM.
    \43\ HRW, Singapore, supra n. 41.
    \44\ Reuters Staff, Facebook says ``deeply concerned'' about 
Singapore's order to block page, Reuters (February 18, 2020), https://
perma.cc/2VJX-RFCM.
---------------------------------------------------------------------------
Short Time Frames for Content Removal
    Another concerning liability trend involves laws or regulations 
that obligate providers to remove content on sharply abbreviated 
timelines--often within hours. These laws discourage companies from 
closely scrutinizing government or user demands to remove content and 
push them to err on the side of quickly removing content. Laws with 
short deadlines for content removals may also effectively require, or 
at least strongly encourage, intermediaries to use automated 
technologies to detect, filter, and remove content, with often 
disastrous impacts for users' freedom of expression. Despite recent 
advances in machine learning and artificial intelligence, automated 
content analysis techniques have significant limitations that create 
risks to human rights.\45\
---------------------------------------------------------------------------
    \45\ See Carey Shenkman et al., Do You See What I See? Capabilities 
and Limits of Automated Multimedia Content Analysis, Ctr. for Democracy 
and Tech. 22-24 (2021), https://perma.cc/XM4B-RLAY.

    Laws discouraging scrutiny of removal demands and encouraging the 
use of automated content analysis tools through brief time frames for 
content removals are unfortunately proliferating in the Indo-Pacific 
region.\46\ For example, the 2021 Indian Intermediary Rules require 
that intermediaries remove content within 36 hours after receiving a 
government order and that they remove certain other categories of 
content within 24 hours.\47\ Similarly, in Australia, the new Online 
Safety Act requires providers to remove content sanctioned by the 
eSafety Commissioner within 24 hours.\48\ And in Indonesia, electronic 
system operators could be required to remove prohibited content within 
just 4 hours after receiving notice from authorities, in urgent 
situations.\49\ In Thailand, users can report banned content to 
intermediaries, and intermediaries ``must remove flagged content within 
7 days for alleged false or distorted information, within 3 days for 
alleged pornographic content, and within 24 hours for an alleged 
national security threat.''\50\
---------------------------------------------------------------------------
    \46\ Such laws and policies are not unique to the region: the 
European Union's Code of Conduct on Countering Illegal Hate Speech 
Online calls for participating companies to review content takedown 
requests from ``trusted flaggers'' within 24 hours. EU: European 
Commission's Code of Conduct for Countering Illegal Hate Speech Online 
and the Framework Decision, ARTICLE 19 (June 2016), https://perma.cc/
J8UV-TH8P. Germany's NetzDG imposes a 24-hour timeline on providers to 
remove ``manifestly'' unlawful content, and illegal content that is not 
manifestly unlawful must be removed within 7 days. NetzDG, Article 
1Sec. 3(2)2-3.
    \47\ 2021 Indian Intermediary Rules, supra n. 36, Rule 3(1)(d); 
Id., Rule 3(2)(b).
    \48\ Freedom House, Freedom on the Net 2021--Australia (2021), 
https://perma.cc/T4LW-HYGA; eSafety Commissioner, Online Safety Act of 
2021 Fact Sheet (January 2022).
    \49\ Freedom House, Freedom on the Net 2021--Indonesia (2021), 
https://perma.cc/7YFC-YD5L.
    \50\ Freedom House, Freedom on the Net 2021--Thailand (2021), 
https://perma.cc/26V3-686V.

    Weak intermediary liability regimes that can be leveraged for 
digital censorship not only impact users rights; they also impose 
economic costs. Given the high volume of user-generated content online 
and correspondingly high volume of content reported as illegal or 
violating a company's Terms of Service, it can be extremely costly for 
online intermediaries to actively monitor content, make decisions about 
the legality or illegality of content, and evaluate content under 
strict time frames to determine whether or not it should be 
removed.\51\ Laws that require intermediaries to undertake these 
efforts--or face litigation costs or steep fines--serve as a barrier to 
entry to new intermediaries, stymying competition and growth. In 
addition, intermediaries that are unable or unwilling to comply with 
intermediary liability regimes that require them to invest huge amounts 
of resources may cease operating in a country altogether, depriving 
local users of online services that allow them to communicate with 
investors or customers, buy and sell goods, and engage in other 
economic activity.
---------------------------------------------------------------------------
    \51\ Katie Schoolov, Why content moderation costs billions and is 
so tricky for Facebook, Twitter, YouTube and others, CNBC (February 27, 
2021), https://perma.cc/L3SF-Z2XJ.
---------------------------------------------------------------------------
Manipulation of Content Moderation Processes by State Actors
    Governments around the world are increasingly relying on service 
providers' own content policies to obtain removal of online content or 
accounts. Rather than challenging content in court as a violation of 
law, the government flags and reports it to the provider for removal on 
the basis that the content violates the provider's Terms of Service. In 
some countries, governments have formalized Terms of Service referrals 
using Internet Referral Units, which are government entities formed to 
flag user-generated content directly to the service provider that hosts 
it, often using the provider's own content-flagging mechanisms, so the 
provider will remove the content under its Terms of Service.\52\
---------------------------------------------------------------------------
    \52\ Jason Pielemeier and Chris Sheehy, Understanding the Human 
Rights Risks Associated with Internet Referral Units, VOX-Pol (March 
26, 2020), https://perma.cc/CC5Q-PF4L.

    Manipulation of private companies' content moderation processes are 
contrary to rule of law principles and allow governments to leverage 
providers' Terms of Service to censor online speech of which they 
disapprove. Terms of Service may prohibit a variety of types of speech, 
including far more speech than that which is prohibited by law. As a 
result, governments can use providers' Terms of Service to obtain 
removal of legal content, including content that cannot be made illegal 
consistent with international human rights standards. Government actors 
may also selectively target speech prohibited by providers' Terms of 
Service to censor speech based on viewpoint or content. In addition, 
government referrals can be coercive, exerting significant pressure on 
a provider to remove content ``voluntarily'' under its own Terms of 
Service. And, in some countries, providers face mandatory regulations 
for refusing to comply with government removal requests \53\ or can be 
stripped of liability protection for user-generated content based on a 
government notification.\54\
---------------------------------------------------------------------------
    \53\ Tomer Shadmy and Yuval Shany, Protection Gaps in Public Law 
Governing Cyberspace: Israel's High Court's Decision on Government-
Initiated Takedown Requests, Lawfare (April 23, 2021), https://
perma.cc/F4HX-LPPE (stating that the Israeli Cyber Unit ``has the power 
to subject the online platforms to mandatory regulations should they 
systematically refuse to comply with its takedown requests'').
    \54\ Jim Killock, Informal Internet Censorship: The Counter 
Terrorism Internet Referral Unit (CTIRU), Open Rights Group (March 5, 
2019), https://perma.cc/LWM2-VTUD (describing the impact of detailed 
notification under the E-Commerce Directive on content hosts' ``actual 
knowledge'' of criminal content and subsequent potential liability for 
that content).

    Governments have used these Terms of Service referrals to target 
critics, rivals, or activists. For example, Amnesty International has 
reported that the Vietnamese Government engages in ``mass reporting 
campaigns'' in which it relies on social media sites community 
reporting functions to have ``large numbers of users . . . 
simultaneously `report' a particular account or specific content with 
the aim of having it deleted or suspended by social media companies on 
the basis of it violating community standards.''\55\ According to news 
reports, the Vietnamese government has used the mass reporting 
technique to target journalists and human rights activists on 
Facebook.''\56\
---------------------------------------------------------------------------
    \55\ ``Let Us Breathe!'': Censorship and Criminalization of Online 
Expression in Viet Nam, Amnesty Int'l 53 (2020), https://perma.cc/D88L-
69CA.
    \56\ Russel Brandom, Facebook's Report Abuse button has become a 
tool of global oppression, The Verge (September 2, 2014).
---------------------------------------------------------------------------
Local-Presence Requirements or ``Personnel Localization''
    Legal requirements that Internet companies locate personnel in 
particular country--known as ``personnel localization'' but sometimes 
referred to as ``hostage provisions''\57\--are another mechanism 
through which states indirectly exert control over online speech. 
Personnel localization requirements make it harder for intermediaries 
to resist abusive government demands to shut down the Internet or to 
remove particular websites or user-generated content, because of the 
threat that failure to comply will result in punishment, including 
imprisonment, of the local personnel.
---------------------------------------------------------------------------
    \57\ GNI Submission to European Commission Consultation on the 
Digital Services Act, Global Network Initiative (April 1, 2021), 
https://perma.cc/2JRT-YECV.

    Recent events in Myanmar demonstrate how countries can use the 
presence of personnel in-country to exert control over communications 
intermediaries. Following the 2021 coup d'etat, and demands by military 
leaders to shut down the Internet, block certain websites, and activate 
communications-intercept equipment,\58\ Telenor Group decided to sell 
Telenor Myanmar.\59\ The sale has yet to be formally approved by 
authorities in Myanmar, and as of February 2022, Myanmar had prohibited 
some Telenor staff, including a Telenor executive who is a Norwegian 
citizen, from leaving the country.\60\ According to Telenor's CEO, 
``The authorities say that they want to have leading Telenor employees 
on the ground as long as they have not clarified whether we will be 
allowed to sell the business or not.''\61\
---------------------------------------------------------------------------
    \58\ Telenor, Updates on Telenor in Myanmar (February 28, 2022), 
https://perma.cc/2L7Z-STW5.
    \59\ Id. This decision raised human rights concerns because of 
links between the companies to which Telenor Myanmar is to be sold to 
the ruling military junta. Access Now, As Myanmar junta extends control 
over telcos, surveillance and privacy risks increase (January 24, 
2022), https://perma.cc/VSU5-G6X7.
    \60\ Gregers M Australia.
           Korea.
           Singapore.
        We have reached section 232 arrangements with Japan, South 
Korea, and Australia.
        With Vietnam there was a more than $90-billion trade deficit 
in 2021.
        With Japan there is more than $200 billion in bilateral trade, 
with a goods trade deficit of more than $60 billion in 2021, most of 
that in autos. For the first 9 months of 2021, the U.S. imported 
1,041,625 new passenger vehicles and light trucks from Japan, while the 
U.S. exported just 12,536 new passenger vehicles and light trucks to 
Japan over the same period.
        The goods trade deficit with the major Pacific Rim Countries 
in 2021 was $503 billion (this excludes a lot of data--for example, the 
good deficit with Thailand was almost $35 billion). Excluding China, 
the goods trade deficit with the Indo-Pac countries was well over $215 
billion).
        The goods trade deficit with India was $33 billion in 2021 (an 
increase of more than 37 percent over 2020).
        The U.S. has more than $1 trillion in foreign direct 
investment in the Indo-Pacific.
        The 7th Fleet regularly transits the South and East China 
Seas. We have forces located across the region.
        We have expanded defense cooperation with Japan, Australia, 
and other regional allies including the recent U.S.-UK-Australia 
trilateral security partnership.
        The revitalized Quadrilateral Security Dialogue is an 
effective forum for strategic cooperation and military preparedness, 
and President Biden has shown its usefulness for cooperation on COVID 
and reaching a common understanding on Ukraine.

    In short, the question is what should be our future engagement in 
the region and what are the opportunities and challenges posed by such 
engagement. The diversity and breadth of the landscape of the Indo-
Pacific defies a one-size-fits-all analysis or approach. I will first 
comment on past initiatives, then current approaches, and finally what 
provisions must be included in any enhanced engagement to advance the 
interests of working people.

    Despite the length of my prepared testimony, it only touches upon 
the important issues before this committee and the Congress, and I look 
forward to working with you as the debate unfolds.

    Today marks the 12th anniversary of the commencement of the first 
round of negotiations on the TPP which were held in Melbourne, 
Australia. As the members of this committee know, the TPP was an 
integral part of the Obama administration's pivot to Asia. Organized 
labor spent thousands of hours engaged on the TPP negotiations.

    The U.S. was right to have refused to join that agreement. The TPP 
was poorly designed, and many of its critical provisions were 
inadequate. Organized labor strongly opposed the agreement.

    Some said that TPP was about writing the rules so that China didn't 
get to. In my view, China didn't need to write the rules, because in 
many areas, we did it for them. The TPP was not the kind of high 
ambition trade agreement that advanced the interests of working people 
here at home, or in the signatory countries.

    There were numerous important flaws in the TPP agreement:

        It failed to include robust provisions on enforceable workers' 
rights that would have adequately advanced the interests of workers and 
ensured that their internationally recognized worker rights were an 
integral part of economic liberalization in the region. For example, 
while signatory countries would have to have a minimum wage, it could 
be 5 cents an hour and fulfill the labor requirements of the agreement. 
In addition, the enforcement mechanisms and standards were deficient.
        It failed to adequately discipline state-owned enterprises, 
allowing all previously granted subsidies and benefits to be 
grandfathered and limiting action regarding the non-market impact of 
SOE activities in many instances to situations where the injury 
occurred for a year or more, tying the hands of producers and workers 
who were serially injured by the SOE predatory practices.
        It included a rule of origin in the auto area that, according 
to its provisions and analysis by the House Ways and Means Committee 
staff, would have allowed roughly two-thirds of an automobiles content, 
for example, to originate from non-TPP countries but still be eligible 
for TPP trade benefits.
        It included unacceptable Investor State Dispute Settlement 
(ISDS) provisions.
        It failed to include disciplines on currency manipulation.
        It failed to address growing overcapacity in key sectors.

    Many are now advocating that the U.S. join the successor 
Comprehensive and Progressive Agreement for Trans-Pacific Partnership 
(CPTPP), but that would be unwise and unacceptable as it includes many 
of the flaws in the TPP.

    We have been asked whether we support the President's Indo-Pacific 
Economic Framework (IPEF). That's impossible to answer as there is not 
yet enough detail to know whether it is an agreement that advances the 
interests of working people. It is still a framework being developed. 
We have engaged and will continue to work with the administration on 
what the architecture of the IPEF should be.

    We support enhancing America's relations with allies and friends to 
foster growth with opportunity, democratic values, human rights and 
workers' rights. Economic reform in a Western sense and greater 
freedom, as we have seen all too clearly with China, are not the 
automatic result of expanded economic relations. Free trade is simply a 
theoretical construct and workers know the reality is far different--
particularly in the Indo-Pacific. How we shape our economic engagement 
is the critical issue.

    There are a number of initial questions that must be answered, 
which I outline below. There are also a number of consequential design 
issues that must be addressed for any agreement to have the support of 
organized labor. As the IPEF is still very much a work in progress, I 
look forward to working with you, other members of Congress and the 
administration in the coming days and know that my labor colleagues 
stand ready as well.

    Some key initial questions:

      1.  Which countries will be participants in the IPEF?
      2.  Will the framework include ``docking'' provisions allowing 
others to sign on and what will be the requirements for participation?
      3.  Will market access commitments be included in the framework? 
While initial answers are no, what are the long-term plans?
      4.  What will be the role for stakeholders and Congress?
      5.  Will enforceable workers' rights and corporate accountability 
measures apply to all modules?

    These are important questions, and I am sure I am missing some. In 
addition to these threshold questions, there are key design questions 
relating to the substance of the provisions. Below I identify several 
important issues. In the coming days, as more information becomes 
available, we will be able to provide further thoughts.
              workers' rights and corporate accountability
    The number one concern for organized labor is how workers' rights 
will be protected, enforced, and promoted in the region. Workers' 
rights are the key to ensuring that trade will promote growth and 
opportunity for workers rather than driving a race to the bottom.

    There is cause for some optimism about workers' rights in light of 
the impact of the first two USMCA rapid response mechanism (RRM) cases 
in Mexico. At the GM facility in Silao and the Tridonex facility in 
Matamoros, entrenched protection unions were voted out and have been 
replaced by independent unions. Following these votes, workers at the 
Mazda facility in Salamanca rejected the contract negotiated by the 
protection union at the facility. There is still a long way to go to 
harvest these successes at these facilities and to expand these wins at 
facilities across the country. But the early signs are positive.

    The RRM created a facility specific enforcement mechanism that 
allows specific products to be sanctioned and potentially denied entry, 
the first time in any trade agreement. Coupled with the labor chapter's 
requirement in the USMCA and the changes in Mexican law that were 
required, the requirement that workers' rights be respected, 
implemented, monitored and enforced has advanced. The agreement, 
however, is only a floor and significant improvements are needed in 
future trade agreements and trade initiatives.

    There can be no question that workers' rights are a priority for 
this administration. Its record has been noteworthy in terms of a real 
commitment to ensuring that not only are workers' rights a priority, 
but that the necessary resources, implementation, and enforcement 
efforts back up their stated commitment. The recent signature into law 
of the Uyghur Forced Labor Protection Act shows that words will be 
backed up by real action.

    Administration officials have indicated that workers' rights will 
be part of the IPEF. But how broad that coverage is, what standards 
will be applied, and what enforcement mechanisms will be included is 
very much an open question.

    Workers' rights commitments and enforcement provisions must cut 
across all of the separate modules that may be part of the IPEF. 
Participants in the IPEF should not be able to cherry-pick which 
modules they want to participate in to avoid having to adhere to high 
standards and advance the interests of working people. There have been 
some indications that workers' rights may only be contained within the 
module being negotiated by the USTR. This would be a blow to the 
administration's overall advocacy for and commitment to a worker-
centered trade policy.

    Access to enforcement efforts must be available to workers as it is 
their interests that are most affected. There must be no requirement to 
show that a violation is ``in a manner affecting trade'' or that there 
be a ``sustained or recurring'' course of violations to merit an 
enforcement effort.Those concepts and requirements are outdated, and a 
worker centered trade policy must ensure that abuse of workers' rights 
be actionable.

    We are willing to assess different approaches to advancing workers' 
rights to ensure that corporations cannot continue to engage in labor 
and environmental arbitrage, scouring the globe for the cheapest and 
most lax regimes in which to operate. The IPEF must create enforceable 
tools to hold corporations accountable for labor rights across their 
global supply chains to ensure that trade is based on fair competition, 
not worker exploitation.
                             digital trade
    Efforts to promote a digital trade agreement predate the 
announcement by the administration for the IPEF. Digital trade remains 
a key module and is presently being shepherded by the USTR. The issue 
of digital trade has garnered considerable attention from organized 
labor in recent years as utilization of ``gig'' worker platforms have 
skyrocketed, the power of technology companies has exploded, and 
digital outsourcing of jobs has accelerated.

    The digital issues are highly complex and require enormous study 
and evaluation. Rushing to adopt new digital trade measures could have 
serious adverse consequences for U.S. economic and national security 
interests. Congress must be broadly engaged, along with other 
stakeholders, in assessing what the road ahead should look like.

    Technology's role in everyday life is difficult to comprehend. As 
some say, data is the new oil with the potential to fuel economic 
engagement at every level. Certainly, technology has provided enormous 
benefits from connecting the world, to promoting democratic advances, 
to facilitating working-from-home during the pandemic, to countless 
other applications.

    But technology has also been used by governments as a tool to 
surveil and suppress, as has been evident in China, Russia, and 
elsewhere. While technology originally helped foster democracy 
advocates in Hong Kong, it was later turned into a weapon against the 
population.

    Data and technology are not only open to abuse by governments, but 
by the private sector as well. Unregulated digital platforms like 
Google and Facebook, collect massive amounts of users' data that is 
then mined, packaged, and sold to third parties. Meanwhile, employers 
are increasingly using ``bossware'' programs to monitor employees' 
remote work and collect other data often without their knowledge or 
consent--sometimes even when they are off the job.

    Wejo, a publicly traded company, collects vehicle data to be used 
by government and business. Of course, mapping congestion, enhancing 
traffic safety and other uses can be for the good, the data can also 
potentially be used for adverse purposes and to monetize every action 
an individual takes. Wejo's website indicates that it has curated more 
than 489 billion miles and, as of the date that this testimony was 
written, has 13.2 trillion data points.

    Similar collection platforms are expanding around the globe, and we 
need to understand how digital trade provisions advance individual 
rights and interests, rather than undermine them, and how any framework 
does not just pad the bottom line of corporations.

    These questions, of course, also go to data localization, privacy, 
online fraud, worker misclassification, and many others. Those are 
issues that organized labor is wrestling with.

    We also must examine how a digital trade agreement addresses the 
use, and abuse, of algorithms which can have a discriminatory effect on 
users and communities. Digital employment tools have been criticized 
for the costs imposed on communities of color, for example, and an 
agreement must help abate that practice.

    The potential direct employment impacts of digital trade provisions 
are significant. At the outset, let me make clear that many jobs are 
already being outsourced through digital means and via digital 
platforms. Agreements that are properly structured, implemented, 
monitored and enforced could make a significant difference. Poorly 
constructed, however, they could mean accelerated outsourcing of jobs. 
We cannot afford another trading arrangement that will ship more jobs 
overseas.

    Let me provide two examples of why we are concerned about the 
offshoring of jobs via digital platforms.

        Call center jobs are increasingly being outsourced with India 
and the Philippines being significant locations for lost jobs. These 
are good family-
supporting jobs, a substantial number of them being union jobs. The 
Wall Street Journal reported last year on a startup that had received 
significant funding for software ``that modifies pronunciation to make 
accented speech more like Standard American English.''\1\ Wealthy 
corporations will do just about anything to lower costs by shipping 
jobs overseas.
---------------------------------------------------------------------------
    \1\ David Carnevali, The Wall Street Journal, Startup That Reduces 
Accents in Real Time Draws Seed Capital: Sanas.ai raises $5.5 million 
after developing software that modifies pronunciation to make accented 
speech more like Standard American English, September 2, 2021, https://
on.wsj.com/3MEDmK0.
---------------------------------------------------------------------------
        Health-care jobs are also increasingly at risk. The Department 
of Labor estimated that there were 341,600 jobs for Medical Records and 
Health Information Specialists in 2019 paying a median wage of $40,090 
per year with much faster than average job growth estimated during the 
2019-2029 period (8 percent).\2\ A web page ad for Healthcare 
Outsourcing Services Philippines, promotes its services highlighting 
that ``Hire Dedicated Offshore Healthcare Professionals and save up to 
75 percent compared to hiring locally.'' The site stresses that ``The 
Healthcare Business Process Outsourcing (BPO) Market is estimated to 
grow at a CAGR of +10 percent from 2019 to 2025 to reach $312 billion 
by 2025 from $191.68 billion in 2019.''\3\ Teleradiology is 
increasingly being used to offshore high-skilled radiology jobs.
---------------------------------------------------------------------------
    \2\ Bureau of Labor Statistics, U.S. Department of Labor, 
Occupational Outlook Handbook, Medical Records and Health Information 
Specialists, at https://www.bls.gov/ooh/healthcare/medical-records-and-
health-information-technicians.htm (visited June 28, 2021).
    \3\ Outsourced, https://outsourced.ph/services/staffing-categories/
healthcare/ (visited July 27, 2021).

    The potential impact of digital trade provisions on public sector 
workers, and those who service the public sector may also be 
significant. The Australia-Singapore Digital Economy Agreement, for 
example, included provisions that would open up access to government 
data allowing ``for the development of new and customized products and 
services demanded by business, government and the community.''\4\ This 
is a potential pathway towards privatization.
---------------------------------------------------------------------------
    \4\ ``Australia-Singapore Digital Economy Agreement: Summary of key 
outcomes,'' https://www.dfat.gov.au/trade/services-and-digital-trade/
australia-singapore-digital-economy-agreement-summary-key-outcomes.

    Many content-creating workers--actors, musicians, writers, and the 
people who work behind the scenes--earn a portion of their collectively 
bargained pay and contributions to their health care and pension funds 
from the sales and licensing of works on digital platforms. Because of 
the economic threat from stolen and unlicensed content, these workers' 
very livelihoods depend on strong copyright protections. Yet past U.S. 
trade agreements have enshrined outdated, overbroad rules that allow 
digital providers to avoid any liability when they profit off of stolen 
content that appears on their platforms, and which robs workers of just 
compensation and future work opportunities. At stake is more than $2 
billion in annual, collective compensation for hundreds of thousands of 
middle-class creative professionals.\5\ A digital trade agreement must 
protect and promote copyright protections for creative professionals, 
not facilitate additional wage theft.
---------------------------------------------------------------------------
    \5\ Creative Professionals Depend on Strong Copyright Protections, 
https://www.dpeaflcio.org/other-publications/creative-professionals-
depend-on-strong-copyright-protections.

    Education unions have also participated in discussions about the 
digital trade issues. As distance and remote learning spiked during the 
pandemic, the risk to our domestic education workforce--teachers and 
others spiked as well. We cannot allow the education of our children be 
put at risk to offshoring along with the provision of services from so 
---------------------------------------------------------------------------
many other professions.

    Until there is a better understanding of the design and direction 
of a digital trade agreement, it is impossible to know its impact but, 
clearly, without proper provisions including strong workers' rights and 
corporate accountability measures that are enforceable, the possibility 
for significant job loss and downward pressure on wages and 
compensation exists.

    As with the TPP, advocates for a digital trade agreement are 
arguing that we need to write the rules so that China doesn't get to. 
Certainly, we cannot allow China's vision of the digital economy with 
the Great Firewall, 50,000 or more Internet cops, and suppression of 
rights and freedoms to win the day. But we also cannot allow today's 
digital rules to guide the future with virtually unregulated corporate 
control of workers' and citizens' data, harvesting of value, fostering 
of hate-filled speech and other abuses to be the model.

    A digital trade agreement, done right, could advance the interests 
of workers. Again, as with other issues within the IPEF, much work 
remains to be done.
                        resilient supply chains
    One of the pillars of the proposed Indo-Pacific Economic Framework 
is resilient supply chains. Until several years ago, the American 
public rarely gave a thought to supply chains. Their attention to the 
issue was often sparked by press accounts such as those highlighting 
dog food tainted with melamine and kids toys with lead paint from 
China. There were occasional concerns for the public, but rarely 
consistent attention.

    The pandemic changed all that. Overnight the public became aware of 
just how painfully dependent we are on China for many of our critical 
products--pharmaceutical ingredients, personal protective equipment 
(PPE) and other products. Autoworkers found their factories idled by 
limited supplies of semiconductors. The availability of other products, 
from toilet paper to paper towels and other daily needs, suddenly 
became a concern for our citizens.

    The increasing dependence on other nations for many of our needs 
has increased dramatically as globalization has accelerated. This 
dependence has been used as a political tool, such as when China 
weaponized supplies of rare earth minerals many years ago. During the 
pandemic, China engaged in so-called mask and vaccine ``diplomacy'' to 
curry favor and advance its interests.

    Russia's attack on Ukraine has also informed the public of our 
dependence on overseas supplies. Energy is top of mind. But supplies of 
critical minerals and materials are also highlighted as being at risk.

    Most Americans want supply chains to be strengthened here at home. 
Certainly, they recognize that we live in a global world and enjoy--and 
depend on--products sourced from around the globe.

    Organized labor's approach to supply chains is easy to articulate: 
We want the vast bulk of production to occur here in the U.S. with the 
jobs held by union workers. Of course, we know that not all products 
will be sourced here.

    So when we hear that the IPEF will include a module to promote more 
resilient supply chains, we look at the idea through the prism I just 
offered. Indeed, with this administration's efforts to ensure domestic 
capacity to meet critical needs--an approach started under the previous 
administration--we wonder whether the IPEF's supply chain approach will 
advance or undermines that goal. Are they consistent objectives?

    In discussions with the administration to date, there simply has 
not been enough information on what will be included in the supply 
chain module. Shifting sourcing from China to other countries in the 
Indo-Pacific may have some benefits in terms of reduced dependence for 
supplies from China which, all too often, benefits from its non-market 
and predatory trade practices, and by signaling that we know our 
economic engagement helps support the power of the Chinese Communist 
Party (CCP).

    But simply shifting the supply base around will at best only have 
marginal benefit, and we will still face potential shocks from 
geopolitical and natural events. We may lose the capacity to build our 
own industrial and technological capacity as research and development 
(R&D) and production moves offshore. For example, according to a staff 
study issued by the U.S.-China Economic and Security Review Commission 
based on Commerce Department data, between 2001 and 2017, the rate of 
increase on R&D spending by U.S. multinationals increased in China at 
three times the rate of their R&D investments here in the U.S.\6\
---------------------------------------------------------------------------
    \6\ Malden, Kaj, Trends in U.S. Multinational Enterprise Active in 
China, 2000-2017, the U.S.-China Economic and Security Review 
Commission, July 1, 2020, at page 12, https://www.uscc.gov/sites/
default/files/2020-06/
US_Multinational_Enterprise_Activity_in_China.pdf.

    A resilient supply chain module should also include provisions 
ensuring that new investments be subject to corporate accountability 
measures that require recognition and enforcement of workers' rights 
and advance shared goals such as decarbonization and environmental 
sustainability. An IPEF must promote our standards and interests, not 
undermine them.
                               conclusion
    Mr. Chairman, Ranking Member Crapo, members of the committee, my 
testimony today has only touched upon the issues that are involved in 
the design and development of the Indo-Pacific Economic Framework. 
Issues like overcapacity, currency manipulation and others deserve 
attention. I fully recognize that this is not a market access agreement 
and, therefore, there are limits to what it can achieve. However, we 
are not interested in an agreement that advances the interests of 
multinational companies without significantly advancing the interests 
of workers.

    There is no question that we should be engaged in the region--we 
already are. The question is what the forward path is and what 
opportunities, and challenges, exist for our workers . . . our 
citizens.

    In past years, trade and international economic initiatives have 
largely been fueled by foreign policy concerns. In many respects, the 
agreements have either failed to produce the promised benefits or, 
worse, have dramatically undermined U.S. interests. The admission of 
China to the World Trade Organization, facilitated by the grant of 
Permanent Normal Trade Relations, is the prime example of that failure.

    In seeking to expand America's role in the region and to strengthen 
our economic and national security interests we must not rush forward 
without paying proper attention to the needs and interests of our 
workers, and workers in the Indo-Pac countries. Workers here in the 
U.S. have increasingly used their voices to speak out on trade issues 
and their impact has been significant in politics and on policy. 
America's leadership would be significantly undermined if another bad 
agreement is brought forward that cannot garner the support of our 
people.
    Organized labor is committed to working with you, your colleagues, 
and the administration to try and develop the right path forward. We 
are not against negotiations, but we will fight for the interests of 
our members.

    Thank you.

                                 ______
                                 
          Questions Submitted for the Record to Michael Wessel
                 Questions Submitted by Hon. Mike Crapo
    Question. Medical supply chains between the United States and Indo-
Pacific countries are deeply intertwined. U.S. innovation in the 
biopharmaceutical sector provides an opportunity for leadership and 
engagement with our allies in the region. Moreover, U.S. leadership in 
this proves to be good for workers. In particular, the 
biopharmaceutical industry annually relies on 22 million union labor 
hours, generating $774 million in wages.

    Accordingly, one would expect the administration's worker-centered 
trade policy to support this innovative industry. Instead, the 
administration appears to have tentatively agreed to an outcome where 
the U.S. will waive its intellectual property rights under the WTO 
TRIPS Agreement with respect to COVID vaccines, immediately. An even 
broader waiver will follow in six months on other therapeutics and 
diagnostics.

    The administration is amenable to this waiver even though existing 
producers believe they can produce 22 billion vaccine doses by June of 
this year. Moreover, the Pharmaceutical Industry Labor Management 
Association warned last May that ``[t]he WTO TRIPS waiver will 
permanently ship . . . jobs overseas to countries that do not have the 
quality that we enjoy in the U.S.''

    Even before the waiver, your testimony to the House Energy and 
Commerce Committee stated that China's support policies are ``driving 
out . . . many U.S. lines of production.'' You moreover asserted in 
other forums that China's regulatory system for drugs is opaque and 
presents safety risks, and that Russia and China hack our companies to 
obtain technological data for vaccines.

    Given all of this, do you agree that the administration should not 
agree to the proposed TRIPS waiver without first preparing and publicly 
sharing an assessment on the waiver's impact on U.S. jobs and global 
vaccine access?

    Do you believe that the waiver should extend to countries that 
systematically undermine U.S. intellectual property rights in the 
pharmaceutical sector?

    Do you believe that the waiver should extend to countries that are 
proven unreliable suppliers to developing countries because their 
products are not proven efficacious, fail safety standards, or fail to 
meet contractual obligations?

    It appears the waiver may extend 3 to 5 years. Do you agree that, 
at this time, the U.S. does not need to seek a waiver of that length?

    Answer. The COVID-19 pandemic and devastating blow to the health of 
tens of millions of people across the globe requires emergency 
responses. More than 2 years after the beginning of the pandemic, too 
many people are still dying, being hospitalized, and suffering in 
countless ways. The health consequences, on their own, are enough to 
merit unique and untested responses. In addition, the pandemic has 
upended supply chains and has altered working conditions across the 
globe.

    A limited waiver of intellectual property rights to address the 
pandemic is in our Nation's and the world's interests. Intellectual 
property is the lifeblood of innovation and is critical to supporting 
American production and employment but where so many lives are at 
stake, we must respond to those needs and do so quickly. Simply 
producing more vaccines here in the U.S. has not yet been sufficient as 
access to those vaccines is still limited in many parts of the world. A 
detailed economic analysis cannot begin to measure the human 
consequences of COVID-19.

    Countries that have systematically infringed on our intellectual 
property rights should be subject to stringent controls in terms of 
access to the vaccine IP. Their serial violations of our rights should 
be taken into account but measures should be available to limit the 
impact and ability to harvest our technology for other gains. These 
considerations should also apply to countries that have failed to have 
the proper safety protocols and regulatory regimes in place to ensure 
the efficacy of their medical products Protecting human life must be 
the core consideration.

    The constant waves of new variants of COVID-19 merits flexibility 
in determining the length of any waivers. The CDC recently authorized a 
second booster for the vaccines from two companies. We have no idea as 
to the future course of this pandemic and should accept a waiver period 
that will help ensure that we can quickly produce and deliver the 
vaccines that are needed to protect people around the globe.

                                 ______
                                 
            Question Submitted by Hon. Robert P. Casey, Jr.
    Question. Thank you for coming today to testify on these important 
issues. I want to commend the Biden-Harris administration for their 
critical work on supply chain resiliency and security, as well as 
prioritizing our domestic production and manufacturing capacities. As 
you know, Senator Cornyn and I have been working to pass the 
bipartisan, bicameral National Critical Capabilities Defense Act, which 
sets up a committee to review offshoring of critical U.S. supply 
chains. As the pandemic has demonstrated, we need enhanced visibility 
on supply chain vulnerabilities. I hope that, as the administration 
develops the Indo-Pacific Economic Framework, they take into account 
the decades of offshoring and unfair practices by non-market economies 
that have left U.S. workers and businesses at a competitive 
disadvantage.

    What tools and strategies do you see as critical to prevent further 
offshoring that threaten domestic supply chains and U.S. workers, 
leaving us dependent on foreign adversaries, like Russia and China for 
critical goods?

    Answer. Policymakers and the public have come to understand the 
risks to America's economic, health, and national security emanating 
from the excessive offshoring of supply chains over the last decades. 
While the pandemic has brought this into sharp focus, the overreliance 
on foreign sources of supply and services have grown for some time. 
Significant portions of critical supply chains such as electronics, 
pharmaceutical, rare earths and other key components and products have 
been offshored and the reclamation of those sources of supply will take 
time and considerable resources.

    This reliance does not only create economic strains, it also 
threatens critical capabilities. For example, rare earth minerals and 
resulting products, have largely been offshored with China controlling 
the vast majority of those products. China has shown its willingness to 
``weaponize'' supplies of these products, as it did with Japan. China 
engaged in mask and vaccine diplomacy as a way of advancing the goals 
of the Chinese Communist Party. These actions make clear that we must 
carefully assess risks to U.S. interests and quickly respond.

    The Trump and Biden administrations both engaged in actions to 
identify critical supply chain risks and identify actions that must be 
taken to abate these risks. Those are important initiatives. But much 
more must be done. An important action would be passing legislation 
based on the proposal you and Senator Cornyn introduced to include an 
outbound investment screening approach and which was included in the 
House America COMPETES package. The U.S.-China Economic and Security 
Review Commission in its 2021 Annual Report to Congress identified the 
goals of your legislation among its top ten recommendations. Congress 
should quickly act to adopt such an approach.

                                 ______
                                 
               Questions Submitted by Hon. John Barrasso
    Question. Chinese overcapacity of steel, aluminum, cement, 
chemicals and numerous other industrial inputs is part of a broader 
strategy to drive down prices and put international competitors out of 
business. Chinese state-owned enterprises and export subsidies hurt 
American businesses and workers. In Wyoming, our soda ash producers and 
steel pipe and tubing producers know firsthand how difficult it is to 
compete with China in the marketplace.

    Where should the U.S. focus our efforts in the Indo-Pacific to 
counter China's export subsidies and overcapacity?

    Answer. China has been seeking to export its overcapacity and 
undermine 
market-based producers around the globe and has been doing so through 
direct and indirect assaults on our producers and workers in a variety 
of sectors. In the Indo-Pacific, the most immediate threat from China's 
actions comes from transshipment of its products through countries such 
as Vietnam, South Korea, and others in an effort to circumvent and 
evade existing relief measures under U.S. law against unfair trade. 
China has also invested in many of these countries in an effort to 
create production facilities that will utilize subsidized and dumped 
input to gain market share and opportunities. If an Indo-Pacific 
Economic Framework proceeds, it should include measures to engage 
partners in the region to respond and contain Chinese practices.

    Question. The Chinese Communist Party continues to commit terrible 
human rights abuses. The Uyghurs, a religious and ethnic minority in 
China, have experienced brutal repression at the hands of the Chinese 
Government. They continue to be subjected to torture, imprisonment, and 
forced labor. At least 1 million Uyghurs have been put in internment 
camps by the Chinese Communist Party. Around 100,000 Uyghurs and ethnic 
minority ex-detainees have reportedly been used as forced labor in 
textile and other industries in China.

    How effective have U.S. actions been at addressing the human rights 
abuses and the use of forced labor?

    How can this framework improve our efforts to crack down on China 
and increase transparency and enforcement?

    Answer. Efforts to address human rights abuses and the use of 
forced labor fostered by the Chinese Communist Party have been limited 
and inadequate. The result of limited commitment to enforcement and 
promotion of human rights is evident not only in the treatment of the 
Uyghurs and other ethnic minorities, but the attack on human rights in 
Hong Kong and across the mainland. Congress's passage of the Uyghur 
Forced Labor Protection Act was an important step forward but the 
implementation of that Act and the adequacy of the regulations now 
being drafted is still very much in question.

    The actions of the last several years in this critical area, and in 
broader terms relating to concerns about supply chains supporting our 
Nation's needs have drawn needed scrutiny on China and other Nation's 
economic relationships with the U.S. We must learn from these efforts 
to identify risks in our supply chains ranging from critical products, 
to those that support efforts to suppress human rights, democracy and 
freedom and quickly respond.

                                 ______
                                 
                 Prepared Statement of Hon. Ron Wyden, 
                       a U.S. Senator From Oregon
    The Finance Committee meets this morning to discuss the challenges 
and opportunities in stepping up our economic ties with countries in 
Asia and the Pacific. The Indo-Pacific region accounts for half the 
world's population. It's full of like-minded democracies and growing 
economies. As one of the gateways to the Pacific, Oregon has a lot to 
gain from this opportunity. One in five jobs in Oregon is trade-
related, and those jobs pay better on average than non-trade jobs.

    When you look across the Pacific, there are big markets for 
everything, from Oregon blueberries and alfalfa to manufactured goods 
to services. Raising environmental standards and ensuring robust labor 
rights in the region could also help level the playing field for 
American workers.

    Last fall the Biden administration kicked off an effort to develop 
a wide-ranging economic framework with several countries in the region. 
There's a long way to go before any such framework comes together, so 
today's hearing gives this committee an opportunity to discuss key 
issues and priorities at the outset of the process.

    First, the United States must fight for a free and open Internet. 
The U.S. sees the Internet as a venue for free speech and commerce. 
Authoritarian governments like China's do not. The competition between 
those two visions is a fight the U.S. must win. Otherwise, Americans 
get hit with a one-two punch. First, authoritarian regimes block 
American exports, and then they export their censorship laws to us.

    The most significant example is the Chinese Government and its 
Great Firewall. When the Internet began to take off a few decades ago, 
Americans were the first ones out of the gate, launching companies with 
big, innovative ideas. The Chinese Government decided it couldn't 
compete on the level. Instead, it blocked the American firms, ripped 
off their ideas, and started clone companies under tight censorship 
rules. As those Chinese tech firms have grown, the reach of their 
censorship has grown too, with repressive effects on the American 
people.

    The Chinese Government is not a part of these Indo-Pacific 
discussions, nor should it be. Even still, winning the fight for a free 
and open Internet requires the U.S. to push for digital rules that lock 
in freedom and openness with our allies at every opportunity. There is 
bipartisan interest in fighting this censorship, so the committee is 
going to watchdog this issue in the months and years ahead.

    Second, the U.S. must fight to raise the bar on labor rights. 
Democrats in Congress fought to make sure that the recent USMCA would 
be the strongest agreement in history when it comes to worker 
protections. It's essential to continue to build on that progress with 
enforceable labor obligations that fit the region and the task. This 
includes combating the scourge of forced labor, which is a top priority 
for this committee. The truth is, forced labor and economic oppression 
overall are part of the Chinese Government's economic model. It's not 
only morally repugnant, it's a major threat to American workers and 
jobs.

    Senator Brown and I closed a major loophole in our forced labor law 
in 2015, and the challenge now is making sure that the law is fully 
enforced. While the U.S. continues to fight against forced labor in 
China, it's also essential to prevent a race to the bottom on labor 
rights in other countries too.

    Labor rights and environmental protections often go hand in hand. 
For example, there's a big need for strong new rules on subsidized 
fisheries. In some parts of the world, highly subsidized and poorly 
regulated fleets are abusing workers and massively overfishing the 
waters. It's not sustainable, and everybody loses in the end, including 
the abused workers and Oregon fishermen who should never have to 
compete with forced labor.

    Third, in all areas of trade policy, this committee also believes 
in the old adage ``sunlight is the best disinfectant.'' In 2015, the 
Finance Committee raised the bar for transparency in trade 
negotiations, because the American people expect it and so do we. That 
means consultations with Congress and access to the text of any 
agreement before it's signed. These new discussions in the Indo-Pacific 
region will need to meet that transparency standard too.

    I'll close on a broader issue. While the committee meets for this 
hearing, there's a terrible war happening about 5,000 miles to the 
east. The events of the last few weeks show the importance of our 
economic alliances, as well as the power they generate for the United 
States and our friends around the world.

    In this unprovoked, unjustifiable war, Vladimir Putin has killed 
thousands of Ukrainians, displaced millions, and decimated cities. The 
U.S. has marshaled the collective strength of our economic allies to 
hit Russia with the most severe economic sanctions in history. Russia's 
economy is in freefall. The country is isolated. Putin is the head of a 
pariah state.

    This is proof that strong economic alliances add up to a whole lot 
more than ``soft'' power. The U.S. is putting that power to work, 
punishing Russia's government and helping in the fight for democracy. 
The more economic allies America has, the better.

                                 ______
                                 

                             Communications

                              ----------                              


                        Center for Fiscal Equity

                      14448 Parkvale Road, Suite 6

                          Rockville, MD 20853

                      [email protected]

                    Statement of Michael G. Bindner

Chairman Wyden and the Ranking Member Crapo, thank you for the 
opportunity to submit these comments for the record. We have attached 
our comments to the Subcommittee on International Trade, Customs, and 
Global Competitiveness from June of last year, as well as our 
attachment on fighting forced labor.

Forced labor is also a concern outside of China. When poor people go to 
work, especially children, they accept conditions that are simply 
unacceptable in the developed world. International inspection, (which 
includes the American workplace), would help this. International 
employee-ownership, with transfer pricing based on a common market 
basket of worker goods, is the ultimate solution.

Let me reiterate--we are not exemplars in the matter of forced labor. 
It can be found on our soil. By the same token, we are not as 
``developed'' as we think we are. American development is uneven. In 
some parts of the country, poverty and poor labor conditions are as 
common as any ``third world'' country. Meanwhile, some nations on the 
pacific rim are as advanced as we are. Just as there is a global upper 
class, there is a global middle class. We don't have a monopoly on 
skyscrapers or fast food.

From the Indian subcontinent to southeast Asia and Indonesia, a key 
concern is climate change. When I shared that I was doing comments for 
this hearing with a friend in Jakarta, she responded with a map of 
global sea level rise. I had already seen it.

Warming in the United States is merely inconvenient. In the Indo-
Pacific region, it will be deadly. Island nations and Bangladesh will 
simply be eliminated. This constitutes a large share of the global 
population. Java has 154 million people in the same space that the 
United States has 53 million in the Boston-Washington urban cluster. 
Visualize relocating them.

Sea level rise is more than the matter for academic debate (which is 
largely settled--climate change is an imminent threat). It is time to 
be serious people on this issue.

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.

 Multilateral Approach to Trade Policy in the Asia-Pacific Region, June 
                    22, 2021

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?

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.

. . . 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. 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 from Finance: Fighting Forced Labor, March 18, 2021

. . . The other issue with China, as well as south Asia and the global 
south, is de facto slavery.

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 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.

                                 ______
                                 
                    E-Merchants Trade Council, Inc.

                 1655 North Fort Myer Drive, Suite 700

                          Arlington, VA 22209

                             (703) 574-0000

                              www.emtc.org

The E-Merchants Trade Council, Inc. (EMTC) appreciates the opportunity 
to submit comments on ``The Promise and Challenge of Strategic Trade 
Engagement in the Indo-Pacific Region,'' which was the subject of a 
hearing before the U.S. Senate Finance Committee on March 15, 2022.

EMTC was formed in July 2021 to represent the interests of the e-
commerce industry by creating a global community of micro, small and 
medium size enterprise (MSMEs) e-sellers, marketplace platforms, and 
service providers to resolve trade, tax and transportation challenges. 
EMTC's advocacy mission is to support national and international 
policies that simplify cross-border transactions of physical and 
digital goods. EMTC facilitates dialogue among the E-Merchant worldwide 
community and global regulators.

Since Chairman Wyden and Ranking Member Crapo emphasized digital trade, 
we hope the Committee finds EMTC's comments particularly relevant.

1. Policy objectives: What is the goal of strategic trade with the 
Indo-
Pacific Region?

We understand that the Senate Finance Committee is concerned about the 
significant impact of China's engagement with the other countries in 
the Indo-Pacific Region through the Regional Comprehensive Economic 
Partnership (RCEP) which covers 15 countries.

As Kelly Ann Shaw noted in her testimony before the Committee:

        [t]he Indo-Pacific is our backyard, filled with military allies 
        and important trading partners. Two-way trade with the region 
        totals upward of $1.75 trillion. But when it comes to our 
        economic vision, the concept of a free and open ``Indo-
        Pacific'' has turned into something we say, rather than 
        something we do.

See, ``The Promise and Challenge of Strategic Trade Engagement in the 
Indo-Pacific Region:'' Hearing before Senate Finance Committee, 
Statement of Kelly Ann Shaw.

EMTC proposes that the Biden Administration and Congress consider that 
an Indo-Pacific Economic Framework (IPEF) combine the best elements of 
trade liberalization and national security. EMTC envisions an economic 
and security agreement that prioritizes:

      Market access for all industry sectors in all IPEF countries.
      Full implementation of the WTO Trade Facilitation Agreement for 
small-
medium enterprises.
      Export control regime and security agreement.
      Digital trade.
      Supply chain resilience.

2. Market access for all industry sectors in all IPEF countries

EMTC strongly urges the Biden Administration to prioritize market 
access for all industry sectors in IPEF. Past administrations made the 
mistake of prioritizing certain industries over others (e.g., 
pharmaceuticals over tobacco), and this had consequences for the 
failure to pass the Trans-Pacific Partnership (TPP). The Centers of 
Excellence and Expertise and Small Business Administration should 
create online access for SMEs to identify and interact digitally for 
opportunities in the Indo-
Pacific region to reduce dependence on the current limited number of 
lower cost sourcing countries. Market access requires the development 
of trust through accountability in governance of the supply chain.

3. Full implementation of the WTO Trade Facilitation Agreement for 
small-medium enterprises

EMTC notes that the WTO Trade Facilitation Agreement has been in force 
for five (5) years. While several IPEF countries have already achieved 
100% of implementation commitments (e.g., Australia, India, Japan), 
other countries have not (e.g., Vietnam).\1\ IPEF may provide an 
opportunity for capacity building as a catalyst for countries to 
achieve 100% implementation. EMTC suggests that preferential financing 
or other trade benefits be contingent upon specific implementation 
goals.
---------------------------------------------------------------------------
    \1\ See, WTO May--Progress on Implementation Commitments at https:/
/tfadatabase.org/implementation/progress/map.

---------------------------------------------------------------------------
4. Export control regime and security agreement

EMTC recognizes that Congress made significant progress in national 
security legislation with passage of the John S. McCain National 
Defense Authorization Act, Pub. L. 115-232 (August 13, 2018) by 
enacting the Foreign Investment Risk Review Modernization Act of 2018 
(132 Stat. 2173) and Export Control Reform (132 Stat. 2208) as part of 
the same regime to work in concert with each other. EMTC believes that 
more IPEF countries should be enticed to become military allies of the 
United States with all the benefits that accrue for purposes of foreign 
direct investment in the United States and export controls for 
technology to IPEF members.

5. Digital trade

EMTC believes that IPEF should address both the cross-border shipment 
of physical goods ordered online (e-commerce) and treatment of digital 
goods (e.g., cross-border digital transmission, data collection, data 
flows, data localization rules, etc.).

For e-commerce, EMTC strongly believes that prioritizing increasing the 
de minimis threshold for low-value shipments will go a long way to 
increase MSME participation in global trade, especially as e-seller 
exporters. Most of the countries in the IPEF have a de minimis level 
between $0 and $200 whereas the United States de minimis threshold is 
$800. The United States was successful in getting Canada and Mexico to 
increase their de minimis in the U.S.-Mexico-Canada Agreement (USMCA).

Title 19 U.S.C. Sec. 1321 on Administrative Exemptions has been part of 
the customs statute since the Tariff Act of 1930. Specifically, the de 
minimis threshold under 19 U.S.C. Sec. 1321(a)(2)(C) for articles free 
of duty ``in any other case'' was initially set at $1 and periodically 
raised by Congress--first, to $5 in 1978, and $200 in 1993 as part of 
the Customs Modernization Act, Title IV of NAFTA.\2\ Congress increased 
the de minimis to $800 recently in the Trade Facilitation and Trade 
Enforcement Act of 2015, Pub. L. 114-125, 130 Stat. 223. As these 
amendments demonstrate, Congress has raised the de minimis every few 
decades taking into account the erosion of purchasing power as a result 
of inflation. EMTC believes this level for de minimis is appropriate 
given reports of inflation at over 6% for 2021 and in excess of 7.5% 
year-to-date. Congress should commit support for the current U.S. de 
minimis level and stress for near reciprocity in treatment of low value 
shipments in the Indo-Pacific countries within a limited phased 
implementation period.
---------------------------------------------------------------------------
    \2\ See list of legislative amendments for 19 U.S.C. Sec. 1321 at 
https://uscode.house.gov/view.
xhtml?path=/prelim@title19/chapter4&edition=prelim.

We recognize that Congress has plenary authority to set trade policy 
---------------------------------------------------------------------------
and tax rates:

        The Congress shall have Power To lay and collect Taxes, Duties, 
        Imposts and Excises, to pay the Debts and provide for the 
        common Defense and general Welfare of the United States; but 
        all Duties, Imposts and Excises shall be uniform throughout the 
        United States.

U.S. Const. art. I, Sec. 8, cl. 1. However, EMTC is alarmed by the 
possibility of Congress revisiting de minimis and lowering the 
threshold under 19 U.S.C. Sec. 1321(a)(2)(C) as such policy instability 
makes it very difficult for companies to plan when they have organized 
their business operations based on the $800 threshold level. It is 
precisely because Congress has only increased the de minimis threshold 
infrequently every few decades that makes the possibility of a change 
after only five (5) years from passage of TFTEA in 2016 greatly 
concerning to the trade community, particularly e-commerce marketplace 
platforms, e-sellers and companies that provide trade and 
transportation services to e-commerce companies.

Since the passage of TFTEA in 2016, the trade community faced the 
prospect of lowering the de minimis threshold under 19 U.S.C. 
Sec. 1321(a)(2)(C) twice. First, during the negotiation of the USMCA in 
2019, the Administration negotiated to raise the de minimis threshold 
for imports to Mexico (to $117) and Canada (to $150), but included a 
footnote:

        Notwithstanding the amounts set out under this subparagraph, a 
        Party may impose a reciprocal amount that is lower for 
        shipments from another Party if the amount provided for under 
        that other Party's law is lower than that of the Party.

USMCA Ch. 7 Customs Administration and Trade Facilitation, Article 
7.8.1(f) Express Shipments, footnote 3 at 7-7.\3\ As a result of the 
trade community's advocacy efforts, Congress wrote a letter to the U.S. 
Trade Representative stating:
---------------------------------------------------------------------------
    \3\ See https://ustr.gov/sites/default/files/files/agreements/FTA/
USMCA/Text/07_Customs_
Administration_and_Trade_Facilitation.pdf.

        We strongly oppose any effort by the Executive Branch to lower 
        the current $800 de minimis threshold through USMCA 
        implementing bill, including any amendment to 19 U.S.C. 1321 
        that would grant the Executive Branch additional authority to 
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        decrease or eliminate the threshold.

        The U.S. de minimis threshold is a policy recently set by 
        Congress, which raised the threshold from $200 in 2016. The 
        current de minimis threshold still enjoys wide bipartisan 
        support in Congress and throughout the manufacturing, retail, 
        logistics, and e-commerce landscapes. In our view, it is 
        neither necessary, appropriate, nor desirable to change this 
        policy in U.S. law as part of the implementation of USMCA's 
        requirements. In fact, we consider that such an effort would 
        amount to an override of Congressional authority by the 
        Executive Branch, and thus would be entirely inappropriate.

Letter from the Congress of the United States to Ambassador Robert E. 
Lighthizer, U.S. Trade Representative dated October 18, 2019.\4\
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    \4\ See letter at: https://schweikert.house.gov/sites/
schweikert.house.gov/files/2019-10-18%20de
%20minimis%20threshold%20letter.%20Schweikert.%20Kind.pdf.

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6. Supply chain resilience

As Congress considers several pieces of legislation to build supply 
chain resilience to counteract the reliance that the United States 
found itself in the difficult position of relying on China for many 
commodities (e.g., active pharmaceutical ingredients) and products 
(e.g., personal protective equipment) during COVID-19, IPEF should 
create incentives to manufacture critical products in countries that 
are U.S. military allies if they cannot be produced in the United 
States. One method of achieving resilience is to jointly map supply 
chains among the partners in the Indo-Pacific region to identify 
mutually beneficial chains to ensure consistent competitively priced 
supplies among the partners through multi-lateral trade agreements and 
de minimis programs.

Global trade volumes have increased and evolved since 1993, and the 
Congress has enacted a series of laws after the attacks of September 
11, 2001, designed to balance the needs of the U.S. Government to 
collect data for supply chain security and the need to facilitate 
legitimate trade. See, Trade Act of 2002, Pub. L. 107-210, 116 Stat. 
933 (August 6, 2002); the Security and Accountability for Every (SAFE) 
Port Act of 2006, Pub. L. 109-347, 120 Stat. 1884 (October 13, 2006); 
Implementing Recommendations of the 9/11 Commission Act of 2007, Pub. 
L. 110-53, 121 Stat. 266 (August 3, 2007); and the Trade Facilitation 
and Trade Enforcement Act of 2015, Pub. L. 114-125, 130 Stat. 122 
(February 24, 2016). However, none of these laws were a holistic 
revision of the statutory framework that has been in place since the 
Tariff Act of 1930.

We understand that a primary driver of IPEF is countering China's 
unfair trade practices. To accomplish this, EMTC recommends focusing on 
creating a risk management framework that:

      Increases supply chain visibility and access through the use of 
transparent digital markets;
      Supports trade facilitation by simplifying cross-border 
transactions and clarification of data elements (country of origin 
calculations) given the competitive advantages this affords the U.S.;
      Targets risk management techniques to be introduced through 
entity-based risk management rather than an entry transaction-based 
system; and
      Advocates for the use of recognized governance standards and 
controls (ISO, COSO) to drive accountability and interoperability in 
ecommerce transactions that result in broad alignment on key common 
issues with similar agreed upon outcomes This type of regime would 
allow for a better assessment of the control environment which would be 
more effective in verifying the integrity and resilience of the supply 
chain.

EMTC's recommendation is based on our experience with previous laws 
passed to increase visibility in the supply chain, such as the Lacy Act 
Amendments passed as part of the Food, Conservation, and Energy Act of 
2008, Pub. L. 110-246, 122 Stat. 2952 (June 18, 2008) and Conflict 
Minerals included in the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, 111-203, 124 Stat. 2213 (July 21, 2010). Neither of 
these laws achieved their policy objectives. In the case of the Lacey 
Act Amendments, the most significant enforcement action was the 
criminal enforcement agreement against Gibson Guitar Corp. with a 
penalty of $300,000, $50,000 payment to the National Fish and Wildlife 
Foundation, and civil forfeiture of $261,844 worth of Madagascar ebony. 
In the case of the ban on importation of Conflict Minerals from 
Democratic Republic of the Congo, several companies instead found that 
their products contain North Korean gold. See, Dozens of Firms Report 
N. Korea Gold in Supply Lines, Wall Street Journal (June 4, 2014); 
Banned North Korean gold taints U.S. products reported in MarketWatch 
(June 5, 2014). Any U.S. law designed to keep certain commodities out 
of the U.S. ultimately fails because these are sourcing issues, rather 
than supply chain issues.

7. Conclusion

EMTC appreciates the opportunity to comment on the Promise and 
Challenge of Strategic Trade Engagement in the Indo-Pacific Region, and 
we are happy to discuss the ideas expressed above in more detail. The 
critical components to effective strategic engagement to drive regional 
prosperity in the Indo-Pacific Region are local accountability, 
regional interoperability and risk management based upon globally 
accepted standards. The Strategy cannot create barriers to trade by 
raising or creating various taxes, setting unachievable standards or 
commitments and expects to participate in a market of 1.5 billion 
people. Rather, setting achievable, transparent standards and working 
towards alignment on key issues with agreed upon outcomes not 
regulations will facilitate the growth of trust among partners and 
therefore resiliency to threats, increased trade among the participants 
and exclusion of less desirable partners (e.g., PRC).

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