[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                       HEARING ON ADVANCING AMERICA'S INTERESTS 
                        AT THE WORLD TRADE ORGANIZATION'S 13TH 
                        MINISTERIAL MEETING

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON TRADE

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 7, 2024

                               __________

                           Serial # 118-TR04

                               __________

         Printed for the use of the Committee on Ways and Means
         
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                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
55-470                       WASHINGTON : 2024                    
          
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                      COMMITTEE ON WAYS AND MEANS

                    JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida               RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania             MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona            JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois               EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio                  BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas               DANNY DAVIS, Illinois
DREW FERGUSON, Georgia               LINDA SANCHEZ, California
RON ESTES, Kansas                    TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania          SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma                 JUDY CHU, California
CAROL MILLER, West Virginia          GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina          DAN KILDEE, Michigan
DAVID KUSTOFF, Tennessee             DON BEYER, Virginia
BRIAN FITZPATRICK, Pennsylvania      DWIGHT EVANS, Pennsylvania
GREG STEUBE, Florida                 BRAD SCHNEIDER, Illinois
CLAUDIA TENNEY, New York             JIMMY PANETTA, California
MICHELLE FISCHBACH, Minnesota        JIMMY GOMEZ, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
                       Mark Roman, Staff Director
                 Brandon Casey, Minority Chief Counsel
                                 ------                                

                         SUBCOMMITTEE ON TRADE

                    ADRIAN SMITH, Nebraska, Chairman
VERN BUCHANAN, Florida               EARL BLUMENAUER, Oregon
DARIN LaHOOD, Illinois               DAN KILDEE, Michigan
JODEY ARRINGTON, Texas               JIMMY PANETTA, California
RON ESTES, Kansas                    SUZAN DelBENE, Washington
CAROL MILLER, West Virginia          DON BEYER, Virginia
LLOYD SMUCKER, Pennsylvania          LINDA SANCHEZ, California
GREG MURPHY, North Carolina          TERRI SEWELL, Alabama
GREG STEUBE, Florida                 BRAD SCHNEIDER, Illinois
MICHELLE FISHBACH, Minnesota
DAVID KUSTOFF, Tennessee
                                CONTENTS

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hon. Adrian Smith, Nebraska, Chairman............................     1
Hon. Earl Blumenauer, Oregon, Ranking Member.....................    44
Advisory of February 7, 2024 announcing the hearing..............     V

                               WITNESSES

Dennis Shea, Executive Director, J. Ronald Terwilliger Center for 
  Housing Policy, Bipartisan Policy Center; former Deputy U.S. 
  Trade Representative and U.S. Ambassador to the World Trade 
  Organization...................................................     3
Bobby Hanks, CEO, Supreme Rice; Chair, International Trade Policy 
  Committee, USA Rice Federation.................................    11
Kelly Ann Shaw, Partner, Hogan Lovells; Lecturer in Law, Columbia 
  Law School; former Deputy Assistant to the President for 
  International Economics........................................    21
Eddie Sullivan, President, SAB Biotherapeutics, Inc..............    27
Bruce Hirsh, Founder, Tailwind Global Strategies, LLC............    34

                        QUESTIONS FOR THE RECORD

Member Questions for the Record and Responses from Bruce Hirsh, 
  Founder, Tailwind Global Strategies, LLC.......................    93

                   PUBLIC SUBMISSIONS FOR THE RECORD

Public Submissions...............................................    96

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 ADVANCING AMERICA'S INTERESTS AT THE WORLD TRADE ORGANIZATION'S 13TH 
                          MINISTERIAL MEETING

                              ----------                              


                      WEDNESDAY, FEBRUARY 7, 2024

                  House of Representatives,
                             Subcommittee on Trade,
                               Committee on Ways and Means,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:03 a.m., in 
Room 1100, Longworth House Office Building, Hon. Adrian Smith 
[chairman of the subcommittee] presiding.
    Chairman SMITH. Good morning. The subcommittee will come to 
order.
    I appreciate my colleagues. Certainly, thank you to our 
panel here for being here today.
    We meet at an important time for international trade. At 
the end of the month, the world's economies will meet in Abu 
Dhabi for the World Trade Organization's 13th Ministerial 
Meeting.
    This ministerial represents both a challenge and an 
opportunity. On one hand, protectionist nations aim to use the 
ministerial as a chance to undermine intellectual property 
rights, fragment the global market, and promote gross 
protectionism in agriculture. Despite this, the ministerial 
offers a pivotal opportunity for U.S. leadership. Countless WTO 
members are looking to our country to defend the free flow of 
data, protect IP rights, and drive a hard bargain for the new 
rules against unfair practices, starting with fisheries 
subsidies.
    The purpose of today's hearing is to help us meet this 
moment and signal to the Biden administration what strong U.S. 
leadership at the WTO looks like. This should not be a partisan 
issue.
    Since 1947, the multilateral trading rules have been a key 
element of American competitiveness. Today, 65 percent of U.S. 
trade is covered exclusively by WTO rules rather than any rules 
from our free trade agreements. Our farmers, ranchers, small 
businesses, and workers need strict enforcement of these rules 
to export competitively.
    Yet, the WTO is not without challenges. Negotiations for 
new trade agreements have stalled as a handful of spoiler 
countries veto progress on new ag market access or trade in 
environmental goods. Judicial activism by the WTO's appellate 
body has undermined confidence in the organization and degraded 
the ability of the U.S. to hold China accountable for its 
unfair practices. Many countries, especially China, either do 
not play by certain rules, such as those requiring notification 
of subsidies, or in other cases, engage in predatory, unfair, 
and anti-free market behavior outside the scope of the WTO's 
rules. All of these challenges come at a cost to American 
farmers, workers, and small businesses.
    These concerns about the WTO are widely shared, long-
standing, and bipartisan. Yet the Biden administration appears 
poised to cede U.S. leadership.
    I was deeply disappointed when the administration withdrew 
robust digital trade proposals from the, quote, ``joint 
initiative on e-commerce,'' end quote, negotiations at the WTO. 
These rules, which received overwhelming bipartisan support in 
the U.S.-Mexico-Canada Agreement, are key to U.S. innovation 
leadership. This digital trade abdication does not inspire 
confidence that the administration will vigorously defend the 
renewal of the long-standing moratorium on the imposition of 
customs duties on electronic transmissions.
    Similarly, I strongly oppose the waiver of IP rights for 
COVID-19 vaccines that the Biden administration agreed to at 
the 12th ministerial. To make matters worse, the administration 
is considering whether to expand that waiver to the IP for 
diagnostics and therapeutics. Such a move would be as harmful 
as it is illogical. Recent independent analysis by the 
International Trade Commission found that, generally, IP is not 
a barrier to access for COVID-19 treatments.
    At the last ministerial, WTO members finally reached an 
agreement on fisheries subsidies. While I was pleased to see 
some progress to limit subsidies for illegal, unreported, and 
unregulated fishing, the initial agreement does not cover other 
harmful practices like forced labor or subsidies that 
contribute to fishing overcapacity. As WTO members discuss a 
second phase of the fisheries agreement later this month, we 
need to know that the Biden administration will negotiate 
aggressively to address these exploitative practices.
    I want to thank our witnesses again for their 
participation, and I look forward to hearing what we can do to 
ensure continued U.S. leadership at the WTO.
    Chairman SMITH. Mr. Blumenauer will be here shortly, and so 
we will certainly proceed with our witness testimony and then 
recognize him when he does arrive.
    I now have the pleasure of introducing our witnesses.
    Dennis Shea is executive director of the J. Ronald 
Terwilliger Center for Housing Policy at the Bipartisan Policy 
Center and previously served as deputy U.S. trade 
representative as a U.S. ambassador to the WTO.
    Bobby Hanks is CEO of Supreme Rice and currently serves as 
chair of USA Rice Federation's International Trade Policy 
Committee.
    Kelly Ann Shaw, no stranger to this committee room, is 
partner at Hogan Lovells, a lecturer in law at Columbia Law 
School, and is a former deputy assistant to the President for 
international economics. Ms. Shaw also served here at the Ways 
and Means Committee as a trade counsel. Welcome back.
    Eddie Sullivan is president of SAB Therapeutics. I 
appreciate you being here today.
    And lastly, Bruce Hirsh is founder of Tailwind Global 
Strategies, LLC.
    Again, thank you for sharing your insights here today. Your 
written statement will be made part of the record, and you each 
have 5 minutes to deliver your remarks. You will see the timing 
light there, and when that turns yellow, if you could bring the 
flag in for landing, we will be all better off for that.
    We do have votes that will be sooner rather than later, so 
I hope we can get as much done before votes happen.
    So, Mr. Shea, you may begin with your 5 minutes.

    STATEMENT OF DENNIS SHEA, EXECUTIVE DIRECTOR, J. RONALD 
   TERWILLIGER CENTER FOR HOUSING POLICY, BIPARTISAN POLICY 
   CENTER, FORMER DEPUTY U.S. TRADE REPRESENTATIVE AND U.S. 
           AMBASSADOR TO THE WORLD TRADE ORGANIZATION

    Mr. SHEA. Well, Chairman Smith, Ranking Member Blumenauer, 
and members of the subcommittee, thank you for the opportunity 
to appear before you today. Let me emphasize I am speaking 
solely in my personal capacity.
    As U.S. ambassador to the WTO during the Trump 
administration, it was a privilege to work with USTR Bob 
Lighthizer to try to reinvigorate the WTO through a 
comprehensive reform agenda that included a major effort to 
improve transparency, a reaffirmation that market orientation 
is a fundamental WTO norm, the establishment of objective 
criteria for determining whether a WTO member may avail itself 
of special and differential treatment, and a comprehensive 
critique of the institutional creep of the WTO's appellate body 
which had done much damage to the interest of the United 
States.
    During my WTO tenure, the U.S. was also an active 
participant in the JSI on Electronic Commerce, one of the new 
plurilaterals that emerged from MC11. In this negotiation, we 
insisted on strong and reciprocally assumed disciplines that 
protect cross-border data flows, prohibit data localization 
mandates, and safeguard U.S.-owned source code from forced 
disclosure.
    A major focus of my work was also educating other WTO 
members about the incompatibility of the state-led nonmarket 
economy of China with WTO norms of openness, nondiscrimination, 
and market orientation.
    Despite these efforts and the current administration's 
approach of ``WTO-reform-by-doing,'' it seems very little has 
changed in Geneva that would signal a sustained upward 
trajectory for the organization. Recent dispute settlement 
panel decisions challenging the self-judging nature of the 
essential security exception in GATT article XXI(b) have set 
the WTO back further.
    So, what can we expect at MC13? To answer this question, 
let's look first at the outcomes of MC12. In my judgment, the 
following outcomes were important and gave WTO some--diminished 
WTO some space to argue for its continuing relevance. I am 
talking about the 2-year extension of the moratorium on customs 
duties for electronic transmissions, a new multilateral 
agreement prohibiting certain harmful fisheries subsidies, and 
a ministerial decision exempting World Food Program 
humanitarian purchases from export prohibitions.
    One MC12 outcome, however, was decidedly against U.S. 
interests, a ministerial decision waiving TRIPS Agreement 
protections for COVID-19 vaccines.
    Looking ahead to MC13, the outcomes we can expect are 
likely to be even less ambitious than those achieved at MC12, 
and from the U.S. perspective, I think that should be perfectly 
acceptable.
    The one must-do at MC13 is extending the current moratorium 
on the imposition of customs duties on electronic transmissions 
until at least the next ministerial. While the prospects of 
establishing a permanent moratorium at MC13 are remote, another 
2-year extension combined with a robust work program should be 
a good outcome.
    A nice-to-have outcome at MC13 would be a follow-up fish 
agreement that disciplines harmful subsidies that contribute 
specifically to overcapacity and overfishing. Developing strong 
disciplines for these types of subsidies has always been a key 
U.S. negotiating objective, including during the Trump 
administration.
    In terms of must-not-dos, the first is getting pushed into 
an unacceptable agreement on dispute settlement reform, 
particularly if it leads to restoration of the appellate body. 
The U.S. has consistently argued the appellate body's intended 
mandate was a limited one to correct legal errors by panels and 
to do so expeditiously. It is clear that some WTO members view 
the appellate body quite differently as an independent 
international court charged with establishing binding 
precedent, filling gaps in the WTO agreements, and creating a 
global common law of trade, and reconciling this clash of 
visions can't be papered over with a few word tweaks.
    A second must-not-do is expanding the misguided TRIPS 
waiver to COVID-19 therapeutics and diagnostics as China, 
India, and South Africa have urged.
    With respect to agriculture, the Trump administration 
advocated for a reset of negotiations based on an updated 
understanding of the state of agricultural trade. In various 
fora, we asked how the WTO could credibly negotiate disciplines 
in agricultural domestic support when we do not have a clear 
picture of what the largest subsidizers in the world are doing. 
And similarly, the Biden administration has called for a 
holistic approach to negotiations.
    With very little movement, it appears that the agricultural 
outcome at MC13 will be limited to a work program leading up to 
MC14. In the discussions at MC13, the United States should 
continue to insist on greater transparency and the need to 
liberalize agricultural trade through lower tariffs and greater 
market access.
    Thank you.
    [The statement of Mr. Shea follows:]
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    Chairman SMITH. Thank you. Thank you for your testimony.
    Mr. Hanks, you are recognized for 5 minutes.

      STATEMENT OF BOBBY HANKS, CEO, SUPREME RICE; CHAIR, 
   INTERNATIONAL TRADE POLICY COMMITTEE, USA RICE FEDERATION

    Mr. HANKS. Good morning, Chairman Smith, Ranking Member 
Blumenauer, and members of the subcommittee. Thank you for the 
opportunity to testify before you today concerning agriculture 
and the WTO.
    My name is Bobby Hanks. I am the CEO of Supreme Rice, a 
mill in Crowley, Louisiana, where we process more than a 
billion pounds of U.S. rice per year. My wife, Molly, and I are 
proud to have raised our three children in the town of Crowley 
and to have a business that provides more than 300 critical 
jobs in rural Louisiana and Arkansas.
    I am here today representing USA Rice, the global advocate 
for U.S. rice industry, a $34 billion industry representing 
American rice farmers, millers, merchants, and allied 
businesses.
    Rice is grown on approximately 3 million acres of family 
farmland across the U.S. About half of our rice is consumed 
here, while the other half is exported to more than 120 
countries around the globe.
    It is widely understood and accepted that the global rice 
market is among the most distorted of any sector, a factor that 
underscores the vital importance of the U.S. farm safety net 
for rice farmers. The impact of the price distortion of world 
rice prices on our industry is the main reason we are 
represented here today and because the WTO should and could 
play a vital role in making sure our industry can compete 
fairly.
    Over the last 20 years, rice imports into the United States 
have grown 286 percent, primarily driven by imports from 
heavily subsidized Asian rice. Without intervention, this 
troubling trend is likely to continue.
    I acknowledge that the WTO has its problems. Disputes take 
too long and have too many administrative hurdles, raising 
costs for both plaintiffs and defendants. We also need to see 
the WTO members do a better job notifying their policies 
accurately to the WTO.
    Many countries are extremely delinquent or use faulty 
methodology which obscures the real policy effects. This makes 
it difficult to monitor policies and negotiate new rules. 
Without appropriate enforcement around transparency, trust in 
the WTO system erodes.
    This is why USA Rice led the way in bringing together about 
a dozen other organizations to form a coalition that we call 
Aggies for WTO Reform, with the goal of encouraging and 
supporting robust U.S. engagement at the WTO on agricultural 
issues, including dispute settlement. We want the WTO to work 
better, to be a place where negotiations can happen, and where 
rules can be enforced.
    One of the coalition's top goals is to avoid backsliding on 
agricultural commitments, including at the upcoming MC13. We 
are especially concerned about the insistence of India that 
their subsidies for commodities like rice should be exempt from 
the WTO rules. India has threatened to take hostage virtually 
any outcome at the WTO unless they get what they want. But for 
our coalition, the status quo is better than the outcome the 
Indian delegation at the WTO have proposed.
    India tends to demand permanent public stockholding 
exceptions at MC13 by holding up progress on negotiations 
across the WTO chapters. By tying public stockholding to 
unrelated discussions, India may prevent any critical 
breakthroughs around dispute settlement and the eventual 
restoration of the appellate body.
    India has a limit of 10 percent of the value of production 
that it can provide to rice specifically. In 2020-2021, they 
were subsidizing up to 93.9 percent, according to the U.S. That 
must change.
    We are grateful to USTR and USDA for continuing to hold the 
line and prevent backsliding, but we need the U.S. Government 
to better engage and lead the way in WTO reform negotiations at 
MC13 and beyond. USA Rice and some Members of Congress, 
including members of this distinguished panel, have repeatedly 
urged USTR to file a dispute against India who, last year, 
controlled 40 percent of the global rice exports.
    This leads us to dispute settlement reforms. U.S. 
agriculture needs the WTO to have binding dispute settlements 
where the loser cannot block a decision that is lost. Right 
now, with no appellate body, WTO members can appeal panel 
decisions into the void and the case effectively ends.
    In summary, the WTO is an irreplaceable asset for U.S. 
agriculture and rice farmers. It needs to be more effective, 
not less, and we need more compliance to support global trade, 
not more so-called policy space to undermine it. It is critical 
that our competitors abide by the same rules that the U.S. 
abides by, especially if I expect my business to stay 
sustainable and profitable and support more than 300 rural jobs 
in our community.
    I would like to thank the members of this subcommittee for 
their time and attention, and I welcome your questions.
    [The statement of Mr. Hanks follows:]
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    Chairman SMITH. Thank you.
    Ms. Shaw, you are recognized for 5 minutes.

 STATEMENT OF KELLY ANN SHAW, PARTNER, HOGAN LOVELLS; LECTURER 
  IN LAW, COLUMBIA LAW SCHOOL; FORMER DEPUTY ASSISTANT TO THE 
             PRESIDENT FOR INTERNATIONAL ECONOMICS

    Ms. SHAW. Thank you.
    Chairman Smith, Ranking Member Blumenauer, distinguished 
members of the committee, thank you for the opportunity to 
discuss America's objectives for the forthcoming 13th 
Ministerial Conference, MC13, in Abu Dhabi.
    Prior to my current role in private practice, I was 
privileged to spend a decade in government service representing 
the United States in multiple trade negotiations, including at 
the WTO in Geneva, where I negotiated and litigated WTO 
disputes on behalf of American workers and businesses. While I 
will draw on these experiences, I also want to be clear that 
the testimony I provide this morning is solely my own.
    Let me start with the punchline: The WTO is in serious 
trouble, and when it comes to the upcoming ministerial, there 
is very little, if anything, on the agenda that will advance 
U.S. interests.
    As someone who spent years working in and around the 
multilateral system, I wish I could deliver a more positive 
message this morning. Following World War II, it was the United 
States and other democratic nations that spent decades building 
a rules-based global trading system centered around the 
principles of nondiscrimination, whereby participating 
countries that played by the rules were rewarded with lower 
barriers to trade in one another's markets. But the WTO in its 
current form is no longer capable of advancing mutually 
beneficial concessions or developing new rules that further 
facilitate trade, address new challenges, and deal with China's 
unfair trade practices.
    As of today, the WTO's negotiating function--its primary 
and key function--is effectively paralyzed. The WTO's last 
major negotiating round collapsed in 2011. While some 
negotiations still continued, most of these focused on narrow, 
technical issues, only involved a subset of the membership, or 
simply lacked ambition. In fact, the agenda for the upcoming 
ministerial demonstrates how limited the role of the WTO has 
actually become in advancing new trade rules relevant for 
today's global challenges. Instead, the more ambitious 
negotiations are occurring completely outside the WTO framework 
through major bilateral and regional trade deals that, at least 
right now, do not include the United States.
    The key issues on the table for MC13 include renewal of the 
e-commerce moratorium, efforts by developing countries to 
expand the TRIPS waiver, India's demands for a permanent waiver 
for its public stocktaking programs, special and differential 
treatment for developing countries, a phase II agreement on 
fisheries subsidies, and various proposals to reform certain 
WTO functions. With the exception of renewing the e-commerce 
moratorium, which at this point is uncertain, and a meaningful 
outcome on fisheries subsidies largely aimed at China and 
India, which seems unlikely, the overwhelming number of issues, 
if agreed, would be detrimental to American workers, 
innovators, and farmers.
    The e-commerce moratorium, for example, which has been 
consistently renewed since 1998, is critical for American small 
businesses and consumers alike. Some countries, like India, are 
actively pushing to terminate the moratorium so that they can 
impose tariffs and other barriers on electronic transmissions 
of both digital goods and digital services. And because renewal 
of the moratorium requires consensus, India in particular is 
now holding the entire WTO membership hostage in exchange for 
an agreement on its public stockholding practices that distort 
global agricultural markets and disadvantage American farmers.
    With respect to dispute settlement, the WTO does not need 
an appellate body or a two-tier dispute settlement system, and 
we should neither negotiate nor agree to one.
    The single biggest challenge facing the WTO is not dispute 
settlement but, rather, the inability of WTO members to 
negotiate new rules. A membership of 164 countries has simply 
proven unworkable. The requirement that decisions be taken by 
consensus among members, including both India and China, has 
ground the WTO to a halt.
    So, when considering the agenda for MC13, I think it would 
be fair for the committee to ask what exactly is the point of 
continuing to invest in a multilateral system when the only 
issues on the table are largely defensive, don't advance U.S. 
interests, have little relevance for today's economy, and would 
largely make Americans worse off.
    The answer is that a strong set of multilateral rules is 
still in America's interest for many of the reasons that I 
outlined in my written testimony and the reasons that drove us 
to create the system in 1947 in the first place.
    The real question for this committee, along with other WTO 
members, is whether we are in or we are out when it comes to 
multilateralism, because the WTO cannot continue down its 
current path. If we are in--and at least at this point I think 
we should be--the United States, along with a subset of like-
minded allies, needs to pour real resources into renegotiating 
and fundamentally rebuilding a multilateral framework that 
addresses modern economic challenges, reflects today's reality, 
and results in meaningful outcomes for the American people. In 
other words, a club of truly preferential partners and most 
favored nations. The current WTO is no longer that.
    Thank you.
    [The statement of Ms. Shaw follows:]
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    Chairman SMITH. Thank you.
    Mr. Sullivan, you are recognized for 5 minutes.

 STATEMENT OF EDDIE SULLIVAN, PRESIDENT, SAB BIOTHERAPEUTICS, 
                              INC.

    Mr. SULLIVAN. Mr. Chairman, Ranking Member Blumenauer, 
members of the subcommittee, thank you for this opportunity to 
share my perspective as the cofounder and president of a small 
biopharmaceutical company based in South Dakota on the proposed 
expansion of an IP waiver for COVID-19 therapeutics and 
diagnostics now before the WTO. The stakes for the United 
States in our continued global leadership in the life sciences 
could not be higher, and I commend the subcommittee for airing 
these issues.
    There is no objective evidence suggesting that IP 
protections have limited patient access to COVID-19 
therapeutics around the world. Rather, regulatory barriers, 
trade restrictions, inadequate investments in health systems, 
and lack of adequate infrastructure are genuine limiting 
factors on supply and access. A waiver of IP rights would 
significantly disrupt the economic model by which innovative 
biotech emerging companies, like SAB Biotherapeutics, have 
successfully advanced medical science to meet global health 
challenges, create jobs, and maintain our country's leadership 
in this critical field.
    SAB Biotherapeutics is a clinical-stage, publicly traded 
biopharmaceutical company employing around 65 people, primarily 
in South Dakota, but with employees in Florida, Illinois, Iowa, 
Kentucky, Massachusetts, Minnesota, Missouri, New York, 
Pennsylvania, and Utah, uniquely focused on the development of 
powerful and proprietary immunotherapeutics polyclonal 
antibodies to treat and prevent autoimmune disorders and 
infectious diseases. Our development programs harness the 
body's natural defense systems to address disease that have 
significant mortality and health impacts on patients, with a 
current focus on type 1 diabetes.
    I have been in biopharma leadership for over 30 years, 
leading initiatives to develop infectious disease, cancer, and 
autoimmune therapies, and have raised over $800 million in 
capital to develop biopharmaceutical platform technologies.
    Underlying our technology platform is a robust IP 
portfolio, including a patent which has recently been granted 
by the USPTO, which we have leveraged to secure funding and 
foster research collaborations related to COVID-19. Our 
technology platform, with continued research and development, 
has the potential not only to combat COVID but address other 
known and novel emerging diseases.
    An agreement to waive IP rights for COVID-19 therapeutics 
at WTO would needlessly expose our company's IP assets 
protecting our platform technology. A waiver of IP rights could 
potentially allow our patents to be infringed and our 
technology platform deployed by competitors to develop COVID 
treatments or other diseases without meaningful legal recourse.
    IP rights are the currency used by innovative biotech 
companies to encourage investment in new and emerging 
technologies with significant promise. Biotechnology research 
and development has a greater than 90 percent failure rate and 
can take many years and cost hundreds of millions of dollars. 
We cannot expect rational investors to fund this work if we 
cannot demonstrate that we have a secure and enforceable right 
to our technology. Investors scrutinize our patent portfolio as 
part of any due diligence. It can make or break a company long 
before we have our first approved product.
    This challenge with access to capital is particularly acute 
for U.S.-based small- and medium-sized enterprises who led the 
global R&D campaign to rapidly develop drug candidates to treat 
COVID-19 and still account for over 75 percent of the projects 
in global pharmaceutical clinical pipelines.
    Most of the innovation in biotech stems from these SMEs, 
and many of these companies have yet to bring an improved 
product to market or have a revenue stream. Most are entirely 
dependent on private capital markets to fund their research and 
IP in their primary asset--IP is the primary asset.
    A waiver of IP at WTO would disrupt the vital funding, 
acutely impacting U.S.-based SMEs to the detriment of science, 
public health, and U.S. competitiveness and leadership in the 
life sciences.
    I am happy to say that SAB has recently announced a private 
placement investment of over $100 million in our company to 
advance a disease-modifying immunotherapy to delay the onset or 
progression of type 1 diabetes, and we just announced the phase 
1 clinical trial. If we would have had to disclose a waiver of 
our IP rights to our COVID-19 portfolio, it would have put our 
company at serious risk of losing major investments.
    The threat to the delicate balance of investment risk 
cannot be understated in an already competitive environment 
that could negatively impact companies that respond to the 
COVID pandemic and perhaps future pandemics. With news of the 
WHO declaring the end of the COVID public health emergency and 
with global supply therapies far exceeding demand, a waiver is 
wholly unnecessary.
    Appreciate the time today, but this is a very serious 
issue. Thank you.
    [The statement of Mr. Sullivan follows:]
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    Chairman SMITH. Thank you.
    Mr. Hirsh, you are recognized for 5 minutes.

STATEMENT OF BRUCE HIRSH, FOUNDER, TAILWIND GLOBAL STRATEGIES, 
                              LLC

    Mr. HIRSH. Mr. Chairman, Ranking Member Blumenauer, and 
members of the subcommittee, thank you for the opportunity to 
appear today. My testimony will focus on the prospects for MC13 
outcomes on changes to the dispute settlement system.
    Under the best of circumstances, WTO negotiations move 
slowly, constrained by a decision-making process that requires 
consensus among its 164 members. As a result, those looking to 
each ministerial with expectations of bold outcomes are often 
disappointed, and this ministerial is likely to be no 
exception.
    Having said that, even without headline outcomes, 
ministerials like MC13 can prove important in laying the 
groundwork for new initiatives and in advancing the ball in 
ongoing initiatives like dispute settlement reform.
    The United States was a driving force behind the creation 
of the dispute settlement system, viewing it as key to 
enforcing WTO commitments and ensuring day-to-day respect for 
the rules. WTO dispute settlement has proven popular, with more 
than 620 disputes brought since the WTO's creation in 1995, 
roughly double the count under the previous 50 years of the 
WTO's predecessor, the GATT.
    The system has been hobbled since 2019, when the United 
States blocked appointments to the system's appellate body, 
resulting in the appellate body losing a quorum to make 
decisions. The U.S. did so out of long-standing bipartisan 
concerns that the appellate body was increasingly straying from 
its limited role of correcting panel errors to filling gaps in 
the WTO agreement and otherwise creating new obligations and 
limiting existing rights. The United States began flagging this 
concern in the early 2000s but made little progress at the 
time.
    There have been meetings in various configurations since 
2019 to better understand U.S. concerns and consider how to 
address them. The most promising of these has been taking place 
for the past 2 years: an informal, bottom-up process in which 
members have discussed their interests in the dispute 
settlement system and how it can best operate. By virtue of 
this interest-based approach and at the urging of Ambassador 
Tai, the process is considering not only U.S. concerns but also 
how the system can work more effectively for the entire 
membership, including developing countries.
    Recent discussions have been marked by an unusual level of 
cooperation, with members generating a number of textual 
proposals on alternatives to litigation and to streamline the 
system. Discussions on the more contentious U.S. concerns have 
lagged. The positive news is that members appear to be 
listening to U.S. concerns in a way they have not in the past.
    The prospects for outcomes on dispute settlement reform at 
MC13 are thus uncertain. There has been some discussion on 
whether to reach some sort of agreement on the process-related 
proposals which are furthest along, a prospect the United 
States has been open to. Other participants have been reluctant 
to agree on anything until there is greater certainty on how 
U.S. concerns with the appellate body might be handled.
    Regardless of whether there is agreement at MC13 on some 
issues, the meeting represents an opportunity for ministers to 
engage with each other to explore how to close gaps in 
positions and to recommit to completion of reform discussions. 
It is important that they do so.
    For all of its flaws, the WTO dispute settlement system has 
played an important role in resolving and containing disputes 
and, more generally, in reinforcing respect for the rules. The 
increasing resort by members to appealing into the void; that 
is, preventing disputes from reaching their conclusion by 
appealing to the nonexistent appellate body, highlights the 
risk of a more general deterioration of respect for the rules 
to the detriment of U.S. workers, producers, farmers, and 
exporters. And, without a functioning dispute settlement 
system, we are likely to see more tit-for-tat trade wars that 
involve cascading cycles of retaliation.
    In conclusion, it would be prudent to temper one's 
expectations for a breakthrough on dispute settlement reform 
issues at MC13. Having said that, MC13 could provide a welcome 
boost to the current talks, which provide a real opportunity to 
address U.S. concerns and restore a more effective dispute 
settlement system.
    Thank you very much.
    [The statement of Mr. Hirsh follows:]
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    Chairman SMITH. Thank you, Mr. Hirsh.
    Thank you to all of our panel here again today. You bring 
some very relevant issues and timely as well.
    I will now recognize Mr. Blumenauer, ranking member, for 
his opening statement.
    Mr. BLUMENAUER. Thank you very much, Mr. Chairman. I 
apologize for the delay.
    But I very much appreciate the testimony from our witnesses 
suggesting that we temper our expectations but that we stay 
with the process. I strongly support the WTO but, sadly, the 
limitations that have been mentioned are ones that challenge 
that optimism. It is important that we remain relevant by 
addressing the issues that they mentioned: the nonmarket 
practices, forced labor, climate change, and women's economic 
empowerment.
    I really appreciate Ambassador Tai and her team in Geneva, 
led by Ambassador Pagan, for the robust agenda at the upcoming 
WTO ministerial. It includes numerous pressing topics that I 
support, such as addressing harmful fishing subsidies, an area 
of some progress, and extending the e-commerce moratorium. 
Substance, not arbitrary deadlines, should drive the outcomes 
at the ministerial.
    I urge the Biden administration to resist any efforts from 
our trading partners, including some of our closest allies, to 
agree to outcomes that do not fully reflect American interests 
just for the sake of agreeing and getting along.
    The success should be measured by the ability of the WTO 
members to craft a forward-looking vision for the WTO that 
takes into account the needs of the least-developed countries. 
In this regard, two least-developed countries, Comoros and 
Timor-Leste, will become the newest WTO members of MC13. These 
two countries are a welcome addition to the organization.
    I also support reforming the WTO by equipping it to 
addressing the climate crisis. The agreement that established 
the WTO recognizes the multilateral trade system should seek to 
protect and preserve the environment. I would like to hear from 
our witnesses how we can form this recognition into concrete 
commitments.
    Another important WTO reform that has been addressed by our 
witnesses is the dispute settlement system. For over 20 years, 
multiple administrations and the United States Congress have 
raised concerns for the WTO dispute settlement system, 
especially the appellate body. We are going to hear from 
today's witnesses about how the WTO appellate body has gone 
beyond WTO rules in a variety of areas, ultimately restricting 
the ability of the United States to regulate in the public 
interest as well as protecting American workers and businesses.
    And speaking of unfair trading practices, the WTO reform 
must also address the disruption caused by nonmarket economies. 
Nonmarket practices are fundamentally inconsistent with the 
norms of the WTO. China, which continues to discriminate 
against American companies and subsidizing its case, is the 
most egregious example. WTO reform needs to address harmful 
nonmarket practices.
    I appreciate the clear-eyed suggestions from our witnesses 
that we approach this in a realistic sense, tamp down our 
expectations, but nonetheless, understand, despite the 
frustrations, it is worth our being involved. And I appreciate 
their guidance in terms of our being realistic, but we need to 
continue moving forward. I think this hearing is a small step 
in that direction.
    Thank you, Mr. Chairman.
    Chairman SMITH. Thank you, Mr. Blumenauer.
    We will now move to questions from members. And, again, 
thank you for your insights. Thank you to our panel.
    Mr. Sullivan, I want to talk to you about the expansion of 
the TRIPS waiver. As you know, the TRIPS waiver is a process 
that waives the protection of intellectual property so that 
other countries would have access to this intellectual 
property, through no expense of their own, despite the fact 
that a great expense has been had by American companies as they 
develop the intellectual property.
    It concerns me that the Biden administration appears to 
believe that waiving IP rights is actually in our national 
interest. They supported a waiver 2 years ago for COVID-19 
vaccines, and they very well may support an expansion of a 
similar waiver to diagnostics and therapeutics. At least we 
have no reason to believe they would head in a different 
direction.
    From interchangeable parts to the steel plow, for example, 
or the intricate details in intellectual property of vaccines, 
innovation has always been a very helpful tool, a very useful 
tool of American competitiveness. Giving away that innovation 
actually undermines incentives to continue in an innovative 
trajectory.
    It is clear to me that IP giveaways would not end with 
COVID-19 or health-related products. In fact, last year, the 
director general of the WTO was asked if she would support a 
TRIPS waiver beyond what is currently being contemplated such 
as for green technologies. She said, and I quote, ``I could not 
agree more.'' Very concerning to me.
    Mr. Sullivan, you are an innovator. I salute you for your 
efforts to find a better way of doing things and to ultimately 
help people, especially in the healthcare arena. Explain to us, 
perhaps, how a TRIPS waiver would impact your business and the 
broader innovation ecosystem later on.
    Mr. SULLIVAN. Thank you, Mr. Chairman. And I certainly do 
share your concerns for what the waiver could mean from the 
broadest perspective. But as an innovator and as a pre-revenue 
company--and, by the way, 75 percent of new biotechnologies 
come from companies just like ours--75 percent. That is the 
majority of new and innovative medicines that help save lives.
    We rely on investment dollars in order to be able to 
advance these technologies. These investment dollars allow us 
to go through the very rigorous process of getting a new 
medicine from the research bench all the way through to a 
licensure and into the hands of patients.
    When we go in and walk into a room to talk to investors, 
one of the first things that they ask us is, what is the 
intellectual property portfolio of this particular asset that 
you are asking us to risk our investment in, remembering that 
nearly 90 percent of new innovation that happens actually 
doesn't survive. It is only the 10 percent that survives. So 
these are high-risk investments, and the investors are 
interested in how we protect those rights, not just in the U.S. 
but globally, in order to ensure that that investment is done 
in a way that they can rightfully expect some return on that 
investment sometime, perhaps decades in the future.
    And so it is very, very important that we realize that it 
is not just about what this means in its intent to get drugs 
into the hands of patients, but what it means even on the 
innovation level and being able to get these drugs to market. 
So it is very, very important.
    And USITC basically said, look, it is not IP rights that 
are holding this back. There are other issues that we need to 
be talking about to get these innovations into the hands of 
people all over the world.
    Chairman SMITH. Thank you. Thank you.
    Ms. Shaw, I want to turn to you about the importance of 
what is referred to as the e-commerce moratorium or certainly a 
moratorium on, say, duties on e-commerce. And this has been an 
issue that I have been focused on for a long time and certainly 
my colleagues, Mr. LaHood and Ms. DelBene, are very focused on 
this issue as well.
    We all know that allowing countries to impose tariffs on 
data would uniquely hurt our country economically, among other 
ways. Our tech firms, farmers, manufacturers, and service 
providers all rely on the free flow of data to be successful.
    In addition to the critical importance to the U.S., I am 
convinced that developing countries actually benefit greatly 
from this moratorium as they seek to advance their own 
industries in the modern economy.
    What I think is less appreciated, however, is the strategic 
threat posed by a failure to renew this moratorium. Can you 
explain to the committee how failure to renew the moratorium 
actually helps China at the expense of U.S. competitiveness?
    Ms. SHAW. Thank you so much for the question. And just to 
be clear, China currently is not supporting India, Indonesia, 
and South Africa in this crusade at the WTO, which should be 
pretty shocking because this is even a bridge too far for 
China. That is how bad this policy is.
    But when you look at the possibility of losing the e-
commerce moratorium, coupled with the administration's decision 
to support the TRIPS waiver and the possibility of expanding 
that waiver to cover diagnostics and therapeutics, as well as 
the October decision to withdraw from long-standing bipartisan 
U.S. views on the importance of the free flow of digital trade, 
it paints a very alarming picture, not just for commercial 
reasons, as you point out, but also for our national security 
objectives and broader values.
    And so what the administration is pointing at policy space, 
is the same policy space that the CCP uses to steal American 
intellectual property, censor its citizens, to restrict the 
free flow of information, and to build its state-directed 
economic model.
    This is not consistent with American democratic values with 
the free flow of information, the exchange of ideas that we are 
accustomed to. And it is certainly concerning not just to 
bipartisan members on the dais and us here in this room, but 
also to our allies who don't understand what we are doing.
    It is leading to an increasing fracturing of the global 
trading system as well. I think we really need to strongly 
rethink these policies and go back to the free flow of data, a 
system that is consistent with American values and a 
partnership with our allies.
    Thank you.
    Chairman SMITH. Thank you very much for your insight.
    I now recognize Mr. Blumenauer for his questions before we 
proceed. Thank you.
    Mr. BLUMENAUER. Thank you, Mr. Chairman.
    Ms. Shaw, you sort of laid it out in terms of the 
alternatives that we face, and your conclusion is that we ought 
to put real resources into renegotiating and rebuilding the MFN 
multilateral framework, like-minded trading partners that 
address modern American economic challenges, reflect today's 
reality, and result in meaningful outcome for the American 
people.
    Can you elaborate on what actually that would look like?
    Ms. SHAW. Yeah. Thank you so much for the question. So the 
WTO is facing an existential crisis, as is the United States 
and other members who are serious about seeing the system 
survive and thrive.
    I appreciate your views that we need to invest in the 
system, and I share them. But we have a choice right now. 
Either we continue to pursue things on a bilateral basis or 
take unilateral action when it comes to trade policies, or we 
invest in a system with other like-minded allies to address 
things like China's unfair trade practices, to address concerns 
we have with labor and the environment, to address digital 
trade and new economy issues. And, if we don't do that with the 
group of countries who are willing to invest and support those 
ideas, we are going to have an increasingly fractured trade 
regulatory system that is going to disadvantage and 
discriminate our workers, our businesses, and our companies. I 
don't think that is a best-case scenario or a desired outcome.
    But part of the challenge is trying to get other members of 
the WTO to agree with that approach. And so, if they don't, you 
know, we are left in sort of a bilateral world, a go-it-alone 
approach. But, ideally, we can work with those members to build 
something greater, but the current paralysis of the negotiating 
function of the WTO is just not sustainable.
    Thank you.
    Mr. BLUMENAUER. Mr. Hirsh, could you comment on the second 
phase of the fisheries subsidies negotiations as being 
critical? This initial round appeared to be one of the bright 
spots of the WTO. Where is this going to lead us?
    Mr. HIRSH. Thank you for the question. The resulted MC13--
the first phase of the negotiation--was, in fact, historic. It 
proved that the WTO can get something done and get something 
done in the environment area.
    The second phase is really where the rubber is going to hit 
the road, though, because it is going to be dealing with those 
subsidies that are contributing to overcapacity and overfishing 
very directly.
    You know, right now, these subsidies are resulting in too 
many boats chasing an increasingly dwindling supply of fish, 
threatening fish stocks collapse. This is bad for the 
environment. It is bad for farmers. And so it is going to be 
critical to get this one right.
    You know, the work is not far enough along at this point to 
have result here at MC13, but, you know, the fact that we did 
get phase I done is, you know, a source of optimism that phase 
II can get done eventually as well.
    Mr. BLUMENAUER. Mr. Hirsh, you heard my question to Ms. 
Shaw. Do you have a reaction to her reaction?
    Mr. HIRSH. You know, as I mentioned in my statement, it is 
frustrating to try to accomplish things at the WTO. It takes 
time. I had the good fortune, when I was in government, to be 
involved in a couple of negotiations where I had the wind at my 
back: fish subsidies and trade facilitation. So it is, with 
patience, possible to get things done.
    But, more importantly, you know, the WTO provides a real 
baseline of--you know, for the operation of the international 
trading system. As was pointed out by Chairman Smith, 65 
percent of our trade is done under the WTO rules only. So, you 
know, we do have to continue to invest in the institution and 
make it reflect our priorities. Certainly, this does not 
exclude the possibility of working with like-minded allies 
outside to resolve and to deal with many of the challenges of 
today, but we have to recognize that if we are to be like-
minded with those allies, we are going to need to continue to 
commit to the WTO because they all are very much committed to 
the WTO.
    So, you know, I don't think it is mutually exclusive. You 
know, we should be working with our allies on initiatives, but 
we can't leave the WTO behind.
    Mr. BLUMENAUER. Thank you, Mr. Chairman.
    Chairman SMITH. Thank you.
    I now recognize the chairman of the full committee, Jason 
Smith.
    Chairman SMITH of Missouri. Thank you, Subcommittee 
Chairman Smith and Ranking Member Blumenauer, for leading this 
hearing today just a couple weeks away from the World Trade 
Organization's 13th Ministerial Conference.
    The United States must lead at the WTO. We cannot afford to 
cede the playing field of setting and enforcing global trade 
rules to China. While the Biden administration has maintained 
President Trump's blockade of the appellate body, until we see 
real reforms to address judicial activism at the WTO, the 
administration has also--and the administration has also pulled 
back on reform proposals related to transparency and the 
ability of WTO members to self-declare as developing countries. 
Both issues are key to leveling the playing field with China.
    The agreement that was finally reached on fisheries 
subsidies failed to include important provisions on forced 
labor and subsidies that contribute to overcapacity. There has 
also been no progress on agriculture, even as many nations 
undermine the competitiveness of our farmers and growers with 
unfair and protectionist barriers.
    After backing a waiver to the TRIPS Agreement to give away 
U.S. intellectual property on COVID-19 vaccines, the 
administration is now considering expanding that waiver to 
cover diagnostics and therapeutics as well. USTR even colluded 
with progressive activists to cede U.S. leadership on digital 
trade, proposals that enjoyed enormous--enormous bipartisan 
support in USMCA to China.
    So I am glad we are hearing from witnesses today who can 
help us chart a better path forward. That starts with tearing 
down unfair barriers to U.S. exports.
    Mr. Hanks, as you know, southeast Missouri, my home, is 
home to 187,000 acres of planted rice, making the State fourth 
in production in the entire country, and all that production is 
only in our congressional district. It generates over $150 
million for the local economy.
    I regularly meet with Missouri rice producers who have 
consistently told me that they face a very unlevel--unlevel 
playing field abroad. U.S. export opportunities are being 
diminished by foreign competitors and flawed WTO rules and 
unfairly--unfairly subsidized rice production. India has been 
the most egregious violator, flaunting both the letter and 
spirit of WTO rules.
    That is why this week I requested the United States 
International Trade Commission conduct an investigation into 
the global competitiveness of the U.S. rice industry. This 
report would include analysis of India's distorted public 
stockholding policies and other subsidies.
    So, Mr. Hanks, can you speak to the impact that these 
policies have on U.S. workers and the importance of USTR 
pushing back on India's efforts to further weaken WTO rules in 
their favor?
    Mr. HANKS. Sure. Thank you for the question. I think the 
answer is it is a job killer. It is an investment killer. It is 
making our U.S. rice farmers unprofitable.
    As I mentioned in my statement, India is controlling 40 
percent of the global trade. We compete with them and many 
countries, and it is becoming--all the market share in those 
countries are becoming inaccessible because of their cheap 
subsidies flooding into their rice production and that 
correspondingly flooding into those markets. Rice farmers don't 
want handouts. They want opportunity.
    The USITC study that you mentioned--the update of that 
study is going to be very eye-opening. In 2015, that study 
revealed that U.S. rice farmers are very, very competitive and 
given an equal playing field that we can compete in the global 
market, including our own market here in the United States.
    We have won two victories at the WTO against China, and 
those cases are still in the void, as we say. And we don't know 
what victory looks like when we bring cases to the WTO because 
their bad behavior is still ongoing. They are dumping rice into 
Puerto Rico as we speak.
    So we are just looking for a level playing field, and we 
appreciate the study being updated. So thank you.
    Chairman SMITH of Missouri. Thank you, Mr. Hanks.
    I want to thank all the witnesses for being here.
    And thank you, Chairman Smith.
    Chairman SMITH. Thank you.
    I now recognize Mr. Kildee from Michigan for 5 minutes.
    Mr. KILDEE. Thank you, Mr. Chairman, and to the ranking 
member, for holding this important hearing.
    One persistent problem that I have been focused on for the 
time that I have been here in Congress, both in the United 
States trade agreements and broader trade agenda, is the issue 
of forced labor.
    Across the globe, an estimated 28 million people work in 
conditions of forced labor. Forced and slave labor, as a matter 
of fact. Whether it is taking place in Xinjiang, China or in 
the Dominican sugar industry, it is a violation of basic human 
rights. All workers deserve basic labor protections, and 
institutions like the WTO should be working to uphold those 
protections around the world.
    We have seen through our own trade agreements, like the 
U.S.-Canada-Mexico Agreement, that clear, enforceable labor 
standards help protect the basic rights of workers abroad, and 
importantly--I think most importantly, in some ways--support 
workers right here at home in the U.S.
    To that end, I support the United States' efforts to 
encourage WTO members to address forced labor on fishing 
vessels, for example, and hope that the U.S. Trade 
Representative will continue seeking opportunities to address 
forced labor and workers' rights at the WTO.
    So if I could turn to Mr. Hirsh. I wonder if you might 
describe the United States' efforts to address the issues of 
forced labor with WTO members and how these efforts support 
American workers, the challenges associated with that 
initiative, of course, and how the efforts can protect workers 
around the world.
    Mr. HIRSH. Thank you very much for the question. You know, 
the Biden administration has been working to broaden the 
consensus on the importance of considering labor issues 
generally as well as forced labor specifically. You know, in 
the WTO, in the context of the fisheries negotiations, they 
have put forward a proposal specifically on forced labor and 
are advocating for it. There is obviously pushback right now, 
as there are in a lot of aspects of the negotiation, but they 
are showing no sign of letting up on it.
    Mr. KILDEE. Thank you.
    I wonder if you could further comment. As you may recall, 
when Congress passed the Uruguay Round Agreements Act, the 
legislation that affirmed our participation in WTO, it directed 
the President to establish--to seek to establish a working 
party at the WTO to examine the relationship between 
international trade and worker rights, including the trade 
impacts of systemically denying workers their basic rights, an 
initiative that obviously would facilitate addressing some of 
these issues.
    And I wonder if you would comment on what you know about 
the status of the development of this working party and what 
actions the U.S. has taken or what we might take, particularly 
in this upcoming ministerial, to advance the development of 
that working party.
    Mr. HIRSH. Well, over the years, USTR and the U.S. 
Government has raised the issue, has pushed for the issue, but 
unfortunately, there has been pushback. And as we have been 
discussing today, decisions at the WTO are made by consensus. 
So, unfortunately, to date, that has not been set up.
    However, the administration is continuing to push. 
President Biden, last fall at the UN General Assembly, raised 
the issue on the importance of introducing labor into WTO 
discussions, and Ambassador Tai regularly raises this issue 
and, in fact, has tied it to the interest in reform at the WTO.
    Mr. KILDEE. Thank you, Mr. Hirsh.
    I wonder, Ms. Shaw, given your testimony and your 
commentary particularly on some of the sort of natural 
limitations that come with an organization as diverse and broad 
as the WTO, if you might comment on what you think the capacity 
of the WTO might be to address something as fundamental as 
basic worker rights, forced labor, child labor, those sorts of 
issues.
    Ms. SHAW. Thank you for the question. I think at 164, soon 
to be 166 members, the odds of that happening are pretty much 
zero because the WTO makes these decisions by consensus.
    You know, historically, the WTO has been allergic to 
addressing issues related to labor within the auspices of the 
organization. It was one of the reasons we created the 
International Labor Organization to specifically address those. 
But I think your point is fair in that there is certainly an 
economic relationship when it comes to forced labor and the 
disadvantages and the discrimination that our own producers 
face when we pay our workers a fair wage and other countries 
don't.
    So there is certainly a trade argument to be made for why 
the WTO should be considering some of these issues, and when it 
comes to forced labor, it is just clearly the right thing to 
do. But in its current makeup, I think you will find that quite 
challenging.
    Mr. KILDEE. I appreciate that.
    And I do think it is important that you point out that we 
all recognize that this is not just about the fundamental 
question of human rights, but the economic interest of American 
workers is served by making sure that we have enforcement 
mechanisms to prevent exploitative efforts like what we see 
across the globe when it comes to forced labor and slave labor, 
et cetera.
    Thank you, Mr. Chairman. I appreciate the hearing. I yield 
back.
    Chairman SMITH. Thank you.
    I now recognize, from Illinois, Mr. LaHood for 5 minutes.
    Mr. LaHOOD. Thank you, Mr. Chairman.
    And I want to thank our witnesses for your valuable 
testimony here today.
    I would like to first focus on the issue of digital trade 
and the recent decision by the Biden administration to abandon 
long-held bipartisan digital trade proposals at the World Trade 
Organization. The sudden change in policy without any 
consultation with Congress represents a troubling trend to walk 
back American leadership and creates an opportunity for 
countries, particularly China, to influence the rules of the 
digital economy.
    The administration attempted to justify this abandonment by 
clinging to the belief that the WTO Joint Statement Initiative 
on Electronic Commerce does not allow for domestic regulations 
to be put in place. This approach, in my view, is misguided, 
and we see the continued proliferation of the new restrictive 
regulations, digital services taxes, and restrictions on data 
flows abroad, which all run counter to our U.S. interests.
    Last November, Rep. DelBene and I co-led a letter, along 
with 36 of our House colleagues, to Ambassador Tai underscoring 
how USTR's decision emboldens adversaries like the CCP, the 
Communist Chinese Party, to advance a model of digital 
governance that permits censorship and surveillance. It also 
promotes human and worker rights abuses and forces unwanted 
technology transfers through initiatives like the Digital Silk 
Road.
    Mr. Chairman, I would ask unanimous consent that this 
letter be entered into the record, the one I just referenced.
    Chairman SMITH. Without objection, so ordered.
     [The information follows:]
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    Mr. LaHOOD. Thank you. While I agree that we should bolster 
consumer data privacy and cybersecurity safeguards, we can do 
so without giving the impression to the world that the United 
States will no longer protect our industries and workers 
against unfair practices.
    Mr. Shea, my question, how does USTR decision to walk away 
from these digital trade proposals not only undermine broad 
American interests, but also threaten American workers?
    Mr. SHEA. Well, thank you for the question, Congressman. 
When we joined the JSI on digital trade, my mandate at the WTO 
was to insist on high ambition, so that meant strong 
prohibitions against forced disclosure of source code, 
prohibitions against cross-border data interference, 
prohibitions against data localization, and make sure that 
these agreements were reciprocally assumed by every member of 
the Joint Statement Initiative.
    We took very strong positions. I think it was well-
appreciated by the leaders of the JSI, Australia, Japan, and 
Singapore. And I think people are probably just at the WTO 
shaking their heads, what did the U.S. just do? They just did a 
180. And we kind of did a 180 on the TRIPS waiver for COVID 
vaccines.
    So, I think it damages U.S. perception at the WTO, and I 
think we are ceding the field to countries like China, who have 
what I would describe as a Stalinist approach to information 
control. So they are the--you know, we are kind of dumbing down 
the negotiation, which was a big, big mistake.
    Mr. LaHOOD. Thank you for that.
    On a related note, following up on the comments by Chairman 
Smith, I would like to underscore how important renewing the e-
commerce moratorium will be for Americans' small- and medium-
size enterprises and the countries they do business in.
    Last month, I, along with subcommittee Chair Smith, Ranking 
Member Blumenauer, and Rep. DelBene, along with 28 House 
Members, sent a letter to USTR urging the administration to 
support a renewed e-commerce moratorium at this year's WTO 
ministerial.
    Mr. Chairman, I would ask unanimous consent that this 
letter be entered in the record as well.
    Chairman SMITH. Without objection, so ordered.
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    Mr. LaHOOD. As our witnesses today have highlighted, the e-
commerce moratorium has been renewed at each WTO ministerial 
since 1998. However, countries like India and Indonesia are 
threatening to depart from this established understanding to 
impose tariffs and regulations that would disproportionately 
harm U.S. businesses.
    Ms. Shaw, can you expand on your written testimony on this 
issue and discuss how these efforts by countries like India and 
Indonesia can be viewed as a direct threat to small businesses 
and workers in the United States?
    Ms. SHAW. Yeah. Thank you for the question. Absolutely. I 
think loss of the e-commerce moratorium would be absolutely 
devastating, in particular for the United States who has built 
this services and digital economy for the globe, but also, in 
particular, for small- and medium-size enterprises who rely on 
the internet to buy and sell goods and to set up businesses.
    But it wouldn't just impact those individuals in the United 
States; it would also disproportionately impact women around 
the world who haven't traditionally had access to the formal 
economy but can use their phones to start a business and start 
a life for themselves and their family.
    I just think that this policy is so absurd, and clearly, 
the data doesn't support it. The small amount that would be 
collected in tax revenue does not even amount to a drop in the 
bucket compared to the cost that it would take to administer 
this policy. The United States should fight hard to maintain 
the moratorium.
    Mr. LaHOOD. Thank you. I yield back.
    Chairman SMITH. Thank you.
    Next, I recognize from California, Mr. Panetta, for 5 
minutes.
    Mr. PANETTA. Thank you, Mr. Chairman.
    Thank you, Ranking Member Blumenauer.
    Thank you to all of our witnesses. Appreciate your time 
today.
    One of mine, well, I guess as you are hearing, one of our 
concerns is illegal, unregulated, and unreported, IUU fishing, 
which I think we can all agree is prevalent on the high seas 
and taints our seafood supply chains. IUU fishing is linked to 
overfishing, environmental degradation, and, of course, forced 
labor.
    Now, exposing these concerns, there has been many articles, 
be it by The New Yorker, or by The Economist, which has found 
direct evidence of forced migrant labor on fishing vessels and 
in seafood processing and China, including those tied to Uyghur 
labor. Now, these stories are pretty bad, I think as you will 
all admit, and compel us to address what drives these abuses.
    We know that one of the contributors to IUU fishing and the 
forced labor connection are these subsidies from foreign 
governments. Thankfully, USTR has been pushing for a strong WTO 
fisheries agreement that prohibits subsidies that contribute to 
overfishing, including subsidies to vessels engaged in IUU 
fishing, fishing on over-fished stocks, and fishing on the 
unregulated high seas.
    Now, I am proud that the U.S. has already gotten 57 
countries to ratify this agreement and encourage them to 
continue to build support for it. However, the agreement does 
fall short in some ways: One, it does not directly address 
forced labor on fishing vessels; and two, China, it allows 
China, which has the largest distant water fleet in the world, 
to be treated as a developing country despite its massive 
subsidies.
    Ambassador Shea, I just kind of want to go to you, and just 
briefly, if you could, one, give me your summary of why it is 
important to continue to prioritize the inclusion of forced 
labor provisions in the fisheries subsidies agreement; two, why 
have countries been so darn reluctant to agree to higher 
standards, especially when it relates to forced labor and IUU 
fishing, and have they given any justifications for their 
opposition?
    Mr. SHEA. Well, basic humanity is the first. We should be 
supporting people, helping people who are subject to these 
conditions. That is number one. Number two, it does have a 
trade impact, trade disruptive impact. If producers use forced 
labor, that makes their goods cheaper, and as a result, that 
has an anti--that spills over.
    I will make a point, every 2 years, there is a discussion 
around cotton at the WTO. Everything is supposed to be on the 
table. I wrote a piece a couple years ago, I said forced labor 
should be on the table in Xinjiang, because that definitely 
impacts the global price of cotton.
    So China insists that forced labor should not be an issue 
at the WTO, does not belong at the WTO, belongs at ILO or, you 
know, other organizations. It is ridiculous that China is 
treated as a developing country, and it has the right 
automatically to say it is exempt from certain rules.
    The problem with the fishery subsidies negotiations, a lot 
of major fish producers, or fishers, are developing countries 
at the WTO, so they are constantly seeking carveouts from the 
rules.
    Mr. PANETTA. Okay. Thank you, Mr. Shea.
    Let me move on to another, going from fishing, going to 
agriculture. I was proud to launch the Ag Trade Caucus with 
Chairman Adrian Smith and Congressman Costa and Congressman 
Dusty Johnson, a bipartisan effort. Obviously, as we know, 
trade barriers not only hurt American farmers, but more 
importantly, they contribute to global food insecurity. 
American farmers can feed the world, but, if there are markets 
abroad and science-based SPS standards that can hurt it, 
opposition to agricultural biotechnology in particular hinders 
our ability to develop and export heartier and more nutritious 
crops.
    Thankfully, there is the WTO SPS agreement, which could 
help address these issues, but even that agreement can be 
undermined by trade partners such as the EU, the European 
Union.
    Mr. Hanks, what can be done to reform the WTO to improve 
compliance with initiatives like the SPS agreement?
    Mr. HANKS. Well, as I said in my statement, you know, the 
subsidies portion of agriculture really needs to be the focus 
of, you know, the U.S. and other WTO members. What we see 
globally is our inability to compete specifically as a result 
of many countries, in particular, India, China, a lot of Asian 
countries that are heavily, heavily subsidizing and violating 
their WTO commitments.
    So holding those countries to their commitments I think, we 
think, is vital to a working WTO.
    Mr. PANETTA. Thank you. Thanks to all the witnesses.
    Mr. Chairman, I yield back.
    Chairman SMITH. Thank you.
    I now recognize from Kansas, Mr. Estes, for 5 minutes.
    Mr. ESTES. Thank you, Mr. Chairman.
    And thank you to our distinguished panel for joining us 
today. I am glad that you and my colleagues touched on the 
disastrous precedent set by the TRIPS waiver. It is ridiculous 
that our current administration is willing to allow other 
countries to steal the intellectual property of American 
businesses.
    I want to touch on this as well, but from a broader 
perspective, on U.S. R&D competitiveness, and the tax 
consequences of forced technology transfers, localized 
operations, and data localization. Intellectual property is a 
direct result of research and development. Our current tax 
system has incentivized the execution of R&D in several ways. 
The first is the immediate R&D expensing, which we will 
hopefully get over the finish line with the Senate soon with 
the bill we just passed the House last week. This is 
complemented with an R&D tax credit that is especially useful 
to small- and medium-size businesses that engage in cutting-
edge research. Additionally, our global tax system contains the 
Foreign-Derived Intangible Income, FDII, deduction that rewards 
companies for domiciling IP in the United States.
    As strong as these incentives are, I believe that the 
administration's active participation in IT theft is a massive 
disincentive for American businesses to conduct R&D here. The 
TRIPS waiver has put us on a slippery slope. We now have 
countries at the WTO proposing more tech transfers, localized 
operations, and data localization, in short, to complete 
abandonment of U.S. digital trade priorities.
    Ms. Shaw, what do you believe the overall effects on U.S. 
economy and research and development if the administration 
fails to oppose foreign government demands on localization?
    Ms. SHAW. Thank you so much for the question. And, you 
know, it is bewildering to me that an expansion of the TRIPS 
waiver is even being considered at the WTO, in particular, 
considering the Biden administration and the World Health 
Organization have already declared the COVID pandemic over. 
There doesn't seem to be any justification for this discussion 
that is happening.
    And I think we have talked about this morning a number of 
the negative impacts that the TRIPS waiver would have, the 
chilling impact on R&D, and the potential, as you say, for a 
slippery slope for this to expand to other types of either 
medical devices or topics altogether.
    The United States is going down an alarming path right now, 
between the TRIPS waiver, the possibility of losing the e-
commerce moratorium, and the reversal of longstanding 
bipartisan proposals on digital trade. And we are positioning 
ourselves to be more like China than the western alliance that 
we have been part of for so long.
    So I strongly support efforts by the administration to push 
back on the TRIPS waiver and to kick it out of the WTO 
altogether. Thank you.
    Mr. ESTES. All right. Thank you.
    This concerns me not just from a trade perspective but from 
a tax perspective as well. On the surface, these proposals may 
result in U.S. companies having permanent establishments in 
foreign countries, ceding primary taxing right to those 
countries, causing jobs to migrate away from the United States, 
and decreasing payroll taxes remitted to the U.S. Treasury.
    However, what is most alarming to me is the interaction of 
the WTO policies with our global tax system and OECD's Pillar 
Two. When we addressed international tax in the Tax Cuts and 
Jobs Act in 2017, we created the FDII and GILTI regimes, which 
basically function as a carrot and a stick. If you have IP in 
the U.S. and sell overseas, those profits are taxed at a lower 
rate; if you have IP overseas, those profits are taxed at a 
higher rate. This system has been successful in bringing IP 
back to the United States and stopping corporate inversion. 
However, the success of this system relies on the U.S. 
retaining primary taxing right on IP within the United States.
    As many of my colleagues know, I have been adamant in 
opposition to the OECD's Pillar Two for a variety of reasons. 
In relation to this topic, what concerns me the most is the 
qualified domestic minimum top-up tax, the QDMTT. A QDMTT would 
be assessed by foreign countries on U.S. companies with a 
physical presence in that country if it is determined that that 
company's effective tax rate is under 15 percent.
    Due to OECD's ordering rules and the U.S. Treasury not 
defending our tax system, QDMTTs are given priority over GILTI 
and FDII. Any QDMTT paid by a U.S. company would generate a 
foreign tax credit, which would be an additional drain on the 
U.S. Treasury.
    With this additional information, Ambassador Shea, what do 
you think would be the overall effects on the U.S. tax base, 
and will U.S. tax receipts be increased or decreased?
    Mr. SHEA. With respect to OECD?
    Mr. ESTES. Yes.
    Mr. SHEA. I just am not confident to answer that question. 
I am not familiar with the Pillar Two.
    Mr. ESTES. Right, okay. Well, obviously that has an impact 
on our trade just because of the way it is discussed. And, I 
mean, the work that you have done so much on WTO has been so 
beneficial in highlighting the weaknesses there.
    Mr. SHEA. Well, it is great to--I remember you visiting us, 
so it is good to see you again.
    Mr. ESTES. It is good seeing you, too, as well.
    So, you know, in summary, I think we need to have the USTR 
focus on policies that are beneficial for the United States and 
utilizing what WTO was originally crafted to be to help us in 
international trade. Thank you.
    Mr. SHEA. Thank you.
    Mr. ESTES. I yield back.
    Chairman SMITH. Thank you.
    I now recognize from Washington State, Ms. DelBene, for 5 
minutes.
    Ms. DelBENE. Thank you, Mr. Chairman.
    And I just want to thank all of our witnesses for being 
with us today.
    I wanted to start with the nexus of trade and climate. In 
2022, Democrats passed the Inflation Reduction Act, which is 
the most significant Federal investment in U.S. history to 
tackle the climate crisis, and to strengthen American energy 
security. It enables the U.S. to cut greenhouse gas emissions 
by 40 percent and invest billions of dollars to enable American 
manufacturers of steel, cement, aluminum, and other high-
emitting industries to decarbonize.
    So combined with the bipartisan infrastructure law, the 
industrial sector is expected to see the largest emissions 
reduction after the power industry. Many businesses across the 
country are doing the right thing by using green energy and 
making processes more efficient, but their competitors in 
certain foreign countries are taking advantage of weaker 
environmental regulations to undercut American industries.
    And, as a result, American jobs in important sectors have 
been lost to countries like China and India, where production 
is three to four times as carbon-intensive. That is why I 
believe that Congress should act to pass legislation, like the 
Clean Competition Act that I recently introduced with Senator 
Whitehouse and Representatives Don Beyer, Kathy Castor, and Ami 
Bera, to drive down carbon emissions globally, and level the 
playing field for American workers by imposing a border fee on 
high carbon products.
    Ambassador Shea, in a 2022 Politico article, your former 
boss and our former trade representative Bob Lighthizer, under 
President Trump, he was quoted as saying, ``When you let 
polluters sell in your market without a border adjustment, you 
are losing U.S. jobs in competing industries, and essentially, 
you are subsidizing the polluters. This makes no sense.''
    And I wondered just kind of, what are your general views 
about the value of a carbon border adjustment tariff, and how 
do you think we should move forward?
    Mr. SHEA. Well, thank you for the question, Congresswoman. 
As a general matter, I don't have a problem with the carbon 
border adjustment. If countries have very low environmental 
standards and are getting an advantage on price and export 
trade as a result of that and hurting U.S. producers who have 
to abide by higher environmental standards, I think a carbon 
border adjustment properly structured, you know, could help 
level the playing field, both for businesses and workers in the 
United States.
    I know that at the WTO, before we left, we submitted a 
proposed general counsel decision that would clarify that the 
agreement on subsidies and countervailing measures would allow 
a member to bring a countervailing duty against another member, 
who had an environmental regime below a fundamental threshold 
of acceptability. So I agree with--generally agree with--you 
know, of course, I agree with Bob Lighthizer, my former boss, 
but I think carbon border adjustment, I am glad to see there is 
more bipartisan support growing around that concept----
    Ms. DelBENE. Thank you.
    Mr. SHEA [continued]. In Congress.
    Ms. DelBENE. Thank you.
    Mr. Hirsh, could you discuss how potential U.S. carbon 
border adjustment policy would interact with existing 
international trade rules at the WTO?
    Mr. HIRSH. Sure. And just, first, let me say that, you 
know, given the nature of the climate challenge, we have to 
look at every option, and this is certainly one of them. You 
know, there are others who are probably more steeped in the 
technical details than I am on that issue, but, I mean, from 
what I understand there should be a way to design a carbon 
border adjustment that would be consistent with trade rules.
    You know, Ambassador Shea mentioned properly designed, and, 
you know, there is always some work to take a look at it and 
make sure that we are actually--accurately reflecting what the 
carbon loads are of goods and how our regulations, for example, 
are taking that into account. And it is work. Your legislation 
obviously is a start in getting that work done, but, you know, 
with that work it probably can be done.
    Ms. DelBENE. Thank you.
    Just a real quick question for Ms. Shaw, and kind of 
following up on earlier conversation around the e-commerce 
moratorium: It has been reported that certain countries, 
including India, South Africa, and Indonesia, may be trying to 
use that moratorium as a negotiating leverage to exact 
concessions from the U.S. And I wondered, what do you think--
what strategies should the U.S. employ to ensure that the 
moratorium is extended?
    Ms. SHAW. Yeah. Thank you for the question. And I am also 
from the great State of Washington, so very much appreciate 
your views.
    You know, this is a tough issue, right. The administration 
should certainly go to the mat on this, right. This is probably 
the most important issue in terms of advancing U.S. interests 
in the WTO for this ministerial. That said, the more the United 
States wants something, the more other countries are going to 
ask in exchange, right.
    So we need some other point of leverage over India, 
Indonesia, South Africa, and others who are looking to flout 
WTO norms and rules, and whether that is the threat of 
retaliation, whether that is the ability to impose taxes on, 
say, Bollywood or some of India's telecommunications and 
computing products, we have to think creatively out of the box 
to give the administration more tools to be able to get the 
outcomes we need. But certainly, pushing the administration to 
fight for it is step one.
    Ms. DelBENE. Thank you.
    I yield back, Mr. Chairman.
    Chairman SMITH. Thank you.
    I now recognize from West Virginia, Mrs. Miller, for 5 
minutes.
    Mrs. MILLER. Thank you, Chairman Smith, Ranking Member 
Blumenauer.
    As we say down south, and thank you all, all y'all, for 
being here today and sharing your expertise on this critical 
topic.
    This year, we have witnessed the consequences of 
disjunctive, contradictory international trade policies in the 
Middle East, the Red Sea, and our adversaries who want to see 
the demise of the U.S. economy. This is why this ministerial 
conference is critical to coordinate with our allies and set 
ourselves and the world up for continued success.
    Ms. Shaw, you have worked extensively with the WTO as well 
as USMCA's dispute resolution mechanisms. From your experience 
and knowledge regarding trade disputes, what impact do these 
disputes have on long-term consumer prices, and what mechanisms 
should the World Trade Organization implement to ensure 
effective and timely resolutions?
    Ms. SHAW. Thank you so much for the question, 
Congresswoman. So dispute settlement, whether it is at the 
World Trade Organization or under one of our FTAs, like the 
USMCA agreement, is fundamentally our stick, right. It is the 
tool that we have to hold our trading partners accountable for 
the discriminatory practices that they may adopt that 
disadvantage U.S. workers, businesses, farmers.
    So on that basis, you know, what impact does it have on 
consumer prices? Sometimes policies that are employed by 
certain nations result in increased consumer prices, and that 
is one of the reasons that we may bring a dispute at the WTO or 
under one of these other forums. But the flip side that I will 
offer is, fundamentally, we are trying to enforce the rules, 
and the tool that we have to enforce the rules is tariffs, 
right.
    So, if we win a case at the WTO or win a case under USMCA 
or any of our other FTAs, the reward that we get is the ability 
to impose retaliation until that country eventually complies. 
And there are sometimes impacts on consumer prices because 
tariffs are the tool that we use for that purpose. But 
fundamentally, in thinking about the effectiveness of dispute 
settlement, it should be, are we getting a result, are we 
putting pressure on the other party, and how quickly are we 
able to give relief to our producers. So those are the types of 
things that you think about in terms of bringing a dispute. 
Thank you.
    Mrs. MILLER. Thank you.
    Mr. Sullivan, I was glad to hear your testimony regarding 
the U.S.-based small- and medium-sized enterprises, such as 
your own, dominating the COVID-19 response in the 
biopharmaceutical industry. We have long been aware of the 
capabilities of our American entrepreneurs and small business 
owners to enact global change. We have a deep responsibility to 
protect them from bad actors. And I am extremely concerned that 
our own administration isn't doing enough to protect our 
intellectual property protections.
    Apparently, it is looking at possibly expanding the TRIPS 
waiver to diagnostics and therapeutics. Can you explain how 
this action might impact the ability of U.S.-based companies to 
invest in further development of lifesaving cures without the 
certainty that your IP is protected, and how this action might 
actually impact the ability of U.S.-based biopharmaceutical 
companies to collaborate with domestic and international 
partners in the development of lifesaving products and cures?
    Mr. SULLIVAN. Thank you for the question. I think this is 
such a critical issue when it comes to how innovation is done 
and why the U.S. leads the world in innovation and in 
biotechnology and other industries. It is because we have 
always stood for strong intellectual property protections.
    You know, I work with brilliant scientists all over the 
world, and so when we talk about some of those that are in 
favor of these kind of intellectual property waivers, like 
China, India, and South Africa, they have absolutely brilliant 
scientists as well, many of whom I have had the opportunity to 
work with, both in their country, as well as those that have 
come to the U.S. to work alongside of us.
    And I have often wondered, why is it that innovation is so 
powerful here in the U.S., and it is because we have always 
stood for strong intellectual property rights for people to be 
incentivized to own what they have invented, and that also 
translates into being able to find funding associated with 
those.
    And so, it is a delicate ecosystem that we have created in 
this country that has allowed us to be the world leader in 
innovation in these kinds of industries, in high-tech 
industries and in biotechnology, in medicines and developing 
these things. And we saw it displayed during COVID where 
companies all over the U.S. stood up and said, ``We want to 
help find solutions.'' And so, it is important to understand 
that this is what keeps us as the innovative leader of the 
world, and we should not weaken that by agreeing to TRIPS 
waivers.
    Mrs. MILLER. Thank you. I yield back.
    Chairman SMITH. Thank you.
    Now, pursuant to committee practices, we will go two to 
one. I will next recognize from Pennsylvania, Mr. Smucker, for 
5 minutes.
    Mr. SMUCKER. Thank you, Chairman Smith, for providing this 
opportunity to share with the administration and with our 
counterparts around the world what our congressional trade 
priorities are in regard to MC13. And I just want to sort of 
associate myself with the remarks of the last two questioners 
on this side regarding the proposed TRIPS--waiving of the 
proposed TRIPS protections for the COVID-19 treatments, and now 
diagnostics.
    You know, we have already seen this waiver expanded since 
the initial proposal focused on vaccines, and I think it just 
sends a really, really bad sign to the industry, and perhaps 
every industry that cares about protecting personal property, 
and I think it will have a dampening effect on companies' 
willingness to innovate and to invest.
    And Mr. Sullivan, you just said that very, very well.
    And so, you know, if we have a future pandemic, if we are 
just giving away the intellectual property, I don't think we 
would have quite the impact or quite the investment in 
innovation that we saw here. But I am also concerned, would 
this set a precedent? And anyone can address this, or is anyone 
worried about the precedent that would set if we do this? Like 
we have other national initiatives, you know, green technology, 
AI, electric vehicles, whatever it may be, you know, if we are 
giving away intellectual property, I think we are also giving 
away that American leadership.
    So, Mr. Shea.
    Mr. SHEA. Yeah, I just want to echo the point that Chairman 
Smith made. The current director general at the WTO earlier, 
sometime last year, suggested that there could be a TRIPS 
waiver for green technology, and apparently, the U.N. General 
Secretary agreed with that position in this conversation. It 
was a press report. So I agree, I am glad the chairman brought 
that up, and setting the precedent, a bad precedent, is a 
really important point to make.
    Mr. SMUCKER. I think it goes against the very system that 
our economy is based on, why we see innovation here in America 
in so many different sectors. And so, I think this is really, 
really an important issue beyond just the pandemic and 
healthcare-related innovations.
    We also know--and I will open this to anyone. Certainly, as 
we are updating systems at the WTO to better address modern 
challenges that we are faced with, the U.S. has an important 
and an influential role. And with 65 percent of U.S. trade 
covered by WTO rules, what role can we play in the U.S., how 
can we best position ourselves, and what role maybe can 
Congress play to support our efforts to make necessary changes 
at WTO? And I will open that up to anyone. And I will call on 
Ms. Shaw, if--go ahead.
    Ms. SHAW. I was just about to call on Ambassador Shea.
    Mr. SMUCKER. I will drag you into it if you need, yeah.
    Ms. SHAW. Sure. Right. So the first step is, you know, 
coming up with a vision for what we want the 21st century World 
Trade Organization to look like. And in my testimony, I have 
extensively outlined some of the challenges that we are facing, 
in part because I am a lawyer, and I am used to being a wet 
blanket, but also because I care a lot about the system and I 
want to see it survive and thrive. And I just don't think, in 
its current permutation, it is equipped to do that.
    So some of the issues that we have been spending a lot of 
time talking about within the committee, as well as with the 
administration, are issues related to China's unfair trade 
practices, the challenges of state-directed economic activity, 
forced technology transfer, and some of the issues related to 
supply chains, industrial policies, and the other challenges 
that we are facing with labor and environmental concerns.
    Those are the types of issues that the WTO should be 
addressing. We shouldn't be spending our time talking about 
whether or not we are going to update committee minutes in 
time, which is actually one of the agenda items for this 
ministerial. The WTO is just completely divorced from what is 
actually happening on the ground and what is impacting everyday 
Americans.
    And so, from that perspective, we need an ambitious 
negotiating agenda, and that is not going to happen among 164, 
soon to be 166, members. While I wish it were, that is not 
possible in a consensus-based system. So we need to find like-
minded allies who want to undertake that exercise with us.
    And negotiations take a very long time. It was 50 years, 
between 1947 and the time that the WTO was established after 
eight successive negotiating rounds. This is not a small 
endeavor. It is a significant one that I am recommending. 
Nevertheless, I think it is the next step, and it is the only 
way that the WTO survives.
    Mr. SMUCKER. Thank you.
    Mr. Shea, in 20 seconds, anything to add, how can Congress 
influence----
    Mr. SHEA. Well, I think we need to have very low 
expectations for the WTO. Two-thirds of the members don't have 
to abide by the rules, LBC, self-declared developing countries. 
And then, the Chinese system, the largest trader in the world, 
second largest economy in the world, their system is 
fundamentally at odds with WTO norms, so that is the WTO.
    Mr. SMUCKER. Thank you.
    Chairman SMITH. Thank you.
    I now recognize from Virginia, Mr. Beyer, for 5 minutes.
    Mr. BEYER. Mr. Chairman, thank you very much.
    And thank you very much for being here with us today.
    Mr. Hirsh, you mentioned that--you talked about the dispute 
over whether the WTO panels can second guess a member's 
decision to take a measure for national security purposes. 
Clearly, this happened in the Donald--President Trump's 
administration. This administration has held fast the position 
that national security concerns remain sacrosanct and out of 
bounds for multilateral body to consider.
    You suggest maybe there is a way to formalize this, but 
have we created this huge hole in the WTO rules? What is to 
prevent self-attestation from any given country to choose any 
given thing? For example, to Mr. Hanks' concern, why couldn't 
India say that they have a national security exemption for 
rice?
    Mr. HIRSH. You know, that is an excellent question. And, 
you know, there is clearly attention between treating national 
security issues and self-judging and the potential for a big 
loophole. But this has been the case since 1947. This has been 
on the books since 1947. The U.S. has taken this position since 
1947. And what held it back, really, from becoming this kind of 
loophole was this mutual recognition, this norm that it should 
not be overused.
    Now, you know, we are in a situation where it is 
increasingly being used. So what can we do? For one thing, the 
U.S. has never denied that when a member invokes national 
security that another member is entitled to retaliate. This is 
frankly the end point of any dispute.
    So what the U.S. really has done in the past is just skip 
over the middle, skip over the notion that trade experts can 
sit in judgment on a member's national security decisions, and 
just cut right to the chase and say, Okay, you want to 
retaliate, this was the impact of our measure, you may 
retaliate up to that point. And so, when I talk about 
formalizing that process, that is what I am referring to. You 
know, that ability to retaliate should serve as some 
disincentive, but----
    Mr. BEYER. Let me interrupt for one second.
    Mr. HIRSH. Yeah.
    Mr. BEYER. Do you consider the Trump/Biden use of this 
exemption for steel and aluminum an overuse?
    Mr. HIRSH. You know, I don't want to, you know, opine on 
that. I mean, I think that this problem--the problem of over-
capacity in steel and China's contribution to that, you know, 
has been going on for an extended period of time. And there 
have been many, many, many international discussions on this 
issue that simply we are getting nowhere. You know, this is, 
you know--again, the judgment we have made is that it is a 
national security issue, and at the end of the day, that has to 
be respected by virtue of the way the disciplines at the WTO 
are set up.
    Mr. BEYER. Thank you very much.
    Ms. Shaw, I was fascinated by your testimony. I am very 
impressed by it. To quickly quote, ``It is fair for the 
committee to ask what exactly is the point of continuing to 
invest in a multilateral system when the only issues on the 
table are largely defensive, don't advance U.S. interests, have 
little relevance for today's economy, and would largely make 
Americans worse off.'' You move on to say, ``We should put real 
resources into renegotiating and rebuilding an MFN multilateral 
framework.''
    Mr. Shea, you were a wonderful host for us a couple of 
years ago in Geneva. What is your perspective on Ms. Shaw's 
recommendation?
    Mr. SHEA. I agree. I mean, the--but I am not sure how many 
people would come along with us, at least initially. I think 
this sort of may be a midterm to longer term. I think that 
there is such a wedded nature--so many members, particularly 
like the European Union, even Australia, Japan, they are wedded 
to the WTO, and they are even--they are very reluctant to take 
actions, for example, against China, whose system I believe is 
completely incompatible with WTO norms.
    So I generally--I definitely agree with the sentiment. I am 
a little skeptical that we would get a lot of players joining 
us, at least initially. There have been some interesting 
commentary, Clyde Prestowitz and Rob Atkinson, for example, 
suggest that we create a DATO, a NATO for trade, where like-
minded market economies would join together when they are 
attacked through economic policies by China or other places, 
and come together and take collective action in response. So 
that is an interesting idea that has been on the table for a 
few years.
    Mr. BEYER. Thank you.
    Ms. Shaw, do you have any quick response to Mr. Shea's 
skepticism about your fascinating suggestion?
    Ms. SHAW. Well, I mean, my honest view is that whether the 
United States does anything or not, the WTO is going to wither 
off into irrelevance. So this is a last-ditch effort to try to 
save the organization, that ultimately, I think, if it works, 
is going to be strongly in the interest of the United States.
    A purely bilateral strategy where we are just negotiating 
one-off with individual countries without a multilateral 
framework proved to result in discrimination to U.S. producers, 
farmers, exporters. We tried that in the first half of the last 
century. That is why we came up with this whole project and 
idea in the first place. So as hard as it is going to be, and I 
am under no illusions that this is going to be easy, I think it 
is our only option.
    Mr. BEYER. Thank you very much.
    Mr. Chairman, I yield back.
    Chairman SMITH. Thank you.
    I now recognize from North Carolina, Dr. Murphy, for 5 
minutes.
    Mr. MURPHY. Thank you, Mr. Chairman.
    Thank you all for coming here today.
    Ms. Shaw, I liked the phrase of a ``wet blanket.'' I didn't 
quite know what that was. I had to--actually, I had to look it 
up, and I kind of feel like I am a wet blanket too. But that is 
what skeptics do, because sometimes unbridled enthusiasm, as we 
have seen with the TRIPS waiver, leads to absolute disaster.
    And so we had the Inflation Reduction Act, which was the 
pill penalty that now CBO thought it would be one fewer 
molecular cut, as far as new medicines, now it has been close 
to 200. This is where unbridled enthusiasm had a motion to 
overtake reality and a rational thoughts, where we, yeah, want 
to share the vaccines with the world. But let's think about--
instead of just feeling better about ourselves, let's think 
about the consequence.
    I can't think anything more destructive than the TRIPS 
waiver for American innovation. I just absolutely can't, 
because what are we going to do? What is the next extension 
with these types of things that we are going to start giving 
our technology away? It is an absolute national security issue. 
Yeah, fine, well, we have Chinese spying on us. Hell, they 
would get our innovation anyway. Why are we just giving it 
away? Next thing we are going to be telling them what the 
battle plans are for our Abrams tanks and all this stuff. It is 
just--it makes us feel better about ourselves, but it is 
destructive to American innovation and American society.
    Mr. Sullivan, you know, I am a physician, been one for 30-
plus years, still practice, and I have relied for innovation 
throughout the years, seen an absolute explosion in this, 
especially in the last decade. So to bring a pandemic, a COVID-
19 therapeutic or diagnostic to market, how much does that 
cost?
    Mr. SULLIVAN. Well, to just----
    Mr. MURPHY. Briefly. I mean, hundreds of millions of 
dollars.
    Mr. SULLIVAN. It is literally hundreds of millions of 
dollars----
    Mr. MURPHY. Right.
    Mr. SULLIVAN [continuing]. In the neighborhood, even 
approaching $1 billion, perhaps.
    Mr. MURPHY. Right.
    Mr. SULLIVAN. And the reason that that is so daunting is 
because we have to remember that not only are we paying for the 
successes, but we are also paying for the failures.
    Mr. MURPHY. Sure.
    Mr. SULLIVAN. And that is the system that we live in to 
innovate and find the really good 10 percent that make all the 
difference in the world. And we do end up paying for failure--
--
    Mr. MURPHY. Sure, because every molecule----
    Mr. SULLIVAN [continuing]. And we don't like to talk about 
that.
    Mr. MURPHY. No. For every molecule, you know, what is it, 
10-to-1, at least, or if not, on some things----
    Mr. SULLIVAN. That is correct. That is correct.
    Mr. MURPHY [continuing]. That is absolutely done. And so, 
you know, you have to plan years in advance. These are not just 
singular, ``Hey, let's just do this tomorrow.'' It takes years 
in advance to do this. And to literally give away American 
technology, American investment to make us feel better about 
ourselves is absurd, no matter what field that we are dealing 
with, no matter what field. It is just beyond me, we have 
somebody in the White House and in the administration that just 
wants to give America away. It is a national security issue. It 
is absolute national security.
    I just want to shift to one thing about fishing. Ms. Shaw, 
I am going to kind of ask this to you. We are one of the 
world's greatest producers in seafood in my district, in North 
Carolina. You know, we have to fight the guys from Florida and 
so many other places, but we always try to win our best. They 
come up to our places to fish. And so, I have the second-most 
coastline district in the country.
    We saw major breakthroughs in the twelfth ministerial 
meeting where countries reached an agreement on some fishing 
subsidies. We still have, you know, some of the Asian countries 
coming off our coast and doing so much of this. This year, WTO 
members are negotiating a second fisheries agreement to cover 
the additional unfair practices.
    And I want to, Ms. Shaw, in your opinion, do you think this 
is going to be a good outcome for the United States? You know, 
now what is it, we get 92 percent of our seafood from overseas, 
and it is done with slave labor and some of these bad 
practices. What do you think is going to happen with this 
second agreement?
    Ms. SHAW. I think if the agreement landed where the U.S. 
wanted it to, it would be a good agreement for America. The 
problem is, we are not the only one at the table. And, as of 
now, it seems very unlikely that we are going to get any 
outcome on overcapacity, overfishing subsidies, which is really 
the heart of what the fishery subsidies negotiations were 
about. If anything, it looks like we may land on something 
related to transparency, effectively just knowing what the 
subsidies are. And that is a pretty basic step. While helpful, 
in terms of driving negotiations forward, it is not really 
going to be a home run in terms of what America takes home.
    Mr. MURPHY. Well, I just have a problem, because, you know, 
like Trump, no Trump, whatever, it is just the whole deal of 
negotiation. We should negotiate in all of our different 
industries regardless from a point of strength, not from a 
point of weakness. And yes, we want to be fair, et cetera, et 
cetera. But when we have China, when we have so many other 
countries taking advantage of our weakness, meaning our 
empathy, it destroys American innovation, it destroys American 
industries.
    Thank you, Mr. Chairman. I will yield back.
    Chairman SMITH. Thank you. I next recognize from Florida, 
Mr. Steube.
    Mr. STEUBE. Thank you, Mr. Chairman.
    I have been in here almost the entire hearing, and I had 
some planned remarks, but I kind of want to go a different 
direction. Each of you did not speak positively of the WTO. I 
can guarantee the people in southwest Florida don't think we 
should be a part of the WTO. If I polled my district, they 
would think why are we wasting millions of dollars. I just had 
my staff look up the numbers. So, in 2022, U.S. gave $23 
million, which was about 12 percent of the budget; China gave 
10 percent of the budget; Germany 7 percent of the budget; 
everybody else is less than 4 percent. So we basically are the 
large--correct me if I'm wrong, these are numbers that I was 
given, we give the most money. Yet, each of you say we 
basically--even the Democratic witness is like, we don't have 
the best of results.
    Mr. Hanks, the rice farmers, we are getting stuck by China 
and India and some of these other people who aren't following.
    Mr. Shea, you say two-thirds of the people don't even have 
to follow the rules that are part of the WTO. I mean, that is 
very fascinating to be part of an organization that you don't 
have to follow the rules for.
    Ms. Shaw, I follow your line of thinking, but my question 
to you--and I am going to, like, give you the platform, and I 
want to start with Ms. Shaw and then Mr. Shea--explain to me 
how I should explain to the farmers in my district, and I used 
to have one of the largest ag districts; after redistricting, I 
don't have as much ag, but citrus is--I am from Florida, so 
citrus is huge, beef cattle, dairy.
    Explain to me how I should explain to my farmers why we 
should even be part of an organization where we spend the most 
money and get absolutely nothing back when we can go and have 
the USMCA and have--like we just passed part of a Taiwan tax 
deal in the last tax bill that we just passed. There are all 
these different things that we can unilaterally do with other 
countries that aren't China and competing with us and agree 
with us on the way that we approach policy and economic 
interests and trade and want to help each other and be 
successful. So help--I guess, argue to me why the United States 
should still be an active partner when just about every one of 
you have said that it is pointless.
    Like, Mr. Hanks, you said that you won. You beat--and then 
it goes into this--you described it as a void. So like, what 
are we doing? I mean, like, why are we doing this when we can 
go out--we are the United States; we can go out and negotiate 
with whoever we want to negotiate with for trade deals. So 
explain to me why we should still be a part of it and give them 
millions of dollars?
    I will start with Ms. Shaw, and then I will go to Mr. Shea.
    Ms. SHAW. Thank you. Well, first of all, I think it is a 
fair question, right. I mean, you have heard for----
    Mr. STEUBE. And explain it to the farmer, like you are 
talking to a farmer in my district who grows citrus. Try to 
explain to his level.
    Ms. SHAW. Absolutely. Well, first of all, 96 percent of the 
world's consumers live outside the United States, so your 
farmer needs an export market, right. We need markets to sell 
our agricultural products into. But part of the problem with 
just doing bilateral deals, if we do a deal with Brazil, we do 
a deal with Argentina, we do a deal with the EU, is that 
nothing prevents them from giving another country an even 
better deal.
    So after we have finished negotiating that deal with the 
European Union, if they cut Brazil a better market access rate, 
U.S. producers are immediately disadvantaged. That is why we 
came up with this multilateral system in the first place.
    Mr. STEUBE. That is not working.
    Ms. SHAW. Not working, okay. Well, we need the markets. The 
WTO is fundamentally flawed, but I can--we can do better, and a 
multilateral system is the most effective way to give a broader 
market to our farmers.
    Mr. STEUBE. And you think by doing better is just dumping 
more resources in--I mean, my remarks about how horrible the 
Biden administration has taken a turn from what Mr. Shea and 
Lighthizer and what the Trump administration did on trade. But 
like what would that look like, dumping resources in it?
    Ms. SHAW. Not as it stands, no. That would be a massive 
waste of money. I think we need to have real conversations with 
our trading partners about whether they are serious about going 
and creating the same project we are. And if they are not, I 
agree with you; we are better off on a bilateral route. But I 
think we are better off, ultimately, if we can get a group of 
like-minded allies, a subset of the WTO, a WTO-plus group, to 
go forward with more ambitious rules who really want to see the 
system move forward. And, if not, you are right. Let's go the 
bilateral route.
    Mr. STEUBE. Mr. Shea.
    Mr. SHEA. I agree with--it is a great question. I agree 
with a lot with what Kelly says. But the WTO is also a place 
where members can come together and discuss trade problems 
informally, not necessarily in a formal setting. So there is 
value in that as well. At the same time, there have been some 
good outcomes: The moratorium on customs duties on electronic 
transmissions, that has been in place since 1998; the very 
limited fish deal in the last ministerial, I think, is a 
positive thing. So positive things do come out, but, as I say 
in my testimony, I would never outsource U.S. economic security 
to this organization. We need to do what we need to do, and 
that is just the way it is.
    Mr. STEUBE. Mr. Hanks, you have got a couple seconds.
    Mr. HANKS. Yeah. I just want to make one comment about the 
alternatives, because as Ms. Shaw mentioned before, that, you 
know, when you have a victory in the WTO the victory manifests 
itself in the form of tariffs, and so, that--you know, nobody 
wants to spend more money for goods.
    There are other--I get this same question from farmers in 
my office all the time: Why are we even engaged in the WTO? 
What other options do we have? And I will just use this 
opportunity to plug the farm bill. For agriculture that is one 
mechanism that we can use that helps offset, to some degree, 
the egregious behavior of some of these folks in the WTO.
    Mr. STEUBE. Yeah, but if somebody like China can obfuscate 
tariffs and just dump rice into Brazil or Puerto Rico, and then 
go around the tariffs that are in place, there is no teeth in 
that, right?
    Mr. HANKS. That is correct. And we fight it day in and day 
out, and we are looking for help from you folks to solve this 
problem.
    Mr. STEUBE. I yield back.
    Chairman SMITH. Thank you. We currently have votes on the 
House floor, so we will stand in recess and reconvene 
immediately after the last vote.
    [Recess.]
    Chairman SMITH. The committee will come back into order. 
Appreciate the patience of our panel as House votes were 
called.
    Without objection, I would like to submit Ms. Sewell's 
statement for the record.
    [The statement of Ms. Sewell follows:]
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    Chairman SMITH. And with that, I will recognize from 
Illinois, Mr. Schneider, for 5 minutes.
    Mr. SCHNEIDER. Thank you. And first, let me thank the 
chairman for recognizing me, but also the witnesses for your 
patience and also your insights and sharing your perspectives.
    A point of personal privilege, as the newest member of the 
subcommittee, I am grateful to be here, and I look forward to 
working together. I have worked on a lot of these issues as a 
telegraph in particular with TRIPS, so I may be asking you 
about TRIPS in particular, but I am excited to be a part of the 
committee.
    I want to thank the chair and ranking member for hosting 
this hearing, and the witnesses for being here. The wealth of 
knowledge that you share from the executive branch to 
experience in industry has been very helpful and helps inform 
our decision-making.
    Regardless of our party, Republican, Democrat, in this 
Chamber, specifically Ways and Means, we have historically 
agreed on the importance of U.S. leadership in global trade. I 
have always said the world is safer and more prosperous when 
America leads, and the need for America and American leadership 
is no greater at this moment than I can think of, certainly any 
time in my lifetime, and probably any time going back to the 
last world war.
    Our economy has been through the wringer the last number of 
years with the pandemic, but thanks in part to the fast action 
of Congress and other decisions, we were able to weather that 
storm to stimulate demand, and the United States economy 
proudly is the economy others are looking to see who can 
recover or how to recover.
    We addressed a lot of challenges from the supply chain to 
the infrastructure bill. We have passed some successful 
legislation with the CHIPS and Science Act, the infrastructure 
bill, and inflation has now cooled, so things are looking up. 
But the world continues to see broad systemic challenges as the 
rules-based international order is increasingly contested and 
undermined by our strategic adversaries, as we have talked 
about today.
    The WTO was intended as a pillar of the order, and America 
has to lead in strengthening and reforming--I believe, in 
strengthening and reforming the WTO to address the challenges 
of the 21st century. We have talked about a number of things, 
from the ascension of Comoros and Timor-Leste, and their 
interest shows that the WTO remains important. But to keep it 
important, to succeed and to achieve American goals, protect 
American interests, we need to reform the WTO, and take a lot 
of steps. So, as we look to the MC13--I will open up to the 
panel--we have talked about some of the challenges, I 
appreciate in the testimony the what to do, what not to do, but 
measuring expectations or metering expectations to this is not 
going to be a crossroads.
    What do you think we can do best to make sure that American 
interests are at least advanced in this ministerial and set us 
up for where we need to go in the future? And maybe I will go 
right to left. So, Mr. Hirsh, start with you.
    Mr. HIRSH. Thank you very much. I think that what we can do 
is largely what we are trying to do. Ambassador Pagan referred 
to below-the-radar screen conversations, and a lot of what is 
going to be accomplished at this ministerial will be in 
bilaterals and in small groups, and we won't see it. But 
hopefully it will result in real reforms that come through, and 
ones that will make the organization operate more effectively, 
and create an organization where we can get things done. So I 
think those conversations, again, will be hard to gauge after 
it is done, but hopefully they will be successful.
    Mr. SCHNEIDER. Mr. Sullivan, first, let me say, I have 
worked with my colleagues on both sides of the aisle expressing 
our thoughts to the administration on TRIPS. I am proud of the 
fact that as the world looks for inoculation to vaccines for 
COVID, it is the U.S. who led that way; and as the world looks 
for treatments, it is the U.S. who continues that way, and it 
is our intellectual property system. But to have success, what 
are the things you would suggest that we focus on?
    Mr. SULLIVAN. And I think it is important to recognize, 
first of all, that all of us have the interest of solving 
issues when pandemics hit. That is absolutely first and 
foremost.
    Mr. SCHNEIDER. You saw that in the actions----
    Mr. SULLIVAN. And we saw that. And industry stepped up to 
really be able to solve what could have been a serious issue, 
and quite frankly, I believe, saved millions of lives. But we 
have to continue to focus on the things that prevent medicines 
from getting to people. And, you know, it certainly is my 
belief, and certainly the belief of what I have seen from 
bodies like the USITC that intellectual property is not the 
issue, and so focusing on the issues that really matter first, 
and that is what we need to do.
    Mr. SCHNEIDER. And I am at the end of time, so I apologize, 
but I don't want to keep you late, but I will finish with two 
thoughts. Mr. Sullivan, you said innovation 90 percent of the 
time fails. I always quote Thomas Edison: ``I didn't fail 90 
percent of the time. I learned new ways how not to, and that is 
equally important.''
    And, Ms. Shaw, your remarks are the last thing we need to 
do is a race to the bottom, so whatever approach we take in 
approaching trade and working with our allies' data, whatever 
we call it, has to be a way that lifts up the United States and 
with 96 percent of consumers outside the United States lifts up 
the world.
    And with that, I yield back.
    Chairman SMITH. Thank you.
    I now recognize from Minnesota, Mrs. Fischbach.
    Mrs. FISCHBACH. Thank you very much. I appreciate it.
    And thank you, guys, for hanging in there. I appreciate 
that. But, you know, I just--I want to let you know, I am an 
agriculture district, heavy agriculture, mostly rural district, 
so trade is obviously very important to us, and as with many of 
the members of the Ways and Means Committee. And so, I really 
appreciate that this is part of this conversation.
    And, you know, I just want to--I appreciated Mr. Steube's 
discussion about, you know, what do we tell our farmer, you 
know, what is really the value to them of the WTO. And I will 
start with Mr. Hanks, and maybe if anybody else wants to jump 
in, because this is going to be your last chance, guys, to say 
anything that you want to say, and I bet there won't be any 
objection if we go a little bit over.
    But with the lack of ability to adequately enforce and 
pursue trade objectives through the WTO, countries, including 
our own, have pursued these goals through bilateral and 
multilateral agreements amongst themselves. From a farmer's 
perspective, do you believe these agreements could ever replace 
the value of the functional WTO, or are they supplemental to 
the WTO as an enforcement negotiation dispute settlement body, 
or are they just preferred over anything with the WTO?
    And so, I threw a lot out there, and I think it goes a 
little further than Mr. Steube was talking about, but, Mr. 
Hanks, if you want to start.
    Mr. HANKS. Sure. I think, you know, we've had many 
successful bilateral and multilateral agreements that have 
benefited agriculture, rice in particular, USMCA obviously 
being renegotiated. We do a lot of trade with Mexico and Canada 
and rice, but also CAFTA-DR has done a really good job of 
opening up markets for our farmers.
    These bilateral and multilateral trade agreements do 
provide market access, but, I think, to Ms. Shaw's earlier 
comments, it doesn't address the subsidies that are impacting.
    So, for example, what India does, what China does in their 
dumping of rice into certain markets, a bilateral or 
multilateral trade agreement won't address that. So the WTO is 
necessary to focus on those aspects of trade and how they 
distort trade, but, you know, having another mechanism to do 
that would certainly be welcomed by agriculture.
    Mrs. FISCHBACH. So potentially, you could see, as a 
marriage, you know, you have got NAFTA, you have got WTO, you 
have got whatever--you know, and I use NAFTA as an example. But 
you see it more of working hand-in-hand, enhancing potentially?
    Mr. HANKS. I do, because, you know, there is lots of trade 
agreements that are being proposed at the moment, but still, 
none of them that I am aware of would address some of the 
challenges that we are experiencing, and particularly in rice, 
and so, therefore, the WTO would be the mechanism where we need 
to address this.
    Mrs. FISCHBACH. Thank you.
    And I think Mr. Shea was----
    Mr. SHEA. Yeah, thank you, Congresswoman. One of the key 
functions of the WTO is monitoring the activities of WTO 
members. Unfortunately, that monitoring pillar is not working 
as it should, but the WTO does serve as a function for greater 
transparency if it were working the way it should be, as a way 
of greater transparency, knowing what our trading partners are 
doing in terms of subsidies and market access.
    When I was the representative there under the Trump 
administration, we filed several counter notifications dealing 
with India's subsidies and trade practices, I think for rice 
was one of the products we covered, and also, highlighting 
their way of calculating domestic support was inaccurate and 
understated the level of domestic support. So the WTO provided 
a forum for the provision of that type of information, and 
dissemination among other countries who share our interests.
    Mrs. FISCHBACH. Thank you.
    And, Ms. Shaw.
    Ms. SHAW. Thank you for the question. And I appreciate the 
sentiment, along with your colleagues, about the interest of 
U.S. agriculture. And just to say, you know, what is in the 
first interest of our agricultural producers, farmers, 
ranchers, is for a functioning WTO or WTO-plus system. Now, shy 
of that, we can look at alternatives.
    But if the United States were to leave the WTO today and to 
just say, we are just not going to deal with, it is not working 
well, it would present a huge vacuum that China and other 
countries who are massive subsidizers would fill. It would 
create rules around us that would severely prejudice the United 
States, not just in terms of our interactions with third 
countries but even our own trading partners, who would feel 
pressure from those markets to get preferential access to China 
and others.
    There is also a lot of technical work that happens. And we 
talked sort of about the big sexy issues here, like what is on 
the negotiating agenda. But as Dennis pointed out, there is a 
tremendous amount of value in some of the technical discussions 
that happen every day between our SPS experts, our USDA experts 
and their counterparts to try to resolve issues and head them 
off before they become discriminatory policies against our 
farmers.
    So there are a couple of different things happening from 
that respect. But what I would say is we need to demand more. 
The United States needs to express leadership, we need to have 
an agenda fit for the 21st century, and we need to work with 
strong allies within the context of the WTO if possible to 
advance these rules, to stop the cheaters from cheating, and if 
not, then we will look at alternative formats. Thank you.
    Chairman SMITH. Thank you.
    Mr. Sullivan.
    Mr. SULLIVAN. Yeah, I just want to mention one important 
point, and it is how the technologies behind everything that we 
do in building biotechnology and innovations in healthcare also 
relate to agriculture and the environment, because it is--you 
know, I am a member of the Biotechnology Innovation 
Organization. I sit on the board, and I am a former member of 
actually the agriculture and environmental section of BIO, and 
it is because many of the technologies that we use to develop 
drugs are also important in agriculture, also important in 
green energy, all of these types of things. So these issues are 
absolutely related, and we protect American interests and 
innovation by supporting strong intellectual property. Thank 
you.
    Mrs. FISCHBACH. I appreciate that.
    And, Mr. Hirsh, I guess you get the last word. Look at 
that.
    Mr. HIRSH. Thank you very much.
    Well, I mean, I think we have all been discussing today, 
you know, the challenges in developing new disciplines. 
Everyone has spoken to that. And we certainly hope that we will 
be able to move the organization in a direction where they can 
start developing new initiatives, but we can't lose sight of 
the existing rule book and the importance of that existing rule 
book.
    You know, the WTO agreement is extensive, and the 
disciplines in that agreement, for example, on SPS are really 
the basis of every one of our bilaterals. We don't generally go 
beyond the WTO. Subsidies are--the WTO is the place to deal 
with it, and while we needn't do disciplines, the existing ones 
are important.
    So I would just, you know, recall--it is important to 
recall, as we are talking about the challenges of developing 
new disciplines, to remember the ones that are currently 
providing a lot of stability to international trade and for our 
farmers.
    Mrs. FISCHBACH. And, Mr. Hanks----
    Mr. HANKS. Just one quick follow-up.
    Mrs. FISCHBACH. Thank you.
    And, Mr. Chair, thank you for your indulgence.
    Mr. Hanks.
    Mr. HANKS. Sorry. One quick follow-up.
    I think another important point is that we need to be going 
on the offensive. We spend a lot of time being on the defense, 
watching other countries, all these other bad actors, subsidize 
and violate their WTO commitments.
    I think we need--the USITC updated study for rice is a good 
first start to do that, but we need to do more of that where we 
are on the offense and not on the defense.
    Mrs. FISCHBACH. Thank you very much.
    And thank you very much.
    And, with that, Mr. Chair, I yield back, and I appreciate 
it.
    Again, thank you all for being here.
    Chairman SMITH. Thank you.
    And thank you, Mrs. Fischbach, for sticking around and 
wrapping things up here.
    Again, thank you to our panel. I think that the timing of 
this issue and this discussion is important heading into the 
next ministerial, but even in a broader set of issues, the need 
to address our concerns is very acute, and so your perspectives 
and insights are especially helpful as we tackle these 
difficult issues.
    Please be advised that members of the committee have 2 
weeks to submit written questions to be answered later in 
writing. Those questions and the panel's answers will be made 
part of the formal hearing record.
    With that, the subcommittee stands adjourned.
    [Whereupon, at 11:37 a.m., the subcommittee was adjourned.]
      

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