[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
PRESIDENT OBAMA'S TRADE POLICY AGENDA
WITH U.S. TRADE REPRESENTATIVE
MICHAEL FROMAN
=======================================================================
HEARING
before the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
APRIL 3, 2014
__________
Serial No. 113-FC17
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
DAVE CAMP, Michigan, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin JIM McDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington XAVIER BECERRA, California
CHARLES W. BOUSTANY, Jr., Louisiana LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
TOM PRICE, Georgia EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida RON KIND, Wisconsin
ADRIAN SMITH, Nebraska BILL PASCRELL, Jr., New Jersey
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas ALLYSON Y. SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota DANNY K. DAVIS, Illinois
KENNY MARCHANT, Texas LINDA T. SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD C. YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JAMES B. RENACCI, Ohio
Jennifer M. Safavian, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
C O N T E N T S
__________
Page
Advisory of April 3, 2014 announcing the hearing................. 2
WITNESS
Ambassador Michael Froman, U.S. Trade Representative, Office of
the United States Trade Representative, Testimony.............. 11
SUBMISSIONS FOR THE RECORD
American Chemistry Council....................................... 65
Citizen Trade Policy Commission of Maine......................... 67
Doctors Without Borders.......................................... 82
Outdoor Industry Association..................................... 91
Rubber and Plastic Footwear Manufacturers Association............ 94
The American Council of Life Insurers............................ 96
The American Farm Bureau Federation.............................. 98
The Express Association of America............................... 101
U.S. Chamber of Commerce......................................... 108
MATERIAL SUBMITTED FOR THE RECORD
Questions For The Record:
Representative Dave Reichert..................................... 120
PRESIDENT OBAMA'S TRADE POLICY AGENDA
WITH U.S. TRADE REPRESENTATIVE
MICHAEL FROMAN
----------
THURSDAY, APRIL 3, 2014
U.S. House of Representatives,
Committee on Ways and Means,
Washington, DC.
The Committee met, pursuant to notice, at 9:36 a.m. in room
1100, Longworth House Office Building, the Honorable Dave Camp
(Chairman of the Committee) presiding.
[The advisory of the hearing follows:]
HEARING ADVISORY
Chairman Camp Announces Hearing on President Obama's Trade Policy
Agenda with U.S. Trade Representative Michael Froman
1100 Longworth House Office Building at 9:30 AM
Washington, March 27
House Ways and Means Committee Chairman Dave Camp (R-MI) today
announced that the Committee on Ways and Means will hold a hearing on
President Obama's trade policy agenda with U.S. Trade Representative
Michael Froman. The hearing will take place on Thursday, April 3, 2014,
in 1100 Longworth House Office Building, beginning at 9:30 A.M.
In view of the limited time available to hear the witness, oral
testimony at this hearing will be from the invited witness only.
However, any individual or organization not scheduled for an oral
appearance may submit a written statement for consideration by the
Committee and for inclusion in the printed record of the hearing.
BACKGROUND:
International trade is essential to advancing U.S. economic growth
and job creation. While the United States is the largest economy and
trading nation in the world, 95 percent of the world's consumers are
abroad. Accordingly, the future success of American workers,
businesses, farmers, and ranchers is integrally tied with continuing
America's strong commitment to finding new markets, expanding existing
ones, and effectively dealing with market access barriers for U.S.
goods, services, and investment. To further the trade agenda and to set
forth procedures to enhance Congressional authorities in shaping and
implementing trade agreements, Ways and Means Committee Chairman Dave
Camp and Senate Finance Committee leaders introduced in January the
Bipartisan Congressional Trade Priorities Act of 2014 (H.R. 3830). This
bipartisan, bicameral legislation establishes new and updated
Congressional trade negotiating objectives that direct the
administration, significantly enhance requirements for consultation and
information-sharing with Congress before, during, and after trade
negotiations, and provide rules for Congressional consideration of
trade agreements and their implementing bills, ultimately ensuring that
Congress has the final say in approving any trade agreement. The
legislation preserves the constitutional role and fulfills the
legislative responsibility of Congress with respect to trade
agreements. At the same time, the process ensures certain and
expeditious action on the results of the negotiations and on the
implementing bill, without amendment.
In addition to TPA, this hearing will provide an opportunity to
explore with Ambassador Froman how the President's trade agenda will
create new and expanded opportunities for U.S. companies, workers,
farmers, and ranchers, and how TPA is crucial to this strategy. Those
opportunities include ongoing negotiations such as the Trans-Pacific
Partnership (TPP), the Transatlantic Trade and Investment Partnership
(TTIP), and the Trade in Services Agreement (TiSA) negotiations, as
well as post-Doha negotiations at the World Trade Organization, such as
expansion of the Information Technology Agreement (ITA) and a WTO
Agreement on environmental goods. In addition, the hearing will examine
important enforcement priorities, including trade-restrictive practices
and non-tariff barriers from major emerging economies that prevent U.S.
companies from competing on a level playing field, as well as various
bilateral and multilateral trade issues and concerns. Finally,
Ambassador Froman's testimony will provide an opportunity to discuss
Bilateral Investment Treaty (BIT) negotiations with China, India, and
others, as well as new BIT and investment policy opportunities;
discussions in other bilateral and multilateral forums; and the trade
and investment relationship with new and emerging trading partners.
In announcing this hearing, Chairman Camp said, ``Seeking new
markets for U.S. goods, services, and investment, while ensuring
enforcement of our existing agreements is key to driving strong
economic growth and job creation here in the United States. U.S. trade
policy is at a crossroads. We have the opportunity to complete new
trade agreements, including the Trans-Pacific Partnership, negotiations
with the European Union, as well as the Trade in Services Agreement
negotiations and other important trade initiatives. However, trade
promotion authority is essential to concluding all of these efforts,
and our bipartisan, bicameral bill empowers Congress and provides
important direction from Congress to get these agreements done right. I
call on the President to actively engage to secure broad bipartisan
support for this bill. We must also continue to develop new trade and
investment opportunities and enforce our trading rights with important
trading partners, including China, India, and Latin America. I look
forward to hearing Ambassador Froman lay out the administration's plan
to advance U.S. economic opportunities around the world.''
FOCUS OF THE HEARING:
The hearing will provide an opportunity to explore with Ambassador
Froman current and future trade issues such as: (1) passing the
Bipartisan Congressional Trade Priorities Act of 2014; (2) seeking to
conclude a successful Trans-Pacific Partnership agreement this year;
(3) negotiating with the European Union for a comprehensive and
ambitious Transatlantic Trade and Investment Partnership; (4)
negotiating a Trade in Services Agreement that increases access for all
sectors of our economy; (5) improving our important trade relationship
with major emerging economies like China, India, and Brazil, and
addressing their trade barriers; (6) ensuring appropriate trade
enforcement efforts; (7) advancing WTO negotiations, including ``post-
Doha'' issues such as Information Technology Agreement expansion and an
agreement for trade in environmental goods; (8) negotiating Bilateral
Investment Treaties (BITs) with China, India, and others, and exploring
new BITs and investment opportunities; (9) establishing long-term,
closer ties with important trading partners; and (10) renewing the U.S.
Generalized System of Preferences and other trade preference programs.
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Please Note: Any person(s) and/or organization(s) wishing to submit
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for the record.'' Once you have followed the online instructions,
submit all requested information. ATTACH your submission as a Word
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FORMATTING REQUIREMENTS:
The Committee relies on electronic submissions for printing the
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materials in alternative formats) may be directed to the Committee as
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Note: All Committee advisories and news releases are available on
the World Wide Web at http://www.waysandmeans.house.gov/.
Chairman CAMP. Good morning. First, I just want to make a
quick comment about the temperature of the room. There is a
mechanical difficulty on the seventh floor of this building. I
have spoken directly to the superintendent's office. They are
trying to repair it as we meet. But it is going to be a little
chilly all morning in here.
Welcome, Ambassador Froman. Thank you for coming back to
the Committee. Obviously, we are very aware and appreciative of
how hard you and your dedicated staff have worked to advance
U.S. trade policy.
A trade policy that opens markets for American exports,
enforces international rules, and ensures a level playing field
for American workers is proven to promote broad economic growth
and job creation here in the United States. The success of
American workers, businesses, farmers, and ranchers is directly
linked to finding new markets, expanding existing ones,
effectively dealing with market access barriers, and strictly
enforcing our existing agreements.
U.S. trade policy is at an important crossroads. Congress
passed the trade agreements with South Korea, Colombia, and
Panama on strong bipartisan votes last Congress, and in the
process the United States recaptured its leadership role in the
global trade negotiations. This past December, U.S. leadership
was critical to ensuring that the WTO Ministerial in Bali
produced the Trade Facilitation Agreement, the first multi-
lateral agreement since the WTO was created nearly 20 years
ago.
We are in the midst of several trade negotiations. The
Trans-Pacific Partnership is nearing conclusion, and I hope it
will be completed as soon as possible this year. Progress in
the EU negotiation is encouraging. The Trade in Services
Agreement negotiations are well underway in Geneva, with 50
countries participating, as is the newly kicked-off WTO
negotiation on environmental goods. We are trying to conclude
an expansion of the Information Technology Agreement, assuming
China acts more constructively. We have an active bilateral
investment treaty negotiating agenda with China, India, and
others.
All these initiatives hold the promise of significant
economic gains, supporting more good jobs that pay well here in
the United States by dismantling barriers to U.S. exports and
creating robust enforcement mechanism to prevent future
barriers. These agreements will tackle both tariff and non-
tariff barriers, including 21st century issues like state-owned
enterprises, cross-border data flows, forced localization,
regulatory coherence, and trade facilitation. They will create
more opportunities for U.S. companies by integrating them more
deeply into global supply chains.
To conclude and implement these negotiations, we need to
pass trade promotion authority legislation. That is why, this
January, I introduced H.R. 3830, the Bipartisan Congressional
Trade Priorities Act, along with then-Finance Committee
Chairman Baucus and Ranking Member Hatch, as well as Rules
Committee Chairman Sessions and Trade Subcommittee Chairman
Nunes.
TPA is how Congress sets its priorities for trade
agreements, and instructs the Administration on how to achieve
them. Every president since FDR has had some form of this
authority. The legislation establishes specific rules for how
the Administration must consult with us, and ensures Congress
the final say in approving any trade agreement. This TPA bill
is the strongest in history, and includes new provisions to
keep Members informed and provide a formal process to guarantee
that Members' views will be taken into account. If the
Administration does not meet our objectives, or keep us
informed, the bill provides that we can strip TPA.
The need for this bill is resonating powerfully among
Members and key stakeholders they know that TPA helps our
negotiators get the very best deal and realize the economic
benefits of our trade agreements. But while the President
called for TPA in his State of the Union speech, he has been
silent since. Ambassador, I know you have been working hard.
But if we are going to get TPA done, we need full engagement by
the President himself, and his entire administration. This is
an all-hands-on-deck moment for the Administration to engage
with Congress and the American people on this bill. I look
forward to hearing from you, Ambassador, about the
Administration's plan to bring TPA across the finish line.
In addition to negotiations, we must also address the
challenges and opportunities presented by trading partners
around the world, including the major emerging economies--
China, India, and Brazil. They provide enormous potential, but
also significant and growing barriers. We must engage these
countries constructively, but firmly, and address trade and
investment barriers such as through an expanded Bilateral
Investment Treaty agenda.
I will conclude by pointing to a recent Pew study on
America's place in the world, which found that 66 percent of
Americans see benefits from greater involvement in the global
economy, because it opens up new markets and opportunities for
growth. With 95 percent of the world's consumers outside our
borders, Americans are keenly aware of the need for strong U.S.
engagement abroad. Let's seize this opportunity on the trade
front.
Chairman CAMP. I will now yield to Ranking Member Levin to
make an opening statement.
Mr. LEVIN. Thank you, Mr. Chairman. I hope you won't find
it out of order for me to say a few words since your public
announcement.
I think we all felt the same way, Mr. Chairman. Your
dedication to public service has been unswerving for your
district, for the state, and, I think, for this country. You
have brought dignified and warm touches to your leadership, and
we are all grateful for that. And----
Chairman CAMP. We will need that warmth today.
Mr. LEVIN. Well, I think it will overcome the lack of heat.
It won't be too hot, Mr. Ambassador.
Ambassador FROMAN. Thank you.
Mr. LEVIN. But we feel that, Mr. Chairman. And you have led
this Committee in a way that I think is very much in keeping
with a tradition in this Committee that goes back long, long
before any of us have served. And so, we listen to your
announcement with, I think, very mixed emotions, and we look
forward to working with you in the days ahead.
Chairman CAMP. Well, thank you very much for those very
gracious comments. I Appreciate it very much.
Mr. LEWIS. Mr. Chairman.
Chairman CAMP. Yes, Mr. Lewis.
Mr. LEWIS. I would like to be identified with the comments.
Chairman CAMP. Well, thank you.
Mr. LEWIS. The gentleman from Michigan, you are my neighbor
upstairs in the Cannon Building, and you are my friend. You are
not just the chairman. And I want to thank you for your years
of service, for your openness, and for all that you have done
to make Michigan better and make our country better. And your
service will never, ever be forgotten.
Chairman CAMP. Well, thank you very much.
Mr. RANGEL. Mr. Chairman.
Chairman CAMP. Yes.
Mr. RANGEL. I think it is premature for me to say too many
kind things about you before this session is over.
[Laughter.]
Mr. RANGEL. But I can tell you that you have been a breath
of fresh air in an atmosphere that has been a tremendous
disappointment to so many of the Members that served here. But
you have managed, notwithstanding the differences in our
parties, always to be a professional, always to be a gentleman.
And, in my case, always to be a friend. And it is deeply
appreciated.
Chairman CAMP. Well, thank you. I think we better get
moving before I start performing like John Boehner.
[Laughter.]
Chairman CAMP. So, Mr. Levin is recognized.
Mr. LEVIN. Okay. We have talked privately, and I think a
lot of us wanted to say something publicly.
Chairman CAMP. I really appreciate it. Thank you very much.
Mr. LEVIN. The notice advising this hearing focused on
trade promotion authority, specifically the TPA legislation
introduced in January by you, Mr. Chairman, and former Senator
Baucus. I believe that legislation is deficient. But let me
suggest that the focus today should not be on TPA, but on the
critical, ongoing negotiations with TPP countries.
The TPP represents both opportunities and major challenges.
The opportunities stem from the dramatic economic growth in
Asian-Pacific nations. We are at a critical stage in those
negotiations. But the outcome of a long list of fundamental
issues? That outcome remains uncertain. Some of these
challenges reflect that this is the most complicated multi-
party negotiation in 20 years, in terms of the issues involved,
and the number of countries that individually present
negotiating challenges.
For example, the 12 trading partners, including Japan, the
third largest economy in the world with an export-dependent and
notoriously closed market. The Korea agreement was hard, and
remains hard, with a number of disturbing implementation issues
outstanding and, in some cases, growing. Japan will be harder.
Important markets in Japan are even more closed, and its
economy is bigger. For the United States, TPP is unique, in
that there is involved, one-to-one negotiations with one of the
largest industrial nations and competitors.
The negotiations also include Vietnam, a Communist country
with a longstanding command economy, and a very poor record on
labor rights and the rule of law. The Colombia agreement was
hard, and remains hard, with a deeply troubling record of
compliance with the labor action plan. Vietnam will be harder.
The fact that the Communist government believes it, and not
independent labor unions chosen by the workers themselves,
represents workers in the workplace creates a new threshold
issue. And Brunei, Malaysia, and Mexico also present challenges
with respect to the implementation of the labor commitments.
The list of major outstanding issues in TPP is too long to
recite or describe here, but includes currency manipulation,
environmental protections, and labor standards, access to
medicines, food safety rules, state-owned enterprises, tobacco
controls, cross-border data flows, and private protection, and
investment issues. I hope all of us today can discuss these
issues.
The TPA introduced by you, Mr. Chairman, and Senator
Baucus, would not effectively enough guide our negotiations to
get these outstanding issues right. Indeed, in a number of key
respects, the TPA doesn't provide a lot of guidance. For
example, on currency manipulation it provides no real guidance,
instead leaving it to the Administration determine what is
appropriate. There is also no guidance as to how to ensure that
Vietnam implements its commitments. On the pricing of
pharmaceuticals, the bill calls for the elimination of price
controls and reference pricing, but neither the U.S. nor any
other TPP country is supporting such a proposal. And the bill
provides little guidance in determining what an acceptable
outcome is with Japan on automotive or agricultural market
access.
Nor would that TPA bill provide much guidance as to how to
improve consultations and transparency in the TPP negotiations.
It largely does two things: it codifies the current procedures,
and requires the Administration, not Congress, to develop new
guidelines for consultations and transparency in the future.
Indeed, the bill would require the Administration to develop
new consultation guidelines 4 months after China--after
Congress might pass a TPA. That would not help TPP.
I believe that Congress needs to be fully involved right
now. Congress needs to be a full partner in these negotiations.
My message to our trading partners is clear: the Congress will
support an agreement that expands trade if and when it does so
in a way that benefits U.S. workers and businesses, effectively
addresses critical new issues, strengthens our economy, and
protects our values. Getting the substance right is what is key
now.
I, therefore, hope we focus in this hearing on the wide-
ranging substantive issues embedded in TPP. We also need to
discuss other important negotiations, including the Trans-
Atlantic Agreement and the Services Agreement, and we need to
act on other legislation, including TAA, the miscellaneous
tariff bill, preference programs, and customs enforcement and
facilitation.
Mr. Ambassador, we deeply appreciate your hard work. I
understand you have worked so hard that your wife had to come
here today to listen to what you are going to say, and so we
welcome your wife, Nancy. You have enjoyed some important
enforcement successes lately. We welcome your appearance today.
Chairman CAMP. Well, thank you very much, Mr. Levin.
Again, welcome back to the Ways and Means Committee,
Ambassador Froman. We have your written statement; it is made
part of the formal record. You have 5 minutes to summarize your
testimony.
STATEMENT OF MICHAEL FROMAN, UNITED STATES TRADE
REPRESENTATIVE, OFFICE OF THE UNITED STATES TRADE
REPRESENTATIVE
Ambassador FROMAN. Well, thank you very much, Chairman
Camp, Ranking Member Levin, members of the Ways and Means
Committee. Thank you for having me back here, and for this
opportunity to testify on the 2014 Trade Policy Agenda. And let
me also take a moment to associate myself with Mr. Levin's
comments about the Chairman, and underscore how much we have
valued the working relationship we have had, and how we look
forward to continuing that working relationship over the course
of this year.
The core of the Obama Administration's economic strategy is
to create jobs, promote growth, and strengthen middle class in
America. Our trade and investment policy contributes
significantly to that strategy by opening markets for made-in-
America products, leveling the playing field, by raising
standards, so that our workers can compete fairly, and
enforcing our trade laws and our trade rights.
Done right, trade policy creates opportunities for American
workers, farmers, and ranchers, manufacturers and service
providers, innovators, creators, investors, and businesses,
businesses of all sizes, and, very importantly, the small and
medium-sized businesses. Done right, trade policy promotes not
only our interests, but also our values. And it gives us the
tools to make sure others play by the same rules that we do.
The Obama Administration has a strong record of success in
promoting U.S. exports and creating jobs here at home. Over the
past 4 years, U.S. exports have increased to a record high of
$2.3 trillion. In fact, a third of our total economic growth is
attributed to this increase in U.S. exports. And exports mean
jobs. Each $1 billion in increased exports supports 5,400 to
5,900 U.S. jobs; 11.3 million Americans now owe their jobs to
exports. That is an increase of 1.6 million in the last 5
years. And those are good jobs, jobs that pay 13 to 18 percent
more, on average, than non-export-related jobs. Indeed,
increasing exports and the well-paying jobs that they support,
is a critical tool for dealing with inequality in this country.
In 2014 we will work to conclude negotiations on the TPP
Agreement, a key pillar of our rebalancing strategy to Asia.
TPP is currently being negotiated among 12 countries, some of
the largest and fast-growing economies in the world,
representing 40 percent of the global GDP, and a third of
global trade. We are working to ensure that the final agreement
will provide comprehensive market opening for goods and
services, strong and enforceable labor and environmental
standards, commitments on intellectual property that promote
innovation and creativity, as well as access to information and
life-saving medicines, groundbreaking new rules designed to
ensure fair competition between state-owned enterprises and
private companies. And, for the first time, obligations that
will address the issues of the digital economy.
We are also working to complete parallel negotiations with
Japan to address longstanding issues related to autos,
insurance, and other non-tariff barriers. And, building on last
year's successful launch, we expect to make significant profits
this year towards a TTIP agreement with the European Union.
This will strengthen the world's largest trade and investment
relationship, and further underscore the strategic importance
of the trans-Atlantic relationship.
Agriculture is vital to the American economy. In 2013, U.S.
farmers, ranchers, and growers exported a record $148 billion
of food and agricultural goods to consumers around the world.
And this year, this administration aims to help them build on
that record performance.
U.S. manufacturing plays a key role in our economy today
and in the future. As American manufacturers increase our
capacity to produce more advanced and value-added goods,
consumers around the world continue to place a high value on
products made in America. In 2012, the U.S. exported nearly
$1.4 trillion in manufactured goods. And in 2014, we aim to
build on the strength of our manufacturing sector.
The U.S. is an innovative economy, and the Obama
Administration is committed to protecting intellectual
property, which is vital to promoting and encouraging
innovation and creativity. Millions of Americans' jobs rely on
intellectual property, and we will continue to use our trade
agenda in 2014 to defend the IP rights of our creators and
innovators, while supporting the freedom of the Internet,
encouraging the free flow of information across the digital
world, and ensuring access to affordable medicines,
particularly by poor and less-developed countries.
At the WTO we will capitalize on the success of the
ministerial meeting in Bali last year. In March we notified
Congress of our intent to enter into negotiations on an
environmental goods agreement with the world's largest traders
in environmental goods, representing 90 percent of this $1.4
trillion market. And we will also move this year toward
conclusion of negotiations on two major sectoral agreements:
the Trade in Services Agreement and the expansion of the WTO
Information Technology Agreement.
The Obama Administration has placed unprecedented emphasis
on trade enforcement. This Administration has filed 17 WTO
complaints, and doubled the rate of cases filed against China.
In fact, just last week, the U.S. scored an important victory
for American workers and manufacturers, and for upholding WTO
rules on fair access to raw materials that are essential for
maintaining U.S. manufacturing competitiveness. And through our
ongoing enforcement agenda, we are leveling the playing field
for key agricultural producers, aircraft workers, and
manufacturers of wind turbines and high-tech batteries across
the country.
As we work through this agenda, we will continue to consult
closely with Congress and seek input from a wide range of
advisors, stakeholders, and the public. We have held over 1,200
meetings with Congress about TPP alone, and that doesn't
include the meetings we have had on TTIP, TPA, AGOA, and other
trade initiatives. Our congressional partners preview our
proposals and give us critical feedback every step of the way,
and we ensure that any Member of Congress can review the
negotiating text, and has the opportunity to receive detailed
briefings by our negotiators.
We are increasing the diversity of trade policy input we
receive through the creation of the Public Interest Trade
Advisory Committee, to include stakeholders focused on
consumer, public health, and other public interest issues. And,
consistent with the statute, the Administration is soliciting
qualified candidates to serve on the ITACs, our Industry
Advisory Committees, to ensure that they are representative of
industry, agriculture services, and labor interests.
Finally, let me say a word about trade promotion authority.
The last TPA legislation was passed over a decade ago, and much
has changed since then. There has been the May 10, 2007
bipartisan agreement on labor, environment, innovation, and
access to medicines, driven by key members of this Committee.
There has been the emergence of the digital economy, and the
increasing role of state-owned enterprises in the global
economy. These issues should be reflected in the statutory
negotiating objectives of a new TPA bill.
We have heard from many that TPA needs to be updated, and
we agree. The Administration welcomed the introduction of the
bipartisan TPA legislation in January, and look forward to
working with this Committee and Congress, as a whole, to secure
trade promotion authority that has as broad, bipartisan support
as possible. We also look forward to renewing trade adjustment
assistance, which expires at the end of this year.
The ambitious trade agenda I have laid out today creates
opportunities for new, well-paying jobs, higher growth, and a
stronger middle class. It incentivizes individuals and
businesses to bring back, expand, and start new production
here, in the United States. And, at its core, this trade agenda
emphasizes strong, enforceable rules that promote U.S. values
and U.S. interests. And, of course, we could only accomplish
these goals and priorities through strong, bipartisan
cooperation between Congress and the Administration.
Thank you again for the opportunity to testify. I am happy
to take your questions.
[The prepared statement of Ambassador Froman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman CAMP. Well, thank you very much, Ambassador
Froman. Earlier this year, I introduced a bipartisan, bicameral
trade promotion authority legislation. It sets out specific
negotiating objectives that Congress wants to achieve in our
trade agreements, and there is a robust framework for
congressional consultations, and actually ensures that Congress
has the final say on consideration and implementation of any
trade agreements. I believe this is absolutely essential
legislation to negotiate and conclude the best agreements
possible--it strengthens USTR's hand at the negotiating table.
Mr. Ambassador, are you committed to meeting the
negotiating objectives set out in TPA, and will you comply with
the extensive consultation with Congress, and information-
sharing provisions set out in TPA?
Ambassador FROMAN. Well, Mr. Chairman, we very much look
forward to working with this Committee and with Congress, as a
whole, to get a trade promotion authority bill that has got
broad, bipartisan support. And, in that context, we would very
much look forward to meeting the negotiating objectives and the
consultation procedures included in such a bill.
As you said, TPA is the way that Congress gives us our
negotiating objectives, our marching orders for negotiations,
tells us how it wants us to work with Congress before and
during the negotiations, and ultimately, what procedures
Congress will use to approve or disapprove any trade agreement
we bring back. And we very much think that having that
authority over time helps open markets and increase exports,
which helps drive job creation here, in the United States.
Chairman CAMP. I appreciate that. And you and I have
previously discussed this. It is very important for Congress,
and particularly this Committee, to know the details of
negotiations so that we can consult in a meaningful way. And we
can provide our guidance and views to the Administration, as we
move forward, because consultation without the appropriate
information really cannot be consultation.
Our level of access to information with prior
administrations, Republican and Democrat, has always been
complete and thorough. And, Ambassador, do you commit to
working with this Committee to provide us the most updated
information, including access to all the text, in a timely and
complete way?
Ambassador FROMAN. I do.
Chairman CAMP. Well, thank you very, very much for that.
You know, I very much appreciate your tireless efforts on
the Hill, and in meeting with both Republicans and Democrats to
talk about trade and TPA. We do need strong support from the
White House and the President. As I said in my opening
statement, we need to be, really, all-hands-on-deck. What is
the Administration doing to build congressional support?
Ambassador FROMAN. Well, we have a whole-of-government
approach to this. As you know, the President talked about this
in the State of the Union. The Vice President has talked about
it. They have met with members of the Democratic party, as well
as the Republican leadership on this issue. We have had the
Chief of Staff of the President up here talking about it, as
well as the Secretary of Treasury, Secretary of Commerce,
Secretary of Agriculture, Secretary of State. Secretary of
Defense has been writing op eds on the importance of our
rebalancing towards Asia, including TPP as a critical component
of that. So we work with all of our interagency partners at the
Cabinet and the White House level on down, to build support up
here for our overall trade agenda.
As you noted, we are all up here a great deal, as we have
had, as I mentioned, more than 1,200 consultations on TPP
alone. Over 450 of those have been with this Committee and its
staff. And so, we are very much involved in making sure that
members of Congress know what it is that we are working on,
have input, give us feedback, and that we are answering their
questions and building support, getting them comfortable with
our trade agenda, so that we could move ahead.
Chairman CAMP. Well, thank you. And, with regard to TPP, I
am committed to working with you to complete TPP. I think a
robust agreement would have significant benefits for the U.S.
economy, support job creation, and better-paying jobs. I am
concerned that Japan is significantly holding up progress on
TPP. And while Japan has been helpful in many of the rules
areas, Japan's position to exclude or limit the inclusion of a
significant number of important agricultural products from the
scope of TPP has become a serious impediment. Japan stands
contrary to the commitment, frankly, that Japan made when it
joined TPP to put all issues on the table. It is also giving
countries like Canada an excuse not to meaningfully open up
their markets. So adequately addressing our bilateral auto
issues with Japan is critical for my support. If a country is
not ready to make the commitments to join TPP as an ambitious,
high-standards agreement, then, in my view, we should complete
TPP without that country, and allow it to join later, if and
when it is ready to make the necessary commitments.
But, first, what is your strategy for ensuring that Japan
adequately opens up its agricultural and auto markets, and do
you agree that a country should not be in TPP if it can't make
sufficiently ambitious commitments?
Ambassador FROMAN. Well, Mr. Chairman, at this juncture in
the TPP negotiation, all eyes are on Japan. Not just the U.S.,
but all the TPP countries are focused and are looking at Japan
to make sure that they provide comprehensive access to their
market, both the agricultural side and other parts of its
market. And we are reminding Japan what it and all TPP members
agreed to when they joined TPP, that this is intended to be a
high-standard, ambitious, comprehensive agreement. We can't
have one country feeling entitled to take off the table and
exclude vast areas of market access, while the other countries
are all putting on the table more ambitious offers. Japan is
not the only country that has sensitivities; we all have
sensitivities. And we are working together to create an
ambitious agreement in that context.
We are also reminding Japan of the benefits of a successful
TPP agreement, and what that can bring to its economy,
particularly at this critical time in its economic recovery,
how its future prosperity could be tied to the structural
reforms that TPP can help incentivize, and how completing TPP
can help enhance its leadership role in the Asia-Pacific
region.
We are well aware of the political sensitivities that Japan
has on a number of issues. This isn't an issue of us needing to
be more flexible. We are being plenty creative in trying to
come up with ways to ensure comprehensive market access to
Japan that addresses political sensitivities, as well. It is
time for Japan to step up to the plate. And, as I said, that is
not just our view, that is the view of all the TPP countries.
We are pressing them on the automotive front, as you
suggested, as well. We have got agreements before they came in
to TPP on tariffs and on access to their market, and sort of
expedited approval of our imports into their market. But we
have a series of other issues dealing with their financial
incentives, their standards, their distribution, the
transparency of the regulatory process, that we are pursuing at
a parallel negotiation. We are making some progress in that,
but the gaps still remain, both on the agricultural side and on
the auto side. And we are very much focused on trying to bridge
those gaps.
Ultimately, it is Japan's decision, as it looks to its own
future, as to whether it is prepared to take the bold steps
necessary to be part of this groundbreaking agreement. And, let
me assure you, we are remaining very focused on assuring that
they open their agricultural markets and their automotive
markets in meaningful and substantive ways, consistent with the
high ambition of TPP.
Chairman CAMP. Well, thank you. And, lastly, I have raised
with you before the pressing need to include currency
disciplines in TPP. And are you considering including
provisions on currency in the agreement? What would those
provisions look like, and what factors should be taken into
account in determining the U.S. position?
Ambassador FROMAN. Well, currency is a serious issue, and
we certainly have heard from Members up here. And it is a
serious issue for the Administration, itself. The Treasury
Department, of course, has the lead on this issue for the
Administration. But from the President to the Secretary of
Treasury, to the rest of the Administration, it has been a high
priority from day one of this administration to press our
trading partners to move towards more market-oriented exchange
rates. For example, with China, whether it is through the IMF
or the G20, or where appropriate, with other countries through
the G7 we have been pressing countries towards market
liberalization and market-determined exchange rates.
With China we have had--we have made some progress. In June
2010 they began to liberalize their exchange rate again, and it
has moved 18 percent in real terms since then. It is not far
enough, it is not fast enough. We need to continue to press
them at every occasion, as we do. And we are continuing to
consult. The Secretary of the Treasury, myself, we are
consulting with Members of Congress, with stakeholders, to
determine how best to address the underlying issue.
Chairman CAMP. All right, thank you. Mr. Levin.
Mr. LEVIN. Thank you. Mr. Chairman, you raised Japan. And I
think it illustrates the work yet to be done. I think it
illustrates the need for continuing and major congressional
involvement. It is often said that Congress sets the terms of
negotiations, and that has been done in TPA. There is no TPA.
TPP is in the middle of its negotiations.
And I think that means that there has to be a way found to
be sure that this Congress, this Committee, and broader, are
deeply involved in the negotiations, in the discussions. I
think that is the only way an agreement can be passed here. And
I think our involvement will send a signal to our trading
competitors and those we are negotiating with that, as you
proceed, there will be support from this Congress. It is only
that intimate relationship between the Congress and the
Administration that will really work here. And I think Japan is
a good example, because--and we have talked about this--much of
the work remains to be done. What was agreed to was kind of
conceptual.
Japan--this is the first one-on-one negotiation the U.S.
has had with a country the size of Japan. And it has the most
closed market in the automotive sector of any country, surely,
of its size. And the same is true of agriculture.
So, let me just ask you--and you raised, Mr. Chairman,
currency. That is another example of why there needs to be the
most active involvement of Congress in these discussions. So
far, currency hasn't really been put on the table. And there is
a letter from the clear majority of Senators insisting that
this be addressed, as well as a letter from a majority of
Members of the House.
So, let me cite another example: Vietnam. A command
economy. We have had difficulty enforcing our trade agreements.
Just say a few words about how you think it is possible to work
out an agreement with a very closed--or what has been a closed
economy, in terms of its basic markets, as well as its labor
markets, and be sure, before we were asked to act, that there
would be very effective change within Vietnam to make their
commitments real. If you would, comment on that.
Ambassador FROMAN. Well, thank you, Congressman Levin. You
know, with regard to Vietnam--and this is true of the other
countries, too, but you have pointed out correctly that Vietnam
poses particular challenges within TPP, given the level of its
development, the structure of its economy. We have made clear
throughout the negotiations, and before Vietnam joined TPP, the
kinds of standards that we would be expecting through TPP, and
the kind of changes and reforms that would be necessary to
bring them into conformity with those standards.
So, for example, on state-owned enterprises, which play a
significant role in the Vietnamese economy, we have been
working with them on a path towards them reforming their SOEs,
consistent with the obligations that we are negotiating in TPP.
And the same is true on labor issues and on environmental
issues. They see TPP as a potential mechanism for helping to
support what they have determined is their own domestic reform
agenda.
Mr. LEVIN. And changes would be in place before the final
negotiation, or at least before we were asked to act?
Ambassador FROMAN. Well, I think in each of these cases we
have to work through what the staging of their changes are, and
how it relates to when we submit it to Congress for approval,
when it goes into force, et cetera. Vietnam is not going to
transform itself overnight, but we need to make sure we have
got mechanisms for assuring that they meet their obligations,
consistent with the standards of the agreement.
Mr. LEVIN. Thank you.
Chairman CAMP. All right. Mr. Johnson.
Mr. JOHNSON. Thank you, Mr. Chairman. Appreciate you being
here.
You know, the expansion of information technology to
include additional products would have significant benefit for
U.S. manufacturers and consumers. By one estimate, updating the
ITA would boost global GDP by $190 billion, and increase U.S.
exports by 3 billion, creating 60,000 American jobs. ITA
expansion has strong bipartisan support in Congress, and I hope
you will continue to press for a robust and ambitious agreement
as soon as possible.
I am a little frustrated by China's refusal to engage
productively in these negotiations, and I understand a top
priority this year for U.S. high-tech companies, including the
semi-conductor industry, is a resumption and successful
conclusion of an ITA expansion negotiation. What opportunity do
you see to move that agreement forward this year?
Ambassador FROMAN. Well, thank you, Congressman Johnson.
And, first of all, we agree completely with your assessment of
the importance of the Information Technology Agreement, and the
implications for the U.S. economy, and share the frustration
that you expressed about the position of China in the
negotiations. We have got countries around the table
representing about 90 percent of the global market for
information technology products.
And the other countries around the table have put on the
table pretty ambitious offers, in terms of opening their
markets. China's offer did not meet that standard. And, as a
result--it wasn't just the U.S., it was the U.S., the EU,
Japan, and the rest of the countries around the table decided
to suspend negotiations until China would return to the table
with a more appropriate offer.
We have, together, made proposals to China to try and get
them back to the table with what we think is a reasonable path
forward. They have yet to respond positively to that. And we
continue to raise this at every one of our high-level meetings,
again, from the most senior leadership to the Joint Committee
on Commerce and Trade meeting that we had in December that
Secretary Pritzker and I co-chaired in December with our
counterpart in China, and we will continue to press that and
try and get them back to the table, so that we can complete
that agreement.
Mr. JOHNSON. You anticipate China talking to us? Do you?
Ambassador FROMAN. Well, we certainly hope so----
Mr. JOHNSON. You think China will talk to us?
Ambassador FROMAN. We certainly hope so. We have a lot on
our agenda with China, but we have made clear that their
constructive engagement on ITA is one of our highest
priorities, and is a litmus test for how they interact on other
negotiations.
Mr. JOHNSON. Thank you, sir. Thank you, Mr. Chairman.
Chairman CAMP. Thank you. Mr. Rangel.
Mr. RANGEL. Thank you, Mr. Chairman. And welcome, once
again, Ambassador. And let me join with those people that
congratulate you for your tenacity, and the ability to bring
people together. If you can bring Republicans and Democrats
together on this bill, that would be fantastic.
When you say ``trade'' to a lot of Americans, it means
jobs. Throughout your testimony you talk about not only
creating jobs through exports, but providing incentives for
manufacturing. Many people, including those in the Congress,
believe that trade means we are losing jobs. So, it seems to me
that, in an agreement, an international agreement, everyone
should walk away from the table believing that they did the
best they could for their country.
My question to you is, do you have any idea as to
geographically or industry-wide or service-wide, where these
new jobs are going to be created? And since we also have to
deal with the re-training of workers that lose their job as a
result of trade, could you give us some ideas of the areas that
we expect to lose jobs as a result of this agreement?
Ambassador FROMAN. Well, let me start by saying that, as
you say, increasing exports supports more jobs here, in the
U.S. But these trade agreements are also a key part of driving
investment and manufacturing and other sectors in the U.S. I
have been visited by several businesses, particularly from
Europe, who have come and said, ``The U.S. is a great market.
You have got the rule of law. You are entrepreneurial. You have
a skilled work force.''
Now you have abundant sources of affordable, cleaner
energy, which are giving the United States a comparative
advantage, particularly vis a vis Europe. When you complete
these trade agreements, TPP and TTIP, the U.S. will have free
trade, will have unfettered access to two-thirds of the global
economy. That makes the U.S. the production platform of choice.
It makes the U.S. the place where manufacturers want to put
their next investment and produce stuff, not just for this
market, but to send to Asia, to Latin America, to Europe.
And so, part of our trade policy is also to make the U.S.
an even more attractive place to locate businesses, to
manufacture, to use as an export platform for the rest of the
country. And we do that by virtue of opening markets, but also
how we use rules of origin, et cetera, to really drive
manufacturing here.
Our market, as you know, is already quite open. Our average
applied tariff is 1.3 percent. We don't use regulations as a
disguise barrier to trade. We don't discriminate against
foreigners through our regulations. But that is not true around
the world. There are a lot of major markets around the world
that have higher tariffs, and that use non-tariff barriers to
keep out our products. So the purpose of these agreements is
really to lower those barriers disproportionately, so that we
can increase exports from here. They already have access,
largely, to our market. The question is whether our workers and
our firms will have access to theirs.
I don't have specific data for you on which industries here
or there will gain or lose, but we can certainly work on that
with you as we conclude the agreement. I think your point,
though, underscores that we need to make sure we are providing
our workers with the support that they need and the skills they
need to transition as necessary. And that is one reason why in
the President's budget we have a comprehensive worker
retraining program, and why we think it is important that the
trade adjustment assistance be renewed, as well.
Mr. RANGEL. It is my understanding that trade union leaders
or representatives are in some way involved not in direct
negotiation, but, say, as observers. Have they shared any of
the things that you just said, in terms of the dramatic
increase in exports, and, therefore, the increase in jobs, so
that they can increase their Membership?
Ambassador FROMAN. Well, labor is a critical group of
stakeholders for us in these negotiations. We have the Labor
Advisory Committee, where 23 union presidents serve on that
advisory committee. Four of them serve on the President's
Advisory Committee on Trade Policy Negotiations. And, as I
mentioned in my testimony, we are now inviting applications for
the other industry trade advisory committees. And they have had
tremendous input from the beginning, not only on the labor
chapter, but on other chapters: a seat on enterprise chapter,
rules of origin, market access issues. And we are still in the
midst of negotiating many of those issues, but we have tried
very hard to take into serious consideration and to negotiate
successfully on the behalf of those issues.
Chairman CAMP. All right, thank you. Time has expired.
Mr. RANGEL. Thank you.
Chairman CAMP. Mr. Nunes.
Mr. NUNES. Thank you, Mr. Chairman. Ambassador, welcome.
Great to see you again. Could you give us a quick update on
your negotiations with--solving or dealing with SPS issues,
specifically dispute resolution in both the TPP and the EU
negotiations?
Ambassador FROMAN. Well, in the TPP negotiations, which are
further along, we are negotiating a strong SPS chapter. And we
anticipate making sure that that chapter is subject to dispute
settlement, either at the WTO or in TPP, itself.
Mr. NUNES. You feel comfortable with where we are--you
think we are making progress? Because several Members of this
Committee and several Members of Congress have expressed a
strong interest in making sure that we do have dispute
resolution.
Ambassador FROMAN. It is not a fully resolved issue, but I
think we are making progress, and we are doing so in a way that
ensures that our regulatory agencies--the Food and Drug
Administration and others--can do what they need to do, as
necessary, in terms of risk assessments and equivalency
determinations to implement their mandate of their obligations
to provide for food safety, and to implement the Food Safety
Modernization Act.
Mr. NUNES. And I know that, because we have a great working
relationship, if there is anything that we can do to ease this
process here in the United States to make it easier for you to
negotiate, we are willing to help, and we will make ourselves
available.
The status of the President's proposal for consolidating
our trade agencies. There is quite a bit of concern over this,
of, you know, moving USTR under some other agency. We have had
this longstanding arrangement with USTR, it has worked very
well. Can you update us on the President's proposal?
Ambassador FROMAN. Well, I think any such reorganization
requires reorganization authority to be granted to the
President by Congress. And, obviously, that would require a
great deal of consultation and coordination with Congress, in
terms of how to proceed.
Mr. NUNES. I know you know that would be quite
controversial, I think, for many of us here in the Congress,
but I appreciate your keeping us updated on it.
Just briefly, the cotton dispute with Brazil, could you
talk to us about where that is?
Ambassador FROMAN. Well, with the passage of the farm bill,
the Brazilian government, as I understand it, is assessing what
was done in the farm bill on cotton to determine whether they
believe that meets our obligations under the WTO case. We are
in dialog with them now to see whether we can settle the case,
based on the changes in the farm bill, or whether they are
going to seek a compliance proceeding at the WTO. And those
discussions are ongoing.
Mr. NUNES. And, as you know, I think, those of us in
Congress who worked on the farm bill, specifically with the
cotton provision, we do feel like it does comply with the WTO.
So, hopefully, our Brazilian friends will put this to bed so
that we can move on with our relationship with the Brazilians.
Just briefly on Ukraine, and as it relates to LNG exports
from the United States, we are going to hold a hearing next
week on this issue. Have you put much effort into looking at
the long-term fundamentals of having a strong export policy as
it relates to LNG?
Ambassador FROMAN. Well, there is nothing specifically that
we are currently doing in TTIP or TPP that directly bears on
the export of natural gas. That is governed by, as you know,
the Natural Gas Act, which determines how the Department of
Energy should make its findings with regard to public interest
for free-trade countries and non-free-trade countries.
Mr. NUNES. Thank you. We will have a hearing next week, and
we will be glad to share some of that information that we glean
from the hearing. And I just want to thank you for your
continued efforts to keep the Congress informed--we have had a
great working relationship, and I hope that that continues.
Ambassador FROMAN. Thank you.
Mr. NUNES. I yield back, Mr. Chairman.
Chairman CAMP. Thank you. Mr. McDermott.
Mr. MCDERMOTT. Thank you, Mr. Chairman. I want to add my
voice to those who will miss you.
Chairman CAMP. Well, thank you.
Mr. MCDERMOTT. I--Mr. Froman, it is good to see you. And,
as you know, there is--5 minutes isn't very much time to talk
about a lot of issues. I could talk about rebar dumping in the
United States out of Mexico, and a few other things that might
be interesting, but I want to focus on agriculture.
White noodles in Asia, the most highly-prized white
noodles, are made from white wheat that grows in Washington and
Oregon, and it is shipped through the northwest ports. It has
been going on since the 1930s. The companies--Temco, which is
co-owned by Cargill and CHS--have employed longshoremen for 30
years under a union agreement. And recently, two Japanese
companies, conglomerates, have come in, bought places. Marubeni
and Mitsui have--are now operating in Washington and Oregon,
and have demanded a concessionary agreement from the labor
unions.
Now, at the same time, Cargill and CHS have been
negotiating, and they came up with an agreement that was
approved by 75 percent of the union members. The Japanese
conglomerates, their concessionary agreement that they forced
on the people was rejected by 95 percent of the people in these
unions.
And it seems to me that when companies are coming in to do
business with our labor unions, and they are now demanding
concessionary agreements and have locked the members out, they
are running with scab labor and with their administrative
people--that is how they are running the graineries--it seems
like a strange time for them to want to come and negotiate
labor agreements in a TPP. And I understand that USTR has been
working with the Japanese on this issue.
And I would like if you could give us some idea of what the
status is of the resolution of this kind of issue, because it
is a PR problem for them to come in to do union-busting at the
same time they are talking about negotiating a trade agreement.
Ambassador FROMAN. Well, thank you, Congressman McDermott.
And thank you for raising this earlier. I think last year, you
and some other Members of the Washington Delegation raised
this, and we engaged with the government of Japan on this
issue, made clear exactly the point that you made, that it was
important for this issue to get resolved. My understanding is
that it has not yet been resolved, and we are encouraging the
parties to come together and get it resolved, as a labor
management issue. But we are going to continue to monitor that.
Mr. MCDERMOTT. Do you see that as being an impediment to
getting the votes in the Congress, if these kinds of issues are
out there? I mean we have already heard from the chairman,
talking about automobiles. And then you are talking about the
docks where you have got dock workers, and you--is--how are you
going to get around that in your negotiations?
Ambassador FROMAN. Well, I think we will make clear to our
trading partners on a number of the issues that Members of
Congress have that making progress on those issues, resolving
those issues, is part of creating the environment in which this
agreement is going to be considered, and considered favorably.
And so, it certainly contributes to the overall atmosphere
around this agreement.
Mr. MCDERMOTT. I have a major steel plant--people think of
Washington State, they think of Boeing and Starbucks and
Microsoft. That is not all of Washington. Our major export is
agricultural goods, but I have actually got a steel plant right
in the middle of Seattle that makes the best rebar, the
cleanest rebar plant in the whole world, I think.
But they are being flooded by Mexican rebar. What kind of--
or at least they feel they are. What kind of situation do you
have--because the Mexicans are in this, as well as the
Japanese. It isn't--you know, the problems you have are all
over the place.
Ambassador FROMAN. Well, my understanding is, on steel
issues and the rebar issues, that there are cases that are
working their way through, or pending at the Department of
Commerce and the ITC as part of our trade remedies laws, anti-
dumping and countervailing duty cases. Those are quasi-
adjudicatory processes run by the Commerce Department and the
ITC. It is something we are monitoring but we are not directly
involved in, because they are quasi-adjudicatory and under the
control of the Commerce Department and the ITC. But we will
monitor that.
Mr. MCDERMOTT. Another time I will talk to you about drug
prices.
Ambassador FROMAN. Happy to.
Mr. MCDERMOTT. Glad to see you here.
Ambassador FROMAN. Thank you.
Chairman CAMP. All right. Mr. Brady.
Mr. BRADY. Thank you, Mr. Chairman, for holding this
hearing. You know, trade is economic freedom. It is the ability
to buy and sell and compete around the world with as little
government interference as possible. And what it means is that
when that mom walks into a grocery store, or that college
student goes online, the choices they see and the prices they
pay are determined by them, rather than some government
somewhere.
And so, the work you are doing, Ambassador, is just
critical in results not just in new jobs here, in America, but
in new choices in families being able to stretch their
pocketbook farther. So this has a real impact on our families.
That is why I hope our trading partners understand this
Congress is pro-trade. We support an aggressive trade agenda.
And the work that you are doing in the Asia-Pacific, in Europe,
in international services and facilitation and technology, is
exactly what we think is important to get this economy going.
And you have got a great team behind you. So I want to commend
you just for your overall approach. I think it is exactly the
right tone, exactly the right substance, at exactly the right
time, especially in a world whose economy is, frankly,
struggling a bit. And you can play a role in doing that.
So, I want to ask you about the Asia-Pacific region. You
know, by some estimates, 80 percent of all the new economic
growth in the world will occur in the Asia-Pacific region. We
want to be, as Americans, where those new customers are. The
Trans-Pacific Partnership is really a 21st century trade
agreement, unlike others in the past, and I think will have
tremendous value.
So, what is your strategy? I know the goal has been to
complete that by the end of the year. What do you see--what is
your strategy toward that end? What are some of the challenges
that you face in trying to close that out in a timely way?
Ambassador FROMAN. Well, thank you, and thank you for your
support, and for the support of my team, Congressman Brady.
As you said, TPP and this region is so critically important
to our economy here. Right now, there are 500 million middle-
class consumers in the Asia-Pacific region. That number is
expected to grow to 2.7 billion between now and 2030. And the
question is, who is going to serve that market?
Mr. BRADY. Yes.
Ambassador FROMAN. Are they going to be buying American
goods and taking American services? Or are they going to be
getting their goods and services provided by somebody else?
What are going to the be the rules defining trade in the
region? Are they going to be the high standards that we are
pressing for on labor and environment, on intellectual property
rights? Are there going to be disciplines around state-owned
enterprises, so there is a level playing field with private
companies? Will we be taking the digital economy into the
future, and making sure that the Internet is free, that we
avoid restrictions on the flow of information? That is what is
at stake with TPP, because we are not the only party out there.
Mr. BRADY. Yes.
Ambassador FROMAN. There are other parties out there with
very different versions and visions of trade, who are also out
there negotiating agreements. And if we sit on the sidelines
and don't fulfill our leadership role in this effort, others
will help define the rules for us. And that will put our
workers and our firms very much at a disadvantage.
We are well down the road in these TPP negotiations. We are
in the end game. We have a reasonable number of outstanding
issues on rules, and we have some critical outstanding issues
on market access. As the chairman talked about earlier, the
critical issue right now is Japan, market access on agriculture
and on autos. It is then bringing Canada to the table, because
I think Canada is waiting to see what happens with Japan.
Mr. BRADY. Yes.
Ambassador FROMAN. Once the market access piece falls into
place--and all the other countries are waiting for Japan to
play its appropriate role in this negotiation--once the market
access piece falls into place, we expect to be able to resolve
the other issues around the rules. There are difficult issues
that are left.
Mr. BRADY. Yes.
Ambassador FROMAN. There is a reasonable number of them.
Our negotiators are working around the clock, here and around
the world, to narrow those differences and close them out.
Mr. BRADY. Well, I would like to see Japan included in
this, but they have got to hit the standards, you know, that we
are insisting among all our trading partners. Do you expect to
be able to complete this this year? *Ambassador Froman. Oh,
very much so. I mean we are focused on, as I said, working
around the clock to get this done as soon as possible.
Mr. BRADY. And, obviously, we appreciate the work, in a
bipartisan way, we continue to build support for the Trade
Priorities Act, so that we can really direct the White House
toward our negotiating objectives to make sure there is strong
consultation, and we can assure others of a timely vote. I
think that is critical, as well. So, thank you, Ambassador, for
the work you are doing.
Ambassador FROMAN. Thank you.
Chairman CAMP. Thank you. Mr. Lewis.
Mr. LEWIS. Thank you very much, Mr. Chairman, for holding
this hearing. Mr. Ambassador, welcome. Thank you for your great
work, and thank you for being here today.
You know, Mr. Ambassador, in our own country we believe in
certain basic rights, certain basic freedoms: freedom of the
press, freedom of assembly, freedom of worship, open and free
election. You said a moment or so ago in your statement that a
trade policy should be a reflection of our values. How do you
square this with a country like Vietnam?
Several people from my district came here to Washington
last week, a Vietnamese-American who fleed [sic] Vietnam
because of Communism, because of suppression. And they are
asking, they are raising a question. How can we trade with
Vietnam? How can we do it?
Ambassador FROMAN. Well, Mr.----
Mr. LEWIS. Or with China.
Ambassador FROMAN. And we very much----
Mr. LEWIS. And Vietnam has such a strong relationship with
China. How can we go down this road? How can we get in bed with
them?
Ambassador FROMAN. Well, through our negotiation with them,
we are working to address some of the issues that you
mentioned. For example, on labor rights, which is a key issue
in Vietnam, we want to make sure that there is a meaningful
rights of association, a meaningful right to collective
bargaining, meaningful disciplines on forced labor, child
labor, meaningful disciplines and commitments on acceptable
conditions of work, all consistent with the ILO standards, and
a work program that can achieve that objective.
In all of our meetings with the Vietnamese government, from
the president on down, when the President met with the
president and prime minister of Vietnam, all the way on down,
human rights are very much part of our agenda, and we talk
about the importance not only of what we are doing in the
agreement on labor rights, but also the importance of Vietnam
making progress on outstanding human rights issues as being an
important part of creating the environment in which there would
be support for this agreement.
Also, when you look at the agreement more generally, if you
look at what we are trying to do on the digital economy and the
Internet, about the free flow of information, that, too, is
supportive of some of those values that you mentioned about
freedom of speech, making sure people have access to
information, that governments are not putting restrictions
around the Internet.
So, it is not that we can transform a country completely,
or solve every problem through a trade agreement. But, through
the trade agreement, we could engage in such a way as to make
meaningful progress on these sorts of issues beyond where we
are in the status quo. I think the question is--you take a
country like Vietnam, which has well-known challenges. What is
the best way, what is the most effective way of improving the
situation there for workers, for minorities, for people who
want to worship? And our view is engagement with them through
this trade negotiation is the most effective way of making
progress on those issues.
Mr. LEWIS. Do you have any assurance that 5 years from now
or 10 years from now, that we are going to see radical changes
in Vietnam? People receiving starvation wages there.
Ambassador FROMAN. Well, that is exactly why, for example,
in the labor chapter, creating some fundamental labor standards
about right of association, right to collective bargain,
restrictions on forced and child labor, decent conditions of
work, that is one reason in having those be enforceable, having
them be binding and enforceable. And our ability to continue
and, over time, ensure that those are upheld is a central part
of what we are trying to negotiate.
I, too, met with a group of Vietnamese emigres, as well as
human rights activists around Vietnam before I went to Vietnam
last time, precisely to make sure we understood what their
priorities were. And we are working with the State Department.
The State Department is having a human rights dialog, I
believe, next month with Vietnam as part of our ongoing
engagement with them, as part of TPP and our overall engagement
to try and address these issues.
So, it is high on our agenda, and we think it is very
important that Vietnam make progress on these issues, as part
of our ongoing engagement with them.
Mr. LEWIS. Mr. Ambassador, let me just ask you this last
question. Do you believe that it is fair to keep the text of
this important historic negotiation hidden from the American
people?
Ambassador FROMAN. Well, we are always looking for ways to
improve the transparency and the input that we get from
stakeholders, from Congress, and from the American public. You
know, I would say, first and foremost, we engage with Congress.
And Congress is the people's representatives. We look to--and
particularly our Committees of jurisdiction--to provide input
on every proposal we table, and to give us feedback throughout
that process.
We have a group of cleared advisors that represent not just
different businesses, but every major labor union,
environmental groups, consumer groups. And, as I mentioned in
my testimony, we are launching a new advisory Committee to be
able to bring in other public interest groups into the process.
We want to make sure we have got their input.
We have experimented with putting out for the public
summaries of our TTIP objectives, summaries of our
negotiations, to try and be as public as possible and be as
transparent as possible, while at the same time ensuring that
we can negotiate the best deal for the American people. And I--
--
Chairman CAMP. All right, thank you. Time has expired.
Ambassador FROMAN. Sorry.
Chairman CAMP. Mr. Tiberi.
Mr. TIBERI. Thank you for being here, Ambassador. Japan's
unwillingness in TPP to meaningfully open up its market to
agricultural products like pork, beef, dairy, as well as
processed products containing these products, I believe, is
unacceptable. I met with a group of farmers, pork producers
from my district in Ohio, yesterday. And they are very
concerned about this particular issue.
As you know, the United States has sought in past trade
negotiations comprehensive liberalization with respect to
agricultural products. This is true for agreements with both
developed and developing countries. So, if Japan is allowed to
continue to remove entire categories like agricultural products
from liberalization, I know the agriculture sectors'--the pork
producers, in particular--support for TPP will be jeopardized.
So, as you continue down this road in negotiating with the
Japanese, will you commit to us today not to allow the Japanese
to exclude agricultural markets from the TPP?
Ambassador FROMAN. Yes. I mean our goal in TPP, and the
goals that Japan signed up for when it joined TPP, is exactly
what you have said, which is comprehensive market access. And
that is exactly what we are going to achieve, we are working to
achieve, in this negotiation.
It is a difficult negotiation. They have not yet come to
the table with a position that allows us to bridge our
remaining gaps on a series of commodity issues. Not just pork,
but other issues, as well. But we are continuing to press them
with the goal of achieving comprehensive market access.
Mr. TIBERI. And you----
Ambassador FROMAN. And we agree that there shouldn't be
exclusions of commodity groups from this agreement.
Mr. TIBERI. And don't you agree that if you exclude a
number of things in this agreement, that that just sets us up
for further exclusions down the road in other free trade
agreements?
Ambassador FROMAN. Well, we think that the TPP was intended
to be an ambitious, comprehensive, high-standard agreement, a
21st century agreement. That is the conditions under which all
12 of us joined the negotiation. And we think it is important
that Japan come to the table to achieve that objective,
absolutely.
Mr. TIBERI. So I can tell the pork producers in Ohio, at
least, that you are committed to not allowing exclusions of----
Ambassador FROMAN. That is----
Mr. TIBERI [continuing]. Products like agriculture, pork,
beef----
Ambassador FROMAN. We think everything should be on the
table; everything should be included. That is what a
comprehensive agreement is.
Mr. TIBERI. I appreciate that. A second issue that is--not
totally within your wheelhouse. A number of manufacturers in
Ohio have told me they have seen a surge in steel coming from
outside the United States. And some of that comes from
countries that obviously have some government subsidies with
respect to their industries. And, obviously, the Department of
Commerce is involved in this, as well. Is this something that
your office is aware of, and sees, and is concerned about?
Ambassador FROMAN. Yes. I mean it is something we are aware
of. I meet with the steel industry on a regular basis, as well
as with the steel workers on a regular basis. And it is exactly
one of the reasons why, in TPP, we are trying to get at issues
like state-owned enterprises, state-owned enterprises that
benefit from subsidies or regulatory forbearance. They may,
back home, have cheap land and cheap energy and all sorts of
benefits, and then they compete against our firms on an unfair
playing field. And, through TPP, for the first time, we are
creating disciplines to try and level the playing field between
state-owned enterprises and private firms. It is one of the
most important new issues being dealt with by TPP. It would
affect, of course, not just the steel industry, but other
industries, as well. But the steel industry is one in which
there is a lot of state-owned enterprise involvement.
Mr. TIBERI. I would like to send you a follow-up letter on
this issue, kind of getting into the deeper grass on this, if
you could just be alert to that.
Ambassador FROMAN. Absolutely.
Mr. TIBERI. And I would love to have your further input
from you and your staff. Yield back.
Ambassador FROMAN. Look forward to it.
Mr. JOHNSON [presiding]. Thank you. Mr. Neal, you are
recognized.
Mr. NEAL. Thank you. Thank you, Mr. Chairman. First, I want
to thank you, Mr. Ambassador, for the work that you have done
outside of Committee hearings with footwear across New England.
You have been very helpful, very good with your time, and you
have tried really hard to speak to the specific questions,
understanding that there is a footwear industry that is still
alive in New England, and we certainly want to keep it that
way.
One of the biggest issues that surround the question of
trade agreements, obviously, is enforcement. And there is a
suspicion, as you know, that geopolitics sometimes gets in the
way of enforcement. And I think it is particularly acute when
it comes to intellectual property rights. And clearly, I think,
in currency manipulation, as it related to China.
But let me follow up specifically on something that Mr.
Tiberi said, because I think it bears noting, and that is the
suspicion that one of our trading partners is in the midst of
dumping steel. And we need to be mindful of that as part of the
enforcement agreements that I spoke of just a couple of moments
ago. And I think, specifically, there is some concern that
South Korea is illegally preparing to dump into the U.S.
market. And I know that the Commerce Department is considering
filing a complaint. And maybe you could bring us up to date on
that.
And the last comment I want to make to give you some time
just to talk about these issues, when it comes to trade
adjustment assistance, there have been hodge-podge programs
across the country. And the truth is that the jury is kind of
out still. Some work, and some don't work. Might I suggest that
we direct more of the trade adjustment assistance to community
colleges? I think that would be the atmosphere, which would be
more conducive to preparing people for the skill set that they
are going to need if they are dislocated because of changes
that trade, they suspect, have created.
So, I would give you some time on both points.
Ambassador FROMAN. Great. Well, thank you, Mr. Neal. And
certainly we agree completely on the importance of enforcement,
and we have had a very robust enforcement agenda throughout
this Administration. We have brought more cases to the WTO than
ever before. We have doubled the rate in which we have brought
cases against China.
We have created something called the Interagency Trade
Enforcement Center based at USTR, with a lot of support from
Commerce, but also support from a number of other agencies,
which has allowed us to put together more complicated, complex
cases to be able to bring to the WTO or--under our trade laws.
We think that is vitally important, that if we are going to
negotiate agreements, that part of the bargain with the
American people is that we fully enforce the rights that we
fought so hard for.
And so, we are fully committed to that, and we are always
looking for additional cases to bring, putting together the
positive cases.
The particular AD, or anti-dumping, or countervailing duty
cases you mentioned, are the province of the Commerce
Department and the ITC, of course, and we are not directly
involved in those. We are not involved in those unless they are
challenged at the WTO, and then we defend our trade laws in
front of the WTO. But we do monitor issues like steel very
closely.
You know, on the trade adjustment assistance and worker
retraining, we will certainly take--ultimately take those views
back to the Department of Labor and the Domestic Policy Council
and others who are involved in this. As you know, in the
budget, the President has a proposal for comprehensive skills
development, and we also have the trade adjustment assistance
program, which expires in December, and we very much support
making sure that American workers have the support and skills
that they need to compete in the global economy.
Chairman CAMP. [Presiding] Thank you. Mr. Reichert.
Mr. REICHERT. Thank you, Mr. Chairman. Welcome, Ambassador.
Good to see you again, and I want to add my compliments, as
almost every other Member has, to you and your team for your
efforts. And I know there are excruciatingly long days--if I
can pronounce that correctly it would be good. I know that you
are really putting forth major effort here.
You mentioned your 1,200 meetings. And we are reaching out,
too. Just yesterday, Mr. Boustany and I met with some of the
ambassadors from six countries--representative of the 12
countries that you are negotiating with. And they have
mentioned to us that, you know, the United States has the ``big
pen'' in this. And it was the term that they used over and
over, and that they are holding onto the pen with us, and they
want to work and be a part of the team.
I am proud to be a member of the Export Council, and have
met you there many times, along with the President. And at the
last meeting that we had the President mentioned to us how much
he appreciated our efforts, and how much he wanted to work with
us. And, in that vein, four of us who are the co-chairs of the
Friends of TPP sent the President a letter on January 15th of
this year. And we have yet to have a response from the
President on requesting to meet with him.
We feel like we could be helpful, because of the meetings
that we are holding here with our Republican friends and the
interaction we have with the other side of the aisle, with Mr.
Kind and Mr. Meeks as co-chairs, along with Mr. Boustany and
myself. If you could relay our message to the President, that
we would like to see a response to that letter, that would be
very helpful.
And I especially appreciate your repeated comments about a
high standard, comprehensive--your strategy that you laid out
for the year. But I just want to mention to you how important
it is for Washington State to get this agreement completed. And
I know you see, you know, the whole United States and how
important this is. But in my home state there is a recognition
that over 40 percent of jobs are tied to trade, and that we
need high standard-trade agreements to grow these jobs, and I
know you agree with that.
As a result, I consistently hear from businesses, local
chambers of commerce, and farmers in my home state about the
need to renew and update TPA, and this is why I support
Chairman Camp's TPA legislation. This is not just the sentiment
in Washington State, and recently we have seen polling data
showing that the American public has become more supportive of
a trade agenda that keeps the United States competitive, and
increases jobs.
So, I am interested. In your discussions around the
country, are you seeing this recognition of how trade and
potential agreements like TPP, TTIP, and TiSA can help the
United States? Are you hearing more and more encouraging words,
I am hoping, from folks across the country as you and your team
reach out?
Ambassador FROMAN. Well, thank you, Mr. Reichert, and thank
you for your leadership on the TPP Caucus, as well.
Yes, as we travel around and meet with small and medium-
sized businesses and their workers who see the benefit of
opening markets, being able to expand their production, expand
their exports, grow their work force, we are seeing that. But I
think it is incumbent on all of us to continuously make the
case to the American people about what is at stake, and what
the potential opportunities are.
As I think the chairman said in his remarks, 95 percent of
the world's consumers are outside the United States; 80 percent
of the purchasing power is outside the United States. The
growing middle classes that are going to buy made-in-America
products are growing fastest outside the United States. We need
to be there. We need to be on the field, opening those markets
for our products, making sure that the rules of the game for
that system allow us to compete on a level playing field. And
that is exactly what we are trying to do through TPP, and what
we are trying to do through TTIP.
But we need to continuously be out there and making that
case. There is a lot of misinformation out there about trade
and about trade agreements, and we need to take that directly
on and make clear to people exactly what the benefits of trade
are, the benefits of exports, and how it relates back to jobs
and incomes here, in the United States.
Mr. REICHERT. Thank you for your time and your answer. And,
again, appreciate it if you could pass on the message to the
President that we would like to see a response.
Thank you, I yield back.
Chairman CAMP. Thank you. Mr. Becerra.
Mr. BECERRA. Thank you, Mr. Chairman. Ambassador, thanks
for being here. And, Mr. Chairman, by the way, I think all of
us echo the remarks that were made earlier about your service
to our country and to this Committee.
Chairman CAMP. That means a lot from a fellow survivor of
the super Committee.
[Laughter.]
Mr. BECERRA. That is right. You are welcome to stay with us
if you like, Mr. Chairman. It is not too late.
Ambassador, let me--actually, the chairman hit on this
point, and I would like to get back to it a little bit, the
whole issue of currency. Over the last few years, it has been
tough, on occasion, for Members in this body to come together
and speak with one voice as American legislators, versus our
particular political philosophies. I think on currency you find
that, whatever part of this dais, I think a number of us are
very concerned about the role currency manipulation has played
in making it harder for some of our businesses to compete, in
making it hard for some of our businesses to keep jobs in
America. And, quite honestly, hard for a lot of Americans who
are still unemployed to find another good-paying job.
And, for many of us, the issue of currency manipulation
must be addressed because, while it is not a direct trade
activity, the fact is if a country can keep its--the value of
its currency lower than what it really is, it makes the
products it produces look far more inexpensive than they really
are. And if you can get into a market and take over that
market, at some point you are able to lift the value of that
product and extract extra dollars from folks.
And I think, for many of us, it would be very important to
see currency manipulation addressed moving forward in these
agreements we have with our competitors, our foreign
competitors, whether it is these trade agreements or otherwise,
but really dealing with it.
I know that the Peterson Institute for International
Economics has estimated that half of the excess unemployment in
the U.S. today is attributable to currency manipulation by our
foreign competitors. Give us a little bit more of a sense of
how USTR is doing in trying to get our partners and competitors
who we are working these deals out with to abide by currency
standards that avoid the manipulation that we see in the
markets.
Ambassador FROMAN. Well, thank you, Mr. Becerra. First of
all, of course, I should say the Treasury is the agency that
has the lead on currency issues. But this administration also
believes that currency is an issue and, from the very start of
the administration, has made clear in its bilateral engagement
with countries like China, in its engagement with the G20,
where there were--we had agreement by all the G20, including by
China, to move toward market-oriented exchange rates, through
the Treasury Department's engagement with the G7 partners, to
ensure the G7 countries abide by the same kind of rules.
We have made clear throughout that this is an issue, and we
want to make sure that we are moving countries in a positive
direction. And as I mentioned earlier, taking China as an
example, we have made some progress. Not enough, not fast
enough, nor far enough. Something that requires continued focus
and continued pressure at every opportunity. But we are making
progress through the various mechanisms.
Secretary Lew, I know he--you had an opportunity to see him
up here testify recently, had an opportunity to talk to him
about this. And I thank Secretary Lew and his consulting on
this, we are working with the Treasury Secretary, the Treasury
Department, consulting with Members up here, with other
stakeholders, to determine how can we be most effective in
addressing the underlying concern.
Mr. BECERRA. And I think you have seen that the greater the
action is in trying to deal with currency manipulation,
probably the likelihood of having trade promotion authority
passing trade deals rises because there is more confidence in
this institution that we will finally tackle something that is
an invidious way to try to get a leg up over the United States
of America and its businesses and its workers.
It is very interesting, because 20 years ago, when I got
here, one of the big issues was dealing with how we treat
workers throughout the world, labor. And we always thought of
trade deals as dealing only with the capital side of things, of
the equation. But now we recognize that you can undermine a
trade deal by undercutting labor, the value of work, or
workers. And can you comment on how you think we are doing with
regard to dealing with labor and the environment in these trade
deals that are moving forward?
Ambassador FROMAN. Well, thank you for making that point,
because you are absolutely right. Twenty years--
Chairman CAMP. We just have a few seconds, so if you could
be quick--
Ambassador FROMAN. Sorry. Twenty years ago, labor and
environment were really considered to be side issues, and not
issues that were core to the agreement. And now, under U.S.
leadership, in our recent FTAs and certainly in TPP and TTIP,
labor and environment, high standards, fully enforceable, are
going to be absolutely core to those agreements, and that
creates a new global standard.
Chairman CAMP. All right, thank you.
Mr. BECERRA. Thank you, Mr. Chairman. Thank you.
Chairman CAMP. Thank you. Dr. Boustany.
Mr. BOUSTANY. Thank you, Mr. Chairman. And I, too, want to
thank you for the tremendous work USTR has been doing under
your leadership.
Mr. Ambassador, I firmly believe that the source of
America's strength and our capacity to lead internationally is
our strong and hopefully growing economy, and our willingness
to engage. And you can argue that our most important export is
the fair application of rule of law. And you are right--the
work you are doing is right at the center of all of that.
I want to focus on the investor state dispute settlement
issue. I believe that having a strong investor state dispute
mechanism in place is critical to protecting U.S. investors
doing business abroad. This is especially important for
companies engaged in energy projects. In my district, we have a
lot of companies that engage internationally, and this is
something I hear from them, that they want to see strong
provisions in any trade agreements that we have.
Clearly, having access to a neutral third-party arbitration
when there is disagreement with governments is something that
is really important, especially in light of what has happened
historically with U.S. oil and gas interests around the world.
And so I believe having--a key element is that these provisions
cover so-called investment agreements that these firms
negotiate with host governments before they actually invest
hundreds of millions or even billions of dollars to develop
these resources.
So, in the TPP negotiation, several countries have
certainly come out in opposition to inclusion of these types of
protections, even though they do exist in other trade
agreements. And I want to give you an opportunity to share your
views on this. And do you share that view, that we ought to
have a very strong investor state dispute mechanism in this
trade agreement?
Ambassador FROMAN. Well, thank you, Dr. Boustany. The--
there are something like 3,200 investment agreements around the
world. And a very significant percentage of those have
something like investor state dispute settlement.
Our approach has been, after a four-year review of our
bilateral investment treaty, and then consultations with
Congress and the public and the run-up to the TPP and TTIP
negotiations, has been to put forward an investor state dispute
settlement process that assures that the same kind of
protections that we provide to domestic and foreign investors
in the United States, in terms of expropriation and due
process, are also available to our investors when they operate
abroad. It is no guarantee of profits. It is a guarantee that
if they are expropriated without compensation, they have got
recourse. And that is the same kind of right that we provide
here, in the United States.
We think it is very important that we are able to provide
that kind of support for investors, at the same time assuring
that governments can regulate as they see fit in the public
interest for health, safety, environmental protection. This
shouldn't be used as a mechanism to undermine government
regulation. It should be used to ensure that investments are
not--investors, foreign investors, are not discriminated
against vis a vis domestic participants.
And so, that has been our approach on investor state. This
is one of the outstanding issues in the negotiations, including
the investment agreement provision that you alluded to. But
that is the fundamental approach that we have been taking
toward that issue.
Mr. BOUSTANY. And, briefly, with the time remaining, can
you address--give us sort of a status report on the
negotiations on--with regard to SOEs. I know that is another
contentious area.
Ambassador FROMAN. We have made some very significant
progress on SOE--on the SOE chapter. And I think there is now
broad agreement among the TPP countries about the importance of
leveling the playing field between SOEs and private firms, and
ensuring that if SOEs are getting non-commercial assistance
from their governments--subsidies, in effect, that--and those
subsidies are creating injury to the private firms, that there
is recourse there.
So, we have a robust SOE chapter that lays out the
principles, lays out transparency provisions, ensures that
there is dispute settlement that we are seeking for that
chapter as well, so that our private firms can have a more
level playing field, vis a vis SOEs.
I should just say--just back on investor state for a
moment--the other part of what we are doing in investor state
is ensuring that we are adding safeguards to support the
ability of governments to regulate by the ability to dismiss
frivolous claims, of awarding damages--awarding attorneys fees,
ensuring that government--assuring that non-parties can
participate in the ISDS process, that there is transparency,
all with the goal of ensuring that legitimate regulation is
provided for, while at the same time ensuring that
discrimination against foreign investors, there is recourse
against that.
Mr. BOUSTANY. Thank you very much. I yield back.
Chairman CAMP. Thank you. Mr. Doggett.
Mr. DOGGETT. Thank you, Mr. Chairman. Thank you,
Ambassador. In March 2012, as you know, a complaint was filed
concerning Honduran labor practices under CAFTA. It was
accepted in May of that year, and was supposed to receive a
report within 180 days. It has now been over two years. When do
you expect that that report about Honduran labor practices will
be published?
Ambassador FROMAN. Thank you, Mr. Doggett. I will check and
get back to you. I don't know what the status of that report
is, but I will be happy to get back to you after this hearing.
Mr. DOGGETT. You have made considerable emphasis on the
value of the May 10th agreements concerning the labor and
environmental protection agreements that, at the time, were the
most that could be obtained from the Bush administration and
the least that could be accepted. But under those May 10th
agreements, has the United States ever initiated on its own
volition any complaint concerning labor or environmental
practices in Colombia, Peru, Korea, or Panama?
Ambassador FROMAN. I don't think we have brought a dispute
settlement----
Mr. DOGGETT. Yes, sir.
Ambassador FROMAN [continuing]. Case yet under those
agreements. We do in----
Mr. DOGGETT. And that is despite the fact that----
Ambassador FROMAN. We----
Mr. DOGGETT [continuing]. With reference to Peru logging,
for example, logging imports to the United States have gone up
substantially, and the World Bank continues to estimate that
over 80 percent of that Peruvian hard wood is illegal. I know
you have done some investigations, but there has never been a
complaint filed. And I think, when we look to how Vietnam will
be treated, we have to look at what the experience has been
under these previous labor agreements.
As you know, the reports out today--and there were last
week--of the European Union trade commissioner complaining
about the position that the United States has taken on dispute
resolution and on transparency. Under the dispute resolution
process, you have told me previously that, though we have no
dispute resolution with Australia, we haven't had any problem
for our investors there, or their investors here.
As far as the dispute resolution process is concerned, is
there a right to appeal from one of these arbitration panels?
Ambassador FROMAN. In the existing ISDS procedures that
exist in, I think, the 40 or so agreements in which we have
them, there is no separate appeals process. By the way--
Mr. DOGGETT. Is there a concern that, in a country such as
the United Kingdom or France or Germany or Denmark, that the
court systems are not sufficiently mature there to provide
adequate protection to U.S. investors of a level that they
would receive in the United States courts?
Ambassador FROMAN. Well, as I said in response to Dr.
Boustany's question, there are 3,000 or so agreements out there
on investment.
Mr. DOGGETT. Yes, sir. I----
Ambassador FROMAN. And through our----
Mr. DOGGETT. I understood your answer; I just want to know
if you think their court systems are----
Ambassador FROMAN. If I could complete it, through our TTIP
and TPP negotiations, we are seeking to raise the standards of
what applies in an ISDS procedure----
Mr. DOGGETT. But not to use the courts.
Ambassador FROMAN. And to add safeguards so that the
standards, overall, of the international trade and investment
regime will be higher than they are now. We can't change those
3,000 agreements, but we can, through our future negotiations,
introduce new standards into the international system that
become the new standards. And that is what we are trying to do
through our ISDS procedures.
Mr. DOGGETT. If you can't respond this morning on whether
you think the court systems of those European countries are
inadequate, I would appreciate your responding in writing, and
your also responding in writing to the letter that has been
pending since last fall from a number of Members of this
Committee and others concerning tobacco and the position that
you have taken with regard to tobacco.
You stated, sir, previously, that your confidence in these
dispute resolution systems is such that you will, in these
negotiations, treat environmental and labor law enforcement the
same way you treat other kinds of trade disputes, and that, in
fact, that position was non-negotiable. Is that still the
position of USTR and the Administration today, that ensuring
that labor and environmental law provisions are treated the
same way as other trade disputes through----
Ambassador FROMAN. Yes, our view is that labor and
environment ought to be binding, subject to the same kind of
dispute settlements, including the availability of trade
sanctions.
Mr. DOGGETT. No different than----
Ambassador FROMAN. No different than IPR or commercial or--
--
Mr. DOGGETT [continuing]. Anything else. And if both of
these agreements don't include those provisions, they won't be
submitted by the Administration----
Ambassador FROMAN. I can't envisage concluding an agreement
that doesn't have binding, enforceable labor and environment
provisions.
Mr. DOGGETT. The other issue that complaint has been made
by the European Trade Commissioner is that the United States is
not very transparent. If our--and that is in a report that is
out this morning. And that they would like to see more
transparency. If the affected industries can see what the
United States' position is, if our trading partners can see,
why not make these agreements open to the public?
Chairman CAMP. Well, you can answer briefly.
Ambassador FROMAN. We each have our processes for engaging
with the public and our various parliaments, and, in their
case, their member states. We do it, as I mentioned, through
consultations with our various Committees, through our
statutorily-created advisory committees, and through a series
of public measures, like putting out, for the first time, a
summary of what our negotiating objectives are, chapter by
chapter, in our TTIP negotiations.
So, we are very much open to other ideas on transparency.
Our systems are somewhat different. They don't consult with
their parliament in the same way that we consult with you. But
we have different procedures for ensuring that we get input
from the public and from our political partners.
Chairman CAMP. All right.
Mr. DOGGETT. They want more transparency that you opposed.
Chairman CAMP. Well, I think his answer, his previous
answer, will have to stand, because we are out of time.
Mr. Gerlach.
Mr. GERLACH. Thank you, Mr. Chairman. Good morning,
Ambassador. Switching gears a bit, Jackson-Vanik trade
restrictions were lifted against Ukraine about 10 years ago,
and thereby giving a Favored Nation trade status to Ukraine.
What is the current status of American-Ukranian trade today,
and how can that relationship be strengthened as expeditiously
as possible for both American companies, as well as for the
benefit of the Ukranian economy?
Ambassador FROMAN. Well, one--thank you very much for your
question. One thing that could be done is the renewal of GSP.
Because Ukraine was a GSP beneficiary, that has expired, and we
look forward to working with this Committee and with Congress
to seek its renewal as soon as possible. That would benefit
Ukraine immediately.
Mr. GERLACH. Has the President specifically asked you to
get involved since the outbreak of the Crimean crisis--asked
you to take a look at American policy relative to Ukraine from
a trade perspective to see where a greater trade relationship,
a better trade relationship, might be one way to help the
Ukranian economy and, of course, American businesses as well?
Has there been any specific dialog between the White House and
your office about that?
Ambassador FROMAN. Yes. I mean there is a robust
interagency process, as you might imagine, involving all of the
agencies, the economic agencies, as well as the other agencies
around this set of issues. We are engaging in that dialog, and
my understanding is, in fact, there will be a delegation here
from Ukraine at the end of next week, which I intend to meet
with, their schedule permitting, to talk precisely about those
issues.
Mr. GERLACH. Would you let us know what the outcome of that
meeting is----
Ambassador FROMAN. Absolutely.
Mr. GERLACH [continuing]. So we are aware of that, and see
what we can do----
Ambassador FROMAN. Absolutely.
Mr. GERLACH [continuing]. From a congressional standpoint,
to assist you in that effort?
Ambassador FROMAN. Absolutely.
Mr. GERLACH. Okay, thank you. Yield back.
Chairman CAMP. Thank you very much.
Mr. Thompson.
Mr. THOMPSON. Thank you, Mr. Chairman. Mr. Ambassador,
thank you very much for being here. And I have got to say you
have been great through all of this. You are more than willing
to meet with any of us, and you have done that a number of
times, and I really appreciate it.
I want to raise a couple of issues, and interested to hear
what you have to say about it today. And if there is anything
that you can add to it, if you would do so in a letter, I would
appreciate that.
I am interested in a few things, like everybody else here,
that are district-centric. Wine, in my district, is extremely
important. You have been out and met with a number of my
growers and a number of the vintners. And, as we had told you
before, the issue of geographic indication is extremely
important. And the EU is making it very, very difficult, as we
explained to you, and some of the things that they have done
have created harmful trade barriers for U.S. exports. And I am
hoping that you can work with them to show that this is not
helpful, and do whatever you can to make sure that we can get
some relief from this idea.
And they are also expanding the GI stuff into the
traditional and semi-generic terms. And this is something that
is very, very dangerous. And I hope that we can get your
commitment to work with us on that.
And then, also, as we explained, in the one region of my
area, the Napa Valley, there is a lot of poaching of names. And
we are--we continue to be concerned that our foreign trade
partners don't poach that name to use on their products, and we
need a strong assurance that you will work toward that end.
Ambassador FROMAN. Well, absolutely, Mr. Thompson. This is
a key issue, particularly in our TTIP negotiations, but also in
our TPP negotiations. We think our system of trademarks and
common names works well. And we are resistant to efforts to
create further geographic indications.
But I go back to something I said earlier. This is one
reason why it is important to move forward and complete these
agreements, because we are not the only party out there. And
the EU is negotiating agreements around Asia, and around the
rest of the world, has a very strong perspective with regard to
GI's. And it is important that we establish a regime that works
for us, as well.
Mr. THOMPSON. Thank you. You had sent me a letter in
response to a question I had asked, I think, the last time that
you were in regarding the Yarn Forward program, and your letter
outlined how well it is working because about $13 billion in
apparel is imported using the Yarn Forward rules. And that is
fine and dandy, but that amounts to about 17 percent of the
total U.S. apparel imports.
So, I want to make sure that we are dealing with the
problem, not just stating percentages, because I don't think it
is one and the same thing. And I would like you to take another
look at that Yarn Forward program and get back to me with
something other than the $13 billion number, because it does
represent a very small percentage of what it is that we are
concerned about.
And on outdoor apparel, I would be interested in hearing
the flexibilities that you see that we can use to accommodate
this industry, given the fast advancement in some of the stuff
they are doing, and the highly technical aspects of the outdoor
apparel industry.
Ambassador FROMAN. Well, I would say, in answer to those
last two points, our approach to textiles and apparel has
always been to ensure that we are striking a balance that helps
our domestic producers continue to be able to produce, while
allowing importers to import products that serve customers and
allow----
Mr. THOMPSON. I see the orange light is on. So if you could
give me a written response on that, I would appreciate it.
Ambassador FROMAN. Happy to.
Mr. THOMPSON. I have one more issue that I want to weigh in
on again with you, and that is rice. And I am very, very
concerned that our rice community is taken care of, and
considered in this. And I know the rice industry didn't do well
in the last round. And I am wondering if the Administration is
ready to move forward without Japan, if Japan continues to hold
back in regard to our trade efforts with them.
Ambassador FROMAN. Well, look. Our focus is to ensure that
Japan meets the same standards as the rest of the TPP partners,
in terms of comprehensive, ambitious, high-standard market
access, that nothing is excluded, and that includes rice. And
so, we are in dialog with Japan about market access, about its
sensitive sectors, and how to achieve meaningful, additional
market access that is consistent with our stakeholders'
objectives as part of this ambitious agreement.
Mr. THOMPSON. Thank you, Mr. Ambassador.
Chairman CAMP. Thank you. Mr. Buchanan.
Mr. BUCHANAN. Thank you, Mr. Chairman, and thank you for
being here today, Mr. Ambassador. I look forward personally to
working with you.
The economic benefits of trade are well documented, as has
been mentioned here today: 38 million jobs are created through
trade, 95 percent of the marketplace is outside the U.S. But I
had an opportunity last year, where being in Beijing, in China,
I met with two different leaders there. One, I think, was
minister of trade or finance. He mentioned their goal has
been--their goal this year, and going forward in the last 4 or
5 years, is creating 20 million new jobs. I met with the vice
premier, a separate meeting. Same thing, 20 million new jobs is
their goal.
So, I kind of thought to myself, ``Game on,'' because I was
there back in the late 1980s, myself and my wife. They were a
non-factor, in terms of the economic global economy.
After that I had a chance to meet with our American Chamber
there; it has got 4,500 members. And I think the general
feeling is people are open to free trade. In fact, I saw a poll
the other day, 80 percent of Americans are open to free trade.
But they want to make sure it is fair. They want to make sure
we have got access. They talked about financial products,
intellectual property, the currency manipulation. They see what
is happening with trade balances in the past, with Japan, and
now with China. They just want to make sure that, at the end of
the day--we just got done, this Committee, we worked on this--
the idea of these past trade agreements with Panama and Korea
and Colombia, and everybody had a sense, to some extent, they
were pretty fair. But the bottom line I got from a lot of
members, American businesses there, they were very concerned
about negotiations being win-win. It is fair, it is a good deal
today, but it is a good deal for both countries two years from
now.
And so, I would just ask you what is your general attitude
about--in terms of negotiation? Because I think a lot of
American companies just feel like they have got--everybody has
got access here, the Japanese, the Chinese, but we don't have
the same access in those markets, and they are very concerned
about it. And I think, you know, as I mentioned, the world has
changed a lot in the last 30 years, the last 10 years, and we
want to make sure we are doing everything to be much tougher
negotiators, to make sure that our companies and our jobs are
protected.
Ambassador FROMAN. Well, we agree completely that--on the
importance of both free and fair trade, and that we are using
these agreements to break down barriers there that have
traditionally kept us out of their markets.
As I mentioned, our market is already relatively open. Our
tariffs are relatively low. Our non-tariff barriers are not
used--our regulations are not used as non-tariff barriers. And
so, what is important through these trade agreements is to do
precisely as you said, whether it is China or Japan or Brazil
or any other country, is to work with them to reduce barriers
for our exports, and also to ensure that they are upholding
certain agreed-upon rules, like the protection of intellectual
property.
In our dialog with China, whether it is the strategic and
economic dialog or the JCCT or our bilateral meetings with them
throughout the year, one of the chief areas of focus is
ensuring that they are using legal software, that they are
protecting intellectual property, that they are clamping down
on privacy, because you could have market access, but then you
can find that your IP has been stolen.
Mr. BUCHANAN. I think the general feeling is just in the
past--and I am not referring so much to this administration--I
would say in the past 30 years we have been outplayed and out-
negotiated. There is that sense there, and we just want to make
sure, now more importantly than ever, going forward, as we
compete in this global economy, that we are doing everything we
can for our companies.
Ambassador FROMAN. Absolutely.
Mr. BUCHANAN. Let me mention on a little different note--it
has been touched on. But, in your mind, how important is the
TPA getting that done quickly, from your standpoint?
Ambassador FROMAN. Well, you know, as we have said, the TPA
is a critical tool for opening markets. But, ultimately, the
only guarantee that an agreement is going to achieve the
support of Congress is that we bring back a good agreement. And
so, our focus in TPP right now, and TTIP, is on the substance
of those agreements, and focusing with our trading partners on
bringing back the kind of agreement that we know Congress and
our stakeholders and the American public will demand in order
to get their support.
Mr. BUCHANAN. Well, what----
Ambassador FROMAN. And that is what our focus----
Mr. BUCHANAN. What are your thoughts on what more we could
do on a bipartisan basis to get this done quickly?
Ambassador FROMAN. Well, you know, again, we welcome the
introduction of the bill in January. We are looking forward to
working with this Committee and the Senate Finance Committee.
And, obviously, there has been a change of leadership there,
and we know that Chairman Wyden is consulting with the
Democrats and Republicans on his committee on the best way to
move forward.
Ultimately, we would like to get a TPA bill that has got as
broad bipartisan support as possible, and we look forward to
working with you on that. But, in parallel, we are going to
continue to work to try and close TPP as an ambitious, high-
standard, comprehensive agreement.
And our message to our trading partners--and I think they
follow our discussion here quite closely--is that the only
guarantee is we bring back a high-standard agreement. We know
what a high-standard agreement looks like. It has got to have
labor, and it has got to have environment. It has got to have
intellectual property rights. It has got to have state-owned
enterprises. It has got to deal with the digital economy. Those
are issues we need to get resolved in this agreement before we
will feel comfortable closing it and bringing it back.
Chairman CAMP. All right. Thank you. Mr. Larson.
Mr. LARSON. And thank you, Mr. Chairman. And, Mr. Chairman,
as I said yesterday, I want to remark again and thank you for
your exceptional service to this Committee and to the country
and to the State of Michigan. You will be dearly missed. And I
wanted to acknowledge you publicly again.
Ambassador, thank you for being here and meeting with us as
often as you have, underscoring the openness and accessibility
that you have had. But I wanted, for the record--and we
discussed prior to coming in to the meeting--I had an
opportunity to meet with the Greater Hartford Labor Board and
they posed a series of questions, more than I could even get to
in the time slot that I have here, as did Representative Rosa
DeLauro. And I have submitted them to you and your staff. I
would appreciate an answer to those.
And, as I mentioned, as chairman of the--co-chair of the
Shellfish Caucus, obviously we are concerned about the EU ban
on United States shellfish. And I am hoping that we can meet
specifically on that, as well.
My question for you today has to deal with intellectual
property. And I want to commend Erik Paulsen, who led a letter
earlier this year, along with myself, to the President. I
appreciate the response from the administration, the President,
the Vice President, yourself. We have met, in fact, and had
ensuing meetings with the ambassador from India. We hope to
have him up to Connecticut.
But the concern remains. And what I wanted to ask you is
what options do you have available to force change on these
discriminatory policies as they currently exist? We understand
and hope that Indian good faith is moving forward. But what
options do you have to enforce this? And, if you could,
elaborate on those.
Ambassador FROMAN. Well, this is an issue of great concern.
We have had great concern about the innovation environment in
India, the issues around the patent rules, as well as around
compulsory licensing. And we have had a series of dialogs with
the government of India, including at the highest levels
between--with the prime minister about issues around
intellectual property rights, and how best to achieve their
objective of assuring access to medicines--it is an objective
we all share--without compromising or undermining the patent
system.
Clearly, right now, they are in the midst of an election,
and we look forward to re-engaging with them as the election is
completed and the government is put in place. And this will be
one of the chief issues on the agenda.
Ultimately, there are mechanisms for bringing dispute
settlement cases, but we are trying to work to--in a
constructive way with India to focus on the array of issues
that they can deal with on access to medicines short of taking
actions on patents or compulsory licenses that we think are
inappropriate.
For example, India has certain tariffs on imported
medicines. And so, if you want to encourage the access to
affordable medicines, one thing any country can do is drop its
tariffs. And that would help access to medicines. There are a
series of other issues around distribution. And that is the
kind of dialog we hope to have with the new government of
India.
Mr. LARSON. Well, I know it is a major concern to a number
of pharmaceutical companies in the State of Connecticut and
across the country.
I also want to commend you and the administration for
continued conversations with the AFL-CIO and its president,
Rich Trumka. How would you characterize your conversations with
Mr. Trumka?
Ambassador FROMAN. Well, we have a good relationship, I
think, with a number of labor leaders. And I have spent a great
deal of time with them and their representatives over the last
few years on several of the issues we have been discussing here
today: TPP, TTIP, other labor rights issues and other
agreements, other enforcement issues.
And we have taken their input very seriously into our
negotiating positions, not just on the labor chapter, but on
issues around state-owned enterprises, or rules of origin, and
various market access issues. So, they have been a good partner
at the table in helping us shape our negotiating proposals.
Again, not that we will necessarily agree on everything, and
not that any stakeholder group is likely to get 100 percent of
what they want, 100 percent of the chapters, 100 percent of the
time. This is a negotiation. But we work very closely with
them. We share a number of their concerns. And we look forward
to continuing that work on TPP, on TTIP, and across our trade
agenda.
Mr. LARSON. Thank you, Ambassador.
Chairman CAMP. Thank you. We will now go two to one. Mr.
Smith.
Mr. SMITH. Thank you, Mr. Chairman, and thank you,
Ambassador, for your diligence in the efforts to increase
exports for American producers.
In addition to facing high tariffs, we know that
competitive American industries such as agriculture are facing,
as mentioned before, non-tariff trade barriers, which can only
be addressed by establishing the enforceable and science-based
standards and trading rules. Representing thousands of Nebraska
producers, I certainly pay close attention to the policies
impacting agriculture technology. You know, thanks to modern
practices and biotechnology, we are saving water and increasing
yields, and there is a lot of great news about this. And yet,
unpredictable and unscientific sanitary and phytosanitary
hurdles are blocking entry into these key markets, and many of
my colleagues have mentioned that already this morning.
But very specifically, considering crops produced through
biotechnology account for about 30 percent of our U.S.
exports--agriculture exports, that is--the biotech approval
processes should be a top policy priority, I would hope, for
this administration. Could you provide an update on what USTR
is doing to ensure that such barriers are receiving the proper
attention?
And also, in recent years we know that China--obviously, a
key market for U.S. ag exports--has stopped numerous shipments
without justifiable cause or proper notice. And would you
support USTR's raising this issue within the 2014 U.S.-China
Joint Commission on Commerce and Trade process?
Ambassador FROMAN. Yes. Well, thank you for that question.
First of all, on the last point with regard to China and
biotechnology products, in fact, we were in China in December--
Secretary Pritzker, Secretary Vilsack, and myself--for a
meeting of the JCCT, and this was very much front and center on
the agenda, both the issues of stopping certain exports, but
also their process for approving biotechnology products, and
assuring that they have a process that is consistent with the
best science, and that it makes decisions on a timely and
appropriate basis.
This issue is, obviously, a key issues with our
negotiations with the European Union. And there, of course, we
have won a WTO case. There, there has been a European Court of
Justice case about the importance of the EU maintaining its own
timetable for approving new products, and biotechnology
products, and this is a key part of our negotiation.
So, it is very much on the agenda, and the Europeans
understand the importance to us, and we are working to find
ways that we can make progress on this, consistent with each
party's interests.
Mr. SMITH. Okay, thank you. And, also, we have heard
several references here this morning of the concern about
Japan. And, perhaps even more specifically, the production of
U.S. pork, perhaps, and its treatment, specifically.
But also, I would like to raise concerns about Canada and
not opening to dairy, poultry, and egg markets, and not opening
their markets. Could you perhaps speak to that, and how we
should move forward with that, or, you know, perhaps--I don't
expect you to share absolutely strategy, but certainly how
should we move forward?
Ambassador FROMAN. Yes. On both, with Japan we continue to
press on those issues, as we talked about.
And you are absolutely right on Canada. It is the only
country in TPP that has not yet given us a market access offer
on issues like--on agricultural issues like dairy and poultry.
And we are pressing them to do so, because it is a very--those
are important priorities for us. We are addressing their
priorities in a number of ways, and we want them to come to the
table, as part of an overall package.
Mr. SMITH. Right. Well, and I appreciate what you mentioned
earlier, that, you know, a comprehensive trade agreement--you
know, needs to open things up. And I appreciate your efforts,
and I look forward to working together on behalf of U.S.
producers and, actually, U.S. consumers, as well.
Thank you. I yield back.
Chairman CAMP. Thank you. Mr. Schock.
Mr. SCHOCK. Thank you, Mr. Chairman. Welcome, Ambassador
Froman. First, let me thank you for your work on trade. I think
it is one of the bright spots of the last couple of years in a
down economy, both here, domestically, as well internationally.
I hate to think of what our economy might be doing in
manufacturing and agriculture if we did not have Panama,
Colombia, and South Korea now fully implemented.
A couple quick questions. One is dealing with the U.S.
biopharmaceutical industry. I have raised this before. It is a
very important issue to me, because not only do they support 3
million jobs in the U.S., but 200,000 in my home state. And I
am just curious whether the Administration--whether you
particularly are supportive of ensuring that the 12-year
guarantee for IP protection for U.S. biologics is included in
whatever we negotiate with TPP.
Ambassador FROMAN. Well, thank you. This is one of the most
challenging outstanding issues in TPP. When you look around the
table, five countries have 0 years of protection. Four
countries have 5 years of protection. Two countries have 8
years of protection. And we have 12 years of protection.
So, consistent with our standard practice, of course, 12
years is in U.S. law, and so that has been our proposal that we
have put on the table in the negotiation. And we are now in the
midst of that negotiation to determine where we can reach a
consensus, in terms of protection for biologics. And we are
working to underscore the importance of data protection for
biologics, how it is different than small molecules, and the
various issues that go into the determination of how much data
protection there should be.
Mr. SCHOCK. Great. Well, I have great confidence in your
persuasive ability. Because, obviously, those three million
jobs are in the United States for precisely that reason,
because we have such a high standard, not only in terms of the
length of time of IP protection, but also the rule of law,
which I know in some of these countries is not so predictable,
particularly in the courts.
My second question is with regards to the U.S. film
industry, which obviously, key to them recouping their costs is
the ability to protect their intellectual property.
Specifically the use of camcorder recording in foreign theaters
is one of the major ways that people steal their products. We
were able to get Canada, as you know, to outlaw this practice,
which basically eliminated the use of camcorder recording in
that country. How important is this on the trade agenda as we
look at TPP? These countries tend to be some of the more rabid
abusers in IP violations, particularly with the film industry.
Is this something that we can accomplish as a part of TPP?
Ambassador FROMAN. Well, this is very much part of our
proposal with TPP, is to have countries take action to deter
camcording as one of our intellectual property rights
proposals. We are working with the other countries on that now.
There is, again, a range of perspectives on it, and we are
optimistic that we will be able to achieve something meaningful
in that area.
Mr. SCHOCK. So they seem to understand that that is
important and achievable?
Ambassador FROMAN. We have underscored that for them.
Mr. SCHOCK. Okay, great. Finally, I know others have talked
about the importance of TPA and what is happening in Russia.
What about the WTO? Russia, obviously, enjoys participation in
WTO. Obviously, the Congress, I think, in a bipartisan way,
supports the administration's effort to put the squeeze on
Russia. You know, the President nor the public, I think, wants
to use military force over there. But should we be using more
economic tools, particularly looking at their participation in
WTO? What is your thought on that?
Ambassador FROMAN. Well, their accession to the WTO helped
bring them into a rules-based trading system, and also gave us
the tools to be able to enforce those rules against Russia when
they violate them. And so we view their participation in WTO as
giving us a tool to be able to take action there.
Stepping back from that, obviously, economic issues are
very much on the table, in light of Russia's recent actions.
The President, the administration, has taken a series of
actions with regard to economic sanctions, as have our allies.
We have made clear there has got to be a price paid for the
actions they have taken to date, and if they maintain the same
path that they are on going forward, that those prices--that
the sanctions will increase.
And so, economics is very much part of that. And from
USTR's point of view, you know, we have ceased all of our
bilateral engagement with them on economic issues, on efforts
that we had underway to improve our trade and investment
relationship, including the negotiation of a bilateral
investment treaty.
Mr. SCHOCK. Okay, thank you.
Chairman CAMP. Thank you. Mr. Blumenauer.
Mr. BLUMENAUER. Thank you, Mr. Chairman. Ambassador, thank
you again for joining us. It has been very helpful, having
conversations. You have been generous to meet in private, small
groups, and yet another Committee hearing. It is, I think,
important to build this record.
I will submit to you a more technical question that deals
with rules of origin for titanium products. It makes a great
deal of difference, I think, in terms of having a preference
for melting, not milling, and I don't expect you to be deeply
versed in this right now. But I would appreciate attention to
it, because it makes a big difference protecting us from unfair
competition from state-owned industries in China and Russia,
for instance, and protecting that capacity in the United
States.
There are 13 Members of this Committee that co-signed a
letter that Congressman Schock and I developed. I have
legislation with Ms. Jenkins dealing with footwear. We have had
some conversations before that this is an industry where less
than 1 percent of the product is manufactured in the United
States. The value chain is concentrated not just in my region
of the Pacific Northwest, but around the country. That is where
we have an opportunity to make some real advantages in the--
going forward. Yet they suffer some of the highest tariff
rates, which retards ability to--for capital formation in this
country to create jobs or move them here. And it is a tax on
the American consumer that is much higher as it moves through
the value chain than just the burden on the individual
companies.
Now, I know this is an area that you have been doing a lot
of work. Vietnam, for instance, is troublesome in some
respects, in terms of some of their practices, but real
opportunities to change some of their behaviors. I wonder if
you could speak briefly to the progress that we are making to
reduce these punitive tariffs and the tax on consumers, and
maybe spark some innovation here.
Ambassador FROMAN. Well, thank you, Mr. Blumenauer. This is
an issue--footwear is an issue of sensitivity both in the U.S.
and among our trading partners. It is a key issue in TPP. We
have been working with domestic stakeholders, both the domestic
producers that exist, but also the importers, including some
from your region of the country, to develop an approach that
will achieve that right balance of helping to ensure that our
domestic producers can continue to compete, but also make sure
that we are able to bring in good, high-quality product for the
American consumers.
And so, it is one of the outstanding areas in our
negotiations with our trading partners, and one that we are in
continuous discussion, including as recently as this week, with
our stakeholders as we formulate our position.
Mr. BLUMENAUER. As I mentioned, there are 13 Members of the
Committee that co-signed the letter, dozens of other Members.
We think there is some support in Congress for efforts to try
and extract more value for the American consumer, and these
American companies.
I appreciated your clarification to a front page story in
the New York Times some weeks ago that talked about the United
States capitulating on environmental issues. I appreciate your
clarification on that, that--including in this hearing, that it
remains a high priority for you, for the administration, to be
able to make progress.
I do identify a little bit, however, with the comment from
my friend from Texas, Mr. Doggett, about our enforcement
actions. As somebody who worked on those provisions, for
example, with the free trade agreement, where we come down on
enforcement, I think, would make a big difference. Anything you
can help to clarify that, either here or going forward, would
make--I think give more dimension and traction to the
representations on what you are trying to do, environmentally.
Ambassador FROMAN. Well, thank you for that, and I am sorry
I didn't have a chance to answer Mr. Doggett's question while
he was here. But let me simply say that I think this
Administration has demonstrated a very thorough and robust
commitment to trade enforcement. We have set up this
Interagency Trade Enforcement Center with assets from around
the government that have allowed us to bring better, stronger,
and more complex cases.
With regard to the particular issues that were raised, with
regard to Peru, for example, and the forestry annex, we have
been able now, with the resources that USTR has been given in
the recent budget, to re-engage with Peru on monitoring that
agreement. And we are now heading toward having a registry in
Peru for the logging, to ensure that it meets the standards of
the annex.
And on labor, we have been meeting with the Guatemalans on
the case that has been brought against Guatemala, the first-
ever case brought against a country on labor issues. And we do
the same with Bangladesh on GSP, given their labor issues. So
we use our enforcement tools thoroughly to make sure those
labor and environmental provisions are fully enforced.
Chairman CAMP. All right, thank you.
Mr. BLUMENAUER. Thank you very much.
Chairman CAMP. Ms. Jenkins.
Mr. BLUMENAUER. Thank you, Mr. Chairman.
Ms. JENKINS. Thank you, Mr. Chairman, and thank you for
holding this important hearing. Thank you, Ambassador, for
being here, and for all of your good work. Many of us have
serious concerns about our economic relationship with China.
One area of great concern to my constituents in Kansas is
China's unjustified barriers to U.S. agriculture. These
barriers ignore international standards, they have no basis in
science, and they raise serious questions about whether China
is complying with its WTO obligations.
Most specifically, the World Organization for Animal Health
recognized last year that all cuts of U.S. beef are safe, yet
China continues to ban U.S. beef imports. And I know
Congressman Smith touched on this, but the first thing I wanted
to ask is that you address what USTR is doing to ensure that
China's regulations on agriculture products--beef, in
particular--comply with its WTO obligations and are otherwise
based on international standards and sound science.
Ambassador FROMAN. Well, thank you. And that is a high
priority in our relationship with China. Ever since the U.S.
was found to be a negligible risk country for BSE last year, it
has been able--we have been able to go back to trading partners
and open up markets for U.S. beef exports.
And, as I mentioned earlier, Secretary Vilsack was with
Secretary Pritzker and myself in China in December, and beef
was very much on the agenda. And we worked together with our
Chinese counterparts to reach an agreement about opening up
their market over the course of this year. And Secretary
Vilsack is following up on that in a series of technical
discussions between USDA and its Chinese counterparts.
But we also need to use all the tools at our disposal. And
here is an example where we brought a WTO case against China
for their exclusion of certain chicken parts, broiler parts. We
have won that case in the WTO, and we will continue to bring
cases on agriculture and other issues where we think parties
have violated their standards.
The underlying point you make, which is that we want to
make sure SPS standards around the world, whether it is in
China or Europe, are based on science, as ours are, is an
absolutely critical and fundamental part of our trade policy.
Ms. JENKINS. Excellent. Well, thank you. Second, my
concerns with China aren't exclusive to agriculture, because
there are many examples where dealing with China is a
significant challenge. But we need to address these concerns
without harming our own economy.
Now, given the limited time and resources available to
address the long list of China's barriers, how would you
prioritize the various challenges U.S. companies face in China?
And would legislation such as some of the currency bills that
have been introduced affect our ability to deal with these
other issues?
Ambassador FROMAN. Well, we engage on a whole range of
concerns with regard to China, whether it is market access
obstacles and--or how--the concerns that they force the
transfer of technology as a condition of doing business there,
we have pushed back over the last couple years on their
indigenous innovation policies that would have required our
intellectual property to be transferred as a condition of doing
business, or participating in government procurement.
We are pushing for the legalization of software, of
ensuring that trade secrets are protected. And, across the
board, we are looking, both through our bilateral dialogue and
through enforcement mechanisms to ensure that China upholds its
WTO obligations.
So these--the complex set of issues you say, both inside
agriculture, but also outside agriculture, are absolutely
critical to improving our trade and investment relationship
with China. We have a lot of mechanisms to do this: the S&ED,
the JCCT, our BIT negotiations, other engagement with China.
And we are ensuring that we set priorities so that we are
making sure we are addressing the most--the practices of
greatest concern to American firms and American businesses.
Ms. JENKINS. Okay. Thank you, Mr. Chairman. I yield back.
Chairman CAMP. Thank you. Mr. Paulsen.
Mr. PAULSEN. Thank you, Mr. Chairman. And, Ambassador
Froman, let me just start by thanking you and your team for
your accessibility, for your responsiveness, and for your
engagement. It is very much appreciated in some challenging
situations you have in communicating with my office, in
particular.
I want to follow up on what John Larson had mentioned
earlier--the situation with India. You know, it was just last
year we had 170 Members of Congress, on a bipartisan basis--and
15 governors--who had asked the Administration to raise
concerns with India's unfair trade practices at the highest
levels of the Indian government. And the President has done
that, you have done that, the Vice President, and the Secretary
of State, on down the line.
Now, since the inception of USTR's special 301 Report,
India is one of the few countries to have been designated as a
priority foreign country in the last 25 years. So India has now
failed to make any meaningful progress, I would say, in
addressing the long-standing concerns raised each year by your
agency in that special 301 report.
And, as there is a whole host now of market access and
trade issues that significantly impede the ability of U.S.
companies and businesses and investors to operate there, given
the importance of the U.S. and India strategic relationship and
India's pure growth potential, which you outlined in your
opening testimony as a market for U.S. goods and services, I
think all efforts need to be made to help overcome these
challenges and our many difficult issues.
However, the primary forum to help address some of these
bilateral trade and investment issues seems to be the Trade
Policy Forum. And USTR co-chairs that forum. It has not been
held since 2010. When do you expect to hold the next Trade
Policy Forum?
Ambassador FROMAN. Well, thank you. First, I have had a
series of meetings with my Indian counterparts since coming
into this job, and we have stayed very closely in touch,
including about how to make sure the Trade Policy Forum is an
effective mechanism for addressing these issues.
And so, when we met--back in September, I believe it was--
we laid out a work program for our staffs to work through
outstanding issues in preparation for our Trade Policy Forum.
And that work is ongoing. Now China is in the midst of an
election season, and I think our--everyone's perspective is we
should wait until they get past the election in order to re-
engage on that. But I am fully committed to re-invigorating the
Trade Policy Forum. We just want to make sure that it is not
just to have a meeting, but that it is a meeting that will help
achieve results. And that is why I want to make sure it is
adequately prepared.
Mr. PAULSEN. So, the elections are coming up soon, and it
sounds like you agree with being--staying on a positive
trajectory that talks with India actually have to produce
concrete results.
Ambassador FROMAN. Absolutely.
Mr. PAULSEN. Okay. Let me just switch topics real quick,
Ambassador. Since Congress last debated TPA in 2002, one aspect
of our economy and trade has dramatically changed, and that is
the use of the Internet for both commerce and for personal use.
You know, back in 2002, nobody knew anything about Google
or Googling anything, or Facebook, or Twitter. And can you just
talk a little bit, or explain a little bit about how our trade
agreements in today's 21st century model can truly reflect the
full balance of U.S. law regarding the Internet?
Ambassador FROMAN. Well, thank you. I mean that is very
much one of the areas of focus in TPP at the moment, because we
want to make sure we take the lessons from the physical world
and bring them into the digital world, consistent with the
existing legislation in the U.S. So, we are pushing for the
free flow of data, for example. We are pushing against
localization requirements that servers have to be located in a
country for a business to be able to serve that country.
We also want to make sure that we are respecting privacy
concerns, and that governments have the ability to regulate in
a bona fide way in the interest of privacy, and those are also
important objectives. So we take, as our touchstone, existing
U.S. law, and we are working in that context to assure that the
digital economy is very much reflected in this 21st century
agreement.
Mr. PAULSEN. Thank you, Mr. Chairman. I yield back.
Chairman CAMP. Thank you. Mr. Kind.
Mr. KIND. Thank you, Mr. Chairman. And thank you for
holding this hearing. And, Mr. Chairman, I too want to share in
the accolades directed towards you, with the leadership you
have shown this Committee, and what you have meant to this
Congress, and our friendship in particular. We are going to
miss you. But we still have some work to do here.
Chairman CAMP. Yes.
Mr. KIND. Mr. Ambassador, thank you for being here. And I
think if there has been a consistent message delivered from the
Committee to you is one of gratitude, given your access and
level of engagement, not only with Members of this committed,
but Members of the Congress, and especially the new Democratic
Coalition, of which I am leading. You have been before us on a
number of occasions. In fact, so often that we are talking
about making you an honorary Member, given our endless meetings
with you. But that is going to be crucial as we do move
forward, not only TPA authorization, but the TPP negotiations.
Members need to have that access, that level of engagement, and
you have been tireless in that effort, and I compliment you.
In fact, just yesterday, Dr. Boustany and Mr. Reichert,
myself, and Mr. Meeks had a chance to have breakfast with the
TPP ambassadors at the Canadian Embassy. We were able to engage
them directly about the market access issues that you have been
working on, but have a diplomatically frank exchange. But you
should also know that there was high praise from every one of
them about the job that you are doing on our behalf. And that
is always very good to hear.
Here is one of the concerns that I have. I think it is
important that we are at the table, that we are moving forward
on a robust trade agenda. It is important not only for the
economic growth for our Nation and the jobs that can come from
it, but U.S. leadership, not only in the Pacific region, but
globally, right now. I am afraid that, with further delay, as
far as TPA is concerned, it may lead to further delay of a
final TPP being negotiated. And the rest of the world is not
sitting around, waiting for us to get our political act in
order here. And there is a danger that TPP could turn into
another Doha, which we are trying to avoid at all costs.
I am just wondering if you are sensing that same type of
concern, or if you are seeing significant progress being made
that might elevate this and enable the Congress to finally
start taking action, give you the tools that you ultimately
need in order to reach the best agreement that we can get with
the TPP nations.
Ambassador FROMAN. Well, thank you. I mean I think, again,
I think the only guarantee--and I will tell you what I tell our
trading partners--the only guarantee of an agreement being
approved by Congress is that we negotiate a good agreement. And
we know what a good agreement is. We can know what that good
agreement is through the expression of TPA and the expression
of the negotiating objectives in TPA. We can also know it
through our thorough consultation with Members of Congress, and
with the stakeholders, and with the public, that we have a good
sense of what is necessary.
We each have our domestic processes that we need to go
through. And ours is TPA, and our trading partners, their
domestic processes, as well. We certainly don't want them to
use the lack of TPA as an excuse for not coming to the table,
and not concluding a high-standard, ambitious, comprehensive
agreement as soon as possible. I think we can do that. I think
we can work in parallel, both to conclude a high-standard TPP,
as Congress considers trade promotion authority issues and
builds bipartisan support for such an approach, and that is the
path that we are on.
Mr. KIND. My sense is--and I think you share this--is that
those at the table now, the 12 nations negotiating, all of them
are there because they want an agreement at the end of the day.
They are not just playing games with it.
But on another level of inquiry, under CAFTA we had some
pretty innovative, capacity-building provisions in CAFTA. I am
wondering if we are still using that as a model, or trying to
elevate that in pursuit of TPP with developing nations. I am
especially thinking about Vietnam and--
Ambassador FROMAN. Absolutely.
Mr. KIND [continuing]. What we are asking them to do to
elevate their labor standards.
Ambassador FROMAN. No, that is very much--and thank you for
mentioning that--that is very much a part of what we are trying
to do with Vietnam as they sign on to international labor
standards. As we developed action plans, and work programs for
them to be able to meet those standards, it is going to require
technical assistance, whether it is from the ILO or from the
solidarity center, or elsewhere, for them to be able to achieve
those objectives. We are working closely with the State
Department and USAID to assure that there will be resources
available, so that they can fully implement their obligations
under TPP.
Mr. KIND. Good. Well, I would be happy to follow up with
you in one of our future meetings on that.
And, finally, a resource issues. I had a chance to meet
with Ambassador Punke recently, talk about the ITA negotiations
with China. I was somewhat alarmed to understand that he was
there on our behalf, facing 16 Chinese negotiators across the
table that tried to wear him thin, or wear him out. I wonder if
we are giving you enough resources in order to pursue these
negotiations and that we are not being undermanned in--
Ambassador FROMAN. Well, we are a lean and mean
organization at USTR. I think that is generally one of our
strengths. I think, frankly, during sequester we got a little
too lean, and we weren't able to fulfill all the
responsibilities the way that we like to. We are working with
our appropriators to assure that we have got the necessary
resources, going forward.
But I would put Ambassador Punke up against 16 Chinese
counterparts any day. I think that is a pretty even match.
Chairman CAMP. All right, thank you.
Mr. KIND. Thank you.
Chairman CAMP. Mr. Marchant
Mr. MARCHANT. Thank you, Ambassador. As you know--global
trade is very important to Texas. In fact, Texas leads all
states in exports, and has for the last 12 years. And in my
district is Dallas-Forth Worth International Airport, for which
trade is very, very important. Yet there are people in my
constituency that are very skeptical of TPA and these trade
agreements. Can you give some assurances or give some examples
of why this--these trade agreements would be very, very
positive to Texas and to my constituents?
Ambassador FROMAN. Well, you know your constituency well.
My understanding that in Texas you are exporting about $8
billion to Korea, and that is about a 54-percent increase over
the last few years. And same is true on Colombia, 140-percent
increase. Panama, 93-percent increase. You are seeing the
benefits of these trade agreements directly in Texas as you see
your exports grow. And that is certainly our goal with TPP and
TTIP, is to see that kind of export growth come with the
opening of these markets.
Mr. MARCHANT. To complement that, just recently American
Airlines just announced it is going to start a non-stop flight
from Dallas to Shanghai. So recently, the Chinese government,
as you know, announced that it was going to make Shanghai an
example, a free market example. Can you talk to us a little bit
about that experiment, and how important that is, and how that
will dovetail into your negotiations with them?
Ambassador FROMAN. It is an interesting question. This is
the Shanghai Free Trade Zone that they announced last year, and
we are monitoring that very closely to see what it is they
intend to do, and how they intend to use it. And that, together
with the outcomes of the Third Plenum in November, where they
laid out a reform program, there is a lot of positive signals
in the Third Plenum program and in the Shanghai Free Trade Zone
proposal about where China wants to take its economy, how it
wants to open its economy, liberalize it, have it be more
market-oriented, take the government out of the process of
approving every investment.
One way we are following up on that is through our BIT
negotiations, our Bilateral Investment Treaty negotiations.
Because that gives us an opportunity to put to the test
whether, when China says it wants to move toward a so-called
negative list, meaning companies can invest and do business in
China everywhere and anywhere in any sector unless it is
explicitly prohibited, to see whether--how far they are willing
to go in that regard, how far they are willing to take the
Third Plenum outcomes, or the sentiment behind the Shanghai
Free Trade Zone and drive it through reform in their economy.
We are in the midst of those discussions, and those will be
continuing, I think, for several more months and longer. But
that gives us an opportunity to put to the test whether some of
those expressions of reform are being translated into reality.
Mr. MARCHANT. Thank you. Yield back.
Chairman CAMP. Mr. Pascrell.
Mr. PASCRELL. Thank you, Mr. Chairman. Mr. Ambassador, you
have a very, very difficult job. You inherited a terrible
situation with trade imbalances. I have listened to the smoke
and mirror games of presidents Democrat and Republican on trade
issues. American people are fed up because they have seen the
results, which many times have not helped us at all in the long
run, and have not helped foreign countries.
So, our policy, I think, is at a crossroads. We have come a
long way since the one-sided deals of the nineties and 2000s,
and--which helped cripple our country's industrial base. We
want to build that base, and I have heard you say that
yourself. We want to build manufacturing in this country, but
not that--the sacrifice of whether it is services or anything
else.
When Democrats took the majority, we fought to include real
protections for labor rights and the environment, and we were
moving in the right direction. Thanks to the involvement and
the investment of the Congress and the United States and the
administration listening at the time. I think that this is
important, and we need an investment. I agree with Chairman--
Ranking Member Levin when he said we need an intense
involvement by the Congress, not after, but before. We have had
serious consequences when that did not happen in the past, and
it has had repercussions to now, today.
What we are seeing in this difficult Trans-Pacific
Partnership negotiation has me fearing we could slip back into
the old ways of doing business. I realize that your job is
difficult. You inherited negotiating with a lot of countries
that don't share our values and commitment to high standards to
labor and environment.
And we saw a break-through in the Peruvian trade deal. That
was, I think, a pivotal point for the Congress of the United
States, to have enforcement rules, to have countries agree
before the deal is signed, sealed, and delivered, that they are
going to make some changes and do that in a very transparent
way. Countries should be our allies in that fight are nowhere
to be found many times, Mr. Ambassador. I urge you to stay firm
and not go backward.
Mr. Ambassador, I am a co-chair of the House Textile
Caucus, what is left of the textile industry in the United
States of America, which we have seen dwindle away in the last
40 years. I would like to thank you for your commitment to the
Yarn Forward rule of origin for textiles and apparel, which, as
you know, is of critical importance to the textile industry in
this country.
My question today is on market access for the most
sensitive textile products manufactured here in the United
States. Can you assure the Members of this Committee that your
negotiators will seek the longest duty phase-out possible for
the most sensitive textile items? That is a pretty direct
question. We don't need a glossary of discussions here. Would
you give me an answer?
Ambassador FROMAN. Well, we are working with--very closely
with textile and apparel stakeholders to make sure we have a
full understanding of what the most sensitive products are, and
using the tools that you mentioned--the Yarn Forward, the short
supply list, and staging issues--we are making sure that we
strike that right balance between assuring protection for our
domestic producers, as appropriate, and also allowing the
importers of apparel----
Mr. PASCRELL. And as you heard before----
Ambassador FROMAN [continuing]. To have access to our----
Mr. PASCRELL [continuing]. Folks are concerned about
Vietnam's wanting immediate access. And I think that this is a
serious problem. Do you think that that is a hurdle we can get
around, get over, et cetera?
Ambassador FROMAN. Well, that is very much part of the
current negotiation.
Mr. PASCRELL. But what do you think?
Ambassador FROMAN. Well, we are in the midst of negotiating
that with our trading partners. So I can't tell you at this
point what the outcome is----
Mr. PASCRELL. Well, are you making a commitment today to
this Committee that you are going to do what the question
entails?
Ambassador FROMAN. We are firmly committed to assuring that
we have an outcome on textiles and apparel, as well as other
products, frankly, that support the maximum number of American
jobs in this country, and take into account the sensitivities
of some of our key sectors.
Mr. PASCRELL. I wanted to highlight a concern about
intellectual property, those decisions in Canada in recent
years that go against our neighbors' international commitments.
The Canadian courts have ruled that certain pharmaceutical
patents, including many belonging to companies in my home state
of New Jersey, invalid due to what I believe to be an
inappropriate interpretation of international patent standards.
This isn't an issue increasing access to medicines in
developing countries. Canada is wealthy, it is an
industrialized nation. This policy is designed to benefit the
manufacturers at the expense of our own--Mr. Ambassador, we do
not need a corporate draft for our trade policies.
Chairman CAMP. All right. Time has expired. Do you want to
respond briefly?
Ambassador FROMAN. I would simply say on the Canadian
patent issue, this is something we are monitoring very closely.
It is now the subject of litigation, both in the Canadian
courts and in an investor state case. But it is something we
are monitoring very closely as part of TPP, as well.
Chairman CAMP. Thank you. Mrs. Black is recognized.
Mrs. BLACK. Thank you, Mr. Chairman, and thank you,
Ambassador, for being here. This is such an important
conversation that we are having here today.
I want to go to the issue of intellectual property, which I
continue to ask about, because I hear so much about that in my
own district about our job creators there that do business
overseas, and how they believe, specifically in the Asian
countries, that there is not the respect for the intellectual
properties.
So, TPP must contain strong IPR protections to be an
effective and comprehensive trade agreement. Not only are these
protections needed to support millions of jobs here in the
United States, and a significant portion of our exports, but
they are also encouraging American innovation and investment.
The full spectrum of intellectual property rights must be
covered, including patents, copyrights, and trademarks, and all
types of products and services must be adequately addressed,
including pharmaceuticals.
How will USTR ensure that TPP will contain strong and
effective IPR protections similar to that found in our U.S.
law?
Ambassador FROMAN. Well, that is certainly our objective in
this negotiation. And as I mentioned in my opening remarks, we
have got millions of Americans whose jobs depend on the
innovation economy, on creativity, on our intellectual property
rights. And whether it is in the copyright/trademark side of
things, or in the pharmaceutical side of the ledger, we are
working to assure the appropriate level of intellectual
property rights, and very much based on concepts in U.S. law.
So strong copyright protection, also limitations and exceptions
consistent with U.S. practice. And, on the pharmaceutical side,
consistent with the May 10th agreement, assuring incentives for
innovation, while at the same time access to medicines by the
poor and developing countries.
Mrs. BLACK. The other issue also right along those lines is
the issue of cross-border data flows, which are critical, not
just to service companies, but also the globalized companies in
any sector. So respecting the differences of those data privacy
approaches from country to country, how can we ensure that
there is a robust protection of those cross-border data flows?
Ambassador FROMAN. Well, that is a central part of our new
approach on the digital economy in TPP, to try and reach
agreement around disciplines on regulating the flow of data,
and making sure that there can be the free flow of data, also
dealing with issues like the localization of servers, so that
businesses aren't required to have servers in a particular
country in order to serve that market. So this is very much--
when we talk about updating our trade agreements for the 21st
century and bringing new issues like the emergence of the
digital economy into those trade agreements, this is precisely
what we are focused on.
Mrs. BLACK. Thank you, Mr. Chairman, and I yield back.
Ambassador FROMAN. Thank you.
Chairman CAMP. Thank you. Mr. Davis.
Mr. DAVIS. Thank you, Mr. Chairman. And I, too, want to
commend you for your service to the nation, and especially for
the outstanding leadership you have provided as chairman of
this Committee in terms of the way that you facilitated its
work. I trust that when you leave Congress you will always
relish the memory of that.
And thank you, Mr. Ambassador, for being here. And to you
and your staff for the great work that you do. Mr. Ambassador,
I come from Chicago, Illinois, which has been known as the
candy capital of the nation. Thousands of jobs in Chicago are
directly related to the availability of sugar at a competitive
price. According to the Commerce Department, to date in this
country, we have already lost 127,000 sugar-using jobs since
1997 because of the trade-distorting sugar program.
Over the last 5 years, confectioners, bakers, candy makers,
and other manufacturers have suffered through the highest sugar
prices anyone can remember, all due to a repressive sugar
policy. Now that those high prices have brought on greater
sugar production in both Mexico and the U.S., and a temporary
sugar surplus, big sugar has decided to use more government
action to eliminate competition.
Last Friday, sugar processors filed anti-dumping and
countervailing duty cases against the importation of Mexican
sugar allowed under the North American Free Trade Agreement.
Mr. Ambassador, can we count on you to oppose any effort to
restrict access to adequate supplies of sugar from Mexico, or
anywhere else, that are needed to preserve good manufacturing
jobs in the confectionary industries in Chicago and throughout
the nation?
Ambassador FROMAN. Well, the anti-dumping and
countervailing duty case that you mentioned is the province of
the Commerce Department and the ITC. It is actually a quasi-
adjudicatory process in which the USTR or any other agency is
involved. It is being dealt with in the technical way that
those two agencies deal with it.
Sugar is obviously a very sensitive issue in trade
negotiations, always has been. And we are consulting very
closely with stakeholders, you know, on the issues around
sugar. But we are not going to do anything through these trade
agreements that will jeopardize or undermine the sugar program.
Mr. DAVIS. In your view, does this dumping complaint help
or hurt our bilateral trading relationship with Mexico?
Ambassador FROMAN. Well, you know, trade remedies--Congress
created trade remedies so that industry would have the ability
to bring these cases when they thought there was dumping and
countervailing duties, and it is brought by the companies
themselves, or the industry themselves, not by the government.
It is certainly something that the Mexican government and the
Mexican stakeholders care a lot about, but it is the province
of our industry, any industry, whether it is sugar or steel or
any other industry, to avail themselves of the trade remedies
that Congress has created.
Mr. DAVIS. As you have indicated, there is a long history
of trade disputes involving sugar and sweetener trade between
the U.S. and Mexico. In the past, Mexico has placed
restrictions on American exports of high fructose corn syrup.
Do you share my concern that corn farmers in Illinois and other
states could get caught up in another cross-border trade
dispute that is not their fault, but is the result of the
market-distorting sugar subsidies?
Ambassador FROMAN. Well, I certainly hope we could avoid
that situation.
Mr. DAVIS. Well, we thank you very much, and I thank you
for your work.
And, Mr. Chairman, I yield back.
Chairman CAMP. Thank you. Mr. Young.
Mr. YOUNG. Mr. Ambassador, thank you so much for being here
today. Really do appreciate it. I will begin by noting my
colleague, Mr. Griffin of Arkansas, was called away to the
floor, and he just asked that I convey to you he will be
submitting a letter for your consideration pertaining to TPP
and Japan's treatment of rice, also pertaining to dumping of
steel rebar from Turkey and Mexico. So he will look forward to
your responses there.
Mr. Ambassador, I recently, working with several of my
colleagues, helped launch a caucus related to TTIP. And this is
a very important issue, and we hope we can consummate this free
trade agreement in coming years between the U.S. and EU. Were
we to do so, it is projected that exports from my home state of
Indiana would increase by roughly 33 percent, and there would
be a net increase in employment of up to 13,780 jobs.
The largest category of exports that will benefit from this
agreement, we estimate, will be pharmaceuticals. So, of course,
the intellectual property rights protections that we have heard
about here today are very important to that industry, as we
work on this agreement.
From your perspective, what barriers for IPR-intensive
trade are most significant as we look at the U.S. and EU
negotiations? Perhaps you could cite areas where there could be
some convergence and other areas where harmonization might not
be possible.
Ambassador FROMAN. You know, I think the--one thing that
categorizes--characterizes the U.S.-EU relationship is that
both of us have strong intellectual property rights regimes.
And so we start from a fairly common perspective in that
regard. And, obviously, our innovative and creative industries
will benefit from that perspective, and we are going to try to
work together through TTIP, the U.S. and the EU, to promote
strong intellectual property rights protections elsewhere
around the world, as well.
As part of TTIP, we are working to bring our regulatory
systems closer together, or to bridge divergences in our
regulatory systems without reducing, undermining, lowering our
health, safety, and environmental standards. Neither one of us
wants to lower our standards. The President spoke quite
eloquently on this in Brussels last week. And so this is not
about deregulation. It is about taking two well-regulated
markets, but markets that are regulated in slightly different
ways--and those differences create trade barriers--and seeing
whether we can bridge those trade barriers by further
cooperation on the regulatory side. And our FDA is working
closely with the EMA in Europe to determine what areas of
cooperation may allow for more interaction in pharmaceuticals
and medical devices.
Mr. YOUNG. So my sense is, based on your response, which I
appreciate, is that we are still teasing out some of those
areas, the thornier areas, the areas of common agreement, and
so forth. So we will look forward to staying in touch in that
regard.
With respect to AGOA, it is essentially a development
program designed to benefit the lesser-developed countries of
Africa, that expires in September of 2015. And we want to make
sure this reauthorization occurs in a way that improves upon,
ideally, the existing program. And I know that USTR has
requested several studies from the ITC pertaining to the
program and its effectiveness and operation, and so forth. This
Committee has requested a separate study from GAO. Can we agree
to share information so that we can work together to improve
this program?
Ambassador FROMAN. We certainly want to work closely with
this Committee and others in Congress on this issue. We
launched a full review of AGOA last August, precisely to do
what you have laid out: Assess what has worked well, what has
worked less well, what has changed in the African economies,
what has changed in their relationships with their trading
partners. And, as we seek the seamless renewal of AGOA next
year, what needs to be done to update it to make sure it is
having maximum impact along the lines that it was originally
designed. So we very much look forward to working with you on
that.
Mr. YOUNG. Thank you. Finally, I would just build upon
Representative Pascrell's comments pertaining to intellectual
property protection as it relates to Canada, particularly
important to the pharmaceutical industry. And you will be
receiving a letter from Representative Pascrell and myself,
along with several other Members, pertaining to this issue and
elevating to Canada special 301 priority watch list in 2014
because of Canada's lack of adequate and effective intellectual
property right protection.
So, we will look forward to getting your response on that.
I appreciate the dialog today. And thank you again for your
service.
Ambassador FROMAN. Thank you.
Chairman CAMP. Thank you. Ms. Sanchez.
Ms. SANCHEZ. Thank you, Mr. Chairman, and I would like to
begin by adding my voice to those who will wish you well.
Chairman CAMP. Thank you.
Ms. SANCHEZ. And at the risk of my husband taking umbrage,
I will say that, like all good men in my life, you are leaving
too soon. And while I say that tongue in cheek, your leadership
will be missed.
Ambassador Froman, I want to thank you for joining us
today. I have two--I have many questions I would love to ask,
but I have two that I would like to get to, so I will jump
right in.
As you know, the United States is the world's largest
creator, producer, and exporter of copyrighted materials. And
jobs that support industries that are innovative typically are
the kinds of jobs that provide benefits to workers and allow
somebody to support a family off of the wages from those jobs
in innovation. So I think it is incredibly important to not
just think about trade generally, but to be very specific about
making sure that we protect and try to grow jobs in the
innovation sector, because they typically do also include
manufacturing jobs with them.
Being from Southern California, I am sure you can
appreciate that the livelihoods of many Southern Californians
are directly impacted when there is a lack of respect for U.S.
domestic industries and intellectual property. Some of my
colleagues have mentioned Canada and India, in particular. And
I know that the administration's goal has been to achieve
``21st century agreements,'' but the size and the scope of our
pending agreements is what concerns me.
As members of Congress, we spend a lot of time--often years
and years--crafting Federal legislation to try to achieve that
goal. And my concern is that in trade agreements like TPP the
work that has been done to pass these laws could be undermined
if we don't include some kind of incentives and enforcement
mechanisms for making sure that we are incorporating standards
of U.S. law in those trade agreements.
In that same vein, criminal enterprises enable infringement
of U.S. intellectual property, which also further impacts both
U.S. and global marketplaces and our workers. So I think you
are in a pretty unique position to try to help address that
particular problem by fostering legitimate online commerce.
So, I am just curious. How are you going to ensure that
these 21st century agreements reflect U.S. law for all
industries, and ensure that those who are intentionally
enabling infringement are held liable for their actions?
Ambassador FROMAN. Well, first of all, I couldn't agree
with you more about the significance of intellectual property
and protecting our creative industries. And not just--I was in
Los Angeles several months ago--not just for the actors and
directors who may participate in this, but for the unionized
carpenters and the engineers who are working on the sets. And
it is a whole ecosystem there that--where we want to make sure
that they are getting the benefits of their labor, and that
they are earning the benefits of their labor.
And that is what we are trying to do in TPP on our--in our
intellectual property efforts on copyright, on camcording, on
making sure that piracy is dealt with, that there are effective
enforcement mechanisms. USTR, we have a process called the
Notorious Markets Process, where we list websites that are
notorious for selling pirated material and get countries to
close them down, or get the websites themselves to drop the
offending material, the pirated material. And so that is
something that we work on, both in our negotiations and in our
enforcement efforts. And it is a high priority for us.
Ms. SANCHEZ. Thank you. And then, switching gears really
quickly--and if we run out of time I will just ask for your
response in writing--but you testified before this Committee
last year that the administration will continue to ensure that
the Jones Act is protected under our trade agreements. And
recently I heard reports that the European Union has put forth
a draft proposal that would try to undermine the Jones Act. So
I am just looking for some reassurance from you that nothing
has changed with respect to the commitment that you made to the
Committee, and that you are going to continue to ensure that
the Jones Act or other programs to promote U.S. flag shipping
are not going to be repealed or diluted in future trade
agreements.
Ambassador FROMAN. There is nothing we are going to do in a
trade agreement that is going to repeal or undermine a U.S.
law. Europeans have a lot of priorities in these negotiations,
and we have a lot of priorities, as well. And that is what the
negotiation is for, is that we work our way through these
issues and understand each other's sensitivities, and how best
to address the concerns of each in the context of an overall
comprehensive agreement.
Ms. SANCHEZ. Thank you. Thank you so much for your time
and----
Chairman CAMP. All right, thank you. Mr. Reed.
Mr. REED. Thank you, Mr. Chairman. And, Mr. Ambassador,
thank you. We are down to the end. And I appreciate--we have
talked, we have met. And, as your predecessor, Ron Kirk also,
you do an outstanding job, and I appreciate the work you do in
regards to this issue, and I enjoy working with you.
And I wanted to relate to you that a large employer from my
district informed me that you did a tremendous amount of good
work in the ITA agreement, Corning, Incorporated. I come from
Corning, New York, and I just wanted you to know that we
appreciate the work in that arena. So kudos to you.
Last week I was at a hearing with the Steel Caucus. And I
also co-chair the U.S. Manufacturing Caucus here in DC. And it
was brought to our attention repeatedly by many of the Member
companies there--Nucor Steel is a constituent, large employer
in my district, also. They have a facility in Chemung County.
U.S. Steel was there. ArcelorMittal was there. And Mr. Griffin
is, I guess, going to send a follow-up letter to you.
But I wanted to just stress to you or relate to you the
theme I heard in the Steel Caucus is that there is a real
threat from the dumping of steel into the U.S. market. I wanted
to see what you thought--especially in the Turkey-Mexico arena.
Wanted to see what you thought about their concern that that is
going on. And is there anything you can do or have done
presently to try to address the issue of inappropriate steel
dumping into America's market?
Ambassador FROMAN. Well, I have--we have met with the steel
industry on a regular basis. It is something that we know is of
great concern. And, therefore, we are monitoring it closely.
With regard to those particular issues of Turkey and Mexico
and the anti-dumping CVD cases, I have really got to refer you
to the Commerce Department and the ITC, because those are
procedures under their mechanisms. They are quasi-adjudicatory,
and we are not involved in those. But the situation in the
steel sector itself, in the steel industry globally, is
something that we do monitor closely and want to continue to
pursue to see if there are things that we can do through our
trade dialogs to try and address some of the concerns that the
U.S. steel industry has.
Mr. REED. And could you give me any indication, like ideas
along those lines that you would be considering to pursue?
Ambassador FROMAN. Well, you know, one thing that has come
up in the context of our China dialog is the concern about
over-capacity. There is clearly over-capacity in the global
steel sector. It is something that China itself has flagged as
an issue that they are concerned about, domestically.
And so, having a dialog with them, with other major steel
manufacturing countries about the situation in the market about
over-capacity is one mechanism that we are exploring to see if
we can make some progress on that issue.
Mr. REED. So it sounds as if they are engaging in that
conversation, and there is a willingness--because I am aware of
the capacity issue, and that is definitely something that was
also referenced in the same steel caucus hearing.
And, with that, it has been a long day, and I have no
further questions. And with that, I yield back, Mr. Chairman.
Chairman CAMP. Well, thank you very much. Again, Ambassador
Froman, thank you for answering every question that the
committee put forward to you in your appearance today. And look
forward to working with you as we move forward on all the
important issues that we have been discussed.
And, with that, this hearing is adjourned.
[Whereupon, at 12:27 p.m., the Committee was adjourned.]
[Submissions for the Record follow:]
American Chemistry Council
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Citizen Trade Policy Commission of Maine
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Doctors Without Borders
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Outdoor Industry Association
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Rubber and Plastic Footwear Manufacturers Association
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The American Council of Life Insurers
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The American Farm Bureau Federation
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The Express Association of America
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U.S. Chamber of Commerce
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MATERIAL SUBMITTED FOR THE RECORD
Questions For The Record:
Representative Dave Reichert
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