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HEARING ON THE PENDING FREE TRADE AGREEMENTS WITH _______________________________________________ HEARING
BEFORE THE COMMITTEE ON WAYS AND MEANS U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED TWELFTH CONGRESS FIRST SESSION January 25, 2011 SERIAL 112-02 Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS |
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WALLY HERGER, California
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SANDER M. LEVIN, Michigan CHARLES B. RANGEL, New York FORTNEY PETE STARK, California JIM MCDERMOTT, Washington JOHN LEWIS, Georgia RICHARD E. NEAL, Massachusetts XAVIER BECERRA, California LLOYD DOGGETT, Texas JOHN B. LARSON, Connecticut EARL BLUMENAUER, Oregon RON KIND, Wisconsin BILL PASCRELL, JR., New Jersey SHELLEY BERKLEY, Nevada JOSEPH CROWLEY, New York |
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JON TRAUB, Staff Director
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C O N T E N T S
Advisory of January 18, 2011 announcing the hearing
WITNESSES
Roy Paulson, President, Paulson Manufacturing Corporation, on behalf of the National Association of Manufacturers
Bob Stallman, President, American Farm Bureau Federation
Michael L. Ducker, Chief Operating Officer and President, International, FedEx Express
William J. Toppeta, President, International, MetLife
Stephen E. Biegun, Corporate Officer and Vice President of International Governmental Affairs, Ford Motor Company
HEARING ON THE PENDING FREE TRADE AGREEMENTS WITH
COLOMBIA, PANAMA, AND SOUTH KOREA AND THE CREATION OF U.S. JOBS
Thursday, January 25, 2011
U.S. House of Representatives,
Committee on Ways and Means,
Washington, D.C.
The committee met, pursuant to notice, at 10:08 a.m., in Room 1100, Longworth House Office Building, Hon. Dave Camp [chairman of the committee] presiding.
[The advisory of the hearing follows:]
Chairman Camp. The committee will now come to order for the previously scheduled hearing on our three pending trade agreements and their job creation benefits.
I would like to welcome all of you to the first trade hearing of the 112th Congress in which we will examine the three pending trade agreements, agreements that were all concluded in 2007, almost 4 years ago.
I also expect to have Ambassador Kirk appear before the committee in the near future to talk about these agreements and our trade agenda.
I would like to take a moment to welcome in particular Ambassador Silva from the Embassy of Colombia, as well as representatives from the Embassies of Panama and the Republic of Korea. I thank you all for attending and for being such strong advocates for these agreements because of the strong ties they will create between our countries.
Given the delay in considering these agreements, I welcomed the President’s announcement last June of a clear timetable for resolving the outstanding issues surrounding the South Korea agreement. Mr. Levin and I worked closely together with stakeholders and the administration to arrive at a compromise that resolved the outstanding auto issues in the U.S.‑South Korea trade agreement. Unfortunately, the administration has not taken the same productive approach to the Colombia and Panama agreements; and I hope the President lays out such a timetable in his address tonight.
I strongly believe that we should consider all three agreements in the next 6 months. This deadline isn’t being driven by politics or posturing. It is driven by the need to create jobs for American workers. The three trade agreements are a sure‑fire way to create American jobs by growing U.S. exports of goods and services and does not require one dime of new government spending.
The President has noted that the South Korea agreement alone will create 70,000 American jobs. However, until Congress passes the agreements, our workers can’t realize these benefits. Continued delay also hinders the ability of American workers, businesses, and farmers to compete in these markets as our competitors move ahead.
Last May, then agriculture Ranking Member Lucas and I released a report documenting how the delay in implementing the Colombian agreement allowed Argentina and Brazil to take market share from U.S. farmers in the Colombian market as they implemented their trade agreement with Colombia. I have just released an updated analysis showing that the ongoing delay has caused U.S. exports to Colombia to decline even further. This updated report also demonstrates that in stark contrast, the existing U.S.‑Peru agreement has resulted in increased U.S. exports and increased market share. If we implement the Colombian agreement, we can enjoy similar gains as we are seeing in the Peruvian market.
Other major economies, including the EU and Canada, have signed or are poised to sign agreements with Colombia, Panama, and South Korea. The EU‑South Korea agreement is slated to enter into force on July 1st of this year. The Canada‑Colombia trade agreement is also expected to enter into force this July. Implementation of their agreements, and continued inaction on our agreements, will result in further missed opportunities to create U.S. jobs. America cannot afford to fall further behind, and by standing still we are doing just that. In these difficult economic times, Congress and the Administration owe it to American workers, businesses, and farmers to take all available steps to increase exports in the jobs they support.
These agreements create new exports and resulting jobs in several ways.
First, they level the playing field for American workers by reducing foreign tariffs on U.S. exports. In fact, we enjoy a manufacturing trade surplus with our trade agreement partners. For some partner countries, the trade agreements have taken us from a deficit before implementation to a surplus afterward. The simple fact is that nearly all imports from Colombia and Panama already enter the United States duty free and U.S. exports to all three countries pay much higher tariffs than exports from those countries to the United States. These agreements would eliminate or substantially lower the tariffs on U.S. exports in all sectors, making our products more competitive.
Second, the agreements remove existing non-tariff barriers and go a long way towards ensuring new barriers do not emerge. The agreements set standards to ensure sanitary and phytosanitary rules in agriculture are not used for protectionist purposes, provide strong protections for intellectual property rights, and encourage greater regulatory harmonization and the use of international standards.
Third, as I have noted, these agreements maintain and improve U.S. competitiveness vis‑a‑vis exporters from other countries. Failure to implement the three pending trade agreements risks putting U.S. exporters at a competitive disadvantage in these markets, costing American jobs and slowing job creation.
Finally, I want to note that it is not just big companies that benefit from these agreements. More than 80 percent of the exporters to each of the three markets are small‑ or medium‑sized businesses with fewer than 500 employees. In many ways, these dynamic businesses and their employees have the most to gain from these agreements and the most to lose if we delay.
I would like to welcome our witnesses, who represent the full spectrum of U.S. agriculture, manufacturing, and services interests, including both large and small businesses; and I look forward to your testimony.
At this time, I will yield to Ranking Member Levin for the purposes of an opening statement.
Mr. Levin. Thank you very much, Mr. Chairman.
While from the outset most Republicans have been calling for immediate passage of all free trade agreements as originally negotiated by President Bush, we have been working hard at fixing them. Our approach on the Democratic side was that each of the FTAs as originally negotiated did not embody a trade policy responsible to the changing dynamic of a globalized economy and to the best interest of the American people. Trade agreements need to be shaped so that as trade expands the benefits are spread more broadly.
The intervening period since the initial negotiation of the FTAs has been for us in the Democratic ranks one of action, not of inaction. It has been an intensive effort to get trade policy right, and it has been working. We changed for the better the Peru FTA before its passage. We have substantially improved the Korea FTA, and we should have in the coming months the implementation language for consideration and approval. There is now the prospect of successfully addressing the tax haven and labor law concerns with the Panama FTA.
With respect to the Colombia agreement, the new Santos administration has now articulated a new approach which provides an opportunity to address the serious concerns ‑‑ and I underline them ‑‑ consistently expressed by us regarding that FTA.
We believe that each trade agreement should be considered on its own merits, not lumped together where key issues are ignored, as some would be willing to do. It was because of our efforts that enforceable worker rights and environmental standards were added to the U.S.‑Peru FTA. As a result, labor conditions are improving in Peru. And while significant work remains to be done to implement and enforce the agreement’s environmental provisions, as a result of that amended FTA Peru has created a new Ministry of Environment, reformed its forestry oversight agency, revised its criminal laws to strengthen penalties for environmental crimes, deployed 3,000 police officers, and created new offices for environmental prosecutors.
The agreement was also revised to balance the need to encourage innovation with the need to provide access for Peruvian citizens to affordable medicines.
Importantly, the Peruvian government made necessary changes to its labor laws before the vote on the FTA, which was then passed by Congress with bipartisan support and signed by the President.
Because of our efforts, the U.S.‑Korea FTA is finally being fixed to open up markets where they were closed and to end one‑way trade. For decades, Korea has employed a unique and ever‑changing regulatory regime to discriminate against our auto imports, while the U.S. market has been open to their goods. As a result, U.S. automakers exported less than 6,000 cars to South Korea in 2009. In contrast, South Korean automakers have been able to use their historically closed markets to finance an aggressive push into the U.S. market, exporting 476,000 cars to the U.S. in 2009. The imbalance is so severe that automotive trade accounts for 75 percent of the $10.6 billion U.S. trade deficit with Korea.
The Republican majority long ago would have simply again accepted a flawed agreement. Fortunately, last year, with the support of Members of Congress, including our chairman, the automakers, and the UAW, the Obama administration negotiated an additional agreement that will provide U.S. automakers and part suppliers with a real opportunity to compete and succeed in the Korean market. With the changes achieved through the additional agreement, the U.S. auto industry, Ford, Chrysler, GM, and the UAW are supporting that agreement.
Because of our efforts, we used the intervening period to address legitimate issues in the Panama FTA. Through the intensive efforts led by Representative Doggett and Senator Levin, the Obama administration successfully concluded a tax information exchange agreement in November, 2010, to address Panama’s status as a tax haven. That agreement still needs to be ratified by Panama.
This administration has also been working to ensure that Panama’s labor laws comply with the FTA obligations, a process we started way back in 2007. Because of our efforts, there are now important labor law changes pending before the Panamanian legislature. If the approach had been followed by those who pushed for the immediate passage of the Panama FTA, we would have failed to address a tax haven country or to improve labor standards in Panama.
A few days ago, I returned from 5 days of fact finding on the ground in Colombia meeting with widely diverse citizen groups and government leaders. I went 20 months ago, and I thought it important to compare conditions then and now. It is clear that the intervening period was important in focusing attention on serious concerns standing in the way of support for the Colombia FTA. Those issues include violence and intimidation in cases involving the exercise of human, political, and labor rights by workers and their leaders, a high level of impunity in such cases, and the failure to reform the legal and administrative structures relating to the exercise of basic international worker rights.
Throughout my discussion, there seemed to be wide agreement that the new Colombian government ‑‑ the new Colombian government ‑‑ was expressing a different approach than its predecessor on these critical concerns. I believe there is now an opportunity for the two governments to work together mutually to achieve real progress on the ground.
In closing, I say to the Republican majority, you may have been willing to press flawed trade agreements, but we were not. We went about fixing Peru, Panama, and Korea. It was time well spent. Instead of criticizing, there should be acknowledgement of the meaningful breakthroughs; and we should be working together to implement the U.S.‑Korea Free Trade Agreement.
I close with this. Today’s hearing is about trade policy and jobs. Yet there are other trade initiatives that have a serious impact on U.S. jobs. Much has been said in recent weeks criticizing House Democrats’ focus in particular on China’s currency manipulation. Well, we focused on it because it matters. China’s undervalued currency has been estimated to cost the U.S. 500,000 to 1.5 million jobs.
According to the NAM ‑‑ and I quote ‑‑ the number one factor affecting their exports is the value of the dollar. I was pleased to work with Chairman Camp last fall on currency, an effort that resulted in majorities of both parties supporting the currency bill. I hope we can continue that effort this year while we also work on China’s other trade‑distorting practices, including its massive subsidies, its failure to enforce intellectual property rights, its discrimination in government procurement, and its indigenous innovation policies. Let me repeat that we must address each trade issue on its own merits and move forward to grow our economy and American jobs and to compete internationally.
Thank you, Mr. Chairman.
Chairman Camp. Thank you.
Today we are joined by five witnesses.
Our first witness will be Roy Paulson, who is President of Paulson Manufacturing Corporation, a small manufacturing business in Temecula, California. Mr. Paulson is also testifying today on behalf of the National Association of Manufacturers, and we welcome you to the committee.
After him, we will hear from Bob Stallman. Mr. Stallman is President of the American Farm Bureau Federation and a rice and cattle producer from Columbus, Texas.
Our third witness will be Michael Ducker, Chief Operating Officer and President, International, at Federal Express.
Fourth, we will hear from William Toppeta, President, International, with MetLife.
And, last, we will hear from Steve Biegun, who is a Corporate Officer and Vice President of International Governmental Affairs at the Ford Motor Company.
We welcome all of you, and we look forward to your testimony. And I would ask that our witnesses keep their testimony to 5 minutes.
Mr. Paulson, your written statement, like those of all of the witnesses, will be made a part of the record; and you are recognized for 5 minutes.
STATEMENT OF ROY PAULSON, PRESIDENT, PAULSON MANUFACTURING CORPORATION, ON BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS
Mr. Paulson. Thank you very much.
Good morning, Chairman Camp, Ranking Member Levin, members of the committee. I am Roy Paulson, President of Paulson Manufacturing; and I am pleased to testify as a member of the board of directors of the National Association of Manufacturers. I have a prepared statement for the record and some brief remarks to make at this time.
Paulson Manufacturing is a manufacturer of safety equipment, specializing in eye and face protection. This is a family business with about 140 employees, yet it is a high‑technology business that utilizes state‑of‑the‑art equipment and modern methods. You have seen our products many times as the face shields worn on firemen’s helmets and the heat‑reflective face shields worn by steelworkers in steel mills. What you have not seen are the many forms of eye and face protection used in so many ways from medical surgery to high technology.
We have an expanding business that is thriving even in the difficult economy. We design and manufacture our products in California with domestic materials and local labor. I am able to compete domestically and abroad with my product line as long as I am selling innovative, cutting‑edge products. The keys are innovation, quality, and customer service.
As I moved into the international markets, I brought along our business philosophy. I discovered that I could successfully sell to most countries with the proper application of our business methods and a large dose of patience. This helped to develop our long‑term relations with our foreign customers, and we have been successful at building our distribution and creating repeat sales in many countries.
Exports are tremendously important to my company. We export to 80 countries, and exports are now one‑fourth of our business. I want to build on that, because markets around the world are growing faster than the domestic U.S. market.
For small business to export more, foreign trade barriers must come down. That can only happen if we get trade agreements that will level the playing field and get rid of these barriers. Tariffs on U.S.‑made products, including my company’s products, are much higher in most foreign markets than corresponding U.S. tariffs on the imports products. When we enter a trade agreement, our barriers drop very little. However, the other countries high tariff barriers drop a lot, as they go to zero. That is why trade agreements are a no‑brainer to me.
I truly don’t understand congressional reluctance, especially since the Commerce Department’s figures show the U.S. has a manufacturing goods trade surplus with our free trade partners. Over the past 3 years, that surplus has accumulated to over $60 billion.
There seems to be a myth in Washington that trade agreements caused the U.S. trade deficit and cost 5 million jobs. Frankly, even spending 5 minutes with the statistics shows that this is just plain wrong.
I am one of those people who hope that Washington will act on facts, not on mythology. One good idea would be for this committee to ask the Commerce Department to brief you on the facts of trade, in fact, brief the entire House.
I hope that you will look more closely at my prepared statement, which has a lot of facts about how these trade agreements are helping manufacturing in America.
Now I would like to talk about my company, Paulson Manufacturing. We sell to all three of the countries where the U.S. has signed free trade agreements that have not yet been passed by Congress. In Panama, I face a 6 percent tariff; in Korea, 8 percent; in Colombia, 20 percent. I could sell a lot more to my customers if I could get my products in duty free, and I could find more customers in those countries. That means my sales would go up. I would gain on my competitors and could even be able to expand my workforce. My nightmare is that my competitors will get free trade agreements first, get in duty free, and I will lose out.
Some people think that trade only benefits large companies. Absolutely untrue. I am here before you as an example, 140 employees and selling to 80 countries around the world.
A lot of smaller companies in the NAM also export. I am on the District Export Council and many other export groups. We all export, and we want to export more. Fully 95 percent of all exporters, including to our free trade partners, are small‑ to medium‑sized businesses. We are all frustrated by this body, and it has been keeping us from expanding our sales and our workforce.
I need those trade agreements, and I want the government to move ahead with the Trans‑Pacific Partnership and open these markets. I want you to also open up Brazil, India, and other markets to me. I want my company and family of employees to grow and prosper. To achieve that, I have to sell to more markets.
Thank you very much for your time and for listening. I am ready to answer your questions at the end of everyone’s remarks.
[The statement of Mr. Paulson follows:]
Chairman Camp. Thank you.
Our next witness will be Bob Stallman. You have 5 minutes, and your written statement will be made a part of the record.
STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN FARM BUREAU FEDERATION
Mr. Stallman. Thank you, Mr. Chairman, Ranking Member Levin, members of the committee. I am Bob Stallman, President of the American Farm Bureau Federation and a rice and cattle producer from Texas. I appreciate the invitation to share the Farm Bureau’s views on the three pending free trade agreements and their benefits to U.S. agriculture.
The Farm Bureau is the Nation’s largest general farm organization, with more than 6 million member families representing producers of nearly every commodity grown or raised commercially in all 50 States and Puerto Rico. We support passage of the Korea, Colombia, and Panama trade agreements with the United States. Combined, these agreements represent almost $3 billion in additional trade for U.S. agricultural producers, but that is only if they are implemented.
The U.S. is facing a proliferation of FTAs, increasing the export potential of our competitors while putting U.S. agriculture at a disadvantage. Due to the administration and Congress’ inaction on these agreements, the debate is no longer simply about generating potential export gains, but it is now about how to prevent the loss of existing export markets.
These trade agreements are not only important to the bottom line of America’s farmers and ranchers. They are important to the economic health of our rural communities and the overall U.S. economy.
The USDA estimates that every billion dollars in agriculture exports supports 9,000 U.S. jobs. There is a long supply chain made up of American workers who get products from the farm gate to our foreign consumers. A decline in our exports means a decline in work for those that are a part of that supply chain. Given the state of our economy, we must do whatever we can to assure we are creating opportunities for work, not taking them away.
The U.S.‑Korea Free Trade Agreement provides a significant opportunity for the U.S. agricultural sector. When the agreement is fully implemented, we estimate export gains to exceed $1.8 billion annually.
Korea has completed an agreement with the European Union which is expected to be implemented by July of 2011. The Korea‑EU FTA in 5 years will eliminate 94 percent of Korea’s tariffs. In contrast, the KORUS would eliminate 94.5 percent of Korea’s tariffs in 3 years of implementation. If the Korea‑EU FTA agreement enters into effect before the KORUS, European exporters will gain a significant competitive advantage over the United States in the Korean market.
Loss of market share in Korea because of U.S. competitors’ preferential access has become a reality for some segments of the U.S. agriculture. Wine consumption has been increasing in Korea. During the 2000 and 2009 period, Chilean market share by value rose from 2.4 percent to 21.5 percent, while the U.S. share fell from 17.1 percent to 10.8 percent. This is believed to be the direct result of the 15 percent import duty eliminated on Chilean wine under the Korea‑Chile Trade Agreement implemented in 2004.
The Colombia Trade Promotion Agreement eliminates Colombian tariffs on U.S. agriculture products, correcting the current imbalance in agricultural trade between our countries created in part by congressional passage and extension of the Andean Trade Preference Act. Our analysis of the agreement suggests gains in exports from this agreement of $815 million.
While U.S. agriculture continues to wait for passage of the agreement, U.S. market share has been slipping in Colombia due to our competitors implementing their own trade agreements. According to the USDA, between 2008 and 2009 we have seen almost a 50 percent drop in our exports, from 1.6 billion to 906 million. According to Colombia’s National Department of Statistics, our peak market share was 46 percent in 2008, while in 2010 it dropped to 21 percent, being taken over by Argentina. In other words, the United States has already blown a major trade opportunity and will need to work hard to ever return to our earlier status.
As a further example, traditionally, the United States has been the top supplier of corn, wheat, and soybeans. In terms of market share, Colombia statistics shows that the U.S. market share went from a peak of 76 percent in 2000 to just 27 percent in 2010, again being taken over by Argentina, with some competition also from Brazil.
Under the Panama agreement, we estimate increased exports for the U.S. agricultural exports to exceed $195 million. Panama has completed a trade agreement with Canada. If this agreement enters into effect before the U.S. agreement, Canadian exporters will gain a significant competitive advantage over the United States for many products we can export.
Mr. Chairman, just to restate, these agreements contain significant export gains for U.S. agriculture that will only be realized by passage and implementation. Conversely, the inaction has proven to result in loss of market share and forfeiture of economic growth here. The U.S. government’s inability to move these agreement benefits our foreign competitors and harms us. We urge that this Congress and the administration support and pass these agreements now and take full advantage of the economic opportunity they offer throughout the United States.
Thank you for the opportunity to share our views.
[The statement of Mr. Stallman follows:]
Chairman Camp. Thank you. Thank you very much.
Mr. Ducker, you are also recognized now for 5 minutes; and your written statement is part of the record as well.
STATEMENT OF MICHAEL L. DUCKER, CHIEF OPERATING OFFICER AND PRESIDENT, INTERNATIONAL, FEDEX EXPRESS
Mr. Ducker. Good morning. Thank you very much, Chairman Camp, Ranking Member Levin, distinguished members of the House Committee on Ways and Means.
I am Mike Ducker. I am the Chief Operating Officer and President, International, for FedEx Express. I also serve as the Chairman of the U.S. Chamber’s International Policy Committee and am a member of its board of directors. The Chamber serves as secretariat for both the U.S.‑Korea FTA Business Coalition and the Latin American Trade Coalition, which represents hundreds of American companies, business, and agricultural organizations and chambers of commerce that support approval of the pending free trade agreements.
As you have heard, I have submitted written testimony for the record, but I am honored to be here today and would like to take just a few moments to discuss our company with the committee.
I represent nearly 300,000 FedEx team members. As I said, I am honored to be here with my fellow panelists to have a discussion with you about how we can pass the trade agreements with Colombia, Panama, and South Korea but, as importantly, how we can work together to position our businesses, our members, our workers, and our communities to thrive in this century in the global economy.
We all share the same priority, igniting economic growth and job creation so we can leave the harmful effects of the recession behind and move forward towards a more prosperous future. Trade has to play a vital role in reaching our shared growth and job creation goals.
The business community welcomed President Obama’s call last year to double U.S. exports within 5 years and the launch of the National Export Initiative, and we all look forward to his comments on trade and passing these trade agreements to enhance U.S. competitiveness at tonight’s State of the Union.
How do we accomplish the bold goal of doubling exports in 5 years? Well, the markets and consumers outside our borders represent 73 percent of the world’s purchasing power, 87 percent of its economic growth, and 95 percent of its consumers. Let me repeat that, 73 percent of the world’s purchasing power, 87 percent of its economic growth, and 95 percent of its consumers. We have to harness these new markets, this growth, and these new customers to lift our economy up and create jobs.
Trade and trade agreements empower businesses of all sizes and their workers. We in the business community must work together, no matter our size, to ensure our suppliers, customers, and business partners can benefit from growth and trade as well.
Our FedEx U.S. operations and our 230,000 American team members support our global express delivery network. Expansion of global trade strengthens FedEx and enables continued growth of our U.S. operations and workforce. As we grow and invest around the world, we create jobs here in the United States. Without global trade, FedEx would be a shadow of our current operations and our domestic U.S. workforce would be dramatically smaller.
But also consider this. As our global FedEx network expands, we purchase new planes, such as our new fleet of Boeing 777 freighters, new trucks, new equipment, supplies, and services. Our growth abroad increases our demand for goods and services from our suppliers and vendors here in the United States, which helps them grow their businesses and create jobs.
We strongly support free trade agreements that create new commercial opportunities for our customers and us. At FedEx, we have seen the results from the free trade agreements currently in force. After implementation, two‑way trade volumes between the United States and its free trade agreement partners increase. Demand for our services to and from those free trade countries increase. Our package volumes increase, and we expand our operations to accommodate that growth. It is really as simple as that.
I joined FedEx in 1975 and started loading packages on small leased jets during the first years of the company when we served only a handful of the cities in the United States. I have grown with the company and worked here in the United States and around the world as their operations have expanded. I have seen firsthand how the global economy has developed, spending much of my career in Europe, the Middle East, and Asia.
Great opportunities are out there around the world for us and our customers and there are great challenges, but we in the private and public sector must act to seize those opportunities and overcome those challenges. For too long, the United States ‑‑
Chairman Camp. I am afraid we are out of time. The remaining part of your statement can be a part of the record, your written statement. But thank you very much for your testimony.
[The statement of Mr. Ducker follows:]
Chairman Camp. Now, Mr. Toppeta will have 5 minutes; and, as with all the other witnesses, your full written statement will be a part of the record of this hearing. Thank you.
STATEMENT OF WILLIAM J. TOPPETA, PRESIDENT, INTERNATIONAL, METLIFE
Mr. Toppeta. Thank you, Mr. Chairman.
My company, MetLife is the premiere global life insurance company, serving more than 90 million customers in over 60 countries. On behalf of MetLife, I offer today our strongest possible support for the FTAs pending with Colombia, Panama, and South Korea.
Let me begin with our own competitive situation overseas.
As an American company doing business in foreign countries, we have certain competitive handicaps which can be corrected by the FTAs. For us and for many in the services industries, the most important challenge in doing business overseas is not tariffs but nontariff barriers that exist in areas such as governmental competition, regulatory restriction, and unlevel playing fields.
Trade agreements are an important vehicle to rectify those nontariff barriers to doing business abroad. Unlike here in the U.S., where our competitors are other private businesses and government is the impartial regulator, in some foreign markets we actually compete against government‑owned or government‑affiliated enterprises. So the foreign government is both our competitor and our regulator. If I may use a baseball analogy, this is like having the umpire playing for the other team.
In FTAs, foreign governments can agree to correct this imbalance. For example, the KORUS FTA will allow U.S. insurers to compete with state‑owned enterprises such as the Korea Post and other government‑affiliated providers under essentially the same regulatory requirements. Korea’s commitments in the KORUS FTA to a number of reforms are intended to level the playing field between the government‑ owned Korea Post and the private sector. These commitments are vital to the growth of MetLife and other U.S. insurers in Korea.
There is another way in which we face competitive disadvantages overseas. That is the case where our competitors from other countries have an FTA, say, with Korea and the U.S. does not. This is a clear and present danger in Korea. Korea has already negotiated an FTA with the European union which is on track to be implemented later this year. As you may know, we have major European competitors. If the Korea‑EU Free Trade Agreement goes into effect this year and KORUS does not, we will be at a competitive disadvantage to European insurers. To use another baseball analogy, it will be as if the Europeans are putting nine players on the field and we can only use six or seven. This disparity can be avoided by passing the KORUS FTA promptly.
My second point is to inform you about how growth of our business in foreign markets, which can be aided by the FTAs, creates and sustains jobs here in the U.S. The fundamental point here is that MetLife as a global life insurance company has businesses in many countries around the world, but we do not export products. Instead, we export competencies and expertise which come largely from the U.S., creating highly skilled, well‑paying jobs right here at home. Let me give you an example.
When we create a new product to offer in Korea, the product development and management are done largely in the U.S. The most highly skilled actuaries, investment professionals, risk managers, and others are here. So as we grow our business internationally we are expanding employment of people in the U.S.; and for each of these experts we employ in the U.S., there is a broad spectrum of U.S.‑based support jobs behind them in areas such as human resources, information technology, and administrative assistance.
I would also make a related point. MetLife as a global company has a highly diversified stream of revenues and earnings. One of the ways in which we are diversified is geographically. This year, more than 30 percent of our top‑line revenues and about 40 percent of our bottom‑line earnings will come from international business. This diversification is important because, as we know, the world’s economies do not always move in lockstep.
Having diversified revenues and earnings from foreign markets allowed MetLife to perform very well during the recent financial crisis and to sustain U.S.‑based jobs of employees supporting our international business. Since the FTAs will enable our growth abroad, they will have a direct and positive impact on creating and sustaining U.S. jobs.
In conclusion, just let me say that American companies are innovative, American workers are highly productive. Given a fair chance, we can compete and win against anybody in the world. It is within your power to put us on a level playing field internationally. By passing these FTAs, you can make it so we don’t have to play against the umpire’s team overseas and you can let us play nine against nine on the foreign field. If you give us that fair chance, if you will unleash us, we can revitalize this economy and put Americans back to work in record numbers. We are asking for your support.
Thank you.
[The statement of Mr. Toppeta follows:]
Chairman Camp. Thank you very much for your testimony.
Mr. Biegun, you now have 5 minutes; and your written statement also is part of the record. Thank you.
STATEMENT OF STEPHEN E. BIEGUN, CORPORATE OFFICER AND VICE PRESIDENT OF INTERNATIONAL GOVERNMENTAL AFFAIRS, FORD MOTOR COMPANY
Mr. Biegun. Thank you, Chairman Camp and Ranking Member Levin and members of the committee for the invitation to share Ford Motor Company’s views today on Panama, Colombia, and Korea. Let me also say it is a real honor as a third‑generation Ford Motor Company employee to represent my company before this distinguished panel today. Thank you.
Ford Motor Company has supported every free trade agreement negotiated by the United States, including the three agreements that are being reviewed by the committee today. I look forward to especially discussing our views during the course of this hearing on the renegotiated 2010 U.S.‑Korea Free Trade Agreement.
Since 2007, Ford has worked diligently to reach today’s position to say with confidence that the U.S.‑Korea Free Trade Agreement will open what has been to date the world’s most closed automotive market. We are now pleased to say that we strongly encourage the Congress to approve this agreement in its current form. Under it, America’s automobile industry will have far greater opportunity to expand the export and sale of American‑made automobiles to Korea.
This was not always the case. In 2007, a deal was originally negotiated that fell far short of opening the Korean market to U.S. auto exports; and, in fact, it would have locked in a one‑sided trade in automobiles, a trade that accounts for 75 percent of the $11 billion United States trade deficit with Korea. This agreement, which hopefully will be before the committee soon, is a significant improvement over the 2007 deal. This outcome would not have happened without the active support and the leadership of the chairman and the ranking member of this committee as well as the tireless efforts of the U.S. trade representative and his team. On behalf of the more than 150,000 men and women who work at Ford Motor Company, I would like to say thank you.
Specifically, improvements have been made in key provisions of the free trade agreement impacting car tariffs, auto safety, environmental standards, taxes, transparencies, and a variety of other issues, which I detail in my written testimony.
We had several strong partners in reaching this outcome, certainly Chrysler and General Motors but also the United Auto Workers; and the results speak for themselves. I cannot recall in recent memory another free trade agreement moving through the Congress with bipartisan support as well as the backing of industry and labor.
And this is a big deal. Korea is an important automotive market, with almost 1.5 million new cars sold every year. Ford has operated in Korea since 1995, selling both Ford and Lincoln brands. Almost all the vehicles we sell here are made here in the United States. Despite the fact that Ford Motor Company today makes cars and trucks that are best in class in safety, fuel efficiency, and quality, in 2010 our total exports were limited to approximately 4,000 vehicles. We look forward under this new agreement to offering the Korean customer a choice of vehicles that has never been available to them before; and we are confident that, given the choice, like consumers around the world, they will choose the best value for the money.
Mr. Chairman, though often overlooked, America’s automobile industry is one of the leading exporters in the American economy. Over the past 5 years, automobiles and auto parts have constituted nearly 9 percent of our total merchandise exports. In 2009 alone, our company exported 270,000 American‑made cars to markets around the world. Including auto components and parts, we exported a total of $9.3 billion from the United States.
We likewise are major importers, sourcing from a global supply chain that stretches across 90 countries and exporting from place of assembly to point of sale nearly half of the 5.2 million vehicles we make worldwide.
We know that trade works. It should therefore not come as a surprise that, as a global company, Ford Motor Company believes that business is best where the trade barriers and tariffs are least. These conditions produce a healthy business climate benefiting all: customers, workers, and businesses.
The latest economic downturn has provided ample illustration that manufacturing matters to American jobs, investment, and economic growth. While U.S. manufacturing took the brunt of the recession, there are now signs that it is leading the way to recovery. Last year, the American economy added manufacturing jobs for the first time in over a decade.
Ford is proud to be at the forefront of American manufacturing’s turnaround. We began our transformation before the recession. We focused on the things that just made sense, return to our core strength, matching capacity to demand, and working with our employees to ensure that Ford not only competes but wins globally. Ford’s turnaround was its own, and now we will all benefit from this success. We recently announced that Ford will add 7,000 new American jobs over the next 2 years. The men and women of Ford Motor Company are working daily both for Ford and the Nation’s recovery.
It has been a difficult and at times contentious effort to get the U.S.‑Korea Free Trade Agreement through. But now we look forward, not back, to combining this agreement with our own transformation to build the best vehicles in America and deliver them around the world, including to Korea. That is what free trade is, and that is what free trade agreements should be about.
Thank you, Mr. Chairman.
[The statement of Mr. Biegun follows:]
Chairman Camp. Thank you very much. Thank you all for your testimony.
At this time, I have a question for all of the panelists here today; and if you could just answer briefly because we are all on the clock here on this.
Will the three agreements ‑‑ Korea, Colombia, and Panama ‑‑ if passed help create jobs here in the United States? And if each of you could answer.
Mr. Paulson. Yes. Thank you very much.
If the three agreements passed, for sure it will create jobs in the United States. I know that, in my own factory, for every $150,000 of sales, we are able to hire another person to the factory; and we not just will be hiring production people but also people that will be in engineering and in the tool building end of the business.
Chairman Camp. All right. Mr. Stallman.
Mr. Stallman. Using our calculation that 9,000 jobs are created by every billion dollars of agricultural exports, these three agreements would add 27,000 jobs for Americans, assuming $3 billion in increased exports. More importantly, passing these three agreements will keep us from losing jobs that will occur when our competitors are out there taking over our markets.
Chairman Camp. That $3 billion is in the agricultural sector? Because I have seen higher numbers for the total exports of all three agreements.
Mr. Stallman. Yes, sir, Mr. Chairman. Strictly for agriculture.
Chairman Camp. Mr. Ducker.
Mr. Ducker. Yes, sir. As I said in my testimony, Mr. Chairman, we have about 300,000 employees worldwide; 230,000 of those are in the United States. The U.S. is by far the largest business; and by harnessing the global market, shifting more into and out of the United States, we add employees here at home. So the benefits of those trade agreements are clear in our case.
Chairman Camp. All right. Thank you.
Mr. Toppeta.
Mr. Toppeta. Yes. I would say in our case the answer is the same.
If I give you my personal experience going back 10 years ago when we were much smaller, had virtually no business outside the United States, we had only a handful of people doing work internationally, and now we are probably at 2,000 or so employees. So the answer is, over that period of time, all because of international growth, we have increased jobs here from close to 0 to 2,000; and I expect that trend would continue.
Chairman Camp. Thank you.
Mr. Biegun.
Mr. Biegun. Mr. Chairman, we do business in all three countries. We have a growing business in all three, and we export U.S.‑made automobiles to all three. And to the extent that all three of these free trade agreements ‑‑ well, the Korea in its renegotiated form going forward ‑‑ all three would definitely help us expand our business, although the Korean market is six times larger than the Colombian market. So that is where the bulk of the opportunity is for us.
Chairman Camp. Thank you.
A huge aspect of the trade debate is the unfair competition we face with China. As the ranking member pointed out in his opening statement, it is indisputable that China unfairly subsidizes its exports, fails to protect U.S. intellectual property, favors production by its own industries, and doesn’t allow its currency to reflect market realities. Our agreement with South Korea would allow us a beachhead in Asia and provide a counterbalance to China there.
We are also seeing a growing influence of China in Latin America. Their reach is extending even to that part of the world, deliberately using all of the tools they have been using in the past to assist their companies in those markets.
My question for each of the panelists and I will start with Mr. Paulson ‑‑ is how will the three pending trade agreements help you compete against China?
Mr. Paulson. Thank you.
For years I used to think I needed to play defense when I was working with foreign markets, and I would look at my prices and I would say I couldn’t compete on items, and I played defense and set up these walls. Well, I changed my mind, and I don’t really like to play defense. I like to play offense.
When I could move into the offensive role and look to sell to these countries instead of worrying about them with what their activities were here in the United States, I found that even in China I do not have a problem selling. They love my products. They clamor for these items, and the issue about these different countries not wanting U.S. goods is just a misnomer. They want our products, and they will pay our prices for quality items.
Chairman Camp. Thank you. Mr. Stallman, just briefly.
Mr. Stallman. Agriculture is in a little bit different situation with China. China has 7 percent of the world’s arable land, over 20 percent of the world’s population. They need to import food. They have moved into a position of being the number two importer of U.S. agricultural products, and so our flow is pretty good. There are specific areas that have created problems in the past in some commodities, but, in general, we view this as being very positive, even establishing a beachhead in Asia and then how that will affect the China market.
Chairman Camp. Thank you.
Mr. Ducker.
Mr. Ducker. Yes, sir.
China is a large and growing part of our global enterprise. We do business in 220 countries and territories. We do think, as Bob said, it is very important to establish the beachhead there because many of the countries in Asia, are the largest trading lanes within Asia. So this beachhead is very important. It helps to put rules around how we trade and is a good, good creation for our business in China as well as the countries that are under consideration here.
Chairman Camp. Thank you.
And Mr. Toppeta.
Mr. Toppeta. Well, I would just give you the example of Korea. I would say Korea is a huge market. It is a trillion dollar economy. It is a fast‑growing economy. It is the eighth largest trading partner for the U.S. And if we don’t fight for that market, then it is clear to me that China and Europe surely will. So it would seem to me that we would be at our best advantage to get the FTA with Korea done so that we can establish our position firmly there.
Chairman Camp. Thank you.
And Mr. Biegun.
Mr. Biegun. Mr. Chairman, I certainly understand the geopolitical argument that you are getting at in relation to China. From a narrow Ford Motor Company perspective, I would say the most important achievement in the Korea Free Trade Agreement was the United States standing firm on principle. It sends a message to the Asian economies across the board that you have to open your markets if you want free trade with us. I think that is beneficial for China and Korea and Japan and many other countries.
Chairman Camp. Thank you. Thank you all very much.
Mr. Levin is recognized for 5 minutes.
Mr. Levin. Thank you.
We very much welcome your testimony. I really don’t think there is any disagreement about the globalization of the economy and the need for us to participate and to compete. The issue is under what standards and whether there are standards that relate to making sure that the benefits of expanded trade are expanded in terms of who benefits in this country in creating jobs and in other countries, for example, helping to develop middle classes there who can buy our goods.
Let me, Mr. Toppeta, ask you a bit of an unfair question. You are sitting next to Mr. Biegun and you very graphically spelled out about the opening of the market for your services, the post owned by the government. If the free trade agreement with Korea had not opened up the market for your services, as Mr. Biegun has said it did not for automotive, would you be supporting the free trade agreement with Korea?
Mr. Toppeta. Well, the answer is, yes, but maybe not as vigorously as I am. And I will give you the example.
Mr. Levin. Even if Korea continued to shut out your services?
Mr. Toppeta. Well, I think you have to look at this in two ways. I think you have to look at this, first of all, from a broader national perspective, right? The question is helping the U.S. to compete better. That is where I think all of us want to start our analysis. And so if we had an agreement in which a lot of our industry, our agriculture would benefit and my company wouldn’t, I would say, sure, I still support a free trade agreement.
Mr. Levin. How about not your company but the services ‑‑ your industry?
Mr. Toppeta. Yeah, I think the same logic applies. I think we want to get the market open. And if we can pry the market open for one sector or two sectors or three sectors, that would be a start. So my answer is I would still support and my company would still support ‑‑ and I will give you the example of Colombia and Panama.
Mr. Levin. Let me ask you about Korea. What if your services represented two‑thirds of the deficit in trade with Korea? Automotive is two‑thirds of the deficit and so, in terms of a closed market, Mr. Biegun has indicated it is the most closed market in the world. So even if your industry represented two‑thirds of the deficit with Korea, you will still say okay?
Mr. Toppeta. Well, I think, sir, it depends on what the rest of the agreement does and what it does for the U.S. economy. You can’t look at everything just from your own narrow perspective. And the point that I was trying to make to you is that, with respect to Colombia and Panama, we weren’t even doing business in Colombia and Panama until November of last year; And we supported the free trade agreements in principle because we thought they were a good idea for our economy.
Mr. Levin. You say the word “narrow”. You talked about nontariff barriers as the most important barrier.
Mr. Toppeta. For my company and my industry.
Mr. Levin. Exactly. And the nontariff barriers in Korea represented two‑thirds of the deficit. We have a major deficit with Korea. All right. Maybe we will leave it at that.
Mr. Paulson, I just want to say I am glad Mr. Camp asked you the question about China. And while your company may be able to benefit from their rules, a lot of companies don’t see it the same way. In many cases, the Chinese say we will let you compete only if you transfer your technology to a partner. In those cases, I think many, many companies in this country and its workers say that is not trade the way it should be. So talking about having a broader perspective, I think as we look at our relationship with China ‑‑ and I favor engaging in expanding trade ‑‑ we need to look at the rules of engagement.
My time is up.
Chairman Camp. Your time has expired. But if you would just like to make a brief comment.
Mr. Paulson. Thank you very much.
It is interesting what you bring up with China. China asked us to bring over the rules and regulations of safety businesses for electrical safety workers to China so they could view those rules and see how they could improve their own circumstances. They didn’t try and copy our product. What they did was trying to learn from us how to protect the workers who are the highly trained electricians. And in this way not only did we export our products but we exported the knowledge of the National Fire Protection Association codes for electrical workers.
Chairman Camp. Thank you.
Mr. Herger is recognized for 5 minutes.
Mr. Herger. Thank you.
Mr. Chairman, this is indeed a critical hearing that has been long overdue. I represent a district with very high unemployment. I know that is characteristic throughout our Nation. So I would like to thank you for making this a priority and for giving us the opportunity to explore how these pending FTAs will provide an immediate boost to our economy and create much‑needed American jobs.
Mr. Stallman, as a member who represents one of the richest agricultural districts in the Nation, one that stands to gain significantly from the tariff reductions included in these agreements for products like almonds, walnuts, and dried plums, I am interested in exploring how increased agriculture export will benefit our local communities and the broader economy.
In your testimony, in answer to several questions, you alluded to a comment in your testimony that the Agriculture Department estimates that every billion dollars in agricultural exports supports 9,000 U.S. jobs. The Farm Bureau estimates that U.S. agriculture exports will increase by almost $3 billion, which would mean 27,000 jobs. Would you provide more detail about how that supply chain works and how additional agricultural exports benefit the broader U.S. economy? And please also provide some insight as to how these exports might be particularly valuable or helpful for small businesses that support our agricultural sector or are part of the supply chain.
Mr. Stallman. Certainly, I will try to do that. The entire chain, the food chain, and ‑‑ starts at the farm gate. And a lot of times people think about agricultural exports only in the context of what is being produced when it leaves the farm gate. Well, the reality is we have transportation workers, processors, packers, longshoremen at the port, sales and marketing employees, administrative and clerical staff for the companies involved. That whole chain that is necessary to move that product from the farm gate to our customer in other countries creates jobs, and it all starts at the local level.
The processing facilities many times, particularly for some of the products that you talked about, are placed at the local level. You have the transportation workers that ship from the local level that probably live there, and they truck or load up the products to be sent on further up the chain.
So this has broad benefits and a broad effect across all of our economy, and those jobs are spread across that entire supply chain.
Mr. Herger. Thank you.
You also discussed in your testimony how exports of Chilean wine into Korea have grown exponentially and clearly have supplanted market share from U.S. wine exporters. You attributed the decline in U.S. exports to the 15 percent duty that was eliminated under the Korea‑Chile trade agreement, but remains in place for U.S. wine exporters. Do you have any other examples of how we have lost market share while others gained by having an agreement in place?
Mr. Stallman. Well, we have examples scattered ‑‑ well, let me start with the Korea agreement. And this is what I fear will happen is that when the EU implements the agreement effective in the summer of this year, their schedule applies to reducing 94 percent of the tariffs over a 5‑year period, while our agreement with Korea, if we get that implemented, we reduce the same amount of tariffs over a 3‑year period. So that gives us a jump, and just like the Chilean wine agreement, any time you have a tariff that is reduced for one country to the detriment of another country that is putting that product in there, your product is at risk. You are going to lose market share. It is happening in Colombia right now with corn and wheat and soybeans.
That will be the continued example that we will see if we don’t get these agreements in place to reduce the tariffs for our products going into those countries.
Mr. Herger. So what you are saying, as I understand it, is that not only if we are not out signing and implementing trade agreements with other countries, we are not just standing still; we are actually losing market share and losing jobs by not participating in these agreements.
Mr. Stallman. Absolutely. And in the past that has not been a problem. We have always looked at moving forward with our trade agreements. Other countries have caught on to this, and they are creating their own free trade agreements with these countries and getting into the markets that we have traditionally had, and for us to sit back and do nothing puts us at a continuing disadvantage.
Mr. Herger. Thank you.
Chairman Camp. The gentleman’s time has expired.
Mr. Johnson is recognized for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman.
Mr. Ducker, in the 3 years before implementation of the U.S.‑Australia agreement, exports from Texas to Australia averaged $800 million a year. And in the 3 years after implementation, they went to $1.3 billion a year, or 66 percent.
And you know ‑‑ and the U.S.‑Chile thing was the same thing. The agreement to ‑‑ exports from Texas to Chile were declining, and since implementation, the exports have increased by 107 percent.
I think the benefits of previous trade agreements are really pretty obvious. And you are all over the world, so can you see changes in the way people conduct business in these countries as compared to exporting from the United States? Are you now seeing exports coming from the rest of the world into these countries that we don’t have agreements with?
Mr. Ducker. Yes, sir, Congressman Johnson. Having lived outside the United States for a long time, at least half of my career, I can unequivocally tell you that not only are other nations taking advantage of the burgeoning global trade, but, as my colleagues have mentioned here, moving rapidly to gain access to these other markets through their trade agreements. And there is no doubt that the numbers that you just mentioned there, as well as some of the numbers that are in my testimony regarding NAFTA, absolutely are indisputable that the world is moving on and, in fact, taking a page out of our playbook about these free trade agreements.
Mr. Johnson. You know, we have got to stop sitting on our hands, don’t we?
Mr. Ducker. We have to move, sir. It is an imperative.
Mr. Johnson. You know, 26 percent of all manufacturing jobs in Texas depend on exports. That is more than one in every four workers. Between 2005 and 2008, the number of manufacturing jobs in Texas dependent on exports increased from around 161,000 to 225,000, an increase of 38 percent.
Mr. Paulson, you rightly note in your testimony that standing still on trade agreements is more accurately described as falling behind. I couldn’t agree more. How has U.S. manufacturing in general been affected by the delay in implementing these three trade agreements?
Mr. Paulson. It is not just an effect with these three countries; it is a vision to the whole world that the United States turned off the sign that says “We are open for business.” We want to turn that sign back on, because if we are stalling out in these agreements, what are we going to stall out next?
Mr. Johnson. Thank you very much. Thank you, Mr. Chairman.
Chairman Camp. Thank you.
Mr. Rangel is recognized for 5 minutes.
Mr. Rangel. Thank you so much, Mr. Chairman, and let me thank all of you for sharing your views with us. While it is true that there are a few Members that would accept any agreement that we might come up with, or there are others that no matter how good the agreement is, that they would be opposed to it. But I think the vast majority of Members, Democrats and Republicans, recognize that we have an excellent opportunity to create jobs, to create competition, to have economic growth, and that I think all of you would agree that having a competitive educational system is important. So I do hope that all of you would send to me what efforts you are making in order to improve the quality of education of all Americans so that indeed we can compete with international workers.
And I think you have to agree, too, that having an educated and healthy workforce is helpful. And I would like to get your views as to what role, if any, you think the United States Government should play in making certain that all of our workers have access to the best health care that is possible in order to be competitive. So I hope that you would share those things with me. I don’t want to take the committee’s time, but I do hope that I do receive some very, very positive things that you are doing.
Let me ask this as it relates to Korea. There are so many reasons why we should support the free trade agreement with Korea. Not only are they are our friends and, as people have pointed out, a largest trading program, but they represent the center of democracy in this part of the world. It is a part, I think, about national security. We have had troops there since I first went in 1950 to Korea, and they are still there after 60 years, and so, therefore, we do have a vested interest in Korea.
I want to know whether anyone sitting at this table would have supported an agreement with Korea that actually singled out our automobile industry for exclusion, where they would accept 6,000 cars and send over half a million cars. It is not just automobiles in Detroit, it is the heart of American manufacturing. Without the changes that I understand have been made, would any of you have supported the Korea FTA? So I ‑‑
Mr. Paulson. Excuse me. I would liked to answer you because you did ask us a question.
Mr. Rangel. I am waiting for an answer, Mr. Paulson.
Mr. Paulson. Certainly.
The Korean FTA has more in it than simply automotives. The NAM, National Association of Manufacturers, has consistently said that an improvement to the Korean FTA in respect to the automotive industry was needed, and as you have seen, the USTR Kirk has done an excellent job of achieving this.
Mr. Rangel. Mr. Paulson, that is a wonderful answer, and I don’t think anyone can challenge it, but my question to you is that if these corrections had not been made in terms of the barriers that Korea has put up to American‑manufactured cars, would you support that agreement, not the one that I am being supportive of today?
Mr. Paulson. I have to say that I was not particularly privy to that.
Mr. Rangel. Okay. You don’t know. Okay.
Let me ask this, then, as it relates to Panama, because we worked on all of these things, and so I am trying to shatter the myth that one party is for trade, and the other party is against trade. I think we have a great agreement with our friends in Panama. But I ask the question would any of you support the Panamanian FTA if you knew that they refused to sign an agreement with us as it relates to them providing a tax haven for billions of dollars from American taxpayers being lost? Would you support the Panamanian agreement knowing this and knowing that our government objected to their failure to sign such a tax exchange ‑‑ information exchange agreement? Would you support that agreement knowing that it had this fault, which I understand now, Mr. Paulson, has been corrected?
Mr. Stallman. Congressman Rangel, we would have. We view trade agreements through the lens of ‑‑ really two lenses: one, what it does for U.S. agriculture; but then more importantly what it does for the economies of the respective countries. Because it is a very simple calculation. As economic growth occurs, and as standards of living increase, that increases opportunities to provide for food ‑‑
Mr. Rangel. I understand that.
Chairman Camp. The gentleman’s time has expired, and at this time I would recognize Mr. Brady for 5 minutes.
Mr. Brady. First, Mr. Chairman, thank you for the timeliness of this hearing. Trade has been locked away in a closet for too long here in Congress. It is appropriate on the day the President will address the Nation on the State of the Union to focus on jobs and competitiveness that we are hearing from leaders in manufacturing, in agriculture, in services, in automobiles, real job creators who are telling us that trade and these pending trade agreements are the answer, are one key component, to creating new U.S. jobs and competitiveness, and making the point, too, that clearly America is falling behind our competitors, is costing us U.S. jobs, and, I think, undermining the credibility as we go forward on the global stage to level the playing field.
I credit the President and USTR for making a very solid agreement even better and clearing the way for passage of that agreement. I think it is important to make distinction between improvement for the sake of passage versus improvement as an excuse for further delays, which is what I see with the Panama and Colombia agreements.
Clearly Panama, in the 4 years since the agreement has been signed, has literally met every request that this Congress and White House, frankly, could dream of, not only incorporating the bipartisan May 10th agreement, but also passing tax and labor laws to meet, every request from the U.S. Government. Panama is ready to go. We have the votes to pass it tomorrow. It is time to open that market. No more excuses.
Colombia is the same. Colombia continues to make dramatic improvements in human rights, labor rights, in protecting labor leaders from violence, and protecting and creating rule of law in their country. In fact, the independent organizations looking at Colombia, the International Labor Organization, recognizes the improvements Colombia has made by removing Colombia from its labor watch list. The U.N. High Commission for Human Rights has cited Colombia’s improvements. The European Union’s latest report on human rights acknowledged the evident reduction of cases of violence. And we have bipartisan support from people like Senator Max Baucus, chairman of the Senate Finance Committee.
Colombia is making remarkable progress, and I think the new government is not a new opportunity for progress, but the continuation of the same opportunity for progress and, unless we move, the same opportunities for harm for our U.S. workers.
So I guess my question today with competitiveness as the issue, from a jobs perspective, from a competitiveness perspective, is it time, in your opinion, to move these three pending agreements, and does the failure to move undermine our competitiveness as a country? Mr. Paulson?
Mr. Paulson. Thank you.
Yes, if we don’t move, as I said previously, it shows the world that we are not open for business in this country. But if we do move, and we do it quickly and appropriately, we will see that there will be more and more business that will come here to the United States not just from these trade agreements, but from our other trading partners.
Thank you.
Mr. Stallman. Absolutely we need to move forward. If we don’t, we will be at a competitive disadvantage.
Let me make one point about Colombia because I don’t think it has been talked about. People want to level the trade playing field. Our Members want to do that. You hear that continually. This Congress has passed the Andean Trade Preferences Act and renewed it. That gives them access to our markets. By them reducing tariffs when they already have access to our markets, we are leveling the playing field, and that is what the Colombia agreement is about for American agriculture.
Mr. Brady. Two‑way trade, not merely one‑way trade.
Mr. Stallman. Absolutely.
Mr. Brady. Mr. Ducker?
Mr. Ducker. Yes, sir, Mr. Congressman, it is time to move. We fly airplanes into all three of these countries. I have been to Colombia several different times and note, as you do, the improvements that have been made in that environment. And as my colleague states, some of the tariffs that exist on American exporters today into Colombia in particular would be eliminated as a result of this agreement.
Others are moving rapidly to create their own agreements with these countries, and I do believe it is urgent that we move and pass these free trade agreements to the benefit of our workers here.
Mr. Brady. Mr. Toppeta?
Mr. Toppeta. I agree. As I said in my testimony, we support all three.
Mr. Brady. Thank you.
Mr. Biegun.
Mr. Biegun. Mr. Brady, we support all three agreements, and we are confident that the committee will find a way to move forward to get all three through.
Mr. Brady. Thank you, Mr. Chairman.
Chairman Camp. The gentleman’s time has expired.
Mr. Stark is recognized for 5 minutes.
Mr. Stark. Thank you, Mr. Chairman. And I want to thank the panel for enlightening us today.
I would like to, as the chairman has, just go down the list with you and say while I am encouraged by the idea of free trade agreements, what are the pitfalls? What do we want to watch out for? It can’t be all 100 percent in our favor. Ford Motor has an issue. I am sure that small manufacturers do. What need we ‑‑ you have all outlined for us the benefits. What, if any, very quickly, are the dangers we have to watch out for?
Mr. Paulson. Well, I think you just properly described the free market, because there is always this situation that there is a push‑me, pull‑you circumstance that occurs, and the cream will rise to the top, and that will be us.
Mr. Stark. Ag?
Mr. Stallman. You always have to watch out for the details of access basically, and I will give you an example with Korea. Rice as a commodity.
Mr. Stark. That is important to California.
Mr. Stallman. That is why I mentioned it. That was taken off the table during negotiations. The Koreans are extremely sensitive about that. The reality is that is not going to be a huge market for us. We have much better markets elsewhere. But when you look at the package ‑‑ and that is what we do as a general farm organization ‑‑ when you look at the package, it is positive for U.S. agriculture.
Mr. Stark. Beef?
Mr. Stallman. The beef issue, we are getting beef back into that market. We are still encouraging the Koreans to adhere to international standards. They have continually said that when their consumer confidence increases, they will. But beef is flowing back into that market at a rapid rate from the U.S.
Mr. Ducker. Yes, sir, Congressman, I think one of the things that you have to be careful of in the trade agreements is a balance, and striking the proper balance. That is why it is a negotiation. Not everybody is going to win on every point, but as long as the broader perspective is maintained and we get good balance in the free trade agreements, then I think the country is best served.
Mr. Stark. You are suggesting that we win in one free trade agreement but maybe give up in the other, and the balance ends up ‑‑
Mr. Ducker. I am suggesting that in all of those free trade agreements there is a balance in a number of different technical points. So in one agreement there may be agricultural provisions that need assistance; in others there may be service agreements. But I am saying the balance on both sides.
Mr. Stark. Could you give me an example of a State law or regulation that hurts the life insurance business? Specific?
Mr. Toppeta. Sorry, Congressman? A State law in the U.S.?
Mr. Stark. No, no, in Korea or wherever.
Mr. Toppeta. That hurts? Oh, yeah. I can give you lots of examples of that. I think that in the current situation in Korea, one of the things ‑‑ we take for granted here in the U.S. that you know what the rules are. You know what the law says. You know what the regulations are.
In Korea, we are frequently subject to what I would call “desk drawer” rules, which means the regulator has got something in his desk drawer, you don’t know what it is, and at the appropriate moment after you have done something, he pulls it out and says, oh, by the way, this is the rule.
Notice and comment provisions, due process provisions are extremely important. They are actually in this agreement, so I think that is a plus for us. But right now there are a number of these things which regulatory transparency is a big issue for us in Korea.
The other thing I would say, you asked a question about things to watch out for. I think the big thing to watch out for in all agreements are the follow‑throughs. I agree with Mike that, you know, in any agreement you are going give something, and you are going to get something, but once you get commitments, you have to make sure that there is a follow‑through. Again, in the KORUS agreement we have established an insurance working group between the two countries to work out these difference.
Mr. Stark. Can their life insurance companies sell in our country?
Mr. Toppeta. Yes, they can under the agreement.
Mr. Stark. Thank you.
Mr. Biegun. Mr. Stark, in the automobile sector, tariffs generally ‑‑ except in exceptional cases, tariffs are not the barrier to imports. It is the nontariff barriers, The regulatory differences often created specifically to impede imports. So you have to build in the market to that standard. So in the FTAs that is the fine print that we really have to spend a lot of time looking over.
Mr. Stark. You will have to explain to me later what a third of a car is.
Thank you, Mr. Chairman.
Chairman Camp. The gentleman’s time has expired.
Mr. Nunes is recognized for 5 minutes.
Mr. Nunes. Thank you, Mr. Chairman.
Mr. Chairman, I do want to remind the committee that it has been 4 years these trade agreements have been pending, more or less. We had President Bush, who was willing to sign free trade agreements for the first 2 years. The last 2 years, we had President Obama and the Democratic Congress, who for the most part has said he supports moving these agreements; however, we have not seen the agreements move. And despite the sluggishness in our economy, despite all of these fine gentlemen here saying they would benefit from these agreements, we still have yet to see any real movement.
This President’s National Export Initiative ‑‑ and I know we politicians love to come up with these wonderful names ‑‑ in 2009, we had $1 trillion in total trade in this country. This initiative set out by the President wants to double U.S. exports. And I guess my question to the panel ‑‑ and this is open to anyone who wants to answer it ‑‑ is this a reasonable expectation to be able to double our exports in the near term, to go from $1 trillion to $2 trillion? And how far down the line would these three agreements get us? I guess we will go to Mr. Paulson first.
Mr. Paulson. Thank you.
I really do feel that the NEI is an achievable goal for our country, and it also puts us into the position that we are striving towards that goal instead of just letting things happen as they may occur over time.
Mr. Nunes. But, Mr. Paulson, can we get there by not passing trade agreements?
Mr. Paulson. We must pass the trade agreements, and work towards the trans‑Pacific agreement, and work towards other trade agreements, not just these three. We have to go beyond that. You can see how other countries, like the cooperation of the EU, is working to establish trade agreements. We have to do the same type of work.
Mr. Nunes. Mr. Stallman.
Mr. Stallman. Well, I don’t think we can do it without passing agreements and negotiating new agreements, reducing tariff barriers and nontariff barriers. But I am encouraged. I think we can accomplish the goal. Agriculture already has very significant exports. But if you look at the numbers between 2010 and 2011, we are projecting basically a 20 percent increase in agricultural exports, and as world demand increases, I think that number will continue to go up. So if we keep working at it, keep enforcing current trade agreements, I think we can do it.
Mr. Ducker. Congressman Nunes, the answer is unequivocally yes, that we can achieve that initiative. If you look at the 5 years between 2003 and 2008, we increased our exports by 79 percent. The global economy is expanding. People want to do business with the U.S. And I would also point out that during that 5‑year period, that we implemented free trade agreements with 10 countries, and we also saw earlier agreements like NAFTA attain full implementation.
So I think the lesson is we can do it, yes. We cannot do it without free trade agreements and an opening up of our trade platform.
Mr. Nunes. Mr. Toppeta.
Mr. Toppeta. Yes, I believe we can do it with the FTAs. I think it is a matter of record that the first letter sent from the President’s Export Council to the President himself was in support of the three FTAs. So I think the President’s Export Council believes that we need to get the free trade agreements in order to do this.
The other point I would make is that I think you can’t really do it without services. And the reason I would emphasize that is services are 75 percent of the U.S. GDP, and they are 40 percent of our exports. And I think that tells a big story. There is a huge opportunity to increase our exports of services.
Mr. Nunes. Mr. Biegun.
Mr. Biegun. Yes, sir, I agree with what the other witnesses have said, and I would add the emphasis of quality agreements. So the renegotiated Korea Free Trade Agreement does offer us this opportunity, in our estimation. But it is a total effort. It is also enforcement. It is competitiveness of the economy. And, frankly, the lion’s share of the responsibility is ours, as leaders in our companies, to be able to build the highest quality, the most desirable products and get out there in the world and sell them. And is that is our job, and we are willing to take that on.
Mr. Nunes. Mr. Stallman, I am going to submit a question about nontariff barriers to trade specifically dealing with agriculture. As you know, some agricultural products do very well, especially when those countries need those products like corn and wheat and other products. And then when it comes to certain types of fruits and vegetables, they tend to put up nontariff barriers to trade. So I will address that in writing.
Chairman Camp. Mr. Tiberi is recognized.
Mr. Tiberi. Thank you, Mr. Chairman.
I thank you all for being here. I come from Ohio. We have lost 400,000 jobs over the last 4 years in Ohio, many in manufacturing, not all manufacturing.
But in your testimony, Mr. Paulson, you express a number of different things, and one was frustration with this body, and one was talking about the mythology of trade. I do want to remind you that some of us up here have supported free trade. Some of us have supported more trade and are just as frustrated, but from a different perspective, as well. Let me give that to all of you.
As part of the President’s Export Council, as was just mentioned ‑‑ Mr. Reichert and I serve on that ‑‑ a year ago the President talked about doubling exports in the next 5 years. This is the same President who, as a candidate in Ohio, less than a year earlier campaigned in Ohio about repealing NAFTA. Now, in Ohio, NAFTA means also trade with Canada, which has created a whole lot of jobs for Ohioans. Now, that is a big change, from repealing NAFTA to doubling exports, our largest trading partner being Canada in Ohio, in the next 5 years.
In the fall of 2010, after the President, before the export council, talked about doubling exports, we saw a record number of advertising by a lot of different people who were antitrade, including the Democrat Congressional Committee, Democratic Governors Association, labor unions, millions and millions of dollars. I had conversations with your association in Ohio, your association in Ohio, the Chamber in Ohio, a number of different folks who say trade is good, and not one, not one, zero associations, zero employers, did anything to counter the millions of dollars in negative advertising on trade.
And this has been building over years, and 2010 saw the record. What I would say to all of them is if this is so good, why aren’t you countering to the American people, to the Ohioans in this case, why trade is good? When you open a new plant and say to me it is because of exports, why aren’t you calling the local TV stations then and saying these 100 jobs are because of the trade agreement with CAFTA; these 25 additional jobs are because of what we are doing because of NAFTA or whatever else it is?
There has never been an answer, yes, we have done that; yes, we are educating the public. So my question for you, Mr. Paulson, and for the entire panel is, number one, why are your associations ‑‑ I understand you as public companies may have other things to do, but you are a board member of NAM ‑‑ why aren’t you more engaged in communicating to the public the benefits of trade? It is great that you are here today, but if this is so good, why are all of these associations not doing what the protectionist side does in saying this is good for the American economy, this is good for the American worker, this creates jobs? Why aren’t you doing that?
And when you expand ‑‑ because you all said if these three trade agreements pass, we will have more jobs in America ‑‑ are you going to put out a press release saying that these jobs are directly responsible to this trade agreement?
And number two, are you communicating with your employees that trade is good?
I would like to hear from all of the gentlemen.
Mr. Paulson. I will try to be quick. First of all, if you go onto export.gov Web site, you will see that I am on it promoting trade. On the U.S. Chamber Web site, Paulson Manufacturing is listed as Faces of Trade for California. And on NAM, we have been doing one heck of a job of trying to communicate the advantages of trade.
Mr. Tiberi. Zero TV ads, sir. Nobody in downtown Columbus is seeing it.
Mr. Paulson. In Ohio, having just been there visiting my customers, I went into one of my customers that works with me over there. I sell to him my products, and he says to me 13 to 30 percent of the products I ship to him he reexports with value‑added products, sewn goods in that particular case. And that fellow needs a new factory because he has no room in his factory anymore because he has got so many people.
Mr. Stallman. We don’t have the resources to do national TV advertising campaigns, but we are very active in editorials, press conferences, news releases, and not only at the national level. That spreads down to our State and local levels. I personally try to get editorials in major newspapers around the country. So we have been very active. We have a complete educational campaign called Trade Matters, which is once again spread out around the country through our grass‑roots network.
I think we are fully engaged. And I don’t know what to say about TV advertising given today’s media and communications systems as they exist. I am not sure that national TV advertising necessarily is the sole answer to this educational issue.
Chairman Camp. The time has expired, but if the remaining three would just give a quick answer, we will move on.
Mr. Ducker. Yes, sir, I will be very quick.
We are committed to educating our workers and our customers. Our Web site blogs extol the virtues of global trade. Our relationship with the Commerce Department that has been ongoing for many years, helps small and medium enterprises to find new export markets. And our Faces of Trade program, which was just mentioned, with the Chamber. So there are a number of activities there. And even in our global advertising, it takes a particularly global tone about trade and the benefits of that to our viewers. But we don’t do major campaign ads about trade.
Chairman Camp. Mr. Toppeta.
Mr. Toppeta. I would second what Mike has just said in terms of what we have done. We have done internal communication with our own employees.
But to your point, I certainly would concede that we could do a better job of communicating with the public on these kinds of issues.
Mr. Biegun. Congressman, we love trade. We sell trade. We benefit from trade. When we launched our 2011 Ford Explorer, the 2010 truck of the year, the central message was this vehicle is going to be exported to 90 markets around the world. It created 1,200 new jobs in a Chicago assembly plant, 600 supplier jobs in Indiana, Ohio and Michigan. And it is an exciting opportunity for us, and as we see the successes from this renegotiated Korea Free Trade Agreement, we are looking forward to sharing those not only with the committee and the Congress, but also with our partners in the UAW to show that quality trade agreements can work for America.
Chairman Camp. Mr. McDermott is recognized.
Mr. McDermott. Thank you, Mr. Chairman.
I have sat on this committee since 1991, beginning with NAFTA and the World Trade Organization and China accession. I have listened to panels like there over and over again, and I have heard promises, and we saw side letters on NAFTA and other things.
I want to ask a simple question of all five of you. Is there any problem you have with taking the time to negotiate labor and environmental provisions in these trade agreements? Is that something that you think was a useful thing to do?
Mr. Paulson. Thank you for the question. The NAM’s point of view is that social portions of the trade agreements should not be part of the trade agreements, but should focus more on the trade issues that are associated. But if I may please add in, don’t forget that our influences of working with these countries on a business‑to‑business value or business‑to‑business circumstance will have a huge change within these countries over a period of time, because while you are our Representatives, when we go into the field, we are the representatives of the United States.
Mr. Stallman. We have much the same view, that trade agreements need to be focused on economics because of the benefits that that brings and also the increased standard of living. The increased standard of living, you reduce political strife and improve labor conditions. But we have accepted and probably think it is a good idea that in agreements that countries should state that they will adhere to international standards and international conventions, which is the level at which we think it is appropriate for labor and environmental agreements to be included.
Mr. Ducker. Very similarly, as I said a little bit earlier, there should be balance in the trade agreements. If there is time that needs to be taken to balance some of those agreements, yes. But the bulk of the agreements should be on the economic benefits of free trade on both sides. And so we have had, as I think one of the Members pointed out, a 4‑year hiatus in terms of moving some of these agreements forward.
Mr. Toppeta. I would echo what my colleagues have said. I think again Mike is right. It is a question of balance. You do have to address concerns about worker protection and environment. The question for us would be how long does that take to accomplish, and what is the balancing act in terms of what may be lost in other areas during that process?
Mr. Biegun. We, too, support as my colleagues here on the panel do, I want to single out the Congress for its ability to achieve an agreement just a few years ago, a bipartisan agreement with the administration and the Congress, to pursue this exact angle. But I should also say that it is not by virtue of agreements alone, but as a global company and for reputational reasons, we also strive to provide those labor protections and environmental standards on an equal basis worldwide regardless of whether or not they were required in the free trade agreement.
Mr. McDermott. It strikes me that none of you said we should have just taken the Bush “slam, bam, thank you, Ma’am” agreements and pass them. You said you thought it was useful that we waited and worked out some of these problems. Is that a fair characterization? You all would have passed the Bush ones as they came out of the White House without any consultation with anybody in the Congress and passed them immediately? That is basically what you would say, right?
Mr. Paulson. I wouldn’t want you to put words in my mouth, but I would say that the agreements that were worked out with the previous administration were certainly striving towards a goal that would then come to this panel for review.
Mr. Stallman. We are on record as supporting those agreements as passed, and we were involved in the negotiations of those, working with our trade representative’s office. And when they were completed, and we did our analysis, we supported them.
Mr. Ducker. As did FedEx support those agreements in the past. And I think there is a certain question of timing in this. Many of the ‑‑ it is 4 years hence now, and countries are roaring ahead that are not the United States with free trade agreements around the rest of the world.
Mr. McDermott. I am going to interrupt because my time is just about up. It strikes me that some people think that these agreements for labor and environment on these are the only ones they will ever be on, and that in the future they won’t be considered. But I don’t hear anybody here saying that this is of legitimate concern to have about every trade agreement, no matter which ones we make in the future.
Thank you, Mr. Chairman.
Chairman Camp. Thank you.
Mr. Davis is recognized.
Mr. Davis. Thank you, Mr. Chairman. I want to briefly echo a comment Mr. Tiberi made regarding the communication at the grass‑roots level. I would have to say personally, also living in the Ohio Valley, the business community in general, and NAM specifically, were absent from the critical political discussions.
The reason I bring that up is we get into this constant battle ‑‑ in fact, I was told once by a senior NAM staffer that NAM is not a political organization, to which I responded, how do you want to get your policy done?
That brings me to the crux of this. We have a much bigger stake in these free trade agreements than simply doing business, than simply creating jobs. There is a huge national security and international security component to this, particularly with the Latin American agreements with Colombia and with Panama. When I think of Hugo Chavez aiding and abetting terrorist activity in his own country, dealing with direct threats to Colombia, as well as trying to destabilize the Latin American republics in Central America; Evo Morales in Bolivia; Rafael Correa in Ecuador, among others, dominate this political landscape.
These trade agreements largely keep us out. And the reason that I bring up the issue of communication, not preaching to the choir, Web site to employees who obviously know that their goods are going overseas doesn’t tell the person one block away. And I see this in my manufacturingcentric district all the time.
Here is the real question: I was flabbergasted by the irony a couple of years ago when labor leaders from Colombia came here to meet with their brethren, labor leaders in the United States, as well as with the then majority leadership in the House, pleading for the signature on the Colombia Free Trade Agreement. And I guess the question that concerns me here is they were turned down by the people that said they were fighting for their interests, and it became a matter of raw politics where in many ways I think we squandered a lot of opportunity.
Here is my question: In light of this strategic interest that spans not only our businesses, but our ability to protect those and our friends, will the failure of these agreements precipitate a longer and much bigger setback for the United States? I open that to any participant.
Mr. Stallman. We think it will, because is it will send a message. It will send the wrong message, as my colleague says, that we are not open for business. It will send the message that, well, you may want to engage in negotiation with us, but at the end of the day, once we agree that we have an agreement, what are you going to do to pass it? Are we going to put our gives on the table, if you will, out there where we have to take political heat in terms of what the other countries are thinking, and then the U.S. takes it back, and the agreements are not passed? And when you are involved in trade negotiations and know trade negotiators, that sends a real message.
Mr. Ducker. Yes, sir, Congressman Davis. I would agree with my colleagues on the open‑and‑ready‑for‑business piece is a very important part of this. I have been to Geneva many times meeting with the trade delegations of the WTO, and always I am struck by the fact that they want American leadership in terms of the negotiations and moving things forward. And I believe establishing that leadership and reinvigorating our trade agenda is very important for our country and the world writ large.
Mr. Davis. Following on a point, FedEx is kind of at the tip of the spear with where you take and pick up many of the parcels that are in transit. Do you feel that this lack of absence on our part of activating these free trade agreements would, in fact, cause a significant setback to the larger interests of the country besides business?
Mr. Ducker. Yes, sir, I do. And I would point out that several of my colleagues have talked about the global supply chain. Today’s business has changed so radically. Really if you have the Internet and FedEx to deliver to almost anywhere in the world, you can be in business. That helps small business. That helps innovation. That helps entrepreneurship. And frankly speaking, removing trade barriers, whether they are tariff or nontariff, around the world puts people in business. And I think it is very helpful to move the trade agenda forward on a positive basis.
Mr. Davis. Your actuarial analysis, Mr. Toppeta?
Mr. Toppeta. What I would say is this: The country of these three that I know the best is Korea. I have been working with the Korean market for the last 20 years, and that is a strategically very important country for the United States. I don’t think there is anybody who would debate that. I can tell you that our friends in Korea, the Korean Government, will be very disappointed, very disappointed, if we can’t make this free trade agreement happen, and I think that will hurt us.
Mr. Biegun. Certainly we are not oblivious to the geopolitical considerations in these free trade agreements. All three countries are good friends of the United States of America, and every effort should be made to find a way forward. But I am also encouraged that, in fact, we are on the cusp of moving forward with one of the agreements, the Korean Free Trade Agreement, that through a good process in this committee has produced a good outcome. So we want to encourage the committee along these lines. We think that it produces a good outcome.
Chairman Camp. Thank you.
Mr. Lewis from Georgia is recognized.
Mr. Lewis. Thank you very much, Mr. Chairman. And I thank the members of the panel for being here.
Mr. Biegun, I have two brothers that worked for Ford for many, many years in Detroit, hosts of other relatives, and many are retired. I want to thank you for your leadership of Ford and for all that you do. But I want to ask you a simple question. Do you think it is more important to rush to get an agreement signed into law, or is it better to take our time and try to get it right?
Mr. Biegun. Thank you, Mr. Lewis, and thank you for your brothers’ service to the company.
Obviously our track record speaks for itself. We fought for 3 years to get the Korea Free Trade Agreement right, and we felt that was critically important to the people of Michigan and to the people of the Ford Motor Company on a global basis, and also to the principle of free trade. Free trade agreements should open trade between markets.
But again, as I said a moment ago, we are quite encouraged by the outcome, that through a thorough effort, through the leadership of the members of this committee, we got to that point.
So, yes, we should get them right. There is a balance in getting them right, and getting them through, and getting them on a timely basis, but the committee in the recent past has, I think, demonstrated the right formula for that, and I encourage that to continue.
Mr. Lewis. I want to go back for a moment to the question that Mr. McDermott raised. Do you think that ‑‑ and I was somewhat not necessarily disturbed, but the way some of you responded. You are not suggesting that we have a double standard when it comes to trade; that we have one standard in America and one standard abroad? Do you believe or feel that trade agreements should be a reflection of the core values that we have as a Nation and as a people?
Mr. Paulson. I would like to answer that in the sense of that as these trade agreements have lingered and laid about, we have had a lot of opportunities to second‑guess the hard work that was put in to develop these.
I suggest that the stakeholders such as yourself, Mr. Lewis, would be involved with the new trade agreement formation right at the beginning so that you can form your ideas and bring those in with our U.S. Trade Representative so he knows how to focus his direction, and not look back so much on we could have, would have, should have. Let us move forward with new ideas.
Mr. Levin. Would the gentleman yield?
Mr. Lewis. Yes.
Mr. Levin. I just want to tell you, Mr. Paulson, we actively engaged the USTR on these issues in the previous administration, and there was simply a disagreement whether core labor standards and international environmental standards should be in trade agreements.
It wasn’t the lack of engagement on our part, and as soon as we had the power to make it happen, it happened. It is true in Peru, and it is true in Korea. The previous administration and the Korean Government would simply not negotiate changes to open up their market, the most closed automotive market in the world.
We were engaged endlessly, as we have been relating to conditions in Colombia. It is not a lack of engagement; it was a lack of willingness on the part of the previous administration to tackle these issues. The Korean Minister told Mr. Rangel and me, we will not discuss. Then we had a new administration that said, in order for that agreement to move, you have to open up your market and have two‑way trade. And if you gentlemen believe in two‑way trade, and I hope you do, and standards as reflecting American values, remember we have been trying to bring that about. With Korea it finally, I think, is happening. And to simply say you balance, we don’t want to support imbalanced trade agreements in terms of two‑way trade or in terms of basic international standards on worker rights and the environment.
Mr. Brady. Will the gentleman yield?
Mr. Lewis. Yes.
Mr. Brady. I was just going to make a point that I really think the breakthroughs on these two agreements, Panama and Colombia, came several years ago when Republicans and Democrats in Congress sat down together and came forward with a May 10th agreement that addressed issues like labor rights, environment. And the result, Colombia has adopted eight of the ILO conventions, six more than the United States itself has adopted.
Mr. Lewis. I take back my time. And ‑‑
Chairman Camp. The time has expired.
Mr. Levin. That is just not ‑‑
Chairman Camp. I would just say I am not sure that the characterization of the back and forth is really particularly helpful to the debate here, because, as Mr. Brady pointed out, there is a May 10th agreement. And frankly, the real effort on Korea occurred after November, the intense discussions. The President made the announcement in July or June, but the real effort occurred after November.
But at this time I would yield to Mr. Reichert for 5 minutes.
Mr. Reichert. Thank you, Mr. Chairman.
I will just mention briefly that I also am from the State of Washington, as is Mr. McDermott. Unlike Mr. McDermott, however, I have only been on this committee for 2 years, and I have been waiting for a hearing on trade agreements.
Mr. Reichert. I am pleased to have you here today, and excited about having our first trade hearing, and am looking forward to Korea, Colombia and Panama all being brought to the House floor for our votes.
As you can see it, if we work together, we can get this done. And you have a responsibility, as has been mentioned, and each of us here at the dais have our responsibilities, and hopefully together, Democrats, Republicans and the community in the business world out there across the country, can all work together to accomplish our goals of creating more jobs and spurring this economy on.
And one statistic that I want to refer to that was mentioned in the panel is this doubling export initiative. As was mentioned, Mr. Tiberi and myself are members of the President’s Export Commission. We want to double exports, but at the same time if you look at the figures, the last time we did that was between 1995 and 2007, and, again, there were nine trade agreements that were passed during that period of time, I think, that made that possible. So I think it is absolutely critical, and I think everyone in the hearing today and everyone in this room and every-one of us sitting here knows it is absolutely critical, that we pass these agreements, we have fair agreements and move forward with these agreements to create jobs. Not only at an economic level is it important, but also as we look at our security across the world.
So I really want to focus on what we lose as we have languished somewhat. And specific to the Korean agreement, we know that the EU and Korea has an agreement that will take effect on July 1st, and here we sit. If you could explain ‑‑ and any one of the panel members, please ‑‑ what will the losses be as you look forward to our inability to ‑‑ and what have your losses been ‑‑ in jobs, in dollars, in the economy here in the United States as we have not been able to pass these agreements, and other countries have moved forward with their agreements, and we are losing market share? Mr. Ducker or anyone who would like to respond to that.
Mr. Paulson. Thank you.
The International Trade Commission has estimated for the 3 agreements, 13 billion in new U.S. exports. So if we divide that, considering that Korea is the largest of these, there will be a huge amount of loss and jobs that will occur. It also gives an opportunity in the case of the EU to enter in in the sense of that ‑‑ and I often use standards, and actually standards for employees’ safety and health. They will bring in these EU standards, which are in my business, very critical, and then we will be having to fight against those standards versus, for example, the steel industry that is begging for our products in Korea. So it will be a change of focus aimed at looking towards Europe as opposed to looking towards the United States.
Mr. Reichert. Mr. Ducker, you mentioned the Chamber of Commerce numbers of losing 380,000 jobs and $40 billion worth of business. Specifically how does that affect us in a negative way as we look forward into the future as these agreements are not made and other countries are moving forward?
Mr. Ducker. That is a widely used model, but the chamber did, in fact, estimate 380,000 jobs, 40 billion lost. And frankly we operate in a fiercely competitive world, and the industrial strength of other countries is growing, and they are aggressively pursuing trade agreements to expand to the economic benefit of their workers and their populations, the benefits of free trade.
Mr. Reichert. So it means fewer products sold across the country because other countries are selling their products, and we can’t sell the cars, we can’t sell ‑‑
Mr. Ducker. Absolutely, sir. It is, as I said, fiercely competitive, and American products do have alternatives manufactured in other places. And a lot of what has been discussed in terms of speed in these trade agreements, FedEx is in the speed and reliability business. So we think there has to be balance, but due speed with passing free trade agreements and moving the trade agenda forward because others are not standing still.
Mr. Reichert. Thank you, Mr. Chairman.
Chairman Camp. Thank you.
Mr. Boustany is recognized.
Mr. Boustany. Thank you, Mr. Chairman. Thank you for holding this hearing, and I look forward to many more hearings on trade policy as we go forward.
Over the past 2 years, the Secretary of State, Hillary Clinton, has traveled around the globe and based our foreign policy on three pillars: diplomacy, developmental aid and defense. It has now become glaringly apparent that we are missing something, and it is a trade agenda, and the failure to move forward on these three agreements puts American prestige, American leverage, American credibility at stake, at risk. And nothing short of American competitiveness is really the issue here.
Now, speaking of American competitiveness, I want to drill down to something earlier, because we need to make sure that everybody is included in this in this country in this equation, which means rural America. Mr. Stallman, you mentioned earlier some numbers, and you mentioned the fact that with the $3 billion in exports in agricultural trade, we would see perhaps 27,000 new jobs created as a result of that. Now, I take it those are direct jobs, jobs that are directly involved in the production of commodities, the shipment of commodities and so forth.
But if you drill down even further and take a look at the indirect jobs, take every small community. I live in Louisiana, rural Louisiana. I have got rice farmers, soybeans. Take a community like Crowley, Louisiana, or Abbeville, Louisiana, very dependent on agriculture and agricultural exports for the entire economy of that small town. You are talking about jobs, you know, convenience stores, dentists’ offices, small rural hospitals. Do you have a sense of what number of indirect jobs we would see either protected or created as a result of just doing these three free trade agreements?
Mr. Stallman. We have not analyzed that to give a specific number, but I think it is obvious. I drive through Crowley, Louisiana, at least twice a year. And, for instance, just take rice; the local rice dryer that employs some people, the equipment dealer, the suppliers. If you don’t have the ability to export in this case rice specifically, which we export roughly half of our rice in this country every year, all of a sudden you don’t have those jobs, you don’t have that business. So it is a direct impact on rural communities in America. And you can just spread that same principle across all of the production areas of agriculture.
Mr. Boustany. So it is critically important that we make the case that job growth is linked to exports. And the case can be easily made, I think, in rural America, and as we try to build consensus to move forward on these trade agreements and future trade agreements, we have to get the American people on board with this. And I think focusing on rural America, focusing on small business development is going to be critical in this.
I don’t think there is any way we can actually double exports in the time period that the President is describing, the 5‑year time period, unless we include small businesses and medium‑sized businesses and their connection to the modern supply chain. And I have seen some of the figures related to all three of these agreements where a lot of the exports will be on the part of small and medium‑sized firms, and I would welcome any of you to comment on that.
Mr. Ducker. Congressman Boustany, I would just give you one small example, if I could. And I couldn’t agree with you more. Small and medium enterprises are going to drive a large part of that.
I would just talk for a moment about the Memphis hub, and it is like a small city at night, perhaps 10,000 employees working in one small area at night. And U.S. exports are one of the fastest‑growing parts of our business. But Memphis is the number one cargo airport in the world, and Memphis is not the number one large‑sized city in the world. We outpunch our weight in the global economy because of exports and connecting the world with what we deliver. And the benefits of that flow through, as you say, to the dentists’ offices, to the grocer and to many parts of the economy. So that is one small part where facilitating trade and facilitating global markets to small and medium enterprises has a dramatic impact locally.
Mr. Boustany. Thank you.
Chairman Camp. Thank you very much.
Mr. Neal is recognized.
Mr. Neal. Thank you, Mr. Chairman. I want to thank our panelists as well.
I think the argument that is being offered here is that sometimes to subordinate human rights concerns and others in terms of getting some sort of economic liberalism a foothold, that that in turn will bring about greater demand in heretofore closed societies for more free choice not only in the marketplace, but, just as importantly, in the polling place and other endeavors.
Now, I think that it bears the reminder, however, that with NAFTA and China, that we were instructed that they could not be amended. I think that is a part of the conflict here today. We were instructed that they could not be amended, that it was all or nothing. And here comes the Peruvian bilateral in which we demonstrated that you could, in fact, amend that agreement, which I supported for the purpose of including human rights, the right to organize, and environmental concerns, and the Peruvian Government adopted it with little fanfare.
Now, Mr. Toppeta, I have been very supportive of your industry’s efforts, as you know, over the years to expand globally, but I think as part of this discussion, there ought to be at least some reasonable discourse about the following idea. It has been difficult, has it not, for your industry in China? That is a fair assessment, isn’t it?
Mr. Toppeta. Yeah, I think that is a fair assessment, sure.
Mr. Neal. And the idea of a forced partnership in a sovereign capitalist nation where you can never control more than 49 percent of your industry, and they really make a lot of basic decisions. And, in fact, without saying so, there is one of your large competitors that has decided to back away in recent weeks.
How do we get their attention if we don’t make the argument here that economic liberalism, including those basic tenets of the Peruvian agreement, the right to organize, campaign for human rights and environmental concerns ‑‑ how do we get them to move the argument forward?
Mr. Toppeta. Look, it is a great question. I am not sure that I have the answer to it, Congressman. I think that in each of these cases, we fully understand the need to address a number of different concerns. The issue that presents itself is can you solve all of the problems in one trade agreement, and if you attempt to do that, you probably wouldn’t get the trade agreement.
And with all due respect, I think we have to recognize as a country that these are negotiations, these are negotiations, and negotiating with a country like Peru may not be the same as negotiating with a country like China. So I think there are difficulties in a number of these markets. We are correcting, I think, some of them in some of our agreements, but we are certainly not getting at all of the issues. The question for me is do you want to make some progress with the prospect of making more later?
Mr. Neal. Fair enough. But it also, I think, notes reminding ourselves that in Panama, the reason that the Panamanian bilateral did not move forward is because the Bush administration took the position that I believe the speaker of their assembly had been involved in the murder of an American soldier, I believe, the result of which was it was the Bush administration that pulled back the Panamanian bilateral. It wasn’t the slowness of this committee, whether our Republican friends were in the majority or we were in the majority. That was an administration position not to submit that proposal, I believe.
Mr. Toppeta. The only thing I can say about that is I am not here certainly and my company is not here blaming anybody. What we are talking about is let us move forward. Let us move forward. We have three good agreements. We think we should move forward on those, and we think it would be beneficial for the country to move forward on those.
Mr. Neal. The last point that I will make is this. China has not proved to be quite what the industry assumed that it would be, has it?
Mr. Toppeta. I think China has a lot of challenges, and it is not alone in that. It is an attractive market for a lot of people because of its size, because of its growth, but it does present difficulties, no doubt about it.
Mr. Neal. One last comment, Mr. Chairman.
Chairman Camp. The committee needs to move forward.
Mr. Neal. If we don’t pursue this here, then your job becomes more difficult, isn’t that so, by pushing them?
Mr. Toppeta. Our job is difficult already. There is no doubt about that.
Chairman Camp. Thank you. The gentleman’s time has expired. And I would just say that the ILO core labor rights found in the Panama agreement are also the exact same language found in the Korea and Colombia agreements as well.
Mr. Neal. Mr. Chairman?
Chairman Camp. Yes.
Mr. Neal. That wasn’t the point that I tried to make. The point that I tried to make, it was the Bush Administration that pulled back on Panama; isn’t that true?
Chairman Camp. I think that this idea of which Administration did what isn’t particularly productive. I think we can find certainly gaps in both ‑‑ certainly the Bush and Obama Administration on these issues. And I just think we are here to talk about what is before us, which is how do we move forward now on these agreements.
Mr. Neal. I agree, Mr. Chairman. The point that I am making is that there has been some testimony or some inquiry this morning from members of the panel that have suggested that there was foot dragging on the part of the minority with some of these bilateral proposals, and I think that the point that I tried to make, which I assume is based on fact here, and that is that it was the Bush administration that pulled back ‑‑
Chairman Camp. The fact is we have had no hearings on trade over the last 2 years, and that is not an Administration issue; that is a committee issue. I wish we had. We didn’t. We are trying to have hearings now. I think these are productive discussions. But it really is Mr. Smith’s time, and you are recognized for 5 minutes.
Mr. Smith. Thank you, Mr. Chairman. And to the panel, thank you for sharing your expertise and insight.
Obviously we are talking about opportunities for the future here, and I am intrigued as we do have this discussion. And I don’t want to repeat what my colleagues have said about losing market share to our competitors around the world, but we do know that it is happening.
Mr. Stallman, if you could reflect a little bit for agriculture on the nontariff trade barriers and how these trade agreements will help address that.
Mr. Stallman. A lot of the problems with agricultural trade, as in other industry sectors, are the nontariff barriers. For agriculture particularly you have the sanitary and phytosanitary barriers. In many cases a bilateral agreement is much more able to address those issues between two countries in terms of health standards, food safety standards, those kinds of things, than depending on the WTO. So in that respect many times in bilaterals you can more directly address those issues than you can with the international agreements.
Mr. Smith. Anyone else wishing to respond?
Mr. Ducker. Well, I am just going to add a comment that many of the provisions in these FTAs level the playing field. And if you are in our business, you compete against non‑U.S. large companies which don’t operate under the some of the same provisions. But these trade agreements prevent cross‑subsidization by government‑owned and ‑assisted competitors. They define contours of postal monopolies or fees that can be assessed to serve markets. They provide expedited customs procedures. It really simplifies and codifies doing business in many of the foreign countries, and that is a great benefit of the FTAs.
Mr. Smith. Mr. Biegun.
Mr. Biegun. Mr. Smith, in the case of the Korea Free Trade Agreement, in the renegotiated text, it is some of the most far‑reaching effort we have seen in free trade agreements to create a level playing field on standards. We are now expecting adequate notice in advance of new regulations, transparency in how those regulations are implemented, and there are enforcement mechanisms in the FTA that will be meaningful if those regulations are used simply to exclude imports. So we are encouraged that with the shoulder to the wheel, we can get agreements like this that will open the market.
Mr. Smith. Thank you very much.
Thank you, Mr. Chairman. I yield back.
Chairman Camp. Thank you.
Mr. Becerra is recognized.
Mr. Becerra. Thank you, Mr. Chairman.
Gentlemen, thank you very much for your testimony and your work.
I would like to just begin by acknowledging that I don’t think there is an American that wouldn’t believe that trade is essential for us to continue to be a growing and vibrant economy. What makes us strong is the fact that not only do we sell to Americans, but we sell to everybody in the world, and everyone loves American products. In fact, everyone loves America, and that is why so many people wish to come to this country as well. So our brand is good not just in terms of our product, it is good in terms of our country and people wanting to be here.
The difficulty I think we get into is we try to ignore that trade causes consequences, and they are not always the greatest. And Mr. Tiberi tried to point that out in terms of Ohio. I can point it out in terms of southern California, where we depend so dramatically on trade because we have the largest ports in the Nation right there in Los Angeles. But to the degree that we try to make it sound like every trade deal is a good trade deal regardless of what it says, that is where we lose, I think. That is where we lose Americans. So when they hear that in 2009 we got to sell to Koreans 6,000 American vehicles, yet they got to sell to us ‑‑ in other words, they exported to us, we imported from them and bought 476,000 vehicles, they don’t need to have degrees in rocket science or in trade to know that something is wrong. And they just simply want to know that it will be level trade, that it will be a fair deal for Americans.
When you take a look at these deals, whether it was the situation for the auto industry with regard to Korea or, as we pointed out, the difficulties with Panama being a tax haven, there are reasons why some of these deals haven’t gone through as quickly as we might like. But let us not just say willy‑nilly we must have a trade deal, because a bad trade deal has major consequences. And if you think about our recent past in the last decade or so, American multinational companies have reduced the size of their domestic workforce by about 1,900,000 Americans, yet their foreign employment as gone up by 2.4 million in that same time. Americans aren’t dumb. They see that we are exporting as many U.S. jobs to places as we are products, and what they want to know is that as we export those products, we want Mr. Paulson and his company and everybody else to continue to create jobs here because you are exporting more.
And so I think what is important to remember is that we are trying to make sure that this is a good deal, not just a trade deal, and if we do that right ‑‑ well, not just for one industry, but for every industry.
Now, I have a question for all of you gentlemen. If you could just give me a quick answer. Currency manipulation. We have heard a lot about it. We know some countries devalue their currency. That makes their products cheaper to buy. It also makes our products more expensive to buy because it makes the U.S. currency look like it is valued at a higher price than it should be. Do you believe that we should tackle the issue of currency manipulation? And obviously the focus has been on China. But do you believe we should address the issue of currency manipulation now?
Mr. Paulson. Thank you.
I do not ‑‑
Mr. Becerra. Just a quick yes or no, if you could. I tried to make it a very direct question because I know that we could go into that forever, but I am going to lose time, and I want to get back to the trade deals.
Mr. Paulson. I don’t think we should address the currency manipulation within the trade agreement.
Mr. Becerra. And I don’t mean within the trade agreement; I mean just address it generally as quickly as we can.
Mr. Paulson. Yes.
Mr. Becerra. Thank you.
Mr. Stallman.
Mr. Stallman. Not in trade agreements, but in the context of international agreements with our countries.
Mr. Becerra. Thank you.
Mr. Ducker.
Mr. Ducker. I would agree with Bob. I mean, that is just one of many issues.
Mr. Becerra. Yeah. And by the way, I am not asking that we address the currency issue in these trade deals. I am just asking if we should tackle that as an issue of importance to American consumers.
Mr. Toppeta. I would agree with the other panelists. Completely agree.
Mr. Becerra. I know the estimates are out there that we lose somewhere between a half a million to 1.5 million jobs because of this currency manipulation that goes on throughout the country, so I hope we can deal with it and deal with it immediately.
I have one final question I would like to ask. Mr. Toppeta was extremely virtuous a moment ago in responding to some questions by Mr. Levin. You mentioned that even if these trade deals had left out your industry and your company, that you think that we might still want to go forward and approve these deals.
Now, we are going to probably, I hope soon, in this committee and in this Congress deal with the issue of tax reform. And I would like to know if you would like to be as noble as well with regard to tax reform and virtuous so that if tax reform occurs, and we by chance don’t deal with your particular industry or company, that you believe that we should still do the tax reform if we don’t tackle the issues that are most important to your company and to your industry. I will try to leave it brief. Now my time is expiring, so if I could just get a quick yes or no from the panel.
Mr. Toppeta. I will say that one is way beyond my competence. So I have no answer for you.
Mr. Paulson. I believe tax reform is important for manufacturers.
Mr. Stallman. Our policy indicates we should work on tax reform, but we will wait to see the details.
Mr. Becerra. I see you all tap dancing very, very well. Thank you.
Chairman Camp. Has everyone had a chance?
Mr. Becerra. Mr. Ducker and Mr. Biegun.
Mr. Ducker. I was just going to say, yes, I think tax reform is important in many different aspects. But corporate taxes are among some of the highest that we deal with in the world and ‑‑ so, yes, we should deal with tax reform.
Mr. Becerra. Thank you.
Mr. Biegun.
Mr. Biegun. We will be here.
Mr. Becerra. Thank you very much, Mr. Chairman. I appreciate it.
Chairman Camp. Mr. Buchanan is recognized.
Mr. Buchanan. Thank you, Mr. Chairman, for holding this important hearing today.
As we work to get our ailing economy back on track, I believe it is crucial that we work to expand our exports. I am pleased that the administration is pushing harder, appears to be pushing hard, to get the Korean agreement done as well as the others that we are working on.
But I guess this is to all of the panelists. Last year the President stated that he wanted to double U.S. exports by 2014. I support this goal. Would you agree that enacting these three trade agreements is an important first step in reaching that goal?
Mr. Paulson. It certainly is an important first step, but we also have to say that the U.S. manufacturing base needs to become fully engaged with not just the trade agreements, but also with improvements to financing for us and improvements to taxes.
Mr. Stallman. Yes, passing these agreements is essential as a first step. We need to continue to focus on enforcement and continue to negotiate other agreements to further open up markets.
Mr. Ducker. Every long journey begins with a first step, and this is a darn good one, and we are strongly encouraging that. But we need to move forward after the passage of these into other very important markets.
Mr. Toppeta. I would agree with that.
Mr. Biegun. And I would just like to repeat what I said earlier, that we bear responsibility, too. It is not just the policies of the government, but it is the job of our companies to make these work, and we look forward to doing so.
Mr. Buchanan. Thank you.
Mr. Stallman, my State that I represent in terms of my district is in Florida, but looking at Florida in general, we have a big area of agriculture, citrus, cattle. How do these trade agreements affect the State of Florida, in your opinion? And I would be interested in anybody else’s comments as it relates to that.
Mr. Stallman. Well, I don’t have the State‑by‑State breakdowns in terms of benefits, but in general all agriculture will benefit from these agreements based on the opening of markets. We know beef in particular, which I am a little more familiar with, these agreements ‑‑ but the enforcement of current agreements, the work with ‑‑ the work that we are doing to open up markets now in China and Japan and keep the market for beef in Taiwan, all of those things will be beneficial to beef specifically. But in general these agreements are what is necessary to improve agricultural market access for our products.
Mr. Ducker. I cannot speak specifically to the agricultural aspects, but I would point out that we have a very large international hub in Miami which serves most all of Latin America, and trade with Latin America certainly benefits the area in and around Miami and all the catchment areas that that Miami hub services.
Mr. Toppeta. I would say something similar. I cannot give you an agricultural angle on this, but for us, we have a large financial center in the State of Florida, and there is no question that there are a lot of jobs sustained and created in that area because of this. It is a finance center for us.
Mr. Biegun. We have Ford stores across the great State of Florida, and our dealer partners in your State benefit as we do when the company is more prosperous and successful. They have been having a very good year, and we look forward to working with them to have more good years. Corporate health will definitely be improved by the ability to export our vehicles around the world.
Mr. Buchanan. I guess the other just general question is this thing has dragged on. I have been here 4 years and have been talking about it for 4 years, these trade agreements. It seems like it is a big disadvantage to our companies compared to other people that are doing business on a partnership with these countries. What are your thoughts on that? My sense is we are losing ground and losing jobs in America.
Mr. Paulson. I would like to say if we put ourselves in the perspective of being in Colombia, and this was a promise, a golden promise, that was given to the Colombian people, and they had to make the changes, and then every day that this drags on, over in Venezuela somebody is laughing. And I can hear him all the way, sitting here.
Mr. Biegun. Mr. Buchanan, in the case of Korea, the good news is that while the Koreans are negotiating free trade agreements with a number of other countries, Canada, Australia and Europe, none of those agreements have been completed either precisely because of the same issues that held ours up, because their market was closed to imported automobiles. Should the committee be able to move with some alacrity on the renegotiated free trade agreement, it will be timed so that we should not lose any ground in relation to other countries. But it is important that that deal come before the committee and get approved by the end of the summer.
Chairman Camp. Thank you very much.
Mr. Lee is recognized.
Mr. Lee. Thank you. And I appreciate all the speakers being here today.
I know a lot of the questions have been brought up, but the positive theme that I keep hearing here is that trade is a good thing; that these three trade agreements at the end of the day will do what the American people are demanding out of Congress, help us create an environment where we can start employing American workers again. It is very simple.
And for my colleagues, as you know, I spent my entire career in manufacturing up until 2009, so I am a huge advocate. We exported products to all over the world, including South Korea, and I am truly a proponent.
And ironically we have the State of the Union this evening, and I am sure we all want the President to talk about economic issues, talk about putting people back to work. One thing I learned from my father, however, was that it is your report card that counts at the end of the day, and it is easy to give lip service to the fact that we want to say we want to double exports over the next 5 years. However, unless you put tangible items into place, in this case free trade agreements, will have a significant impact.
It is known by experts and obviously by this panel here we can start doing the right thing, but we are out of time. And to have these trade agreements that have sat on the shelf here for the last several years in Congress and had inaction, and the President talk about this for 2 years and move none of these forward, I think it is very hard for us to look at the American people. We are not doing our job.
Again, I hope tonight we are going to hear a different story from him, and that we here in this committee ‑‑ there were several opportunities over the last few years for this issue to be debated if there had been concerns so that we could help push this along. But now at the 11th hour, trying to slow this up is reckless, and the American people shouldn’t put up with it.
We need to start moving forward on trade. There is nothing here that I’ve heard today that would stop us from doing what, again, American people want, allow them an opportunity to make a good living and take care of their family.
So with that I yield back.
Chairman Camp. Thank you.
Mr. Blumenauer is recognized.
Mr. Blumenauer. Thank you, Mr. Chairman.
I guess I would like to focus for a moment on the role agriculture will play in our opportunities going forward. And I appreciate, Mr. Stallman, your being here and your testimony. If my Republican friends are serious about addressing spending and the deficit, and I think they are, we are going to have to deal with the rather expensive support that we provide to agriculture in this country. I want to be clear that I am not referring to assistance that is not trade‑distorting. I am not talking about marketing; I am not talking about paying farmers to help them comply with clean water and other environmental requirements, marketing. These are areas, research and marketing, I think it is legitimate for us to help and in some cases maybe do more.
But since I have been in Congress and on this committee, and before that, trying to work to move forward with a bipartisan trade agenda, I have watched as our agricultural subsidies got in the way of moving these programs forward. I watched how a tiny loosening of sugar subsidies was a serious problem with CAFTA. We had problems with our Australian agreement because of sugar again and beef restrictions where we just simply were not going to allow free trade to operate. More recently we are paying ‑‑ the American taxpayers are paying Brazil $143.3 million a year because of our lavish cotton subsidies, which are illegal under our agreements, in order to forestall retaliatory actions for intellectual property and other goods that would have been close to a billion dollars. We are going to pay that every year.
I am very interested in wondering if the panel thinks that we need to continue these agricultural subsidies. Can American farmers compete in a global market without lavish subsidies? I would start, Mr. Paulson, with the National Association of Manufacturers. Do you support reforming our foreign policy to reduce costs and to avoid these international trade complications?
Mr. Paulson. Since I am a manufacturer and have been focused on that my whole life, I really do have to pass on this question.
Mr. Blumenauer. I would respectfully request that maybe you check back, because you as a manufacturer could be hit because of retaliatory actions when we violate our WTO requirements. And as I mentioned, these are things that have gotten in the way of other trade agreements.
Mr. Paulson. I certainly believe that you have brought up a very important point. I am not trying to say anything about that. But I will say that it is just one that I am not well prepared to answer.
Mr. Blumenauer. I am just requesting that maybe you could check and find out what the association’s position is and maybe make that part of the record?
Mr. Paulson. Certainly.
Mr. Blumenauer. Mr. Ducker, FedEx, do you have any thoughts about potential retaliation because of lavish foreign subsidies?
Mr. Ducker. Having spent most of all of my life in the services industry, I am going to refer this to Bob, who has much greater expertise in this area than I.
Mr. Blumenauer. Would you mind if lavish farm subsidies resulted in retaliatory trade actions that affected FedEx? Would that get your attention?
Mr. Ducker. If people aren’t living up to their agreements, and there are retaliatory measures, I think we should live up to the agreements that we have ‑‑ that we have signed.
Mr. Blumenauer. Like Brazil and cotton?
Well, Mr. Stallman, I don’t want the time to run out without turning to you. I am wondering if the Farm Bureau feels that we need to have the current level of subsidies for our agricultural products to compete internationally, like, for example, the illegal cotton subsidies that we are now paying Brazilian farmers to avoid Mr. Ducker and Mr. Paulson having retaliation. What is your feeling on that?
Mr. Stallman. Yeah, a couple of quick points, Congressman Blumenauer. First, with respect to the degree of subsidies we have as you designate them being lavish, had we reduced our entire Federal budget to the extent to which those payments had been reduced over the course of this last farm bill, we would not be talking about budget deficits in this country if that same percentage reduction basically occurred across the board.
Secondly, with respect to the Brazilian cotton agreement, that $143 million first is not going directly to Brazilian farmers. The second point is that was a negotiated agreement, a temporary agreement, if you will, while the Brazilians are waiting to see what we do in the context of the negotiation of the 2012 farm bill and in terms of nontrade distorting, the direct payment component in the Title I of the farm bill is considered to be green‑boxed under WTO trade rules.
Mr. Blumenauer. Do you feel that American agriculture can ‑‑
Mr. Brady. [Presiding.] Thank you, Mr. Blumenauer. Mr. Blumenauer, all time has expired.
The chair recognizes Ms. Jenkins for 5 minutes.
Ms. Jenkins. Thank you, Mr. Chairman.
Agriculture is obviously important to the great State of Kansas in my district. Back in 2009, experts in ag products from our State, they valued the exports at more than $4.7 billion. The pending free trade agreements are especially important to our farmers, who traditionally lead the Nation in wheat production. Kansans know the importance of international trade in these markets. In 2007 and 2008, the U.S. wheat industry dominated the Colombian wheat market with almost 70 percent of the market share. It was valued at $330 million.
So delaying the Colombian Free Trade Agreement has already hurt Kansas and American farmers. While the U.S. waited, Argentina and Canada began their own negotiations. And, of course, by 2009‑2010, the U.S. wheat industry’s market share had fallen to 46 percent, a 24 percent loss. U.S. Wheat Associates estimate that if the Colombian Free Trade Agreement is not signed, U.S. wheat producers will lose up to $100 million per year.
So considering the impact on the wheat industry alone, could you all remind us what the economic impact on your business or industry will be if we fail to implement the three free trade agreements?
Mr. Stallman. Well, I think, if I understood the question, it was broader, it was beyond agriculture that ‑‑
Ms. Jenkins. Yes, I would like to hear from each one of you.
Mr. Paulson. Excuse me. I thought that you were just talking in agriculture for that. So if we don’t get these free trade agreements through, naturally those are estimates that are how much loss will be made over a period of time and the number of jobs. We are using again the International Trade Commission’s estimate that it is 13 billion. I believe that what we will see, though, is that there will be greater losses beyond this because it isn’t just these trade agreements. The whole world is watching. The world is watching what we are up to right at this moment. And these trade agreements have taken on a greater impact than just dollars and cents going back and forth. They become the image of how well the U.S. embraces other countries throughout the world, how are we out working with others.
Mr. Stallman. You stated the case for agriculture very well. You used wheat specifically. I lumped in corn and wheat and soybeans with the particular example of Colombia and the fact that other countries have stepped in and begun to take those markets to the detriment of our agricultural producers, and that is why it is critical that we move forward and go ahead and get us back in the game.
Mr. Ducker. I would not put it in an agricultural context. You have done that quite nicely. But I would say that just one simple statistic that exports from this country support one in three U.S. manufacturing jobs. The markets are huge and immense outside the United States. Eighty‑seven percent of the growth is occurring there. Ninety‑five percent of the world’s consumers are there. And one of the great vehicles to get at those consumers, at that economic growth, is through free trade agreements.
And so I believe that while we delay, others are moving, because their calculators work the same way that ours do in terms of the numbers and the economic power that exists in global trade.
Mr. Toppeta. Thank you.
As I said earlier, I think the main impact for us of delay will be in terms of Korea and the fact that the European Union will have an agreement going into effect in the middle of the year. That will mean that those competitors from Europe will be able to get their products to market quicker in Korea. They will be allowed to do more things than we are allowed to do in the markets. They will be subject to different rules and regulations, which will be to their advantage, frankly. So there is no question that if we don’t get this Korea agreement done, it will hurt the insurance industry competitively in Korea. No doubt about it.
Mr. Biegun. We support all three agreements, but in particular I would like to repeat what was just said. On Korea, the good news again is that we are on a timetable now to have the Korea agreement passed as soon as, if not earlier, than some of our major competitors.
But I would also be remiss if I didn’t point out that had the Korea Free Trade Agreement gone through in its previous form before these provisions were renegotiated, it actually would have had a punishing effect on our industry. So we are very supportive of the agreement. And the timing still affords us the opportunity to move, moving with alacrity, to get it through in time to realize that benefit.
Ms. Jenkins. Thank you.
Mr. Brady. Thank you. Time has expired.
The chair recognizes Mr. Paulsen for 5 minutes.
Mr. Paulsen. Thank you, Mr. Chairman. I want to thank you also for your leadership at the subcommittee level and being a part of this hearing today, and for all of the witnesses for their testimony.
There is no doubt that all the trade agreements ‑‑ we have heard about Panama, Colombia and South Korea, of course, which is the latest that has had the most discussion from the administration standpoint and now the support from a lot of our colleagues from both sides of the aisle. It is very important.
I really believe free trade is a very simple concept that is a natural proven stimulus. It is a cost‑free job creator. I can look at Minnesota, my home State. And we talked a little bit about services having 75 percent of U.S. GDP. Well, in my district I have got 80 percent of services occupying that portion of the economy, and there is a lot of jobs that are connected directly with that. Seven hundred forty‑one thousand jobs in Minnesota depend on trade independently. It covers manufacturing. It goes all the way to services.
And I just want to go back to a little bit of the services testimony, Mr. Toppeta, if that is okay, because you mentioned earlier ‑‑ you had identified some key nontariff barriers; regulation, investment restrictions, due process, regulatory transparency, data management rules, for instance. And you talked a little bit about how trade agreements very importantly touch on those issues, because the average person doesn’t understand that or doesn’t relate to that. They always think of tariffs. Can you just expand a little bit about what signs you have seen in different markets as these implemented trade agreements have gone forward and actually taken place?
Mr. Toppeta. I am sorry. What signs I have seen?
Mr. Paulsen. Some of the progress, I think, within the markets and some of the good things that have happened.
Mr. Toppeta. Maybe I could ‑‑ Korea specifically ‑‑ here again, let me give you an example that I think is important, and this one relates to data management, and it covers really two points about Korea. One is this question of the desk drawer rules that I was talking about before, that you sometimes don’t know what the rules of the road are.
We had an experience in Korea where we wanted to do data management in a more centralized location. We believed that that was permissible. We had discussions with regulators about whether that was permissible. We were allowed to go ahead and do our data management outside of Korea. There was a change of people in the regulatory body that regulates us. They came back and said, sorry, you have to move your data center back into Korea. Now, that is an example of tremendous expense on our part that we had to go through partly because we didn’t know the rules, partly because they had restrictions on data.
I think with these kind of issues, and this is directly addressed in the Korea FTA, we will be able to do data management outside of Korea. I think that is going to be very useful for some companies. They may do their data management from here in the U.S., and that will again create jobs here in the U.S.
The second thing that I would say is this will also give us the ability to do really a good job of data privacy protection, because when you have small data centers all over the world, it is much harder to bullet‑proof those, the phrase that is used, to make sure that they are protecting the consumers’ information. So this is an example where the Korea FTA, I think, can give us both better efficiency, but also better effectiveness. So that is a positive sign, I think, going forward.
Mr. Paulsen. Thank you very much.
Mr. Stallman, let me just quickly follow up on a question with you, because Cargill is based right in my district, and, of course, you think agriculture right away. And Minnesota exports quite a bit, $6 million worth of wheat and corn, I think, to South Korea currently. Is it possible to estimate the effect of an increase in opportunities for one large exporter, what that can be on the local economy? I think you mentioned 9,000 jobs earlier. But for a company like Cargill, the supply chain and the agriculture, how many new jobs locally might be added?
Mr. Stallman. It is awfully hard to get those numbers precisely at the local level. But just assume that Cargill exports an additional billion or some fraction of that at the rate of 9,000 jobs per billion ‑‑ those are direct jobs, not the indirect effects ‑‑ will definitely help the local economy where those facilities are located.
Mr. Paulsen. Mr. Chairman, one more point I want to make is that in Minnesota in particular, we have seen successful exporting both in services and with manufactured goods. But the reality is that with our FTA partners, where we have got FTA partners that currently exist, there is actually an exponential increase in exports that have gone on. In fact, I think there is a 103 percent increase overall in terms of Minnesota exports since 2002 with the FTA partners that we have. So I think if we look at expanding in Korea and Panama and Colombia, we are all going to benefit, and it is going to open the door to China and other countries down the road.
Thank you, Mr. Chairman.
Mr. Brady. Thank you.
The chair recognizes Mr. Pascrell for 5 minutes.
Mr. Pascrell. Thank you, Mr. Chairman. I thank each member of the panel.
I am a skeptic on these issues. I must say this to begin with: Free trade agreements through the last 4 Presidents ‑‑ so this is not a partisan statement I am making ‑‑ I personally believe have contributed to the job loss in this country and, worse, contributed to the minimizing of the dignity of the American worker. I did not come and rush to that conclusion. I have voted for trade agreements.
But I do know that free trade is not simple, not at all. And I would like to start by saying to those who say that the jobs that will come out of the Korean FTA are going to spread throughout the land and contribute to our recovery, well, the International Trade Commission has found that net job creation from the Korean FTA will be negligible, while independent estimates have found, for instance, a subject already brought up, that stopping Chinese currency manipulation would create up to 1.2 million jobs.
As that is my preface, I would like to ask Mr. Biegun, the European Union recently completed its own free trade negotiations with South Korea and was able to secure a 55 percent minimum rule of origin requirement, which is a major problem in many different areas, not just automobiles, and a cap on duty drawbacks. So our agreement, on the other hand, one we are examining right now, contains only a 35 percent rule of origin and no limits on the duty drawbacks, none.
Is Ford concerned that what I see as a major disparity, which would allow a Korean car company to assemble over 65 percent of the value of a car in a regional country like China, will put the United States auto industry at a disadvantage compared to our European competitors?
Mr. Biegun. Thank you, Mr. Pascrell.
Breaking down the two issues, on the issue of duty drawback, the approach in the U.S. free trade agreement and in the EU free trade agreement are largely the same. So in that case there is not a significant difference. However, in both cases, Ford and other automobile industry companies fought very hard to put limits on the degree to which the Korean Government could use duty drawback, because, as you point out, it allows the import of content from outside the free trade areas.
Mr. Pascrell. Does that concern you?
Mr. Biegun. It certainly is a concern. It is one of many that we have had.
Mr. Pascrell. What is the concern? What is your actual concern with what I just said specifically?
Mr. Biegun. Specifically it will allow manufacturers in Korea to import content from third countries and then reexport to the United States duty free. We in the United States do not enjoy that privilege, so we would import the same product from the same country to put it in our automobile, and we would pay a tariff on it. So it is something of a competitive disadvantage.
However, as in any free trade negotiation, it is a package of gives and takes. Ultimately Ford Motor Company’s principal concern in this agreement was opening the Korean market to our goods. The Koreans are already well represented in this market, and it is our estimation that this free trade agreement will not sizably increase their imports, although the duty drawback is a competitive advantage for them.
Mr. Pascrell. I have folks coming into my office every day because we were once a great manufacturing power in New Jersey. Paterson, New Jersey, was the original manufacturing city in this country, the cradle of the industrial revolution. Alexander Hamilton went there, debated very severely Thomas Jefferson over whether we should be an industrial or ‑‑ and we decided we needed to be a multifaceted society.
We made the decision 35 years ago. The problem of trade didn’t just start in the last 10 years, did it? The problem of trade existed now for many, many years. We lost our textile business 35, 40 years ago. We were the silk city of the world. So this didn’t just happen.
But here is what comes into my office, and I will conclude with this if I may, Mr. Chairman ‑‑
Chairman Camp. [Presiding.] Yes, you may conclude.
Mr. Pascrell. Folks who import ‑‑ who are trying to make stone and send it to other places, parts manufacturers come into my place every week. They can’t stay in existence ‑‑ we are talking about trading products? You have to have a product to trade. If we don’t do something about manufacturing in this country, if we don’t do something about that phase of the economy, these trade deals only make certain people affluent and bury other people. And bury other people. And that is what has happened in the United States. And I would look at that very carefully because I think we are being put out ‑‑ and I only use this as one example.
My time has run out.
Chairman Camp. The time has expired. Thank you.
Mr. Berg is recognized.
Mr. Berg. Thank you, Mr. Chairman. I thank everyone that has come here for this hearing.
In 2004, I guess, compared to this year, North Dakota’s exports to South Korea have doubled. And those exports, primarily in agriculture, are wheat, peas and soybeans. In fact, right now we have a delegation in South Korea trying to expand that. And one of the questions that I have is ‑‑ there is a lot of these other trade agreements that are in the mix. And I am assuming that every country in the world is trying to increase its trade so it can pull itself out of the same environment that we are in. So I guess my question is if we do nothing and say for 2 years ‑‑ and maybe this is for you Mr. Stallman. If we do nothing for 2 years, this component of North Dakota’s increased trade with South Korea, will that stall, or will that continue if we do nothing?
Mr. Stallman. Well, it is hard to speculate totally, but the bias will be for it stalling and not moving forward, because you have an EU agreement with reduced tariffs that will be put in place, you have other countries negotiating free trade agreements, and if those are implemented before ours, and those tariff reductions occur before we have a chance to implement our agreement, that puts our shippers of any agricultural products and many other products at a competitive disadvantage. And the Koreans aren’t going to buy from us just because we are nice people. We are going to have to have a good deal.
Mr. Berg. That kind of leads to another question. But I have heard the hearing today, and I have kind of thought about a water tank that is up on stilts that is leaking, and we are trying to figure out what is the best way to fix this water tank, or how can we have the best water tank. That water tank is full of our trade and our export, and my thinking is if we do nothing, we may come up with a great water tank, but there will be no more market share. It will all be drained out of that tank.
So I guess, continuing with what you said, I would just like a ‑‑ it is going to be a tough question probably, but if we do nothing, and we assume that these other countries are engaging in free trade agreements and expanding their trade, what will we lose in terms of jobs in these sectors over the next 2 years if nothing is done? So in manufacturing, just kind of what is your feel and what would we lose in agriculture? Or in the service industry what would we lose by standing still and watching others take our market share in these three countries? Mr. Paulson?
Mr. Paulson. Thank you.
I know we have talked about the jobs, the dollars and the totals. And not to avoid your question, but I want to overemphasize, please, that the commercial diplomacy of the U.S. businessmen entering these markets will by far exceed what all of these calculations that have been made, because as I move into a market and I go into Colombia, I bring with me all other companies that I know about and have them entertain the idea of also selling there.
So again, I am trying to be clear, let the U.S. businessman do his job. He will bring prosperity to our country here, but he has to have that opportunity and level that playing field.
Mr. Stallman. If we don’t move forward and pass these agreements, work to open up other agreements, what will happen to U.S. agriculture is that our competitors will step in. They will begin to take more market share, as they already are in many countries, and thus, since American consumers won’t be eating more, we will be backing up our supply. We will be filling up our domestic supply, increasing that supply, and with stagnant demand what happens is basic economics: The price of the product goes down.
So that is a real concern. We won’t stand still. We are either going to move forward, or we are going to fall backward.
Mr. Berg. Please go ahead.
Mr. Ducker. I was just going to say one thing about that, Congressman Berg. If we do nothing, we do something, because if we do nothing, others continue to move. We lose market share, we lose jobs, we lose the future prosperity. I mean, if you look at NAFTA as just one data point, since NAFTA was created, 4 million U.S. jobs have been created. There is $1 trillion a year in trade, in that NAFTA trade. So if we do nothing, we do something.
Mr. Toppeta. Yeah. I mean, I will second the motion. I think that one of the other consequences will be we will not be able to meet this goal of doubling our exports in the next 5 years. I think that goal will go by the wayside if you don’t go forward. So I think that is a significant detriment.
Mr. Biegun. Since no importer sells any significant volume of cars into Korea, currently it is all upside. But with a good deal, the sooner the better. And it is a good deal.
Mr. Berg. Thank you.
Mr. Brady. [Presiding.] Thank you.
Mrs. Black is recognized for 5 minutes.
Mrs. Black. Thank you, Mr. Chairman. And thank all of you for being here today and helping to enlighten us on the trade issue.
I want to, first of all, thank you, Mr. Ducker, and how proud I am to have FedEx in our State and the amount of jobs that it has supplied in the ‑‑ how it has helped our economy there in the State of Tennessee and particularly there in Memphis. As you recognize, there is almost a city there of itself with FedEx. So thank you for that.
Mr. Paulson, I was interested as I read your written comments about your enlightenment about how trade really did increase your opportunity to be able to grow your business, and in particular you said, there was a time that I viewed foreign countries as competitors, and I made a whole series of defensive moves to protect my sales in the market, in the domestic market. And then you said you changed your perspective.
I know one of the comments that you also made that intrigued me ‑‑ and I do believe that being a small business person, that I agree that innovation, quality and customer service are three very, very important pieces of what makes you successful as a business and makes you stand out from other businesses. But what made you change your mind? And what were those factors that made you then decide to move forward in being a strong competitor in the international market?
Mr. Paulson. It didn’t happen overnight; it took quite a while actually for me to change from a defensive position to an offensive position. However, I was always making some ‑‑ I call them opportunistic exports, and it was not really a planned event.
So as I started to go around the world, going to the trade shows, working actually with the U.S. Commercial Service, who is a very strong element in the United States for teaching people how to work outside the country, and then working with, like, the senior commercial officers in these foreign countries, I was imbued with this whole new world of opportunity in front of me, and through that I started making sales. And it was my good success and fortune that really turned my mind, because all of a sudden I could see there was so much opportunity, and the sales ‑‑ I can say the sales in the most unusual places also through the help of the U.S. Commercial Service.
Mrs. Black. Is your trade organization helping those manufacturers who have had great difficulty and some of them just not being able to be successful with their product; are they helping them to get into these foreign markets?
Mr. Paulson. Absolutely. The National Association of Manufacturers offers free help to open foreign markets and teach people how to work in those markets. And I can also say that I personally spend a lot of my own time as ‑‑ and volunteer time of teaching others how to enter a market. One of the things I like to say is if you put me to work at your business, within just a couple of years, you will also have 25 percent of your sales in foreign markets.
Mrs. Black. My final question may be for any of the other panelists. In looking at innovation, quality and customer service, would you say that that is the key for why other countries may want our products as opposed to the product being made in their country and the competitiveness of that?
Mr. Toppeta. I would comment on that. I think that is absolutely right. We see in all of these markets that customers are looking for innovation in products, and frankly, doing business with a global company and a U.S. company is something that they very much desire because of the innovativeness and because of the quality of the service that is provided. So I think it is definitely an advantage.
Mr. Biegun. And, Congresswoman, this is where I keep coming back to our responsibilities. And that is our responsibility. But I can tell you that Ford Motor Company in our 106 years in business around the world has never found a customer that wants to pay more for less quality or for a lower ‑‑ less desirable product. We are absolutely convinced that given the opportunity to present our vehicles to customers around the world, they will make a choice based upon best value for the money.
Mr. Ducker. Congresswoman Black, I would like to thank you, first of all, for your service to our State and to our country. But I would say personally about our trade missions, India is one great example. Most of the group is dominated by small companies, and while we were there, many trade agreements signed and the fortunes of those small businesses greatly enhanced by being open and exposed to innovative, new American products that they could take to market in India. So, yes, I would definitely agree that innovation, certainly creating value, is one of the greatest things that we bring.
Mrs. Black. So if we can remove barriers, we have the products with the innovation, the customer service and the quality that will make us very competitive. Thank you.
Mr. Brady. Thank you.
Mr. Roskam is recognized for the final question.
Mr. Roskam. Thank you, Mr. Chairman.
Those of us who are speaking late feel a little bit like the Jimmy Stewart character in “Mr. Smith Goes to Washington” when the Chamber clears out. So thank you very much for your patience and the patience of our colleagues.
It seems like one of the subtexts of today’s hearing is that you have one side that has been making an argument or a suggestion about the cost of waiting, and another that is making an argument about the cost of moving forward. And those are very thoughtful questions, and you can kind of weigh them out. On Korea, as Mr. Rangel alluded, there was kind of a negotiation technique and so forth on moving forward and creating more opportunities for Ford Motor Company, for example, and other manufacturers. There is also a notion, well, as it relates to Colombia and Panama, there is a human rights element that I think most largely recognize have been remedied and so forth.
But I just want to share with you an experience of a group that came in to see me, and it gets to this idea about no‑cost job creation that I think is very powerful and something that can bring us all together to Mr. Camp’s point on moving forward, moving this debate forward.
I had a group come to see me sort of with talking points over at the Cannon House Office Building just a couple years ago, and they were against the Colombia Free Trade Agreement. And I kind of shrugged them off and I said, I don’t really want to talk about Colombia. Let me tell you about something that I just heard about. And I began to explain to them ‑‑ I said, hey, there is this opportunity for us as the United States to create changes within the Tax Code that actually get our manufactured products in a better position vis‑à‑vis another area in the world that is actually four times the size of Illinois. And I asked them if we were able to do that, were able to change the Tax Code so that Illinois manufacturers had an advantage in selling and taking things then to O’Hare Airport on trucks and flying them down to this other market that is four times the size of Illinois, would you all be for that? They looked around and kind of crumpled up their talking points, and they said, yeah, we are for that, that sounds good. That is the Colombia Free Trade Agreement. And it was sort of a revelatory moment for them. Now, they didn’t give me the satisfaction of telling me that I persuaded them, but I think that the way that was framed up was a little bit different.
So I guess the challenge that we have ‑‑ my staff sometimes will come to me, my kids will come to me, and they will ask me a question, and sometimes I will say, well, let me think about it. Now, as we all know, “let me think about it” means one of two things; it either means no, and I just don’t want to deal with it, or it means let me think about it. And I think that we are upon this time right now as a committee, as a Congress, and as a country where sort of the thinking is done. We need to make decisions moving forward to try to create an environment where worldwide American companies or little American companies are in the best possible footing to be competitive and dynamic, and that is no‑cost job creation, and that is something I think we can all agree on.
Mr. Biegun, let me just ask you one sort of closing question, and that is sort of relating that experience that I had with this group in my office about Colombia and the type of manufacturing that you mentioned when you were having a conversation with Mr. Tiberi a couple of minutes ago, can you comment on what the Colombia FTA agreement means in terms of Ford Motor Company production opportunity and how that ripples out in jobs from a no‑cost job creation point of view?
Mr. Biegun. Sure. Thank you, Mr. Roskam.
As I said earlier in the hearing, we source a number of our vehicles that we sell ‑‑ the vast majority of the vehicles that we sell ‑‑ in Colombia from the United States, and this will increase our exports from the United States. So it will be entirely beneficial as Colombia doesn’t manufacture any cars, and none are coming ‑‑ or any cars are exported to the United States anyway. So none are coming the other way.
Let me also add in the case of Korea, had you presented me with the Koreans’ 8 percent tariff was going away, it would have been of no benefit to us, but we would have seen a sizable advantage to the Korean importers. So, there is a formula that we have to get right.
But let me end with this note, that we worked through that with this committee, with the leadership and the chairman and the ranking member, and we are very encouraged with the outcome of this. And in conclusion we have bipartisan support; we have industry and labor all supporting the Korea deal. I think that is a model of success, and I think it shows that we can together, private sector and government, work these things through, and I think that has been a great experience for us.
Mr. Roskam. I yield back.
Chairman Camp. [Presiding.] Thank you. I thank the gentleman for yielding. And I want to thank ‑‑ sincere thanks to all of our witnesses for their excellent testimony and to the Members for their thoughtful questions today.
Let me note for our witnesses, Members may submit questions to you for the record. If they do, I hope you will respond promptly in writing.
Chairman Camp. Our witnesses today made clear that all three pending trade agreements offer significant benefits for agriculture, manufacturing and the services sectors of our economy, all without requiring any new government spending. Continued delay will only harm the ability of American workers, businesses and farmers to compete in these markets as our competitors move ahead.
Tonight we have an opportunity to hear from the President. I hope we will hear about these agreements and that he lays out a clear action plan and timetable for considering all three of them. I strongly believe that we should work together and consider all three agreements together, and hopefully within the next 6 months. I hope that we can continue to work together to make that happen.
I again want to thank all of you for spending time today, and the committee is about to adjourn, but we will hold.
Mr. Rangel. I just want to remind the panel ‑‑ and I really thought it was a great panel ‑‑ of my request as to your feeling as to whether or not our great country is meeting your standards in terms of education and also health care. It is very, very important to many of us that we find out what your position really is and what are you doing about it.
Thank you, Mr. Chairman.
Chairman Camp. Thank you. Thank you very much. The committee is now adjourned.
[Whereupon, at 1:14 p.m., the committee was adjourned.]
QUESTIONS FOR THE RECORD:
NONE
SUBMISSIONS FOR THE RECORD:
Securities Industry and Financial Markets Association
Emergency Committee for American Trade
National Oilseed Processors Association
California Table Grape Commission (Colombia)
California Table Grape Commission (Korea)
American Forest & Paper Association
USA Rice Federation
National Grain and Feed Association
Distilled Spirits Council of the United States, Inc.
National Pork Producers Council
PepsiCo
American Natural Soda Ash Corporation
Campbell Soup Company
ConAgra Foods
American Association of Port Authorities
International Dairy Foods Association
Intel Corporation
Corn Refiners Association
Herbalife Ltd.
National Cattlemen’s Beef Association
National Potato Council
Council of the Americas
California Coalition for Free Trade
Public Citizen’s Global Trade Watch
American Meat Institute
Financial Services Roundtable
National Milk Producers Federation & U.S. Dairy Export Council
Retail Industry Leaders Association
American Manufacturing Trade Action Coalition, National Textile Association, U.S. Industrial Fabrics Institute, American Fiber Manufacturers Association
Association of Colombian Flower Exporters
Advanced Medical Technology Association
American Apparel & Footwear Association
Consumer Electronics Association
Industrial Fabrics Association International
California Chamber of Commerce
Otis McAllister