Hearing on President Obama’s Trade Policy Agenda with U.S. Trade Representative Michael Froman
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Hearing on President Obama’s Trade Policy Agenda with U.S. Trade Representative Michael Froman _________________________________
HEARING BEFORE THE COMMITTEE ON WAYS AND MEANS U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED THIRTEENTH CONGRESS SECOND SESSION April 3, 2014 SERIAL 113-FC17 Printed for the use of the Committee on Ways and Means |
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COMMITTEE ON WAYS AND MEANS |
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SAM JOHNSON, Texas |
SANDER M. LEVIN, Michigan CHARLES B. RANGEL, New York JIM MCDERMOTT, Washington JOHN LEWIS, Georgia RICHARD E. NEAL, Massachusetts XAVIER BECERRA, California LLOYD DOGGETT, Texas MIKE THOMPSON, California JOHN B. LARSON, Connecticut EARL BLUMENAUER, Oregon RON KIND, Wisconsin BILL PASCRELL, JR., New Jersey JOSEPH CROWLEY, New York ALLYSON SCHWARTZ, Pennsylvania DANNY DAVIS, Illinois LINDA SÁNCHEZ, California |
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JENNIFER M. SAFAVIAN,Staff Director and General Counsel
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C O N T E N T S
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WITNESSES
Ambassador Michael Froman
United States Trade Representative, Office of the United States Trade Representative
Testimony
Hearing on President Obama’s Trade Policy Agenda
with U.S. Trade Representative Michael Froman
U.S. House of Representatives,
Committee on Ways and Means,
Washington, D.C.
[The advisory of the hearing follows:]
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The committee met, pursuant to notice, at 9:36 a.m. in Room 1100 Longworth House Office Building, Hon. Dave Camp [chairman of the committee] presiding.
*Chairman Camp. Good morning. First, I just want to make a quick comment about the temperature of the room. There is a mechanical difficulty on the seventh floor of this building. I have spoken directly to the superintendent’s office. They are trying to repair it as we meet. But it is going to be a little chilly all morning in here.
Welcome, Ambassador Froman. Thank you for coming back to the Committee. Obviously, we are very aware and appreciative of how hard you and your dedicated staff have worked to advance U.S. trade policy.
A trade policy that opens markets for American exports, enforces international rules, and ensures a level playing field for American workers is proven to promote broad economic growth and job creation here in the United States. The success of American workers, businesses, farmers, and ranchers is directly linked to finding new markets, expanding existing ones, effectively dealing with market access barriers, and strictly enforcing our existing agreements.
U.S. trade policy is at an important crossroads. Congress passed the trade agreements with South Korea, Colombia, and Panama on strong bipartisan votes last Congress, and in the process the United States recaptured its leadership role in the global trade negotiations. This past December, U.S. leadership was critical to ensuring that the WTO Ministerial in Bali produced the Trade Facilitation Agreement, the first multi‑lateral agreement since the WTO was created nearly 20 years ago.
We are in the midst of several trade negotiations. The Trans‑Pacific Partnership is nearing conclusion, and I hope it will be completed as soon as possible this year. Progress in the EU negotiation is encouraging. The Trade in Services Agreement negotiations are well underway in Geneva, with 50 countries participating, as is the newly kicked‑off WTO negotiation on environmental goods. We are trying to conclude an expansion of the Information Technology Agreement, assuming China acts more constructively. We have an active bilateral investment treaty negotiating agenda with China, India, and others.
All these initiatives hold the promise of significant economic gains, supporting more good jobs that pay well here in the United States by dismantling barriers to U.S. exports and creating robust enforcement mechanism to prevent future barriers. These agreements will tackle both tariff and non‑tariff barriers, including 21st century issues like state‑owned enterprises, cross‑border data flows, forced localization, regulatory coherence, and trade facilitation. They will create more opportunities for U.S. companies by integrating them more deeply into global supply chains.
To conclude and implement these negotiations, we need to pass trade promotion authority legislation. That is why, this January, I introduced H.R. 3830, the Bipartisan Congressional Trade Priorities Act, along with then‑Finance Committee Chairman Baucus and Ranking Member Hatch, as well as Rules Committee Chairman Sessions and Trade Subcommittee Chairman Nunes.
TPA is how Congress sets its priorities for trade agreements, and instructs the Administration on how to achieve them. Every president since FDR has had some form of this authority. The legislation establishes specific rules for how the Administration must consult with us, and ensures Congress the final say in approving any trade agreement. This TPA bill is the strongest in history, and includes new provisions to keep Members informed and provide a formal process to guarantee that Members’ views will be taken into account. If the Administration does not meet our objectives, or keep us informed, the bill provides that we can strip TPA.
The need for this bill is resonating powerfully among Members and key stakeholders they know that TPA helps our negotiators get the very best deal and realize the economic benefits of our trade agreements. But while the President called for TPA in his State of the Union speech, he has been silent since. Ambassador, I know you have been working hard. But if we are going to get TPA done, we need full engagement by the President himself, and his entire administration. This is an all‑hands‑on‑deck moment for the Administration to engage with Congress and the American people on this bill. I look forward to hearing from you, Ambassador, about the Administration’s plan to bring TPA across the finish line.
In addition to negotiations, we must also address the challenges and opportunities presented by trading partners around the world, including the major emerging economies — China, India, and Brazil. They provide enormous potential, but also significant and growing barriers. We must engage these countries constructively, but firmly, and address trade and investment barriers such as through an expanded Bilateral Investment Treaty agenda.
I will conclude by pointing to a recent Pew study on America’s place in the world, which found that 66 percent of Americans see benefits from greater involvement in the global economy, because it opens up new markets and opportunities for growth. With 95 percent of the world’s consumers outside our borders, Americans are keenly aware of the need for strong U.S. engagement abroad. Let’s seize this opportunity on the trade front.
*Chairman Camp. I will now yield to Ranking Member Levin to make an opening statement.
*Mr. Levin. Thank you, Mr. Chairman. I hope you won’t find it out of order for me to say a few words since your public announcement.
I think we all felt the same way, Mr. Chairman. Your dedication to public service has been unswerving for your district, for the state, and, I think, for this country. You have brought dignified and warm touches to your leadership, and we are all grateful for that. And ‑‑
*Chairman Camp. We will need that warmth today.
*Mr. Levin. Well, I think it will overcome the lack of heat. It won’t be too hot, Mr. Ambassador.
*Ambassador Froman. Thank you.
*Mr. Levin. But we feel that, Mr. Chairman. And you have led this Committee in a way that I think is very much in keeping with a tradition in this Committee that goes back long, long before any of us have served. And so, we listen to your announcement with, I think, very mixed emotions, and we look forward to working with you in the days ahead.
*Chairman Camp. Well, thank you very much for those very gracious comments. I Appreciate it very much.
*Mr. Lewis. Mr. Chairman?
*Chairman Camp. Yes, Mr. Lewis?
*Mr. Lewis. I would like to be identified with the comments.
*Chairman Camp. Well, thank you.
*Mr. Lewis. The gentleman from Michigan, you are my neighbor upstairs in the Cannon Building, and you are my friend. You are not just the chairman. And I want to thank you for your years of service, for your openness, and for all that you have done to make Michigan better and make our country better. And your service will never, ever be forgotten.
*Chairman Camp. Well, thank you very much.
*Mr. Rangel. Mr. Chairman?
*Chairman Camp. Yes?
*Mr. Rangel. I think it is premature for me to say too many kind things about you before this session is over.
[Laughter.]
*Mr. Rangel. But I can tell you that you have been a breath of fresh air in an atmosphere that has been a tremendous disappointment to so many of the Members that served here. But you have managed, notwithstanding the differences in our parties, always to be a professional, always to be a gentleman. And, in my case, always to be a friend. And it is deeply appreciated.
*Chairman Camp. Well, thank you. I think we better get moving before I start performing like John Boehner.
[Laughter.]
*Chairman Camp. So, Mr. Levin is recognized.
*Mr. Levin. Okay. We have talked privately, and I think a lot of us wanted to say something publicly.
*Chairman Camp. I really appreciate it. Thank you very much.
*Mr. Levin. The notice advising this hearing focused on trade promotion authority, specifically the TPA legislation introduced in January by you, Mr. Chairman, and former Senator Baucus. I believe that legislation is deficient. But let me suggest that the focus today should not be on TPA, but on the critical, ongoing negotiations with TPP countries.
The TPP represents both opportunities and major challenges. The opportunities stem from the dramatic economic growth in Asian‑Pacific nations. We are at a critical stage in those negotiations. But the outcome of a long list of fundamental issues? That outcome remains uncertain. Some of these challenges reflect that this is the most complicated multi‑party negotiation in 20 years, in terms of the issues involved, and the number of countries that individually present negotiating challenges.
For example, the 12 trading partners, including Japan, the third largest economy in the world with an export‑dependent and notoriously closed market. The Korea agreement was hard, and remains hard, with a number of disturbing implementation issues outstanding and, in some cases, growing. Japan will be harder. Important markets in Japan are even more closed, and its economy is bigger. For the United States, TPP is unique, in that there is involved, one‑to‑one negotiations with one of the largest industrial nations and competitors.
The negotiations also include Vietnam, a Communist country with a longstanding command economy, and a very poor record on labor rights and the rule of law. The Colombia agreement was hard, and remains hard, with a deeply troubling record of compliance with the labor action plan. Vietnam will be harder. The fact that the Communist government believes it, and not independent labor unions chosen by the workers themselves, represents workers in the workplace creates a new threshold issue. And Brunei, Malaysia, and Mexico also present challenges with respect to the implementation of the labor commitments.
The list of major outstanding issues in TPP is too long to recite or describe here, but includes currency manipulation, environmental protections, and labor standards, access to medicines, food safety rules, state‑owned enterprises, tobacco controls, cross‑border data flows, and private protection, and investment issues. I hope all of us today can discuss these issues.
The TPA introduced by you, Mr. Chairman, and Senator Baucus, would not effectively enough guide our negotiations to get these outstanding issues right. Indeed, in a number of key respects, the TPA doesn’t provide a lot of guidance. For example, on currency manipulation it provides no real guidance, instead leaving it to the Administration determine what is appropriate. There is also no guidance as to how to ensure that Vietnam implements its commitments. On the pricing of pharmaceuticals, the bill calls for the elimination of price controls and reference pricing, but neither the U.S. nor any other TPP country is supporting such a proposal. And the bill provides little guidance in determining what an acceptable outcome is with Japan on automotive or agricultural market access.
Nor would that TPA bill provide much guidance as to how to improve consultations and transparency in the TPP negotiations. It largely does two things: it codifies the current procedures, and requires the Administration, not Congress, to develop new guidelines for consultations and transparency in the future. Indeed, the bill would require the Administration to develop new consultation guidelines four months after China ‑‑ after Congress might pass a TPA. That would not help TPP.
I believe that Congress needs to be fully involved right now. Congress needs to be a full partner in these negotiations. My message to our trading partners is clear: the Congress will support an agreement that expands trade if and when it does so in a way that benefits U.S. workers and businesses, effectively addresses critical new issues, strengthens our economy, and protects our values. Getting the substance right is what is key now.
I, therefore, hope we focus in this hearing on the wide‑ranging substantive issues embedded in TPP. We also need to discuss other important negotiations, including the Trans‑Atlantic Agreement and the Services Agreement, and we need to act on other legislation, including TAA, the miscellaneous tariff bill, preference programs, and customs enforcement and facilitation.
Mr. Ambassador, we deeply appreciate your hard work. I understand you have worked so hard that your wife had to come here today to listen to what you are going to say, and so we welcome your wife, Nancy. You have enjoyed some important enforcement successes lately. We welcome your appearance today.
*Chairman Camp. Well, thank you very much, Mr. Levin.
Again, welcome back to the Ways and Means Committee, Ambassador Froman. We have your written statement; it is made part of the formal record. You have five minutes to summarize your testimony.
STATEMENT OF MICHAEL FROMAN, UNITED STATES TRADE REPRESENTATIVE, OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
*Ambassador Froman. Well, thank you very much, Chairman Camp, Ranking Member Levin, members of the Ways and Means Committee. Thank you for having me back here, and for this opportunity to testify on the 2014 Trade Policy Agenda. And let me also take a moment to associate myself with Mr. Levin’s comments about the Chairman, and underscore how much we have valued the working relationship we have had, and how we look forward to continuing that working relationship over the course of this year.
The core of the Obama Administration’s economic strategy is to create jobs, promote growth, and strengthen middle class in America. Our trade and investment policy contributes significantly to that strategy by opening markets for made‑in‑America products, leveling the playing field, by raising standards, so that our workers can compete fairly, and enforcing our trade laws and our trade rights.
Done right, trade policy creates opportunities for American workers, farmers, and ranchers, manufacturers and service providers, innovators, creators, investors, and businesses, businesses of all sizes, and, very importantly, the small and medium‑sized businesses. Done right, trade policy promotes not only our interests, but also our values. And it gives us the tools to make sure others play by the same rules that we do.
The Obama Administration has a strong record of success in promoting U.S. exports and creating jobs here at home. Over the past four years, U.S. exports have increased to a record high of $2.3 trillion. In fact, a third of our total economic growth is attributed to this increase in U.S. exports. And exports mean jobs. Each $1 billion in increased exports supports 5,400 to 5,900 U.S. jobs; 11.3 million Americans now owe their jobs to exports. That is an increase of 1.6 million in the last 5 years. And those are good jobs, jobs that pay 13 to 18 percent more, on average, than non‑export‑related jobs. Indeed, increasing exports and the well‑paying jobs that they support, is a critical tool for dealing with inequality in this country.
In 2014 we will work to conclude negotiations on the TPP Agreement, a key pillar of our rebalancing strategy to Asia. TPP is currently being negotiated among 12 countries, some of the largest and fast‑growing economies in the world, representing 40 percent of the global GDP, and a third of global trade. We are working to ensure that the final agreement will provide comprehensive market opening for goods and services, strong and enforceable labor and environmental standards, commitments on intellectual property that promote innovation and creativity, as well as access to information and life‑saving medicines, groundbreaking new rules designed to ensure fair competition between state‑owned enterprises and private companies. And, for the first time, obligations that will address the issues of the digital economy.
We are also working to complete parallel negotiations with Japan to address longstanding issues related to autos, insurance, and other non‑tariff barriers. And, building on last year’s successful launch, we expect to make significant profits this year towards a TTIP agreement with the European Union. This will strengthen the world’s largest trade and investment relationship, and further underscore the strategic importance of the trans‑Atlantic relationship.
Agriculture is vital to the American economy. In 2013, U.S. farmers, ranchers, and growers exported a record $148 billion of food and agricultural goods to consumers around the world. And this year, this Administration aims to help them build on that record performance.
U.S. manufacturing plays a key role in our economy today and in the future. As American manufacturers increase our capacity to produce more advanced and value‑added goods, consumers around the world continue to place a high value on products made in America. In 2012, the U.S. exported nearly $1.4 trillion in manufactured goods. And in 2014, we aim to build on the strength of our manufacturing sector.
The U.S. is an innovative economy, and the Obama Administration is committed to protecting intellectual property, which is vital to promoting and encouraging innovation and creativity. Millions of Americans’ jobs rely on intellectual property, and we will continue to use our trade agenda in 2014 to defend the IP rights of our creators and innovators, while supporting the freedom of the Internet, encouraging the free flow of information across the digital world, and ensuring access to affordable medicines, particularly by poor and less‑developed countries.
At the WTO we will capitalize on the success of the ministerial meeting in Bali last year. In March we notified Congress of our intent to enter into negotiations on an environmental goods agreement with the world’s largest traders in environmental goods, representing 90 percent of this $1.4 trillion market. And we will also move this year towards conclusion of negotiations on two major sectoral agreements: the Trade in Services Agreement and the expansion of the WTO Information Technology Agreement.
The Obama Administration has placed unprecedented emphasis on trade enforcement. This Administration has filed 17 WTO complaints, and doubled the rate of cases filed against China. In fact, just last week, the U.S. scored an important victory for American workers and manufacturers, and for upholding WTO rules on fair access to raw materials that are essential for maintaining U.S. manufacturing competitiveness. And through our ongoing enforcement agenda, we are leveling the playing field for key agricultural producers, aircraft workers, and manufacturers of wind turbines and high‑tech batteries across the country.
As we work through this agenda, we will continue to consult closely with Congress and seek input from a wide range of advisors, stakeholders, and the public. We have held over 1,200 meetings with Congress about TPP alone, and that doesn’t include the meetings we have had on TTIP, TPA, AGOA, and other trade initiatives. Our congressional partners preview our proposals and give us critical feedback every step of the way, and we ensure that any Member of Congress can review the negotiating text, and has the opportunity to receive detailed briefings by our negotiators.
We are increasing the diversity of trade policy input we receive through the creation of the Public Interest Trade Advisory Committee, to include stakeholders focused on consumer, public health, and other public interest issues. And, consistent with the statute, the Administration is soliciting qualified candidates to serve on the ITACs, our Industry Advisory Committees, to ensure that they are representative of industry, agriculture services, and labor interests.
Finally, let me say a word about trade promotion authority. The last TPA legislation was passed over a decade ago, and much has changed since then. There has been the May 10, 2007 bipartisan agreement on labor, environment, innovation, and access to medicines, driven by key members of this Committee. There has been the emergence of the digital economy, and the increasing role of state‑owned enterprises in the global economy. These issues should be reflected in the statutory negotiating objectives of a new TPA bill.
We have heard from many that TPA needs to be updated, and we agree. The Administration welcomed the introduction of the bipartisan TPA legislation in January, and look forward to working with this Committee and Congress, as a whole, to secure trade promotion authority that has as broad, bipartisan support as possible. We also look forward to renewing trade adjustment assistance, which expires at the end of this year.
The ambitious trade agenda I have laid out today creates opportunities for new, well‑paying jobs, higher growth, and a stronger middle class. It incentivizes individuals and businesses to bring back, expand, and start new production here, in the United States. And, at its core, this trade agenda emphasizes strong, enforceable rules that promote U.S. values and U.S. interests. And, of course, we could only accomplish these goals and priorities through strong, bipartisan cooperation between Congress and the Administration.
Thank you again for the opportunity to testify. I am happy to take your questions.
[The statement of Ambassador Froman follows:]
*Chairman Camp. Well, thank you very much, Ambassador Froman. Earlier this year, I introduced a bipartisan, bicameral trade promotion authority legislation. It sets out specific negotiating objectives that Congress wants to achieve in our trade agreements, and there is a robust framework for congressional consultations, and actually ensures that Congress has the final say on consideration and implementation of any trade agreements. I believe this is absolutely essential legislation to negotiate and conclude the best agreements possible — it strengthens USTR’s hand at the negotiating table.
Mr. Ambassador, are you committed to meeting the negotiating objectives set out in TPA, and will you comply with the extensive consultation with Congress, and information‑sharing provisions set out in TPA?
*Ambassador Froman. Well, Mr. Chairman, we very much look forward to working with this Committee and with Congress, as a whole, to get a trade promotion authority bill that has got broad, bipartisan support. And, in that context, we would very much look forward to meeting the negotiating objectives and the consultation procedures included in such a bill.
As you said, TPA is the way that Congress gives us our negotiating objectives, our marching orders for negotiations, tells us how it wants us to work with Congress before and during the negotiations, and ultimately, what procedures Congress will use to approve or disapprove any trade agreement we bring back. And we very much think that having that authority over time helps open markets and increase exports, which helps drive job creation here, in the United States.
*Chairman Camp. I appreciate that. And you and I have previously discussed this. It is very important for Congress, and particularly this Committee, to know the details of negotiations so that we can consult in a meaningful way. And we can provide our guidance and views to the Administration, as we move forward, because consultation without the appropriate information really cannot be consultation.
Our level of access to information with prior administrations, Republican and Democrat, has always been complete and thorough. And, Ambassador, do you commit to working with this Committee to provide us the most updated information, including access to all the text, in a timely and complete way?
*Ambassador Froman. I do.
*Chairman Camp. Well, thank you very, very much for that.
You know, I very much appreciate your tireless efforts on the Hill, and in meeting with both Republicans and Democrats to talk about trade and TPA. We do need strong support from the White House and the President. As I said in my opening statement, we need to be, really, all-hands-on-deck. What is the Administration doing to build congressional support?
*Ambassador Froman. Well, we have a whole‑of‑government approach to this. As you know, the President talked about this in the State of the Union. The Vice President has talked about it. They have met with members of the Democratic party, as well as the Republican leadership on this issue. We have had the Chief of Staff of the President up here talking about it, as well as the Secretary of Treasury, Secretary of Commerce, Secretary of Agriculture, Secretary of State. Secretary of Defense has been writing op eds on the importance of our rebalancing towards Asia, including TPP as a critical component of that. So we work with all of our interagency partners at the Cabinet and the White House level on down, to build support up here for our overall trade agenda.
As you noted, we are all up here a great deal, as we have had, as I mentioned, more than 1,200 consultations on TPP alone. Over 450 of those have been with this Committee and its staff. And so, we are very much involved in making sure that Members of Congress know what it is that we are working on, have input, give us feedback, and that we are answering their questions and building support, getting them comfortable with our trade agenda, so that we could move ahead.
*Chairman Camp. Well, thank you. And, with regard to TPP, I am committed to working with you to complete TPP. I think a robust agreement would have significant benefits for the U.S. economy, support job creation, and better‑paying jobs. I am concerned that Japan is significantly holding up progress on TPP. And while Japan has been helpful in many of the rules areas, Japan’s position to exclude or limit the inclusion of a significant number of important agricultural products from the scope of TPP has become a serious impediment. Japan stands contrary to the commitment, frankly, that Japan made when it joined TPP to put all issues on the table. It is also giving countries like Canada an excuse not to meaningfully open up their markets. So adequately addressing our bilateral auto issues with Japan is critical for my support. If a country is not ready to make the commitments to join TPP as an ambitious, high‑standards agreement, then, in my view, we should complete TPP without that country, and allow it to join later, if and when it is ready to make the necessary commitments.
But, first, what is your strategy for ensuring that Japan adequately opens up its agricultural and auto markets, and do you agree that a country should not be in TPP if it can’t make sufficiently ambitious commitments?
*Ambassador Froman. Well, Mr. Chairman, at this juncture in the TPP negotiation, all eyes are on Japan. Not just the U.S., but all the TPP countries are focused and are looking at Japan to make sure that they provide comprehensive access to their market, both the agricultural side and other parts of its market. And we are reminding Japan what it and all TPP members agreed to when they joined TPP, that this is intended to be a high‑standard, ambitious, comprehensive agreement. We can’t have one country feeling entitled to take off the table and exclude vast areas of market access, while the other countries are all putting on the table more ambitious offers. Japan is not the only country that has sensitivities; we all have sensitivities. And we are working together to create an ambitious agreement in that context.
We are also reminding Japan of the benefits of a successful TPP agreement, and what that can bring to its economy, particularly at this critical time in its economic recovery, how its future prosperity could be tied to the structural reforms that TPP can help incentivize, and how completing TPP can help enhance its leadership role in the Asia‑Pacific region.
We are well aware of the political sensitivities that Japan has on a number of issues. This isn’t an issue of us needing to be more flexible. We are being plenty creative in trying to come up with ways to ensure comprehensive market access to Japan that addresses political sensitivities, as well. It is time for Japan to step up to the plate. And, as I said, that is not just our view, that is the view of all the TPP countries.
We are pressing them on the automotive front, as you suggested, as well. We have got agreements before they came in to TPP on tariffs and on access to their market, and sort of expedited approval of our imports into their market. But we have a series of other issues dealing with their financial incentives, their standards, their distribution, the transparency of the regulatory process, that we are pursuing at a parallel negotiation. We are making some progress in that, but the gaps still remain, both on the agricultural side and on the auto side. And we are very much focused on trying to bridge those gaps.
Ultimately, it is Japan’s decision, as it looks to its own future, as to whether it is prepared to take the bold steps necessary to be part of this groundbreaking agreement. And, let me assure you, we are remaining very focused on assuring that they open their agricultural markets and their automotive markets in meaningful and substantive ways, consistent with the high ambition of TPP.
*Chairman Camp. Well, thank you. And, lastly, I have raised with you before the pressing need to include currency disciplines in TPP. And are you considering including provisions on currency in the agreement? What would those provisions look like, and what factors should be taken into account in determining the U.S. position?
*Ambassador Froman. Well, currency is a serious issue, and we certainly have heard from Members up here. And it is a serious issue for the Administration, itself. The Treasury Department, of course, has the lead on this issue for the Administration. But from the President to the Secretary of Treasury, to the rest of the Administration, it has been a high priority from day one of this Administration to press our trading partners to move towards more market‑oriented exchange rates. For example, with China, whether it is through the IMF or the G20, or where appropriate, with other countries through the G7 we have been pressing countries towards market liberalization and market‑determined exchange rates.
With China we have had ‑‑ we have made some progress. In June 2010 they began to liberalize their exchange rate again, and it has moved 18 percent in real terms since then. It is not far enough, it is not fast enough. We need to continue to press them at every occasion, as we do. And we are continuing to consult. The Secretary of the Treasury, myself, we are consulting with Members of Congress, with stakeholders, to determine how best to address the underlying issue.
*Chairman Camp. All right, thank you. Mr. Levin?
*Mr. Levin. Thank you. Mr. Chairman, you raised Japan. And I think it illustrates the work yet to be done. I think it illustrates the need for continuing and major congressional involvement. It is often said that Congress sets the terms of negotiations, and that has been done in TPA. There is no TPA. TPP is in the middle of its negotiations.
And I think that means that there has to be a way found to be sure that this Congress, this Committee, and broader, are deeply involved in the negotiations, in the discussions. I think that is the only way an agreement can be passed here. And I think our involvement will send a signal to our trading competitors and those we are negotiating with that, as you proceed, there will be support from this Congress. It is only that intimate relationship between the Congress and the Administration that will really work here. And I think Japan is a good example, because ‑‑ and we have talked about this ‑‑ much of the work remains to be done. What was agreed to was kind of conceptual.
Japan ‑‑ this is the first one‑on‑one negotiation the U.S. has had with a country the size of Japan. And it has the most closed market in the automotive sector of any country, surely, of its size. And the same is true of agriculture.
So, let me just ask you ‑‑ and you raised, Mr. Chairman, currency. That is another example of why there needs to be the most active involvement of Congress in these discussions. So far, currency hasn’t really been put on the table. And there is a letter from the clear majority of Senators insisting that this be addressed, as well as a letter from a majority of Members of the House.
So, let me cite another example: Vietnam. A command economy. We have had difficulty enforcing our trade agreements. Just say a few words about how you think it is possible to work out an agreement with a very closed ‑‑ or what has been a closed economy, in terms of its basic markets, as well as its labor markets, and be sure, before we were asked to act, that there would be very effective change within Vietnam to make their commitments real. If you would, comment on that.
*Ambassador Froman. Well, thank you, Congressman Levin. You know, with regard to Vietnam ‑‑ and this is true of the other countries, too, but you have pointed out correctly that Vietnam poses particular challenges within TPP, given the level of its development, the structure of its economy. We have made clear throughout the negotiations, and before Vietnam joined TPP, the kinds of standards that we would be expecting through TPP, and the kind of changes and reforms that would be necessary to bring them into conformity with those standards.
So, for example, on state‑owned enterprises, which play a significant role in the Vietnamese economy, we have been working with them on a path towards them reforming their SOEs, consistent with the obligations that we are negotiating in TPP. And the same is true on labor issues and on environmental issues. They see TPP as a potential mechanism for helping to support what they have determined is their own domestic reform agenda.
*Mr. Levin. And changes would be in place before the final negotiation, or at least before we were asked to act?
*Ambassador Froman. Well, I think in each of these cases we have to work through what the staging of their changes are, and how it relates to when we submit it to Congress for approval, when it goes into force, et cetera. Vietnam is not going to transform itself overnight, but we need to make sure we have got mechanisms for assuring that they meet their obligations, consistent with the standards of the agreement.
*Mr. Levin. Thank you.
*Chairman Camp. All right. Mr. Johnson?
*Mr. Johnson. Thank you, Mr. Chairman. Appreciate you being here.
You know, the expansion of information technology to include additional products would have significant benefit for U.S. manufacturers and consumers. By one estimate, updating the ITA would boost global GDP by $190 billion, and increase U.S. exports by 3 billion, creating 60,000 American jobs. ITA expansion has strong bipartisan support in Congress, and I hope you will continue to press for a robust and ambitious agreement as soon as possible.
I am a little frustrated by China’s refusal to engage productively in these negotiations, and I understand a top priority this year for U.S. high‑tech companies, including the semi‑conductor industry, is a resumption and successful conclusion of an ITA expansion negotiation. What opportunity do you see to move that agreement forward this year?
*Ambassador Froman. Well, thank you, Congressman Johnson. And, first of all, we agree completely with your assessment of the importance of the Information Technology Agreement, and the implications for the U.S. economy, and share the frustration that you expressed about the position of China in the negotiations. We have got countries around the table representing about 90 percent of the global market for information technology products.
And the other countries around the table have put on the table pretty ambitious offers, in terms of opening their markets. China’s offer did not meet that standard. And, as a result ‑‑ it wasn’t just the U.S., it was the U.S., the EU, Japan, and the rest of the countries around the table decided to suspend negotiations until China would return to the table with a more appropriate offer.
We have, together, made proposals to China to try and get them back to the table with what we think is a reasonable path forward. They have yet to respond positively to that. And we continue to raise this at every one of our high‑level meetings, again, from the most senior leadership to the Joint Committee on Commerce and Trade meeting that we had in December that Secretary Pritzker and I co‑chaired in December with our counterpart in China, and we will continue to press that and try and get them back to the table, so that we can complete that agreement.
*Mr. Johnson. You anticipate China talking to us? Do you?
*Ambassador Froman. Well, we certainly hope so ‑‑
*Mr. Johnson. You think China will talk to us?
*Ambassador Froman. We certainly hope so. We have a lot on our agenda with China, but we have made clear that their constructive engagement on ITA is one of our highest priorities, and is a litmus test for how they interact on other negotiations.
*Mr. Johnson. Thank you, sir. Thank you, Mr. Chairman.
*Chairman Camp. Thank you. Mr. Rangel?
*Mr. Rangel. Thank you, Mr. Chairman. And welcome, once again, Ambassador. And let me join with those people that congratulate you for your tenacity, and the ability to bring people together. If you can bring Republicans and Democrats together on this bill, that would be fantastic.
When you say “trade” to a lot of Americans, it means jobs. Throughout your testimony you talk about not only creating jobs through exports, but providing incentives for manufacturing. Many people, including those in the Congress, believe that trade means we are losing jobs. So, it seems to me that, in an agreement, an international agreement, everyone should walk away from the table believing that they did the best they could for their country.
My question to you is, do you have any idea as to geographically or industry‑wide or service‑wide, where these new jobs are going to be created? And since we also have to deal with the re‑training of workers that lose their job as a result of trade, could you give us some ideas of the areas that we expect to lose jobs as a result of this agreement?
*Ambassador Froman. Well, let me start by saying that, as you say, increasing exports supports more jobs here, in the U.S. But these trade agreements are also a key part of driving investment and manufacturing and other sectors in the U.S. I have been visited by several businesses, particularly from Europe, who have come and said, “The U.S. is a great market. You have got the rule of law. You are entrepreneurial. You have a skilled workforce.”
Now you have abundant sources of affordable, cleaner energy, which are giving the United States a comparative advantage, particularly vis a vis Europe. When you complete these trade agreements, TPP and TTIP, the U.S. will have free trade, will have unfettered access to two‑thirds of the global economy. That makes the U.S. the production platform of choice. It makes the U.S. the place where manufacturers want to put their next investment and produce stuff, not just for this market, but to send to Asia, to Latin America, to Europe.
And so, part of our trade policy is also to make the U.S. an even more attractive place to locate businesses, to manufacture, to use as an export platform for the rest of the country. And we do that by virtue of opening markets, but also how we use rules of origin, et cetera, to really drive manufacturing here.
Our market, as you know, is already quite open. Our average applied tariff is 1.3 percent. We don’t use regulations as a disguise barrier to trade. We don’t discriminate against foreigners through our regulations. But that is not true around the world. There are a lot of major markets around the world that have higher tariffs, and that use non‑tariff barriers to keep out our products. So the purpose of these agreements is really to lower those barriers disproportionately, so that we can increase exports from here. They already have access, largely, to our market. The question is whether our workers and our firms will have access to theirs.
I don’t have specific data for you on which industries here or there will gain or lose, but we can certainly work on that with you as we conclude the agreement. I think your point, though, underscores that we need to make sure we are providing our workers with the support that they need and the skills they need to transition as necessary. And that is one reason why in the President’s budget we have a comprehensive worker retraining program, and why we think it is important that the trade adjustment assistance be renewed, as well.
*Mr. Rangel. It is my understanding that trade union leaders or representatives are in some way involved not in direct negotiation, but, say, as observers. Have they shared any of the things that you just said, in terms of the dramatic increase in exports, and, therefore, the increase in jobs, so that they can increase their membership?
*Ambassador Froman. Well, labor is a critical group of stakeholders for us in these negotiations. We have the Labor Advisory Committee, where 23 union presidents serve on that advisory committee. Four of them serve on the President’s Advisory Committee on Trade Policy Negotiations. And, as I mentioned in my testimony, we are now inviting applications for the other industry trade advisory committees. And they have had tremendous input from the beginning, not only on the labor chapter, but on other chapters: a seat on enterprise chapter, rules of origin, market access issues. And we are still in the midst of negotiating many of those issues, but we have tried very hard to take into serious consideration and to negotiate successfully on the behalf of those issues.
*Chairman Camp. All right, thank you. Time has expired.
*Mr. Rangel. Thank you.
*Chairman Camp. Mr. Nunes?
*Mr. Nunes. Thank you, Mr. Chairman. Ambassador, welcome. Great to see you again. Could you give us a quick update on your negotiations with ‑‑ solving or dealing with SPS issues, specifically dispute resolution in both the TPP and the EU negotiations?
*Ambassador Froman. Well, in the TPP negotiations, which are further along, we are negotiating a strong SPS chapter. And we anticipate making sure that that chapter is subject to dispute settlement, either at the WTO or in TPP, itself.
*Mr. Nunes. You feel comfortable with where we are ‑‑ you think we are making progress? Because several members of this Committee and several Members of Congress have expressed a strong interest in making sure that we do have dispute resolution.
*Ambassador Froman. It is not a fully resolved issue, but I think we are making progress, and we are doing so in a way that ensures that our regulatory agencies ‑‑ the Food and Drug Administration and others ‑‑ can do what they need to do, as necessary, in terms of risk assessments and equivalency determinations to implement their mandate of their obligations to provide for food safety, and to implement the Food Safety Modernization Act.
*Mr. Nunes. And I know that, because we have a great working relationship, if there is anything that we can do to ease this process here in the United States to make it easier for you to negotiate, we are willing to help, and we will make ourselves available.
The status of the President’s proposal for consolidating our trade agencies. There is quite a bit of concern over this, of, you know, moving USTR under some other agency. We have had this longstanding arrangement with USTR, it has worked very well. Can you update us on the President’s proposal?
*Ambassador Froman. Well, I think any such reorganization requires reorganization authority to be granted to the President by Congress. And, obviously, that would require a great deal of consultation and coordination with Congress, in terms of how to proceed.
*Mr. Nunes. I know you know that would be quite controversial, I think, for many of us here in the Congress, but I appreciate your keeping us updated on it.
Just briefly, the cotton dispute with Brazil, could you talk to us about where that is?
*Ambassador Froman. Well, with the passage of the farm bill, the Brazilian government, as I understand it, is assessing what was done in the farm bill on cotton to determine whether they believe that meets our obligations under the WTO case. We are in dialogue with them now to see whether we can settle the case, based on the changes in the farm bill, or whether they are going to seek a compliance proceeding at the WTO. And those discussions are ongoing.
*Mr. Nunes. And, as you know, I think, those of us in Congress who worked on the farm bill, specifically with the cotton provision, we do feel like it does comply with the WTO. So, hopefully, our Brazilian friends will put this to bed so that we can move on with our relationship with the Brazilians.
Just briefly on Ukraine, and as it relates to LNG exports from the United States, we are going to hold a hearing next week on this issue. Have you put much effort into looking at the long‑term fundamentals of having a strong export policy as it relates to LNG?
*Ambassador Froman. Well, there is nothing specifically that we are currently doing in TTIP or TPP that directly bears on the export of natural gas. That is governed by, as you know, the Natural Gas Act, which determines how the Department of Energy should make its findings with regard to public interest for free‑trade countries and non‑free‑trade countries.
*Mr. Nunes. Thank you. We will have a hearing next week, and we will be glad to share some of that information that we glean from the hearing. And I just want to thank you for your continued efforts to keep the Congress informed ‑‑ we have had a great working relationship, and I hope that that continues.
*Ambassador Froman. Thank you.
*Mr. Nunes. I yield back, Mr. Chairman.
*Chairman Camp. Thank you. Mr. McDermott?
*Mr. McDermott. Thank you, Mr. Chairman. I want to add my voice to those who will miss you.
*Chairman Camp. Well, thank you.
*Mr. McDermott. I ‑‑ Mr. Froman, it is good to see you. And, as you know, there is ‑‑ five minutes isn’t very much time to talk about a lot of issues. I could talk about rebar dumping in the United States out of Mexico, and a few other things that might be interesting, but I want to focus on agriculture.
White noodles in Asia, the most highly‑prized white noodles, are made from white wheat that grows in Washington and Oregon, and it is shipped through the northwest ports. It has been going on since the 1930s. The companies ‑‑ Temco, which is co‑owned by Cargill and CHS ‑‑ have employed longshoremen for 30 years under a union agreement. And recently, two Japanese companies, conglomerates, have come in, bought places. Marubeni and Mitsui have ‑‑ are now operating in Washington and Oregon, and have demanded a concessionary agreement from the labor unions.
Now, at the same time, Cargill and CHS have been negotiating, and they came up with an agreement that was approved by 75 percent of the union members. The Japanese conglomerates, their concessionary agreement that they forced on the people was rejected by 95 percent of the people in these unions.
And it seems to me that when companies are coming in to do business with our labor unions, and they are now demanding concessionary agreements and have locked the members out, they are running with scab labor and with their administrative people ‑‑ that is how they are running the graineries ‑‑ it seems like a strange time for them to want to come and negotiate labor agreements in a TPP. And I understand that USTR has been working with the Japanese on this issue.
And I would like if you could give us some idea of what the status is of the resolution of this kind of issue, because it is a PR problem for them to come in to do union‑busting at the same time they are talking about negotiating a trade agreement.
*Ambassador Froman. Well, thank you, Congressman McDermott. And thank you for raising this earlier. I think last year, you and some other members of the Washington Delegation raised this, and we engaged with the government of Japan on this issue, made clear exactly the point that you made, that it was important for this issue to get resolved. My understanding is that it has not yet been resolved, and we are encouraging the parties to come together and get it resolved, as a labor management issue. But we are going to continue to monitor that.
*Mr. McDermott. Do you see that as being an impediment to getting the votes in the Congress, if these kinds of issues are out there? I mean we have already heard from the chairman, talking about automobiles. And then you are talking about the docks where you have got dock workers, and you ‑‑ is ‑‑ how are you going to get around that in your negotiations?
*Ambassador Froman. Well, I think we will make clear to our trading partners on a number of the issues that Members of Congress have that making progress on those issues, resolving those issues, is part of creating the environment in which this agreement is going to be considered, and considered favorably.
And so, it certainly contributes to the overall atmosphere around this agreement.
*Mr. McDermott. I have a major steel plant ‑‑ people think of Washington State, they think of Boeing and Starbucks and Microsoft. That is not all of Washington. Our major export is agricultural goods, but I have actually got a steel plant right in the middle of Seattle that makes the best rebar, the cleanest rebar plant in the whole world, I think.
But they are being flooded by Mexican rebar. What kind of ‑‑ or at least they feel they are. What kind of situation do you have ‑‑ because the Mexicans are in this, as well as the Japanese. It isn’t ‑‑ you know, the problems you have are all over the place.
*Ambassador Froman. Well, my understanding is, on steel issues and the rebar issues, that there are cases that are working their way through, or pending at the Department of Commerce and the ITC as part of our trade remedies laws, anti‑dumping and countervailing duty cases. Those are quasi‑adjudicatory processes run by the Commerce Department and the ITC. It is something we are monitoring but we are not directly involved in, because they are quasi‑adjudicatory and under the control of the Commerce Department and the ITC. But we will monitor that.
*Mr. McDermott. Another time I will talk to you about drug prices.
*Ambassador Froman. Happy to.
*Mr. McDermott. Glad to see you here.
*Ambassador Froman. Thank you.
*Chairman Camp. All right. Mr. Brady?
*Mr. Brady. Thank you, Mr. Chairman, for holding this hearing. You know, trade is economic freedom. It is the ability to buy and sell and compete around the world with as little government interference as possible. And what it means is that when that mom walks into a grocery store, or that college student goes online, the choices they see and the prices they pay are determined by them, rather than some government somewhere.
And so, the work you are doing, Ambassador, is just critical in results not just in new jobs here, in America, but in new choices in families being able to stretch their pocketbook farther. So this has a real impact on our families. That is why I hope our trading partners understand this Congress is pro‑trade. We support an aggressive trade agenda. And the work that you are doing in the Asia‑Pacific, in Europe, in international services and facilitation and technology, is exactly what we think is important to get this economy going. And you have got a great team behind you. So I want to commend you just for your overall approach. I think it is exactly the right tone, exactly the right substance, at exactly the right time, especially in a world whose economy is, frankly, struggling a bit. And you can play a role in doing that.
So, I want to ask you about the Asia‑Pacific region. You know, by some estimates, 80 percent of all the new economic growth in the world will occur in the Asia‑Pacific region. We want to be, as Americans, where those new customers are. The Trans‑Pacific Partnership is really a 21st century trade agreement, unlike others in the past, and I think will have tremendous value.
So, what is your strategy? I know the goal has been to complete that by the end of the year. What do you see ‑‑ what is your strategy toward that end? What are some of the challenges that you face in trying to close that out in a timely way?
*Ambassador Froman. Well, thank you, and thank you for your support, and for the support of my team, Congressman Brady.
As you said, TPP and this region is so critically important to our economy here. Right now, there are 500 million middle‑class consumers in the Asia‑Pacific region. That number is expected to grow to 2.7 billion between now and 2030. And the question is, who is going to serve that market?
*Mr. Brady. Yes.
*Ambassador Froman. Are they going to be buying American goods and taking American services? Or are they going to be getting their goods and services provided by somebody else? What are going to the be the rules defining trade in the region? Are they going to be the high standards that we are pressing for on labor and environment, on intellectual property rights? Are there going to be disciplines around state‑owned enterprises, so there is a level playing field with private companies? Will we be taking the digital economy into the future, and making sure that the Internet is free, that we avoid restrictions on the flow of information? That is what is at stake with TPP, because we are not the only party out there.
*Mr. Brady. Yes.
*Ambassador Froman. There are other parties out there with very different versions and visions of trade, who are also out there negotiating agreements. And if we sit on the sidelines and don’t fulfill our leadership role in this effort, others will help define the rules for us. And that will put our workers and our firms very much at a disadvantage.
We are well down the road in these TPP negotiations. We are in the end game. We have a reasonable number of outstanding issues on rules, and we have some critical outstanding issues on market access. As the chairman talked about earlier, the critical issue right now is Japan, market access on agriculture and on autos. It is then bringing Canada to the table, because I think Canada is waiting to see what happens with Japan.
*Mr. Brady. Yes.
*Ambassador Froman. Once the market access piece falls into place ‑‑ and all the other countries are waiting for Japan to play its appropriate role in this negotiation ‑‑ once the market access piece falls into place, we expect to be able to resolve the other issues around the rules. There are difficult issues that are left.
*Mr. Brady. Yes.
*Ambassador Froman. There is a reasonable number of them. Our negotiators are working around the clock, here and around the world, to narrow those differences and close them out.
*Mr. Brady. Well, I would like to see Japan included in this, but they have got to hit the standards, you know, that we are insisting among all our trading partners. Do you expect to be able to complete this this year? *Ambassador Froman. Oh, very much so. I mean we are focused on, as I said, working around the clock to get this done as soon as possible.
*Mr. Brady. And, obviously, we appreciate the work, in a bipartisan way, we continue to build support for the Trade Priorities Act, so that we can really direct the White House toward our negotiating objectives to make sure there is strong consultation, and we can assure others of a timely vote. I think that is critical, as well. So, thank you, Ambassador, for the work you are doing.
*Ambassador Froman. Thank you.
*Chairman Camp. Thank you. Mr. Lewis?
*Mr. Lewis. Thank you very much, Mr. Chairman, for holding this hearing. Mr. Ambassador, welcome. Thank you for your great work, and thank you for being here today.
You know, Mr. Ambassador, in our own country we believe in certain basic rights, certain basic freedoms: freedom of the press, freedom of assembly, freedom of worship, open and free election. You said a moment or so ago in your statement that a trade policy should be a reflection of our values. How do you square this with a country like Vietnam?
Several people from my district came here to Washington last week, a Vietnamese‑American who fleed [sic] Vietnam because of Communism, because of suppression. And they are asking, they are raising a question. How can we trade with Vietnam? How can we do it?
*Ambassador Froman. Well, Mr. ‑‑
*Mr. Lewis. Or with China.
*Ambassador Froman. And we very much ‑‑
*Mr. Lewis. And Vietnam has such a strong relationship with China. How can we go down this road? How can we get in bed with them?
*Ambassador Froman. Well, through our negotiation with them, we are working to address some of the issues that you mentioned. For example, on labor rights, which is a key issue in Vietnam, we want to make sure that there is a meaningful rights of association, a meaningful right to collective bargaining, meaningful disciplines on forced labor, child labor, meaningful disciplines and commitments on acceptable conditions of work, all consistent with the ILO standards, and a work program that can achieve that objective.
In all of our meetings with the Vietnamese government, from the president on down, when the President met with the president and prime minister of Vietnam, all the way on down, human rights are very much part of our agenda, and we talk about the importance not only of what we are doing in the agreement on labor rights, but also the importance of Vietnam making progress on outstanding human rights issues as being an important part of creating the environment in which there would be support for this agreement.
Also, when you look at the agreement more generally, if you look at what we are trying to do on the digital economy and the Internet, about the free flow of information, that, too, is supportive of some of those values that you mentioned about freedom of speech, making sure people have access to information, that governments are not putting restrictions around the Internet.
So, it is not that we can transform a country completely, or solve every problem through a trade agreement. But, through the trade agreement, we could engage in such a way as to make meaningful progress on these sorts of issues beyond where we are in the status quo. I think the question is ‑‑ you take a country like Vietnam, which has well‑known challenges. What is the best way, what is the most effective way of improving the situation there for workers, for minorities, for people who want to worship? And our view is engagement with them through this trade negotiation is the most effective way of making progress on those issues.
*Mr. Lewis. Do you have any assurance that 5 years from now or 10 years from now, that we are going to see radical changes in Vietnam? People receiving starvation wages there.
*Ambassador Froman. Well, that is exactly why, for example, in the labor chapter, creating some fundamental labor standards about right of association, right to collective bargain, restrictions on forced and child labor, decent conditions of work, that is one reason in having those be enforceable, having them be binding and enforceable. And our ability to continue and, over time, ensure that those are upheld is a central part of what we are trying to negotiate.
I, too, met with a group of Vietnamese emigres, as well as human rights activists around Vietnam before I went to Vietnam last time, precisely to make sure we understood what their priorities were. And we are working with the State Department. The State Department is having a human rights dialogue, I believe, next month with Vietnam as part of our ongoing engagement with them, as part of TPP and our overall engagement to try and address these issues.
So, it is high on our agenda, and we think it is very important that Vietnam make progress on these issues, as part of our ongoing engagement with them.
*Mr. Lewis. Mr. Ambassador, let me just ask you this last question. Do you believe that it is fair to keep the text of this important historic negotiation hidden from the American people?
*Ambassador Froman. Well, we are always looking for ways to improve the transparency and the input that we get from stakeholders, from Congress, and from the American public. You know, I would say, first and foremost, we engage with Congress. And Congress is the people’s representatives. We look to ‑‑ and particularly our committees of jurisdiction ‑‑ to provide input on every proposal we table, and to give us feedback throughout that process.
We have a group of cleared advisors that represent not just different businesses, but every major labor union, environmental groups, consumer groups. And, as I mentioned in my testimony, we are launching a new advisory committee to be able to bring in other public interest groups into the process. We want to make sure we have got their input.
We have experimented with putting out for the public summaries of our TTIP objectives, summaries of our negotiations, to try and be as public as possible and be as transparent as possible, while at the same time ensuring that we can negotiate the best deal for the American people. And I ‑‑
*Chairman Camp. All right, thank you. Time has expired.
*Ambassador Froman. Sorry.
*Chairman Camp. Mr. Tiberi?
*Mr. Tiberi. Thank you for being here, Ambassador. Japan’s unwillingness in TPP to meaningfully open up its market to agriculture products like pork, beef, dairy, as well as processed products containing these products, I believe, is unacceptable. I met with a group of farmers, pork producers from my district in Ohio, yesterday. And they are very concerned about this particular issue.
As you know, the United States has sought in past trade negotiations comprehensive liberalization with respect to agriculture products. This is true for agreements with both developed and developing countries. So, if Japan is allowed to continue to remove entire categories like agriculture products from liberalization, I know the agriculture sectors’ ‑‑ the pork producers, in particular ‑‑ support for TPP will be jeopardized.
So, as you continue down this road in negotiating with the Japanese, will you commit to us today not to allow the Japanese to exclude agriculture markets from the TPP?
*Ambassador Froman. Yes. I mean our goal in TPP, and the goals that Japan signed up for when it joined TPP, is exactly what you have said, which is comprehensive market access. And that is exactly what we are going to achieve, we are working to achieve, in this negotiation.
It is a difficult negotiation. They have not yet come to the table with a position that allows us to bridge our remaining gaps on a series of commodity issues. Not just pork, but other issues, as well. But we are continuing to press them with the goal of achieving comprehensive market access.
*Mr. Tiberi. And you ‑‑
*Ambassador Froman. And we agree that there shouldn’t be exclusions of commodity groups from this agreement.
*Mr. Tiberi. And don’t you agree that if you exclude a number of things in this agreement, that that just sets us up for further exclusions down the road in other free trade agreements?
*Ambassador Froman. Well, we think that the TPP was intended to be an ambitious, comprehensive, high‑standard agreement, a 21st century agreement. That is the conditions under which all 12 of us joined the negotiation. And we think it is important that Japan come to the table to achieve that objective, absolutely.
*Mr. Tiberi. So I can tell the pork producers in Ohio, at least, that you are committed to not allowing exclusions of ‑‑
*Ambassador Froman. That is ‑‑
*Mr. Tiberi. ‑‑ products like agriculture, pork, beef ‑‑
*Ambassador Froman. We think everything should be on the table, everything should be included. That is what a comprehensive agreement is.
*Mr. Tiberi. I appreciate that. A second issue that is ‑‑ not totally within your wheelhouse. A number of manufacturers in Ohio have told me they have seen a surge in steel coming from outside the United States. And some of that comes from countries that obviously have some government subsidies with respect to their industries. And, obviously, the Department of Commerce is involved in this, as well. Is this something that your office is aware of, and sees, and is concerned about?
*Ambassador Froman. Yes. I mean it is something we are aware of. I meet with the steel industry on a regular basis, as well as with the steel workers on a regular basis. And it is exactly one of the reasons why, in TPP, we are trying to get at issues like state‑owned enterprises, state‑owned enterprises that benefit from subsidies or regulatory forbearance. They may, back home, have cheap land and cheap energy and all sorts of benefits, and then they compete against our firms on an unfair playing field. And, through TPP, for the first time, we are creating disciplines to try and level the playing field between state‑owned enterprises and private firms. It is one of the most important new issues being dealt with by TPP. It would affect, of course, not just the steel industry, but other industries, as well. But the steel industry is one in which there is a lot of state‑owned enterprise involvement.
*Mr. Tiberi. I would like to send you a follow‑up letter on this issue, kind of getting into the deeper grass on this, if you could just be alert to that.
*Ambassador Froman. Absolutely.
*Mr. Tiberi. And I would love to have your further input from you and your staff. Yield back.
*Ambassador Froman. Look forward to it.
*Mr. Johnson. [Presiding] Thank you. Mr. Neal, you are recognized.
*Mr. Neal. Thank you. Thank you, Mr. Chairman. First, I want to thank you, Mr. Ambassador, for the work that you have done outside of committee hearings with footwear across New England. You have been very helpful, very good with your time, and you have tried really hard to speak to the specific questions, understanding that there is a footwear industry that is still alive in New England, and we certainly want to keep it that way.
One of the biggest issues that surround the question of trade agreements, obviously, is enforcement. And there is a suspicion, as you know, that geopolitics sometimes gets in the way of enforcement. And I think it is particularly acute when it comes to intellectual property rights. And clearly, I think, in currency manipulation, as it related to China.
But let me follow up specifically on something that Mr. Tiberi said, because I think it bears noting, and that is the suspicion that one of our trading partners is in the midst of dumping steel. And we need to be mindful of that as part of the enforcement agreements that I spoke of just a couple of moments ago. And I think, specifically, there is some concern that South Korea is illegally preparing to dump into the U.S. market. And I know that the Commerce Department is considering filing a complaint. And maybe you could bring us up to date on that.
And the last comment I want to make to give you some time just to talk about these issues, when it comes to trade adjustment assistance, there has been hodge‑podge programs across the country. And the truth is that the jury is kind of out still. Some work and some don’t work. Might I suggest that we direct more of the trade adjustment assistance to community colleges? I think that would be the atmosphere which would be more conducive to preparing people for the skill set that they are going to need if they are dislocated because of changes that trade, they suspect, have created.
So, I would give you some time on both points.
*Ambassador Froman. Great. Well, thank you, Mr. Neal. And certainly we agree completely on the importance of enforcement, and we have had a very robust enforcement agenda throughout this Administration. We have brought more cases to the WTO than ever before. We have doubled the rate in which we have brought cases against China.
We have created something called the Interagency Trade Enforcement Center based at USTR, with a lot of support from Commerce, but also support from a number of other agencies, which has allowed us to put together more complicated, complex cases to be able to bring to the WTO or ‑‑ under our trade laws. We think that is vitally important, that if we are going to negotiate agreements, that part of the bargain with the American people is that we fully enforce the rights that we fought so hard for.
And so, we are fully committed to that, and we are always looking for additional cases to bring, putting together the positive cases.
The particular AD, or anti‑dumping, or countervailing duty cases you mentioned, are the province of the Commerce Department and the ITC, of course, and we are not directly involved in those. We are not involved in those unless they are challenged at the WTO, and then we defend our trade laws in front of the WTO. But we do monitor issues like steel very closely.
You know, on the trade adjustment assistance and worker retraining, we will certainly take ‑‑ ultimately take those views back to the Department of Labor and the Domestic Policy Council and others who are involved in this. As you know, in the budget, the President has a proposal for comprehensive skills development, and we also have the trade adjustment assistance program, which expires in December, and we very much support making sure that American workers have the support and skills that they need to compete in the global economy.
*Chairman Camp. [Presiding] Thank you. Mr. Reichert?
*Mr. Reichert. Thank you, Mr. Chairman. Welcome, Ambassador. Good to see you again, and I want to add my compliments, as almost every other Member has, to you and your team for your efforts. And I know there are excruciatingly long days ‑‑ if I can pronounce that correctly it would be good. I know that you are really putting forth major effort here.
You mentioned your 1,200 meetings. And we are reaching out, too. Just yesterday, Mr. Boustany and I met with some of the ambassadors from six countries ‑‑ representative of the 12 countries that you are negotiating with. And they have mentioned to us that, you know, the United States has the “big pen” in this. And it was the term that they used over and over, and that they are holding on to the pen with us, and they want to work and be a part of the team.
I am proud to be a member of the Export Council, and have met you there many times, along with the President. And at the last meeting that we had the President mentioned to us how much he appreciated our efforts, and how much he wanted to work with us. And, in that vein, four of us who are the co‑chairs of the Friends of TPP sent the President a letter on January 15th of this year. And we have yet to have a response from the President on requesting to meet with him.
We feel like we could be helpful, because of the meetings that we are holding here with our Republican friends and the interaction we have with the other side of the aisle, with Mr. Kind and Mr. Meeks as co‑chairs, along with Mr. Boustany and myself. If you could relay our message to the President, that we would like to see a response to that letter, that would be very helpful.
And I especially appreciate your repeated comments about a high standard, comprehensive ‑‑ your strategy that you laid out for the year. But I just want to mention to you how important it is for Washington State to get this agreement completed. And I know you see, you know, the whole United States and how important this is. But in my home state there is a recognition that over 40 percent of jobs are tied to trade, and that we need high standard ‑‑ trade agreements to grow these jobs, and I know you agree with that.
As a result, I consistently hear from businesses, local chambers of commerce, and farmers in my home state about the need to renew and update TPA, and this is why I support Chairman Camp’s TPA legislation. This is not just the sentiment in Washington State, and recently we have seen polling data showing that American public has become more supportive of a trade agenda that keeps the United States competitive, and increases jobs.
So, I am interested. In your discussions around the country, are you seeing this recognition of how trade and potential agreements like TPP, TTIP, and TiSA can help the United States? Are you hearing more and more encouraging words, I am hoping, from folks across the country as you and your team reach out?
*Ambassador Froman. Well, thank you, Mr. Reichert, and thank you for your leadership on the TPP Caucus, as well.
Yes, as we travel around and meet with small and medium‑sized businesses and their workers who see the benefit of opening markets, being able to expand their production, expand their exports, grow their workforce, we are seeing that. But I think it is incumbent on all of us to continuously make the case to the American people about what is at stake, and what the potential opportunities are.
As I think the chairman said in his remarks, 95 percent of the world’s consumers are outside the United States; 80 percent of the purchasing power is outside the United States. The growing middle classes that are going to buy made‑in‑America products are growing fastest outside the United States. We need to be there. We need to be on the field, opening those markets for our products, making sure that the rules of the game for that system allow us to compete on a level playing field. And that is exactly what we are trying to do through TPP, and what we are trying to do through TTIP.
But we need to continuously be out there and making that case. There is a lot of misinformation out there about trade and about trade agreements, and we need to take that directly on and make clear to people exactly what the benefits of trade are, the benefits of exports, and how it relates back to jobs and incomes here, in the United States.
*Mr. Reichert. Thank you for your time and your answer. And, again, appreciate it if you could pass on the message to the President that we would like to see a response.
Thank you, I yield back.
*Chairman Camp. Thank you. Mr. Becerra.
*Mr. Becerra. Thank you, Mr. Chairman. Ambassador, thanks for being here. And, Mr. Chairman, by the way, I think all of us echo the remarks that were made earlier about your service to our country and to this Committee.
*Chairman Camp. That means a lot from a fellow survivor of the super committee.
[Laughter.]
*Mr. Becerra. That is right. You are welcome to stay with us if you like, Mr. Chairman. It is not too late.
Ambassador, let me ‑‑ actually, the chairman hit on this point, and I would like to get back to it a little bit, the whole issue of currency. Over the last few years, it has been tough, on occasion, for Members in this body to come together and speak with one voice as American legislators, versus our particular political philosophies. I think on currency you find that, whatever part of this dais, I think a number of us are very concerned about the role currency manipulation has played in making it harder for some of our businesses to compete, in making it hard for some of our businesses to keep jobs in America. And, quite honestly, hard for a lot of Americans who are still unemployed to find another good‑paying job.
And, for many of us, the issue of currency manipulation must be addressed because, while it is not a direct trade activity, the fact is if a country can keep its ‑‑ the value of its currency lower than what it really is, it makes the products it produces look far more inexpensive than they really are. And if you can get into a market and take over that market, at some point you are able to lift the value of that product and extract extra dollars from folks.
And I think, for many of us, it would be very important to see currency manipulation addressed moving forward in these agreements we have with our competitors, our foreign competitors, whether it is these trade agreements or otherwise, but really dealing with it.
I know that the Peterson Institute for International Economics has estimated that half of the excess unemployment in the U.S. today is attributable to currency manipulation by our foreign competitors. Give us a little bit more of a sense of how USTR is doing in trying to get our partners and competitors who we are working these deals out with to abide by currency standards that avoid the manipulation that we see in the markets.
*Ambassador Froman. Well, thank you, Mr. Becerra. First of all, of course, I should say the Treasury is the agency that has the lead on currency issues. But this Administration also believes that currency is an issue and, from the very start of the Administration, has made clear in its bilateral engagement with countries like China, in its engagement with the G20, where there were ‑‑ we had agreement by all the G20, including by China, to move towards market‑oriented exchange rates, through the Treasury Department’s engagement with the G7 partners, to ensure the G7 countries abide by the same kind of rules.
We have made clear throughout that this is an issue, and we want to make sure that we are moving countries in a positive direction. And as I mentioned earlier, taking China as an example, we have made some progress. Not enough, not fast enough, nor far enough. Something that requires continued focus and continued pressure at every opportunity. But we are making progress through the various mechanisms.
Secretary Lew, I know he ‑‑ you had an opportunity to see him up here testify recently, had an opportunity to talk to him about this. And I think Secretary Lew and his consulting on this, we are working with the Treasury Secretary, the Treasury Department, consulting with Members up here, with other stakeholders, to determine how can we be most effective in addressing the underlying concern.
*Mr. Becerra. And I think you have seen that the greater that the action is in trying to deal with currency manipulation, probably the likelihood of having trade promotion authority passing trade deals rises because there is more confidence in this institution that we will finally tackle something that is an invidious way to try to get a leg up over the United States of America and its businesses and its workers.
It is very interesting, because 20 years ago, when I got here, one of the big issues was dealing with how we treat workers throughout the world, labor. And we always thought of trade deals as dealing only with the capital side of things, of the equation. But now we recognize that you can undermine a trade deal by undercutting labor, the value of work, or workers. And can you comment on how you think we are doing with regard to dealing with labor and the environment in these trade deals that are moving forward?
*Ambassador Froman. Well, thank you for making that point, because you are absolutely right. Twenty years ‑‑
*Chairman Camp. We just have a few seconds, so if you could be quick ‑‑
*Ambassador Froman. Sorry. Twenty years ago, labor and environment were really considered to be side issues, and not issues that were core to the agreement. And now, under U.S. leadership, in our recent FTAs and certainly in TPP and TTIP, labor and environment, high standards, fully enforceable, are going to be absolutely core to those agreements, and that creates a new global standard.
*Chairman Camp. All right, thank you.
*Mr. Becerra. Thank you, Mr. Chairman. Thank you.
*Chairman Camp. Thank you. Dr. Boustany.
*Mr. Boustany. Thank you, Mr. Chairman. And I, too, want to thank you for the tremendous work USTR has been doing under your leadership.
Mr. Ambassador, I firmly believe that the source of America’s strength and our capacity to lead internationally is our strong and hopefully growing economy, and our willingness to engage. And you can argue that our most important export is the fair application of rule of law. And you are right ‑‑ the work you are doing is right at the center of all of that.
I want to focus on the investor state dispute settlement issue. I believe that having a strong investor state dispute mechanism in place is critical to protecting U.S. investors doing business abroad. This is especially important for companies engaged in energy projects. In my district, we have a lot of companies that engage internationally, and this is something I hear from them, that they want to see strong provisions in any trade agreements that we have.
Clearly, having access to a neutral third‑party arbitration when there is disagreement with governments is something that is really important, especially in light of what has happened historically with U.S. oil and gas interests around the world. And so I believe having ‑‑ a key element is that these provisions cover so‑called investment agreements that these firms negotiate with host governments before they actually invest hundreds of millions or even billions of dollars to develop these resources.
So, in the TPP negotiation, several countries have certainly come out in opposition to inclusion of these types of protections, even though they do exist in other trade agreements. And I want to give you an opportunity to share your views on this. And do you share that view, that we ought to have a very strong investor state dispute mechanism in this trade agreement?
*Ambassador Froman. Well, thank you, Dr. Boustany. The ‑‑ there are something like 3,200 investment agreements around the world. And a very significant percentage of those have something like investor state dispute settlement.
Our approach has been, after a four‑year review of our bilateral investment treaty, and then consultations with Congress and the public and the run‑up to the TPP and TTIP negotiations, has been to put forward an investor state dispute settlement process that assures that the same kind of protections that we provide to domestic and foreign investors in the United States, in terms of expropriation and due process, are also available to our investors when they operate abroad. It is no guarantee of profits. It is a guarantee that if they are expropriated without compensation, they have got recourse. And that is the same kind of right that we provide here, in the United States.
We think it is very important that we are able to provide that kind of support for investors, at the same time assuring that governments can regulate as they see fit in the public interest for health, safety, environmental protection. This shouldn’t be used as a mechanism to undermine government regulation. It should be used to ensure that investments are not ‑‑ investors, foreign investors, are not discriminated against vis a vis domestic participants.
And so, that has been our approach on investor state. This is one of the outstanding issues in the negotiations, including the investment agreement provision that you alluded to. But that is the fundamental approach that we have been taking towards that issue.
*Mr. Boustany. And, briefly, with the time remaining, can you address ‑‑ give us sort of a status report on the negotiations on ‑‑ with regard to SOEs. I know that is another contentious area.
*Ambassador Froman. We have made some very significant progress on SOE ‑‑ on the SOE chapter. And I think there is now broad agreement among the TPP countries about the importance of leveling the playing field between SOEs and private firms, and ensuring that if SOEs are getting non‑commercial assistance from their governments ‑‑ subsidies, in effect, that ‑‑ and those subsidies are creating injury to the private firms, that there is recourse there.
So, we have a robust SOE chapter that lays out the principles, lays out transparency provisions, ensures that there is dispute settlement that we are seeking for that chapter as well, so that our private firms can have a more level playing field, vis a vis SOEs.
I should just say ‑‑ just back on investor state for a moment ‑‑ the other part of what we are doing in investor state is ensuring that we are adding safeguards to support the ability of governments to regulate by the ability to dismiss frivolous claims, of awarding damages ‑‑ awarding attorneys fees, ensuring that government ‑‑ assuring that non‑parties can participate in the ISDS process, that there is transparency, all with the goal of ensuring that legitimate regulation is provided for, while at the same time ensuring that discrimination against foreign investors, there is recourse against that.
*Mr. Boustany. Thank you very much. I yield back.
*Chairman Camp. Thank you. Mr. Doggett?
*Mr. Doggett. Thank you, Mr. Chairman. Thank you, Ambassador. In March 2012, as you know, a complaint was filed concerning Honduran labor practices under CAFTA. It was accepted in May of that year, and was supposed to receive a report within 180 days. It has now been over two years. When do you expect that that report about Honduran labor practices will be published?
*Ambassador Froman. Thank you, Mr. Doggett. I will check and get back to you. I don’t know what the status of that report is, but I will be happy to get back to you after this hearing.
*Mr. Doggett. You have made considerable emphasis on the value of the May 10th agreements concerning the labor and environmental protection agreements that, at the time, were the most that could be obtained from the Bush administration and the least that could be accepted. But under those May 10th agreements, has the United States ever initiated on its own volition any complaint concerning labor or environmental practices in Colombia, Peru, Korea, or Panama?
*Ambassador Froman. I don’t think we have brought a dispute settlement ‑‑
*Mr. Doggett. Yes, sir.
*Ambassador Froman. ‑‑ case yet under those agreements. We do in ‑‑
*Mr. Doggett. And that is despite the fact that ‑‑
*Ambassador Froman. We ‑‑
*Mr. Doggett. ‑‑ with reference to Peru logging, for example, logging imports to the United States have gone up substantially, and the World Bank continues to estimate that over 80 percent of that Peruvian hard wood is illegal. I know you have done some investigations, but there has never been a complaint filed. And I think, when we look to how Vietnam will be treated, we have to look at what the experience has been under these previous labor agreements.
As you know, the reports out today ‑‑ and there were last week ‑‑ of the European Union trade commissioner complaining about the position that the United States has taken on dispute resolution and on transparency. Under the dispute resolution process, you have told me previously that, though we have no dispute resolution with Australia, we haven’t had any problem for our investors there, or their investors here.
As far as the dispute resolution process is concerned, is there a right to appeal from one of these arbitration panels?
*Ambassador Froman. In the existing ISDS procedures that exist in, I think, the 40 or so agreements in which we have them, there is no separate appeals process. By the way ‑‑
*Mr. Doggett. Is there a concern that, in a country such as the United Kingdom or France or Germany or Denmark, that the court systems are not sufficiently mature there to provide adequate protection to U.S. investors of a level that they would receive in the United States courts?
*Ambassador Froman. Well, as I said in response to Dr. Boustany’s question, there are 3,000 or so agreements out there on investment.
*Mr. Doggett. Yes, sir. I ‑‑
*Ambassador Froman. And through our ‑‑
*Mr. Doggett. I understood your answer; I just want to know if you think their court systems are ‑‑
*Ambassador Froman. If I could complete it, through our TTIP and TPP negotiations, we are seeking to raise the standards of what applies in an ISDS procedure ‑‑
*Mr. Doggett. But not to use the courts.
*Ambassador Froman. And to add safeguards so that the standards, overall, of the international trade and investment regime will be higher than they are now. We can’t change those 3,000 agreements, but we can, through our future negotiations, introduce new standards into the international system that become the new standards. And that is what we are trying to do through our ISDS procedures.
*Mr. Doggett. If you can’t respond this morning on whether you think the court systems of those European countries are inadequate, I would appreciate your responding in writing, and your also responding in writing to the letter that has been pending since last fall from a number of members of this Committee and others concerning tobacco and the position that you have taken with regard to tobacco.
You stated, sir, previously, that your confidence in these dispute resolution systems is such that you will, in these negotiations, treat environmental and labor law enforcement the same way you treat other kinds of trade disputes, and that, in fact, that position was non‑negotiable. Is that still the position of USTR and the Administration today, that ensuring that labor and environmental law provisions are treated the same way as other trade disputes through ‑‑
*Ambassador Froman. Yes, our view is that labor and environment ought to be binding, subject to the same kind of dispute settlements, including the availability of trade sanctions.
*Mr. Doggett. No different than ‑‑
*Ambassador Froman. No different than IPR or commercial or ‑‑
*Mr. Doggett. ‑‑ anything else. And if both of these agreements don’t include those provisions, they won’t be submitted by the Administration ‑‑
*Ambassador Froman. I can’t envisage concluding an agreement that doesn’t have binding, enforceable labor and environment provisions.
*Mr. Doggett. The other issue that complaint has been made by the European Trade Commissioner is that the United States is not very transparent. If our ‑‑ and that is in a report that is out this morning. And that they would like to see more transparency. If the affected industries can see what the United States’ position is, if our trading partners can see, why not make these agreements open to the public?
*Chairman Camp. Well, you can answer briefly.
*Ambassador Froman. We each have our processes for engaging with the public and our various parliaments, and, in their case, their member states. We do it, as I mentioned, through consultations with our various committees, through our statutorily‑created advisory committees, and through a series of public measures, like putting out, for the first time, a summary of what our negotiating objectives are, chapter by chapter, in our TTIP negotiations.
So, we are very much open to other ideas on transparency. Our systems are somewhat different. They don’t consult with their parliament in the same way that we consult with you. But we have different procedures for ensuring that we get input from the public and from our political partners.
*Chairman Camp. All right.
*Mr. Doggett. They want more transparency that you opposed.
*Chairman Camp. Well, I think his answer, his previous answer, will have to stand, because we are out of time.
Mr. Gerlach?
*Mr. Gerlach. Thank you, Mr. Chairman. Good morning, Ambassador. Switching gears a bit, Jackson‑Vanik trade restrictions were lifted against Ukraine about 10 years ago, and thereby giving a Favored Nation trade status to Ukraine. What is the current status of American‑Ukranian trade today, and how can that relationship be strengthened as expeditiously as possible for both American companies, as well as for the benefit of the Ukranian economy?
*Ambassador Froman. Well, one ‑‑ thank you very much for your question. One thing that could be done is the renewal of GSP. Because Ukraine was a GSP beneficiary, that has expired, and we look forward to working with this Committee and with Congress to seek its renewal as soon as possible. That would benefit Ukraine immediately.
*Mr. Gerlach. Has the President specifically asked you to get involved since the outbreak of the Crimean crisis — asked you to take a look at American policy relative to Ukraine from a trade perspective to see where a greater trade relationship, a better trade relationship, might be one way to help the Ukranian economy and, of course, American businesses as well? Has there been any specific dialogue between the White House and your office about that?
*Ambassador Froman. Yes. I mean there is a robust interagency process, as you might imagine, involving all of the agencies, the economic agencies, as well as the other agencies around this set of issues. We are engaging in that dialogue, and my understanding is, in fact, there will be a delegation here from Ukraine at the end of next week, which I intend to meet with, their schedule permitting, to talk precisely about those issues.
*Mr. Gerlach. Would you let us know what the outcome of that meeting is ‑‑
*Ambassador Froman. Absolutely.
*Mr. Gerlach. ‑‑ so we are aware of that, and see what we can do ‑‑
*Ambassador Froman. Absolutely.
*Mr. Gerlach. ‑‑ from a congressional standpoint, to assist you in that effort?
*Ambassador Froman. Absolutely.
*Mr. Gerlach. Okay, thank you. Yield back.
*Chairman Camp. Thank you very much. Mr. Thompson?
*Mr. Thompson. Thank you, Mr. Chairman. Mr. Ambassador, thank you very much for being here. And I have got to say you have been great through all of this. You are more than willing to meet with any of us, and you have done that a number of times, and I really appreciate it.
I want to raise a couple of issues, and interested to hear what you have to say about it today. And if there is anything that you can add to it, if you would do so in a letter, I would appreciate that.
I am interested in a few things, like everybody else here, that are district‑centric. Wine, in my district, is extremely important. You have been out and met with a number of my growers and a number of the vintners. And, as we had told you before, the issue of geographic indication is extremely important. And the EU is making it very, very difficult, as we explained to you, and some of the things that they have done have created harmful trade barriers for U.S. exports. And I am hoping that you can work with them to show that this is not helpful, and do whatever you can to make sure that we can get some relief from this idea.
And they are also expanding the GI stuff into the traditional and semi‑generic terms. And this is something that is very, very dangerous. And I hope that we can get your commitment to work with us on that.
And then, also, as we explained, in the one region of my area, the Napa Valley, there is a lot of poaching of names. And we are ‑‑ we continue to be concerned that our foreign trade partners don’t poach that name to use on their products, and we need a strong assurance that you will work toward that end.
*Ambassador Froman. Well, absolutely, Mr. Thompson. This is a key issue, particularly in our TTIP negotiations, but also in our TPP negotiations. We think our system of trademarks and common names works well. And we are resistant to efforts to create further geographic indications.
But I go back to something I said earlier. This is one reason why it is important to move forward and complete these agreements, because we are not the only party out there. And the EU is negotiating agreements around Asia, and around the rest of the world, has a very strong perspective with regard to GI’s. And it is important that we establish a regime that works for us, as well.
*Mr. Thompson. Thank you. You had sent me a letter in response to a question I had asked, I think, the last time that you were in regarding the Yarn Forward program, and your letter outlined how well it is working because about $13 billion in apparel is imported using the Yarn Forward rules. And that is fine and dandy, but that amounts to about 17 percent of the total U.S. apparel imports.
So, I want to make sure that we are dealing with the problem, not just stating percentages, because I don’t think it is one and the same thing. And I would like you to take another look at that Yarn Forward program and get back to me with something other than the $13 billion number, because it does represent a very small percentage of what it is that we are concerned about.
And on outdoor apparel, I would be interested in hearing the flexibilities that you see that we can use to accommodate this industry, given the fast advancement in some of the stuff they are doing, and the highly technical aspects of the outdoor apparel industry.
*Ambassador Froman. Well, I would say, in answer to those last two points, our approach to textiles and apparel has always been to ensure that we are striking a balance that helps our domestic producers continue to be able to produce, while allowing importers to import products that serve customers and allow ‑‑
*Mr. Thompson. I see the orange light is on. So if you could give me a written response on that, I would appreciate it.
*Ambassador Froman. Happy to.
*Mr. Thompson. I have one more issue that I want to weigh in on again with you, and that is rice. And I am very, very concerned that our rice community is taken care of, and considered in this. And I know the rice industry didn’t do well in the last round. And I am wondering if the Administration is ready to move forward without Japan, if Japan continues to hold back in regard to our trade efforts with them.
*Ambassador Froman. Well, look. Our focus is to ensure that Japan meets the same standards as the rest of the TPP partners, in terms of comprehensive, ambitious, high‑standard market access, that nothing is excluded, and that includes rice. And so, we are in dialogue with Japan about market access, about its sensitive sectors, and how to achieve meaningful, additional market access that is consistent with our stakeholders’ objectives as part of this ambitious agreement.
*Mr. Thompson. Thank you, Mr. Ambassador.
*Chairman Camp. Thank you. Mr. Buchanan?
*Mr. Buchanan. Thank you, Mr. Chairman, and thank you for being here today, Mr. Ambassador. I look forward personally to working with you.
The economic benefits of trade are well documented, as has been mentioned here today: 38 million jobs are created through trade, 95 percent of the marketplace is outside the U.S. But I had an opportunity last year, where being in Beijing, in China, I met with two different leaders there. One, I think, was minister of trade or finance. He mentioned their goal has been ‑‑ their goal this year, and going forward in the last 4 or 5 years, is creating 20 million new jobs. I met with the vice premier, a separate meeting. Same thing, 20 million new jobs is their goal.
So, I kind of thought to myself, “Game on,” because I was there back in the late 1980s, myself and my wife. They were a non‑factor, in terms of the economic global economy.
After that I had a chance to meet with our American Chamber there; it has got 4,500 members. And I think the general feeling is people are open to free trade. In fact, I saw a poll the other day, 80 percent of Americans are open to free trade. But they want to make sure it is fair. They want to make sure we have got access. They talked about financial products, intellectual property, the currency manipulation. They see what is happening with trade balances in the past, with Japan, and now with China. They just want to make sure that, at the end of the day ‑‑ we just got done, this Committee, we worked on this ‑‑ the idea of these past trade agreements with Panama and Korea and Colombia, and everybody had a sense, to some extent, they were pretty fair. But the bottom line I got from a lot of members, American businesses there, they were very concerned about negotiations being win‑win. It is fair, it is a good deal today, but it is a good deal for both countries two years from now.
And so, I would just ask you what is your general attitude about ‑‑ in terms of negotiation? Because I think a lot of American companies just feel like they have got ‑‑ everybody has got access here, the Japanese, the Chinese, but we don’t have the same access in those markets, and they are very concerned about it. And I think, you know, as I mentioned, the world has changed a lot in the last 30 years, the last 10 years, and we want to make sure we are doing everything to be much tougher negotiators, to make sure that our companies and our jobs are protected.
*Ambassador Froman. Well, we agree completely that ‑‑ on the importance of both free and fair trade, and that we are using these agreements to break down barriers there that have traditionally kept us out of their markets.
As I mentioned, our market is already relatively open. Our tariffs are relatively low. Our non‑tariff barriers are not used ‑‑ our regulations are not used as non‑tariff barriers. And so, what is important through these trade agreements is to do precisely as you said, whether it is China or Japan or Brazil or any other country, is to work with them to reduce barriers for our exports, and also to ensure that they are upholding certain agreed‑upon rules, like the protection of intellectual property.
In our dialogue with China, whether it is the strategic and economic dialogue or the JCCT or our bilateral meetings with them throughout the year, one of the chief areas of focus is ensuring that they are using legal software, that they are protecting intellectual property, that they are clamping down on privacy, because you could have market access, but then you can find that your IP has been stolen.
*Mr. Buchanan. I think the general feeling is just in the past ‑‑ and I am not referring so much to this Administration ‑‑ I would say in the past 30 years we have been outplayed and out‑negotiated. There is that sense there, and we just want to make sure, now more importantly than ever, going forward, as we compete in this global economy, that we are doing everything we can for our companies.
*Ambassador Froman. Absolutely.
*Mr. Buchanan. Let me mention on a little different note ‑‑ it has been touched on. But, in your mind, how important is the TPA getting that done quickly, from your standpoint?
*Ambassador Froman. Well, you know, as we have said, the TPA is a critical tool for opening markets. But, ultimately, the only guarantee that an agreement is going to achieve the support of Congress is that we bring back a good agreement. And so, our focus in TPP right now, and TTIP, is on the substance of those agreements, and focusing with our trading partners on bringing back the kind of agreement that we know Congress and our stakeholders and the American public will demand in order to get their support.
*Mr. Buchanan. Well, what ‑‑
*Ambassador Froman. And that is what our focus ‑‑
*Mr. Buchanan. What are your thoughts on what more we could do on a bipartisan basis to get this done quickly?
*Ambassador Froman. Well, you know, again, we welcome the introduction of the bill in January. We are looking forward to working with this Committee and the Senate Finance Committee. And, obviously, there has been a change of leadership there, and we know that Chairman Wyden is consulting with the Democrats and Republicans on his committee on the best way to move forward.
Ultimately, we would like to get a TPA bill that has got as broad bipartisan support as possible, and we look forward to working with you on that. But, in parallel, we are going to continue to work to try and close TPP as an ambitious, high‑standard, comprehensive agreement.
And our message to our trading partners ‑‑ and I think they follow our discussion here quite closely ‑‑ is that the only guarantee is we bring back a high‑standard agreement. We know what a high‑standard agreement looks like. It has got to have labor, and it has got to have environment. It has got to have intellectual property rights. It has got to have state‑owned enterprises. It has got to deal with the digital economy. Those are issues we need to get resolved in this agreement before we will feel comfortable closing it and bringing it back.
*Chairman Camp. All right. Thank you. Mr. Larson?
*Mr. Larson. And thank you, Mr. Chairman. And, Mr. Chairman, as I said yesterday, I want to remark again and thank you for your exceptional service to this Committee and to the country and to the State of Michigan. You will be dearly missed. And I wanted to acknowledge you publicly again.
Ambassador, thank you for being here and meeting with us as often as you have, underscoring the openness and accessibility that you have had. But I wanted, for the record ‑‑ and we discussed prior to coming in to the meeting ‑‑ I had an opportunity to meet with the Greater Hartford Labor Board and they posed a series of questions, more than I could even get to in the time slot that I have here, as did Representative Rosa DeLauro. And I have submitted them to you and your staff. I would appreciate an answer to those.
And, as I mentioned, as chairman of the ‑‑ co‑chair of the Shellfish Caucus, obviously we are concerned about the EU ban on United States shellfish. And I am hoping that we can meet specifically on that, as well.
My question for you today has to deal with intellectual property. And I want to commend Erik Paulsen, who led a letter earlier this year, along with myself, to the President. I appreciate the response from the Administration, the President, the Vice President, yourself. We have met, in fact, and had ensuing meetings with the ambassador from India. We hope to have him up to Connecticut.
But the concern remains. And what I wanted to ask you is what options do you have available to force change on these discriminatory policies as they currently exist? We understand and hope that Indian good faith is moving forward. But what options do you have to enforce this? And, if you could, elaborate on those.
*Ambassador Froman. Well, this is an issue of great concern. We have had great concern about the innovation environment in India, the issues around the patent rules, as well as around compulsory licensing. And we have had a series of dialogues with the government of India, including at the highest levels between ‑‑ with the prime minister about issues around intellectual property rights, and how best to achieve their objective of assuring access to medicines ‑‑ it is an objective we all share ‑‑ without compromising or undermining the patent system.
Clearly, right now, they are in the midst of an election, and we look forward to re‑engaging with them as the election is completed and the government is put in place. And this will be one of the chief issues on the agenda.
Ultimately, there are mechanisms for bringing dispute settlement cases, but we are trying to work to ‑‑ in a constructive way with India to focus on the array of issues that they can deal with on access to medicines short of taking actions on patents or compulsory licenses that we think are inappropriate.
For example, India has certain tariffs on imported medicines. And so, if you want to encourage the access to affordable medicines, one thing any country can do is drop its tariffs. And that would help access to medicines. There are a series of other issues around distribution. And that is the kind of dialogue we hope to have with the new government of India.
*Mr. Larson. Well, I know it is a major concern to a number of pharmaceutical companies in the State of Connecticut and across the country.
I also want to commend you and the Administration for continued conversations with the AFL‑CIO and its president, Rich Trumka. How would you characterize your conversations with Mr. Trumka?
*Ambassador Froman. Well, we have a good relationship, I think, with a number of labor leaders. And I have spent a great deal of time with them and their representatives over the last few years on several of the issues we have been discussing here today: TPP, TTIP, other labor rights issues and other agreements, other enforcement issues.
And we have taken their input very seriously into our negotiating positions, not just on the labor chapter, but on issues around state‑owned enterprises, or rules of origin, and various market access issues. So, they have been a good partner at the table in helping us shape our negotiating proposals. Again, not that we will necessarily agree on everything, and not that any stakeholder group is likely to get 100 percent of what they want, 100 percent of the chapters, 100 percent of the time. This is a negotiation. But we work very closely with them. We share a number of their concerns. And we look forward to continuing that work on TPP, on TTIP, and across our trade agenda.
*Mr. Larson. Thank you, Ambassador.
*Chairman Camp. Thank you. We will now go two to one. Mr. Smith?
*Mr. Smith. Thank you, Mr. Chairman, and thank you, Ambassador, for your diligence in the efforts to increase exports for American producers.
In addition to facing high tariffs, we know that competitive American industries such as agriculture are facing, as mentioned before, non‑tariff trade barriers, which can only be addressed by establishing the enforceable and science‑based standards and trading rules. Representing thousands of Nebraska producers, I certainly pay close attention to the policies impacting agriculture technology. You know, thanks to modern practices and biotechnology, we are saving water and increasing yields, and there is a lot of great news about this. And yet, unpredictable and unscientific sanitary and phytosanitary hurdles are blocking entry into these key markets, and many of my colleagues have mentioned that already this morning.
But very specifically, considering crops produced through biotechnology account for about 30 percent of our U.S. exports ‑‑ agriculture exports, that is ‑‑ the biotech approval processes should be a top policy priority, I would hope, for this Administration. Could you provide an update on what USTR is doing to ensure that such barriers are receiving the proper attention?
And also, in recent years we know that China ‑‑ obviously, a key market for U.S. ag exports ‑‑ has stopped numerous shipments without justifiable cause or proper notice. And would you support USTR’s raising this issue within the 2014 U.S.‑China Joint Commission on Commerce and Trade process?
*Ambassador Froman. Yes. Well, thank you for that question.
First of all, on the last point with regard to China and biotechnology products, in fact, we were in China in December ‑‑ Secretary Pritzker, Secretary Vilsack, and myself ‑‑ for a meeting of the JCCT, and this was very much front and center on the agenda, both the issues of stopping certain exports, but also their process for approving biotechnology products, and assuring that they have a process that is consistent with the best science, and that it makes decisions on a timely and appropriate basis.
This issue is, obviously, a key issues with our negotiations with the European Union. And there, of course, we have won a WTO case. There, there has been a European Court of Justice case about the importance of the EU maintaining its own timetable for approving new products, and biotechnology products, and this is a key part of our negotiation.
So, it is very much on the agenda, and the Europeans understand the importance to us, and we are working to find ways that we can make progress on this, consistent with each party’s interests.
*Mr. Smith. Okay, thank you. And, also, we have heard several references here this morning of the concern about Japan. And, perhaps even more specifically, the production of U.S. pork, perhaps, and its treatment, specifically.
But also, I would like to raise concerns about Canada and not opening to dairy, poultry, and egg markets, and not opening their markets. Could you perhaps speak to that, and how we should move forward with that, or, you know, perhaps ‑‑ I don’t expect you to share absolutely strategy, but certainly how should we move forward?
*Ambassador Froman. Yes. On both, with Japan we continue to press on those issues, as we talked about.
And you are absolutely right on Canada. It is the only country in TPP that has not yet given us a market access offer on issues like ‑‑ on agricultural issues like dairy and poultry. And we are pressing them to do so, because it is a very ‑‑ those are important priorities for us. We are addressing their priorities in a number of ways, and we want them to come to the table, as part of an overall package.
*Mr. Smith. Right. Well, and I appreciate what you mentioned earlier, that, you know, a comprehensive trade agreement ‑‑ you know, needs to open things up. And I appreciate your efforts, and I look forward to working together on behalf of U.S. producers and, actually, U.S. consumers, as well.
Thank you. I yield back.
*Chairman Camp. Thank you. Mr. Schock?
*Mr. Schock. Thank you, Mr. Chairman. Welcome, Ambassador Froman. First, let me thank you for your work on trade. I think it is one of the bright spots of the last couple of years in a down economy, both here, domestically, as well internationally. I hate to think of what our economy might be doing in manufacturing and agriculture if we did not have Panama, Colombia, and South Korea now fully implemented.
A couple quick questions. One is dealing with the U.S. biopharmaceutical industry. I have raised this before. It is a very important issue to me, because not only do they support 3 million jobs in the U.S., but 200,000 in my home state. And I am just curious whether the Administration ‑‑ whether you particularly are supportive of ensuring that the 12‑year guarantee for IP protection for U.S. biologics is included in whatever we negotiate with TPP.
*Ambassador Froman. Well, thank you. This is one of the most challenging outstanding issues in TPP. When you look around the table, five countries have zero years of protection. Four countries have five years of protection. Two countries have eight years of protection. And we have 12 years of protection.
So, consistent with our standard practice, of course, 12 years is in U.S. law, and so that has been our proposal that we have put on the table in the negotiation. And we are now in the midst of that negotiation to determine where we can reach a consensus, in terms of protection for biologics. And we are working to underscore the importance of data protection for biologics, how it is different than small molecules, and the various issues that go into the determination of how much data protection there should be.
*Mr. Schock. Great. Well, I have great confidence in your persuasive ability. Because, obviously, those three million jobs are in the United States for precisely that reason, because we have such a high standard, not only in terms of the length of time of IP protection, but also the rule of law, which I know in some of these countries is not so predictable, particularly in the courts.
My second question is with regards to the U.S. film industry, which obviously, key to them recouping their costs is the ability to protect their intellectual property. Specifically the use of camcorder recording in foreign theaters is one of the major ways that people steal their products. We were able to get Canada, as you know, to outlaw this practice, which basically eliminated the use of camcorder recording in that country. How important is this on the trade agenda as we look at TPP? These countries tend to be some of the more rabid abusers in IP violations, particularly with the film industry. Is this something that we can accomplish as a part of TPP?
*Ambassador Froman. Well, this is very much part of our proposal with TPP, is to have countries take action to deter camcording as one of our intellectual property rights proposals. We are working with the other countries on that now. There is, again, a range of perspectives on it, and we are optimistic that we will be able to achieve something meaningful in that area.
*Mr. Schock. So they seem to understand that that is important and achievable?
*Ambassador Froman. We have underscored that for them.
*Mr. Schock. Okay, great. Finally, I know others have talked about the importance of TPA and what is happening in Russia. What about the WTO? Russia, obviously, enjoys participation in WTO. Obviously, the Congress, I think, in a bipartisan way, supports the Administration’s effort to put the squeeze on Russia. You know, the President nor the public, I think, wants to use military force over there. But should we be using more economic tools, particularly looking at their participation in WTO? What is your thought on that?
*Ambassador Froman. Well, their accession to the WTO helped bring them into a rules‑based trading system, and also gave us the tools to be able to enforce those rules against Russia when they violate them. And so we view their participation in WTO as giving us a tool to be able to take action there.
Stepping back from that, obviously, economic issues are very much on the table, in light of Russia’s recent actions. The President, the Administration, has taken a series of actions with regard to economic sanctions, as have our allies. We have made clear there has got to be a price paid for the actions they have taken to date, and if they maintain the same path that they are on going forward, that those prices ‑‑ that the sanctions will increase.
And so, economics is very much part of that. And from USTR’s point of view, you know, we have ceased all of our bilateral engagement with them on economic issues, on efforts that we had underway to improve our trade and investment relationship, including the negotiation of a bilateral investment treaty.
*Mr. Schock. Okay, thank you.
*Chairman Camp. Thank you. Mr. Blumenauer?
*Mr. Blumenauer. Thank you, Mr. Chairman. Ambassador, thank you again for joining us. It has been very helpful, having conversations. You have been generous to meet in private, small groups, and yet another committee hearing. It is, I think, important to build this record.
I will submit to you a more technical question that deals with rules of origin for titanium products. It makes a great deal of difference, I think, in terms of having a preference for melting, not milling, and I don’t expect you to be deeply versed in this right now. But I would appreciate attention to it, because it makes a big difference protecting us from unfair competition from state‑owned industries in China and Russia, for instance, and protecting that capacity in the United States.
There are 13 members of this Committee that co‑signed a letter that Congressman Schock and I developed. I have legislation with Ms. Jenkins dealing with footwear. We have had some conversations before that this is an industry where less than one percent of the product is manufactured in the United States. The value chain is concentrated not just in my region of the Pacific Northwest, but around the country. That is where we have an opportunity to make some real advantages in the ‑‑ going forward. Yet they suffer some of the highest tariff rates, which retards ability to ‑‑ for capital formation in this country to create jobs or move them here. And it is a tax on the American consumer that is much higher as it moves through the value chain than just the burden on the individual companies.
Now, I know this is an area that you have been doing a lot of work. Vietnam, for instance, is troublesome in some respects, in terms of some of their practices, but real opportunities to change some of their behaviors. I wonder if you could speak briefly to the progress that we are making to reduce these punitive tariffs and the tax on consumers, and maybe spark some innovation here.
*Ambassador Froman. Well, thank you, Mr. Blumenauer. This is an issue ‑‑ footwear is an issue of sensitivity both in the U.S. and among our trading partners. It is a key issue in TPP. We have been working with domestic stakeholders, both the domestic producers that exist, but also the importers, including some from your region of the country, to develop an approach that will achieve that right balance of helping to ensure that our domestic producers can continue to compete, but also make sure that we are able to bring in good, high‑quality product for the American consumers.
And so, it is one of the outstanding areas in our negotiations with our trading partners, and one that we are in continuous discussion, including as recently as this week, with our stakeholders as we formulate our position.
*Mr. Blumenauer. As I mentioned, there are 13 members of the committee that co‑signed the letter, dozens of other Members. We think there is some support in Congress for efforts to try and extract more value for the American consumer, and these American companies.
I appreciated your clarification to a front page story in the New York Times some weeks ago that talked about the United States capitulating on environmental issues. I appreciate your clarification on that, that ‑‑ including in this hearing, that it remains a high priority for you, for the Administration, to be able to make progress.
I do identify a little bit, however, with the comment from my friend from Texas, Mr. Doggett, about our enforcement actions. As somebody who worked on those provisions, for example, with the free trade agreement, where we come down on enforcement, I think, would make a big difference. Anything you can help to clarify that, either here or going forward, would make ‑‑ I think give more dimension and traction to the representations on what you are trying to do, environmentally.
*Ambassador Froman. Well, thank you for that, and I am sorry I didn’t have a chance to answer Mr. Doggett’s question while he was here. But let me simply say that I think this Administration has demonstrated a very thorough and robust commitment to trade enforcement. We have set up this Interagency Trade Enforcement Center with assets from around the government that have allowed us to bring better, stronger, and more complex cases.
With regard to the particular issues that were raised, with regard to Peru, for example, and the forestry annex, we have been able now, with the resources that USTR has been given in the recent budget, to re‑engage with Peru on monitoring that agreement. And we are now heading towards having a registry in Peru for the logging, to ensure that it meets the standards of the annex.
And on labor, we have been meeting with the Guatemalans on the case that has been brought against Guatemala, the first‑ever case brought against a country on labor issues. And we do the same with Bangladesh on GSP, given their labor issues. So we use our enforcement tools thoroughly to make sure those labor and environmental provisions are fully enforced.
*Chairman Camp. All right, thank you.
*Mr. Blumenauer. Thank you very much.
*Chairman Camp. Ms. Jenkins.
*Mr. Blumenauer. Thank you, Mr. Chairman.
*Ms. Jenkins. Thank you, Mr. Chairman, and thank you for holding this important hearing. Thank you, Ambassador, for being here, and for all of your good work. Many of us have serious concerns about our economic relationship with China. One area of great concern to my constituents in Kansas is China’s unjustified barriers to U.S. agriculture. These barriers ignore international standards, they have no basis in science, and they raise serious questions about whether China is complying with its WTO obligations.
Most specifically, the World Organization for Animal Health recognized last year that all cuts of U.S. beef are safe, yet China continues to ban U.S. beef imports. And I know Congressman Smith touched on this, but the first thing I wanted to ask is that you address what USTR is doing to ensure that China’s regulations on agriculture products ‑‑ beef, in particular ‑‑ comply with its WTO obligations and are otherwise based on international standards and sound science.
*Ambassador Froman. Well, thank you. And that is a high priority in our relationship with China. Ever since the U.S. was found to be a negligible risk country for BSE last year, it has been able ‑‑ we have been able to go back to trading partners and open up markets for U.S. beef exports.
And, as I mentioned earlier, Secretary Vilsack was with Secretary Pritzker and myself in China in December, and beef was very much on the agenda. And we worked together with our Chinese counterparts to reach an agreement about opening up their market over the course of this year. And Secretary Vilsack is following up on that in a series of technical discussions between USDA and its Chinese counterparts.
But we also need to use all the tools at our disposal. And here is an example where we brought a WTO case against China for their exclusion of certain chicken parts, broiler parts. We have won that case in the WTO, and we will continue to bring cases on agriculture and other issues where we think parties have violated their standards.
The underlying point you make, which is that we want to make sure SPS standards around the world, whether it is in China or Europe, are based on science, as ours are, is an absolutely critical and fundamental part of our trade policy.
*Ms. Jenkins. Excellent. Well, thank you. Secondly, my concerns with China aren’t exclusive to agriculture, because there are many examples where dealing with China is a significant challenge. But we need to address these concerns without harming our own economy.
Now, given the limited time and resources available to address the long list of China’s barriers, how would you prioritize the various challenges U.S. companies face in China? And would legislation such as some of the currency bills that have been introduced affect our ability to deal with these other issues?
*Ambassador Froman. Well, we engage on a whole range of concerns with regard to China, whether it is market access obstacles and ‑‑ or how ‑‑ the concerns that they force the transfer of technology as a condition of doing business there, we have pushed back over the last couple years on their indigenous innovation policies that would have required our intellectual property to be transferred as a condition of doing business, or participating in government procurement.
We are pushing for the legalization of software, of ensuring that trade secrets are protected. And, across the board, we are looking, both through our bilateral dialogue and through enforcement mechanisms to ensure that China upholds its WTO obligations.
So these ‑‑ the complex set of issues you say, both inside agriculture, but also outside agriculture, are absolutely critical to improving our trade and investment relationship with China. We have a lot of mechanisms to do this: the S&ED, the JCCT, our BIT negotiations, other engagement with China. And we are ensuring that we set priorities so that we are making sure we are addressing the most ‑‑ the practices of greatest concern to American firms and American businesses.
*Ms. Jenkins. Okay. Thank you, Mr. Chairman. I yield back.
*Chairman Camp. Thank you. Mr. Paulsen?
*Mr. Paulsen. Thank you, Mr. Chairman. And, Ambassador Froman, let me just start by thanking you and your team for your accessibility, for your responsiveness, and for your engagement. It is very much appreciated in some challenging situations you have in communicating with my office, in particular.
I want to follow up on what John Larson had mentioned earlier ‑‑ the situation with India. You know, it was just last year we had 170 Members of Congress, on a bipartisan basis – and 15 governors ‑‑ who had asked the Administration to raise concerns with India’s unfair trade practices at the highest levels of the Indian government. And the President has done that, you have done that, the Vice President, and the Secretary of State, on down the line.
Now, since the inception of USTR’s special 301 Report, India is one of the few countries to have been designated as a priority foreign country in the last 25 years. So India has now failed to make any meaningful progress, I would say, in addressing the long‑standing concerns raised each year by your agency in that special 301 report.
And, as there is a whole host now of market access and trade issues that significantly impede the ability of U.S. companies and businesses and investors to operate there, given the importance of the U.S. and India strategic relationship and India’s pure growth potential, which you outlined in your opening testimony as a market for U.S. goods and services, I think all efforts need to be made to help overcome these challenges and our many difficult issues.
However, the primary forum to help address some of these bilateral trade and investment issues seems to be the Trade Policy Forum. And USTR co‑chairs that forum. It has not been held since 2010. When do you expect to hold the next Trade Policy Forum?
*Ambassador Froman. Well, thank you. First, I have had a series of meetings with my Indian counterparts since coming into this job, and we have stayed very closely in touch, including about how to make sure the Trade Policy Forum is an effective mechanism for addressing these issues.
And so, when we met ‑‑ back in September, I believe it was ‑‑ we laid out a work program for our staffs to work through outstanding issues in preparation for our Trade Policy Forum. And that work is ongoing. Now China is in the midst of an election season, and I think our ‑‑ everyone’s perspective is we should wait until they get past the election in order to re‑engage on that. But I am fully committed to re‑invigorating the Trade Policy Forum. We just want to make sure that it is not just to have a meeting, but that it is a meeting that will help achieve results. And that is why I want to make sure it is adequately prepared.
*Mr. Paulsen. So, the elections are coming up soon, and it sounds like you agree with being ‑‑ staying on a positive trajectory that talks with India actually have to produce concrete results.
*Ambassador Froman. Absolutely.
*Mr. Paulsen. Okay. Let me just switch topics real quick, Ambassador. Since Congress last debated TPA in 2002, one aspect of our economy and trade has dramatically changed, and that is the use of the Internet for both commerce and for personal use.
You know, back in 2002, nobody knew anything about Google or Googling anything, or Facebook, or Twitter. And can you just talk a little bit, or explain a little bit about how our trade agreements in today’s 21st century model can truly reflect the full balance of U.S. law regarding the Internet?
*Ambassador Froman. Well, thank you. I mean that is very much one of the areas of focus in TPP at the moment, because we want to make sure we take the lessons from the physical world and bring them into the digital world, consistent with the existing legislation in the U.S. So, we are pushing for the free flow of data, for example. We are pushing against localization requirements that servers have to be located in a country for a business to be able to serve that country.
We also want to make sure that we are respecting privacy concerns, and that governments have the ability to regulate in a bona fide way in the interest of privacy, and those are also important objectives. So we take, as our touchstone, existing U.S. law, and we are working in that context to assure that the digital economy is very much reflected in this 21st century agreement.
*Mr. Paulsen. Thank you, Mr. Chairman. I yield back.
*Chairman Camp. Thank you. Mr. Kind?
*Mr. Kind. Thank you, Mr. Chairman. And thank you for holding this hearing. And, Mr. Chairman, I too want to share in the accolades directed towards you, with the leadership you have shown this Committee, and what you have meant to this Congress, and our friendship in particular. We are going to miss you. But we still have some work to do here.
*Chairman Camp. Yes.
*Mr. Kind. Mr. Ambassador, thank you for being here. And I think if there has been a consistent message delivered from the committee to you is one of gratitude, given your access and level of engagement, not only with members of this committed, but Members of the Congress, and especially the new Democratic Coalition, of which I am leading. You have been before us on a number of occasions. In fact, so often that we are talking about making you an honorary member, given our endless meetings with you. But that is going to be crucial as we do move forward, not only TPA authorization, but the TPP negotiations. Members need to have that access, that level of engagement, and you have been tireless in that effort, and I compliment you.
In fact, just yesterday, Dr. Boustany and Mr. Reichert, myself, and Mr. Meeks had a chance to have breakfast with the TPP ambassadors at the Canadian Embassy. We were able to engage them directly about the market access issues that you have been working on, but have a diplomatically frank exchange. But you should also know that there was high praise from every one of them about the job that you are doing on our behalf. And that is always very good to hear.
Here is one of the concerns that I have. I think it is important that we are at the table, that we are moving forward on a robust trade agenda. It is important not only for the economic growth for our nation and the jobs that can come from it, but U.S. leadership, not only in the Pacific region, but globally, right now. I am afraid that, with further delay, as far as TPA is concerned, it may lead to further delay of a final TPP being negotiated. And the rest of the world is not sitting around, waiting for us to get our political act in order here. And there is a danger that TPP could turn into another Doha, which we are trying to avoid at all costs.
I am just wondering if you are sensing that same type of concern, or if you are seeing significant progress being made that might elevate this and enable the Congress to finally start taking action, give you the tools that you ultimately need in order to reach the best agreement that we can get with the TPP nations.
*Ambassador Froman. Well, thank you. I mean I think, again, I think the only guarantee ‑‑ and I will tell you what I tell our trading partners ‑‑ the only guarantee of an agreement being approved by Congress is that we negotiate a good agreement. And we know what a good agreement is. We can know what that good agreement is through the expression of TPA and the expression of the negotiating objectives in TPA. We can also know it through our thorough consultation with Members of Congress, and with the stakeholders, and with the public, that we have a good sense of what is necessary.
We each have our domestic processes that we need to go through. And ours is TPA, and our trading partners, their domestic processes, as well. We certainly don’t want them to use the lack of TPA as an excuse for not coming to the table, and not concluding a high‑standard, ambitious, comprehensive agreement as soon as possible. I think we can do that. I think we can work in parallel, both to conclude a high‑standard TPP, as Congress considers trade promotion authority issues and builds bipartisan support for such an approach, and that is the path that we are on.
*Mr. Kind. My sense is ‑‑ and I think you share this ‑‑ is that those at the table now, the 12 nations negotiating, all of them are there because they want an agreement at the end of the day. They are not just playing games with it.
But on another level of inquiry, under CAFTA we had some pretty innovative, capacity‑building provisions in CAFTA. I am wondering if we are still using that as a model, or trying to elevate that in pursuit of TPP with developing nations. I am especially thinking about Vietnam and ‑‑
*Ambassador Froman. Absolutely.
*Mr. Kind. ‑‑ what we are asking them to do to elevate their labor standards.
*Ambassador Froman. No, that is very much ‑‑ and thank you for mentioning that ‑‑ that is very much a part of what we are trying to do with Vietnam as they sign on to international labor standards. As we developed action plans, and work programs for them to be able to meet those standards, it is going to require technical assistance, whether it is from the ILO or from the solidarity center, or elsewhere, for them to be able to achieve those objectives. We are working closely with the State Department and USAID to assure that there will be resources available, so that they can fully implement their obligations under TPP.
*Mr. Kind. Good. Well, I would be happy to follow up with you in one of our future meetings on that.
And, finally, a resource issues. I had a chance to meet with Ambassador Punke recently, talk about the ITA negotiations with China. I was somewhat alarmed to understand that he was there on our behalf, facing 16 Chinese negotiators across the table that tried to wear him thin, or wear him out. I wonder if we are giving you enough resources in order to pursue these negotiations and that we are not being undermanned in ‑‑
*Ambassador Froman. Well, we are a lean and mean organization at USTR. I think that is generally one of our strengths. I think, frankly, during sequester we got a little too lean, and we weren’t able to fulfill all the responsibilities the way that we like to. We are working with our appropriators to assure that we have got the necessary resources, going forward.
But I would put Ambassador Punke up against 16 Chinese counterparts any day. I think that is a pretty even match.
*Chairman Camp. All right, thank you.
*Mr. Kind. Thank you.
*Chairman Camp. Mr. Marchant?
*Mr. Marchant. Thank you, Ambassador. As you know ‑‑ global trade is very important to Texas. In fact, Texas leads all states in exports, and has for the last 12 years. And in my district is Dallas‑Forth Worth International Airport, for which trade is very, very important. Yet there are people in my constituency that are very skeptical of TPA and these trade agreements. Can you give some assurances or give some examples of why this ‑‑ these trade agreements would be very, very positive to Texas and to my constituents?
*Ambassador Froman. Well, you know your constituency well. My understanding that in Texas you are exporting about $8 billion to Korea, and that is about a 54 percent increase over the last few years. And same is true on Colombia, 140 percent increase. Panama, 93 percent increase. You are seeing the benefits of these trade agreements directly in Texas as you see your exports grow. And that is certainly our goal with TPP and TTIP, is to see that kind of export growth come with the opening of these markets.
*Mr. Marchant. To complement that, just recently American Airlines just announced it is going to start a non‑stop flight from Dallas to Shanghai. So recently, the Chinese government, as you know, announced that it was going to make Shanghai an example, a free market example. Can you talk to us a little bit about that experiment, and how important that is, and how that will dovetail into your negotiations with them?
*Ambassador Froman. It is an interesting question. This is the Shanghai Free Trade Zone that they announced last year, and we are monitoring that very closely to see what it is they intend to do, and how they intend to use it. And that, together with the outcomes of the Third Plenum in November, where they laid out a reform program, there is a lot of positive signals in the Third Plenum program and in the Shanghai Free Trade Zone proposal about where China wants to take its economy, how it wants to open its economy, liberalize it, have it be more market‑oriented, take the government out of the process of approving every investment.
One way we are following up on that is through our BIT negotiations, our Bilateral Investment Treaty negotiations. Because that gives us an opportunity to put to the test whether, when China says it wants to move towards a so‑called negative list, meaning companies can invest and do business in China everywhere and anywhere in any sector unless it is explicitly prohibited, to see whether ‑‑ how far they are willing to go in that regard, how far they are willing to take the Third Plenum outcomes, or the sentiment behind the Shanghai Free Trade Zone and drive it through reform in their economy. We are in the midst of those discussions, and those will be continuing, I think, for several more months and longer. But that gives us an opportunity to put to the test whether some of those expressions of reform are being translated into reality.
*Mr. Marchant. Thank you. Yield back.
*Chairman Camp. Mr. Pascrell?
*Mr. Pascrell. Thank you, Mr. Chairman. Mr. Ambassador, you have a very, very difficult job. You inherited a terrible situation with trade imbalances. I have listened to the smoke and mirror games of presidents Democrat and Republican on trade issues. American people are fed up because they have seen the results, which many times have not helped us at all in the long run, and have not helped foreign countries.
So, our policy, I think, is at a crossroads. We have come a long way since the one‑sided deals of the 1990s and 2000s, and ‑‑ which helped cripple our country’s industrial base. We want to build that base, and I have heard you say that yourself. We want to build manufacturing in this country, but not that ‑‑ the sacrifice of whether it is services or anything else.
When Democrats took the majority, we fought to include real protections for labor rights and the environment, and we were moving in the right direction. Thanks to the involvement and the investment of the Congress and the United States and the Administration listening at the time. I think that this is important, and we need an investment. I agree with Chairman ‑‑ Ranking Member Levin when he said we need an intense involvement by the Congress, not after, but before. We have had serious consequences when that did not happen in the past, and it has had repercussions to now, today.
What we are seeing in this difficult Trans‑Pacific Partnership negotiation has me fearing we could slip back into the old ways of doing business. I realize that your job is difficult. You inherited negotiating with a lot of countries that don’t share our values and commitment to high standards to labor and environment.
And we saw a break‑through in the Peruvian trade deal. That was, I think, a pivotal point for the Congress of the United States, to have enforcement rules, to have countries agree before the deal is signed, sealed, and delivered, that they are going to make some changes and do that in a very transparent way. Countries should be our allies in that fight are nowhere to be found many times, Mr. Ambassador. I urge you to stay firm and not go backwards.
Mr. Ambassador, I am a co‑chair of the House Textile Caucus, what is left of the textile industry in the United States of America, which we have seen dwindle away in the last 40 years. I would like to thank you for your commitment to the Yarn Forward rule of origin for textiles and apparel, which, as you know, is of critical importance to the textile industry in this country.
My question today is on market access for the most sensitive textile products manufactured here in the United States. Can you assure the members of this Committee that your negotiators will seek the longest duty phase‑out possible for the most sensitive textile items? That is a pretty direct question. We don’t need a glossary of discussions here. Would you give me an answer?
*Ambassador Froman. Well, we are working with ‑‑ very closely with textile and apparel stakeholders to make sure we have a full understanding of what the most sensitive products are, and using the tools that you mentioned ‑‑ the Yarn Forward, the short supply list, and staging issues ‑‑ we are making sure that we strike that right balance between assuring protection for our domestic producers, as appropriate, and also allowing the importers of apparel ‑‑
*Mr. Pascrell. And as you heard before ‑‑
*Ambassador Froman. ‑‑ to have access to our ‑‑
*Mr. Pascrell. ‑‑ folks are concerned about Vietnam’s wanting immediate access. And I think that this is a serious problem. Do you think that that is a hurdle we can get around, get over, et cetera?
*Ambassador Froman. Well, that is very much part of the current negotiation.
*Mr. Pascrell. But what do you think?
*Ambassador Froman. Well, we are in the midst of negotiating that with our trading partners. So I can’t tell you at this point what the outcome is ‑‑
*Mr. Pascrell. Well, are you making a commitment today to this Committee that you are going to do what the question entails?
*Ambassador Froman. We are firmly committed to assuring that we have an outcome on textiles and apparel, as well as other products, frankly, that support the maximum number of American jobs in this country, and take into account the sensitivities of some of our key sectors.
*Mr. Pascrell. I wanted to highlight a concern about intellectual property, those decisions in Canada in recent years that go against our neighbors’ international commitments. The Canadian courts have ruled that certain pharmaceutical patents, including many belonging to companies in my home state of New Jersey, invalid due to what I believe to be an inappropriate interpretation of international patent standards. This isn’t an issue increasing access to medicines in developing countries. Canada is wealthy, it is an industrialized nation. This policy is designed to benefit the manufacturers at the expense of our own ‑‑ Mr. Ambassador, we do not need a corporate draft for our trade policies.
*Chairman Camp. All right. Time has expired. Do you want to respond briefly?
*Ambassador Froman. I would simply say on the Canadian patent issue, this is something we are monitoring very closely. It is now the subject of litigation, both in the Canadian courts and in an investor state case. But it is something we are monitoring very closely as part of TPP, as well.
*Chairman Camp. Thank you. Mrs. Black is recognized.
*Mrs. Black. Thank you, Mr. Chairman, and thank you, Ambassador, for being here. This is such an important conversation that we are having here today.
I want to go to the issue of intellectual property, which I continue to ask about, because I hear so much about that in my own district about our job creators there that do business overseas, and how they believe, specifically in the Asian countries, that there is not the respect for the intellectual properties.
So, TPP must contain strong IPR protections to be an effective and comprehensive trade agreement. Not only are these protections needed to support millions of jobs here in the United States, and a significant portion of our exports, but they are also encouraging American innovation and investment. The full spectrum of intellectual property rights must be covered, including patents, copyrights, and trademarks, and all types of products and services must be adequately addressed, including pharmaceuticals.
How will USTR ensure that TPP will contain strong and effective IPR protections similar to that found in our U.S. law?
*Ambassador Froman. Well, that is certainly our objective in this negotiation. And as I mentioned in my opening remarks, we have got millions of Americans whose jobs depend on the innovation economy, on creativity, on our intellectual property rights. And whether it is in the copyright/trademark side of things, or in the pharmaceutical side of the ledger, we are working to assure the appropriate level of intellectual property rights, and very much based on concepts in U.S. law. So strong copyright protection, also limitations and exceptions consistent with U.S. practice. And, on the pharmaceutical side, consistent with the May 10th agreement, assuring incentives for innovation, while at the same time access to medicines by the poor and developing countries.
*Mrs. Black. The other issue also right along those lines is the issue of cross‑border data flows, which are critical, not just to service companies, but also the globalized companies in any sector. So respecting the differences of those data privacy approaches from country to country, how can we ensure that there is a robust protection of those cross‑border data flows?
*Ambassador Froman. Well, that is a central part of our new approach on the digital economy in TPP, to try and reach agreement around disciplines on regulating the flow of data, and making sure that there can be the free flow of data, also dealing with issues like the localization of servers, so that businesses aren’t required to have servers in a particular country in order to serve that market. So this is very much ‑‑ when we talk about updating our trade agreements for the 21st century and bringing new issues like the emergence of the digital economy into those trade agreements, this is precisely what we are focused on.
*Mrs. Black. Thank you, Mr. Chairman, and I yield back.
*Ambassador Froman. Thank you.
*Chairman Camp. Thank you. Mr. Davis?
*Mr. Davis. Thank you, Mr. Chairman. And I, too, want to commend you for your service to the nation, and especially for the outstanding leadership you have provided as chairman of this Committee in terms of the way that you facilitated its work. I trust that when you leave Congress you will always relish the memory of that.
And thank you, Mr. Ambassador, for being here. And to you and your staff for the great work that you do. Mr. Ambassador, I come from Chicago, Illinois, which has been known as the candy capital of the nation. Thousands of jobs in Chicago are directly related to the availability of sugar at a competitive price. According to the Commerce Department, to date in this country, we have already lost 127,000 sugar‑using jobs since 1997 because of the trade‑distorting sugar program.
Over the last five years, confectioners, bakers, candy makers, and other manufacturers have suffered through the highest sugar prices anyone can remember, all due to a repressive sugar policy. Now that those high prices have brought on greater sugar production in both Mexico and the U.S., and a temporary sugar surplus, big sugar has decided to use more government action to eliminate competition.
Last Friday, sugar processors filed anti‑dumping and countervailing duty cases against the importation of Mexican sugar allowed under the North American Free Trade Agreement. Mr. Ambassador, can we count on you to oppose any effort to restrict access to adequate supplies of sugar from Mexico, or anywhere else, that are needed to preserve good manufacturing jobs in the confectionary industries in Chicago and throughout the nation?
*Ambassador Froman. Well, the anti‑dumping and countervailing duty case that you mentioned is the province of the Commerce Department and the ITC. It is actually a quasi‑adjudicatory process in which the USTR or any other agency is involved. It is being dealt with in the technical way that those two agencies deal with it.
Sugar is obviously a very sensitive issue in trade negotiations, always has been. And we are consulting very closely with stakeholders, you know, on the issues around sugar. But we are not going to do anything through these trade agreements that will jeopardize or undermine the sugar program.
*Mr. Davis. In your view, does this dumping complaint help or hurt our bilateral trading relationship with Mexico?
*Ambassador Froman. Well, you know, trade remedies ‑‑ Congress created trade remedies so that industry would have the ability to bring these cases when they thought there was dumping and countervailing duties, and it is brought by the companies themselves, or the industry themselves, not by the government. It is certainly something that the Mexican government and the Mexican stakeholders care a lot about, but it is the province of our industry, any industry, whether it is sugar or steel or any other industry, to avail themselves of the trade remedies that Congress has created.
*Mr. Davis. As you have indicated, there is a long history of trade disputes involving sugar and sweetener trade between the U.S. and Mexico. In the past, Mexico has placed restrictions on American exports of high fructose corn syrup. Do you share my concern that corn farmers in Illinois and other states could get caught up in another cross‑border trade dispute that is not their fault, but is the result of the market‑distorting sugar subsidies?
*Ambassador Froman. Well, I certainly hope we could avoid that situation.
*Mr. Davis. Well, we thank you very much, and I thank you for your work.
And, Mr. Chairman, I yield back.
*Chairman Camp. Thank you. Mr. Young?
*Mr. Young. Mr. Ambassador, thank you so much for being here today. Really do appreciate it. I will begin by noting my colleague, Mr. Griffin of Arkansas, was called away to the floor, and he just asked that I convey to you he will be submitting a letter for your consideration pertaining to TPP and Japan’s treatment of rice, also pertaining to dumping of steel rebar from Turkey and Mexico. So he will look forward to your responses there.
Mr. Ambassador, I recently, working with several of my colleagues, helped launch a caucus related to TTIP. And this is a very important issue, and we hope we can consummate this free trade agreement in coming years between the U.S. and EU. Were we to do so, it is projected that exports from my home state of Indiana would increase by roughly 33 percent, and there would be a net increase in employment of up to 13,780 jobs.
The largest category of exports that will benefit from this agreement, we estimate, will be pharmaceuticals. So, of course, the intellectual property rights protections that we have heard about here today are very important to that industry, as we work on this agreement.
From your perspective, what barriers for IPR‑intensive trade are most significant as we look at the U.S. and EU negotiations? Perhaps you could cite areas where there could be some convergence and other areas where harmonization might not be possible.
*Ambassador Froman. You know, I think the ‑‑ one thing that categorizes ‑‑ characterizes the U.S.‑EU relationship is that both of us have strong intellectual property rights regimes. And so we start from a fairly common perspective in that regard. And, obviously, our innovative and creative industries will benefit from that perspective, and we are going to try to work together through TTIP, the U.S. and the EU, to promote strong intellectual property rights protections elsewhere around the world, as well.
As part of TTIP, we are working to bring our regulatory systems closer together, or to bridge divergences in our regulatory systems without reducing, undermining, lowering our health, safety, and environmental standards. Neither one of us wants to lower our standards. The President spoke quite eloquently on this in Brussels last week. And so this is not about deregulation. It is about taking two well‑regulated markets, but markets that are regulated in slightly different ways ‑‑ and those differences create trade barriers ‑‑ and seeing whether we can bridge those trade barriers by further cooperation on the regulatory side. And our FDA is working closely with the EMA in Europe to determine what areas of cooperation may allow for more interaction in pharmaceuticals and medical devices.
*Mr. Young. So my sense is, based on your response, which I appreciate, is that we are still teasing out some of those areas, the thornier areas, the areas of common agreement, and so forth. So we will look forward to staying in touch in that regard.
With respect to AGOA, it is essentially a development program designed to benefit the lesser‑developed countries of Africa, that expires in September of 2015. And we want to make sure this reauthorization occurs in a way that improves upon, ideally, the existing program. And I know that USTR has requested several studies from the ITC pertaining to the program and its effectiveness and operation, and so forth. This Committee has requested a separate study from GAO. Can we agree to share information so that we can work together to improve this program?
*Ambassador Froman. We certainly want to work closely with this Committee and others in Congress on this issue. We launched a full review of AGOA last August, precisely to do what you have laid out: assess what has worked well, what has worked less well, what has changed in the African economies, what has changed in their relationships with their trading partners. And, as we seek the seamless renewal of AGOA next year, what needs to be done to update it to make sure it is having maximum impact along the lines that it was originally designed. So we very much look forward to working with you on that.
*Mr. Young. Thank you. Finally, I would just build upon Representative Pascrell’s comments pertaining to intellectual property protection as it relates to Canada, particularly important to the pharmaceutical industry. And you will be receiving a letter from Representative Pascrell and myself, along with several other Members, pertaining to this issue and elevating to Canada special 301 priority watch list in 2014 because of Canada’s lack of adequate and effective intellectual property right protection.
So, we will look forward to getting your response on that. I appreciate the dialogue today. And thank you again for your service.
*Ambassador Froman. Thank you.
*Chairman Camp. Thank you. Ms. Sanchez?
*Ms. Sanchez. Thank you, Mr. Chairman, and I would like to begin by adding my voice to those who will wish you well.
*Chairman Camp. Thank you.
*Ms. Sanchez. And at the risk of my husband taking umbrage, I will say that, like all good men in my life, you are leaving too soon. And while I say that tongue in cheek, your leadership will be missed.
Ambassador Froman, I want to thank you for joining us today. I have two ‑‑ I have many questions I would love to ask, but I have two that I would like to get to, so I will jump right in.
As you know, the United States is the world’s largest creator, producer, and exporter of copyrighted materials. And jobs that support industries that are innovative typically are the kinds of jobs that provide benefits to workers and allow somebody to support a family off of the wages from those jobs in innovation. So I think it is incredibly important to not just think about trade generally, but to be very specific about making sure that we protect and try to grow jobs in the innovation sector, because they typically do also include manufacturing jobs with them.
Being from Southern California, I am sure you can appreciate that the livelihoods of many Southern Californians are directly impacted when there is a lack of respect for U.S. domestic industries and intellectual property. Some of my colleagues have mentioned Canada and India, in particular. And I know that the Administration’s goal has been to achieve “21st century agreements,” but the size and the scope of our pending agreements is what concerns me.
As Members of Congress, we spend a lot of time ‑‑ often years and years ‑‑ crafting federal legislation to try to achieve that goal. And my concern is that in trade agreements like TPP the work that has been done to pass these laws could be undermined if we don’t include some kind of incentives and enforcement mechanisms for making sure that we are incorporating standards of U.S. law in those trade agreements.
In that same vein, criminal enterprises enable infringement of U.S. intellectual property, which also further impacts both U.S. and global marketplaces and our workers. So I think you are in a pretty unique position to try to help address that particular problem by fostering legitimate online commerce.
So, I am just curious. How are you going to ensure that these 21st century agreements reflect U.S. law for all industries, and ensure that those who are intentionally enabling infringement are held liable for their actions?
*Ambassador Froman. Well, first of all, I couldn’t agree with you more about the significance of intellectual property and protecting our creative industries. And not just ‑‑ I was in Los Angeles several months ago ‑‑ not just for the actors and directors who may participate in this, but for the unionized carpenters and the engineers who are working on the sets. And it is a whole ecosystem there that ‑‑ where we want to make sure that they are getting the benefits of their labor, and that they are earning the benefits of their labor.
And that is what we are trying to do in TPP on our ‑‑ in our intellectual property efforts on copyright, on camcording, on making sure that piracy is dealt with, that there are effective enforcement mechanisms. USTR, we have a process called the Notorious Markets Process, where we list websites that are notorious for selling pirated material and get countries to close them down, or get the websites themselves to drop the offending material, the pirated material. And so that is something that we work on, both in our negotiations and in our enforcement efforts. And it is a high priority for us.
*Ms. Sanchez. Thank you. And then, switching gears really quickly ‑‑ and if we run out of time I will just ask for your response in writing ‑‑ but you testified before this Committee last year that the Administration will continue to ensure that the Jones Act is protected under our trade agreements. And recently I heard reports that the European Union has put forth a draft proposal that would try to undermine the Jones Act. So I am just looking for some reassurance from you that nothing has changed with respect to the commitment that you made to the committee, and that you are going to continue to ensure that the Jones Act or other programs to promote U.S. flag shipping are not going to be repealed or diluted in future trade agreements.
*Ambassador Froman. There is nothing we are going to do in a trade agreement that is going to repeal or undermine a U.S. law. Europeans have a lot of priorities in these negotiations, and we have a lot of priorities, as well. And that is what the negotiation is for, is that we work our way through these issues and understand each other’s sensitivities, and how best to address the concerns of each in the context of an overall comprehensive agreement.
*Ms. Sanchez. Thank you. Thank you so much for your time and ‑‑
*Chairman Camp. All right, thank you. Mr. Reed?
*Mr. Reed. Thank you, Mr. Chairman. And, Mr. Ambassador, thank you. We are down to the end. And I appreciate ‑‑ we have talked, we have met. And, as your predecessor, Ron Kirk also, you do an outstanding job, and I appreciate the work you do in regards to this issue, and I enjoy working with you.
And I wanted to relate to you that a large employer from my district informed me that you did a tremendous amount of good work in the ITA agreement, Corning, Incorporated. I come from Corning, New York, and I just wanted you to know that we appreciate the work in that arena. So kudos to you.
Last week I was at a hearing with the Steel Caucus. And I also co‑chair the U.S. Manufacturing Caucus here in D.C. And it was brought to our attention repeatedly by many of the member companies there ‑‑ Nucor Steel is a constituent, large employer in my district, also. They have a facility in Chemung County. U.S. Steel was there. ArcelorMittal was there. And Mr. Griffin is, I guess, going to send a follow‑up letter to you.
But I wanted to just stress to you or relate to you the theme I heard in the Steel Caucus is that there is a real threat from the dumping of steel into the U.S. market. I wanted to see what you thought ‑‑ especially in the Turkey‑Mexico arena. Wanted to see what you thought about their concern that that is going on. And is there anything you can do or have done presently to try to address the issue of inappropriate steel dumping into America’s market?
*Ambassador Froman. Well, I have ‑‑ we have met with the steel industry on a regular basis. It is something that we know is of great concern. And, therefore, we are monitoring it closely.
With regard to those particular issues of Turkey and Mexico and the anti‑dumping CVD cases, I have really got to refer you to the Commerce Department and the ITC, because those are procedures under their mechanisms. They are quasi‑adjudicatory, and we are not involved in those. But the situation in the steel sector itself, in the steel industry globally, is something that we do monitor closely and want to continue to pursue to see if there are things that we can do through our trade dialogues to try and address some of the concerns that the U.S. steel industry has.
*Mr. Reed. And could you give me any indication, like ideas along those lines that you would be considering to pursue?
*Ambassador Froman. Well, you know, one thing that has come up in the context of our China dialogue is the concern about over‑capacity. There is clearly over‑capacity in the global steel sector. It is something that China itself has flagged as an issue that they are concerned about, domestically.
And so, having a dialogue with them, with other major steel manufacturing countries about the situation in the market about over‑capacity is one mechanism that we are exploring to see if we can make some progress on that issue.
*Mr. Reed. So it sounds as if they are engaging in that conversation, and there is a willingness ‑‑ because I am aware of the capacity issue, and that is definitely something that was also referenced in the same steel caucus hearing.
And, with that, it has been a long day, and I have no further questions. And with that, I yield back, Mr. Chairman.
*Chairman Camp. Well, thank you very much. Again, Ambassador Froman, thank you for answering every question that the committee put forward to you in your appearance today. And look forward to working with you as we move forward on all the important issues that we have been discussed.
And, with that, this hearing is adjourned.
[Whereupon, at 12:27 p.m., the committee was adjourned.]
Public Submissions For The Record
American Chemistry Council
Citizen Trade Policy Commission of Maine
Doctors Without Borders
Outdoor Industry Association
Rubber and Plastic Footwear Manufacturers Association
The American Council of Life Insurers
The American Farm Bureau Federation
The Express Association of America
US Chamber of Commerce