[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
THE TRANS-PACIFIC PARTNERSHIP:
OUTLOOK AND OPPORTUNITIES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
AUGUST 1, 2013
__________
Serial No. 113-45
__________
Printed for the use of the Committee on Foreign Affairs
Available via the World Wide Web: http://www.foreignaffairs.house.gov/
or
http://www.gpo.gov/fdsys/
______
U.S. GOVERNMENT PRINTING OFFICE
82-310 WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected].
COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
STEVE CHABOT, Ohio BRAD SHERMAN, California
JOE WILSON, South Carolina GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas ALBIO SIRES, New Jersey
TED POE, Texas GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina KAREN BASS, California
ADAM KINZINGER, Illinois WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas ALAN GRAYSON, Florida
PAUL COOK, California JUAN VARGAS, California
GEORGE HOLDING, North Carolina BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas JOSEPH P. KENNEDY III,
SCOTT PERRY, Pennsylvania Massachusetts
STEVE STOCKMAN, Texas AMI BERA, California
RON DeSANTIS, Florida ALAN S. LOWENTHAL, California
TREY RADEL, Florida GRACE MENG, New York
DOUG COLLINS, Georgia LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina TULSI GABBARD, Hawaii
TED S. YOHO, Florida JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
------
Subcommittee on Terrorism, Nonproliferation, and Trade
TED POE, Texas, Chairman
JOE WILSON, South Carolina BRAD SHERMAN, California
ADAM KINZINGER, Illinois ALAN S. LOWENTHAL, California
MO BROOKS, Alabama JOAQUIN CASTRO, Texas
TOM COTTON, Arkansas JUAN VARGAS, California
PAUL COOK, California BRADLEY S. SCHNEIDER, Illinois
SCOTT PERRY, Pennsylvania JOSEPH P. KENNEDY III,
TED S. YOHO, Florida Massachusetts
C O N T E N T S
----------
Page
WITNESSES
Mr. Edward F. Gerwin, Jr., president, Trade Guru LLC............. 5
Mr. Steven Metalitz, counsel, International Intellectual Property
Alliance....................................................... 16
Mr. Amgad Shehata, vice president, International Public Affairs,
United Parcel Service.......................................... 24
Ms. Celeste Drake, trade and globalization policy specialist, The
American Federation of Labor and Congress of Industrial
Organizations.................................................. 29
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Mr. Edward F. Gerwin, Jr.: Prepared statement.................... 7
Mr. Steven Metalitz: Prepared statement.......................... 18
Mr. Amgad Shehata: Prepared statement............................ 26
Ms. Celeste Drake: Prepared statement............................ 31
APPENDIX
Hearing notice................................................... 70
Hearing minutes.................................................. 71
Material submitted for the record by the Honorable Ted Poe, a
Representative in Congress from the State of Texas, and
chairman, Subcommittee on Terrorism, Nonproliferation, and
Trade:
Letter to the Honorable Ted Poe, dated August 2, 2013, from the
Greater Houston Partnership.................................. 72
Statement from former Congressman Anh ``Joseph'' Cao........... 73
Partial list of Montagnard prisoners as of February 2012....... 79
THE TRANS-PACIFIC PARTNERSHIP: OUTLOOK AND OPPORTUNITIES
----------
THURSDAY, AUGUST 1, 2013
House of Representatives,
Subcommittee on Terrorism, Nonproliferation, and Trade,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 1:30 p.m., in
room 2200 Rayburn House Office Building, Hon. Ted Poe (chairman
of the subcommittee) presiding.
Mr. Poe. The subcommittee will come to order. Without
objection, all members may have 5 days to submit statements,
questions, and extraneous materials for the record, subject to
the length limitation in the rules.
I am a strong supporter of promoting United States exports
and increasing trade. To put it simply, I am a free trader.
With unemployment 7.6 percent, we should be doing everything we
can to create jobs for Americans, in America. Free trade
agreements like the ones we have with Panama, Colombia, and
South Korea grow jobs in the United States, help our economy
get back on track and strengthen friendships abroad. Open trade
is good policy and it makes sense.
Right now, we are in the middle of negotiating a new
agreement, the Trans-Pacific Partnership or the TPP, as an
opportunity for the United States to expand its trade network
in the Asia-Pacific region and beyond. TPP will open trade
between the United States and 11 other countries. This would
make it America's largest free trade agreement. Combined, these
11 countries account for 40 percent of the global GDP; and 30
percent of the entire world trade. We can make it even bigger
after TPP is signed. It is possible for more countries like
Taiwan to join. And I hope that is a strong consideration.
For years now, many TPP countries have been experiencing an
explosion in economic growth. The Asia-Pacific region alone is
expecting to grow by 6 percent this year. This means more
foreign consumers will want to import U.S. goods. That, in
turn, will drive job growth in our manufacturing, shipping, and
services industries. To put this in perspective, TPP countries
represent a $1.7 trillion trading relationship for the United
States. This makes it the largest export market for the United
States.
Many Americans are excited about what TPP will bring for
them and their businesses. I know this because I have been
hearing from my neighbors in Houston, Texas, how TPP will
benefit our area. The Port of Houston is the biggest port in
the United States on a per tonnage basis. With the expansion of
the Panama Canal, we are primed to export even more to Asia.
Three weeks ago, the Department of Commerce announced that
Houston was the number one exporting metro area in the entire
United States with a total of $110 billion in exports last
year. That number will increase once we expand our markets
through TPP. Houston will be able to build upon its close ties
with Canada, Japan, Mexico and Singapore and the well
developed, already emerging trade relationships with Malaysia,
Australia, and Chile.
America's other major shipping hubs like Los Angeles, Long
Beach which my colleague, Mr. Lowenthal, represents in his
district, will see a lot of growth from TPP as well. The United
States needs to be involved in trade agreements with these
countries, otherwise, we may find ourselves shut out of a
booming market. The United States is not the only player in the
international trading market. The European Union, for example,
has already negotiated agreements with Canada, India, and
Japan. And China, Japan, and South Korea have also been having
trade talks among themselves.
At the same time, I think it is very important that we need
to make sure this agreement is fair, fair to all countries
concerned and it is fair to the United States. United States
companies are not afraid of competing in international markets,
but it is important that TPP creates a level playing field for
all. And what I mean by that is we have to make sure that
United States companies do not face a disadvantage from state-
owned enterprises in other countries or risk having their
intellectual property stolen by other nations. We need to
understand the obvious and make sure that this does not occur.
We need to set high standards in this area. This agreement is
not about setting in stone already unfair advantages. Countries
should not be able to steal American intellectual property.
TPP is more important than the specific countries involved
because it has the opportunity to set a strong precedent for
future American trade agreements. This will especially be true
as China opens up its economy to more exports and looks to sign
its own agreements, competing with us and its own agreements to
join existing countries.
TPP is touted as a 21st century high-standard agreement.
Our witnesses today will speak specifically about these
principles and will be speaking for their industries. I look
forward to hearing from them about what high quality free trade
agreements should look like and what we should look out for in
case there are some important issues that we may miss.
I will now yield time to the ranking member, Mr. Sherman
from California.
Mr. Sherman. I have a different view. The definition of
insanity is to keep doing the same thing over and over again
and expect a different result. We have been traveling this road
for 20 years. We have the largest trade deficit in the history
of the world. But one bright spot, as the chairman points out,
is our ports where there are good jobs unloading the imports
from other countries and sending back the containers empty or
crammed with waste paper.
Washington's trade policies over the last two decades have
created huge profits for Wall Street and an eroding middle
class here at home. Now as to this TPP, it will eliminate over
1100 tariff lines among the parties, a massive trade deal with
consequences that could very well be negative. We must be
skeptical of this TPP because we were not skeptical as we
should have been of the earlier agreements.
The United States International Trade Commission has said
our trade deficit with China would grow by $1 billion if we
provided for permanent MFN. Instead, that trade deficit
exploded from $84 billion in 2000 to $315 billion in 2012.
According to the Economic Policy Institute, the U.S. trade
deficit has eliminated or displaced 2.8 million American jobs.
In the early 1990s, the supporters of NAFTA criticized
their critics as being Luddite protectionists. Almost two
decades later, we know what the numbers are. We have posted a
trade deficit with Canada and Mexico nearly every year since
the enactment of NAFTA, most recently $62 billion with Mexico
and $31 billion with Canada.
Now I am concerned about the rules of origin which have yet
to be negotiated in this deal, but we may be signing a free
trade pact with China that is unilateral. That is to say, free
access to our markets with us getting no access to theirs. Why?
Well, let us look at the U.S.-Korea free trade agreement where
goods can be 65 percent made in China. Then 35 percent South
Korean content, but that includes Chinese workers living in
barracks in South Korea, free access to the United States.
One trembles when we think that the same negotiators may be
involved in negotiating the rules of origin agreement in this
latest deal.
Let us look at the U.S.-Korea free trade agreement. Our
trade deficit hit an all-time high in May of this year, $2.46
billion in 1 month. Imports hit a record high in that month of
$5.7 billion while U.S. exports in May were only 3.2 In fact,
U.S. exports to South Korea from January through May of this
year were lower than U.S. exports during the same period last
year before the free trade agreement.
We are going to be looking at a free trade agreement with
Vietnam, a state-controlled economy. So the access we will have
to their markets will be whatever their state-controlled
economy decides to accept, whereas their access to our markets
will be unlimited. Celeste Drake, I believe, mentions in her
testimony, state-owned enterprises are common, not only in
Vietnam and Malaysia, they could represent a threat to us,
given America's lack of comprehensive manufacturing strategy
that is particularly the case. This TPP arrangement gives those
who oppose the Buy American agreements which Congress has
passed a chance to try to override them through the treaty
process.
And then finally, and this is a threat to our national
security. We have used sanctions as an effective means of our
policy and we are hoping very much to prevent a nuclear Iran
through sanctions. Well, what does this agreement do? I am told
that apparently, the USTR has agreed to text in which our right
to impose sanctions is subject to a tribunal's review. For
example, the U.S. free trade agreement with Korea either party
can have national security sanctions and that claim of national
security is self-adjudicated whereas under the draft that
appears we are prepared to accept a tribunal that could very
well decide that we can't impose sanctions.
This agreement, therefore, poses a threat to our national
security, as well as to our economy. I look forward to its
substantial improvement. I yield back.
Mr. Poe. I thank the ranking member for his comments. He
pointed out exactly why we are having this hearing, to find out
the good, the bad, and the ugly about the TPP, to put it
bluntly.
The chair will recognize other members who wish to be
recognized for 2 minutes.
Mr. Kinzinger from Illinois.
Mr. Kinzinger. Thank you, Mr. Chairman, and welcome to our
large and overwhelming hearing room. Thank you all for coming.
We are here today to discuss the possibility of the largest and
most comprehensive trade agreement in our nation's history. The
TPP is being negotiated by 12 countries including 4 with which
we do not have existing trade relationships. No doubt, this
would be an impressive accomplishment, a win for American
business and middle class families.
In 2012, U.S. trade with TPP countries totaled more than
$1.5 trillion. By lowering barriers and increasing market
access for U.S. companies, the trade and the American jobs it
supports can be made even greater. In addition, increasing
trade, achieving a high standard agreement on this scale can
have positive, long-term effects for U.S. businesses and
innovators. Aiming high has the potential to influence future
trade negotiations, lifting standards all over the world and
serving as a permanent boost for American jobs and the American
economy.
There are certain issues that American trade
representatives should give special priority to. These include
ensuring market access to foreign countries for American
agriculture producers, enhancing intellectual property right
protections, ensuring regulatory transparency and
competitiveness, and ensuring access for small businesses.
These issues are at the core of what a 21st century trade pact
should look like which is why they are included and should
remain a top priority for U.S. negotiators.
Mr. Chairman, I yield back.
Mr. Poe. The gentleman yields back. I am going to introduce
each of the witnesses and give them time for opening
statements. Without objection, all the witnesses' prepared
statements will be made part of the record. I ask that each
witness please keep your presentation to 5 minutes because you
may be gaveled. And as a former Judge, that is not a pleasant
experience.
If I mispronounce your name, I apologize. My name is Ted
Poe and I have been called tadpole and many other things, so I
will do the best I can with each of your names. But thank you
for being here, all four of you.
Mr. Edward Gerwin, Edward Gerwin is the president of Trade
Guru, LLC and provides analysis and strategic advice on trade
policy for domestic and international clients. He previously
served as a senior fellow for trade and global economic policy
at Third Way.
Mr. Steven Metalitz is a partner in the Washington, DC,
office of Mitchell, Silberberg & Knupp, LLP and counsel to the
International Intellectual Property Alliance. For 20 years, he
has advised on domestic and international anti-piracy and other
copyright matters.
Mr. Amgad Shehata is the vice president of International
Public Affairs for UPS. He is based in Washington, DC. He
serves as the chair of the Canadian-American Business Council
and is treasurer for the Express Association of America.
Ms. Celeste Drake is the trade and globalization policy
specialist at the AFL-CIO. She actively follows negotiations
for Trans-Pacific Partnership free trade agreements where she
advocates for policies to ensure shared gains from trade.
Mr. Gerwin, we will start with you. You have 5 minutes.
STATEMENT OF MR. EDWARD F. GERWIN, JR., PRESIDENT, TRADE GURU
LLC
Mr. Gerwin. Thank you, Mr. Chairman. Mr. Chairman, Ranking
Member Sherman, and members of the subcommittee. The TPP has
the potential to be a transformative 21st century trade deal--
one that opens key global markets for American goods and
services, while supporting stronger economic growth, good jobs
for our workers, and key American values. In my prepared
statement, I have discussed the TPP and its potential benefits
from three different perspectives.
First, how can the TPP be a transformative trade deal for
America? Second, what recent trends are relevant to U.S. trade
in the Asia-Pacific region? And third, how can we determine if
the TPP is a good deal of the United States?
Let me highlight a few points. The TPP can be a
transformative trade deal in many ways. There are two ways that
stand out. First, the TPP could strongly orient America's trade
toward the Asia-Pacific, especially toward dynamic markets in
East Asia. These markets are forecast to grow two, three, or
even four times faster than ours. By 2020, the Asia-Pacific
will add 1.2 billion new middle class consumers to the global
economy.
In a report last year for Third Way, I detailed how these
consumers and Asia's growing businesses increasingly want what
America excels in making--from heavy equipment and healthcare
to financial services and wholesome food. A growing Asia has
huge potential for America's producers and workers, but to
reach this potential, we will need strong agreements to clear
away the many trade barriers that still block our access to the
region.
The TPP could also enhance America's leverage in defining
new rules for global trade. A number of key developing
countries--including China and India--often support rules that
protect their markets and favor their state-owned enterprises.
A strong TPP could help America and like-minded countries to
push back and advance an alternative vision that stresses high
standards and open, transparent, and fairer trade.
My prepared statement also highlights three important trade
trends that are relevant to the TPP. First, there has been an
explosion in new trade deals in Asia. In the last decade alone,
Asia's trade agreements have grown from 3 to 50, and 80 deals
are currently in the pipeline.
Secondly, America's share of trade into key Asian markets
has been plummeting, falling by over 42 percent between 2000
and 2010. Meanwhile, China and Korea are growing their shares
of these markets by 14 percent.
Third, new studies show that countries are increasingly
making things together. Because of strong supply chains in our
region, for example, exports from Canada and Mexico to the rest
of the world often contain a very high level of American
content made by American workers.
These trends highlight the need for a TPP that would get
America back in the race for new trade deals, that would
increase our share of trade into the region, and that would
help America and American workers seize opportunities in global
supply chains.
Finally, for the TPP to be a good deal for the United
States, it should be comprehensive and ensure broad access to
foreign markets for both goods and services. It should have
high standards on issues like intellectual property and food
and technical rules. And it should promote key American values
like nondiscrimination, due process, and protection of workers
and the environment.
If America is going to prosper in the 21st century economy,
the TPP must also be part of a broader U.S. strategy--one that
includes very strong trade enforcement: Investing in
infrastructure, innovation, and worker training, and one that
provides adequate funding for our hard-working trade officials.
Thank you again for the opportunity to testify and I very
much look forward to your questions.
[The prepared statement of Mr. Gerwin follows:]
----------
Mr. Poe. I thank the gentleman.
Mr. Metalitz, 5 minutes.
STATEMENT OF MR. STEVEN METALITZ, COUNSEL, INTERNATIONAL
INTELLECTUAL PROPERTY ALLIANCE
Mr. Metalitz. Thank you very much, Chairman Poe, Ranking
Member Sherman, members of the subcommittee. I appreciate this
chance to present the views of the International Intellectual
Property Alliance on progress toward the TPP agreement.
IIPA represents the U.S. copyright-based industries that
contribute so much to our nation's economic health,
international competitiveness, and to good, U.S. jobs. A strong
TPP has enormous potential to open up important foreign markets
to the copyrighted products and services that are the fruit of
American creativity, ingenuity, and talent. Recently, that
potential dramatically expanded as three of our four largest
trading partners came to the TPP table. But these gains can
only be achieved if the TPP embodies both high standards of
copyright protection and enforcement and strong compliance
mechanisms to ensure that our trading partners deliver on their
obligations.
Businesses and consumers around the world have demonstrated
an insatiable appetite for U.S. books, music, movies, software
applications, and other copyrighted works. But our industries
still encounter many barriers overseas, most notably pervasive
piracy. Piracy of U.S. works makes it difficult for legitimate
distributors to gain a foothold in overseas markets and when
those distribution channels do get established, piracy online
or offline stunts their growth. This explains why it has been a
cornerstone of U.S. trade policy for more than two decades
under both Republican and Democratic administrations and with
strong and consistent bipartisan support from Congress to get
our trading partners to ensure the adequacy of their copyright
laws and their regimes for enforcing those laws.
Free trade agreements are a powerful tool for advancing
this goal.
The Korea FTA, approved last Congress, exemplifies this
effort. It includes a state-of-the-art copyright chapter that
we have urged U.S. negotiators to employ as a benchmark in the
TPP. Even in those TPP partners that have relatively modern
copyright laws, there are important and in some cases long-
standing gaps that hamper our industry's ability to fully
compete in those markets. TPP offers the potential to resolve
some of these problems.
My written testimony gives several examples. I will just
mention a few. We want the TPP partners to harmonize the term
of protection of copyright, rather than simply meeting the
minimum requirements in that area. We want them to enforce
strong, legal protections for technological measures that
right-holders use to protect their works, including meaningful
remedies against trafficking in tools and services aimed at
circumventing these controls. These technologies are absolutely
essential to cloud computing services and to a lot of new ways
of delivering copyrighted materials to the public. These
governments should set a strong example by ensuring that their
public sector uses only legal and licensed software. They
should enact and implement deterrent civil and criminal
remedies to copyright infringement and they should choke off
the main supply channel for online movie piracy by specifically
outlawing unauthorized camcording of films in theaters. This
has been shown to be very effective everywhere it has been
done.
These issues are complex and we know that negotiating them
with such a large group of major trading partners is especially
challenging. The U.S. negotiators have worked hard and with
unstinting dedication and our industries are committed to doing
whatever we can to enable them to bring back a high standard
TPP agreement with an exemplary copyright chapter. That outcome
is critical not only to the continued growth of the U.S.
copyright industries, and thus of the U.S. economy as a whole,
but also to bolstering innovation, the healthy growth of the
internet, and free expression.
Our industries are proud of their role in providing more
creative works to more people in more ways at more price points
and on more devices than ever before in human history. A TPP
that builds on KORUS FTA will help spread this creativity and
innovation benefitting the citizens of all the TPP partner
countries.
Finally, the ultimate outcome of the TPP depends on a
vigorous, prompt, and consistent compliance effort. Concluding
a successful TPP agreement is only the first chapter. The rest
of the story will be written in the legislatures, ministries,
and market places of our trading partners. The U.S. Government
needs to redouble its efforts and its commitment of personnel,
intellectual bandwidth, and other resources to proactively
enforcing our trade agreements including what the IIPA hopes
will be a strong and comprehensive copyright chapter in the
TPP.
Thank you again for inviting me and I welcome your
questions.
[The prepared statement of Mr. Metalitz follows:]
----------
Mr. Poe. I thank the gentlemen.
Mr. Shehata, 5 minutes.
STATEMENT OF MR. AMGAD SHEHATA, VICE PRESIDENT, INTERNATIONAL
PUBLIC AFFAIRS, UNITED PARCEL SERVICE
Mr. Shehata. Chairman Poe, thank you, and Ranking Member
Sherman, members of the subcommittee. Thank you for the
opportunity to testify on the Trans-Pacific Partnership
agreement and its effects on the U.S. economy. I am testifying
today on behalf of UPS and our nearly 400,000 employees working
in the United States and around the globe.
In 1906, an enterprising 19-year-old, Jim Casey, borrowed
$100 from a friend and established American Messenger Company
in Seattle, Washington. A lot has changed in 100 years. The
American Messenger Company became United Parcel Service which
eventually grew into the world's largest package delivery and
logistics company. Today, UPS operates in 220 countries and
territories with a fleet of 100,000 vehicles and is one of the
world's largest airlines.
We handle more than 6 percent of the U.S. GDP and 2 percent
of the global GDP every day.
With 95 percent of the world's consumers living outside of
the United States, new trade agreements like the Trans-Pacific
Partnership are critical to providing U.S. businesses greater
access to the global marketplace. The TPP's agreements are
important to the global economy, stems from its recognition of
some of the fastest-growing regions in the world. With Japan's
recent entry into the negotiations, alongside the likes of
Singapore, Vietnam, and Malaysia, a successful TPP would be the
most commercially significant free trade agreement ever
negotiated; as we heard earlier, representing a third of the
world's trade and 40 percent of global GDP, strategically
integrating American supply chains with the Asia-Pacific.
UPS's goals within the TPP. Free trade agreements such as
the TPP offer real, tangible benefits to UPS and our customers.
As a global transportation company, UPS is expected to benefit
greatly from the growth in trade. In our experience, with every
new FTA, UPS's export volume to that particular market
increases on average over 20 percent in the first year. Of
course, it is not enough to fill planes with goods if one
cannot quickly get shipments to customers, freely establish as
a foreign company, hire your own people or confidently invest
in these foreign markets. In many of these markets we face a
highly regulated transportation sector, complex board of
procedures, and incoherent domestic regulations which
effectively prevent us from providing the best and most
competitive services to our customers.
Through the TPP, we expect to secure critical commitments
on market access, customs and trade facilitation, and
regulatory disciplines which will allow us to compete on a
level playing field. We operate in the new reality where
businesses are linked together through a web of interconnected,
predictable, and efficient supply chains. Inputs come from all
over the world and are shipped to create products with the
greatest values for consumers here in the U.S. or for eventual
export. In order to enable these supply chains, UPS seeks
strong commitments on customs and trade facilitation for
express shipments including a competitive de minimis as well as
electronic pre-clearance and guaranteed time release. Measures
such as these are the basic building blocks of a modern and
fluid trading regime. And best of all, these improvements and
efficiency and regulatory coherence do not have to compromise
the supply chain security. And in fact, can improve by
leveraging new technological advancements.
In conclusion, exporting to new markets continues to be the
lifeblood of growth for the American economy and services are
the central nervous system on which U.S. businesses rely,
particularly SMEs. These businesses cannot penetrate foreign
markets without support of a competitive and fluid supply
chain. They must have free access to foreign markets and
nondiscriminatory treatment within those markets. Given the
TPP's ambition for market access and setting a global gold
standard, it is timely for this subcommittee to be holding its
hearing today. At this critical point in global economic
recovery, it is imperative that the U.S. continue to
demonstrate its leadership in advancing a global trade agenda.
We must oppose demands to accept protectionism. We cannot
afford to turn the clock back on international trade,
particularly the growing Trans-Pacific market.
After the 18th round of negotiations this month in
Malaysia, we are enthused by the vigor with which the U.S. and
all other parties are attempting to close open items within the
remaining chapters and successfully conclude negotiations this
year.
Thank you again for your attention and your ability to
focus on this very important issue. A comprehensive and
commercially meaningful TPP is of vital importance to the
expansion and prosperity of America's economy. Thank you.
[The prepared statement of Mr. Shehata follows:]
----------
Mr. Poe. I thank the gentleman.
Ms. Drake, you have 5 minutes.
STATEMENT OF MS. CELESTE DRAKE, TRADE AND GLOBALIZATION POLICY
SPECIALIST, THE AMERICAN FEDERATION OF LABOR AND CONGRESS OF
INDUSTRIAL ORGANIZATIONS
Ms. Drake. Chairman Poe, Ranking Member Sherman, members of
the committee, good afternoon. I appreciate this opportunity to
testify on behalf of the AFL-CIO on the outlook for the Trans-
Pacific Partnership trade and globalization agreement. I have
submitted written testimony for the record and will summarize
my comments here.
American workers already live in a global, economic
environment which includes deep trade ties with TPP partner
countries, but those trade ties are severely unbalanced,
particularly with Japan with which we have a trade deficit of
more than $76 billion, $52 billion in autos alone. The AFL-CIO
does not believe that more of the same trade policy that
brought us NAFTA and the WTO is going to fix the problem. Those
deals have cost America's workers nearly $700,000 and 2.7
million jobs respectively. They have led to increasing trade
deficits and flat wages. This model of trade liberalization is
also contributing to a declining share of national income for
workers even as their productivity rises. In other words, as
workers help their employers make record profits, they aren't
seeing rewards that are commensurate with their efforts.
Entities as diverse as the Federal Reserve Board and the
Economic Policy Institute have documented this trend. We can do
better which is why seeing the potential of a new trade model
in the TPP, the AFL-CIO has actively engaged with the
administration, Members of Congress, negotiators from each TPP
country, and a variety of international allies to engage in
this process and try to shape the deal into one that promotes
American interests and not just the interests of its global
business sector.
Unfortunately, the publicly-available evidence has made us
concerned that the TPP could repeat the mistakes of past trade
policy which closed factories, sent jobs to overseas'
sweatshops and failed to protect workers, small businesses,
family farms, and even our national security. To attempt to
address some of the shortcomings of past trade policy, the
administration secured a preliminary deal with Japan in April,
but the deal excluded a number of critical issues including
concrete commitments on currency, auto parts, rules of origin,
and labor rights.
American workers are not confident that the deal is strong
enough to pry open Japan's closed markets or create a level
playing field, particularly in the auto sector.
To promote the shared prosperity necessary to increase net
exports and reduce our perennial trade deficit, we ask for your
assistance in ensuring that the TPP charts a new course. It
must include commercial terms that don't dilute Buy American
policies or let foreign state-owned enterprises use subsidies
to harm U.S. businesses or their workers. It must require
reciprocal market access and strict rules of origin that
promote jobs here or in TPP partner countries, but not in
countries like China that have not made commitments to us.
In addition, all TPP countries must agree to enforce the
ILO core labor rights which empower workers to seek improved
wages, benefits, and working conditions. Enforcement measures
when governments refuse to protect those rights must be at
least as swift, effective, and meaningful and those for
commercial violations. The TPP must not give foreign investors
the right to bypass our courts to challenge American laws that
they don't want to follow. Investment policies to protect our
states, cities, and workers against companies seeking to thwart
the people's will.
To really grow the American economy, the TPP must also
require nations to uphold basic environmental standards,
contain an effective mechanism to address currency manipulation
which has been used by China, Japan, and South Korea to
advantage their own exports, include banking and insurance
rules that promote economic stability, ensure imports including
food and toys are safe, ensure the rights of publicly-supplied
services like electricity and water and contain intellectual
property rules that support American innovation and the arts
without making life-saving medicines unaffordable.
The TPP countries account for one third of global trade and
40 percent of global GDP and that is before additional
countries joined, so we can't afford to get it wrong. To avoid
a repeat of the mistakes of NAFTA, we encourage all members of
this committee to review the developing TPP test. Your input
could be vital to creating good jobs and fair opportunities for
businesses in your district.
I thank the committee for its time and would be pleased to
answer any questions.
[The prepared statement of Ms. Drake follows:]
----------
Mr. Poe. I thank all four of our witnesses. Just so
everyone knows, in approximately 30 minutes we are supposed to
have votes, so I will save my questions until last and we will
see how many members we can get in before votes. The chair
recognizes the gentleman from Illinois, Mr. Kinzinger.
Mr. Kinzinger. Thank you, Mr. Chair. Thank you for that. I
am going to hopefully keep this under 5 minutes. Politicians
talking get old sometimes.
Several countries not currently involved in the
negotiations have expressed interest in signing on to the TPP
once it is done, such as Taiwan. What is the likelihood that
they will and what kind of opportunity does this present for
U.S. trade. And I will ask just the three gentlemen here at the
end if you can answer that.
Mr. Gerwin?
Mr. Gerwin. Yes, Congressman. I think it does create an
opportunity for those countries to join on. As I mentioned in
my testimony, one of the things that is good about the TPP is
that we have an expanding group of countries that are
coalescing around high standards. And other countries are
attracted to that because I think they believe very strongly
that if they don't get in the game, they are going to get left
out. So I think there is a certain degree of attraction that
the TPP has that will bring in other countries. I know other
countries--not only in Asia, but in Latin America--have been
expressing interest in joining.
Mr. Kinzinger. Good. Mr. Metalitz?
Mr. Metalitz. Yes, I would agree with what Mr. Gerwin said.
It certainly provides that opportunity. It is a very complex
negotiation even now and so I think the focus should be on
getting that high-standard agreement in place and then if there
are countries that are willing to step up to those standards
they could certainly be considered at that point.
Mr. Shehata. I guess a way to certainly raise the game of
countries that want to join it is a template that forces them
to live with disciplines that make open economy a reality. So
from a UPS standpoint, we believe in a very efficient supply
chain, so if those countries abide by standards that allow for
that movement and velocity of goods, we think it is a good
idea.
Mr. Kinzinger. Do you believe there are negotiating areas
in which the U.S. position will change if Congress weighs in
and presses hard enough? And if so, what are they?
Ms. Drake, I will start with you.
Ms. Drake. I believe if Congress weighs in and presses hard
enough the USTR could change its negotiating objectives in any
area. Congress has the authority under the Constitution to
negotiate international trade so the administration should
follow Congress' wishes. I think it would be important
particularly for Congress to weigh in regarding state-owned
enterprises. I know from speaking with negotiators from other
countries that they do not like the U.S. proposal. They do not
want their state-owned enterprises to be subject to disciplines
that would level the playing field. So that would be one
potential area and I would also ask Congress to look at other
commercial sectors like rules of origin, Buy American, and
these kinds of things to help us propose exports.
Mr. Kinzinger. Okay, sir?
Mr. Shehata. Yes, actually, from a state-owned enterprise's
standpoint, my comments officially were focused on a level
playing field. We do have concerns to ensure that within the
negotiations on a level playing field against state-sponsored
or state-owned enterprises is critical and it is a focus area
of UPS.
Mr. Metalitz. I think Congress has weighed in in many ways
already in support of strong copyright protections in this
agreement, but I think it would be valuable to continue to do
so. This is a tough negotiating area on some issues and so it
is important to express that.
Mr. Kinzinger. Any thoughts, Mr. Gerwin?
Mr. Gerwin. Yes, Congressman. I agree with Ms. Drake. I
think state-owned enterprises are a very, very important issue
to focus on, not only for this agreement, but because we are
setting a template for the world and we can use this to
pressure other countries that are not part of these discussions
like China to reconsider their policies on state-owned
enterprises as well.
Mr. Kinzinger. And then finally, what are the most
significant obstacles that will impede the 12 countries
involved in the TPP from reaching an agreement by the end of
the year? And I will ask all four of you. I have got 1 minute
left.
Mr. Gerwin?
Mr. Gerwin. I think the biggest obstacle, Congressman, is
the lack of comprehensivity. If the agreement is not
comprehensive, if we are not willing to enter into a
comprehensive agreement, the other countries we are negotiating
with will not as well and we will enter into this downward
spiral where momentum will come out of the negotiations. And if
we do get something, we are not going to get something that is
in the best interests to the United States.
Mr. Metalitz. I would agree with that. This is a complex
agreement, but if we don't aim for a comprehensive agreement
that is possible, then we are not going to succeed.
Mr. Shehata. I think the recent acceptance of Japan to the
agreement may have some delaying consequences. So we need to
ensure that like Canada and Mexico that we bring them on board
quickly.
Mr. Kinzinger. Okay, Ms. Drake?
Ms. Drake. The most controversial issues appear to be
labor, environment, intellectual property, state-owned
enterprises and investment. And my advice would be to weigh and
get these things right, rather than rush to finish.
Mr. Kinzinger. I thank the witnesses, Mr. Chairman, thank
you. Ii yield back.
Mr. Poe. I thank the gentleman. The chair recognizes the
ranking member for 5 minutes. Mr. Sherman.
Mr. Sherman. Thank you. I have got so many questions here.
My colleague from Long Beach will be asking one that I wanted
to ask, but it relates more to his district than mine and I
still have too many questions. I have some efficiency ideas.
I would ask members of the panel to raise their hands if
they believe that this agreement is going to reduce our trade
deficit with the countries involved. Now I will let you know
that our trade deficit currently totals $154 billion, half of
that if you exclude Japan. So how many people think it will
reduce? Mr. Gerwin, okay. And how many people think it will
increase our trade deficit? Okay.
Which of you, either yourself or on record or your
organizations are on record as predicting that MFN for China
would dramatically increase our trade deficit? I see one hand.
So the others who ventured--and that is Ms. Drake.
So the other two gentlemen here didn't get it right on
China, but they are confident that they are going to get it
right this time. And who here predicted that we would see an
increase in our trade deficit with Korea after the Korea free
trade agreement? I see Ms. Drake raising her hand. I see the
other panelists not.
So nothing more connotes insanity than doing the same over
and over again and expecting another result.I21Mr. Gerwin, I
want to focus on the footnote that we got in our most recent
agreements with Panama, Colombia, Korea and that stated that if
we invoke the essential security provision allowing us to take
action essential for our own national security interests or for
international peace and security that that matter was not
subject to review. Can you shed any insight as to why we would
in effect be erasing that that we got in the Korea free trade
agreement by not having it in the TPP?
Mr. Gerwin. I am afraid I can't, Congressman. I don't know
exactly what is being discussed in the current context of the
TPP and I must say I am not--I can't say I am a specialist on
national security issues.
Mr. Sherman. Well, this is the subcommittee on terrorism
and nonproliferation as well as trade and to think that we
would sit by while that footnote is obliterated by those who
want to make ever-greater concessions on trade issues during
these negotiations is surprising. And perhaps we can get
Government witnesses to come before us here and find out why
they are hell bent on sacrificing our national security
interests in an effort to go forward with this agreement.
Ms. Drake, can you give us a little insight as to what this
enormous trade deficit means for working families in the United
States?
Ms. Drake. Absolutely. The trade deficit represents lost
jobs, either directly, they were here, they were shipped
overseas so that different services could be produced there and
then exported back to the U.S. Or they are a lost opportunity
where it could have been job growth within the U.S., but it was
job growth elsewhere.
Just from the first year of the Korea FTA which you
discussed a bit in your opening statement, 1 year doesn't make
a trend, but those first-year numbers are quite disturbing and
it looks like the $5.8 billion increase in our deficit from
that first year represented about 40,000 jobs that American
workers could have had.
Mr. Sherman. If I can interrupt and you are the only person
here representing an organization who predicted something close
to that result. What about currency manipulation? Raise your
hands if you or your organization have been actively calling
for enforcement of the rules against currency manipulation.
Again, we see only Ms. Drake's hand go up.
And I would just ask how can you call it a free trade
agreement if American workers are protected by an organization,
namely the U.S. Government that is unwilling to invoke the
currency manipulation provisions that we have now, unwilling to
call China a currency manipulator? I fear for the American
people that they have to live with the trade decisions made by
this Government. I yield back.
Mr. Poe. To answer the gentleman's question, the United
States Trade Representative was invited to testify and refused
to testify. You can take that however you want to take it.
Mr. Sherman. Those with good cases don't hesitate to
present them.
Mr. Poe. Silence speaks loudly. The chair will recognize
members of the subcommittee and then I see that we have some
members of the full committee here.
Mr. Rohrabacher, as procedure, we will take those
individuals and then ask questions at the end.
Mr. Lowenthal from California is recognized next.
Mr. Lowenthal. Thank you, Mr. Chair, and thank you Ranking
Member also for this. You know, I have a question to follow up
on what Ms. Drake had said before about looking at how these
really make sure that we as we promote free trade, we also
protect American workers. We promote jobs here. And so I want
to give you an example of something that is recently come to my
attention.
The question is how does this all fit together? Two large
grain conglomerates, Mitsui and Marubeni, which are Japanese
grain conglomerates have locked out members of the ILWU. I
don't know if you are aware of that in both Oregon and in
Washington State. At grain export facilities, they have locked
out these workers despite the fact that the American member of
the Northwest Grain Handlers Association, Cargill, has reached
an agreement with the ILWU with the help of Federal mediators.
And so, you know, how are these--now we are about to engage in
a trade agreement with Japan. How are these American workers
going to be treated by Japanese companies? Should we be
considering Japanese participation in the Trans-Pacific
Partnership when, in fact, we are beginning to document locking
out workers that could be a radical harm to American workers?
And shouldn't we ensure that these foreign-based companies
treat American workers with the respect and the dignity they
receive, or should we just kind of disregard this and just move
forward.
My question is to you, Ms. Drake?
Ms. Drake. American workers are very concerned about Japan
joining the TPP. We are not sure that either the U.S. or Japan
are ready for the kind of negotiations they would need to make
sure that workers can get the best deal.
When foreign investors, be they Japanese or from any other
country, invest in the U.S., they should absolutely be held to
the highest standards, the same standards as any other producer
in the U.S. in terms of compliance with workplace safety laws,
labor laws, wage standards, environmental regulations, all of
it. And in fact, the AFL-CIO has suggested as one tool to
incentivize foreign employers to operate here to comply to not
give them access to some of the special privileges in a trade
agreement such as investor/state dispute resolutions unless
they absolutely have clean hands and don't have unfair labor
practice allegations against them or don't have unpaid taxes
and that kind of thing.
Japanese corporations, in particular, tend to have good
relationships with their Japanese unions and then often somehow
it doesn't translate when they operate in the U.S. And so in
particular, the United Auto Workers have been very involved in
trying to improve those relationships and actually get some
recognition agreements and some contracts with the Japanese
auto makers.
Mr. Lowenthal. One additional question and we have heard
about safety issues, now about labor issues, environmental
issues, some of the other unfinished business about state-own
enterprises, some of the investment issues around investment of
foreign corporations and legal issues around that where it will
be heard.
I have another question. This committee, since I have been
on Foreign Affairs under the leadership of both Chairman Royce,
Chairman Smith have really taken a very aggressive stand and
myself about human rights violations, especially about one
country that wants--one or more of these countries like
Vietnam. This is a very critical issue to members of this
committee. Should human rights--should we be rewarding
countries that have severe human rights violations? I ask any
member of the panel.
Mr. Gerwin. Congressman, I absolutely agree. These are, as
I mentioned in my testimony, I think it is extremely important
that we use these agreements to promote American values.
Mr. Lowenthal. That is a critical American value.
Mr. Gerwin. That is absolutely a critical American value.
But one of the things that often happens is that others are
doing trade agreements as well. For example, China is doing
lots of trade agreements. One of the things that China has done
is taken the issue of labor, and taken the issue of the
environment off the negotiating table in their trade
negotiations with other countries. So if we don't do these
trade agreements and do the best we can to enforce things like
labor and the environment and other important American values--
--
Mr. Lowenthal. If it is not even being discussed, is it not
a race to the bottom?
Mr. Gerwin. No, Congressman. I think it enhances our
ability to have good relations with these countries and to push
them to improve their economies and to improve----
Mr. Lowenthal. So first we reward them and then we push the
issue or do we do it before we----
Mr. Gerwin. Well, I think we are doing it in multiple
contexts, but I think having closer relationships with them is
helpful. And as I said, countries like China don't care.
Mr. Lowenthal. I hope you are right, but most human rights
organizations have indicated just the opposite. They have not
since asking to join the TPP, their human rights violations
have escalated rather than not escalating.
Mr. Poe. The gentleman's time has expired. The chair
recognizes the gentleman from Texas, Mr. Castro, for 5 minutes.
Mr. Castro. Thank you, Chairman Poe. I thank each of you
for coming and lending your testimony on this issue today. I
have a question around our previous labor agreements and how
well we have enforced or how well actually the other countries
have enforced labor provisions and how well we have done in
overseeing those issues in terms of labor and the environment,
et cetera, and also the evolution of what we have required of
other countries in terms of labor conditions, working
conditions, going from NAFTA forward?
Anybody on the panel is fine.
Ms. Drake. I am happy to start.
Mr. Castro. Sure.
Ms. Drake. The commitments in labor that the U.S. has asked
for in its free trade agreements certainly have evolved over
time and have improved generally over time. It wasn't
necessarily straight line, but it started with sort of a side
agreement that was largely unenforceable with NAFTA to a CAFTA
standard of enforced labor laws to what is now the high water
mark of the March 2007 agreement in Peru which again is a
promise to be a floor and should be higher in this agreement.
Mr. Castro. So you would agree that it is going in the
right direction?
Ms. Drake. It is going in the right direction, but it is a
weak tool because it involves sort of diplomatic relationships
and there is no sort of hard penalty that puts in place
immediately, but it highlights promises and it does put
pressure on countries to comply. It is just that it is a slow
process. But we encourage it to get stronger and stronger.
Mr. Castro. And I guess that is what I am trying to get to
the bottom of. There is sometimes a difference between what you
have on paper and what happens in practice. So my question is
essentially about the gap there. But you know, I take the point
to heart about the trade deficit although I do think you have
got to ask yourself the question about both parties, do both
parties do better even though you may be buying more of their
stuff than they are of yours, do both parties do better by the
agreement? I think that is something that we struggle with.
The reason I ask the labor question is because what we have
seen over the years is America losing jobs to other countries,
places where workers can be paid essentially a pittance for
their work. We have got to improve the labor conditions and the
working conditions and really the wage conditions in other
countries if we are going to be successful in keeping American
jobs in America. And so I see that as an opportunity in these
agreements and really it is something that should be
fundamental to them. I don't think that we can be shut off from
the reset of the world. I do think that we need to engage other
countries in trade, but I do think that the agreement should be
done in a useful way that accomplishes also making sure that
American workers are able to compete fairly against people in
other countries.
If you all have any comments on anything I have said?
Mr. Gerwin. Yes, Congressman Castro, a couple of things.
First of all, I would like to address the question of our trade
deficit which has been discussed. If you look at our agreements
with free trade agreement countries, we actually have
manufacturing goods, services goods, and ag goods surpluses
with those countries. The reason we, for example, have mostly
trade deficits with Canada and Mexico is because we import a
lot of oil from those countries. The real drivers of our trade
deficits are China, a country that we don't have a free trade
agreement with, and petroleum. So I think when we are talking
about free trade agreements and deficits, I think it is
important to drill down and see the effects that the agreements
themselves have.
Mr. Castro. So your point is that in certain sectors or
industries, we are actually coming out ahead?
Mr. Gerwin. Yes, I mean if you look at manufacturing
services and ag. and you aggregate our free trade agreements
historically, we are doing well. So I think that is important.
And I will reiterate the other point. I think it is very
important for us to get the highest possible labor standards
and environmental standards that we can get in these agreements
and one of the things the TPP could help us do is go back and
perhaps improve the agreements that we have, the side
agreements we have with Canada and Mexico, now that they are
part of the TPP.
Mr. Metalitz. If I could just add one point to what Mr.
Gerwin said on the first point? If you look at the sectors that
depend on copyright protection on books, on music, on
publishing, on software, these are big exporters, $130 billion
in foreign sales and exports, far bigger than many
manufacturing industries, for example. And that has continued
and if we can get stronger protections in these countries, we
are going to be exporting more and we are going to be creating
more jobs in the United States in all of those industries. So I
think they get to look at it on a sector----
Mr. Castro. Just to make a final comment on that, Chairman,
last week and several of us were in Los Angeles. Lucille
Roybal-Allard, a congresswoman from Los Angeles, led a
discussion with the Motion Picture Association and former
Senator Dodd who now heads up that organization was there and
he was talking about the very extensive problem that you have
with piracy in China and in other countries, so I hear you on
that.
Mr. Poe. The gentleman's time has expired. I will yield
myself 5 minutes. We are in the process of votes. We will try
to finish before the voting process because it is going to be a
long process.
Mr. Gerwin, you mentioned something about oil. I realize
that oil, exporting into the United States, affects the overall
trade deficit of the United States because we import so much
oil. How much is it? The trade deficit made up of importing
crude oil is what percentage?
Mr. Gerwin. You know, I don't know the precise number,
Congressman, but I think it is about a third.
Mr. Poe. Does anybody else want to weigh in on that?
Mr. Gerwin. We did a study when I was at Third Way and I
think if you called oil its own country, I think it would be
like our number three trade deficit country.
Mr. Poe. Hopefully, we will change that and become an
exporter, especially of natural gas. That is a different issue
however.
Four of these countries are on the intellectual property
watch list which means that we are watching them. Should we
include them in the TPP, especially Vietnam as pointed out they
have got some other issues. They don't treat their own people
right. They have got human rights violations, international
trafficking. Should we just exclude those four or should we try
to do something with them?
Mr. Metalitz?
Mr. Metalitz. Yes, those countries, I think it is important
that those countries be involved in the TPP, but I think the
fact that they are on the watch list and in one case on a
priority watch list from USTR is significant and it raises
issues that need to be addressed in the TPP negotiations.
Chile is on the priority watch list. We signed a free trade
agreement with Chile that had very strong copyright provisions
and they simply have not implemented many of them and that is
setting a terrible example for our future TPP partners. They
may be thinking well, we can sign up----
Mr. Poe. Let me interrupt just for a second. So they don't
agree. They are still violating the rules. They are cheating.
And so what are we doing? Saying woe is me or taking them to
the international court? What are we doing?
Mr. Metalitz. Well, there are steps that could be taken
under our free trade agreement.
Mr. Poe. Are we doing anything?
Mr. Metalitz. I don't think we are doing enough. It is a
source of frustration----
Mr. Poe. I am going to have to ask a lot of questions here.
Our negotiators, are they good negotiators? Are diplomats
negotiating this or do we have some horse traders in there
fighting for America? I am serious about this. As the ranking
member has pointed out, we go in to these agreements and all of
a sudden we find out maybe we didn't get the best deal and then
we come back and we show it to the American public and it is a
done deal and it is a deal.
I am asking your opinion of the negotiators for the United
States. It is an opinion. Everybody has got an opinion.
Ms. Drake?
Ms. Drake. If I may, we would like to see USTR do a lot
better. For instance, we think that in the Korea FTA it was a
huge mistake to let that 35 percent regional value content go
for automobiles. That left jobs on the table and USTR could
have done a heck of a lot better. And we have meetings with
USTR fairly regularly. As I said, they do have an open-door
policy and we are constantly saying we need you to really go
after rules or origin, market access commitments, reciprocal
market access commitments that get good jobs for Americans. And
as was mentioned, allow workers in other countries to have
rights that they can raise their own wages.
Mr. Gerwin. Mr. Chairman, I think we also need more of
them, too.
Mr. Poe. More negotiators?
Mr. Gerwin. More negotiators. Ambassador Froman has said
that the serious budget issues that USTR has makes it difficult
for them to go and do some of the kinds of assessments they
need to do in foreign countries to determine whether those
countries are actually violating things like intellectual
property rights.
We only have 200 plus people at USTR. It has a lot of
responsibility and I think they need some more resources.
Mr. Poe. Would you recommend, the four of you, as I am
nearly out of time that Congress, this committee, make a list
of recommendations that we put on the table to make sure we
think these are the best in America's interest to go after them
on these issues. Let us make this part of the deal, while it is
still in flux and it hasn't been signed yet. Would you agree
with that, yes or no. I will just go down the list?
Mr. Gerwin. Yes.
Mr. Metalitz. Yes.
Mr. Shehata. No.
Ms. Drake. Yes.
Mr. Poe. Okay, why no? Why do you think Congress should----
Mr. Shehata. I'm going to wrap my answer in the question
you asked earlier in regards to are they doing the best job
they possibly can? I think they have been engaged for 3\1/2\
years. They have learned the issues. They have America's
interest in mind. They are trying to take our core beliefs and
instill them in a number of countries through an agreement that
has discipline on getting them to where we need to go.
So my answer of no is we need to give them more horsepower,
but we need them to be able to achieve what we ask them to do.
Mr. Poe. And as Ms. Drake said, not rush through this, but
get it done right, rather than just get it done.
Last comment, just brief answer from one of you on the
state-owned enterprises. I am very concerned about these state-
owned enterprises competing with Americans because they seem to
cheat. Should this be a bigger issue? Should we emphasize this
more in the TPP negotiations that we want--they have to go by
the same rules, even though they are state-owned enterprises,
yes or no?
Mr. Gerwin. Absolutely. We are certainly concerned with how
the governments operate state-owned enterprises, especially in
terms of respecting intellectual property. That is essential.
Mr. Poe. Okay.
Mr. Shehata. Critical, definitely very important.
Ms. Drake. It is a critical issue.
Mr. Poe. Okay, thank you. I thank all four of you. I see
that Mr. Rohrabacher is here. I will stay if the other members
want to go on the House floor.
And Mr. Rohrabacher, do you want to ask some questions?
The question is, Mr. Rohrabacher, do you want to ask any
questions?
Mr. Rohrabacher. Yes, I do. Thank you, Mr. Chairman.
Mr. Poe. You have 5 minutes.
Mr. Rohrabacher. I have 5 minutes, all right. I was just
noting again as some of the other members did that we have
Vietnam right in the middle there of all these other countries
and there are some questionable political institutions or lack
of institutions in some of these countries, but Vietnam is an
out-and-out dictatorship. It is the dictatorship of the
proletariat. You go there and they are still talking that
stupid way.
Is there some notion that we are going to be more
successful in Vietnam that by trading with them they are going
to become a freer society? That didn't work in China, did it?
China isn't any more democratic today than it was--in fact,
some people think it is less democratic today because they are
using our computers to track down their dissidents. Is this
just another mistake in an idea that we are going to make them
more liberal by trading with them, the old hug a Nazi, make a
liberal theory? [Laughter.]
Does anybody want to tackle that?
Mr. Gerwin. Well, Congressman, there is a difference
between what we are proposing to do with Vietnam and what we
have done with China. We have traded more with China. What we
are proposing to do with Vietnam is to make them sign up to a
whole bunch of new commitments including things like labor and
the environment and rule of law and notice of process
rulemaking, all of that. And if they are not willing to sign up
to that, they are not going to do an agreement with us. And I
think those kinds of deeper commitments can be helpful. A big
slog, I understand that.
Mr. Rohrabacher. I think if you really dig down, you are
going to find out that countries like Vietnam, governments like
Vietnam, actually have constitutions. They have signed on to it
with their people and then they don't pay any attention to it
whatsoever. I mean the Soviet Union had a wonderful
constitution. Signing on isn't the point. Actually, it is
enforcing something that somebody signed on and I see our
representative from labor is shaking her head. Maybe you can
tell us do we enforce, do we have a history of enforcing these
types of agreements once we have got countries like Vietnam
under signature?
Ms. Drake. Not strongly enough. For example, we have been
told for years that signing countries up will exactly as you
say, will liberalize, will improve human and labor rights
conditions, et cetera, et cetera. What we found particularly
with the CAFTA countries is that labor rights have been
degraded. The same is true in Mexico and in many other
countries and we are afraid that just sort of signing Vietnam
up might lead us to a situation that is similar to Colombia
where there is a labor action plan, there are commitments for
what is going to be better, but the real day-to-day rights for
workers change very little, if at all.
Mr. Rohrabacher. Is there a right to strike? Is there a
right to strike in Vietnam? Do people have a right to strike in
Vietnam?
Ms. Drake. There is not. It is illegal.
Mr. Lowenthal. Only dissidents.
Mr. Rohrabacher. That is right. You know, years ago when I
was a young man which is many, many years ago when I was 19 I
spent some time in the Central Highlands of Vietnam. I was not
in the military, but I was with the Montagnards up there and I
couldn't help but note that there are 350 Montagnards right now
being held in prison because they are evangelical Christians.
They have managed to be converted to Christianity.
I just can't imagine that it is consistent with our values
that we are going to declare that a country that holds 350
people and that is just these Montagnard Christians, they hold
other religious people in prison, that we are going to lump
them in with other free countries as if there is no difference
in our relationship between New Zealand and this communist
dictatorship that still tries to stamp out people's belief in
God. I just can't believe we just ignore that fundamental fact
that is staring us in our face.
I think that the decisions we have, Mr. Chairman, are more
than economic decisions. We are defining ourselves to the world
as to what we believe most and if we believe that like we have
been dealing with China that just making money is the only
thing that America is all about I just don't think that people
will respect us and we won't be any more prosperous of safe
because of it. Thank you very much.
Mr. Poe. I thank the gentleman. I want to thank all four of
you for being here. There will be more questions in writing
submitted to you from members of the panel, just so you know
they are coming. Don't take a long time in answering them. So
without objection, all members may have 5 days to submit
statements, questions, extraneous materials for the record,
subject to the length limitation in the rules of this committee
and the committee is adjourned. Thank you again.
[Whereupon, at 2:38 p.m., the subcommittee was adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing RecordNotice deg.
\\ts\
\ \
\ \
\ \
[Note: The remainder of the above material is not reprinted here but is
available in committee records.]