[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
HEARING ON PRESIDENT OBAMA'S TRADE POLICY AGENDA WITH U.S.
TRADE REPRESENTATIVE MICHAEL FROMAN
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HEARING
before the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
July 18, 2013
__________
Serial No. 113-FC11
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
DAVE CAMP, Michigan, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin JIM MCDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington XAVIER BECERRA, California
CHARLES W. BOUSTANY, JR., Louisiana LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
TOM PRICE, Georgia EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida RON KIND, Wisconsin
ADRIAN SMITH, Nebraska BILL PASCRELL, JR., New Jersey
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois
KENNY MARCHANT, Texas LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio
Jennifer M. Safavian, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
C O N T E N T S
__________
Page
Advisory of July 18, 2013 announcing the hearing................. 2
WITNESSES
Ambassador Michael Froman United States Trade Representative,
Office of the United States Trade Representative
Testimony........................................................ 7
HEARING ON PRESIDENT OBAMA'S TRADE POLICY AGENDA WITH U.S.
TRADE REPRESENTATIVE MICHAEL FROMAN
----------
THURSDAY, JULY 18, 2013
U.S. House of Representatives,
Committee on Ways and Means,
Washington, DC.
The committee met, pursuant to call, at 9 a.m., in Room
1100, Longworth House Office Building, the Honorable Dave Camp
[chairman of the committee] presiding.
HEARING ADVISORY
Chairman Camp Announces Hearing on
President Obama's Trade Policy Agenda with
U.S. Trade Representative Michael Froman
Thursday, July 18, 2013
House Ways and Means Committee Chairman Dave Camp (R-MI) today
announced that the Committee on Ways and Means will hold a hearing on
President Obama's trade policy agenda with U.S. Trade Representative
Michael Froman. The hearing will take place on Thursday, July 18, 2013,
in 1100 Longworth House Office Building, beginning at 9:00 A.M.
In view of the limited time available to hear the witness, oral
testimony at this hearing will be from the invited witness only.
However, any individual or organization not scheduled for an oral
appearance may submit a written statement for consideration by the
Committee and for inclusion in the printed record of the hearing.
BACKGROUND:
International trade is an engine for growth and job creation in the
United States. While the United States is the largest economy and
trading nation in the world, 95 percent of the world's consumers are
abroad. Accordingly, the future success of American workers,
businesses, farmers and ranchers is integrally tied with continuing
America's strong commitment to finding new markets and expanding
existing ones for U.S. goods and services.
This hearing will provide an opportunity to explore with Ambassador
Froman how the President's trade agenda will create new and expanded
opportunities for U.S. companies, workers, farmers and ranchers. Those
opportunities include ongoing negotiations such as the Trans-Pacific
Partnership, the U.S.-EU Trade and Investment Partnership and the Trade
in Services Agreement negotiations, as well as post-Doha negotiations
at the World Trade Organization such as expansion of the Information
Technology Agreement (ITA), a trade facilitation agreement and a WTO
agreement on environmental goods and services. The hearing will also
explore the need for Trade Promotion Authority legislation, which the
President has recently requested, in setting out Congressional
objectives, consultation, and consideration of trade agreements. In
addition, the hearing will examine important enforcement priorities,
including trade restrictive practices and non-tariff barriers from
major emerging economies that prevent U.S. companies from competing on
a level playing field and various bilateral and multilateral trade
disputes and concerns. Finally, Ambassador Froman's testimony will
provide an opportunity to discuss Bilateral Investment Treaty (BIT)
negotiations with China, India, Pakistan and Mauritius, as well as new
BITs and investment opportunities; discussions in other bilateral and
multilateral forums; and the trade and investment relationship with new
and emerging trading partners.
In announcing this hearing, Chairman Camp said, ``Opening new
markets and enforcing our trade rights support economic growth and job
creation here in the United States. We are at a critical juncture to
move forward aggressively on a number of trade fronts including
negotiations on the Trans-Pacific Partnership, with the European Union,
as well as negotiations for the Trade in Services Agreement. Trade
Promotion Authority legislation is essential to concluding ongoing
negotiations and providing important Congressional direction,
particularly to the talks that are just now beginning. We must also
continue to develop new trade and investment opportunities, and enforce
our trading rights with important trading partners, including China,
India, and Latin America, to maximize American competitiveness and
ensure that we do not fall behind. The Administration's active and
engaged leadership is critical to achieving these goals.''
FOCUS OF THE HEARING:
The hearing will provide an opportunity to explore with Ambassador
Froman current and future trade issues such as: (1) developing and
passing of Trade Promotion Authority legislation; (2) seeking to
conclude a successful Trans-Pacific Partnership agreement this year;
(3) negotiating with the European Union for a comprehensive and
ambitious trade and investment agreement; (4) negotiating a Trade in
International Services Agreement that increases access for all sectors
of our economy; (5) improving our important trade relationship with
major emerging economies like China, India and Brazil, and addressing
their trade barriers; (6) ensuring appropriate trade enforcement
efforts; (7) advancing WTO negotiations, including ``post-Doha'' issues
at the WTO such as Information Technology Agreement (ITA) expansion, a
trade facilitation agreement and an agreement for trade in
environmental goods and services; (8) negotiating Bilateral Investment
Treaties (BITs) with China and India and exploring new BITs and
investment opportunities; and (9) establishing long-term, closer ties
with important trading partners.
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Chairman CAMP. The committee will come to order.
Well, good morning, everyone. I want to welcome everyone
here today and extend a special welcome to United States Trade
Representative, Ambassador Mike Froman. First of all, let me
congratulate you on your confirmation. You are now leading one
of the most professional and productive agencies in the United
States Government. We are glad to have you here, and we wish
you very well in your new responsibilities.
You take the helm of USTR at a critical juncture. We are in
the midst of three major trade negotiations, all of which will
need strong Administration leadership to complete. We are in
deep into negotiations on the Trans-Pacific Partnership, which
I hope will be finished this year.
Earlier this month, you held the first round of
negotiations for a U.S. EU Trade and Investment Agreement,
which holds enormous potential economic benefit. A negotiation
for a Trade in Services Agreement have begun, promising huge
commercial gains and attracting new participants.
We had initially seen some encouraging movement at the WTO
on expansion of the Information Technology Agreement and a
trade facilitation agreement, but that progress seems to have
stalled, particularly with yesterday's announcement about
China, forcing us to suspend ITA negotiations. We need to find
a way around these obstacles in Geneva.
Each of these negotiations will support more, better-paying
jobs here in the United States by dismantling barriers to U.S.
exports and creating robust enforcement mechanisms to prevent
future barriers from emerging. These agreements will tackle
tariff and nontariff barriers as well as new 21st century
issues like state-owned enterprises, regulatory coherence and
trade facilitation. In addition, these agreements help to more
deeply integrate U.S. companies into the global supply chains
that are the reality of today's marketplace.
Quick movement on these negotiations is important because
other countries are signing agreements that open markets and
increasing their competitiveness at our expense.
I look forward to continuing to work closely with you on
each of these negotiations to ensure that each is ambitious,
comprehensive and concluded as soon as possible. However,
finishing these negotiations will not be easy. For example, in
the TPP, I have serious concerns about Japanese nontariff
barriers in the auto, insurance and agriculture sectors. In the
EU, we face regulatory barriers to U.S. exports that must be
resolved, particularly in agriculture.
I look forward to hearing your testimony on these issues
and working together to ensure that these barriers and others
are fully addressed before any negotiation is completed.
Another critical issue that has raised considerable concern
is how to deal with currency in our trade agreements. I believe
that currency misalignment is a serious problem, and I look
forward to hearing more from you about how the administration
plans to address this issue.
Last Congress we passed, and the President signed into law,
seven bipartisan trade bills, including legislation that
implemented trade agreements with Colombia, Panama, and South
Korea. I hope to build on that bipartisan cooperation to move a
bipartisan Trade Promotion Authority bill. TPA is essential so
that we in Congress can outline our priorities for you,
establish how you consult with us, and create the mechanism for
considering implementing legislation.
It is no overstatement to say that the success of your work
at the negotiating table absolutely depends on passing TPA, and
we simply will not be able to enjoy the benefits of what we
negotiate unless we have Trade Promotion authority.
I look forward to hearing today from you, Ambassador, about
how the Administration plans to engage on this issue as well.
In addition to negotiations, we must also pay attention to the
challenges and opportunities presented by trading partners
around the world. Take, for example, the major emerging
economies, China, India, and Brazil. Each provides enormous
potential opportunity, but also significant and growing
barriers. We must seek ways to engage these countries
constructively and address trade and investment issues. We
should use our bilateral investment treaty agenda as one tool
to address these concerns and also seek to expand our agenda to
new partners.
Finally, I also note that we continue our work here in
Congress on several important initiatives. I will continue to
seek a path forward to pass as soon as possible the bipartisan
Miscellaneous Tariff Bill, which Ranking Member Levin and I
introduced yesterday, to provide tariff relief to U.S.
manufacturers for products not made in the United States. Our
bill remains a model of transparency with benefits available to
any entity that uses the products covered by the bill, and I am
very aware that last December duties increased for over 600
products.
Ranking Member Levin and I also introduced legislation
yesterday to renew the Generalized System of Preferences, and
we will continue to work together to find a path forward in
this Senate that ensures that the Senate can move the bill
without amendment. In addition, I hope to move a bipartisan
customs reauthorization bill quickly.
A robust international trade agenda puts U.S. job creators
back on the offense. Let us seize this opportunity.
Chairman CAMP. I will now yield to Ranking Member Levin to
make an opening statement.
Mr. LEVIN. Thank you very much, Mr. Chairman.
And, Ambassador, on behalf of all of us, if I might say so,
a warm welcome.
With negotiations spanning the Atlantic and the Pacific
illustrating that globalization is accelerating, we face major
opportunities and challenges. I believe that this
administration, in which you have played a key role, has, on
some important occasions, demonstrated a broader vision of
international trade. It has helped to create jobs through
exports, while also looking actively at the impact of imports.
It is working to incorporate enforceable worker and
environmental standards in trade agreements. It has been more
active in enforcement, from initiating WTO cases to applying
the China safeguard on tires, to creating the ITEC. It has
responded to a series of tragedies in the factories of
Bangladesh, tragedies that have shaken conventional resistance
to building some basic standards to shape the human impact of
the heightened flow of international trade.
As USTR, you face many challenges: forced localization in
China and India, for example; continued concerns about labor
rights in Colombia; evasion of antidumping duties; even the
future success of the WTO.
TPP can expand our imports in many sectors, including
services which are also under negotiation in Japan. While there
are many outstanding issues, Japan's engagement raises a
broader policy question: whether and how to address one-way
trade, a very unlevel playing field.
The U.S. has had massive trade deficits with Japan for
decades, the vast majority in the auto sector where Japan is
taking advantage of a completely open U.S. market, while
Japan's has been tightly locked to imports from us and anywhere
else. If the principle of two-way trade really matters, and I
believe it does, we need to chart a course to achieve it. What
the U.S. negotiates with Japan could have important impacts on
the U.S. economy and also how TPP would be received in
Congress. I am working with stakeholders to develop a proposal
and hope to share it next week.
The Transatlantic negotiations also provide an opportunity
to expand our exports and strengthen our economy. Just as
important, they can establish new rules for global trade,
promoting an equitable and market-based economic model over the
emerging model of, in quotes, ``state capitalism.'' These
negotiations won't be easy, but our relationship with Europe is
unlike any other. We should build upon the strength of that
relationship, and it should reflect our many common objectives
and values, while also respecting our differences.
The discussion on TPA has begun, and there is widely shared
interest in getting it right. First, TPA sets the rules for
engagement between Congress and the administration. A
significant sustained role for Congress is critical. Today
trade agreements address a broad and growing range of policy
areas, so Members of Congress must play an active role in their
development. There is also a chance that more effective,
broader congressional involvement, and I would like to
emphasize this, would help to establish more common ground in
Congress for trade agreements.
Second, the TPA process must be a vehicle in crafting a
broader strategy, as we did in 1988, to tackle the increasing
challenges and potential benefits of globalization and enhance
U.S. competitiveness. Since we last considered TPA, the U.S.
has experienced the largest trade deficits in our history,
contributing to lost jobs. These imbalances have more than one
ingredient. One source often stems from trading partners
refusing to play by the rules.
As the chairman mentioned, currency manipulation is a vivid
example. There is precedent preparing TPA with currency
legislation. We did so with the very first TPA bill in 1974,
and we did it again in the 1988 act. The House and Senate have
both passed currency legislation, and this issue needs to be
part of the TPA, TPP and T-TIP. We are going to have trouble
keeping these three things separate, aren't we?
So I close to mention this of interest, I know, to you in
your new position. With sequestration, USTR, like many other
agencies, is working under difficult personnel constraints. We
need to help ensure that the administration can continue--can
continue to devote the needed resources not only to negotiating
new trade rules, but to enforcing those that exist.
So, Mr. Ambassador, it is nice to call you that, we look
forward to working with you.
Chairman CAMP. All right. Thank you.
Chairman CAMP. We will now turn to our witness. I want to
welcome Ambassador Mike Froman again to the committee, and
thank you very much for being with us today. You have five
minutes to present your testimony, and your full written
statement has been submitted for the record. Mr. Ambassador,
you are recognized for five minutes.
STATEMENT OF MICHAEL FROMAN, UNITED STATES TRADE
REPRESENTATIVE, OFFICE OF THE UNITED STATES TRADE
REPRESENTATIVE
Ambassador FROMAN. Thank you, Mr. Chairman, Ranking Member
Levin, Members of the Committee. Thank you very much for having
me here today. There is a long tradition of partnership between
the Ways and Means Committee and the U.S. Trade Representative,
and that is a tradition I plan to continue.
As President Obama's advisor on international economic
issues for the past 4 years, I have had the opportunity to work
with many of you on a number of initiatives, including those
that are now my full-time focus: opening markets for American
goods and services and, in doing so, supporting jobs here at
home.
We have made important progress over the past 4 years.
Exports are at an all-time high. Increases in U.S. exports have
supported more than 1.3 million additional American jobs and
have accounted for more than one-third of U.S. GDP growth over
this period. I am pleased that you invited me here today
because there is so much more that we need to do together.
As President Obama has made clear, our focus must be to
promote growth, create American jobs and strengthen our middle
class. USTR can contribute to this effort in three important
ways: First, by opening markets around the world so we can
expand our exports; second, by leveling the playing field so
that our people can compete and win in the global economy; and
third, by ensuring that the rights and trade rules we have
fought so hard for are fully implemented and enforced.
Trade policy, negotiated and enforced vigorously to reflect
both our interests and our values, gives our workers, farmers
and ranchers, our manufacturers and service providers, our
innovators, creators, investors in businesses of all sizes the
best chance to compete around the world.
The President has laid out one of the most ambitious trade
agendas ever, and we at USTR are committed to getting it right.
Last week, U.S. and EU negotiators completed the first round of
Transatlantic Trade and Investment Partnership, or T-TIP,
negotiations with the ultimate goal of enhancing what is
already the world's largest trading relationship. And as we
speak, USTR negotiators are in Malaysia, hard at work
negotiating the groundbreaking Trans-Pacific Partnership, or
TPP, a 21st century agreement that raises standards and
introduces new trade disciplines.
We are working on fresh, credible ways to energize
multilateral trade liberalization at the WTO. We are working to
negotiate a trade facilitation agreement, and we hope to make
progress on an information technology agreement. Our services
negotiators are hard at work negotiating a high-standard trade
in services agreement, or TISA, that will allow our already
competitive services providers to compete for global business
on a more level playing field.
If we are able to complete these agreements, and I say if,
because let me be clear, it is better to have no agreement than
a bad agreement, we will have created free trade with 65
percent of the global economy. These agreements hold real job-
supporting export potential for manufacturers in Michigan and
Pennsylvania, farmers and ranchers in Wisconsin and California,
and service providers in New York and Massachusetts.
Trade policy can only work, however, if it is fair.
American workers are the most productive in the world. They
deserve a level playing field to compete on, and this
administration is taking a tough approach to trade enforcement,
filing 18 cases to enforce our trade rights. The Interagency
Trade Enforcement Center, or ITEC, has further enhanced the
complexity, depth and reach of the administration's enforcement
efforts.
The Obama administration is committed to pursuing freer
trade, but we are equally committed to enforcing our trade
rights and providing skills and opportunities for workers,
including through the Trade Adjustment Assistance Program,
which expires at the end of this year.
Trade is also a powerful tool for our broader development
policy. I recently returned from Africa where President Obama
announced a Trade Africa Initiative, working with a new
generation of reform-minded leaders in some of the poorest
countries in the world who are focused on pursuing policies of
trade, not just aid; investment, not just assistance as the key
to sustainable economic development.
In that regard I am encouraged by the introduction
yesterday by the leaders of this committee of a bipartisan bill
to extend GSP, and I look forward to working with you to ensure
the seamless renewal of AGOA before it expires in 2015.
Trade policy fulfills its greatest potential when it is the
product of close consultations between the administration,
Congress, and a wide range of stakeholders. Transparent
collaboration leads to better policies and better outcomes, and
while USTR has done much to advance transparency in recent
years, in my view, we can always do better, and here, too, I
look forward to consulting with you as we explore what further
steps should be taken.
Let me say a word about an issue I know of importance to
many of you, trade promotion authority, or TPA. As I said in my
confirmation hearing, TPA is a critical tool, and as the
leadership of our committees undertake a process to develop a
TPA bill, we stand ready to work with you to craft a bill that
achieves our shared interests.
Finally, all of these things I have mentioned, all of our
shared goals, are contingent on USTR having the resources to
pursue its mission. We are managing our resources aggressively,
and we will do our best to achieve our priorities with whatever
resources we have, but to be frank, I am worried. At a time of
unprecedented levels of activity, sequestration and other
budget cuts are compromising USTR's ability to conduct trade
negotiations and other market-opening efforts as well as to
initiate new enforcement actions. Financial constraints are
forcing us to make difficult decisions every day, and the
opportunities we miss have real effect on whether or not your
constituents are getting the full benefits of a robust trade
policy and the jobs and growth promised by our trade
agreements.
With that, let me thank you again for inviting me to
testify today. I am happy to take your questions.
Chairman CAMP. Well, thank you very much.
[The prepared statement off Ambassador Froman follows:]
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Chairman CAMP. Mr. Ambassador, I have been working with Mr.
Levin and our counterparts in the Senate on a bipartisan,
bicameral basis to develop TPA legislation. As I mentioned, I
believe you need this authority to bring TPP to a close, as
well as the other things you mentioned, the EU agreement,
services and other negotiations, because, as I said, it gives
the administration the backing of the Congress and a clear
sense of what our negotiating objectives are.
While we are making progress, we will not be able to do
that without the administration's full involvement and
engagement, and I welcome your statement both at your
confirmation hearing and again today that the Administration is
asking for TPA, that you believe it is a critical tool, but we
really do need to be full partners in this venture if it is to
succeed.
What exactly are you and the President doing to help build
the case for TPA?
Ambassador FROMAN. Well, Mr. Chairman, I think the
President and the rest of the administration has been very much
discussing the importance of our trade agenda, the implications
of our trade agenda for a larger economic policy, and are fully
committed to moving forward with what is necessary to get our
trade agenda done.
With regard to TPA specifically, the bipartisan leadership
of this committee and of the Senate Finance Committee I know
are beginning a process or working on a process to develop a
bipartisan TPA bill, and we stand ready to engage and to help
in that process as requested.
Chairman CAMP. Regarding TPP,as I said, I am committed to
working with you on that, and I think a robust agreement will
have significant benefits for the U.S. economy and support job
creation and better-paying jobs here.
Japan's scheduled entry next week, I think, raises some
very significant concerns. Japan's entry into the negotiations,
should not be allowed to undo the work that has already been
completed. I think a robust package fully addressing Japan's
nontariff and tariff barriers that have been long-standing, as
Mr. Levin mentioned, particularly as they relate to auto,
agriculture and insurance exports will be essential to
obtaining my support for this agreement.
But first, what steps are you taking to ensure that Japan
will resolve these outstanding barriers to trade?
Ambassador FROMAN. Thank you, Mr. Chairman. And this is a
very important issue to us, as we appreciate your leadership
and the leadership of Ranking Member Levin on this issue as
well.
Before--we had extensive consultations with Japan prior to
agreeing to allow them to join TPP precisely on the issues you
mentioned, on agricultural issues, on insurance, and on the
auto sector, and we insisted on making progress on those issues
before they were allowed to come in, and we reached some
upfront agreements in certain areas, but also reached agreement
on terms of reference for ongoing negotiations in these areas
that will be linked to and part of TPP.
So, for example, in the agricultural area, they moved
forward with their agreement to allow American beef into their
markets in 30 months and under. On the insurance area, there is
a standstill for the introduction of new products through their
postal system and an agreement to negotiate, and terms of
reference for that negotiation, for further opening of that
market. And on autos, very importantly, we reached upfront
agreements both on measures to allow greater access to the
Japanese market by more than doubling what they call their PHP
program, which allows expedited entry of U.S. vehicles, but
also we reached agreement on how the staging of U.S. tariffs
will be done in the context of the overall TPP negotiations,
and we laid out a negotiation on all the nontariff barriers, or
many of the nontariff barriers that you referred to, and made
it clear that negotiation of an agreement, an adequate and
acceptable agreement on that, on those nontariff barriers, will
be a key part of the TPP agreement, will be binding, will be
subject to dispute resolution.
So we share, very much share, your concern and your focus
on the importance of opening up Japan's market as part of their
entry into TPP, and we believe we have structured an engagement
with them through TPP and in parallel to TPP that can achieve
that objective.
Chairman CAMP. As a follow-up to that, I have heard a from
various stakeholders and Members of Congress about Japan's
currency practices, and their past practices, you know, very
serious concerns, particularly its uncoordinated intervention
in 2011. Treasury flagged its concerns about those
interventions in its semiannual currency report, and I have
raised this issue with it before.
Are you considering including provisions on currency in the
TPP, and what would those provisions look like? What factors
should be taken into account in determining the U.S. position
with regard to those?
Ambassador FROMAN. Well, Mr. Chairman, we share the
concerns about--about currency. Clearly, obviously, Treasury
has the lead on these issues, but these issues have been very
much at the top of our agenda, engagement with countries of
concern. China, for longstanding--there has been a longstanding
dialogue with China about its currency policy, and whether it
is through the G7 in the case of Japan, or the G20, IMF,
elsewhere with regard to China, we made very clear the
importance of exchange rates being based on market-determined
forces and our opposition to--in the G20, for example, making
it not just our opposition, but opposition of the bulk of the
international economy to efforts to manipulate currency or to
engage in competitive devaluation.
So we do see this as a very important issue, and we
explore, and we pursue it in the way that we think is most
effective at each juncture.
Chairman CAMP. I just think it is a real concern that we
not allow this agreement to slip, that it needs to be concluded
this year, and I think the active engagement of the
administration on this issue is critical if we are to conclude
TPP this year. So thank you for your responses.
Mr. Levin is recognized.
Mr. LEVIN. Thank you.
Let me just say, Mr. Chairman, on currency, I think the
administration needs to face up very directly to the question
of inclusion of currency issues in both TPP and the discussions
with Europe. And I don't think there has been satisfaction here
with progress today, and so we just have to confront the formal
introduction of this issue in TPP as well as with Europe.
And let me just say this to--to TPP in Japan, there is
immense pressure on Japan, and they really haven't been very
unequivocal about addressing rice and other agricultural
issues. And as a number of us said before, and I will spell out
more of this in the coming days, I don't think what has been
put forth so far on autos is likely to change decades of the
same situation.
Mr. Camp joined us in addressing this issue in Korea, and
the agreement was changed and strengthened. Japan is an even
sterner case. Nothing, to date, has ever worked. We are today,
in terms of our access to Japan's auto, automotive, its parts
as well as assembled vehicles, essentially where we were 34
years ago. So we need to have a very emphatic dialogue on this,
and I am sure we will.
So let me just say a word and ask you about TPA. I think it
is important, Mr. Chairman, that all of us work together on TPA
to determine what kind of a TPA, and not simply say, ``Let us
just do it.'' We have been through this before. In the 1980s,
we had a fast track that was worked out that had rather strong
bipartisan support. That fell apart in 2002, and it passed by,
I think, three votes, keeping, as I remember, the vote open for
awhile to see if those votes could be secured.
And with the burgeoning globalization, I think we need to
sit down on a bipartisan basis with the administration to
determine issues like what will be the role of Congress; what
will be the objectives stated in a TPA; what will be the role
of Congress in seeing that these objectives are kept; and then,
related to it, the whole issue of transparency; and what access
not only Members of the Committee, very importantly, in
finance, but others have to the negotiations that are under
way.
And I think we just want to have, on our side, your
assurance that there will be a very active discussion of these
issues, because simply to say, let us pass it, without focusing
on its contents, I think, is a serious mistake substantively,
and procedurally would likely lead to much more conflict
instead of confluence. So just briefly your reaction.
Ambassador FROMAN. Well, thank you, Congressman Levin. We
certainly, as I said, stand ready to work with you-all in your
process as you proceed to develop a TPA--a TPA bill to ensure
precisely what you say, that it reflects our shared interests
and our shared goals. And so we will look forward to--we will
look forward to that.
On transparency in particular, we think that is a very
important issue. We think it is critically important that vis-
a-vis Congress, vis-a-vis our advisors, vis-a-vis the public,
that we have a robust policy of engagement to ensure that we
are getting the best input, and that we are also explaining
what it is we are doing, how it is we are doing it, and why it
is we are doing it. And we are looking at those, the whole
array of policies and procedures that we have, to determine how
best to take that forward. I think we have done a lot over the
last few years, and I will just mention one example.
You know, we now have had our negotiations. TPP, we started
this, and we just did it again last week with T-TIP, we
organized an event for stakeholders to come and be able to
present directly to negotiators, not just U.S. negotiators, but
our trading partners as well, and so they can have a direct
dialogue with them. We had 350 people come to the session last
week to be able to present those--their ideas. That is
something that has never been done before, but as I said, I
think we can always do better, and we look forward to working
with you on that.
Mr. LEVIN. Thank you.
Chairman CAMP. Thank you.
Time has expired, and because today's hearing has to end at
11:00, in order to try to accommodate every Member who wants to
ask questions, Mr. Levin and I have agreed that we would limit
Members' questions to 3 minutes.
Mr. Johnson is recognized.
Mr. JOHNSON. Thank you, Mr. Chairman.
Mr. Froman, first, I want to thank you for being here with
us. It is a delight to see you, and while I was sad to see my
good friend and fellow Texan Ron Kirk move on, I am sure you
will be equally up to the task.
As you know, trade is very important to our home State of
Texas, and recent data shows that the Dallas/Fort Worth area
alone was responsible for 26-plus billion in exports. Over one-
quarter of all manufacturing workers in Texas depend on
exports. That is why I think it is critically important that
Congress develop and pass bipartisan trade promotion authority
that set out negotiating objectives.
For the ongoing negotiations you have already outlined, do
you think that your negotiations can be concluded and any
agreement implemented without trade promotion authority? And is
the administration, in your opinion, prepared to actively
engage with the Congress to build political support for TPA?
Ambassador FROMAN. Thank you, Congressman.
We think TPA is a critical tool, and we stand ready to work
with the committees as they develop a bill that addresses our
shared interests and our shared goals. We are engaged in these
negotiations, we will continue to pursue them aggressively, and
we consult very actively with this committee, with the finance
committee and other committees of jurisdiction to ensure that
we have the input with regard to our negotiating objectives and
how those objectives are translated into actual proposals at
every step in this process. And so we feel confident that as we
are negotiating, we are taking into account the input that we
have received from our--from our committees of jurisdiction.
Ultimately, to get through Congress, we think TPA would be
very useful for the ultimate agreements to get through
Congress, and in the meantime we will operate according to the
longstanding procedures we have of consulting with you-all and
your colleagues in the Senate and making sure that what we are
doing with regard to our negotiating objectives are consistent
with the input that we have from you.
Mr. JOHNSON. Thank you, sir. Welcome aboard.
Yield back.
Chairman CAMP. Thank you.
Mr. Rangel.
Mr. RANGEL. Thank you, Mr. Chairman.
And I join with the committee in welcoming you, looking
forward to one possible bipartisan effort that this Congress
can participate in. We do have a record of sorts in working
together, and, with your help, we look forward to improving
even on that. I would like to report that our staff feels very
comfortable with the relationship we have with your office and
ask you to continue that, because many times we have to depend
on staff with our views, and it makes it a lot easier for us to
get some type of agreement before something is presented to us
than trying to convince each other that we are right.
You have answered many of the questions that I have. I
would be interested in seeing how America, as a result of the
President's trip to Africa--exactly what plans we have to be
competitive with China and other countries that have taken
advantage of this economic growth that has taken place. And
also, when you talk about supporting jobs, it is very important
that your office understands that to a person that is
unemployed or those protecting the workers, you say ``trade,''
and some people automatically think that means losing jobs.
You have to help us in working with the Education
Department and Department of Labor so that we can present new
job opportunities that are going to be involved country by
country, and where we are going to lose because we cannot
compete, we have to talk about training and retraining as
though we are just talking to Americans and not to importers
and exporters, because we all are looking toward for the same
goal.
And again, I don't have to tell you that we have to be
competitive with countries. With our automobile industry and
what we have been through, I don't think it should be a hard
sell that people should not put barriers up when we are
competing with a good product. There were changes that we had
to make in Detroit during the crisis, and made those changes.
But we look forward to working with you, and when you think of
trade, trade, trade, some of us have to--are forced to think
about jobs, jobs, jobs.
So, welcome on board.
Ambassador FROMAN. Thank you, Congressman. That is a very
healthy reminder that this is all about jobs, jobs, jobs in the
U.S., and we need to do a better job of talking about how what
we are doing through negotiations or through enforcement leads
to greater exports, leads to greater jobs and higher wages,
allows us to deal ourselves into global supply chains rather
than being on the outside of them. And I look forward to
working with you on Africa, on training, on the auto sector,
and the whole array of issues.
Chairman CAMP. All right. Thank you.
Mr. Brady is recognized.
Mr. BRADY. Ambassador, congratulations on your new role.
Thank you for the critical role that you played in reaching
sales agreements with Colombia, Panama, and South Korea. Our
local businesses' workers are looking for new customers, and
those agreements that you played a critical role on have
leveled the playing field and allowed us to compete. So it is
creating both new jobs in my region and neighborhood, and more
secure jobs as well. So thank you for that role, look forward
going forward.
To that vein, I want to ask two questions, one about the
Trans-Pacific Partnership, a critical region for those new
customers, and the role of the bilateral investment treaties
going forward. On the timetable for TPP, do you see that
completed by the end of the year and being submitted to
Congress shortly thereafter?
Ambassador FROMAN. With regard to TPP, we have stated that
our objective is to finish it this year. It is ambitious, but
our negotiators are hard at work as we speak in Malaysia, and
we are going to work very hard with Japan when they get in to
bring them up to speed and not allow them to reopen or re-
litigate or delay the negotiations. So our focus is to try and
get this done this year.
Mr. BRADY. Do you think there is a good chance we can do
that? Always the tougher issues come at the end, you know what
I mean, a little more unpredictable as you are sort of near the
finish line, but are you optimistic that we can finish in that
timetable?
Ambassador FROMAN. Yeah, I am. I think it is ambitious, but
I think it is doable.
Mr. BRADY. Great.
On the bilateral investment treaties, those are important
because they really take a big first step toward a level
playing field, and they can also provide protections for
American investment when we are chasing those customers around
the world. We, as a government, in the first term the President
took a look at the bilateral investment treaties. We sort of
pulled the truck to the side of the road, took a look at the
engine, made some adjustments, but now it is really time to get
back on down the road, and it is an important tool.
So, as we look at China, India, Pakistan, as we look at
Africa and other areas, B, do you see bilateral investment
treaties as an important tool; and, two, are you going to use
them to advance our trade agenda?
Ambassador FROMAN. Yes, Congressman. I think they are an
important tool, and we will use them as appropriate. And I
would just note that last week we had the strategic and
economic dialogue with China here in Washington, and one of the
outcomes was China agreeing to engage in bid negotiations on
the basis of some of the key principles of our bid, including
national treatments in the pre-establishment phase, and on the
basis of coming up with a negative list rather than a positive
list.
Now, obviously, the devil will be in the details, and we
have not yet even begun to negotiate, and it will be very
important to make sure that those--those commitments are
implemented fully, but it is a potentially very positive
development both in terms of our bilateral relationship, but
also what it will require China to domestically in terms of
its----
Mr. BRADY. No, I agree. I think that is an important role
in China and in the other regions as well. Thank you,
Ambassador.
Chairman CAMP. Thank you.
Mr. Neal.
Mr. NEAL. Thank you, Mr. Chairman. Thank you, Mr. Chairman.
Three questions quickly. I know this is an abbreviated
opportunity to ask them.
First, footwear in New England, we are down to New Balance,
small operations after that, ensuring their success. They are
the last ones to really--in New England to do athletic
footwear, very important part of our economy, and certainly
interested in what the administration's position is going to
be.
And on enforcement procedures with competition, can you
address the issue of financial service and regulatory issues in
the U.S. and EU? Did it come up in the first round of
discussions? And an opportunity for you to hold forth on the
President's goal as to whether or not we have been able to
double exports, or are we on a path of doubling exports during
the 5 years that the President has outlined, understanding it
really is, last year, I think, the fastest part of American
economic growth in trade and trade-related issues. So,
abbreviate it, but the opportunity is yours, Mr. Ambassador.
Ambassador FROMAN. Thank you, Congressman.
On footwear, that is obviously a very sensitive sector, and
we are looking at our domestic producers, our importers and our
retailers to come up with a proposal that maximizes job
creation and jobs supported by trade in footwear in the United
States. But we are well aware of the sensitivities there, and
indeed I will be visiting--I am planning to visit the New
Balance factory sometime later this summer.
Mr. NEAL. Thank you.
Ambassador FROMAN. On financial regulation, yes, we have
had extensive discussions with the Europeans about this, and
our view is the following. The financial services sector is a
key part of the Transatlantic relationship. It cannot be left
outside T-TIP altogether. We think financial services market
access belongs in a trade agreement, but since the financial
crisis of 2008, 2009, there has been an explosion of regulatory
cooperation activity bilaterally through the G20, through the
FSB, the BIS, the IOSCO, IASB, and we think that those
processes should be encouraged to make progress in parallel
alongside the trade agreement so that when the trade agreement
is done, we can look back and see that we have managed to bring
the two markets closer together.
Mr. NEAL. Lastly, are we on the President's----
Ambassador FROMAN. On NEI. The President laid out goals of
doubling exports and increasing jobs supported by exports by 2
million. We have increased jobs supported by exports by 1.3
million. I think we are broadly on track. On the doubling of
exports, a number of markets around the world, we are at or
above the run rate that would have as double exports, but to be
frank, with the headwinds in Europe over the last couple of
years, that has been a drag on our overall export growth, and
we are going to need to continue to do everything we can do
to--in terms of our export promotion efforts, but also opening
markets and focusing on enforcement--to continue on the path
towards doubling exports.
Mr. NEAL. Thank you, Mr. Chairman.
Chairman CAMP. All right. Thank you.
Mr. Nunes.
Mr. NUNES. Thank you, Mr. Chairman.
Ambassador, welcome.
I want to echo Mr. Rangel's comments that not only does the
staff here work in a bipartisan manner, but we also enjoy this
long-term relationship with your staff, and we hope that that
continues.
I would like for you to quickly address SPS enforcement
mechanisms, specifically dispute resolution as it relates to
the TPP. I know we have a short time, so I will leave it at
that, and then I have one additional question.
Ambassador FROMAN. This is a critical part of our--of our
negotiation, and as we propose SPS-Plus disciplines in TPP, we
want to make sure we have mechanisms for ensuring that those
disciplines are fully implemented.
The substantive disciplines of SPS-Plus are really rooted
in the WTO and the WTO commitments, and there, of course,
binding dispute resolution is available. The other elements of
SPS-Plus are procedural elements, and most of those are also
subject to dispute resolution in--under TPP. So we think that
the bulk of the commitments that we are likely to achieve in
TPP in the SPS chapter will be subject to enforcement either
under the WTO or through this consultative mechanism in TPP,
leading to a dispute resolution on the procedural elements.
Mr. NUNES. Well, we look forward to continuing to work
closely with you. As you know, American agriculture is strongly
behind getting some type of enforcement mechanism in the TPP
negotiations.
I would like to, with the remaining time, for you to
address our ongoing relationship and ever-improving
relationship with Brazil. We had a hearing on Brazil about a
month ago, and we are looking at possibly doing some
legislation to kind of redouble our effort on our trade
relationship with Brazil. And I know that you have met with
them recently, and I know that they are--I think they are
sending a delegation here in the fall, and, you know, what we
can do from this committee and the Congress to improve those
relations.
Ambassador FROMAN. Well, thank you. Clearly Brazil is an
incredibly important country in the hemisphere, and we think
really has the potential to be an even closer economic partner
of us going forward. We have had a lot of dialogue with the
Brazilians, both business community to business community, but
also over energy, over trade issues, and we try and make
progress through these dialogues on our outstanding issues.
The President visited there, as you know, a couple of years
ago. We talked about wanting to be a strategic energy partner
of theirs as they develop their new energy resources, and we
have had discussions with them about, for example, pursuing a
bilateral investment treaty, as that would be a next step
towards deepening our relationship. They have not yet responded
positively to that, but we will continue to have those
discussions, including as high-level visits continue later this
year.
Mr. NUNES. We are looking at possibly consolidating the
dialogues into kind of a more clairvoyant structure. Is that
something that you would think would be helpful to get high-
level dialogue between not only your office, but also the
Congress?
Ambassador FROMAN. I am happy to talk further with you
about that. We have got an energy dialogue, a CEO forum. We
have a, I believe, a commercial dialogue as well, and we try
and use each of these to make progress on their respective
agendas. And, of course, our two Presidents have a good
relationship and have an ongoing dialogue, and we expect to see
more of that in the future.
Mr. NUNES. I thank you, Ambassador.
Thank you, Mr. Chairman.
Chairman CAMP. Mr. Doggett, and after Mr. Doggett I will
proceed two to one.
Mr. DOGGETT. Thank you, Mr. Chairman.
Thank you, Ambassador, for your testimony. With your stated
objective of finishing the Trans-Pacific agreement by the end
of this year, what do you view as the deadline for Congress
approving fast-track authority for President Obama?
Ambassador FROMAN. Well, thank you, Congressman. I don't
think it is for me to give a deadline to Congress.
Mr. DOGGETT. Just tell us by when you think you--I
understand you are a diplomat first off.
Ambassador FROMAN. We look toward to working with you as
you-all proceed with your process on TPA. I think our
negotiators are going to proceed apace, and they are proceeding
apace as we speak. I think having TPA before we bring an
agreement to Congress is very important.
Mr. DOGGETT. So it will be sometime next year?
Ambassador FROMAN. I think getting the TPA right is
important, and I think getting it in time to--before the bill--
the trade agreement is ready to be submitted to Congress would
be a great help.
Mr. DOGGETT. And the thinking of the Obama administration
is that it cannot get the Trans-Pacific Partnership Agreement
approved in the fashion that it would like to have it approved
without fast-track authority.
Ambassador FROMAN. I think traditionally, I think all but
one trade agreement in history, I believe, in the--at least
since the 1980s, has been approved under some form of trade
promotion authority, and I think that that is likely to be the
most productive way of moving forward on TPP as well.
Mr. DOGGETT. So you are not saying you couldn't do without
it. Actually during the time I have been on this committee, I
think most of the trade legislation has been approved without
fast-track authority. But you would view it as essential to
your work, or are you saying you can do without it?
Ambassador FROMAN. Well, no, no, no. I think, again, I was
just assuming between trade agreements and trade legislation, I
think with the exceptional of the Jordanian FTA, all other FTAs
have been approved under some form of fast-track authority. I
haven't thought through what it would mean to try and proceed
without that kind of authority, but I am happy to work with the
committee, and, of course, we stand ready to work with you as
you work on your process.
Mr. DOGGETT. In your work on TPP, has USTR undertaken or
requested that anyone undertake any studies concerning the
economic subsectors where we will see job growth and those
where we will see job loss?
Ambassador FROMAN. I think there has been a lot of work
done by various think tanks and other research centers. I am
not aware of what has been done when TPP started 2\1/2\ years
ago. Oftentimes there is a study done by the ITC, and I am not
sure whether that was done in this case or not, but I am happy
to look into that and get back to you.
Mr. DOGGETT. It is not--isn't that a factor in your
negotiations?
Ambassador FROMAN. Well, we certainly are looking to open
markets for all of our sectors, and we consult very closely
with stakeholders and get their perspective on where they see
the opportunities for expanded exports and job creation, and
that helps inform our priorities as well.
Chairman CAMP. All right. Thank you.
Mr. Reichert.
Mr. REICHERT. Thank you, Mr. Chairman.
And welcome. Good to see you again. I want to echo some of
the comments made by Members here. The working relationship we
had with the Ambassador Kirk and his team, I hope, continues
with our staff. And I know that our staff is in continuous
conversation with yours, and we hope that continues.
I just want to make a quick comment about TPA. We know that
you don't have to make a formal request for that authority, It
is Congress' job to move forward with that, but I think there
is a perception that goes back to, I think, the Korean
agreements and goes back to the ascension of Russia into the
WTO world that the administration wasn't, you know, as actively
involved in that process and those processes as we would like
to see. And so I think there is the perception today that the
administration may not be as aggressively involved as we would
like to see them be in helping us promote the idea of the
tremendous need for TPA, so I am going to encourage you to be a
more active--and the President to be more active in that
regard.
But I also want to ask a question. On TPP, you mentioned
that you, you know, have a focus to get this done by the end of
the year. I want to get a little bit more specific. I would
like to know what your strategy is to get it done by the end of
the year, and is there anything we can do to help you get that
accomplished?
Ambassador FROMAN. Well, our strategy is to work very hard,
and we are working around the clock.
Mr. REICHERT. Any more details than that?
Ambassador FROMAN. I am happy to go through more details
with you, but, look, the team at USTR is doing a phenomenal
job. It is a very complex negotiation; 11 and soon to be 12
countries in the negotiation. We have 29 chapters. Many of the
issues we are dealing with are new issues, issues that none of
the countries around the table have negotiated before in any
agreement, and that is an ongoing mutual learning process.
We have done a lot of work over the last 2 years to close
out chapters, close out issues, park issues. They are engaged,
as we speak, right now in trying to move that agenda forward,
and they will be meeting with the Japanese at the end of this--
at the end of this round to welcome them into the discussions
and bring them up to speed on the status of the negotiations.
But we have--our strategy is to work country by country,
issue by issue, and to get a sense, as we--particularly as we
enter the end game of where the trade-offs are going to be and
how best to come up with a deal that everyone will find in
their mutual interests, but that raises the overall standards
and achieves the level of ambition that we set out.
Mr. REICHERT. So we know that your staff works hard, so the
fact that they work hard, and that is your strategy, we can
count on them, the timeline being the end of the year.
Ambassador FROMAN. Well, that is our objective. As I said,
it is ambitious, but it is doable, and we are going to do
everything we can at all levels of government to try and make
that happen.
Mr. REICHERT. Thank you, Mr. Ambassador.
I yield back.
Chairman CAMP. All right. Thank you.
Dr. Boustany.
Mr. BOUSTANY. Thank you, Mr. Chairman.
Welcome, Ambassador.
The Trade in Services Agreement, or TISA, has massive
potential, commercial potential, and could be a major source of
job creation for U.S. firms. And if you look at our economy, we
have a competitive advantage in this area clearly, with 75
percent of the U.S. GDP being in services, 80 percent of the
private sector employment, and currently 30 percent of our
exports.
As I look at TISA, 70 percent of the world market is
represented with those countries, and yet several high-profile
events have come and gone. I was glad to hear you mention TISA
in your testimony today, but in previous occasions, we have not
heard the White House or the administration put the kind of
emphasis that needs to be put on this agreement. I think it
should be given as much emphasis as TPP and the EU
negotiations.
I sent a letter this week, earlier this week, talking about
some of this, and I just want to get your assurances that TISA
will be given the priority it really deserves going forward,
because I think the potential is immense.
Ambassador FROMAN. Well, Congressman, I totally agree, and
we think this is really one of the most promising areas of
trade globalization going on in the world right now. And we
have a terrific ambassador in Geneva in the form of Michael
Punke, who is leading those negotiations with our team back
here. And as you say, it represents 70 percent of the global
services market, so we think it is a very significant--it could
be a very significant market that we hope other countries may
join over time.
So we very much agree with you on the importance to our
economy, to our jobs in the United States, to promoting growth
here in the United States, and we are optimistic that we will
continue to make progress.
Mr. BOUSTANY. Yeah. My home State is Louisiana, and we are
an energy-producing State, and in the energy sector this could
be really beneficial. I was with Chairman Nunes down in Brazil,
and they are struggling with the right kind of expertise and
technology to develop deepwater resources as well as shale.
Other countries have the same concerns. We have the expertise.
We have the engineering services and so forth.
Mr. BOUSTANY. Yeah. Agreed.
Ambassador FROMAN. So we should move forward. Yeah, thanks.
Mr. BOUSTANY. I yield back.
Chairman CAMP. Thank you.
Mr. Thompson.
Mr. THOMPSON. Thank you, Mr. Chairman. Thank you for having
the hearing.
Ambassador, thank you for being here, and congratulations.
We look forward to working with you.
The chairman started off talking about some tariff and
nontariff barriers as it pertains to agriculture, and I would
like to pick up on that. I represent an area that has a very
significant agricultural component. We produce some of the best
wines in the world, and some of the T-TIP and TPP countries
present some pretty good barriers for our product. And so I
would like to be able to get a good commitment that we work
together to make sure that we lower these barriers and work to
protect this important agricultural product that we have. The
2006 bilateral Wine Trade Agreement with the U.S. and the EU
was a good start, and I would like to make sure that we
continue that.
Along the same lines, counterfeit and imitation wines that
are made by other countries that try and capitalize on our
brand are a real problem, and our geographical indicator system
works well, and I would like to make sure that we work to
protect that as well.
And another agricultural product that is important to
California is our rice, and recently the President and Japan's
Prime Minister sent a joint statement that said, and I will
paraphrase, all tariffs are on the table. And the U.S. rice
industry would like to very much make sure that this holds true
to rice, and that we don't exempt rice in any agreements that
are coming in, and that we include them and you work with them
as we work towards facilitating this particular market.
And then lastly you had sent a letter to some of our Senate
colleagues talking about apparel rules in textiles, and I think
you said that appropriate balance between divergent views was
important, and I hope we can find more opportunity for trade
liberalization other than just short supply issues. And I look
forward to working with you on all of these issues.
Ambassador FROMAN. Well, thank you, Congressman.
Let me just say that with regard to the agricultural
issues, agricultural trade is at an all-time high. Our exports
last year, I think, were $140 billion. We see this as a
tremendous opportunity for expansion. We are working very
closely with Secretary Vilsack and USDA to ensure that we are
doing everything that we can to promote agricultural trade in
all of our agreements. That is why, as Congressman Nunes
mentioned, the SPS-Plus agreement is important in----
Mr. THOMPSON. Some of our tariff and nontariff barriers are
at an all-time high. Also, if you look at China, when we send
our U.S. wine there, we are paying about 56 percent combined
tax and tariff, and it is terribly prohibitive.
Ambassador FROMAN. These are all issues we want to work on
in the context of these hearings.
Mr. THOMPSON. Thank you.
Chairman CAMP. Thank you.
Mr. Buchanan.
Mr. BUCHANAN. Thank you, Mr. Chairman.
And I really look forward--and congratulations, Mr.
Ambassador. Looking forward to working with you, and I am sure
the committee does, on a bipartisan basis.
I am from Florida, and these trade agreements, the FTAs we
just did with Panama and Colombia are huge to Florida. And I
just see the--what trade means to Florida with 14 ports is
550,000 jobs, so $70 billion in economic activity.
But I also grew up in Michigan. So I take a look at--just
curious, from your standpoint, you look at a lot of the coastal
communities, huge benefits in terms of trade, the President
talking about doubling trade, 95 percent of the marketplace
outside. But then you will see different parts of the country,
somewhat the Midwest and other areas, that don't benefit as
much as the--many at times the coastal communities. What is
your thought on that, what we could do more to help more States
feel like it is a win-win for them as well on trade?
Ambassador FROMAN. Well, thank you very much, Congressman.
From our perspective trade is part of the broader economic
strategy of creating jobs and promoting growth, strengthening
the middle class, and that has got to work across the country.
And, obviously, different parts of the country will be affected
in different ways, but it is one reason we put so much emphasis
on our manufacturing policy in the administration and making
sure that our trade policy is supportive of our manufacturing
policy. We want to make sure that it is--even as we export
additional services, and we export additional agricultural
products, that we are also building a stronger manufacturing
capability in the United States.
Mr. BUCHANAN. Another quick question because we only have 3
minutes. The question I wanted to really kind of get to is I
was in Beijing in January, and, you know, they have AmCham,
which is about 4,500 members in the chamber, U.S. businesses in
the chamber there. And, of course, you have heard this a lot
about intelligence properties; it is still the biggest issue.
An article that The Times had put out a little while back, it
said that it is costing the U.S., I think, $48 billion in 2009.
I think it would--if they improved their IP protection, it
would mean $87 billion to the U.S. and create 2 million jobs.
I know you worked on that, and it is something that is a
big issue, but I can tell you, that is a very big issue to our
country in terms of job creation, the additional economic
opportunities for companies in the U.S. Where are we at on
that?
Ambassador FROMAN. Well, it is a very high priority, and as
recently as last week when we had the strategic and economic
dialogue, intellectual property rights, trade secrets, cyber
thefts all featured very prominently in that discussion.
We need to keep on pressing China to make progress there.
We have made some progress. We reached an MOU on access for our
films, which----
Mr. BUCHANAN. I think it is about enforcement. I mean, you
might get agreement, but then try to get something implemented.
Ambassador FROMAN. Absolutely. And we want to see more
legalization of software; the use of legal software by
government agencies, by SOEs, by others. And they have stepped
up their efforts in certain respects. It is not enough, it
hasn't gone far enough, it hasn't gone fast enough.
The one thing I would say that gives us some hope is that
they are beginning to see in their own country developers of
intellectual property, and as that happens, there is more of a
constituency within China that wants to see better enforcement
of intellectual property rights. We need to capitalize that--on
that and press for further resources being put into
enforcement, further metrics and benchmarks, and ensure that
they are not stealing our intellectual property.
Chairman CAMP. Thank you.
Mr. Nunes, for the purposes of UC.
Mr. NUNES. Thank you, Mr. Chairman.
Mr. Thompson reminded me that there is actually a letter
that was sent to Mr. Froman and Secretary Vilsack on the SPS
measures, and I just want to submit that for the record.
Chairman CAMP. Without objection.
[The information follows: The Honorable Devin Nunes]
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Chairman CAMP. Ms. Jenkins is recognized.
Ms. JENKINS. Thank you, Mr. Chairman.
Thank you for being here.
Strong intellectual property right protections are
essential to the success of U.S. and EU economies. In the
United States alone, intellectual property-intensive industries
account for over 50 million jobs, nearly 6 trillion in output,
and a trillion in exports.
So a couple questions. First, what barriers for IPR-
intensive trade in goods and services do U.S. companies face in
the EU? And, second, in what areas is there potential for
greater convergence between U.S. and EU IPR practices, and how
can the United States and the EU enshrine high levels of
protection in those areas in which harmonization is not
pursued?
And I would be interested in hearing about not only
patents, trademarks and copyrights, but also about protection
of trade secrets from disclosure by governments.
Ambassador FROMAN. Well, it is--intellectual property is a
critical part of our economy, as you said, and it is a critical
part of our relationship with the EU as well. And we both have
quite high levels of IPR protection, although they are somewhat
different in terms of the number of years of protection or
exactly on how they are implemented.
We see the T-TIP negotiations as giving us an opportunity
to work together with the EU to raise the standards overall for
the global community, for the global economy, and to work vis-
a-vis third countries where we have common interests to help
strengthen intellectual property rights enforcement.
On a bilateral basis we have our differences. Geographical
indications is one area, and we want to make sure we protect
the trademarks and the common product names of our products.
But we see more commonality in terms of the overall levels of
protection between the U.S. and EU than with a number of other
markets, and as a result we see the opportunity to really work
together to set high standards around the world.
Ms. JENKINS. Okay. Thank you. I yield back.
Chairman CAMP. Thank you.
Mr. Blumenauer.
Mr. BLUMENAUER. Thank you, Mr. Chairman.
Welcome, Ambassador. We have appreciated the
professionalism, and the hard work, and the skill of the USTR.
Look forward to working with you, the other committees,
members.
I appreciated our earlier conversation about the importance
of labor and environmental protections, which, I think, working
with you for the extent to which we are able to protect and
enhance, I think that makes it better for everybody all the way
around.
My friend Mr. Neal referenced the footwear industry. You
talked about going to New England. I think that is terrific.
I would ask unanimous consent to enter in the record a
letter that we had submitted with my friend Aaron Schock,
almost 50 Members of the House, that talked about the value
chain of footwear.
[The information follows: The Honorable Earl Blumenauer]
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Mr. BLUMENAUER. I would hope that you would be able to
visit Portland, Oregon, and look at part of that supply chain.
I represent people who manufacture shoes in the United States,
Danner Boots, King Footwear. We have got a whole range of
others, however, because although less than 1 percent of
footwear is manufactured in the United States, the vast amount
of the value chain is here. Companies like Nike, New Balance,
King, others--not New Balance--well, New Balance also--their
design, promotion, the intellectual property, the engineering,
the sales, the marketing, a huge amount of the value is here.
And we are trapped in the past with a tariff structure that is
outmoded, long ago ceased to actually have any rational bearing
on the marketplace, and, in fact, translates into a very
substantial sales tax, particularly on the lower-end product.
And it would be exciting if we could have some meaningful work
with the treaty negotiations that you are under way with to do
something meaningful in terms of tariff reduction to be able to
promote that entire value chain.
I mean, do you have any thoughts or observations? You can
accept the invitation to come visit us. We would be happy to
put tech and and and wine into the mix as well.
Ambassador FROMAN. Thank you. Thank you, Congressman.
You know, I would say on the footwear issue in particular,
and this goes to some other products as well, we have got
multiple interests at stake, as you say: the domestic
producers, those who are assembling product that is being
imported, the retailers, the consumers. And one thing we have
to do is weigh all those interests and find the best possible
path, and one in particular that supports the most jobs in the
United States.
And so we are looking at all those issues. We recognize the
sensitivities. And we hope to be able to strike a balance that
addresses the multiplicity of interests at stake.
Mr. BLUMENAUER. Well, I appreciate that. And, as I say, we
would be able to show you in our community people who are
manufacturing, but also the design, the production, the
engineering, the sales, thousands of very high-paying jobs
right here in the United States that support that mechanism
that you talked about.
Chairman CAMP. All right. Thank you.
Mr. Paulsen.
Mr. PAULSEN. Congratulations, also, Mr. Ambassador. I echo
the comments of some of my colleagues.
I want to shift gears and just talk about India real quick.
You are aware that many U.S. businesses and investors are
facing issues that are significantly impeding their ability to
compete in India. And, as you know, Congressman Larson and
myself, we recently sent a letter with 170 of our colleagues
ahead of last month's U.S.-India strategic dialogue urging the
administration to make India's deteriorating environment for
intellectual property a focus for that dialogue.
I know last week India announced a review of its
preferential market-access policy, which requires information
technology products to be produced in India as a condition of
sale. That is a policy that would violate fundamental global
trade rules, obviously. But that review does not solve the
problems facing the information technology sector in India. It
doesn't do anything to address the serious concerns in other
sectors, including the solar industry. And it doesn't do
anything to address discriminatory tax treatment or stop the
blatant theft of American intellectual property.
The primary forum to discuss bilateral trade investment
issues is the Trade Policy Forum, which USTR cochairs, but it
hasn't been held since 2010. When do you expect to hold the
next Trade Policy Forum? What can we do to support you in these
efforts? And what is the administration doing to ensure that
U.S.-India trade and investment relationship is on a positive
trajectory down the road?
Ambassador FROMAN. Well, thank you, Congressman. And this
was very much at the center of the agenda last week when we had
the U.S.-India CEO forum. We had the Finance Minister, the
Trade Minister, and Deputy Chairman of the Planning Commission
in town for a series of meetings precisely on that issue of the
investment and innovation environment in India, how it is
affecting our bilateral economic relationship, how we might be
able to address it.
And I had very good conversations with my new counterpart,
the Trade Minister Sharma there, and we have agreed to have our
staffs work closely together to tee up and try and resolve a
number of the outstanding issues so that we can have a
ministerial-level Trade Policy Forum sometime in the future.
But we want to make sure that the groundwork is laid and that
we are making progress towards resolving those issues in the
run-up to that meeting.
Mr. PAULSEN. And what can we do to help support you in that
effort, knowing that this is a town--Congressman Crowley and
others, we had a little meetings also with the Finance Minister
recently, had a great conversation to keep that dialogue going.
But what else can we do to support you in your effort?
Ambassador FROMAN. I think it has been very important for
India to understand the breadth of concern in the business
community, in Congress, the bipartisan basis of that concern. I
think it helps focus the attention on what needs to be done. It
is one thing if we say it to them, but if they are hearing it
also from a variety of other sources, I think that is very--
that is very positive, and I would encourage you to continue
that.
Mr. PAULSEN. Thank you. I yield back.
Chairman CAMP. Thank you.
Mr. Marchant.
Mr. MARCHANT. Welcome, Ambassador.
I represent 700,000 people that live and work within 30
minutes of the--one of the great trade hubs in the United
States, DFW Airport. Trade agreements equal high-quality and
high-paying jobs in my district, and it isn't just--it is an
equation that is a district equation. And so we are very
interested in your success and want to let you know that we are
more than willing to help in any way.
My question is about the TPP. The TPP is meant to be a
living agreement that could eventually be the basis for a free
trade area for the Asia-Pacific. Such a free trade area would
further integrate the United States into the supply chains that
cross the Asian-Pacific region, benefiting our exports and
increasing our competitiveness.
I understand that now the focus is properly on completing a
high standard and ambitious TPP agreement; however, we need to
lay the groundwork so that the Pacific Rim countries from Latin
America through Asia that meet the high standards will
eventually join and increase the value of TPP. What is the USTR
strategy for ensuring that this can happen?
Ambassador FROMAN. Well, thank you. And, as you said, our
focus right now is trying to complete this agreement this year
with the 12 countries that will be part of it, but we have
always envisioned this as a living agreement, as a platform to
which other countries could ultimately accede if they so
wished. And we heard expressions of interest, formal and
informal, from a number of other countries who are following
TPP's progress with great interest, and who we expect may want
to join in a second tranche of countries sometime in the
future. But our focus for now is just bringing this first
tranche to a close.
Mr. MARCHANT. Mr. Chairman, I would like unanimous consent
to submit a question for the record concerning our relationship
with Taiwan to the Ambassador.
Chairman CAMP. Without objection.
Mr. MARCHANT. Yield back.
Chairman CAMP. All right. Mr. Davis.
Mr. DAVIS. Thank you very much, Mr. Chairman.
Let me add my congratulations, Mr. Ambassador.
You know, as we experience globalization, there seem to be
more and more small, moderate, minority-owned, women-owned
businesses who are trying to get into the pipeline and make use
of opportunities to do business abroad. How helpful does your
office expect to be to help these individuals make connections,
contacts, and get moving?
Ambassador FROMAN. Well, thank you very much for asking
that question, because getting small and medium-sized
businesses into the export business has been a major focus of
the administration, and we want to do more on that.
A couple of years ago, Ambassador Kirk launched an SME
initiative at USTR. And more broadly in the administration,
through the National Export Initiative, and through the works
of the Export Promotion Cabinet, we made increasing the number
of small, medium-sized businesses who export a major objective.
And we went at that by, one, increasing the availability of
trade finance and working with community banks, who have the
best relationships with small and medium-sized businesses, to
bring them into the trade finance business. We also looked at
the array of points of contact that the administration, the
government has with small and medium-sized businesses, the SBA,
the commerce offices around the country, to ensure that they
were trained and capable of providing small and medium-sized
businesses with the kind of advice they need about how to begin
to export, how to evaluate a market, and how to navigate their
ways through the various procedures that they need to navigate.
So this has been a major priority of ours.
In TPP itself, we have a small and medium-sized business
chapter. And the objective there is to be able to look back at
TPP as it is being implemented to ensure that the benefits of
TPP are also going to small and medium-sized businesses and to
make adjustments as appropriate.
So this is a high priority for us. We agree these are the
drivers of jobs in the United States, and we think there is
much more that we could do to help these companies become part
of the global economy.
Mr. DAVIS. Thank you very much. We had a great relationship
with Ambassador Kirk and look forward to working with you.
I yield back.
Chairman CAMP. All right. Thank you.
Mr. Reed.
Mr. REED. Thank you, Mr. Chairman.
And thank you, Ambassador, for being here today. And I
offer my congratulations and also my personal thanks for all
the hard work on Korea in particular that you were involved
with and that we worked on with Korea, Colombia, and Panama.
I represent upstate western New York. I have got companies
like Nucor Steel, Corning Incorporated. So I am very concerned
about making sure that we are enforcing our trade provisions to
the fullest extent possible to make sure we have that level
playing field that is critical to the future of America and
American manufacturing in particular. So just want to make sure
I have a clear understanding that you and I agree that
enforcing our trade remedy laws is something that protects
American jobs, good for American jobs.
Ambassador FROMAN. Absolutely.
Mr. REED. And when it comes to intellectual property, for
example, at Corning Incorporated, and the trade secrets and
things like that, would you agree with me that being able to
point at our U.S. criminal and civil laws is critical in your
negotiations as you go in regards to the trade agenda across
the world?
Ambassador FROMAN. Well, certainly the whole area of trade
secret theft has been of great concern to us and a high
priority. And Corning is one of the specific cases we have
advocated for aggressively with China to try and see if we can
help resolve that case.
I don't know enough about the criminal and civil laws to
comment on the relation between that and what we are doing on
the trade side other than to say that we have underscored that
trade secret theft is unacceptable, and that it is important
that these issues, both the individual cases, but also the
broader message from the Chinese leadership that trade secret
theft won't be tolerated, has got to be a critical part of
moving forward.
Mr. REED. Well, I so appreciate that commitment, because
that is an important piece to me, obviously.
Is there anything that you would recommend to us from a
legislative perspective to champion to put you in the best
position to accomplish your job in regards to that trade secret
initiative?
Ambassador FROMAN. Well, I would say the following, and I
mentioned it in my opening statement a bit. Our--my biggest
worry at the moment is really about--is about resources. USTR
is lean, it is nimble, but it is highly constrained at the
moment for all the reasons that we know, between sequestration
and other budget cuts, and it is forcing us to make hard
decisions between what negotiations we can engage in and how,
what other market-opening measures we want to pursue, and what
enforcement cases we can bring.
And so I am quite concerned that we will manage our
resources to the best of our ability, we will do the best we
can to meet our various priorities, but, frankly, I think USTR
gets the biggest bang for the buck of anyplace I know. And I
think making sure that we are fully resourced to be able to
achieve the kinds of enforcement gains and negotiating and
monitoring gains that you identify are very important.
Mr. REED. I appreciate that, and if there is anything you
need from our office, don't hesitate to reach out. I look
forward to working with you, I truly do, Ambassador. Good luck.
Chairman CAMP. Thank you.
Mr. Griffin.
Mr. GRIFFIN. Thank you, Mr. Chairman.
Thank you for being here. I want to talk to you about SPS
enforceability. And I think my colleague, Mr. Nunes, talked a
little about this.
I believe that you discussed the current arrangement, which
is to go through WTO procedures to deal with this, as opposed
to having something in the agreement itself. Is that a fair
characterization?
Ambassador FROMAN. Well, in TPP, as we seek to negotiate--
and, of course, we are still in the midst of negotiating--as we
seek to negotiate what we are calling SPS-Plus disciplines, we
want to make sure that they are fully implemented. Many of the
SPS disciplines, SPS-Plus disciplines, go to a future
elaborating how countries' WTO commitments are to be
implemented. So, for example, that regulations be based on
science, it describes how that science should be applied, or
what kinds of relevant science there are to apply and how that
should be discussed. Those underlying commitments, those
underlying commitments to apply science, are subject to WTO
dispute resolution.
Mr. GRIFFIN. Right. And that process is laid out in the WTO
agreement, not in the agreement that is being negotiated here.
Ambassador FROMAN. What we have got in TPP is both the WTO
dispute resolution process on the substance of the SPS
commitments, but also separate TPP disputes element on the
procedural enhancements that we are seeking to achieve.
Mr. GRIFFIN. I have looked at this and talked with some of
my constituents, and I am concerned that there are not enough--
there is not enough teeth and efficiency in using the WTO
dispute resolution process as opposed to elevating this and
creating a more effective mechanism in the agreement itself.
And this is something that I think we should pursue.
And let me ask you this: If there are voices in the
administration, in the Federal Government, that disagree with
me, where do those voices come from? Are they FDA? Are they
worried about their science being under scrutiny? What--I mean,
the FDA is already science-based, so where is the rub there?
Ambassador FROMAN. We approach this in--by trying to figure
out what is the most efficient, quickest way to resolve issues
as their arise. And that is a little bit what is behind the
consultative mechanism that we have proposed in TPP, because we
think by being able to raise these issues through a formal
process, forcing the parties to come to the table to try and
resolve them can help expedite some of the resolution.
We think we have struck the right balance by leveraging off
the scientific expertise of the WTO, because it really is a
very science- and technical-heavy set of issues, while at the
same time adding a consultative mechanism that will allow us to
force parties to the table and get the procedural elements
addressed in the context of TPP.
Chairman CAMP. All right. Thank you.
Mr. McDermott.
Mr. McDERMOTT. Welcome.
I don't know if you got promoted or demoted, leaving the
White House and going over to Trade.
The last 2 years as you have worked on this TPP, the issue
of access to medicines has been central to some of our
concerns, and it seems like the language you have put in is
really a step back for the May 10th agreements that Chairman
Rangel and Mr. Levin made with the White House in terms of
trade agreements.
The proposal you put out did away with the word
``guarantees.'' I think that is what poor countries really want
are guarantees of access to the medicine within 5 years of
their introduction in the United States. You got a lot of
negative feedback at the time that first came out, and since
that time, you have said you are in a period of reflection. Can
you tell us where you are on your decision about that?
Ambassador FROMAN. Thank you, Congressman. And thank you
for your leadership on this issue.
This is a critically important issue, and we are committed
to finding the right balance to strike between protecting
innovation, but also achieving access to--access to medicines.
We are in the process of engaging with our TPP partners to
educate them as to what is in U.S. law. We took the feedback on
our original proposal very seriously. We received a wide range
of feedback. And we are in the process of figuring out how we
want to take it forward, consistent with some of the principles
that you laid out that strikes that balance between----
Mr. McDERMOTT. Is there any language presently written that
we can look at?
Ambassador FROMAN. We have not tabled--we have not tabled
new text on this issue. We are in the process of dialogue with
our TPP partners about what the principles of a chapter on this
might look like.
Mr. McDERMOTT. So the only tabled proposal is the one of
February or wherever?
Ambassador FROMAN. We never tabled that proposal. We
briefed the committee here and our stakeholders on it.
Mr. McDERMOTT. You never tabled it.
Ambassador FROMAN. Correct.
Mr. McDERMOTT. Okay. Let me ask you a second question. This
committee does a lot of things here, but most of them are
irrelevant. But it seems to me that we ought to be dealing with
GSP if we are serious about our relationship with the rest of
the world. Can you just tell the committee why GSP ought to
pass in the next 2 weeks and not expire on the 1st of August?
Ambassador FROMAN. Well, thank you. Thank you very much for
that. And I--we very much agree that GSP has both its
development dynamic to it, but also very importantly it helps
importers of products who can't otherwise access those products
to bring those products in and provide them to American
consumers at lower costs. So we think it is both good for
American consumers, but also good for development. We were
comforted to see and welcomed the introduction yesterday of the
bipartisan bill by the leadership of this committee to renew
GSP, and we think that is important.
Chairman CAMP. All right. Thank you.
Mrs. Black.
Mrs. BLACK. Thank you, Mr. Chairman.
And welcome, Ambassador. We look forward to working with
you.
I want to turn to the issue of data. One of the most
important 21st century issues is the protection of cross-border
data flows, which, of course, is critical not just for service
companies, but to any globalized company in any sector. Firms
with global sales forces must be able to transfer the sales
data back to their headquarters, and many companies across the
sectors that centralize the processing of their data must be
able to do so, as you know, seamlessly. The emergence of the
digital trade also depends on the free flow of data across
borders.
In both the EU and the United States, data privacy is
protected, but we do have different systems for providing that
protection. So respecting the difference of those privacy
approaches, how can we ensure a robust protection for cross-
border data flows in the EU negotiations, in the Trade in
Services Agreement, and also in TPP? And in what other ways has
the digital revolution impacted services trade in a manner that
should be reflected in these negotiations?
Ambassador FROMAN. Well, thank you very much.
And clearly the impact of the--of digital--the digital
economy, of digital trade is playing an increasing role in all
of our trade agreements, as you say. In TPP we have a
particular focus on it, but we will also be talking about it
with our European colleagues and in the services agreement.
We think the free flow of data is important for all the
reasons that you say. And also, as technology develops, and the
cloud develops, we want to make sure that businesses are able
to structure its operations in a way that makes maximum sense.
At the same time, obviously, there are privacy concerns. We
want to take those seriously, and strike the right balance, and
ensure that we are able to achieve those privacy concerns
without distorting the free flow of data as part of the digital
economy.
So those are active issues for discussion right now in TPP.
We have begun that dialogue with the EU as well. And my sense
is it is going to become an increasing part of our trade
agreements going forward, and we would be happy to work with
you and get your input on how you think we ought to be thinking
about this.
Mrs. BLACK. I appreciate that. We can all certainly
appreciate the fact that data must be protected. It is a very
important part of businesses and a very important part of the
flows.
Are you feeling in negotiations at this point in time that
there is any really good case model that you could say, yes,
this is going to work for all of our agreements?
Ambassador FROMAN. You know, I think TPP is farthest along
in terms of the negotiation at the moment, and we will have to
see where we come out on that. But I think we need to remain
flexible to determine how best to raise standards and create
new disciplines in each of our agreements depending on the
particular partners that we're working with.
Mrs. BLACK. Thank you. I look forward to working with you.
I yield back.
Chairman CAMP. Thank you.
Mr. Kind.
Mr. KIND. Thank you, Mr. Chairman.
And, Mr. Froman, thank you for being here and for your
service to our country. We look forward to working with you and
the administration on a robust fair trade agenda that can help
spark the economic growth and job creation that we need in this
country right now. And you have a lot on your plate.
Let me just raise a couple of the concerns, and then happy
to follow up with you on. But I appreciate USTR's report on
Russia and WTO compliance and what further action needs to be
taken. I and most of the members on this committee did support
Russia PNTR. We felt it was important to get the sixth largest
economy into a global rules-based trading system, but there are
shortcomings that I feel need to be addressed, not least of
which, being from Wisconsin, their exclusion of dairy products
since 2010. And I am hoping that with your assistance--and I
will follow up with you as I did with Ambassador Kirk--that we
may look at practical steps to be taken to see if we can get
Russian and the Customs Union there to open up their markets to
our dairy products.
Canada right now is revising their standards on dairy
products, too. We are concerned about the possible exclusion of
more exports into the Canadian market.
And then finally, just pivoting to TPP quickly, as you
probably have seen, Prime Minister Abe's LDP Party has been
taking a lot of agricultural--at least attempting to take a lot
of our agricultural products off the table when it comes to TPP
negotiations: rice, wheat, barley, pork, beef, dairy, sugar.
Obviously that is very disturbing. You had mentioned earlier in
your testimony the large agricultural exports, roughly 140
billion a year. We feel we can do even better than that. Japan
is a late entry in TPP negotiations. Hate to see us go down the
road of allowing them to unilaterally try to exclude certain
products from negotiations, and I am sure we will enjoy your
support on that as we move forward as well.
But there is a lot that has to be addressed. And, as you
know already, it is going to be important to keep not only this
committee, but other Members in the Congress informed as far as
the state of negotiations, especially the large new class that
has joined the Congress recently, too, who have never been
through a trade debate or a trade discussion. Try to get them
information as well.
But I would be interested in your perspective on Russia and
where they are right now with their new-found WTO obligations.
Ambassador FROMAN. Well, thank you very much. And we agree
that it is very important to stay focused on ensuring that
Russia implements the commitments it made when it acceded to
the WTO. And there were, I think, four or five areas that we
asked them to take action on. They have taken action on a
couple of them, but a couple of them still remain outstanding.
You know, I would note that when we were talking about PNTR
for Russia, one thing that we underscored, the value of
bringing them into the WTO, is that they would be subject to
certain disciplines and subject to dispute resolution when they
failed to meet those disciplines. There is now a case being
brought against them on the auto recycling fee in the WTO, and
we will be joining that case.
And so I think that is exactly the sort of process we want
to see. Obviously, we would prefer for them to implement all
their commitments assiduously, but if they don't, we will
certainly go to dispute resolution as necessary.
Just with regard to Japan, it was very important to us that
Japan agreed before we let them into the TPP that everything is
on the table. There are no upfront exclusions. Now, obviously,
every country has its sensitivities, and those will all be
subject to negotiation, but we have not agreed to any upfront
exclusions with regard to Japanese agriculture.
Chairman CAMP. Thank you.
Mr. Kelly.
Mr. KELLY. Thank you, Mr. Chairman.
Mr. Ambassador, welcome and congratulations.
On the TPP, I am really interested in this. Now, I know if
we are going to get the economy back on track, we have got to
go after the global market. There is just no question about
that. And in the district--and we all have been talking about
our districts and how important the ability to sell things all
over the world is to each of our districts individually.
But on the TPP, though, you have got a heavy, heavy load
there. And I am wondering, we talk about this and this sense of
urgency, because I would just say that sooner, of course, is
better than later, and as you see us approaching that, the
challenges that you are going to have trying to get there, and
I wonder--because geopolitically right now I don't think there
is more important trade policy that we can get than in that
part of the world, especially with the influence of China and
all the rest of the members that are talking, NGOs, nations
that are talking to you. So the biggest challenges you see.
And then on top of that, what can we do to help you here?
Is there anything we can do to help you? Because I am looking
at what you are doing, I don't know how you are going to get it
done as quickly as you want to get it done. And I know you said
we are going to work really hard. But the biggest challenges
you see.
Ambassador FROMAN. Well, thank you for underscoring----
Mr. KELLY. This is a big deal.
Ambassador FROMAN.--the challenges ahead.
You know, this will be a complicated process to bring TPP
to a close as well as these other negotiations that we are
working on. But there is a lot of political will among the
countries around the table, because they see this as an
opportunity to set high standards, to introduce new
disciplines, to have a positive impact on the multilateral
trading system, and that, I think, has mobilized and motivated
our trading partners to work with us to try and resolve these
issues. But there will be very difficult issues that will
require some tough trade-offs at the end of the day to ensure
that we can get this done.
You know, I would just add to what I said to Congressman
Reed. I think our biggest challenge right now is the resource
challenge, simply not having--we have open positions we can't
fill. We have travel budgets that are constrained that we can't
send negotiators to all the rounds we would like to send them
to, and we have meritorious enforcement cases we would like to
bring but don't have the capability of necessarily bringing
them all.
And so I think where you all can help, I think, in the
short run is in trying to ensure that we have the necessary
resources and support to get our job done.
Mr. KELLY. Well, I appreciate what you are doing. I think
the closer relationship we have with these countries who--the
better we are as partners also in a world that is constantly
now undergoing some changes. China, to me, really scares that
part of the world. And when I have been over there, I have
talked to those folks, have a read pretty good relationship
with South Korea, I don't know how we--if we don't. Now, of
course, this is a huge lift for us, but for that part of the
world, if we aren't the biggest player, and we are not the most
influential, then we are going to lose out. And again, if
people to look to us to be the leaders, we need to be able to
do that.
So thanks for what you are doing. Any way we can help,
please let me know.
Ambassador FROMAN. Thank you.
Chairman CAMP. Thank you. Thank you.
Mr. Pascrell.
Mr. PASCRELL. Mr. Chairman, thank you.
Ambassador Froman, congratulations on your confirmation. I
am sure those of us on--all of us on the Ways and Means look
forward to having a great relationship with you.
My other colleagues have mentioned today different policies
that would improve our competitiveness hand in hand with the
trade promotion authority: legislation on currency
manipulation, strong enforcement of our trade laws, trade
adjustment assistance, just to name a few.
I would like to bring your attention to something that we
worked on the last 2 years. The Bring Jobs Home Act would
provide tax credit for companies that bring jobs back into the
United States of America. These are the kinds of policies we
need if we are to get the most out of our trading
relationships.
I want to zero in on the Trans-Pacific Partnership, if I
may. I would like to talk about our domestic textile industry,
that which is still alive, that is. I was glad to learn of your
support for this rule during your recent Senate confirmation.
I want to draw your attention to a bipartisan letter from
Representatives Howard Coble, Patrick McHenry, and I sent to
you, which was signed by 167 House Members, including many of
my colleagues who sit on this committee.
And I--I would like to ask, Mr. Chairman, unanimous consent
to have this letter entered into the record.
Chairman CAMP. Without objection.
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Mr. PASCRELL. Mr. Froman, have you reviewed this letter?
Ambassador FROMAN. I am not familiar with the specifics of
the letter, but I am happy to discuss it with you.
Mr. PASCRELL. The letter supports the inclusion of strong
rule of origin language, which has really hampered us in other
trade agreements; in this case, the yarn forward rule. I
understand that you are negotiating strategy has yarn forward
at its center. Can you update this committee on your
negotiations over the rule of origin?
Ambassador FROMAN. Well, thank you very much. And you are
right that we have--we want to very much pursue a policy that
addresses both our domestic manufacturing interests in the
textile and apparel sector, as well as our other interests and
strike the right balance. And we think yarn forward at the
center of that proposal makes a lot of sense, and that is the
proposal that we are currently negotiating with.
With regards to rules of origin more generally, those are
being discussed among our TPP partners, and we are looking to
make sure that across all sectors we are dealing ourselves into
supply chains by making sure the rules of origin support that;
that having manufacturing and production here in the U.S. is
made more attractive by the rules of origin of TPP so that
companies can make their decisions in a way that enhances job
creation, creates jobs here in the United States.
Mr. PASCRELL. So you are willing to work with the industry
to find the proper trade tariff reduction arrangement that does
allow for a reasonable approach, particularly during the
transition period?
Ambassador FROMAN. Yes. I said we are very much in touch
with the stakeholders and obviously with the staffs of the
committees here as we try and work through these issues of yarn
forward and rules of origin more generally.
Chairman CAMP. All right. Thank you.
Mr. Becerra.
Mr. BECERRA. Thank you, Mr. Chairman.
Ambassador, thank you for being with us. A couple quick
points and then one crucial question.
Enforcement. More and more that I have watched and been
here, my sense is that my vote on any trade deal will now hinge
on enforcement, because I find that a trade deal is a hollow
agreement if our trading partner doesn't or won't play by the
rules. And so the last thing we need is to tell American
businesses or American workers that we struck a good deal with
a trading partner, then find that the other side doesn't follow
the rules, and we are losing jobs, hemorrhaging jobs and the
rest.
Secondly, I hope that you will take a deep interest in the
whole issue of currency manipulation. On a bipartisan basis
more than 230 Members of this House, Republicans and Democrats,
sent a letter to the President last month saying, please,
please consider language on currency manipulation when it comes
to any future trade deal, because what we find is that
somewhere between 1 million to 5 million American jobs have
been lost, shipped overseas because of currency manipulation by
other countries where they artificially depress their currency
so they can export more things to us. And so I hope you will
really take a crucial look at that and let us know that you
will be defending the American interests of both work and
business.
Intellectual property. I am from Los Angeles, so, to me, if
we can't protect intellectual property, again enforcement
provisions are crucial, we are going to lose some industries
that have been net exporters of goods.
And finally the question to you. As I just mentioned, I am
from the Los Angeles area. The Los Angeles area, because of our
two ports, Los Angeles and Long Beach port, we account for some
10 percent of all U.S. trade in the U.S., and that is now 5
years running. We are the largest port in the Nation, and we
are one of the largest ports in the world. Lots of folks in Los
Angeles depend on the ports for their jobs; lots of Americans
throughout the country do as well.
I know you have to travel all over the place, all over the
world, including the west coast. I would love it if the next
time you find yourself going through Los Angeles, you will give
me a chance to introduce you to some of those folks in Los
Angeles who create American jobs, keep American businesses
thriving. And can I ask you, if you do have a chance to go to
Los Angeles, we can count on you to perhaps spend a little time
with some folks there in Los Angeles?
Ambassador FROMAN. Absolutely. I would be happy to do that.
Let me just say on enforcement in particular, we very much
agree. In our view this administration's view has been that it
is not enough to negotiate an agreement and to implement it;
you need to make sure that it is being fully enforced as well.
And that is why we brought 18 enforcement actions over the
course of this term. We brought the first super 301 case--or
301 case in 15 years against China for subsidizing unlawfully
their wind energy business. We brought the first 421 case on
tires. We have brought an aggressive agenda to WTO, and we are
continuing to focus on that, including through the standing up
of the Interagency Trade Enforcement Center. So we are very
much in line with your perspective on that.
Mr. BECERRA. Thank you. Look forward to seeing you in Los
Angeles.
Yield back, Mr. Chairman.
Chairman CAMP. Thank you.
Mr. Crowley.
Mr. CROWLEY. Thank you, Mr. Ambassador. Great to have you
before your committee. Congratulations to you. Look forward to
working with you, continuing the relationship we have developed
over the past few years. And thank you for your endeavors.
And I want to point out in particular we appreciate the
time and the effort that you and the administration have given
and put on the enforcement of trade rules, as were mentioned.
As America exports more, we need to make sure that foreign
barriers to trade are not erected to prevent the free flow of
American goods and services, because it is one thing to have
trade, but it is another thing to have trade deals that work
for us and for our partners. So please keep up that focus on
enforcement. I think it is paying off and will continue to do
so as well.
One of the major problems for service exporters like those
from New York, my hometown, is having to compete with state-
owned industries in other countries. What do you envision for
the USTR in terms of how you view those enterprises? And how do
you see these issues coming into play in the deals that are
being negotiated right now? Japan post comes to mind, for one,
as it pertains to TPP.
Ambassador FROMAN. Well, thank you very much. And I very
much enjoyed working with you, and look forward to doing so
going forward.
Certainly the role of state-owned enterprises is absolutely
critical, and that is why in TPP this is one of the areas of
new disciplines that we are working to introduce into the
agreement to ensure that state-owned enterprises whose--that
are focused on competing with commercial firms, are engaged in
commercial activity, that they play by the same rules and are
subject to the same kind of disciplines as private firms, and
that we deal with their inherent subsidies and their other
inherent advantages in an appropriate way.
And equally on our bilateral investment treaties, I
mentioned progress made last week with China in terms of their
moving forward and wanting to negotiate a bilateral investment
treaty with us. We have made clear that SOEs will be a critical
part--looking at their SOE sector will be a critical part of
that negotiation as well. And we at USTR, working with our
colleagues at the State Department to co-lead that effort, are
very much looking forward to engaging with them on that.
Mr. CROWLEY. Thank you, Ambassador.
I just want to also follow up briefly on my colleague Mr.
Paulsen and his referencing to India. I did not sign on to that
letter of over--almost 150 Members, but that doesn't diminish
my interest in the issue. I am the cochair of the India Caucus
here in the House, and I am concerned about that level you
talked about in terms of the unprecedented nature of the coming
together of U.S. industries and the concern for their
opportunities, or diminished opportunities, within India, and I
appreciated your response as well and look forward to working
with you and the administration moving forward on a positive
growth agenda between our two nations.
I do view India and the U.S.--it is probably our most
important ally in this century, and we have to get this right.
So thank you, Mr. Chairman. Thank you, Mr. Chairman, for
holding this committee meeting today.
Chairman CAMP. Thank you.
Mr. Larson and then Mr. Smith. Mr. Larson is recognized.
Mr. LARSON. Thank you, Mr. Chairman. Thank you for
conducting this hearing.
Ambassador, welcome, and thank you for your outstanding
service to the Nation. I want to thank you for your testimony
today, and I wanted to follow up and echo on the comments of my
colleague Erik Paulsen.
Over the last few months, I have become concerned on what
we have heard regarding the environment for American businesses
operating in India. Whether it be patent violations and
compulsory licensing in pharmaceutical industries, piracy
within the software and film industries, local content rules in
the technology sector, or forced globalization in green tech
industries, the news coming out of India has not been good for
American innovators.
These challenges are of great concern to me because of what
they mean for American businesses and American workers. America
is at the heart of the nations of innovators, and millions of
American jobs, including thousands in my State of Connecticut,
rely on this very important innovation. I know that both of and
the President get it, and I appreciate the fact that you stated
recently at the U.S.-India Business Council that we must begin
to address these challenges.
Could you please expand on those recent comments in detail
for the committee what specific steps you will take over the
next year to combat the increasing challenges that Mr. Paulsen
and myself outlined?
Ambassador FROMAN. Well, thank you. And to build on what
Congressman Crowley also said, this is a very important
relationship. And we should--we shouldn't ignore the fact that
our economic relationship has developed significantly over the
last few years; that there are vast areas of good cooperation,
defense sector, counterterrorism, and a number of other areas.
It is a strong relationship.
I think the frustration we are all hearing from the
business community and others is that this relationship is not
nearly achieving its potential precisely because of the
policies that you identified. And that is the message we
conveyed to our Indian Government counterparts last week both
from ourselves, but also from the American business community,
and the American business community that is interested in
India, that wants India to succeed and wants to invest there.
And our hope is that through these dialogues, including the
Trade Policy Forum, other high-level dialogues, including the
Vice President will be going there, I believe, next week and
will be conveying similar messages, that we can help the Indian
Government move towards addressing some of these concerns.
We have seen some movement. Even this week they lifted
certain caps on foreign direct investment in certain sectors.
And so they have taken some steps, but the key is for them to
be able to convey that India is a place that people want to do
business, and that people can rely on as a place to do
business. And that is in our mutual interest. And so we very
much look forward to working with them through all these
mechanisms to try and address those issues.
Chairman CAMP. All right. Thank you.
Mr. Smith.
Mr. SMITH. Thank you, Mr. Chairman.
And thank you, Ambassador, for your presence here today.
I guess I want to add emphasis to some of the issues--some
of my colleagues talking about SPS and how important it is, and
especially more specifically to, obviously, agriculture. We
know that there is more U.S. pork sent to a Central American
country of 7.7 million population compared to the 28 European
countries that make up 500 million population. I think that
there needs to be some dispute resolution contained in the
agreements moving forward. And can you, I guess, respond to
that and add anything you might have had to say previously?
Ambassador FROMAN. Well, thank you. And we agree that
agricultural opportunities for export are significant. We are
exporting at an all-time high now, but there is much more that
we can do, and it is a central part of what we are doing in TPP
and T-TIP as well.
And I would just say with regard to T-TIP, we have worked
very closely with our European colleagues, even before we
launched negotiations, to underscore the importance of
resolving some of these SPS issues, and to work with them to
resolve some longstanding disputes, including over lactic acid,
live swine, and a variety of other areas. We have underscored
that is going to be important looking forward to address these
outstanding issues.
On the issue of dispute resolution itself, as I mentioned,
most of what we are seeking in TPP, what we call the SPS-Plus
chapter, the underlying disciplines are subject to dispute
resolution either in the WTO or under the consultative
mechanism that we are proposing in TPP. And we think that is
the appropriate way of moving forward to ensure that there are
efficient ways as issues arise of getting them resolved on an
expedited basis. But we very much agree that this is a critical
area of our trade. It is a critical area of these negotiations.
We want to make sure that we have mechanisms to ensure that
they are fully implemented.
Mr. SMITH. Okay. Thank you. I yield back.
Chairman CAMP. Thank you.
Ms. Sanchez is recognized.
Ms. SANCHEZ. Thank you, Mr. Chairman.
And Ambassador Froman, congratulations on your
confirmation, and thank you for being here to discuss the
administration's trade agenda.
You are obviously stepping into the U.S. Trade
Representative at a very exciting time. The administration is
negotiating agreements with the European Union, the Pacific Rim
countries, and working on a new international services
agreement. We also have the issue of congressional action on
trade promotion authority, or fast-track authority, and the
expiring Generalized System of Preferences program, and
hopefully tougher trade enforcement rules.
I guess the main point that I want to express to you is
that in the past I have been highly critical of past U.S. Trade
Representatives, because all too often I think that our trade
deals that are negotiated are unfair to American workers, and
that they erode our U.S. manufacturing base. So I just want to
share with you a few of the priorities that I think we should
keep in mind as you continue your work in that office.
First of all, strengthening Customs enforcement to create a
level playing field for American industries is something that I
am very interested in seeing.
Aggressively trying to crack down on currency manipulators.
One of my colleagues mentioned that that results in huge job
losses for American businesses.
Ensuring high levels of labor and environmental standards
in our trade negotiations, and specifically trying to build on
the bipartisan May 10th agreement.
And also promoting U.S. manufacturing and opening up access
to foreign markets.
So I look forward to hopefully working with you and my
colleagues to ensure that our trade agenda keeps in mind those
priorities.
You have been asked questions about aggressively cracking
down on antidumping and countervailing duty violators. That is
an area that I am pleased to see progress on with this
administration, but I think we can be doing more there. So I am
going to ask you a question specifically about the Trans-
Pacific Partnership, because I do have some concerns there.
Clearly Japan's late entry into the Trans-Pacific
Partnership has created concerns for the U.S. automotive
industry. And, for instance, the Japanese automotive companies
control more than 94 percent of the domestic Japanese market,
making Japan one of the most closed auto markets in the world,
and that is despite the fact that Japanese auto tariffs are at
zero percent. So with the TPP negotiations, how does the USTR
hope to effectively address Japanese nontariff barriers?
Ambassador FROMAN. Thank you very much.
Obviously Japan's auto sector has been an area of concern
for--as Ranking Member Levin said, for decades, and it is still
very much a concern today. And that is why prior to allowing
Japan to come into TPP, we insisted on negotiating certain
upfront commitments both in terms of the reduction of tariffs
in the U.S., but also in terms of access to their market, more
than doubling of the PHP program, which provides for expedited
entry of imports into Japan, but also agreed on the terms of
reference for a specific parallel negotiation on the auto
sector that will be part of TPP, will be binding, will be
subject to dispute resolution. And those negotiations are
focused directly at those nontariff barriers that you mention.
We are looking forward to working with the auto industry
here and auto workers here to get our best understanding of
their priorities for that negotiation. But this is a high
priority for us, and we want to make sure that we achieve
concrete results through these negotiations.
Chairman CAMP. All right. Thank you.
Mr. Schock.
Mr. SCHOCK. Thank you, Mr. Chairman.
Thank you, Ambassador. We are all excited that you are in
your new post, and confident that we are going to do even more
on trade in the coming years with you at the helm.
I just want to bring up some--two specific concerns that I
have had, one of them that I brought up repeatedly to the
previous trade ambassador and, in my opinion, really haven't
gotten a clear answer on.
U.S. biologics is an important industry in our country.
From my home State of Illinois, we have several of the big
pharmaceutical companies based there. Current U.S. law
basically guarantees them 12 years to be able to recapture
their investment in U.S. biologic medicines and
pharmaceuticals.
On several occasions the administration in its budget and,
we have heard, in some of the discussions has opened the door,
if you will, on the potential to roll back 12 years' protection
to perhaps a 7-year protection, as was put in the President's
budget. Obviously, that concerns that industry, certainly
concerns me as their representative, if we are going to change
current U.S. law which protects them up to 12 years to 7 years,
which would be, you know, more than a 50 percent reduction in
how many years they can recapture their earnings or their
investment.
Can we get some answer from you on whether or not that is
still a position the administration holds, or is the
administration's position going forward that they are going to
negotiate trade agreements like they did in Korea in TPP that
upholds current U.S. law; i.e., the 12 years?
Ambassador FROMAN. Well, thank you----
Mr. SCHOCK. Let me just--why the nonclarity? In other
words, unless you are adamant that you are going to go to 7
years, all this is doing is creating uncertainty within the
pharmaceutical industry and making them not want to invest. If
we are going to stick to current law, which is what we did in
Korea, moving forward--and it is current U.S. law, by the way,
and I don't know how we agree to a trade agreement that isn't
consistent with U.S. law. Let us just say that so we remove the
doubt, and we can move on to other important things.
Ambassador FROMAN. Thank you for that. And obviously, this
is a very important issue in terms of protecting innovation in
the U.S., which is a high priority.
We are currently engaged with our TPP partners in
discussing how U.S. law works, the distinction between small
molecules and biologics, the timeframes that are in U.S. law
for each, and beginning that process of consultation with them
about why U.S. law operates the way it does.
We have not tabled text yet in this particular area, but we
are in the process of socializing the issues around current
U.S. law with our trading partners, and obviously this will be
subject to negotiation. But for--but at the current time, our
focus is on educating our trading partners as to what is in
U.S. law, why it operates the way it does, and how it operates.
Mr. SCHOCK. Do you believe you can negotiate a free trade
treatment and agree to text that is inconsistent with current
U.S. law?
Ambassador FROMAN. Well, I think what we need to do is to
achieve the highest level of protection possible for our
innovative industries, and the first step in that process is
educating our trading partners about what is in U.S. law and
why it operates the way it does.
Chairman CAMP. All right. Thank you.
Thank you very much, Ambassador Froman for your testimony,
and with that, this hearing is adjourned.
[Whereupon, at 10:55 a.m., the committee was adjourned.]
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