[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
OPPORTUNITIES TO EXPAND U.S. TRADE RELATIONSHIPS IN THE ASIA-PACIFIC
REGION
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HEARING
BEFORE THE
SUBCOMMITTEE ON TRADE
OF THE
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 11, 2017
__________
Serial No. 115-TR02
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Printed for the use of the Committee on Ways and Means
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
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U.S. GOVERNMENT PUBLISHING OFFICE
33-656 WASHINGTON : 2019
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COMMITTEE ON WAYS AND MEANS
KEVIN BRADY, Texas, Chairman
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
DEVIN NUNES, California SANDER M. LEVIN, Michigan
PATRICK J. TIBERI, Ohio JOHN LEWIS, Georgia
DAVID G. REICHERT, Washington LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
VERN BUCHANAN, Florida JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska EARL BLUMENAUER, Oregon
LYNN JENKINS, Kansas RON KIND, Wisconsin
ERIK PAULSEN, Minnesota BILL PASCRELL, JR., New Jersey
KENNY MARCHANT, Texas JOSEPH CROWLEY, New York
DIANE BLACK, Tennessee DANNY DAVIS, Illinois
TOM REED, New York LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania BRIAN HIGGINS, New York
JIM RENACCI, Ohio TERRI SEWELL, Alabama
PAT MEEHAN, Pennsylvania SUZAN DELBENE, Washington
KRISTI NOEM, South Dakota JUDY CHU, California
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
TOM RICE, South Carolina
DAVID SCHWEIKERT, Arizona
JACKIE WALORSKI, Indiana
CARLOS CURBELO, Florida
MIKE BISHOP, Michigan
David Stewart, Staff Director
Brandon Casey, Minority Chief Counsel
______
SUBCOMMITTEE ON TRADE
DAVID G. REICHERT, Washington, Chairman
DEVIN NUNES, California BILL PASCRELL, JR., New Jersey
LYNN JENKINS, Kansas RON KIND, Wisconsin
ERIK PAULSEN, Minnesota LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania SANDER M. LEVIN, Michigan
PAT MEEHAN, Pennsylvania DANNY DAVIS, Illinois
TOM REED, New York BRIAN HIGGINS, New York
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
TOM RICE, South Carolina
C O N T E N T S
__________
Page
Advisory of October 4, 2017 announcing the hearing............... 2
WITNESSES
Matthew Goodman, William E. Simon Chair in Political Economy &
Senior Adviser for Asian Economics, Center for Strategic and
International Studies.......................................... 6
(Truth in Testimony)......................................... 18
Kelley Sullivan, Owner/Operator, Santa Rosa Ranch................ 20
(Truth in Testimony)......................................... 27
Demetrios Marantis, Senior Vice President and Head of Global
Government Relations, Visa Inc................................. 28
(Truth in Testimony)......................................... 37
Stefanie Moreland, Director of Government Relations and Seafood
Sustainability, Trident Seafoods Inc........................... 38
(Truth in Testimony)......................................... 48
Scott Paul, President, Alliance for American Manufacturing....... 49
(Truth in Testimony)......................................... 61
QUESTIONS FOR THE RECORD
Questions from The Honorable Patrick Meehan, to Matthew P.
Goodman........................................................ 81
Questions from The Honorable Patrick Meehan, to Ambassador
Demetrios Marantis............................................. 84
PUBLIC SUBMISSIONS FOR THE RECORD
BSA &bond; The Software Alliance................................. 86
HanesBrand, Inc.................................................. 89
Sahra English, Vice President, Global Public Policy Mastercard,
statement...................................................... 92
U.S. Chamber of Commerce, statement.............................. 100
OPPORTUNITIES TO EXPAND U.S. TRADE RELATIONSHIPS IN THE ASIA-PACIFIC
REGION
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WEDNESDAY, OCTOBER 11, 2017
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Trade,
Washington, DC.
The subcommittee met, pursuant to call, at 2:06 p.m., in
Room 1100, Longworth House Office Building, Hon. Dave Reichert
[chairman of the subcommittee] presiding.
[The advisory announcing the hearing follows:]
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Chairman REICHERT. The committee will come to order.
Welcome to the witnesses. Good afternoon. The subcommittee
will come to order as I said.
Welcome to the Ways and Means Trade Subcommittee hearing on
Opportunities to Expand U.S. Trade Relationships in the Asia-
Pacific Region.
Before hearing from our witnesses, I would like to make a
few points. Many of the largest and fastest growing economies
in the world are in the Asia-Pacific region. The 21 Asia-
Pacific Economic Corporations, or APEC, members account for 59
percent of the global GDP and 49 percent of world trade. U.S.
companies can sell only so much to the 4 percent of the world's
population that lives in the United States, so we must improve
our access to global markets. If we want to remain competitive,
then we must focus on doing more in the Asia-Pacific region.
Washington is one of the most trade-dependent States in the
country, with 40 percent of all jobs tied to trade. Given our
location on the West Coast, my constituents are very aware of
the importance of export markets in the Asia-Pacific region.
Far too often, U.S. companies are held back in this region by
high tariffs, nontariff barriers, and discriminatory policies
and regulations. And all too often it is much more difficult to
do business in the region than it should be.
Reducing these barriers would increase opportunities for
the United States companies to compete and win, and would also
increase prosperity throughout the Asia-Pacific, enhance
security in the region, and set high standards for future
agreements.
One important tool that the United States can use to
address these issues is negotiating trade agreements. But we
have trade agreements with only three countries in the Asia-
Pacific region, Korea, Australia, and Singapore. We must expand
our presence. I am convinced that KORUS, our trade agreement
with Korea has been a great success for both the United States
and Korea.
KORUS has been in place only 5 years, and some of the
tariff reductions are still being phased in and evaluated,
especially for sensitive agricultural products. So we can
expect even greater gains in the future. Even still, we have
seen the benefits of KORUS throughout the United States, and
particularly in my home State of Washington. And I mention this
quite frequently, we have nearly doubled our cherry exports to
Korea since this agreement was put into effect, making it our
third largest market for cherries in the world.
At the same time, Korea's implementation of certain
portions of the agreement have been very disappointing. And I
know some tough conversations are ongoing to address these
problems. The best way to resolve these issues and instill
confidence in both countries about the future of the agreement
is to use the committee structure it set up under KORUS. That
structure has helped us put an end to several disputes already.
But Korea needs to do much more.
I am eager today to hear from each of our witnesses about
your experiences in Korea and throughout the region, both where
you are having success and where you see some continuing
challenges. I hope that this hearing will help us policymakers
more effectively push our trading partners to ensure a level
playing field for U.S. companies and their employees.
When we have a trade agreement in place, we can work to
enforce that agreement and push our trading partner to live up
to its side of the bargain. But our limited number of trade
agreements in the Asia-Pacific region greatly reduces our
leverage relative to the competitors in other countries that
have been more aggressive in negotiating trade agreements.
Therefore, I firmly believe we need to pursue new bilateral
agreements in the Asia-Pacific region.
High standard, ambitious, and enforceable agreements would
benefit all Americans, including farmers, ranchers, workers,
fishermen, fisherwomen, manufacturers, and service providers.
The longer we wait, the more we will fall behind. We simply
cannot afford to delay.
I am eager to hear from our witnesses again about how such
new agreements can help us force markets open and make sure we
are treated fairly.
I now yield to the ranking member, Mr. Pascrell, for his
opening statement.
Mr. PASCRELL. Thank you, Mr. Chairman.
I want to thank our witnesses. We have a great, great five
of you, all terrific backgrounds.
But I wanted to thank the chairman for putting us together
today.
With rapidly growing economies, and more than half the
world's population, it is critical that we engage with the
Asia-Pacific countries in a constructive trade relationship. In
addition to considering these important issues, as all of you
know, this administration is in the middle of renegotiating our
trade agreement with Canada and Mexico, the NAFTA agreement.
But we have yet to have one administration witness come before
this committee to testify on these negotiations.
Considering the President has threatened more than once to
withdraw the United States from NAFTA, I think it is critical
that we have a public hearing on the trade agreement, the
renegotiation process, and what the threat of withdrawal means
to our economy, our workers and our communities. And I look
forward to a response from the chairman on this matter soon.
President Trump has had an incoherent and unpredictable
trade policy. And nowhere is this more clearly on display than
with China. In April, the President initiated a 232
investigation on steel and aluminum to try to address the
crisis facing our producers and our workers because of the
well-documented market distortions created by China's steel and
aluminum overcapacity.
But since initiating the investigation, the administration
has pushed off making a decision or releasing its findings.
This is what you are getting into now. So be aware in context
what is going on around you not only in terms of what we are
here to talk about today.
The result of this uncertainty has been an increase to
steel imports because of consumers' fear of pending trade
restrictions. According to the Commerce Department's most
recent steel import monitoring and analysis data, steel imports
rose 21.4 percent through the first 8 months of 2017 compared
to the same time last year. Think about that and think of all
the rhetoric that you and I have heard.
In July, President Trump told the Wall Street Journal that
he was not going to act on the 232 investigation at that time.
It is unclear when, if ever, the President intends to take
action. Right now it seems that paradoxically, the President
has exacerbated the problem of increasing steel imports that
has been devastating the U.S. steel industry. Boy, we have a
knack of making things worse.
The President has also threatened to withdraw from the
Korean free trade agreement, or KORUS. I believe KORUS has
flaws. We all have flaws. It could be improved. It could work
better for American companies seeking market access,
particularly American auto companies. And it still contains
some troublesome dispute settlement mechanisms that favor
powerful corporations in the form of investor-state dispute
settlements. However, our relationship with South Korea is
critical and is a valuable trade partner, and some elements of
the KORUS agreement set very high standards.
So let's not do something drastic by blowing up the
agreement and creating chaos. That serves no one. So we have
threats to blow that up. We have threats to blow up NAFTA. And
I am reading newspapers lately, like all of you, I don't know
what the heck he is planning to blow up next. That is the
context in which you are here. Our relationship with South
Korea is critical. It is a valuable trade partner. And some
elements of the KORUS agreement set very high standards. I said
this, but I want to repeat it because this is important and
critical before we go onto the discussion.
I look forward to discussing how we can improve our trade
relationship with the Asia-Pacific countries. This region
represents nearly half of the global trade, 60 percent of
global gross domestic product, and nearly $20 trillion worth of
goods and services flowing through the region. This rapidly
growing economic zone is critical to our continued success as
an economy as we look to the future. This is not going to be
answered by bumper stickers. And thank you for coming today.
Mr. Chairman.
Chairman REICHERT. Thank you, Mr. Pascrell. Today we are
joined by five witnesses.
Mr. Matthew Goodman, the William E. Simon chair in
political economy and senior adviser for Asian economics at the
Center for Strategic and International Studies.
Ms. Kelley Sullivan, owner-operator of Santa Rosa Ranch in
Crockett, Texas.
Our third witness is Ambassador Demetrios Marantis, senior
vice president and head of global government relations for
Visa, Incorporated. He served as deputy U.S. Trade
Representative in the prior administration, covering Asia-
Pacific.
And though seafood from the Pacific northwest needs no
introduction, our fourth witness is Ms. Stefanie Moreland,
director of government relations and seafood sustainability for
Trident Seafoods in Seattle in my home State of Washington. A
special welcome to you, Ms. Moreland.
Finally, our fifth witness is Mr. Scott Paul, president of
the Alliance for American Manufacturing.
Before recognizing our first witness, let me note that our
time is limited, so you should please limit your testimony to 5
minutes. And your statements will all be entered into the
record.
Mr. Goodman, you are recognized for 5 minutes.
STATEMENT OF MATTHEW GOODMAN, WILLIAM E. SIMON CHAIR IN
POLITICAL ECONOMY & SENIOR ADVISOR FOR ASIAN ECONOMICS, CENTER
FOR STRATEGIC AND INTERNATIONAL STUDIES
Mr. GOODMAN. Thank you, Mr. Chairman. I have submitted more
complete written testimony, but I would just like to make three
points here.
First, the United States is a Pacific power, and we have
compelling national interests in this vital Asia-Pacific
region. Those include, as the chairman and ranking member said,
a critical economic stake in a region that accounts for nearly
60 percent of global GDP, and has more than tripled in economic
size since the end of the Cold War. U.S. exports of
agricultural goods, manufactured products, and services to the
Asia-Pacific region totaled nearly half a trillion dollars last
year, about half our total exports.
According to the Commerce Department, about 3.4 million
American jobs were supported by exports to the region in 2015.
Asian companies with direct investments in the United States
employ over one million Americans, with many more jobs
supported indirectly by those operations and supply chains
across North America. And the region holds even more potential
in the future. By 2030, Asia will be home to more than three
billion middle class consumers. This means more export
opportunities for U.S. companies and more growth in jobs at
home.
My second point is the landscape in the Asia-Pacific region
is changing, and not necessarily in ways favorable to our
interests. American companies have long faced an array of
barriers in Asia-Pacific markets, both at the border, tariffs
and conditions on market entry, for example, and behind the
border, intellectual property theft, regulatory discrimination,
and so on. But mercantilist trade policies persist, and more
assertive industrial policies in the region have grown in
recent years.
China in particular has stepped up policies that deny
market opportunities to American companies, support its own
national champions, and distort global markets. Beijing's so-
called Made in China 2025 policy or plan shows that it is
targeting the industries of tomorrow, artificial intelligence,
robotics, aviation, and is prepared to use subsidies, forced
technology transfers, and abusive competition policy to get
there.
Other countries have adopted policies harmful to U.S.
interests, such as data localization requirements in Indonesia
and Vietnam. While all of this argues for stepped up U.S.
engagement, particularly with our allies in the region, the
administration's statements and actions on trade risk isolating
the United States. At the same time, countries in Asia have
moved ahead without the United States to shape the region's
trade architecture and the rules of the road for trade and
investment. President Trump's early, and in my view mistaken,
decision to withdraw from the Trans-Pacific Partnership gave a
boost to Asia's other large trade agreement, the Regional
Comprehensive Economic Partnership, or RCEP, which brings China
together with 15 other Asia-Pacific countries, but not the
United States.
TPP itself has continued without our involvement, as Japan,
Australia, and 11 other signatories try to salvage a deal. On
the plus side, this would preserve some of the high standards
in TPP, but it would also have negative diversionary trade
effects for the United States. Countries have also moved ahead
with bilateral trade deals. The largest of these is between the
European Union and Japan, initialed this past summer. This
agreement is likely to contain European-style rules on data
privacy and special protections for so-called geographic
indications for food and beverage products like parmesan and
champagne.
Together, these other deals have the potential to
significantly erode the competitiveness of U.S. exporters and
to lock in rules that hurt our interests. Beyond trade
agreements, Asian countries are pushing competing visions for
infrastructure investment across the Eurasian supercontinent
that could reorder the region's trade linkages and affect our
commercial and geopolitical interests. Most prominent among
these is China's so-called belt and road initiative, which is
literally making all roads--or intended to make all roads lead
to Beijing.
My third point is that despite this changing and
increasingly challenging environment, the United States can
still recapture economic leadership in the Asia-Pacific region
and take advantage of the huge opportunities there. We are
still a uniquely attractive trading partner for the region with
our huge market, abundant human and financial capital,
innovative capacity, and rule of law. But we have to have a
strategy and policies to back it up.
The President's upcoming trip to Asia provides an
opportunity to reaffirm our interests and commitment to the
region, and to articulate for the American public and for our
Asian trading partners a comprehensive, consistent, and long
term economic strategy for the region. CSIS will be issuing a
short report tomorrow outlining such a strategy, and I am happy
to share it with the committee. We recommend the President give
a speech before or during the trip outlining U.S. interests in
the region and the broad pillars of engagement, including an
economic strategy. We have other recommendations, but in the
interests of time I will skip through those.
I just want to say one final thing, which is that there is
something we should not do, which is to withdraw from NAFTA,
the North American Free Trade Agreement, or KORUS, the Korea
bilateral deal, as the administration has signaled it may
intend to do. It would be extremely harmful to our economic and
political interests in the Asia-Pacific region. This would take
away hard-won market opening gains for our ranchers,
manufacturers, and service providers, and undercut the rules
that will give our companies and workers the long term basis to
compete.
Moreover, withdrawing from these agreements would be a
serious blow to our credibility in the region and the world,
and make it harder for us to persuade others to follow us, not
just on trade, but in addressing other serious political and
security challenges.
Again, I have made a number of recommendations in my
written testimony and in this CSIS report, and I am happy to
discuss those in the question period. Thank you very much.
[The prepared statement of Mr. Goodman follows:]
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Chairman REICHERT. Thank you Mr. Goodman. Ms. Sullivan, you
are recognized.
STATEMENT OF KELLEY SULLIVAN, OWNER/OPERATOR, SANTA ROSA RANCH
Ms. SULLIVAN. Good afternoon. Mr. Chairman, distinguished
members of the committee. My name is Kelley Sullivan, and I am
a beef cattle producer. I own and operate Santa Rosa Ranch in
Crockett, Texas, and I am here today on behalf of the National
Cattlemen's Beef Association, and I am honored to provide you
with our perspective on the importance of trade with our
customers in the Asia-Pacific region.
As someone who personally visited our customers in July in
both Korea and Japan, I have firsthand observations of the
strong demand for U.S. beef. Over the years, exports have
become critical to the success of the U.S. beef industry and
rural economies. In 2016, we sold over $6.3 billion worth of
beef products to other countries, with exports alone accounting
for over $290 of value per head. We expect these values to
increase in response to growth in foreign demand.
Our perspective on international trade stems from a basic
premise. If we are going to raise the cattle and produce beef,
we need competitive access to consumers who are willing to pay
for our products. For many years, Americans have been our
primary focus because Americans prefer ribeyes, tenderloins,
and hamburger, and are willing to pay a higher price. But other
beef cuts, such as short ribs, tongues, and livers fetch a
lower price on the domestic market, but actually yield great
premiums in foreign markets. For this reason, we are
increasingly looking beyond our borders for opportunities to
maximize sales, and Asia is a prime target.
As more Asian consumers join the middle class, they are
adding proteins like beef to their diets. Simply put, trade
allows us to capitalize on the differences in consumer
preferences and capture value that would not exist if we sold
to the domestic market alone.
Today, the success or failure of the U.S. beef industry
depends on our level of access to global consumers. Our top
export markets include Japan, Korea, Mexico, Canada, Hong Kong,
and Taiwan. In 2016, 84 percent of our export sales came from
these six markets. So you can see why we get nervous about
market access being threatened.
We have consistently encouraged the U.S. Government to
aggressively pursue opportunities to remove tariff and
nontariff barriers around the world. As a result, the U.S. beef
industry has reaped the benefits of trade policies such as
implementation of NAFTA and KORUS. Our future success hinges on
our ability to avoid the mistakes of the past and take an
aggressive nature in support of trade liberalization.
We are very excited that after 14 years in exile, U.S. beef
access has been restored to China. While previous
administrations worked diligently to address China's concerns
and negotiate terms, it was the Trump administration that
closed the deal and restored U.S. beef access to China this
summer. Our negotiators worked hard to secure market access
terms that are superior to terms of our competitors, and we
view China as an important investment for the future of our
industry. While we are excited about the opportunities that
China holds, we are very concerned with statements from our
government that may jeopardize our success under KORUS. Let me
be clear, we have absolutely nothing to gain by walking away
from KORUS.
Despite criticism of KORUS from anti-trade groups and even
some leaders within our government, the U.S. beef industry has
thrived under KORUS. Korea is now our second largest export
market, accounting for over a billion dollars in annual sales.
In fact, annual U.S. beef sales have increased 82 percent
during KORUS. If we dissolve KORUS, Korea will undoubtedly
reinstate a 40 percent tariff on U.S. beef, and we will lose
our competitive advantage over Australia and other countries.
While Korea is our second greatest export market, Japan is
the top export market for U.S. beef. In 2016, Japanese
consumers purchased $1.5 billion worth of U.S. beef, even with
a 38.5 percent tariff in place. 2017 has been a record year for
U.S. beef in Japan, reaching nearly $1.1 billion in sales just
through July. Due to that success, however, Japan triggered a
snapback tariff of 50 percent on frozen beef. It went from 38.5
percent to 50 percent overnight. Without a free trade agreement
in place, U.S. frozen beef will continue facing a 50 percent
tariff until April 2018, and we could face this higher tariff
again in future years without a trade agreement.
In contrast, Australian beef imports are not subject to the
50 percent snapback tariff because they have a trade agreement
in place with Japan. Instead, Australia enjoys a stable 27
percent tariff rate. Many U.S. beef producers are eagerly
looking for a solution, and NCBA strongly supported the TPP
because it would have lowered the tariff on U.S. beef from 38.5
percent to 9 percent in 16 years. Remember, we are currently
sitting at 50 percent because TPP is not in place, or some sort
of bilateral agreement.
Unfortunately, the decision to remove the United States
from TPP puts us at a significant disadvantage. We would ask
U.S. negotiators to focus on securing new market access for
U.S. beef exports, starting with making up the ground we lost
walking away. It is time for the U.S. Government to make it
right and expend all necessary resources to secure strong
market access for future generations of U.S. beef producers.
Thank you.
Chairman REICHERT. Good job on getting that all out right
at the end.
Ms. SULLIVAN. That was not easy for a talkative person, I
will promise you. Thank you.
[The prepared statement of Ms. Sullivan follows:]
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Chairman REICHERT. Ambassador Marantis, you are recognized.
STATEMENT OF DEMETRIOS MARANTIS, SENIOR VICE PRESIDENT AND HEAD
OF GLOBAL GOVERNMENT RELATIONS, VISA INC.
Mr. MARANTIS. Thank you. Chairman Reichert, Ranking Member
Pascrell, distinguished members of this committee, it is really
nice to be here. And thank you very much for inviting me to
testify on behalf of Visa about the importance of Asia-Pacific
trade to U.S. jobs and exports.
I spent a career working on these issues as a congressional
staffer, at USTR, and now in the private sector. And it is
always an honor to testify before this committee.
For almost 60 years, Visa has facilitated the growth of
commerce through electronic payment services technology. Today,
we connect more than 3 billion Visa cards and millions of
merchants globally. We are a major U.S. exporter, operate in
more than 200 countries and territories around the world, and
employ thousands of high skilled workers across the United
States. To grow our business and extend the benefits of digital
commerce globally, we need open markets and the ability to
compete on a level playing field internationally.
The global leadership role of the U.S. payments industry
and the well-being of our workers and their families and our
customers depends on it. Worldwide, there are tremendous
opportunities to strengthen economies through increased use of
electronic payments. A Visa-commissioned report released this
morning projects that increasing digital payments in 100
international cities could produce annual net benefits of $470
billion through greater efficiencies, cost savings, and
expanded commerce.
Visa also estimates that Asia-Pacific economies stand to
gain more than $6 trillion by shifting from cash and checks
towards credit, debit, or prepaid forms of digital payments.
Exciting things are happening throughout the Asia-Pacific
region. Australia has one of the world's highest rates of
contactless transactions. China has become a world leader in
mobile payments. And in India, the volume of digital payments
increased dramatically since Prime Minister Modi removed 86
percent of bank notes from circulation last November.
In the months that followed, Visa, together with the Indian
Government, and other key stakeholders, introduced an
interoperable low cost acceptance solution to accelerate the
transition to electronic payments. However, there are still
significant challenges in the region. In many countries, trade
barriers and regulatory discrimination distort the market. My
written testimony describes challenges facing U.S. payment
companies in China, where Visa recently submitted an
application for a license to begin operating in the domestic
market, and Korea, where strong regulatory preference for local
brands tilts the playing field.
But the most urgent challenge we now face is in Vietnam,
where U.S. electronic payment suppliers are on the brink of
being forced out of the domestic market. We are grateful for
the strong bipartisan leadership from this committee, including
Chairman Reichert and Ranking Member Pascrell in highlighting
concerns with Circular 19, a regulation issued by the State
Bank of Vietnam, that grants a de facto monopoly on domestic
payment processing to the state-owned National Payments
Corporation, known as NAPAS.
Despite grave concern raised by the current and former
administration, as well as dialogue between governments and
industry, NAPAS is charging ahead and pressuring banks to
prepare to process all transactions, including those of Visa
and Mastercard, over its network. This fundamentally threatens
the ability of U.S. payment companies to continue operating in
Vietnam. To ensure a level playing field for U.S. electronic
payment suppliers, such blatant discriminatory treatment should
not be allowed to occur in Vietnam or elsewhere in the region.
As APEC chair this year, Vietnam should instead be a champion
of fair and open trade. Given the consistent message from
Congress and the administration on this issue, we remain
hopeful that the Vietnamese Government will suspend and revise
Circular 19 before President Trump's visit to Vietnam for the
APEC leaders meeting next month.
Achieving a positive outcome in Vietnam will send an
important signal about the beneficial effects of sustaining
open and fair trade across the region.
In that spirit, we look forward to working with the
committee to strengthen trade relationships throughout the
Asia-Pacific, and to help further expand U.S. exports in
support of Visa's workers and their families in communities
across the country. Thank you.
[The prepared statement of Mr. Marantis follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman REICHERT. Thank you. Ms. Moreland, welcome.
STATEMENT OF STEFANIE MORELAND, DIRECTOR OF GOVERNMENT
RELATIONS AND SEAFOOD SUSTAINABILITY, TRIDENT SEAFOODS INC.
Ms. MORELAND. Thank you. Chairman Reichert and Ranking
Member Pascrell, on behalf of Trident Seafoods, I thank you for
convening today's hearing. Trident is one of the largest
vertically integrated seafood companies in North America,
headquartered in Washington. We own and operate a dozen
facilities in coastal Alaska, and a fleet of modern harvesting
and at-sea processing vessels that fish and process within U.S.
waters of the Bering Sea and off the coast of the Pacific
Northwest.
These platforms, in combination with an independent
fisherman fleet that we partner with, harvest and process
hundreds of millions of pounds of U.S. seafood. Trident has
value-added reprocessing facilities in the State of Washington,
Minnesota, and Georgia, as well as overseas in Japan, China,
and Germany.
We employ approximately 8,000 men and women in the U.S.
during peak production. We sell finished seafood products
directly to restaurants, distributors, and retail, primarily
throughout North America, Asia, and Europe. It is often
reported that as much as 85 percent of seafood that is consumed
in the U.S. is imported, and that the United States runs a
significant seafood trade deficit. What is less reported is
U.S. seafood producers export over $5 billion worth of seafood
products annually, or approximately two-thirds of the U.S.
seafood production by volume. Our industry can only thrive with
strong export markets, particularly in the Pacific and
northwest, where 80 percent of all seafood exports originate.
Asia-Pacific markets, specifically China, Japan, and Korea,
are critically important. In 2015, U.S. seafood exports to
those nations accounted for about half of all U.S. seafood
exports. As with other export-dependent sectors, years of a
strong U.S. dollar negatively impacted our ability to sell
products abroad in countries with relatively weaker currencies.
At home, low cost imports undercut U.S. seafood products. Both
resulted in the global seafood market depressing prices.
In addition, we increasingly compete in a global market
against foreign producers that have very low labor costs and
much less rigorous fisheries management, air and water quality,
and food safety standards. That said, Trident supports a free
market approach to trade over a protectionist approach. We
cannot afford retaliatory market restrictions that could result
in reaction to protectionist U.S. trade policy. However, more
needs to be done to create a level playing field to ensure U.S.
seafood producers remain competitive in the U.S. and in
important export markets.
My testimony covers the promising market growth in China
and Korea, remaining competitive in the Japanese market, and
challenges we face from Russia far east seafood producers.
Regarding U.S.-China trade policy, China produces most of the
seafood in the world, and is the largest seafood exporting
Nation globally. However, China is also one of the largest
seafood importing nations.
China's seafood imports are projected to rise to 10 million
tons by 2020. Rapid expansion of the Chinese domestic market
makes it the largest growth opportunity for U.S. seafood
products. We could substantially increase U.S. seafood exports
to China if U.S. trade negotiators could reduce or eliminate
stiff tariffs and value-added tax rates on U.S. seafood exports
for consumption in China, currently at 23 percent for many of
our products.
Regarding U.S.-Japan trade policy, the Trans-Pacific
Partnership contained favorable terms for U.S. seafood exports
to Japan. We urge U.S. trade officials to continue to negotiate
the favorable TPP provisions.
Trident, along with other U.S. seafood producers, were
looking forward to significant benefits from TPP, including
elimination of Japanese tariffs on some of the most abundant
U.S. resource and product forms. TPP tariff reductions would
have improved the U.S. industry's position in relation to non-
TPP-covered Russian products, and could have created important
new market opportunities.
U.S. and South Korea trade policy. U.S. seafood exports to
South Korea markets have increased by 20 percent since
implementation of the U.S.-Korea Free Trade Agreement.
Withdrawing from that agreement would erase positive gains
already achieved and prevent future negotiated gains from
coming into effect.
Before the free trade agreement, Alaska pollock was subject
to a 30 percent import tariff in South Korea. And this was a
critical barrier to entry, particularly with Russian pollock
imported into South Korea at virtually duty free level. Since
implementation of a tariff-reduced quota under the free trade
agreement, awareness and availability of Alaska pollock quickly
spread. The quota is now insufficient. We urge U.S. trade
negotiators to pursue a substantial increase in the quota for
Alaska pollock under the free trade agreement.
Regarding U.S.-Russia policy, American seafood producers
compete directly in Chinese, Japanese, and South Korean
markets, as well as the U.S. As stated in my written testimony,
we really urge equity access to that market. In closing, I am
grateful for the opportunity to share Trident's input, and
applaud you for your efforts to examine opportunities and
challenges related to Asia-Pacific trade policy.
[The prepared statement of Ms. Moreland follows:]
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Chairman REICHERT. Thank you. Mr. Paul.
STATEMENT OF SCOTT PAUL, PRESIDENT, ALLIANCE FOR AMERICAN
MANUFACTURING
Mr. PAUL. Thank you, Chairman Reichert, Ranking Member
Pascrell, and members of the subcommittee for the opportunity
to testify on behalf of the Alliance for American
Manufacturing.
It is an honor to appear before you as we look to expand
trade relationships in the Asia-Pacific region. I believe it is
vital to the success of U.S. companies and American workers
that we concurrently seek to adopt policies that strengthen
U.S. competitiveness, open foreign markets, and counteract
massively lopsided trade deficits with China and other nations.
You have copies of my written testimony with detailed data
and recommendations. I will briefly summarize a few of the key
points here.
It is impossible to talk about trade in the Asia-Pacific
region without coming to terms with massive trade imbalances.
Since Beijing's 2001 entry into the WTO, the U.S. bilateral
trade deficit with China has more than quadrupled. Our global
market share in manufactured exports over that same period have
shrunk from 14 percent in 2000 down to 9 percent in 2013.
Authoritative research performed by MIT economist David Autor
and other colleagues estimates net losses of up to 2.4 million
jobs from rising Chinese imports into the United States from
1999 to 2011.
The challenges are not limited to China. The U.S.-Korea
Free Trade Agreement was predicted to increase exports of
American goods by up to $11 billion, yet the U.S. trade deficit
with South Korea actually has more than doubled between 2011
and 2015, displacing up to 95,000 jobs. The agreement hasn't
opened new markets for U.S. automobiles and for some other
products. And it should stand for some reconsideration or
renegotiation.
When President Trump gave perhaps the most detailed speech
on trade policy, which was last year on the campaign trail in
Monessen, Pennsylvania, he endorsed a philosophy of reciprocity
and rebalancing and promised to pursue many trade policy
reforms that some members of this subcommittee have been
steadfastly calling for.
In May, we applauded the Trump administration for
prioritizing the elimination of significant trade deficits
through an executive order. Yet after nearly 10 months in
office, the administration's words have resulted in either
inaction or confusion as to the path forward. We believe it is
time for clarity as well as for action. Here are a few of our
recommendations.
First, we have urged the administration to accelerate the
work of the G-20 Global Forum on Steel Excess Capacity and to
press for verifiable and enforceable net reductions in global
overcapacity, including that of China and other Asian nations.
Second, China is and should continue to be treated as a
nonmarket economy, as it fails to meet any of the six criteria
laid out in our trade laws for market economy status.
Third, it is critical that the government provide support
when foreign interests steal trade secrets to manufacture
products abroad and send them to the United States. We are
deeply concerned that section 337 has proven to be an
ineffective remedy for U.S. manufacturing companies injured by
cyber theft, transshipments, and duty evasion. If the statute
does not work as it was intended, Congress needs to modernize
it.
Fourth, we urge passage of legislation to treat foreign
currency manipulation as a subsidy under trade remedy laws, and
we support the inclusion of strong enforceable rules in all
trade agreements to deter and penalize currency manipulation.
We will also be closely watching as the administration prepares
to release yet another semiannual report on international
economic and exchange rate policies due in 4 days.
Finally, I want to focus your attention, as Mr. Pascrell
has, on the pending section 232 steel investigation, on the
impact of imports on U.S. national security. In April,
President Trump directed the Department of Commerce to complete
the self-initiated investigation under an expedited timeline by
July 1st. That date has come and gone. More recently, the
President and the Secretary of Commerce said they intend to
complete tax reform before focusing on the section 232
investigation. It is difficult to understand how one issue has
anything to do with the other, and America's workers deserve a
better explanation.
Steel workers are suffering. Since the investigations were
announced, as Mr. Pascrell noted, steel imports have soared 21
percent as foreign countries have rushed product into the U.S.
market in anticipation of promised action. And we recently
received news that several steel mills in Pennsylvania are
reducing operations, including one that produces armor plate
for the U.S. military, and played an active and important role
in supporting the production of armored vehicles to protect our
servicemen and women from IED attacks in Iraq and Afghanistan.
Domestic production of steel and aluminum are vital in the
manufacture of America's military and critical infrastructure.
If domestic manufacturing capabilities deteriorate further, we
may be forced to rely on countries like China and Russia to
supply steel for our military and critical infrastructure
needs. We cannot let that happen, and it is time to complete
the section 232 investigation and take decisive action to
safeguard America's economic welfare and national security.
Thanks for the opportunity to testify today. I look forward
to your questions.
[The prepared statement of Mr. Paul follows:]
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Chairman REICHERT. Thank you, Mr. Paul. I would like to
begin the questioning with Ms. Moreland. Naturally, I would be
a little bit interested in Trident's success in the Asia-
Pacific. You mentioned that the U.S.-Korea Free Trade Agreement
reduced the tariff by 23 percent I think was in your testimony.
If you could be more explicit on how the Korea Free Trade
Agreement has made a difference in Trident's ability to export
to Korea. And would Trident's competitors have an advantage if
KORUS wasn't in place?
Ms. MORELAND. Mr. Chairman, the free trade agreement
created a tariff-reduced quota for some of the most abundant
products that we have, specifically Alaska pollock. That
fishery has been able to harvest 1.3 million metric tons
annually in recent years. It is an abundant resource.
Russians also harvest an Alaska pollock species, the same
species, and have long relationships with Korea. Product
harvested on the Russian side of the border by Russian
companies that work bilaterally with Korean companies are able
to bring that fish into the market with no tariff.
Chairman REICHERT. Now when you say work bilaterally, what
do you mean? What is the advantage that Russia has there?
Ms. MORELAND. There has been both joint venture as well as
quota allocations to Korean companies of the Russian resource.
And that fish brought into the South Korean market is able to
enter duty free. We have achieved a reduced tariff quota. That
quota level is quite low. There is interest by many of our
customers to grow their relationship and dependence on U.S.-
produced Alaska pollock. We would like an opportunity to do
that.
Chairman REICHERT. Thank you. Ambassador, your testimony
made clear that Visa and other electronic payment services, EPS
providers, face unwarranted barriers to prevent you from doing
business in Vietnam. If the opportunity arose to negotiate a
bilateral FTA with Vietnam, do you think we could build on the
work done with TPP negotiations to open the EPS market? And
secondly, how can we address that issue in other Asia-Pacific
markets?
Mr. MARANTIS. Thank you, Chairman Reichert. And thank you
very much for your support and for the letter that you have
circulated on the Vietnam issue. It is a real challenge for us.
I mean on the one hand, there is a huge opportunity in markets
like Vietnam. I mentioned in my testimony that there is a $6
trillion opportunity to move from cash and checks to digital
form of payments.
And Vietnam is a huge market. They have embraced a market
opening philosophy on most everything except on this one
particular issue, where we continue to face a severe level
playing field issue, where the government action is really
tilting the playing field in favor of a domestic competitor and
is driving U.S. payments companies essentially out of the
market. We have an opportunity over the course of the next
month, before President Trump travels to Vietnam, to resolve
that issue. And working together with you and the
administration, we are hopeful we can get there.
TPP had a provision on electronic payment services, which
was a very useful provision, and would have helped us to
address this issue in Vietnam. We don't have that now, so we
are open to exploring every possible tool we can use to solve
this problem. And the President's upcoming trip is one of them.
You also asked about other challenges we face. Korea is
another one, where government action is essentially favoring
local brands over international brands. So what happens in
Korea is the government basically says you, bank, if you are
going to issue a card, you have to make sure that the local
brand has the exact same products and services as the
international brand. And oh, by the way, offer that at lower
cost. So as a result of that action, our market position in
Korea has deteriorated significantly over the course of the
past 10 years.
Chairman REICHERT. Great. I appreciate your answers. Thank
you. Mr. Pascrell.
Mr. PASCRELL. Thank you very much, Mr. Chairman. Mr. Paul,
the question of trade deficits is a fascinating subject area I
think. We seem not to have a handle on it in any of the deals
that we are talking about.
The United States has lost five million manufacturing jobs
in the last 16 years. So there seems to be a strong correlation
between China entering the WTO in 2001 and establishing
permanent, normalized trade relationships in 1998, and the
acceleration of low-cost China imports into our market. Look at
those three things.
So I think you mentioned or referred to our largest trading
partner is China, $578 billion in trade between our countries,
and a trade deficit of $347 billion. Economist Robert Scott
found in 2015 in the Economic Policy Institute report, growing
trade deficits in manufacturing goods led to the loss of 3.6
million manufacturing jobs from 2000 to 2007, prior to our
Great Recession. He found that it is not just increasing
productivity or automation driving the job losses.
The Information Technology Innovation Foundation similarly
attributes significant job losses to trade pressures, and not
primarily to automation or to immigration. Anyway, so my
question is to you, Mr. Paul, you mention in your testimony, a
couple times, that the trade deficit with China since its entry
into the WTO has quadrupled, from $83 billion to $347 billion,
a number I referred to before. How would you reduce the trade
deficit with China? And how would it impact U.S. GDP?
Mr. PAUL. Mr. Pascrell, thank you for the question. It is a
question that I think the past couple of administrations have
struggled with.
First, I think we have to look at the terms under which
China entered into the WTO. And by all accounts, they were
extraordinarily favorable to China. And the commitments that
China made to market reform, to adhere to international trade
standards, have been widely ignored. It has led the current
U.S. Trade Ambassador Bob Lighthizer to say that the types of
challenges that China presents cannot be well addressed through
normal WTO mechanisms, they are so broad in scope. We hear the
central planning.
With respect to the steel industry, the largest steel
companies in China are run by the government. There is
systematic violation of intellectual property rights. And there
is, you know, the annual list of trade barriers that the U.S.
Trade Representative puts together is the stick. Mr. Marantis
and the Obama administration, the current USTR, could spend all
day filing cases against China. There are plenty of them to be
filed.
I think the challenge is that this is going to take greater
leadership and is going to take a priority from this
administration to seek that kind of deficit reduction. You
know, we have seen very specific commercial deals that have
been beneficial or could be beneficial to narrow aspects of
American industry. But to get an economy-wide effect, and one
that is going to have a significant impact on reducing the
trade deficit, is going to require China to purchase more U.S.
products and is going to have to reduce China's industrial
overcapacity, which is present not only in the steel and
aluminum industries, but also in semiconductors and other
advanced technology products, in clean energy products, and in
other types of manufactured goods. And it is going to take a
serious negotiation, one that we haven't yet seen so far.
Mr. PASCRELL. Well, we are relying on China to do our
bidding, help us in our bidding in terms of the North Korean
crisis. If you remember the commitments that were made about
trade with China, we forgot them as soon as we asked China to
do its job, live up to its responsibilities. That has not
happened. They may have tried, but it hasn't happened.
We need to take very careful--I just leave this question in
the air right now. Should we use trade as a bargaining chip in
terms of international relations, particularly in times of
conflict, as exists right now? We will come back to that maybe.
Thank you very much.
Chairman REICHERT. Thank you. The gentleman's time has
expired. Ms. Jenkins.
Ms. JENKINS. Thank you, Mr. Chairman. And I thank the panel
for joining us today. All across my district there are rural
families who either own or work in small businesses and ag
operations that are substantially dependent on exporting their
products that they produce, raise, or grow. Kansas is called
the Wheat State for good reason, but we also have much more.
Soybeans and corn fields also dot our landscape, and our
expansive grasslands provides some of the best pastures and
ranges in the world to produce the highest quality beef.
Therefore, successful trade agreements to ship out and add
value to their products are one of the top priorities expressed
by my constituents in conversations.
For Kansas wheat growers, new trade deals in Vietnam, the
Philippines, and Indonesia would be ideal. For cattle
producers, Ms. Sullivan, spoke a moment ago about China and
Japan. It is clear that the barriers to access these markets
have detrimental aspects to so many families across Kansas and
the Nation.
So Ms. Sullivan, to you, with regards to the U.S.-Korean
trade agreement, or KORUS, can you give us a sense of the
challenges that farmers and ranchers would face today in
accessing the South Korean market if KORUS and the recent gains
made in the region were nonexistent?
Ms. SULLIVAN. Ms. Jenkins, thank you for the question.
Again, as I mentioned in my testimony, I personally visited
Korea and Japan, both, in May. And it was really refreshing, as
a producer, and that is where I derive my entire livelihood, to
see the demand for the product that I and your constituents
produce. So what would be troubling to me as a producer is,
quite frankly, from any of the barriers where a tariff is
concerned.
Right now we enjoy an 8 percent or so tariff within KORUS.
And what would happen with the elimination, it would jeopardize
all of that, and in fact increase our tariff to 40 percent. I
mentioned earlier that we saw a tariff increase in Japan take
place from 38.5 to 50 percent. If we were to see that, it would
significantly--I mean just logic tells you what happens if
families, Korean families are threatened with increased costs,
they are going to find alternatives. And what we have been able
to do as producers is actually build such a strong demand for
our product just recently.
I will give you a case in point when I was there. Costco
has a huge presence in Korea, and have recently converted all
of their beef from Australian beef to U.S. beef. And I visited
a Costco, the largest in the country, in one of the suburbs of
Seoul, and I watched as consumers stood six, seven deep at the
meat case, buying up U.S. beef. And they have to refill their
meat case six times a day. So it is a tremendous market for us.
And we enjoy that because of KORUS being in place. If KORUS
were to go away, it really frightens me to think about what
could happen. And again, these are items that as U.S. citizens
we don't consume. They have a demand for items, for cuts that
we do not utilize in the American diet. And that automatically
reduces that economic value of those cuts tremendously, and
basically brings it to nil.
So that is one of the most frightening parts about those
trade agreements going away or any adjustment being made, is
that actually we will see that market disappear. And it would
significantly impact all of our American ranchers.
Ms. JENKINS. Thank you. Helpful information. Mr. Chairman,
I will yield back.
Chairman REICHERT. Mr. Kind.
Mr. KIND. Thank you, Mr. Chairman. I want to thank the
witnesses for your testimony today. Mr. Chairman, hopefully we
can tee up some more hearings like this to explore U.S. trade
policy and where we go from here.
Just for the whole panel, out of curiosity, do any of you
think that now is an appropriate time for us to be withdrawing
from the South Korea trade agreement? I would like the record
to reflect no hands are up. What about this being the
appropriate time for us to be withdrawing from NAFTA trade
agreement? Again, no hands are raised.
Does anyone on the panel believe that it was appropriate or
wise for us to unilaterally withdraw from the Trans-Pacific
Partnership agreement without further consideration of those
terms in the agreement? Mr. Paul, you want to be recognized.
Yeah, go ahead.
Mr. PAUL. Yeah. I would just say from a manufacturing
perspective, it was lacking. There were no enforceable currency
disciplines. It was projected to increase the manufactured
goods trade deficit. That was the Peterson Institute as well as
an ITC estimate, and to lose manufacturing jobs. As it stood, I
didn't think it was a well negotiated agreement.
Mr. KIND. I appreciate that. With the chairman's
leadership, he and I both submitted a bipartisan letter that we
worked on that we sent to the administration, saying that it
would be a terrible idea for us to be withdrawing from South
Korea, although there are certainly areas of improving that
agreement.
And many of us are quite concerned about the loss of market
down in Mexico in particular if we were to withdraw from NAFTA
at this time. But what is frustrating is the whole perception
of trade right now. It is more than just goods and products
crossing borders. But I believe that when that does happen,
armies don't. It is an important tool in our diplomatic and
national security arsenal.
And when we vacate that space, I think bad things happen
for our country and, quite frankly, for the entire global
trading regime. I mean since our withdrawal from TPP, for
instance, the EU now has stepped up their negotiations with
Mexico, with Indonesia, Japan, has made overtures to Australia
and New Zealand. The EU has concluded FTAs with Vietnam and
Canada.
They have established geographic indicator standards now,
which may be tough for us to try to go back and revise, which
will be detrimental to our agriculture producers. This is what
is happening. The rest of the world is moving on without us.
And we have created a vacuum. And Mr. Goodman, you have pointed
out that China is more than happy to step in with the Regional
Comprehensive Economic Partnership.
In fact, during the whole course of TPP negotiations, China
negotiators were following on our heels telling these same
countries we were talking to, don't listen to those crazy
Americans. They are asking too much of you. Environmental
standards, labor standards, human rights standards, they are
crazy. Come to us, because we don't care about any of that.
How withdrawing from that right now puts us in a stronger
position, especially in the fastest growing economic region in
the world today, the Pacific rim area, I fail to comprehend or
understand. So working with all of you, we have obviously got a
stake in the whole trade, we are trying to figure out a way how
to get back in the game again. And it is difficult when you
have a current President and the administration threatening to
withdraw from a lot of crucial trade agreements now, but
without any real clear objective or end goal with any of this.
And it is very, very frustrating, but also a very dangerous
game that is being played. Because the more that we recede and
pull back in isolationism, I think the world is in a worse
place then. And there is more at stake than what we are----
Mr. Paul, I appreciate your concerns about manufacturing,
the impact TPP might have. But right now we only have 20 trade
agreements with nations around the globe. There are 198 of
them. And of those 20 countries, we are actually running a
trade surplus in manufacturing, in agriculture, in services.
And I said for some time that it is the countries that we don't
have a trade agreement with that gets us into trouble. That is
a race to the bottom, with no standards, no values, no rules to
enforce, no disciplines to enforce. It is just a race to the
bottom. And no one should be happy with that.
But we live in a very dangerous climate right now. And
there is economic anxiety at home, because the easiest
political card to play is blame the foreigners, blame the
immigrants, blame trade agreements, and somehow all of that is
going to solve the problems that we face. And that is going to
be a problem as we move forward too.
Mr. Marantis, we will continue trying to work and trying to
resolve the electronic payment issue. I know the chairman and I
have teamed up, and others, to try to resolve that with
Vietnam. I am afraid we have given up tremendous leverage by
withdrawing from TPP. But as you pointed out, it is not just
Vietnam, it is China, it is South Korea, it is other nations
too now trying to establish their de facto monopolies.
So leading up to the Vietnam meeting, I would be happy to
continue to work with you and all of you on the panel as far as
what more we need to be doing with the administration to make
sure we are at the table and we are ultimately getting a fair
shake on all that.
So I guess that was more of a statement than a question,
but I appreciate your testimony here today, and look forward to
working with you in the future.
Thank you, Mr. Chairman.
Chairman REICHERT. Thank you, Mr. Kind.
Mr. Paulsen.
Mr. PAULSEN. Thank you, Mr. Chairman. Let me also just
thank all of our witnesses for being here today.
And it is a given that our trade agreements need to
eliminate tariffs faced by our exports. Equally important,
though, as many of you have mentioned, is the need to negotiate
the right rules. And in the modern economy today it is critical
that we address issues like restrictions on data flows and data
server, localization requirements that so many governments have
used to limit the availability of our companies to do business,
ability of our companies to do business.
And Ambassador Marantis, just to follow up a little bit,
you talked about Korea, Vietnam a little bit. Can you elaborate
a little bit more for Visa or for other electronic payment
service providers on the importance of limiting those barriers?
I mean, just elaborate just a little bit more.
Mr. MARANTIS. Sure. I mean, you point to some very real
challenges we are facing in the region, including data
onshoring requirements. But I think as the committee thinks
about agreements and being modernized, for us, from the
electronic payment services perspective, I think three
provisions are key.
Market access, obviously, is important. Because you can't
have anything else without getting into a market. But, second,
and equally as important, is national treatment. We are facing
significant level-playing-field challenges where governments
are deciding to favor a local competitor over U.S. companies.
Vietnam is a great example, Indonesia, Korea. So national
treatment is very, very important.
And then, I think the third area, Mr. Paulsen, is what you
have identified, are some of the provisions that were in the
TPP electronic commerce chapter. The digital trade provisions,
are enormously relevant for us. Having free flow of data. We
can't offer our services without being able to do that. We are
seeing increased data localization requirements. So addressing
that issue will help a company like Visa be able to provide
their services on a cross-border basis and be as efficient as
possible. So I would point to those three as, at least for us,
the big three.
Mr. PAULSEN. And, of course, for those of us that are
watching the modernization discussions now on NAFTA, digital
trade didn't exist decades ago when it was first put together.
And so we want to make sure that a chapter on digital trade is
included that recognizes e-commerce and those challenges that
ag producers use, manufacturers use, minors use in today's
world.
I want to follow up, Mr. Goodman, I will start with you.
Yesterday I met with a company in Minnesota, and they are doing
a lot more exporting. But they identified a challenge they have
with regards to streamlining customs clearance. And they just
brought up an example. They got a product that is registered
for the first time in another country, and they don't think it
should be necessary to file additional product registrations
with that regulatory agency over and over.
Can you just talk about how important it is to have a
streamlined customs clearance process in place in the context
of trade agreements?
Mr. GOODMAN. It is enormously important. I don't have the
statistics off the top of my head, but it has a real impact on
actual trade flows, significant additional cost imposed at the
border from those procedures. And this is, again, an example of
something the TPP was trying to take on. There was a good
chapter on these procedures that helped to eliminate a lot of
those unnecessary regulations and to put disciplines on how you
could use custom procedures or not use it as a barrier to
trade, de facto to slow trade and leads to the bigger point
about--and I just want to echo your point--about digital and
what Demetrios said as well.
You know, this was something that I would say almost more
than any other chapter was absolutely critical part of TPP, the
digital economy chapter. The Obama administration, at the end
of the administration, created a list of what they called the
digital two dozen, of two dozen of the commitments that were
made that, you know, a person like me who is not an expert in
digital, an ordinary citizen could look at the list, see no
duties on digital trade, free and open internet, free data
flows, no localization requirements, a simple list which you
understand.
The U.S. has a huge stake in ensuring that these rules are
the ones that govern international digital commerce. And if we
are not going to do it in TPP, we need to find a way back to
that leadership on those issues. And I would say if we can do
that in NAFTA, if we can put a digital chapter equivalent or
similar to the TPP chapter, I think that would be great.
Same thing on the customs procedures. I think those are the
kinds of things that there is an opportunity with renegotiating
NAFTA to try to import--some people call it the organ
transplant strategy, which is to take the best parts of TPP and
transplant them into NAFTA. That would be encouraging. Locking
away or putting on onerous, unrealistic burdens that Canada and
Mexico are not going to agree to, I think, would be a real
mistake.
Mr. PAULSEN. Thank you, Mr. Chairman. I yield back.
Chairman REICHERT. Mr. Doggett.
Mr. DOGGETT. Thank you, very much, Mr. Chairman. I commend
you on conducting a hearing. It is something we have not had in
the tax policy subcommittee or in the full committee concerning
the Republican tax bill, which, as Mr. Paul indicated, is
apparently going to be coming up here before some trade matters
are.
Indeed, we have been here for the entire month of
September. We will have soon, with next week's recess, have
gone through half of October, and not one expert, not one
business with the varying impact on business, has appeared
before any subcommittee or the full committee to talk about
taxes or the impact of the Republican tax plan on business.
It would appear that the approach will be the same jack-in-
the-box approach that was used in the failed attempt to destroy
healthcare coverage for millions, and that is to pop out a bill
without ever having a thorough public discussion of its impact
on the American economy and the American taxpayer.
But, having an appreciation for the fact that we are having
a hearing today does require some consideration of what the
hearing is on. And, with all due respect to the chairman and
the witnesses, this seems to me to be the wrong hearing at the
wrong time. Yesterday, President Trump said that NAFTA--and I
quote, NAFTA will have to be terminated if we are going to make
it good. Otherwise, I believe you can't negotiate a good deal.
While our trade relationship with Vietnam, and Korea, and the
various countries in Asia, is important, we just had the prime
minister of Canada, Mr. Trudeau, remind us that America sells
more goods to Canada than it does to China, Japan, and the
United Kingdom combined. And Morning Trade is quoting one
business representative as saying this is absolutely headed for
a disaster. This is an absolute crisis.
The New York Times is reporting, while we have been
meeting, about the far-reaching consequences for the economy
for so many businesses and the disruption of supply chains if
President Trump proceeds to terminate NAFTA, which he is
empowered to do.
It is particularly surprising that we would be having this
hearing about Asia while Mexico and Canada and our trade with
them and so much is at stake. But whether it is Asia or NAFTA,
we have no one here from the administration who is been asked
to come and explain the administration trade policy. That may
be because the administration can't seem to agree on its trade
policy any more than it can agree with fellow Republicans about
its foreign policy, as Senator Corker has acknowledged.
It would seem to me that the importance of having the
administration come here on NAFTA is emphasized by the fact
that when NAFTA was first approved, we had 8 days of hearings
on it. We had 8 appearances by administration officials to
explain the administration position. And I think it is very
important that the administration be summoned here to explain
its trade policy, whether it is Asia or perhaps much more
important what it is doing with reference to NAFTA and what the
consequences of terminating NAFTA will be on one sector of our
economy after another and how many job losses will result from
it.
I very much favor reform of NAFTA. There are many things
that need to be changed in it after two decades. But the idea
of terminating or repealing it will have far-reaching
consequences in Texas, and it will have far-reaching
consequences across our country.
I think that for the subcommittee and for our full
committee to not summon the administration officials here to
explain their position on NAFTA and on other aspects of our
trade policy really just empowers President Trump to make this
very significant blow against NAFTA.
Mr. RICE. Would the gentleman yield?
Mr. DOGGETT. On your time.
Ms. Moreland, let me ask you. What effect will terminating
NAFTA have on your business?
Is it good or bad?
Ms. MORELAND. Thank you for the question.
With respect to NAFTA, it is an area--it is an agreement
that would least impact us depending on the extent of change or
reach.
Mr. DOGGETT. Thank you.
Ms. Sullivan, how does it affect your business?
Ms. SULLIVAN. Mr. Doggett, it is deeply concerning for our
industry, for the beef industry. It would have a significant
impact. I believe that--and I am speaking as a producer.
Mr. DOGGETT. Sure.
Ms. SULLIVAN. So it is my personal opinion alone. I think
that there are some items, as you had mentioned, that are worth
readdressing. But for the beef industry it would have a
significant impact.
Mr. DOGGETT. Thank you. And I will be glad to yield on your
time.
Chairman REICHERT. The gentleman's time has expired.
Mrs. NOEM. Thank you, Mr. Chairman.
And I would like to reiterate that all of our recent
conversations with the administration, with all the members on
this committee, with the U.S. Trade Representative, indicate
that we are modernizing NAFTA, that we are not eliminating
NAFTA. Nobody is talking about throwing it out, that the
discussions have been on what can we improve while we continue
to negotiate on other bilateral trade agreements.
And so I want to thank all of ours witnesses for being here
today. I know it is never easy to take this much time away from
your businesses and your schedules are tight. And so I do
appreciate you being willing to come.
Ms. Sullivan, I related to you because I am from South
Dakota, and I spent decades raising cattle in a commercial cow/
calf operation and then we backgrounded them, as well, for the
market. So I appreciated your testimony today. And I also
recognize the concern that you showed on tariffs, because we
also were crop farmers as well. And so we were in several
different areas of caring about making sure that we could
export our food and make sure we not only take care of this
country's food supply but we feed many, many other people as
well. So thank you for being here.
In fact, beef production is so important in our State of
South Dakota that there is actually more cattle than there are
people. So it is incredibly important to our economy and to our
State. And so I thank you for making those comments.
I did want to ask you, one of the concerns that I have had,
is while we revisit current trade agreements such as NAFTA, we
are going back and looking at South Korea, that we could lose
market access. We are seeing that now as Australian beef is
flowing into Japan. And they do have a trade agreement there,
and it is sucking up more market access. And so we not only
have the tariffs that impact that, but this lost market share
that we are having, as well, because we are banned from the
country.
So I was wondering if you had a perspective on that as to
impact on the industry that you have seen as well on market
access and the concerns you may have if we don't aggressively
pursue these bilateral agreements while we are renegotiating
important agreements like NAFTA?
Ms. SULLIVAN. Ms. Noem, thank you. I appreciate the
question. You know, from my perspective, it is hard to find
more free market capitalists than agriculture producers.
Mrs. NOEM. Yeah.
Ms. SULLIVAN. And what we do is we produce a product that
needs to be consumed. I mean, we like to say that agriculture
produces the food and fiber that feeds the world. And that is
what we do.
We need access to those markets and without barriers.
Because, without question, we produce the safest, most
consistent, nutrient-dense form of protein, in our opinion--
although I do love seafood. I am from the coast, believe it or
not. But we do. In the world.
And all we need is access. And that is what we seek more
than anything. Because, again, we are family farmers. Everyone
likes to talk about corporate farms this. Well, that is not the
case. Families are producing these animals that are feeding
everyone. Families are producing those crops.
I am actually originally from Galveston, Texas. And we have
the Port of Galveston, which is a primarily agriculture export
facility there along the Gulf Coast of Texas. And so we have a
lot of your grain from South Dakota that has gone out of the
Port of Galveston. Our economies, my local economy in my
hometown, exists because of exports.
So the trickle-down effect, if you will, of market access
is tremendous where the U.S. economy is concerned. Again, this
is my personal opinion. I have a lot of them. So I am willing
to share them, if only asked. But having access is so
critically important because we can provide what the world
needs to feed and clothe all of our neighbors. We just need the
ability to get that product there without barriers.
Mrs. NOEM. That is great. And that is exactly the
discussion that I had last week with the U.S. Trade Ambassador
Lighthizer was the fact that we appreciate that you are
modernizing these agreements. We appreciate that you are fixing
different issues that have been in there. He indicated that he
felt agriculture usually comes out pretty well in agreements.
And, you know, I said that we have at times, but then we face
regulatory barriers once our grain and beef hits the border of
that country as well. And so we need to pay attention that we
don't get shut out of those markets by regulatory actions that
may happen from those foreign governments.
But he indicated that he understood the value of
agriculture. But, also, what I drove home to him was the speed
that he needs to use to negotiate these bilateral agreements.
Because every single day other countries are looking to fill
those markets, and we can do it better than anybody else. So
thank you for being here today.
With that, I yield back.
Chairman REICHERT. Mr. Levin.
Mr. LEVIN. Thank you, and welcome. I am glad you are here.
Let me just say a few words if we are talking about Asia
and the Korean free-trade agreement.
Mr. Goodman, as I read your testimony, I had these
recollections and feelings. I was one who helped to negotiate
the Korea free trade agreement. We attempted to strengthen it,
and, at times, the administration, we had to renegotiate it or
redo it. The Obama administration was willing to settle for
something less than some of us, both in the labor movement and
the auto industry, myself, thought essential. So they returned,
the Obama negotiators, to try to strengthen the agreement. The
problem is in some respects it was strengthened. It was far
from perfect. And I think the rule of origin was defective.
But if you look at what has happened since then in the
industrial sector, it is woeful. And those of you who support
expanded trade need to help focus on the problems we have in
making agreements real. Because otherwise the public, and I
think rightfully, thinks that we are putting together something
that may look okay on paper but in terms of their real lives is
truly defective.
And one of the auto companies invested a lot in trying to
help put together the agreement. And they invested a
considerable amount in establishing places, auto dealers in
Korea, to try to break through. It has been frightfully
difficult.
So those of you who are in the agricultural business who
want to point to where there has been a breakthrough, also, I
think, need to look at other areas where there has been a stone
wall. Because, otherwise, any plea to negotiate further trade
agreement really hits a wall with good parts of the public.
The same is true, really, of currency. You know, some of us
have tried endlessly to get past administrations to step up to
the plate on currency. They never really have. And so now you
have--not China. It isn't manipulating its currency. But it did
frightfully. And we let it happen, and it lost millions of
jobs.
Korea has been manipulating their currency. And there is no
outcry. And I meet with businesspeople in Korea who are part of
the U.S.-Korea business roundtable or entity, and they just
pull back. So what was missing, I think, in this testimony, was
a sense of urgency.
And so let me also say something about NAFTA since we are
talking about Asia. Mexico has this industrial policy, and we
have had no hearings on it, which essentially attract industry
from the United States to go to Mexico, keeping wages
frightfully low, a dollar, a dollar and a quarter an hour. And
it is not only true of automotive where there have been
movement of plants to Mexico, but I was reading about the
washing machine industry. And the two large Korean producers
have now moved increasingly their production to Mexico.
And I asked someone in Mexico to check. And they are paying
a dollar and a quarter an hour to their workers. And the
American company, Whirlpool, that pays a decent wage, is now in
danger of losing its production capacity because of a failure
to have an honest discussion, here and elsewhere, about the key
problem with the original NAFTA agreement.
So I just want to finish my 6 seconds to urge that
everybody who thinks expanded trade can work needs to help out
pointing to areas where it isn't working. Otherwise, you won't
have credibility.
Chairman REICHERT. Thank you.
Mr. Holding.
Mr. HOLDING. Thank you, Mr. Chairman.
The Investor-State dispute system has been in the news
lately, and we have all seen that. I have always considered
ISDS as an important part of our trade agreement that helps
ensure that U.S. companies have a meaningful remedy if they are
treated unfairly by a foreign government. That is why, during
the TPP negotiations, I was adamant that no sector or part of
the economy should be carved out of ISDS.
So I am going to address this to the panel if any of you-
all can elaborate the importance of ISDS in your sector or
things that you have seen with ISDS that are important and
relevant that you might want to bring forward.
And, Mr. Goodman, do you want to start? And we will just go
down the line.
Mr. GOODMAN. Well, the Investor-Dispute settlement
provisions are obviously one of the most controversial in these
new agreements. And there is--you know, I mean--I think there
is a legitimate argument about what the best way is to protect
investors. But these provisions were set up really with our
investors' challenges in challenging markets. Not so much the
ones--the advanced markets that we are dealing with in--you
know, some of the bigger economies in Asia. But for countries
where our investors are subject to arbitrary and unreasonable
treatment of our investors, they are important mechanisms that
allow our investors to get their rights enforced. And, so far,
there have been no cases in which the United States has been
subject to a finding that was, you know, adverse to us. So I
think it has been shown to be helpful to our interests.
But it is certainly something that has been a subject of a
lot of scrutiny. And I think, frankly, as an analyst, I think
there is a set of discussions that need to be had about the
best way to do this investor protection and future agreements.
Mr. HOLDING. Sure.
Ms. Sullivan, in your sector of the economy have you had
any dealings with the ISDS?
Ms. SULLIVAN. It is not really something that we have
confronted just on that regard. It was more than anything the
tariffs in particular. But as far as just the investor
protection mechanisms, it wasn't necessarily a threat that we
were really--discussed as a real--something that really put us
in jeopardy very much.
Mr. HOLDING. Good.
Mr. Marantis.
Mr. MARANTIS. Strong investor protections are extremely
helpful. Let me give you a live example. We own our entity in
Indonesia. We have been told by the bank of Indonesia that if
you want to continue to process domestic payments in Indonesia,
you will have to divest--we will have to divest 80 percent of
our ownership to a domestic Indonesian entity. So we don't have
an investment treaty with Indonesia, but that is an example of
a situation where strong investment protections could help.
Mr. HOLDING. So let's just explore the situation that you
are facing there a little bit. What recourse do you have
without ISDS? Where are you turning to, the Indonesian courts?
Mr. MARANTIS. We have been working very closely with the
U.S. Embassy in Indonesia which has been enormously helpful. We
have raised the issue with the foreign business community in
Indonesia. We are actually starting to make some headway, but
we don't have a specific trade tool to rely on other than the
trade and investment framework agreement, that we have with
Indonesia, which provides for bilateral dialogue between the
two countries.
Mr. HOLDING. So if the advocacy section of the embassy
isn't able to make any headway on the diplomatic front and you
ultimately had to go to Indonesian courts to try to protect
your interests there, what are your lawyers telling you, if you
would like to divulge, as to your chances in Indonesian courts?
Mr. MARANTIS. Sir, I am not sure. I don't know Indonesian
law well enough, but I can look into that and get back to you.
Mr. HOLDING. All right. Ms. Moreland.
Ms. MORELAND. Of course dispute resolution is something of
great interest anywhere that we have investments in ensuring
that there is a structure to be able to support any elevated
dispute resolution would be important to us, but it is nothing
that is an immediate threat.
Mr. HOLDING. Thank you. Mr. Chairman, I yield back.
Chairman REICHERT. Thank you.
Mr. Davis.
Mr. DAVIS. Thank you, Mr. Chairman.
We keep hearing that looking at deficits is not necessarily
a good way to evaluate trade policy. Let me ask each one of
you, perhaps beginning with Mr. Goodman, what should we be
looking for in trade policy as benefits to this country,
especially job creation and income?
Mr. GOODMAN. I think it is legitimate to look at deficits
if we are doing that on a global, macro basis. It is the
question of whether it makes sense at a bilateral basis with
individual countries. Because some of that reflects just
patterns of supply chains and the way things are produced in
various markets, and then the last country to ship the product
to the U.S. gets credited for the full value of the export to
the U.S. So that can often look like--that will skew the
deficit for that country, or surplus for them and deficit for
us.
But if you look on a global basis, I think there is a real
issue, which is that our current account surplus, which is the
global position, overall, of our trade, is a--you know, is a
result of the way--is a combination of our savings and
investment, how we save and invest in our country. And,
frankly, we don't save enough to cover the investment we need.
And so that creates a fundamental problem.
And then there are practices in other countries and some
have been alluded to, like currency manipulation, which has
been a problem historically in a lot of other countries that
has skewed these overall deficits. And I think those are issues
that we should be legitimately looking at.
But, you know, the bottom line is that trade is not, you
know, zero sum. There are benefits that are not just measured
by a bilateral trade deficit, and we shouldn't be too focused
on that in my opinion.
Mr. DAVIS. Ms. Sullivan.
Ms. SULLIVAN. Yes, sir. In our industry, we have really
found that trade agreements actually have given more
predictability, if you will. We have been able to secure and
protect our market access better and without trade agreements
in place, it is not really holding our trading partners
accountable. It is defining how we actually work with our
trading partners. And so by having bilateral trade agreements
in place, it gives greater predictability, if you will, to our
industry. And I think that is something that makes it more
equitable as we move forward in trading, particularly beef, but
any agriculture products, as far as I am concerned.
Mr. DAVIS. Thank you.
Ambassador.
Mr. MARANTIS. Mr. Davis, that is a great question. I think,
from Visa's perspective, a really good proxy to measure the
success of our trade policy is, do we operate on a level
playing field? I think whether we are a payments company,
whether beef, whether seafood, manufacturing, U.S. companies
can compete and win wherever they are, but we need a level
playing field in order to be able to do that. And if we can use
our trade policy to push for a level playing field, so much the
better for all of us.
Mr. DAVIS. Ms. Moreland.
Ms. MORELAND. Thank you for the question.
We can't change the fact that U.S. consumers want to eat a
lot of shrimp. And they are eating shrimp that needs to be
imported. Similarly, with farmed Atlantic salmon, tilapia,
pangasius. So we just need market access elsewhere. We are
providing it to everybody else here.
Mr. DAVIS. Mr. Paul.
Mr. PAUL. I think it is a great question, and I do think
trade deficits are one important data point in measuring both
the competitiveness of an economy and also in identifying some
other barriers.
Exchange rates. I am glad that was mentioned, because I
think that is important. Also, countries that tend to run
higher surpluses either have very strong industrial policies or
very mercantilist practices without much regard for the
agreements that they signed. And it is helpful in identifying
where some of these barriers are. And, you know, sometimes
trade deficits decline because of really bad reasons like
recessions. And so you can't look at it in a vacuum.
But I am pleased that this administration is trying to take
a look at trade deficits. I don't know where they are going to
end up on this. But the trade deficit we have with China is not
a natural occurrence. It is something when you are trying to
marry a free-market economy like the United States with a
State-run economy like China that has an aggressive industrial
policy and historical currency manipulation, that is going to
be the end result. And it is important to note that that does
mean it displaces some production in the United States as a
result of import competition and impacts jobs in the United
States and job quality as well.
Mr. DAVIS. Thank you very much.
Thank you, Mr. Chairman.
Chairman REICHERT. Thank you, Mr. Davis.
Mr. Rice.
Mr. RICE. Thank you, Mr. Chairman.
First, I want to respond to what Mr. Doggett said earlier.
I am sorry he left. But, you know, it is alarming his
commentary that we haven't had any hearings on tax reform or on
NAFTA. But the only problem with that is, it is just not true.
We have had at least two full committee hearings in the last
few months on that. And I am not on the tax policy
subcommittee, but I am told the tax policy subcommittee has had
two hearings on tax reform as well.
With respect to NAFTA, I know that Secretary Ross has been
here in closed-door meetings at least twice, I think three
times, and once in front of the full committee. And the primary
topic of discussion was certainly trade policy and NAFTA in
particular.
And I know Mr. Lighthizer, Ambassador Lighthizer, has been
here at least once and the primary topic of discussion is on
NAFTA. So the plain fact is we have had hearings. We are having
hearings, and we will continue to have hearings.
Now, with respect to the Korean trade agreement and TPP,
you know, everybody here today has generally been decrying the
demise of TPP. But, again, the plain fact of that is that both
presidential candidates said it was a bad deal. Whether Donald
Trump got elected or Hillary Clinton got elected, TPP was going
nowhere. And the plain fact of it is the majority of the
Democratic caucus thought TPP was a bad deal. So to sit here
and complain about the fact it has gone away now is, you know,
crying over spilt milk. Both presidential candidates felt we
could get a better arrangement.
And so, you know, what I want is everybody on this panel,
with the exception of maybe one or two, agree that we need
trade agreements. And I think we certainly need some form of
the Trans-Pacific Partnership, but I also want to make sure
that our interests are protected.
With respect to this Korean trade agreement, Ms. Sullivan,
you were saying that there is a Korean tariff on U.S. beef of 9
percent and Japanese of 50 percent, correct?
And do we get any meat products from Korea?
Ms. SULLIVAN. Not that I am aware of.
Mr. RICE. Do we get any seafood from Korea, Ms. Moreland?
Ms. MORELAND. Not of significance.
Mr. RICE. I didn't hear your answer.
Ms. MORELAND. Not of significance relative to the other--
Mr. RICE. Is there any tariff on Korean seafood?
Ms. MORELAND. Coming into the U.S.?
Mr. RICE. Yes.
Ms. MORELAND. It would only be subject to up to maybe a
half of a percent, a set of fees.
Mr. RICE. Okay. And so you said you have a very small
reduced tariff quota. Correct?
Ms. MORELAND. Correct.
Mr. RICE. And so what is your reduced tariff with Korea.
Ms. MORELAND. For the product form that I am talking about,
Alaska pollock, heading got a particular category, 6,000 metric
tons.
Mr. RICE. And what is the tariff on that reduced quota.
Ms. MORELAND. I have to look at my notes.
Mr. RICE. Okay. And what is the tariff when you get passed
the reduced quota?
Ms. MORELAND. Thirty percent is what we----
Mr. RICE. Thirty percent.
And there is maybe a half percent on their seafood coming
in here, correct?
Ms. MORELAND. Correct.
Mr. RICE. And yet we are running a trade deficit, I think,
of like $17 billion a year with South Korea. And you are paying
a, what is it, 9 percent tariff.
Ms. SULLIVAN. Eight.
Mr. RICE. And I suspect there are meat products coming from
South Korea, and I suspect that their tariff, if there is any,
is minimal. So, you know, we have a very large market that they
want access to like you want access to their market.
And, you know, I don't want to do anything to unduly
disrupt this arrangement and these trade agreements, but it is
pretty obvious to me that we can do better than this. And I
personally am glad that the Secretary and Ambassador Lighthizer
are going to look at this and try to make sure that the
American worker gets a fair shake here.
As you, Mr. Paul, pointed out. We have had 2.4 million jobs
lost in manufacturing. Mr. Pascrell said the number was 5
million jobs. I think we can do a little bit better than that.
I think we gotta make this country competitive. We need to look
at tax reform as an aspect. Do you agree tax reform can make
this country more competitive, Mr. Paul?
Mr. PAUL. If it is done in the right way.
Mr. RICE. Do you think that it could restore American jobs.
Mr. PAUL. Again, I think a lot depends on the product which
we have yet to see.
Mr. RICE. Do you think lowering the corporate tax rate will
help make American corporations more competitive worldwide.
Mr. PAUL. Certainly having a competitive Tax Code that
recognizes that we are in a global economy----
Mr. RICE. So tax reform, trade reform, we need to look at
all these things, and we need to give the American worker a
fair shake. My time is up. I yield.
Chairman REICHERT. Thank you, Mr. Rice.
Mr. Smith, follow that.
Mr. SMITH. I will try. Thank you, Mr. Chairman. Thank you
to our panel.
Ms. Noem kind of got to some of the topics that I wanted
to. But I might ask for you to further elaborate.
The 50 percent tariff that Japan levees on U.S. beef,
ridiculous. It was bad even before it reached the 50 percent.
And there were plenty of reasons to engage in a bilateral trade
agreement. That would carry out some of what TPP may have
accomplished with Japan. But a bilateral trade agreement, that
I think there could be strong support for, would give us the
opportunity to achieve so many of the same things with a major
economy. I don't have to tell you that, obviously, with--and
that is just beef.
And so I am hoping that we can continue to head in that
direction. A lot of things happening right now with trade. But
we cannot be distracted from getting this done.
Ms. Sullivan, can you speak perhaps more specifically in
how beef trade could be enhanced through a bilateral trade
agreement with Japan, more specific?
Ms. SULLIVAN. Well, I find--I will reflect back on Mr.
Rice's statements about TPP. There is no such thing as the
perfect trade agreement. Again, this is my opinion, Kelly
Sullivan. I am speaking for me. There is no such thing as the
perfect trade agreement. But I will say agriculture would have
benefitted greatly had TPP been pursued. It is gone. You are
right. It is gone. There is no reason to talk about it anymore.
So let's go back to the table, and we need to aggressively
pursue a bilateral trade agreement with our number one trading
partner, Japan, right now. It is of tremendous urgency for our
industry, not just for the beef industry, but for agriculture
in general. And, again, I am just speaking from our point of
view.
You know, we went from--we were seeing a tremendous
increase in beef imports to Japan up through July, as I
mentioned in my opening statement. And that was prior to the
tariff increase that was implemented. It is yet to be seen what
impact it is going to have. Inventory levels in Japan were
built to a point that we are still seeing absorption of that in
the market. I just kind of follow, as a morbid fascination, a
lot of these economic indicators that we are watching. And so
we haven't seen any adjustment yet. But, again, logic will tell
you that if something goes from 38 and a half to 50 percent,
there is going to be a detrimental effect. That is why we have
to be aggressive to, again, as we said earlier, get on a level
playing field.
Our number one competitor is Australia. They pay 27 percent
on Australian beef. That is--you can't compete. Now, granted, I
will say that the beef that we produce in the United States is
far superior, as I should, because we do. But----
Mr. SMITH. More specifically, Nebraska beef are you saying?
Ms. SULLIVAN. Oh, no, actually, you know, Texas beef. But,
hey, we are all beef producers. Right? You know, I have my pin
on with my stars and stripes. We are all U.S. beef producers. I
don't care. We are here to do the same thing. We are all in
this together.
But we have to appreciate the fact that Australia is our
greatest competitive threat. We are in their sights. They are
going to take every advantage--all of our competitors are, but
I will just use Australia as an example--are going to take full
advantage of the fact that we do not have any trade agreements
in place, and they are going to try to absorb as much market
share as they possibly can as quickly as they can. And they are
moving very, very quickly. They are nimble.
And so we need to make this a tremendous priority. Because
the problem is that those agreements are going to get in place,
and it is going to be very difficult for us to get back in and
recapture any of that market once it has gone away.
Mr. SMITH. Well said. Thank you very much.
I yield back, Mr. Chair.
Chairman REICHERT. Thank you Mr. Smith.
I want to thank all the witnesses for your testimony and
your very clear answers to the questions that were posed to you
today. Some very good points have been made.
And I think just to sort of revisit some of the comments
and discussion that occurred, just to follow up on some of Mr.
Rice's comments, not only have we had hearings on some of the
issues that Mr. Doggett referred to, but we have also, all of
us on this dais, and members of the committee, have
opportunities to meet with members of legislative branches from
all of these countries. They are visiting us almost daily.
The Canadians have been very active in visiting with all of
us, especially those of us who are on this committee. The prime
minister today spent an hour with the full committee in
discussing some of the issues that we talked about today. And
even though the title of this hearing has been Asia-Pacific, we
have had discussion about NAFTA. This all ties together as it
relates to all of you and the businesses that you represent,
and the thoughts that you represent around trade and around the
economy that it creates, and the jobs that it creates here in
the United States. But we also know that there are improvements
to be made and especially when we look at Korea. There are some
concerns there with implementation.
So I think that, you know, in highlighting some of the
things that haven't been implemented in agreements that we have
made, going back and reviewing and taking a new look at NAFTA
and Korea, I think is a good exercise. But, on the other hand,
as you-all know, and as some of you have said today, we cannot
allow much more time to lapse in creating opportunities to have
other agreements. And especially when you look at Japan, as has
been mentioned, a great friend and trading partner, it is
critical that we keep that open market to our products.
Also, looking at Vietnam, we have got to move forward
quickly on these bilateral agreements so that our industries,
our ag industries, manufacturing, et cetera, services, have the
opportunity to compete fairly across this world, sell their
products, create more jobs, and raise wages here in the United
States. All those things happen if we are able to sell our
products. When we sell products, we have to make more products.
Right?
So thank you, again, for all of your testimony. Thank the
members for their questions.
And as just a reminder, be advised that members will have 2
weeks to submit written questions to be answered later in
writing. Those questions and your answers will be made a part
of the formal hearing record.
Our record will remain open until October 25th, and I urge
interested parties to submit statements to inform the
committee's consideration of these issues discussed today.
Committee is adjourned.
[Whereupon, at 3:46 p.m., the subcommittee was adjourned.]
[Member Questions for the Record follows:]
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