place good morning it's a pleasure today at long last to have the committee discuss the implementation of the us bahrain free trade agreement clearly this agreement will open up important opportunities for u s business setting a strong precedent for the gulf region it makes one hundred percent of u s exports in commercial and industrial goods duty free on the day that the agreement comes into force it covers all u s agricultural products in the  broadest market opening for u s services in any free trade agreement yet also has significance far beyond its immediate market opportunities bahrain has been a regional leader in political reform adopting a new constitution in two thousand and two and subsequently convening its first parliamentary session in bahrain since one thousand nine hundred seventy five other countries free trade policies and open markets have made it a regional financial center the international confederation of labor unions has praised its labor reforms noting that it's encouraging other gulf states to follow the example of bahrain our nations have long had a history of cooperation in the one nine hundred twenty s the standard oil company of california worked with bahrain to develop its petroleum resources bahrain has steadfastly been an ally long before our recent shared fight against global terrorism and playing a major open port role during world war two together with israel jordan and the morocco free trade agreements the bahrain free trade agreement is a critical additional stone in the foundation of the middle east free trade agreement initiative that has helped spark reforms in the region few thought possible just a few years ago the nine eleven commission report specifically recognize the significance of b reign and that a comprehensive u s strategy to counter terrorism should include economic policies that encourage development more open societies and opportunities for people to improve the lives of their families in the region investors reformers and ordinary citizens in the persian gulf region and beyond will be closely watching how strong we the americans support the free trade agreement today we have an opportunity to show that our words of support are truly backed by action to stay and by reformers in the middle east who are willing to open their political and economic systems similarly bahrain has an opportunity to show its commitment to us while they have approved the f d a by an overwhelming margin of twenty five to four involves a range elected lower house and unanimously in its appointed upper chamber there are challenges to the commitments t bahraini government has made to the united states honoring commitments between partners is fundamental to receiving us support this hearing will i am sure highlight  the support we can provide but this hearing will also underscore the need for a compliment to follow through on promised action  i now recognize the ranking member the gentleman from new york mr rangle for any comment he may wish to make thank you mr chairman i'm very pleased to be informed by the members and staff of the cooperation that we're receiving from the government of rain especially in improving their labor laws and its commitment to dismantle the primary boycott against israel again it's been a good friend and ally of the united states and i would  look forward to working with you for a successful at bahrain bahrain has been a good friend of the united states it has helped us in a lot of the political issues the military issues in the middle east and we we thank them for that i commend investor portman and the government of bahrain for making this a good deal i think for both countries and we look forward to its approval and to particularly impressed by the leadership and courage of the government of bahrain has demonstrated with regards to the arab league boycott against israel and also in regards to changing its own labor standards on the boycott bahrain has not only r leadership and courage and i believe it should serve as a model for other eight nations in the middle east you mention the fact that the administration has embarked on an f d a in the middle east with the countries of the middle east i think the bahrain has demonstrated that this should be the standard that we use for other in that region in regards to the labor issue i fully agree with the chairman's assessment we are  using the model the enforcement of your own laws and with a different standard for enforcement than other provisions in trade agreements i don't think that would surprise anyone in this room that i would like to see a different model used one that made international labor standards specific an agreement and there was no differential in forstmann but using this model and we've used this model in other agreements and we have approved other agreements that many of us on our side the all including us congressman has supported it's very important that the country's internal laws do comply with the ilo standards and bahrain has taken significant progress to achieving those goals the reforms in two thousand and two were not easy and they were important and they were dramatic and i congratulate the bahraini government in the changes that were made in two thousand and two i also applaud the leadership of the bahraini government and working with the u s to you are and working with members of the aiello community to identify additional changes that are needed in order for the bahraini and law to comply ilo standards and we'll be talking a little bit about that during this hearing i agree with chairman thomas that commitments need to be honored and we need to make sure that these changes are in fact accomplished and i know the bahraini government is working towards those goals and we want to make sure that we assist them in any way that we can so mr chairman i thank you very much for the manner in which we've been able to work with you and the bahraini government and the u s to you are i think this is the way that free trade agreement should proceed we look forward to the witnesses that are here today to help us in this regard and i look forward to working with you for a successful completion i do want to acknowledge if i might one member of the second panel michael in garden who happens to come from my state of maryland it's a pleasure to have him on the panel thank you mr chairman oates a gentleman perhaps doesn't come from the gentleman's district in maryland but he comes from the state and i understand i understand the gentleman's focus on the state of maryland rather than any particular subdivision within maryland cherokee that is a gentleman from florida the chairman of the but we're very proud to have him with us this morning i would ask animists consent that my full statement be put into the record together with a letter from brian's finance minister ambassador portman to the best of portman regarding the issue of the boycott israel israeli boycott which i think was brings us way way ahead towards settling many problems in that part of the part of the world office mr donnelly any written statements you have will be made a part of the record you can addresses as he see fit in the time available thank you very much mr chairman chairman congressman rangle and all members of the committee i'd like to thank you chairman and congressman rangle and the other members of the committee who have worked so closely with us in our partnership on free trade agreements i'm also grateful to congressman ryan and crowley who have been especially supportive of the spa rain agreement the u s bomb rain f d a is an important element of overall u s policy in the middle east as you said mr chairman with this agreement bahrain has made a legally binding commitments to liberalize trade with the united states beyond substantial trade liberalisation this f d a will help support ongoing economic political and social reforms in bahrain and signal to other reforming countries in the region the benefits of pursuing market liberalizing policy the f d a is imprimatur will also be an important force in encouraging increased direct for gn investment in bahrain and in creating an economic environment that's conducive to additional employment opportunities for the people of bahrain the administration's trade agenda is a fundamental part of the president's broader efforts to advance reform in the middle east in may two thousand and three as you know president bush announced our goal of establishing a united states middle east free trade area by two thousand and thirteen this trade agenda is one element of a comprehensive approach to address the economic social and political challenges that face a region as well as of course our interest in the area of particular our trade static threat a g is predicated on the idea that sustained economic growth can best be brought to a region through internally generated reforms and market based trade liberalizing policies the agreement will promote transparency and the rule of law in this small but important partner in a strategically important region our strategy toward the countries  region is to engage each of them at their own level of development to provide them access to the u s market based on rest prosody and to require that they adopt high standards for trade and investment and it's working in addition to the f d a with bahrain we as with morocco and jordan as well as our longstanding free trade area great with israel and we've signed trade investment framework agreements with qatar kuwait yemen and the united arab emirates in two thousand and four the strong desire of these countries to conclude f t s with the united states leads to more certain market access for goods and services high standards for intellectual property transparency and anticorruption as you said mr chairman the nine eleven commission urged the u s government to expand trade with the middle east and to encourage development more open societies and opportunities for people to improve the lives of their families and to enhance prospect for their children's future the commission highlighted this particular f d a with  bahrain as well as our f d a with morocco as specific examples of positive steps in this direction we work in close partnership with the congress and it's been critical to our success we base all of our f d a is on the trade promotion authority language as passed this agreement will benefit as you said u s workers manufacturer consumers farmers ranchers and service providers on day one day one that the agreement takes effect one hundred percent of consumer and industrial products and eighty one percent of u s agricultural exports will enter bahrain duty free this new trade opening will expand opportunities for exports of aircraft machinery vehicles pharmaceuticals and agricultural products in addition bahrain's commitments to a science based sanitary and phytosanitary and technical barriers to trade regimes and transparency and standards setting will service accident when examples for the rest of the arabian gulf area in the services area they have this agreement as you said mr chairman will open wider than any previous f d a partner in creating a wide array of opportunities and services sector such as banking and securities insurance telecommunications audiovisual express delivery distribution health care architecture  engineering the agreement provides for a high level of protection for intellectual property rights as do all of our other agreements has provisions for government procurement rules of origin we envision the possibility of  was with after other f d a partners in the region with the passage of its two thousand and two work or trade union law bahrain now has labor laws that give effect to the principles and rights that are set forth in the ilo declaration on fundamental principles and rights at work this agreement enjoys widespread support from our advisory committees the advisory committee for trade policy negotiations founding agreement strongly in the interest of united states the other advisory committees have endorsed the agreement save the labor advisory committee which is has been referred to earlier has expressed concerns about all f has concluded and that such concerns relate is well to the committee's assessment of this agreement however we believe this agreement fully meets the guidance congress gave us in the trade promotion authority as you said the international confederation of free trade unions has praised bahrain's progress on labor rights we continue to envision a very active dialogue with the bahraini is to carry this labor issue forward because there is still work to be done but we intend to work with the congress and with the government of bahrain to continue in that area thank you very much mr chairman thank the gentleman i have no question i shall learn from florida have no questions except i want to compliment the administration together with the questions but i do think that the consequences of the negotiation of both bahrain's own development and the negotiations between the night and bahrain are in part response responsible for their really  excellent response to the foreign workers march in the capital of last week i think the strong commitment of the government to assuring the paying the wages and to ensuring the fair treatment of foreign workers was impressive and i assume that we're following that closely at your level as well congresswoman we are following our closely and we share your assessment of it thank you gentleman from michigan mr levin wish to i overall question of whether free trade agreements are going to be crafted so that the benefits of expanded trade are shared widely rather than  workers who represent such an important segment of the population in bahrain and other places as true in this country are going to benefit from from from trade reforms for two thousand and two were significant i don't think it's accurate to say as you say in your testimony that the labor laws give effect to the principle and rights set forth in the declaration the ilo declaration because i think us to knowledge is that there's further work to be done  this in the vast majority don't accept the basic standard in this agreement in for sure own laws we think that there should be incorporation of the basic ilo standards in the text of the agreement and enforceable in meaningful ways so this statement that it gives effect i think is not good enough because i mean isn't it true us and others and we've been working on discussions with bahrain for further improvements in their laws isn't that isn't that correct yes serve it is correct and these are improvements that relate to the ilo declaration right we're talking about these basic labor standards you want to spell out the areas of time which further discussion is in suing you can you spell them out quickly i'll certainly try mr chairman first just to say i certainly acknowledge that there has been and remains differences between the administration and the minority with the guidance we've been given in the trade promotion authority but what we want to improve the labor situation in both went rain we share your assessment that there are areas that are that need further work i think the bahrain government has told us that i was speaking last night to the bahraini finance minister along those lines and we encourage that we think this after can be a tool to do that if as we carry along in the concluding of it we'll be setting up a labor consultation in terms of meeting the basic ilo standards and we've had sure inches from the bahraini government that the work will be completed to two to fill the gap come to congress on trade legislation it's great to see that happening i have a question at the end but i want to just put things in kind of a historical context so people understand how far we've come with bought her a and what promise ninety three in one thousand thirty s we we discovered oil the bahraini as did they were very helpful in supplying us with oil during world war two after that we were able to utilize some of their actual imports and now today we have our fifth fleet which is headquartered in box rain most of our operations in the persian gulf come from our fifth fleet headquarters in bahrain so we have a very very significant military agreement and presence in cooperation with bahrain as we do a financial because bahrain has become one of the most impressive financial services centers of the middle east today bahrain is a very important ally with the u s in the war on terrorism they were the only c country to commit forces to operation enduring freedom in afghanistan they're helping us right now in the reconstruction of iraq there are regional security hub which they're using their financial banking ackman to help us combat terrorist financing they become a very important ally in this and because of that bahrain has been designated as the major non nato ally in two thousand and two but there's more to the story than just that bahrain has been at the cutting edge in its region of recognizing human rights of recognizing political political openness in two thousand they made these reforms they adopted a constitution to try farm for her and terri emirate constitutional my monarchy they they created by camel legislature they created universal suffrage for all citizens over the age of eighteen and they allow women to run in parliamentary elections that's the first in the region they an active significant labor reforms not only  ninety three but has been mentioned in two thousand to these labor reforms create a law for the creation of independent labor unions both foreign and domestic workers they provide collective bargaining rights they've also now have forty private sector unions in the country they're moving forward on this issue this agreement brings them forward even further with new commitments and these amendments will make it easier to form new labor unions provide for the adoption of two new labor ilo core standards and provide greater protection for the rights of working women so we've seen tremendous progress and what i want to conclude in saying this is basically the flagship agreement in the gulf in the g c c and this is very important because it's a part of the middle east area initiative when we now have ten thousand throughout the region this is such a good agreement in my opinion because this is how we can help expand relationships between americans and arabs in the gulf it helps bring transparency rule of law economic opportunity and political development toward democracy in these regions that without putting a boot on the ground that without any military involvement that would trade agreements so we are with the middle east free trade area agreement helping leverage relationships and integral toward democracy and transparency this agreement is a good prototypical agreement that we can help to see occur throughout the region and we're already seeing fruits of this labor manifest itself with the elections in nearby countries with troops with other agreements that are being under way that are in discussion so  very pleased to see this happen not to mention the fact that agricultural exports eighty one percent are off the books as soon as this agreement is reached all of our manufacturing terrorists against our products are immediately eliminated so what very impressive this is this is a bipartisan agreement and i just want to ask you mr donnelly if you could comment on where we go from here you know where where the rest of it is going to take us with respect to the neighbors and what have you seen the reaction it has become because of this what is the reaction in the gulf what is the reaction of its neighbors and what is the price that bothering is paid for being a leader in moving forward on some of these issues particularly the israeli boycott lifting th the primary interest boycott that has not come out come without a price for the bahraini i'd like to ask you to get on the gentleman's time has expired and frankly that is a comment that should be put in writing so that you can go into some depth about the positive aspects that this proposed agreement has in generating interest and opportunities in the region we look forward to reading that and the chair puts the gentleman from once wisconsin down as a forward in the manner in which this agreement has been negotiated i appreciate the comments to mr ryan's made and i'm not going to spend my time going over other issues that we are very pleased about so let me concentrate on the one major open issue that needs to be completed and that we need to concentrate on i concur in your statement in that the two thousand and two changing the labor law was a huge step towards reaching international standards to protect workers rights so you're not going to get any disagreement with me it was a major step in one in which was  incredible statement there remains open some additional issues which we that is the members of congress on both sides of the in the u s t r have been working openly with the bahraini government in order to get modifications to the two thousand and two law to deal with several issues that raise concern on compliance with international labor standards they deal with issues of joining one trade union versus having multiple trade unions it deals with the requirement to join the general federation of workers trade unions it deals with penalties imposed for anti union discrimination it deals with withholding salaries from foreign workers it deals with reinstatement of workers who have been fired in appropriate and it deals with requirements on the right of strike i mention that so that there be no misunderstandings and i want to get from you if i might a response to mr levin's inquiry and that is it is our and  chairman mr thomas is point it is our hope that these changes will be submitted by the bahraini and government to its parliament within the matter of weeks and that it will be successfully and acted by the parliament before we complete the consideration here of the bahraini an agreement i believe that is reading between the lives of our chairman and listening to our conversations with the u s t r our expectation and i just really want to put that on the record and get your response if you would like to the point that i'm raising thank you thank you very much mr card first i guess i the congratulations you have given really belonged to my predecessor i've only been in this job about five weeks kathy novelli was the assistant u s t r really led this this effort she's moved on to the private sector so i am here for the the the closing stages but but i appreciate and i will share it with my colleagues at u chairman i think my sense of this is that we are all in that in the same place that there has been considerable progress in the labor situation in in bahrain there remains work to be done there is an active dialogue that involves  you've raised in terms of introducing legislation or clarifying regulations that address most of those of those issues and i think that what the message i'm certainly taking is that i hear from you and from the chairman and others is that that this work needs to continue and i certainly commit to you that we will carry that forward on on on all of the areas just so it's clear i think the anticipation is that there will be legislation submitted by the government very shortly and will be the government will do with its power to make sure that right is enacted and obviously we understand the parliamentary process but that we will have a clear understanding of where we are prior to at least we hope prior to we take final action on this agreement thank you mr chairman thank challen gentleman from colorado wish them thank you mr chairman and mr donnelly thank you for bringing this agreement in front of us today i think  very recently with king abdullah from jordan and certainly my own perspective that this region of the world that i guess to say that bahrain is is is is curiously located by just simply saying important is an understatement there they're critical to us i want to talk about that just a little bit and i'd like your observation my observation again and that of king abdullah and many of the israelis that i have met many of the new iraqi leadership is that if peace ultimately is going to be achieved in the middle east and in this part of the world it is of great concern to all of us now including those that live in the middle east i think it is going to be dependent upon economic and educational opportunity and advancement i was very taken by king abdullah again how he emphasized that point is critical to his nation which i think is among the most advanced in both of those areas speak for a little bit if you would of of your assessment i know that may not be your primary emphasis in this agreement but i think even the nine eleven commission report spoke about the importance of this agreement and others like it to further the eventual end point we all want to get to and that's peace and stability in the middle east thank you congressman beaupr i agree completely with your general characterization of bahrain is as a great friend an ally of united states in many ways this is an important part of our overall effort to encourage reform and an economic liberalization political liberalization throughout the region the immediate gulf region and even the broader  middle eastern region you're right the nine eleven commission did highlight this is the kind of agreement we as an administration should be doing more of that clearly the the middle east as a region is under integrated into the global economy it's under integrated into very even to their neighbors and part of this reform effort is really about people in those regions feeling that their lives are getting better the lives that their children will leave have more promise and an education is key to that jordan is certainly a leader as you said but so is bahrain although on a small island it really is has come to realize that it is a service based economy the petroleum resources there are are not going to last that much longer and the leadership in bahrain has realized that in if you're going to be competitive in a services based economy you have to invest in your in your people and so the education and training program is a key element of b effort to define their competitive niche in the global economy and and i think that this agreement can help cement that and provide some additional support for it i mean i think we see services economies can involve a lot of training institute and educational things i mean we'll see what the market makes of the opportunities of disagreement opens but by this is this is this is all about sort of changing the whole model of economic to keep wondering what these agreements are all about is obviously not about commers as we're talking about a point below three percent of our international commerce so we're not we're not this is we're getting smaller and smaller we go from chile to singapore to australia to baracoa caf the now we're down into point zero three is this is this basically valuable because of the geo political statement that you're making you're putting the stamp of him of approval on a arab country that is that the primary reason for this means i can't see any economic reason why this makes any difference at all we've got at the military deeply entrenched there you have an investment treaty already in place so everything's protected whatever we invest over there what possible value is this to the united states thank you chairman you raise a lot of important questions look we we select our priorities are our countries that we're going to do free trade agreements with on a number of criteria clearly political importance is one factor but we don't do free trade agreements if a if  a partner is a potential partner is not prepared to come up to the high standards of liberalization that we're looking for we do some with small countries and we do so with larger countries and and  what i think there are commercial advantages brought rain is a major regional financial center we have a coalition of about one hundred major u s companies and trade associations that are that have strong come out strongly supporting this agreement so  they apparently feel there is some benefit for them them there but let me just why when you go and work on a free trade agreement with venezuela they have a democratically elected government democratically elected parliament why wouldn't you try to have one significant size country that has a real economic relationship with us well mr chairman i don't want to get into i mean i'm looking at what you're choosing is it is it because the people took our military in when we got thrown out of saudi arabia or there wasn't any other place for us to go there to establish a headquarters mediterranean where he might have some degree of expertise to speak lolis free to arrange the globe u s t r is arranged in terms of expertise in particular areas and i know the gentleman may have difficulty finding such a clear example  in the european or mediterranean area so cherish perfectly well and let the gentleman roam the globe but well whatever testimony we have i'm anxiously awaiting the response to the gentleman's question you off the hook i appreciate that mr chairman i'm going to i'm not going to comment on any other particular countries look we look for countries that have economic potential that in so size is certainly one factor but we don't just go looking for the biggest  economies of the most important factor really is countries that are prepared to take the high level of commitment that we demand in these in these free trade agreements that opens up opportunities and it also frankly builds a network of countries that are most helpful to us in the global negotiations so it's it's we're not just just looking for small countries not working for big countries looking for countries that are prepared to work with us on a high standard trade agreement so companies that want to move into the moat into the middle east need a base from which to operate so that they can avoid the tax consequences of being in the united states they can move over there and  they will now have a base that has absolutely all the protections of living in the united states but to be outside the country protects purposes is that correct and no service not correct that's not what we're trying to do we're trying to i didn't see is that a correct statement about what their situation would be in bahrain so i'm not i'm not a tax expert and i don't believe it is i mean we're trying to promote opportunities for commerce between bahrain and the united states but we're suspect that you were vigorously preparing for today's hearing and you weren't here during the campaign hearing i am interested and i would say that mr cutler of course you represent of the u s trade representative bore the brunt of heavy criticism not personally directed at her i might add but bipartisan criticism over a perceived lethargic response regarding the enforcement part of trade agreements and mr leavened i hope you're sitting down but i actually agree with you with the point that you made so let me let me ask you a question we have you provided us or your staff has provided us from the office of u s trade representative a trade agreement fact sheet  obviously was prepared before you came in because the date on this is made may twenty seventh of two thousand and four do you have that fact i can get it mr chairman hang on let me just let me ask him please general questions and i'm sure staff will will assist you as necessary it's actually there's about a seven page and you don't need to pull seven pages but here you know as the gentleman my friend from wisconsin talked about all of the positives and you know and there are many i guess the new market access for consumer for industrial for ag products for opening service markets for banks insurance for securities there's a section dealing with open telecommunications markets as well as copyright protections and patents and trademarks generally assume that all of the things that are in fact sheet from may twenty seventh are there a both for now this is over a year ago are there any additions or changes to that fact sheet regarding those concessions that we've we've received received i see behind you some heads well let me i haven't i didn't look behind the this agreement was concluded in may of two thousand and four and i think it was on that occasion that the fact sheet was issued it has not changed since then so this would be still an accurate rendering of the the major provisions of the agreement let me turn to if you have it in front of you page six of that seven pages where there is a section entitled to rule is to enforce the trade agreement and it says and i'll paraphrase in the interest of time all core obligations of the agreement are subject to the dispute settlement provisions there are dispute panel procedures setting high standards of openness and transparency for instance open public hearings public release of legal submissions by governments opportunities for third parties to submit views now there's an emphasis on promoting compliance through consultation we heard a little bit about that yesterday and trade in hansing remedies and then it says the agreement includes strong enforcement mechanisms including the ability to suspend trade concessions or status monetary assessments now you know again i don't want yesterday's to color this trade agreement however you know we quibble on this committee about specifics going into an agreement but yesterday there was unanimity over the need to be to  be vigilant to strongly enforce these agreements and i'm not prejudging and i'm not imagining a worst case scenario i obviously you know the things that that are happening in bahrain are exceptionally important and positive but if i were buying a used car  trade representative in this administration and you can have the remaining time to answer ok that gives me thirty seconds congressman i was not here yesterday i heard a very quick characterization of the meeting i've only been at u s t r five weeks but embassador portman who obviously shares a background with many of you has made very clear to me and i believe to all of our colleagues that that in forstmann is absolutely a top priority he doesn't want to just running around the world negotiating new agreements and filing him away and then go on to do to do more agreements i mean this only works if we can we can go out and get into a good agreement our business communities can use it and it's beneficial and we aggressively monitor and then enforce it and u s t r along with our colleagues at the commerce and agriculture and over departments and our embassies are committed to that and i give you my word that it's certainly in the area that i'm responsible for this will be a top priority but more to make a statement that them and my staff to send over to me from here regarding the reasoning for this agreement that i certainly agree with and i think those of us who've been following the war on terror  will be pleased about and that's basically that yes we have found an f readily arab government it's proved it's friendship with the united states over a long term near the heart of extremely complex geopolitical region obviously but this is part of a larger initiative by the administration to try to move forward to stabilize that region and certainly economic commerce but you know between the two countries and obviously a number of other countries in that region as we have with jordan  israel are certainly going to improve the stability that this sort of an obvious next step if i'm not mistaken would you agree mr donnelly yes i would congresswoman and i think before you came in the chairman and other members and i made made many of those similar points about the overall importance of this thank you i enjoyed reemphasizing and then i actually have a specific question regarding something that i've been working on about the financial services sector and i've been reading through some of the material regarding the agreement and it treatment basically the financial services sector i have a specific interest in middle eastern financial services especially while as and concern about transparency of traditional middle eastern financing systems i'm pleased then that a lot of american companies will be able to access that market and and obviously follow the same transparency requirements that they have here in the united states is that correct yes ma'am ok good according to some of our documents that that there is going to be increased requirements also in the bahraini i guess if that's  correct system regarding additional transparency in their current system and it doesn't say specifically what they've done to change it and if you don't know the answer i'll take it in writing but i'm very interested in what you know about that and what  on regarding additional transparency and financial sector thank you ms hart i think i'd like to take advantage of off it in writing with some of my colleagues who are more expert on the financial services but i know the sort of agreement why there are the bahraini will be taking on a requirement to follow many of our administrative procedures about publishing draft regulations getting input from business and other constituents labor and consumer groups and so on but as it relates specifically to the financial services area i would like to get back to you in writing i appreciate that i specifically be interested in what steps they've taken to liberalize their foreign ownership rules and also what they've done regarding their money laundering laws we've addressed ours very specifically we've actually had some legislation move forward to address while as in this country making them not usable here because they are basically because they're secret at work and i'd be very interested in knowing what they've done and i will get you that i my general impression from my previous experience in the job at the state department is a bahrain has been a very good partner for us in this whole terrorist financing effort is very important given their their critical role including on islamic banking but we will get you details on that thank you we actually need an ally there in financing i'm familiar with the sector in dubai and some of the other nations that have not been as friendly so thank you very much also incorporate sometimes the ilo expertise in helping to build this capacity can you describe the capacity building initiatives in this agreement and whether there's a an opportunity for the ilo to be involved in component to this it's a little different situation from some of the other countries who are less economically developed the g d p per capita in bahrain is in the fourteen fifteen thousand dollars a year level so they don't qualify for many of our normal a i d programs that have provided much of the the funding for capacity building programs on labor or others are f t s but we've worked with our colleagues at the state department there's this program the middle east partnership initiative mapi program it's called and we've been able to identify some resources in that in that program that can help we think that there are opportunities even if bahrain provides the financing for it we can help  in technical assistance and even if it's reimbursable and so on as far as i understand we are working on on the details of that and i'll try to get you in writing if i could more details on it but we we as is consistent with the earlier discussion we think there is work to be done capacity building needs to be part of it it won't be just like previous agreements but it will try to accomplish the same object i just suggest to you in order to meet some of the issues about  labor this is an important area of capacity going to assist our partners in being able to enforce agreement and to write them in the correct way i want to commend you as others have on the work you've done with this agreement i look forward to supporting ongoing efforts recognizing that ambassador novelli did the bulk of the a heavy lifting here in reviewing the current labor law in bahrain as well as the proposed amendments to the law being put forward next month which we find very encouraging development comparing those laws with those currently in effect in morocco i've noted some differences it appears to me is on the face of it the labor protections in bahrain especially after the pose changes would be adopted would create a labor law regime actually stronger than morocco it appears even much stronger than jordan is that an accurate assessment of mr english i frankly i'm not sure i need to do a little more work on that we think that they all are unique countries that unique places and we're trying to move them in a in a common direction but we certainly think that the bahrain provisions particularly when one factors in the discussions that have been held about likely  further amendments to the labor law that bahrain would introduce would certainly bring them to the top of the class in the middle east region i think i think jordan and morocco are also in that in that area but that's about all i could  significant impact on the prospects for people throughout the gulf region and my distinguished colleague from washington asked why are we doing this i think that that's one of the reasons  that makes all of this worthwhile another being trade because even trade with small places cumulatively can create opportunities for our products now let me ask given that we all know that strong laws on the books have little use without strong enforcement and recognizing that bahrain has recently increased the number of inspectors seeking labor code violations what other steps do they need to take to improve in forstmann and what is your assessment of how effective enforcement of labor laws is overall at this time thank you mr english i think it's really quite good is it perfect no but i think it's it's they've made the bahraini have had a clear commitment to improving their labor environment with the law in two thousand and two as you referred to there is  now they have the intention to double the size of the least double the size of their labor inspection force i think there's there's more work to be done there's still capacity building to be done with the labor courts i think that play a key role in this with the support that we're going to try to give them through an active dialogue through capacity building i think they're going to have a very good package of both laws and enforcement i don't claim any special expertise when it comes to trade policy visa v bahrain but my sister did live there for a number of years i am familiar somewhat with this community and it seems to me to be a particularly fertile prospect for us to develop closer ties for a variety of the reasons that have been outlined by others here every time we build a new left in the region and create a new opportunity we also build an or of comparison which ultimately will play a very significant role in any future trade agreements that we might pursue with larger markets in that region it seems to me that bahrain represents a  chairman thank you for being with us and thank you for your testimony and continue to work please with with regard to bahrain and hopefully will be able to move forward in a bipartisan fashion on the agreement that mia concentrate on just one area as well since i think most folks agree that a number of issues have been addressed in ways that are considered a move in the right direction with regard to intellectual property and so forth so let me focus on just the the issues of labor which i think a number of us have focused on my understanding is that in bahrain which is i think a good sign the government moved forward with the stablish seen a a committee that was composed of its workers most of the companies and employers and the government itself to try to come up with a way of coming up with solutions on the low aber front was a tripartite committee that was established to move forward an agenda are you familiar familiar with that i think only in the general sense and i'm looking to my colleague who is much more familiar and he's nodding soul that is my that is he began and i'm only generally fees he's a new u s assistant u s air for labor so he does this full time but that is my understanding as well both be looking in that direction then and my understanding is this is a try park type committee that's been formed not just to explore the trade agreement but to talk about its labor reforms generally correct yes  that is my understanding as well i mean look list doesn't work if we're coming in and imposing on a country that doesn't want to make a change whether it's labor or investment anything else this comes when they're reformers who want to do it and i think that's that's what we've seen from bahraini they need some help but it's part of their own agenda to bring their labor regulations and enforcement forward i'd agree with that and it seems that this is something that we haven't seen other countries do where they've actually come together in a more formalized way to bring together the various groups that would have some stakeholders in this in this issue of labor reforms i'm i have been told and i don't know if you know this or not and maybe you can clarify this and i here earlier but i'm being told that the the national federation of these labor worker organizations the i think it's called the general federation of bahraini trade unions has indicated that it has not yet received a complete copy of the trade deal which was signed last year are you aware of that is that if that's true or not i have heard that i don't like i obviously i'm not a party to that i don't know i mean we have not seen it is our job to share it with them and obviously that's bahrain thing we have our own consultation process the the english language version of the treaty of of the agreement has been up on the u s t r website and i understand on a bahraini website for for over a year and but i would also in the arabic version on the u s t r with us here it is yes but  mean whether excuse me as to whether individual labor leaders or unions have received it i just don't know and that would really be something that only those why i'm hearing that the labor unions have not yet received a copy of the agreement in arabic and a complete copy in arabic and that of course that makes it difficult which would also to some degree seem to undermine the value of this tripartite committee that's supposed  helping reform the labor laws if in fact here you've got a major agreement and it may not yet have been made available now in two thousand and five for agreement signed in two thousand and four to one of the three partners in this tripe part try part ar apartheid committee so i guess if it's up on our website we'll let the folks know in bahrain that they can take a look at it on our website even if the bahraini government hasn't perhaps made it available to them on their websites i have understand  do i understand that summaries have apparently been given but i think it's different to have the actual text if you you've got an indictment against you want to know the specific words if you've got it agreement on a contract to buy a house you want the specific words you have an agreement on trade you want to specific words and i'm hoping that i'm hearing some signs as well that this tripartite part committee which apparently i think would be great to see in other countries as well there's  been a bit of a breakdown because evidently a lot of the things that were agreed on by the stright apartheid committee when it came to these new labor reforms are now being to some degree changed by the parliament bahraini parliament because there are new amendments a new provisions being added or taken out that were not part of this tripartite committee's work so i don't know if you know about that but if you can get back to us at some point let us know because that would be of interest to for us to know if last exchange does the united states trade representatives website have in its entirety in arab book the us foreign agreement yes it  the agreement in arabic is available to anyone who wishes to access the web site that is correct and western of whether or not they have been handed in person is another question second question the chair needs clarification on is the tri part committees a committee designated by the bahraini and government to conclude the specifics of the agreement or is it the elected parliament that determines the final structure along with the the parliament of bahrain my understanding of this tripartite commission it is it is a it is not directly related to the free trade agreement it is a a process that the bahraini have to to guide their overall effort to shape their  own labor legislation and environment which obviously intersects with our free trade agreement but i will double check that we need to have the record clear on that gentleman from california mr bush to inquire chairman mr donnelly thank you for testifying today i appreciate the progress you're making in this area it's my understanding that the u s export of eighteen million dollars  agriculture products to bahrain in two thousand and four and although this is not a staggering statistic for agriculture i believe that progress toward trade liberalization is significant a meaningful progress nonetheless to that in the u s bahrain f d a is comprehensive and will provide immediate duty free access for one hundred percent of the current trade in consumer and industrial products and ninety eight percent of u s agricultural exports tariff lines as well as an unprecedented access for u s service exports my question to you is this how does this agreement compare with the others we have negotiated do you believe it is a model for the region will it strong commitments in areas such as services help advance our multilevel out of negotiations in areas such as services help advance our multilateral negotiations in these areas how would it look to our other potential trading partners in the region and elsewhere if we did not strongly support this agreement given the high level of commitments it can aims to do as the gentleman would  bravely i'll tell everyone in the room and members that were being requested to leave this room from the door to the chairman's right the audience's left there is a concern in the hallway on the side so if you wish to leave please leave to the right hand or the chair also believes there's only one additional inquirer and wishes to get this panel finished prior to our going to vote we will then recess since it's multiple votes so following the last inquire and shortly after the culmination of the series of votes will reconvene for the second panel chair thanks the gentleman from california mr donnell thank you and mr however a lot of good questions there i mean we see our actual exports in the agriculture area to buy bahrain have not been large you cited the two thousand and four figure but actually back in two thousand and one we had a number in the thirty five million dollar range we've exported things like cotton and beef and poultry that are obviously areas where we are very competitive so we do see significant potential as we get these these barriers  down i my understanding i maybe will be a little biased here is that this is the most market opening of any of the f d a that we have done certainly when you factor in the services commitments and the fact that that  hundred percent of industrial goods come in most of our agreements have some limited amount of phasing in so i think this sets a very high standard i do believe that that each of these agreements sets a model for their for a very neighbors but each agreement is unique it's negotiated between two sovereign nations and takes account of particular relationships but we certainly use a template that the congress has given us under trade promotion authority and that's what we base these on and we think we very much believe that this bahrain agreement is the basis for the other agreements we're trying to do with oman the united arab emirates and as we get into others in the region we're looking at egypt as a possibility haven't decided we're these w t o o ministerial meetings where we work on the real big prize of the doha global agreement that it's often our countries that we have f d a agreements with that are our best partners they've already taken the high level commitments on services on intellectual on on all of these agreements that can work with us and support him as he tries to carry it forward so i know there are some who feel that that bilateral agreements are a distraction from the multilateral agenda we think the opposite we think we can do both and that they they reinforce and then i think your final question that i took down was what what the impact of the failure of the u s congress or administration to deliver on this i don't want to speculate on that it's it's you know we have great confidence when the congress looks at this will see if it were to happen it would be a serious impact i mean in the trade area but i think more generally about u s reliability as a partner i mean it's this is really as some of us have said earlier today it's a trade agreement but it's part of a much broader partnership with a key a key ally in an important region so my sense is there would be serious implications if we were not able to move ahead and and bring this into force that's certainly our commitment mr donnelly i agree with you completely as you know california is the largest agricultural exports in the nation and the district i represent in the northern sacramento valley is one of the riches of the area's we cannot eat all the rice dry plums that we  grow we're dependent on exporting it certainly is very helpful to our balance of payments and i want to thank you for again setting this example the good example we see we'd like to be setting these examples with all the nations in the w the fact is we're having difficulty doing that but i agree with you the fact that we're we are making agreements like this that others can see helps give the incentive and the momentum to be able to add these agreements and to be able to move towards the same type agreements with others so again thank you very much you and the administration  marketplace for our products in the middle east but let me ask you this appears not to be a large agreement but a strategic one and while trade can't solve everyone's problems these agreements often are a catalyst for democratic reforms civil rights rule of law free and fair elections how will this agreement help further progress in other areas not directly trade related thank you mr brady and  chairman and others spoke on this on this topic and i tried to make a few comments earlier but but i think it's very important look we do trade agreements with countries that are potential trade partners and are willing to accept a high standard but but the benefits go go far beyond i mean we have explicit transparency provisions in here about how countries will make regulations and write laws and solicit input we think that's important we think the the effort to create a more private sector economy a more dynamic economy in these countries that can create jobs and attract investment from their own citizens and from foreign investors including american but others can can help create a climate of opportunity and optimism that's really important in a region like this i mean we there were several references to the nine eleven report nine eleven commission which looked at the whole issue of how terrorism and things evolve in this region and how the u s relates to the broader middle east they recommended the morocco agreement and the veyron agreement as models of how to integrate these these this region that has been under integrated into the global economy and  opening up an economy and creating competition and creating growth i mean obviously you know that creates opportunities and pressures for further liberalization and and democratization i mean it it's it's i'm one of those who believes that economic liberalization and political liberalization go together it's not a straight linear relationship it doesn't happen exactly the same way in every country but there's a clear link we've seen that and we think that these trade agreements can help in that in that broader agenda of the president's you know broader middle east agenda and that's what we're trying to do thank you i was secretly hoping you would slip up and address me as mr chairman just so i would feel a whiff of that power but thank you very much  it's just something you have to live with and so the chair will simply move from left to right with the panelists that are present and any written statement do you have will be made a part of the record and you may address this in the time you have may know you may not know mirsky is one of the largest shipping companies in the world serving customers all over the globe with a fleet of more than four hundred fifty container ships is it a vision of a group a company that employs more than seventy thousand people and over one hundred twenty five countries the united states will generate employment for twelve thousand americans and our united states corporate affiliate first line limited has a top secret clearance from the department of defense and provides of variety of support functions for the agency of particular importance to today's hearings the a p molo group has a presence in bahrain since the one nine hundred fifty s today we continue to provide maritime services to that country and we are pleased to be a member of the us better free trade bring increased opportunities we believe for commercial exchange not only in bahrain but throughout the middle east region company believes that the free trade agreement advances the national interests of the united states will improve and expand trade for  countries certainly will improve trade between the two countries it will boast a bahrain's economic and political stability for significant commercial opportunities for many companies in north america the maritime free trade agreement demonstrates that both of us are intent on liberalizing promoting economically and we are hopeful that the pre trade agreement will act as a template for other agreements that may be negotiated throughout the middle east region is a well established market for u s goods and services strategically located it offers an opportunity also to serve as a hub for the upper gulf region in terms of trans shipment last year the united states exported approximately three hundred million dollars in goods to bahrain including machinery medical equipment pharmaceuticals sports equipment and the port is the primary gateway to bahrain in recent years handle a million tonnes of general called bahrain also provides many terror related activities in support of the united states mid east operations we believe that these agreement will enhance the competitiveness of our nation exporters and service providers and will bring opportunities the united states to gain additional market share in this area it will also provide the opportunity for our nation to establish another free to establish other free trade zones in the gulf region today is a free trade zone and opening up  will create an alternative to that country providing complete competition and a new hub with an area with greater possibilities for accessing other markets it is not news to the members of the committee that bahrain is located in the region of the world obviously home to the us fleet permit me to just mention that just recently the a p m company has been granted a franchise to operate a terminal in bahrain and we are very optimistic about the progress that will take it was intended and we compete along with many other countries and it will be completed in the next eighteen months mr chairman we strongly support the us bahrain free trade agreement and urge the congress to act on its implementation very quickly the more the trade shackles are removed the more opportunities there are companies to compete in international trade and we are ready to meet this challenge and look to congress to implement the free trade agreement so as to the so it's a free trade with bahrain state harvard in the now is in north carolina and really in many other places in between it's a mix that that i have not heard before mr kapl chairman and distinguished members of the house ways and means committee thank you for the opportunity this morning to testify on behalf of the u s the rain free trade agreement my name is eric kaplan and i am president of brunswick's commercial g products formally boston will commission get more products we are a subsidiary of the brunswick corporation runs a corporation is a fortune four hundred company that specializes in five product categories marine engines pleasure boats fitness equipment boeing billiards and emerging technologies the branch of corp was founded in eight hundred forty five and is headquartered in lake forest illinois bronze brunswick employs over twenty six thousand people worldwide and generated over five point two billion in net sales in two thousand and four runs a commercial which i am president is headquartered in florida and employs roughly one hundred five people we have been working with bahrain since one thousand nine hundred eighty nine brunswick commercial manufactures three types of commercial boats boston whalers and trophies they are the safest longest lasting most dependable watercraft that are does designed to withstand the toughest weather conditions because of this hundreds of city county state and federal in cities and every branch of the armed services in the united states and countries all over the world purchase our products the brain defense force uses our products for law enforcement security and military purposes and over the last few years our direct sales to the kingdom have been a proxy two million dollars additionally our sales include personal use vessels for citizens a brain including the emir my company is a significant consumer of aluminum and is one of brains primary exports the us brain free trade agreement could benefit us immediately by making brainy an aluminum or price competitive than other foreign suppliers additionally the opportunity to build craft in country for export to the region europe and africa would allow brunswick to expand our products overseas exponentially the second step after the jordan a towards middle east free trade area will help they could help create a larger market for our products and expand our business both in the united states and worldwide the creation of a free trade agreement sends a strong signal to companies such as mine that brain is committed to transparent fair and open trade and give us a higher level of assurance in doing business there haven't personally been in brain twelve to fifteen times over the years and our company's experience in the country for over fifteen years we have seen first hand brains commitment to the economic and political reforms that have put the nation on the path to greater liberty and prosperity bran is an example to other countries in the region of fledging democracy a closer economic relationship will benefit both countries as well as small american businesses like mine who wish to pursue larger opportunities in the region the the tanker war the support that was provided by the bahraini government to our naval forces at that time was key to the success that we had containing a radiant aggression and the prosecution of u s policy in general in addition life for my sailors was significantly enhanced by the hospitality extended to us by the people subsequent to my retirement from the navy in one thousand nine hundred one as a middle east defense policy consultant i travel to bahrain frequently further adding to my knowledge and understanding of our society in one thousand nine hundred five i formed an environmental services company in norfolk virginia one of the compan principal objectives was to facilitate the cleanup of tanker generated oily waste water in the persian gulf with civic focus on the port of bahrain although the project did not succeed due to the fact that my american partner was stricken with cancer the process that we went through in setting up the company demonstrated to me that the business climate in bahrain was hospitable to american commercial interests and was governed by a reasonable set of transparent rules and regulations most recently from two thousand and one to two thousand and three i was directly involved in successfully setting up an investment bank in bahrain during this process i became familiar with bahrain's banking and financial institutions and regulations without question from a western point of view the best regulated banking system in the gulf region perhaps in the entire middle east since nine hundred ninety one served as a director of the american bahraini friendship society based here in washington the society is dedicated to enhancing mutual understanding between the two countries a number of former military commanders are on the society's board reflecting i believe the affection and the respect that these individuals hold for the kingdom these gentlemen and other flag officers who have served in the gulf a total of thirteen including admiral bill crouch former chairman of the joint chiefs of staff and admiral tom fargo recently commander in chief a civic have signed their names to a letter in support of and if you'll allow me i'd like to just read a couple of portions of that letter not the whole letter and it begins presented as former military commanders who have lived and worked in the middle east we are writing to express our collective support for the u s bahrain free trade agreement this agreement can serve as an important foundation for economic stability and peace in the middle east and is in support of the sound recommendation of the nine eleven commission report we each have personally experienced over the past thirty years the  longstanding and strong cooperation between the kingdom of bahrain and the united states and we wholeheartedly support the continuation of this strategic relationship through congressional approval of the pending f d a of vital importance to the u s navy the kingdom of bahrain has hosted since one thousand nine hundred eighty nine the u s navy's middle east force and subsequently the fifth fleet and its headquarters facilities those facilities now comprise sixty two preposition materials for future crises this vital access to the kingdom of bahrain continues to serve the military as a major staging point for strategic operations in iraq recently the kingdom of bahrain was designated a major non nato ally by the president in closing we emphasize the kingdom of bahrain has long been a strategic ally of the united states we have an opportunity to further strengthen a friendship that has been more than a century in the making each of us considers approval of this effort to be in the best interests of both the united states and the kingdom of bahrain and it's signed by the thirteenth i will not read their names but it will be entered in the record thank you very hundred seventy five made him our was a founding member and continues to be a historic supporter of the national u s arab chamber of commerce which has always strived to uphold the support trade between the united states and member states of the arab league which  denominator across the equator and throughout the world of a lack of agricultural productivity malnutrition protein deficiency when i was in the peace corps forty percent of the children died before the age of five because the malnutrition unfortunate to some degree this white has continued during the past forty years madam are was incorporated in iowa nine hundred seventy five which stablished specifically for international trade and development i had no business plan no economic background but to take the ability of i was agricultural resources and history to implemented some of the areas and countries where i had served thankfully made a mark has developed a staff of nearly thirty highly dedicated and skilled people with several backgrounds from several countries minimal our exports of nearly thirty five countries in asia middle east north and west africa the caribbean and service all fifty state's minimal was a pioneer in the first us a company focus indonesia to bahrain in the gulf states madam our products have gain acceptance in the global markets in bahrain based on our minimum our quality usa products and the integrity middlemarch as a full service division of equipment industrial equipment supplies our company has build and supplied total concept turnkey restaurants ice cream manufacturing plants from baku azerbaijan to malaysia singapore the gulf and middle east including behind both singapore and bahrain are island nations having limited agricultural productivity this makes both of these markets ideal for quality usa products as their land limitation will always be a direct bearing on their food productivity just as singapore and malaysia have very cooperative and compatible trade relations across their bridge bahrain is also an excellent doorway to the kingdom of saudi arabia the next bridge of trade is a proposed causeway between behind and qatar another very valued nation and a albany international trade and not a request for international assistance or aid bahrain does not request international aid bahrain requests and has a right for open the international trade which will be beneficial to all parties is my firm under supervision of islamic service of america for certification it is very important for the american industry and trade groups to recognize and respect other countries regulations and concerns and values their consumers and the imports of quality american products we have seen countries in africa asia in the middle east gradually and can continue to refine and define him port regulations many of the importing countries regulations might not  looked upon as barriers but must be respected in terms of their consumer rights and demands just as our u s d a f d a an f a s takes responsibility for our american consumers made him our products are supplied to b mars product line is available in supermarkets five star hotels international fame restaurants catering and to the local people's market that amar has made the focus to provide not only to the flow and developing consumer but has worked with our american producer producer for line of products and range of consumer products in the middle east to export bahrain as a valued market and made a more than an open market to american business represent those with a welcoming airport that is efficient visas on arrival x in the hotel facilities polite and honest taxi drivers and a functioning infrastructure and a safe society where americans and visitors feel absolutely no threat or insecurity women are respected and participate in all levels of bahrain society i have always said and an airport is a window to a country and an indication as to how a country is manage and what one can expect on arrival from the airport and upon leaving visit bahrain and you will see professional men and women working side by side without ever being harassed or hassle or intimidated one will find the same professional spirit in the hotels and modding modern shopping malls and in business with increased oil and crude oil prices shipping costs will continue to increase and this will have a direct bearing on the cost and competitive competitiveness of goods delivered to the gulf a strategic area a free trade agreement will reduce tariffs and keep the market share open for quality usa products benefiting from lower tariffs the u s a s major meat protein competitors are from australia new zealand south america with less competition dependence on europe power the global supply of protein products is being aggressively pursued by exporters from the p r c thailand and brazil even europe has lost market share as a way that usa must progressively work for expanded trade with mutual relations in closing i thank you for the opportunity to be present and present our position as president amid amar and many other companies we urge the approval of this trade agreement i would be pleased answering questions or comments thank you thank you very base near baltimore maryland united source one is an international food management and distribution company we specialize in u s exports to the islamic countries of the middle east including bahrain in december two thousand with a staff of about fifteen sales in two thousand and one reach about twelve million dollars united source one played an important role in supplying food to military contractors in iraq leading up to during  immediately following the second gulf war when food exports from u s one of the gulf exceeded twenty one million pounds this year with u s beef banned slowly lifting we expect export sales to reach about thirty million dollars with staffing back up to about fifty full time employees united source one may be best known in the business for its expertise in american beef exports and for developing and operating u restaurant franchise international food supply programs in the casual dining sector when hunting out in bahrain at five records or chili's or papa john's or applebee's for example the imported u s food on your pla was first processed through our facilities in maryland on its way overseas and in the us bahrain free trade agreement which covers all agricultural products bahrain will provide immediate duty free access for u s agricultural exports all of the food we distribute would benefit from the lower tariffs additionally u s companies would be significantly helped by the lowering of terrorists which would help to offset higher shipping costs into the region compared to europe over the years bahrain's newest leaders and generation have moved closer to the u s bahrain's import regulations have been reasonable and based in large part on science and common sense helping ease access to quality u s food products for bahraini consumers following tariffs is important this f d a is equally important because of the broader implications it has for the region encouraging free trade has benefits that go beyond just making goods cost less following the first gulf war bahrain and other g c c countries greatly expanded commercial ties with the u s more business men and their families came to the states many more traveled here to go to school they embraced american life and then they took those experiences back to the region not surprising american restaurants have become a great vehicle for transferring a popular aspect of american culture that has been embraced in bahrain and around the gulf this is good for the country it promotes understanding it builds bridges this is a good thing i started my international career in one thousand nine hundred one and al khobar saudi arabia managing a saudi company importing and distributing u s beef and other u s value added foods i've worked in the region for the better part of twenty five years and my company united source one exports products nearly exclusively to nine middle east islamic countries bahrain and the other gulf countries have little agricultural production they have great demographics great disposable income these are good markets for american food products free trade in this f d a encourages other gulf states to follow bahrain's lead and work toward a fair trade agreement of their own with the us it promotes trade relations understanding these are all the right things that benefit at the region and the u s most importantly it shows the united states commitment to the region i've seen firsthand that business is a great way to promote american values and the food business in particular helps bring different cultures and people together the f d a you're now considering is good for my company it is good for my country and for improving the competitiveness of u s businesses i urge you to pass it without delay thank you for the opportunity to share my experiences in bahrain and i'm happy to answer any questions you may have thank you very much mr johnson thank you mr chairman members of the committee my name is lionel johnson i'm the vice president and director of international government affairs of citi group and i am also privileged to serve as co chair of the u s barring free trade agreement coalition which comprises seventy five companies and associations that have strongly supported the negotiation of this agreement and urge the congress to approve it citi bank has been present in bahrain since one thousand sixty nine and we were among the first foreign banks to stablish operations in the kingdom we remain fully committed to our presence there and believe that the f d a offers an excellent opportunity to grow our business in the region and to enable us to offer a wider range of world class financial services to our bahraini and our persian gulf customers bahrain's leaders including the minister of finance our reformers in the region in search of expanded opportunities through greater integration into the global economy we have found the government of bahrain to be strongly committed to economic reform and liberalization and citigroup is deeply grateful for its support of our activities in the region bahrain is often consult and work with us in the formulation of new laws and regulations that impact our sector as the geographical and financial center of the middle east and west an asian region bahrain is perfectly positioned to serve as the economic gateway to the gulf through bahrain the doors open to the g c c economies and while just across the gulf region lay the increasingly important economies of southwest asia with which bahrain has had a long thriving relationship even with its vast supplies of natural resources the middle east region remains one of the poorest regions of the world combined with a youthful population that sees little prospect of a brighter economic future these two and factors can lead to destabilizing conditions that pose a security threat that is directly impacting the united states liberalized trade with the region offers the people of the middle east the promise of improved conditions and true participation in the multilateral trading system as well as an enhanced respect for transparency and the rule of law at these economies grow it is crucial that american businesses workers and farmers have a seat at the table i appreciate again this opportunity to testify on behalf of citigroup as well as our business coalition in support of this high standard and comprehensive free trade agreement we congratulate the united states and bahrain negotiators for their achievement and for their willingness to engage the private sector and other important stakeholders throughout this negotiation process we urge swift approval of the agreement by the congress and the present all of us an opportunity to continue the constructive spirit of bipartisanship that has characterized u s trade policy for decades thank you mr chairman thank you m mr levin members of the committee for the opportunity to speak to you today on behalf of the working men and women of the a f l c e o about some of the concerns we have about the us bahrain free trade agreement and of course all submit my full statement for the record that is just summarize some of the key points here with regard to the element of the agreement itself we have some serious concerns with an objection to the basic template that the bush administration has put forward here and in numerous other bilateral and regional trade agreements particular with respect to workers rights i think everybody here knows that we believe these provisions are inadequate ineffective and weaker than what we have in current u s trade law under the g s t and other bilateral other preferential trade programs and under the jordan free trade agreement because the only enforceable provision in this agreement is that countries need to enforce their own labor laws there is no no enforceable protection for the core labor standards of the ilo nor enforcement for country derogating from a weakening of labor laws in order to increase trade in addition the dispute settlement mechanism is clearly inferior to that for the commercial dispute settlement it's designed in our view not to work and i think most people would understand certainly the business community understands that if these provisions were put forward with respect to intellectual property rights if the only enforceable provision with respect intellectual property rights with the countries needed to enforce their own i p r laws whatever they happen to be they could change them at any time that would not be considered adequate for four companies that had a stake in that and these are not considered adequate with respect to labor rights we also have concerns as we've laid out in the testimony and in other places with the services the government procurement and the intellectual property rights provisions of this agreement but there are also some specific problems i want to mention with respect to bahrain we certainly welcome the labor law reforms that took place into the thousand and two which allowed independent unions to form for the first time this is an important step forward it's important certainly in the concept of the middle east but it is far from a comprehensive labor law reform and it falls far short of meeting the ilo standards or bringing the rains labor laws into compliance with the ilo core labor principles there are extremely important issues that have not been addressed yet with respect to the scope of the right to organize and bargain collectively there is no right to organize in the public sector at this time are severe restrictions on the right to strike there is no national minimum wage at this point there is no right for unions to engage in political activity there are problems with forced labor as the us state department has noted and there is no right for women to receive equal pay for equal work the consultation issues are also important some of this came up in the earlier panel that the barclay unions have never received from their government an arabic translation of the a they simply received an eleven page summary in arabic this is simply not adequate it's a shame that this agreement passed the buck for any parliament and yet their unions were never even given a copy of the agreement in arabic that they could read the fact that it's up on the u s t r website is a good thing however u s t r has never even bothered to inform me of that so i can tell the bahraini unions even though i made a formal request for an arabic translation over a month ago with respect to the labor law reform process again the unions have been involved in that process through a tripartite consultation and yet the government has made numerous changes in amendments and we can weakening to that labor law without any consultation whatsoever the unions would like to be included in that process and i don't think that's too much to ask given all the serious issues we believe that ratification of the f b i f d a that requires only the enforcement of domestic labor laws it would be inadvisable given how weak the labor rights protections are that are included in the f d a it's all the more important that these deficiencies in the box ready labor law and the consultation process be addressed before the us congress ratifies disagreements since we know that there is no provision whatsoever in the agreement to bring back rains labor laws up to ilo standards after it is in place and finally let me just say that we have serious concerns with the concept of the middle east free trade agreement particularly the countries of the united arab emirates and oman where there are no rights whatsoever very little democratic consultation and yet the bush administration the u s has already tabled very inadequate labor rights provisions if in fact these agreements are to serve as a beacon for reform in the middle east they simply must do a better job at addressing some of the serious issues with respect to democracy and workers rights that are still open thank you again for the opportunity to come here and testify and i look forward to your questions thank you very much i always search for ways that hearings can have a positive and immediate results in my assumption is that either sometime today or tomorrow you will send to the labor unions in bahrain the arabic text located on the us to our website  that into consideration it is interesting to me that for example your company and several people here talking about the logistics of moving product from this country all the way to the middle east apparently can compete with near p and union and they're significantly shorter shipping distances is it that we just have a sharper pencils  or some of their internal structures or inability to meet particular market tendencies obviously the holocaust gives us the advantage it's kind of amazing when you look at the globe and we've got obviously people who are doing quite well and you are moving their products into that region how do you do it if notable miles is certainly a difference but coming from europe  competitiveness of these gentlemen's products and their price and their ability to serve the customers beyond the transaction date and that's why the successful it's not the logistics mr kaplan we're looking at bahrain before the movement on the free trade agreement for factors other than the obvious convenience of the free trade agreement yes and if so why we have found that the region has been an opportunity for us to provide value products and we see value products as you were asking in the previous question is quality and the ability to service those products brunswick is a international business we have offices in region possibly in bahrain based in discussions it has been an area that we have been conducting business with for decades and with our international presence we're viewing that market as one of our next expansion opportunities  area over the last twenty years based upon your personal experience or if you can provide a different timeline of what has been or was are some of the most significant changes that you've seen  has it been a move recently to try to meet criteria to get a free trade agreement or has it been more of an evolutionary process based upon standing relationship between the united states and i think it's probably been both i think it's certainly been evolutionary i don't think there's any question about that i think just the mere fact of globalization the a great many very well educated people and of course as has been noted by other speakers  a number of them have been educated in the united states and i think my friends particularly in the business world recognize that for a long time that the united states in fact is the leader of commercial enterprise employees the majority are bahraini women and i think it's a very interesting point certainly from my point of view thank you one of the things i personally was impressed with in talking to her a nice and we had a brief history would lose that resource and focused on the fundamental resource and that is their people and they have i think made significant strides in education and other directions and it certainly could be a model for other countries in the region thankfully we've been one of the major providers to the five star hotels with quality meat but we have not entered the commodity market of the beef liver there was an egyptian delegation that was just here recently but egypt has been a good market for us past eighteen years and it has just recently reopened their market to quality usa beef boneless beef mr i'm getting i don't recall that you mentioned specifically in your testimony  not require been all your major protein groups have to be certified prior to export for entry and the middle east countries and the only reason i mention egypt is about hiring a certainly a nice market with seventy plus million people is an entirely different story if we can move forward with the free trade agreement with egypt and our ability to supply products especially in the poultry and other meat areas so much is been made about how small the whole reign as and actually if you add up most of the gulf states that are all small and even as a total collective they aren't that bart but i have to believe that being able to enter into a free trade agreement and you folks who are on the ground can tell me more directly if this is the case would probably give a slight margin of advantage to bahrain over its neighbors which its neighbors would like to remove as quickly as possible and with the partial exception of ms lee and i guess one of the questions i would ask her is if bought her a new isn't a minimally decent model for labor in the area notwithstanding its faults is there any other country that you would hold up that actually is a better model in that immediate gulf area or are they just is it is it possible to rank them relatively not with standing there faults and where would you place bought her reign if you were willing to do that i think it is hard to rank countries better or worse because it's not a a single linear scale but rain is certainly one of the better countries in the middle east with respect to labor rights and our concern is about the provisions in the agreement being inadequate so many countries understand we're  sweden and so and then the question is you know what is built in in terms of incentives and mechanisms to improve the labor laws in those very important areas workers where they are still inadequate and i would just in a brief retard i don't want to do it here but to use the caribbean basin initiative as a as a base mark is of course advantageous to you but you have to remember that that was a gift on the part of the united states in to the caribbean region and we can include whatever we want in a gift to a region in terms of opening up a market which is precisely what we did but a free trade agreement is just that it's an agreement between two countries and you have to get agreement on both sides to have an agreement and so do use an example of a gift as a basic which you certainly entitled to because those provisions are more attractive and we supported the republicans a majority supported those provisions as well but you do have to understand that it was in the context of a gift back to the main point not withstanding labor that i've got to believe that this structure as a model certainly one enhances our ability to get additional agreements and to enhances our ability to get additional agreements at a standard that is perhaps as high or higher than most of you might have expected what five years ago three years ago i mean at some point i hope people appreciate the acceleration of relationships in this area and that if this pace continues and egyptian reforms continue and the saudis realize how far they really have to go to be able to be reasonable competitors both in terms of civil rights and legal rights  that this is an opportunity to move into a major and growing market which i don't think too many people had penciled in some time ago on the broad basis of involvement  johnson your business obviously as reflected by the number of other banks that have utilized the financial services and other structures you went there why  environment for financial services at that early period was very conducive to our business and we found as well typically citigroup will follow its major corporate clients and the investment that was going into the  country to the kingdom at that time provided a good foundation for for us to establish that business and today of course and working with the kingdom and the government of bahrain we have  determined that bahrain is not only a hub for financial services in the region for other institutions but for us as well we do a lot of our work throughout the gulf out of bahrain but also for our middle east our europe essentially east europe business and africa through bahrain as a as a regional hub so over those years it's developed systematically into a major financial services center for us notwithstanding the decision that you made in the sixty's and it's difficult to be objective on this if you are now attempting to move into the region today with your decision to be the say it would certainly be the same i think the financial services provisions of this agreement  based on the regulatory environment the attitudes of government there the high standard of of services that are provided that are available to us there and most importantly as the admiral indicated of the the quality of the workforce we have a very very very happy and successful workforce there seems to me that if in fact we are committed not think we should be to enter into a closer economic relationships and we were looking for some kind of a standard or a model to which we would want to hold others that the bahrain agreement being first would be the appropriate country and the agreement as a standard certainly will move people in the direction of examining what's going on in that country their country and use that as a yardstick mistrusting if again i thank you for allowing us to be here at the u s air trade line of september october on page eight has some statistics on bahrain which may be reviewed but again  looking at bahrain geographically and strategically i think it's important to look at behind just as we look at singapore position between malaysia and indonesia you have bahrain as a key state with a large population of egypt just like indonesia if we can move by rain along and there's been a lot of talk about instability the war on terrorism would have it it's important to solidify relations with these countries and we cannot just bahrain as a small market a small country isolate in the gulf it has to be looked upon within the region and globally windows a small of a house but it's a good way to get in and that's why i say the if one goes to the bahrain airport you'll see efficiency visas on arrival that will tell you how the country functions gemma from michigan property or investment or in services there's no other place and said to reason why i think it's important to talk this through were important steps forward there are places where the laws to meet the basic core labor standards they've essentially acknowledged that and the question is whether or not they're going to complete their compliance before issue green that is placed before us or whether we're going to depend on their actions afterwards and we had here yesterday discussion about our unwillingness to rely simply good intentions and i think the bahraini government is in good faith trying to bring their laws up to the basic ilo standards some of the deficiencies we touched on earlier some of them are in the testimony of a agree to that for intellectual property and i think in that sense that was the system we had with intellectual property ten years ago so i'm hopeful that the minimum wage issue is an important issue but it's not part of the ilo standards you're talking about the basic core standards that are in the declaration that this government has signed on to show just want everybody and when we talk about workers we're talking about important parts of the economy in this society we're not talking about interest groups  possible that the bahraini government will will make this is much is less an issue it's possible that's what was done in reality in singapore and with chile where the laws reflect international standards incorporate them and force them i want to finish to take advantage of your presence mr cl think they were directly employed by you but i do think an active part of the poor you know maybe you know you can't be sure how active you are in every port so i don't mean to put you on this but i just my my friend from michigan that i do understand your belief that the level of requiring people to live up to their own laws is not as meaningful a standard as you would like but it seems to me that if they're committed to living up to their own laws and they're committed to making changes and also laws that is an absolute requirement that we simply do not assume that if they have committed to do that they have but that we will go forward under the assumption that they may at a future date i want to underscore that in sending a message to the government of bahrain that they have made commitments to us on the basis of certain policy positions and we assume take my full time but i think this panel has been very very enlightening i'd like to make an observation however which i think is most important and i now understand my friend from michigan and his passion for workers rights but i can't think of one free trade trade agreement that has in any way diminished workers rights in our trading partners as a matter of fact i think it has shine this spotlight on such things as human rights and electoral property rights environmental questions and workers rights so i think that if it if it if it if our mission is part of negotiations so i think we're making tremendous step forward in all of these areas and through our negotiation negotiation process i think also we have found that with few exceptions and there are some exceptions but few exceptions that american labor has profited from these free trade agreements because of the jobs that have been created now needless to say some of these jobs have gone overseas and i do understand that but when you look at the overall picture of where we are in the direction we're going believe that it is safe to say that it's been good for american business it's been good for american labor it's been good for the american economy and you can go through and strike off the various countries in which we have stablished free trade agreements and and establish that because if that were not true and if american competitiveness was not increased as a result of these free trade agreements i would venture to say that we would be we'd be losing losing out and going backwards thank you about the thing german did the bahrain and in the region and what is the most significant aspect the f t a that will help you see these opportunities prior to responding up mr clancy if you are feeling time pressure for the question i think that in the first instance the more there is an increase in bilateral trade the better the fantasy services industry does and to be able to provide the financing and to to be the conduit for that trade through financing and the provision of world class family services we benefit and we do very well there we look for continued opportunities for growing our business through the expansion of branches and providing a wider range of financial services to the clientele that we have both in bahrain and in the region so i think that within the context of our range there are lots of opportunities for growth and we look forward to that the context of the region as the chairman has stated earlier as these as the agreements are struck with each of the countries in the region we see a wider network of opportunities for us in those particular markets but as a market overall so we look at bahrain as perhaps being a small geographic entity a sovereign state but taken collectively the region offers enormous opportunities for financial services providers like like our own with thank you mr johnson for your comments and just in my travels around different countries in that part of the world and and in general  experience is that the business community that we've met with are outstanding representatives of our country and i would agree with you the more we can have our representatives out being able to have a positive impression making a positive impression on those in a part of the country that are so crucially important in the war on terrorism and just developing friends around the world i really think it's a win win what we're doing again i thank you and each of our witnesses here today for your involvement in and this area thank you thank you thank john gentleman from wisconsin thank you mr chairman i think this is been a very helpful hearing we've heard some questions i think mr mcdermott had a question about well why are we doing this you know why a small country like bahrain how is this important to us i think that question has been answered pretty well for those of us as policymakers the reason many of us are so interested in this particular agreement and the future agreements we're going to have in the gulf is this is a key part not just to our economic security but to our national security this is a key tool in fighting the war on terrorism and  argue that the best weapon against terrorism is democracy democratic capitalism helping bring hope and opportunity self determination to people in the countries that do not now have them that are  our hope and goal is policymakers is that the spread of democratic capitalism of openness of transparency of human individual rights is going to be the best medium and long term weapon to bring peace and security not just for america but for the world and for the middle east in particular so that's really the vision thing what i want to ask each of you because most of you have been in business in bahrain in this region for quite some time what i want to access each of you is your own personal observations of each of you is an actor and a participant and on the ground player in what's going on in this country and in this region in particular and so i would really like to get each of your personal observations as to what the trend is what's actually happening not just the trade agreement but this trade agreement having this trade agreement in discussions of the trade agreement the lead up to this trade agreement brought about opening markets bringing  transparency to the to the government to the systems democratizing the gulf region and what have you seen has occurred because of our engagement in this region with respect to opening democracy markets free enterprise transparency the rule for that part of the world and it's because of the transparency that the shippers the owners of the merchandise a comfortable within the importers whether they're in that country or other countries will grow business more offices on the other countries will begin to ask what do i need to do to participate in this growth in this activity and what we see in other places in the world as they will try to begin to emulate what they see what's happening in bahrain  from my observations i have noted brainy government has been very positive towards our interaction with them through our products and services over the last fifteen years but what  also noticed is that as they are evolving in understanding democracy of how we view things and the opportunities available to them they're doing a great job of balancing between the democracy and the religious factors that they have internal and they seem to be managing that quite well and looking towards how to move their country their process forward in a way that is acceptable within say just from my limited relationship there and other countries in the region i think that it's all along the lines of education and i don't mean education of the individuals but understanding how we in the united states operate how europe operates how asia operates and trying to get the best of what they they're it's just a matter of being involved and understanding and realizing that there are good things that are out there that you can grasp and  extremely difficult to do if you don't utilize half of your population as part of the folks who are working to make the country a better place and from all i've heard and i have not been there yet  year when i was in bahrain i met with a number of business man including the chamber of commerce and they told me a very interesting story after the constitution was approved the parliament was first elected the business community centrally to a large degree ignored the parliament because they didn't really think it was terribly relevant to their when the free trade agreement issue became an issue they suddenly became very concerned that the parliament indeed support the free trade agreement and all of a sudden the business community became very interested in the democratic process formed a number of groups business groups lobbying groups if you will which were very reminiscent of groups in this country that attempt to influence policy at the parliamentary congressional level it was a very interesting aspect of what the free trade agreement what impact is it could have in raisins products from california so when one talks about bahrain you have to think about the greater market because behind it is a transit point and california is a major supplier into that region and it's a gift to us because we're competing against formally pistachios from afghanistan and not from india but california is a major to your point if i'm a migrant grandfather h leach and senator grassley and senator harkin and i think when we talk about moderates it cannot be a catch all for all of the frustration and deviance it's a broader picture than that and our greatest challenge when you said you'd like to know the challenge in the middle east in that area the greatest challenge is most of these countries nearly half of their population and up to sixty five percent in iran and iraq are under the age of thirty employment that we have a real challenge and as a toy earlier i think we have to get back to some basics and dealing in these regions when we talk about employment in this area one has to keep in mind  cultural values twenty years ago you could not have a young lady from any type of family work in a hotel because there is a cultural stigma your daughter works in a hotel she's a hotel worker that had a negative stigma so the process in this area i first went to the peace corps in sixty five went to saudi arabia sixty seven to seventy one it was a very close traditional country after sixty seven war the suez was closing as the these countries made tremendous strides to come to where we would like to see them to reform and it's not going to be a quick process when we talk about democracy we think of all of europe as democratic but what they have in norway not like greece where they haven't spain is not like switzerland so there's not a footprint of democracy for the middle east they have to find their own ways but the biggest challenge has how employment is going to be created for hundred sixty one as a student from cornell college we have to address and that's why it's so important to approve this trade agreement because we cannot let one thing like labor issues where these countries have gone through tremendous strides to involve their people to broaden the base of employment in constructive involvement in the society so we have a challenge in and i think in our business we started with no business plan but my father never had an education but he said there are four or five things you pay your taxes i came this country with nothing and our first obligation is pay our taxes second you pay the banks thirdly you pay your suppliers because you can't get anything for it you take care of your customers and if there's anything left you did a good good management job that's for you and i think this is what our government has to do no foreign aid to help these countries get trade and always tough to follow bill on the panel i'll do my best but the democracy i've been in the region twenty five years there been a lot of changes been a lot of things that haven't changed democracy depends on an educated population not only in the middle east but here in the states when i've had other u s businessmen travel with me to the region the first thing i tell them is you better get up to speed a little bit on the current news in washington because they'll know more about what's going on than you do and that's that's still the case probably the the best thing as i mentioned in my testimony we need to encourage for democracy to take hold for the for any of us to work for there to be more understanding we've got have exchange you've got to have commerce you've got to have something going on on the political front we don't always score very high marks in that part of the world from a business standpoint we need to do better we're much better buyers than we are sellers the more we can encourage business people in particular in their families to come to the states go to new york to go to disney world to eat in our restaurants than our hotels drive on our highways the more they spend time here and go to our schools and get educated here they take those ideas back and my concern since nine eleven has been we've begun to close the door make it more difficult for the people who are the influence people in the region to come here and if we're not careful and we close the door too tight we're going to lose a generation and if we lose a generation we're going back mayor certainly mr ryan we agree with you that democracy and human rights are especially important in this part of the world but we also would like to see that a larger a higher priority in our governments negotiations and we don't see problems with forced labor and so why are those the countries we've picked out to reward with n f t a at this time and i think it's important to harp on this issue of the workers rights provisions but you know mr thomas you said you know they'll make the labor law reforms and then we have their assurance that maybe five years ten years from now a new government could come into place and could eliminate all those labor law reforms could got the labor laws entirely and there's nothing we could do under the terms of this agree i'm an optimistic person and i like to think the best of people but i know also that when we negotiate a trade agreement we don't negotiate on a best case scenario assuming that our trading partners always behave themselves as we would hope we have to negotiate for bad case scenario and that's what we have not done in the case of workers rights so if in fact a less democratic government were to take place take over in five ten fifteen fifty years in bahrain there's nothing we haven't built any protections for ourselves in this agreement with respect to that and i want to say just a couple of words in response to what mr shaw said about how labor has benefited profited from the we've lost almost three million manufacturing jobs in this country real wages are falling poverty is increasing median family incomes are falling we have trade deficits w almost all the countries growing trade deficits with whom we've negotiated free trade agreements our overall trade deficit is approaching seven hundred billion dollars a year that does not look to me like evidence that u s competitiveness has been improved by the kinds of trade policies we put in place t hat we're out of time i'll just conclude with this without a trade agreement we have no progress on worker rights we have no commitments that are going to be followed up on with that i'll just conclude thank you very much  lou we have a twelve point five billion dollars economy were growing faster than most any other in the world on a consistent basis we create jobs in a way that provides a dynamic for people to move up within a generation rather than between generations and i don't completely understand your argument although i hear it that somehow we have to be careful because ten years fifty years from ramifications across the entire society and that it would be then a less democratic society which would have ramifications in the legal system and a number of other areas as well it is as though somehow labor is isolated from the actions and interactions of an entire society and indeed now it was danding your conclusion that we are a democracy and every member on this panel and every member in the house of representatives offers their vote voluntarily and frankly as chairman of this committee moving this legislation through i'm anxious to see how many members republican or democratic voluntarily supply a yes vote on this particular agreement i think based upon your concluding statement i'm going to be a bit more pleased than you are i want to thank the panel and especially your willingness to allow us to carry on our  business while you waited for us to allow you to carry on yours thank you very much mr chairman i ask a question ok since many members are not present how do you relate back to your committee the response of this committee so many of i'll tell the gentleman that the important people were here committee is adjour