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92–444—PDF 2015

S. HRG. 113–526 

TRADE ENFORCEMENT: USING TRADE RULES 

TO LEVEL THE PLAYING FIELD 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 25, 2014 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

RON WYDEN, Oregon, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

MARK R. WARNER, Virginia 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JOSHUA SHEINKMAN, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee on 

Finance .................................................................................................................. 1 

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 3 

WITNESSES 

Brosch, Kevin J., trade consultant, BroschTrade, LLC, on behalf of the National Chicken Council, Washington, DC ........................................................... 8 

Wilkins, Richard, treasurer, American Soybean Association, Greenwood, DE .. 10 

Peterson, Bart, senior vice president, corporate affairs and communications, 

Eli Lilly and Company, Indianapolis, IN ........................................................... 12 

Gerard, Leo W., international president, The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union (United Steelworkers), Pittsburgh, PA ...................... 14 

Longhi, Mario, president and chief executive officer, United States Steel Corporation, Pittsburgh, PA ...................................................................................... 16 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Brosch, Kevin J.: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 35 

Responses to questions from committee members ......................................... 40 

Gerard, Leo W.: 

Testimony .......................................................................................................... 14 

Prepared statement .......................................................................................... 42 

Grassley, Hon. Chuck: 

Letter from the National Cattlemen’s Beef Association to Senator Grassley, dated June 25, 2014 ............................................................................... 60 

Hatch, Hon. Orrin G.: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 62 

Longhi, Mario: 

Testimony .......................................................................................................... 16 

Prepared statement .......................................................................................... 65 

Responses to questions from committee members ......................................... 71 

Peterson, Bart: 

Testimony .......................................................................................................... 12 

Prepared statement .......................................................................................... 73 

Wilkins, Richard: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 78 

Responses to questions from committee members ......................................... 85 

Wyden, Hon. Ron: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 88 

COMMUNICATIONS

American Wire Producers Association (AWPA) .................................................... 91 

ANSAC ...................................................................................................................... 95 

National Association of Manufacturers .................................................................. 97 

(III) 

(1) 

TRADE ENFORCEMENT: USING TRADE RULES 

TO LEVEL THE PLAYING FIELD 

WEDNESDAY, JUNE 25, 2014 

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. 

The hearing was convened, pursuant to notice, at 2:12 p.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Ron Wyden 

(chairman of the committee) presiding. 

Present: Senators Stabenow, Carper, Cardin, Brown, Casey, 

Hatch, Grassley, Crapo, Thune, and Toomey. 

Also present: Democratic Staff: Jason Park, International Trade 

Counsel; Jayme White, Chief International Competitiveness and 

Innovation Advisor; and Elissa Alben, International Trade Counsel. 

Republican Staff: Chris Campbell, Staff Director; Everett Eissenstat, Chief International Trade Counsel; Rebecca Eubank, International Trade Analyst; Kevin Rosenbaum, Detailee; and Shane 

Warren, International Trade Counsel. 

OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR 

FROM OREGON, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The Finance Committee will come to order. 

Much of the recent debate in the Congress over international 

trade has focused on new agreements, agreements that are currently in the works, including the Trans-Pacific Partnership and 

the Trans-Atlantic Trade and Investment Partnership. It is my 

view that not enough time has been spent on the trade agreements 

that are already in place. Have they created American jobs? Have 

they boosted our economy? Are they being effectively enforced? 

While I intend for the Finance Committee to examine all aspects 

of U.S. trade policy, today it is going to focus on enforcement. Without strong enforcement, no trade deal old or new is able to live up 

to its potential for jobs and economic growth, and it becomes extraordinarily difficult to build support for new agreements. Foreign 

nations will continue locking American goods and services out of 

their markets. Foreign companies that get unfair backing from 

their own governments will continue to undercut our manufacturers. They will undercut our farmers, they will undercut our ranchers, and they will drive hardworking Americans out of business 

and out of their jobs. 

The latest tactics used by some foreign nations and companies to 

skirt our trade rules seem like they have been ripped from the 

pages of crime and spy novels. They hide paper trails to make it 

harder to build cases in trade courts. They intimidate witnesses, 

2 

force American businesses to relocate factories or surrender intellectual property, and threaten retaliation if they speak out against 

unlawful behavior. They even spy on our trade enforcers and our 

companies to undermine efforts to hold them to the rules, and, 

after they have been caught breaking the rules, they engage in outright fraud to avoid punishment. They play cat-and-mouse with 

Customs authorities, and they use shell games and fraudulent 

records to exploit weaknesses in our system. 

The global economy is more interconnected than ever, which 

means that there is even more at stake for American workers and 

American businesses. China, India, Brazil—the list of critical markets with serious, serious enforcement challenges has grown. As 

that process has played out, for example, currency manipulation 

has hit American workers and our businesses harder than it did in 

previous decades, and that is particularly true when it comes to 

China. Currency manipulation makes any product manufactured in 

our country—any product—artificially more expensive. In effect, it 

is a way for China to keep a finger planted on the scale, costing 

the U.S. jobs and making it harder to recover further from the 

Great Recession. 

Now, when I came to the Senate, the U.S. had only three free 

trade agreement partners. Today it has free trade agreements with 

20 countries. China joined the World Trade Organization in 2000, 

bringing with it a host of enforcement challenges. With so many 

new agreements and issues to confront, the enforcement job has 

gotten bigger. Our enforcement policies have to account for new 

rules in trade. Guatemala, for example, is now a U.S. free trade 

partner. When Guatemala repeatedly fails to enforce its own labor 

laws, our country has to take a stand, and our country has to uphold the rules. 

All trade commitments and all agreements have to be enforced 

with the same vigor. The challenges of the modern global economy 

simply do not always fit within our aging enforcement system. 

American trade enforcement, in short, needs to be brought into the 

21st century. For example, when the Chinese government gives its 

domestic solar companies massive subsidies, our government needs 

to respond quickly and with all available resources. In practice, the 

response took years, and it was too little and too late to protect 

thousands of American jobs and homegrown technologies. The Chinese solar companies had already crippled their American competitors. That is why a more effective enforcement authority is needed. 

Better enforcement tools would identify and stop a problem more 

quickly before it costs our people jobs. 

Now, the same goes for enforcement on our borders. When fake 

tennis shoes or counterfeit computer chips arrive in our country, 

Customs often appears too focused on security rather than its trade 

mission. This is especially damaging, since foreign companies and 

governments are finding new ways to mask where the products 

come from before they show up at our doorstep. For example, Chinese companies avoid antidumping duties by routing merchandise 

through a place like Singapore before it heads to the United States. 

The schemes are becoming even more complex, sometimes involving shell companies that appear one day and disappear the next 

without leaving any paper trail. The ENFORCE Act, bipartisan legVerDate Mar 15 2010 16:48 Feb 25, 2015 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 R:\DOCS\92444.000 TIMD
3 

islation I first introduced in 2011, would mount a stronger defense 

against those practices. It would set up a standardized process to 

move investigations forward, and it would establish better lines of 

communication between agencies to get information in the right 

hands. It would also refocus Customs so that its trade mission does 

not get short shrift. 

Proper trade enforcement is an increasingly difficult job. It takes 

time, and the fact is that it is impossible to stand up a trade case 

in a single day. But it is essential for enforcement agencies to have 

the resources needed to do their jobs effectively. Too often when 

these cases lag, American workers are losing their jobs, and our 

businesses close their doors. Succeeding in the global economy is 

already challenging. The U.S. should not add to the difficulty by 

underfunding important enforcement efforts. 

This is especially true when our country is negotiating more 

trade agreements. There are lots of American businesses and workers who look at the North American Free Trade Agreement and the 

World Trade Organization and wonder whether more trade agreements are really a pathway to growth, and that comes up in my 

State all the time, a State where one out of six jobs depends on 

international trade. 

If enforcement falls short for the agreements already in place, it 

is going to call into question America’s ability to enforce future 

agreements, and our international competitors will see an opening 

to break the rules at the expense of American jobs and American 

exports. So the challenge now is to build a strong enforcement system that befits a modern global economy and one that ensures 

trade agreements respond to today’s challenges to deliver jobs and 

economic growth to more Americans. 

[The prepared statement of Chairman Wyden appears in the appendix.] 

Senator Hatch? 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Thank you, Mr. Chairman. I apologize for being 

a little late, but I appreciate you holding this hearing. 

Today we are examining the role of trade enforcement in advancing U.S. international trade interests. Now, some of the most important trade enforcement tools we have are U.S. safeguard and 

antidumping and countervailing duty laws for companies like U.S. 

Magnesium, which operates in Salt Lake City and Rowley, UT. 

Trade laws are essential to their ability to compete against imports 

that unfairly benefit from foreign government interference in the 

market. I want to ensure that these laws remain effective tools in 

our international trade arsenal. 

That is one reason the Bipartisan Congressional Trade Priorities 

Act, which I introduced with former Senator Baucus in January, 

includes, as a principal negotiating objective, a directive to preserve 

the ability of the United States to rigorously enforce our trade 

laws. I also want effective trade enforcement at the border. That 

is why I worked with Chairman Wyden to craft a version of the 

ENFORCE Act that gained unanimous bipartisan support in the 

Finance Committee. This bill provides new tools to help stop cirVerDate Mar 15 2010 16:48 Feb 25, 2015 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 R:\DOCS\92444.000 TIMD
4 

cumvention of our trade remedy laws, and I want to compliment 

Senator Wyden for his work on that. Legislation I introduced with 

former Senator Baucus in 2013 to reauthorize U.S. Customs and 

Border Protection includes the ENFORCE Act, in addition to a 

number of other tools that will help stop the entry of counterfeit 

and other illegally shipped goods into the United States. 

Now, I hope the committee will act on that bill soon. And, while 

we work to ensure that our Nation has the tools to battle unfair 

trade practices domestically, we also need to create effective multilateral and bilateral systems to help us enforce our rights abroad. 

When used well, the World Trade Organization dispute settlement system has proven to be an effective forum. Senator Portman, 

when he was the U.S. Trade Representative, brought the first WTO 

dispute against China, in which China was found to have breached 

its WTO commitments. Before that case, China was imposing restrictions on imports of U.S. auto parts that were harming U.S. 

companies and workers. By effectively employing the WTO dispute 

settlement system, we were able to get China to reverse course and 

remove those restrictions, and, as you can see, we have a system 

that works. 

Of course, the effective use of the dispute settlement tools at our 

disposal depends upon the proper prioritization of enforcement efforts by the administration. I remain disappointed in the Obama 

administration’s failure to bring a single case against Russia since 

they joined the WTO. 

When Congress considered legislation granting Permanent Normal Trade Relations to Russia in 2012, the administration argued 

vigorously that we needed Russia in the WTO so we could bring 

them to dispute settlement when they violated international trade 

rules. Ironically, Russia recently announced that they would pursue a WTO case against the United States while our administration refuses to act, even though Russia has repeatedly violated 

WTO rules concerning sanitary and phytosanitary practices, intellectual property rights, and, of course, localization barriers. 

I am similarly disappointed when it comes to the administration’s enforcement of intellectual property rights abroad. Despite 

Canada’s, Chile’s, China’s, and India’s rampant and repeated disregard for their obligations regarding intellectual property rights, 

the Obama administration refuses to bring a single case against 

any of these countries’ practices, sending a signal not only to these 

nations, but to the rest of the world, that this administration will 

not act to protect U.S. holders of intellectual property rights 

abroad. 

I also remain deeply disappointed in the Obama administration’s 

selective implementation of our trade agreements with Colombia, 

Panama, and South Korea, time and again choosing labor over innovation. For example, Panama was forced to make statutory and 

regulatory changes to its labor laws before the administration 

would even submit that free trade agreement to Congress for approval. In the case of Colombia, the administration required the 

Colombians to make changes to their labor regime that were not 

even required by the free trade agreement before sending the 

agreement to Congress. 

5 

Contrast this with the case of the Korea Free Trade Agreement, 

where the Obama administration allowed the agreement to enter 

into force knowing that the Koreans had not created an effective 

and fully independent review mechanism for pricing and reimbursement of pharmaceuticals and medical devices. In my view, 

they squandered the leverage of entry into force, and now we face 

an uphill battle to bring Korea into compliance. 

We should not tolerate similar practices going forward. That is 

why the Trade Promotion Authority bill that former Senator Baucus and I introduced contains strong new oversight mechanisms 

that will help ensure full implementation and effective enforcement 

of our trade agreements. I intend to make absolutely sure that each 

country with which we have a future trade agreement is fully in 

compliance with that agreement before the agreement enters into 

force. 

We must also do a better job of protecting U.S. innovation. That 

is why I introduced legislation to create a Chief Innovation and Intellectual Property Negotiator in the Office of the U.S. Trade Representative. This individual would ensure that intellectual property 

rights are no longer an afterthought, but a key component of our 

trade and enforcement policies. 

Now, strong enforcement of existing obligations is vital, but we 

also need to be pushing boundaries, constantly developing and negotiating the international rules to counter unfair trade practices 

with new high-standard trade agreements. Again, our bipartisan 

Trade Promotion Authority bill achieves this, addressing currency 

practices, digital piracy, digital trade, cross-border data flows, 

cyber-theft of trade secrets, localization barriers, non-scientific sanitary and phytosanitary practices, state-owned enterprises, and 

trade-related labor and environment policies. 

Many of the tools I mention today will only be effective once they 

are put into law. So I hope the committee will soon act on these 

pending trade bills so that we may provide the American people 

with the best, most up-to-date, and effective enforcement regime 

possible. 

Again, Mr. Chairman, thank you for holding today’s hearing. I 

look forward to hearing from our witnesses. 

The CHAIRMAN. Thank you, Senator Hatch. 

[The prepared statement of Senator Hatch appears in the appendix.] 

The CHAIRMAN. I simply would like to offer to the folks in the 

back with the signs: I understand that Americans have strong 

views that they want to express, and the First Amendment protects 

our right to say what we want, but we also have to respect the 

rights of others in order to have a discussion. 

So at this point, I would like to make clear that I am going to 

be listening in the days ahead to those who share the views of 

those with the signs, and I would like to ask our guests in the back 

to put away their signs and sit down, please. 

Thank you very much. 

Senator GRASSLEY. I have a letter I would like to submit for the 

record from the National Cattlemen’s Beef Association dealing with 

trade. 

6 

The CHAIRMAN. Without objection, Senator Grassley’s letter is 

entered at this time. 

[The letter appears in the appendix on p. 60.] 

The CHAIRMAN. We are pleased to begin our hearing today with 

Mr. Kevin Brosch, representing the National Chicken Council in 

Washington, DC. 

Following Mr. Brosch is Mr. Richard Wilkins, a soybean farmer 

from Greenwood, DE and treasurer for the American Soybean Association. 

Senator Carper, would you like to say a few words about Mr. 

Wilkins? 

Senator CARPER. No. No. [Laughter.] Yes I would. 

I have known Richard for a long time. I am happy to see him, 

and he and his wife, Donna, along with—I think it was a nephew 

named Christopher—farmed near a place called Greenwood, DE, 

which is in Sussex County. 

Richard, the fellow sitting here to my right had the temerity of 

asking me before we began this hearing whether or not 400 acres 

was just about the size of Delaware, and I am just here to say that 

this man, he lives and he farms in Sussex County, DE, the third 

largest county in America. They raise more soybeans in Sussex 

County, DE than any county in America, and more chickens than 

any county in America. 

So we are proud of all that. Not only does Richard raise soybeans, he raises corn, wheat, barley, vegetables, hay, and I think 

about 150 head of cattle. No chickens, is that right? 

Mr. WILKINS. Senator, unfortunately, I married a beautiful young 

lady who had an allergic reaction to feathers. 

Senator CARPER. Well, that is too bad. You are probably the only 

farm family in Sussex County that does not raise chickens. 

We are happy that you are here. The farm has been in their family for, gosh, since 1951, that would be over 60 years. And I have 

been told that your family has been farming this area for hundreds 

of years. 

In addition to his day job, Richard is also the treasurer of the 

American Soybean Association. I do not know what that pays, but 

we are proud that you hold that position, one of nine soybean growers nationwide who make up that organization’s executive committee. 

He has been active in the American Soybean Association for over 

a decade, serving in the past as president of the association’s Delaware chapter and vice president for the entire organization. Vice 

president kind of runs in our blood in Delaware—the Soybean Association, the country, whatever it might be. 

Richard also serves as a member of the American Farm Bureau 

Soybean Advisory Committee—a blue hen, a fighting blue hen, not 

a mud hen, as Richard Durbin likes to say, but a fighting blue hen 

from the First State of Delaware, earning a bachelor of science degree in agriculture from the University of Delaware, one of my 

alma maters. 

It is great to you see here. Thank you for being a big part of our 

State and for being here today. 

Mr. WILKINS. Thank you, Senator. 

Senator CARPER. Thank you, Mr. Chairman. 

7 

The CHAIRMAN. Thank you, Senator Carper. 

After Mr. Wilkins is Mr. Bart Peterson, senior vice president for 

corporate affairs and communications at Eli Lilly and Company 

from Indianapolis, IN. 

After Mr. Peterson, we are going to hear from Mr. Leo Gerard, 

international president for the United Steelworkers from Pittsburgh, PA. Mr. Gerard will now be introduced by our colleague, 

Senator Casey. 

Senator CASEY. Mr. Chairman, thank you, and thank you to 

Ranking Member Hatch for holding this critical hearing. 

We know that aggressive trade enforcement is critical to maintaining a level playing field for all of our companies. Too often we 

find ourselves on the defense. For example, we know that the domestic steel industry now is facing a new crisis due to unfair trade 

practices from our competition. According to the recent report by 

the Economic Policy Institute, domestic steel imports increased by 

almost 13 percent just from 2011 to 2013. Without action, we stand 

to lose half a million jobs in this country, over 35,000 in Pennsylvania alone. So we cannot afford to send any of these good-paying 

jobs overseas. 

So, given the importance of this topic, I am pleased to have the 

opportunity to informally introduce Leo Gerard of the United Steelworkers and also welcome Mr. Mario Longhi, who is head of U.S. 

Steel, two great organizations that work together every day to create jobs. 

Many of you know Leo Gerard’s story, but I will just summarize 

it quickly. I do not think there is anyone who has fought harder 

to level that playing field over these many years than Leo Gerard. 

He is the son of a union miner and activist. He was appointed 

International President of the Steelworkers in 2001. Since taking 

the helm, the Steelworkers have filed more trade law complaints 

than any other union or company. 

He is a superb and effective advocate, especially for his workers. 

We know that Leo and the 850,000 steelworkers, including over 

55,000 in Pennsylvania, live these issues day in and day out, and 

I look forward to hearing his testimony and Mr. Longhi’s as well. 

We are grateful that he is here with us fighting these same battles. He came to Pittsburgh and U.S. Steel in 2012 and was named 

president and CEO in June of 2013. 

So we are grateful for their leadership and their presence here 

and their testimony. We are happy to have the chance to say hello 

to both. 

Thank you. 

The CHAIRMAN. Senator Casey, thank you, and thank you also 

for making it clear that this is a business/labor kind of effort that 

you are focusing on. That is very constructive. 

My thanks to all the witnesses for being here. It is our usual 

practice that your prepared statements are automatically going to 

be made part of the record. We would like you to use 5 minutes 

or so to summarize. And even by Senate standards, the next hour 

is going to be a little bit chaotic because we are going to have three 

votes on a very important piece of legislation involving essentially 

the workforce and training. 

8 

So you are going to see Senators try to keep this going. We will 

be almost like trolleys, but I hope that you all will recognize that 

we would rather be able to just do this continuously. That is not 

going to be possible. So we will start and get as far as we can. 

Mr. Brosch? 

STATEMENT OF KEVIN J. BROSCH, TRADE CONSULTANT, 

BROSCHTRADE, LLC, ON BEHALF OF THE NATIONAL CHICKEN COUNCIL, WASHINGTON, DC 

Mr. BROSCH. Thank you. Thank you, Mr. Chairman and members of the committee. My name is Kevin Brosch. I am a Washington trade lawyer who has specialized in agricultural trade for 

more than 30 years. I have worked in private practice here in 

Washington, at the Department of Agriculture, and here in the 

U.S. Senate. 

Today I appear before you on behalf of the National Chicken 

Council. Chicken is one of our most important agricultural products 

and exports. U.S. production value in 2013 was $30.7 billion, and 

we exported 20 percent of our production to nearly 100 countries. 

U.S. poultry exports have quadrupled since 1990. 

The topic you have chosen for today’s hearing, Mr. Chairman— 

enforcement of U.S. rights under trade agreements—is an issue of 

paramount importance to the U.S. poultry industry. The United 

States is the most efficient poultry-production country in the world, 

and potential benefits from free and fair trade are substantial for 

our industry. 

In general, trade agreements have been a success story for our 

industry. In addressing the issue of enforcement, I should begin by 

thanking the Obama administration for a very significant recent 

WTO victory. 

In 2009, China imposed unfair antidumping duties on U.S. chicken. The Obama administration aggressively litigated that case before the WTO, and last summer a WTO panel ruled in our favor. 

We are currently awaiting China’s announcement and hope that it 

will comply with WTO rules. The China case is the best example 

we can point to of vigorous and timely trade enforcement. Unfortunately, not all unfair trade practices have been pursued this aggressively or successfully. 

Several years ago, Mexico brought a similarly unfair antidumping case, and their officials found us in violation. But because 

Mexico was struck by a virulent outbreak of avian influenza, it has 

experienced a significant shortage of poultry meat, and Mexico has 

held imposition of the duties in abeyance. Because of the threat 

that these antidumping duties could be imposed anytime in the future, we challenged Mexico’s decision under the NAFTA agreement’s private right of action provisions. The NAFTA dispute settlement system depends upon the governments agreeing to formation of a panel. In our case against Mexico, the case was instituted 

nearly 2 years ago, but at present we still do not have a panel to 

hear the case. We believe this is a significant problem of enforcement that needs to be addressed. 

Since 1996, we have been shut out of the European market because of supposed SPS restrictions, in particular, the ban of the use 

of hyper-chlorinated water. As you know, the use of hyperVerDate Mar 15 2010 16:48 Feb 25, 2015 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 R:\DOCS\92444.000 TIMD
9 

chlorinated water has long been approved as safe and efficacious 

by USDA’s Food and Safety Inspection Service. Every week Americans safely consume approximately 156 million chickens that have 

been processed under FSIS rules. 

In 1998, the U.S. agreed to forego the right to use hyperchlorinated water in trade with Europe if the E.U. would consider 

four alternative anti-microbial treatments. After 7 years, the E.U. 

Scientific Advisory Committee finally opined that these AMTs were 

safe and efficacious and presented no health risk to consumers. 

However, when the European Commission presented the proposal 

for acceptance of the use of antimicrobials, the E.U. member states 

defeated the proposal 27–0. 

A few months before it left office, the Bush administration requested dispute settlement before the WTO. After a year, the case 

moved to panel selection phase. For reasons that have never been 

explained, the U.S. and E.U. have taken no action to form a panel 

over the past 4 years, and there is no indication that our government is pursuing enforcement in this case at present. 

In 2000, South Africa, a WTO signatory, began imposing unfair 

antidumping duties on U.S. poultry as well. Despite repeated requests from our industry over the past 14 years, the U.S. Government has not invoked WTO dispute settlement. Prior to 2000, we 

had a 55,000 metric ton market in South Africa, and, given the rise 

of the middle-class citizens and the competitiveness of U.S. chicken 

prices, that market would have grown substantially since that 

time. Had the U.S. pursued enforcement against South Africa, it 

would have prevailed. The South African case presents exactly the 

same legal issues as the China case that we recently won. 

In the same year that South Africa began imposing these unfair 

duties, our Congress passed the African Growth Opportunity Act, 

which gave South Africa preferential duties access to our market. 

South Africa has consistently benefitted from a trade surplus with 

the United States in the range of $1 billion to $3 billion annually. 

In September 2015, AGOA will expire if Congress does not renew 

it. In our view, it makes no sense for the United States to give special preferences to South Africa under AGOA if they treat our trade 

unfairly. So, Mr. Chairman and members of this committee, you 

could help be our enforcement entity in this particular case. 

With respect to the two new trade agreements—TPP and TTIP— 

trade is an important part of the future for the poultry industry, 

and we are generally supportive of all major trade initiatives, but 

the trade agreements, as the chairman said, must provide not only 

strong market access, but adequate systems of enforcement. 

With respect to TPP, our major goals are strong commitment to 

enforcement, and particularly in the area of sanitary and phytosanitary measures. We support the so-called ‘‘SPS plus’’ initiative, 

but once again, stronger rules only benefit us if there is timely, aggressive, and consistent enforcement. 

Our second major ambition—— 

The CHAIRMAN. Mr. Brosch, I feel badly about interrupting you. 

We already have the vote on. There is just over 5 minutes left. If 

you could come to a—— 

10 

Mr. BROSCH. I can end this by saying our major ambition is to 

open the Canadian market in TPP, and, with respect to TTIP, we 

are a lot less sanguine about that agreement, Mr. Chairman. 

Thank you. 

The CHAIRMAN. Very good. 

[The prepared statement of Mr. Brosch appears in the appendix.] 

The CHAIRMAN. Mr. Wilkins, we may be able to get you in. I 

know colleagues are going to start having to rush off for the vote. 

I think at this point, colleagues, we will suspend and go make 

the vote, and we are going to all come back as quickly as we can. 

Thank you. 

[Whereupon, at 2:39 p.m., the hearing was recessed, reconvening 

at 3:22 p.m.] 

The CHAIRMAN. The Finance Committee will come to order. 

I want to apologize again to all our guests for an afternoon 

which, even by Senate standards, is bedlam. 

Mr. Wilkins, welcome. We look forward to your testimony. 

STATEMENT OF RICHARD WILKINS, TREASURER, 

AMERICAN SOYBEAN ASSOCIATION, GREENWOOD, DE 

Mr. WILKINS. Good afternoon. I am Richard Wilkins, a soybean 

farmer from Greenwood, DE and treasurer of the American Soybean Association. ASA represents all U.S. soybean producers on national and international issues important to our industry. 

Thank you, Mr. Chairman, Ranking Member, and the committee, 

for holding this hearing. We appreciate the opportunity to speak to 

you. 

Since 1996, biotechnology has expanded to encompass the majority of our production. In 2013, more than 90 percent of U.S. soybeans, canola, corn, cotton, and sugar beets were grown with 

biotech, which is critical as we work to feed a global population of 

9 billion by the year 2050. As part of the U.S. Biotech Crops Alliance, ASA urges the administration to make biotech a top trade 

policy priority by engaging our trading partners on these issues at 

the highest level and ensuring that each partner honors its obligations under international trade rules. Only with this engagement 

can we overcome our regulatory challenges, minimize trade disruptions, and strengthen our competitive access. The best way to do 

this is through bilateral and multilateral negotiations, including 

under TPP and TTIP. 

While enforcement tools through the WTO exist, negotiations to 

remove barriers with our partners can resolve problems without 

litigation. Differing regulatory frameworks between importers and 

exporters pose a challenge for agricultural biotech. In the U.S., the 

interagency Coordinated Framework establishes that, once a 

biotech trait is determined to be safe for food, feed, and the environment, it is deregulated. 

Other countries have adopted systems for approving biotech 

traits, but these decisions are subject to different regulations or are 

overtly political, which can result in lengthy delays between approvals in importing and exporting countries. This is a concern because, until an importer approves a new trait, even a trace amount 

of that trait detected in a cargo can result in its rejection and 

major losses for the shipper. 

11 

We need a system for harmonizing these approvals. The best approach would be for countries to synchronize their approval 

timelines or to recognize each others’ approval decisions. However, 

given the varied current regulatory approaches, these solutions 

may be many years away. 

One answer is to establish a global Low Level Presence policy. 

An LLP would allow a shipment containing a small amount of an 

exporting country’s approved trait without resulting in rejection by 

an importer. Unfortunately, this discussion has not advanced globally. We believe the United States’ leadership on this issue is critical to bringing others to the table. We urge the committee to work 

with the USTR, USDA, EPA, and FDA to establish an LLP policy 

that can serve as an example, and to work with our trade partners 

to establish these policies. 

China is by far the largest buyer of U.S. soybeans, importing 

over one-fourth of our annual production and over one-half of our 

exports. USDA forecasts that China will also become the world’s 

largest corn importer by 2020. In the past, China routinely deregulated new biotech traits. However, since 2011, China has adopted 

requirements that unnecessarily lengthen the approval process, including field testing of crops not intended for cultivation. 

It is critical for the administration to engage the Chinese at the 

highest level and remind them that their food security depends on 

our ability to commercialize new traits in a timely manner. We ask 

for your help in this effort. 

We also have serious problems with the regulatory system in the 

E.U. While the E.U. approved the first biotech crops in 1996, it has 

since taken steps to limit their use and to slow new trait approvals. 

It now requires products containing more than .9 percent of a 

biotech ingredient to be labeled. Faced with likely consumer rejection of such labels, food companies reformulated and effectively 

eliminated these foods in the marketplace. The E.U. could have 

provided information to consumers without distorting trade by establishing voluntary labeling standards for non-biotech foods. 

As a WTO member, the E.U. is obliged to choose a less restrictive 

measure if one that accomplishes its objective is available. The 

E.U. also has allowed its process for approving imports of new 

traits to become politicized. Member states routinely block approvals despite positive safety recommendations by the European Food 

Safety Agency. The result is that the E.U. regularly fails to meet 

the approval time frames established in its own regulations. Together these factors have led to more than a 50-percent drop in 

soybean exports to Europe since 1995. 

In 2003, the WTO found the E.U. guilty of undue delays in processing applications. The administration should restart negotiations 

on implementation of this ruling in the context of the TTIP, and 

should refuse a TTIP that does not bring the E.U. into full compliance. 

Prior to the launch of TTIP, ASA called for negotiations to address the E.U.’s labeling regulations and the delayed timeliness for 

decisions on new traits. However, E.U. officials have repeatedly 

stated that they will not change any of their biotech laws under a 

new TTIP. This is unacceptable. 

12 

Trade agreements require cooperation by all parties to implement their provisions. We urge the administration and Congress to 

ensure that the E.U.’s discriminatory policies are addressed within 

TTIP. 

In conclusion, biotechnology must be a top priority in these and 

future trade agreements. Only when they have real teeth will the 

U.S. be able to use enforcement tools to protect our interests. If we 

do not hold our trading partners to their obligations, it will make 

improving conditions for our exports that much harder. 

Thank you again, Mr. Chairman, and to Senator Carper for having me. I am happy to respond to any questions. 

The CHAIRMAN. Mr. Wilkins, thank you. We are glad you are 

here. I know Senator Carper looks forward to asking questions as 

well. 

[The prepared statement of Mr. Wilkins appears in the appendix.] 

The CHAIRMAN. Mr. Peterson, welcome. 

STATEMENT OF BART PETERSON, SENIOR VICE PRESIDENT, 

CORPORATE AFFAIRS AND COMMUNICATIONS, ELI LILLY 

AND COMPANY, INDIANAPOLIS, IN 

Mr. PETERSON. Thank you, Mr. Chairman and members of the 

Finance Committee, and ladies and gentlemen. I appreciate the opportunity to testify before you today on a matter of great importance to my company, Eli Lilly and Company, to our industry, and 

to all U.S. businesses that are involved either directly or indirectly 

in trade. 

My name is Bart Peterson. I am the senior vice president of corporate affairs at Lilly. And since our founding in 1876, we have 

been committed to discovering and developing medicines that make 

life better for people here and around the world. 

Fair and transparent trade rules are fundamental to our success 

as a business, and the U.S. Government must have the tools and 

the resources necessary to enforce them. We welcome the committee’s efforts to ensure that those tools and adequate resources are 

available. In particular, we welcome Senator Hatch’s proposal to 

create the position of Chief IP Negotiator at USTR. We also encourage the committee to work diligently to pass Trade Promotion Authority. The bipartisan TPA bill introduced earlier this year addressed a number of important issues for our sector. We hope that 

any future versions of TPA legislation will be equally strong on 

these important provisions. 

Intellectual property is the lifeblood of the pharmaceutical sector, 

and its protection is one of our most pressing trade issues. Nowhere is the need for strong language to protect IP more important 

than in the Trans-Pacific Partnership. It is critical that the final 

TPP agreement has pharmaceutical IP provisions equal to KORUS 

and U.S. law, including 12 years of data exclusivity for biologics. 

On TTIP, we strongly favor an ambitious, comprehensive, and 

high-standard trade and investment agreement. Lilly and the biopharmaceutical industry believe that TTIP represents a unique opportunity to promote the highest standards of intellectual property 

protection, market access, and regulation. 

13 

* The Agreement on Trade-Related Aspects of Intellectual Property Rights. 

I would like to provide four brief examples of why trade enforcement is so important to Lilly employees and to the hundreds of 

small and medium-size businesses that depend upon us in the 

United States. 

First, Canada. Since 2005, Canadian courts have struck down 20 

pharmaceutical patents, including three Lilly patents, for lack of 

utility or usefulness, resulting in considerable lost revenue. Domestic generic companies have then been allowed to copy these clearly 

useful drugs. Canada is the only country in the world using this 

heightened utility standard, which is in violation of their trade obligations under both NAFTA and TRIPS.* 

In India, in recent years, Indian administrative and judicial decisions have undermined biopharmaceutical intellectual property in 

ways that are inconsistent with India’s WTO commitments. We 

greatly appreciate the efforts of Congress and the administration so 

far on these issues, and we are hopeful that the innovative industry and the U.S. Government will be able to engage in a renewed 

dialogue with the new Indian government on these issues and work 

productively toward solutions. 

In China, when China joined the WTO, it committed to provide 

6 years of protection against unfair commercial use of data submitted to the regulatory agency in the approval of new medicines. 

However, China defines ‘‘new’’ as new to the world, and this unique 

interpretation allows non-innovators to rely on an innovator’s approval outside of China to produce unauthorized copies of those 

medicines inside China. This is not only inconsistent with common 

international practices, but it also stands to undermine the protection of the next generation of important medicines. 

Then finally, Korea. Certain Korean government pricing practices fundamentally conflict with commitments made under 

KORUS. Patented pharmaceuticals are priced by referencing the 

prices of similar products on the market, including the prices of 

generics and off-patent originator drugs. This fails to recognize the 

value of the significant investment it takes to develop and bring 

new patented medicines to the people of Korea. 

Let me conclude by mentioning anti-counterfeiting efforts. Counterfeiting is not only a serious form of trademark infringement, it 

costs jobs and revenue and, most importantly, threatens human 

health. Current laws have had limited effect in stopping this counterfeit trade. Lilly supports the expansion of stronger enforcement 

measures to better combat this problem, examples like Operation 

Pangea that targets Internet sales of counterfeit medicines and devices worldwide. 

In closing, Mr. Chairman, I would like to compliment the work 

that your committee and staff have done with the White House and 

with USTR to continue to put advancing trade and enforcing the 

rights of U.S. innovators front and center. Lilly looks forward to 

working with you on improvements to U.S. trade policy and enforcement, to the benefit of our economy and our citizens. 

Thank you. 

The CHAIRMAN. Thank you very much. 

14 

[The prepared statement of Mr. Peterson appears in the appendix.] 

The CHAIRMAN. Mr. Gerard? 

STATEMENT OF LEO W. GERARD, INTERNATIONAL PRESIDENT, THE UNITED STEEL, PAPER AND FORESTRY, RUBBER, 

MANUFACTURING, ENERGY, ALLIED INDUSTRIAL, AND SERVICE WORKERS INTERNATIONAL UNION (UNITED STEELWORKERS), PITTSBURGH, PA 

Mr. GERARD. Thank you very much, Mr. Chairman and Ranking 

Member Hatch. My name is Leo Gerard, and I am the international president of the Steelworkers Union, the largest industrial 

union in North America, representing 850,000 workers. 

I know that my time is short, so I will try to summarize as quickly as possible by saying that manufacturing is the key to a strong 

global economy, to a strong American economy. And let me just report that, since the allowance of China into the WTO, we have 

managed to accumulate slightly over a $7-trillion accumulated 

trade deficit with China. Each $1 billion results in the loss of 

18,000 jobs, just like each $1 billion spent on infrastructure results 

in the creation of that many jobs. 

But I know that my time is short, so I want to get to it quickly. 

Unfortunately, the Steelworkers Union has more experience in 

trade enforcement than almost any other single entity, and our experience is often the result of products being sold, dumped, and 

subsidized at subsidized prices in our market. We have filed or supported cases on countless products ranging from steel to paper to 

tires to rare earth to solar to wind turbines, in a continuous attempt to try to stop unfair trade. 

Let me just say now, quickly, in order to win a case at the USTR, 

we first have to lose. And what I mean by that is, we have to demonstrate that we have lost jobs, that we have lost market share, 

that our employers are losing income, that our employers may be 

losing profitability, that we have people on layoff. We have to show 

that somehow we have been badly damaged. 

Our trading partners have figured that out. So, when we file a 

trade case, by the time it gets from start to finish, not only have 

we had to lose jobs at the start, but we continue to lose jobs as they 

steal market share and damage our industry, not just for the short 

term, but for the long term. 

So let me highlight a couple of issues. First, the issue of currency 

manipulation is an area of inaction. Both the Senate and the House 

have individually passed legislation against currency manipulation, 

but they have never been able to do it at the same time and get 

any results. Not only does China cheat on currency, so does Japan, 

Korea, Malaysia, and many others, using the practice to tax our 

products out of their market and to subsidize the flood of products 

into our market. 

Everyone talks about this problem. That is why we are in this 

mess. This administration and the last one pointed to dialogue, but 

engagement is the answer. To point to the members of my union 

and workers and farmers all across the country, we lose jobs, and 

that is the result of inaction. The time for talk should be over. The 

15 

time for action is now. The House and Senate, as I mentioned, have 

both passed legislation at one time or another. 

I urge you to pass legislation and put it on the President’s desk, 

to work with the House and pass legislation to prevent currency 

manipulation. I want to thank Senators Brown and Schumer— 

members of the committee—and indeed Senator Sessions, for their 

leadership on this issue. 

The second issue I want to talk about briefly is Oil Country Tubular Goods, at this point in time, an area where government inaction is going to be the cause of a huge problem if government does 

not act. 

Oil Country Tubular Goods is the product being used to bring 

natural gas and oil to the surface. It is a high-value product, and 

our companies have invested billions—I say billions with a ‘‘b’’—in 

plant and equipment needed to make this and many other critical 

advanced products that they now have in the marketplace. 

We supported a trade case to address the dumping of this product in our market. In their preliminary finding some weeks ago, 

the Department of Commerce found dumping margins against a 

range of companies from various countries, but let Korea off the 

hook. Their decision was based on faulty assumptions and analysis. 

South Korea produces this product for export—and I repeat— 

they produce this product only for export. They do not produce a 

pound for their own consumption. They do not drill a foot. They do 

not use a pound of Oil Country Tubular Goods. It is all for export. 

None of it is sold in their home market. 

So what Commerce chose to do was to check a low-grade, standard, run-of-the-mill construction tubing and use that as a comparison against Oil Country Tubular Goods. That would be like comparing an old used car against a spaceship. They are both vehicles, 

but they are both dramatically different. 

The decision was preliminary. The law provides for a review of 

their finding and an assessment of their determination. So workers 

across this country, those directly involved in production of this 

product and those dependent on the job simply allied with their 

case, have been rallying for change. Their words have been heard 

by elected officials. Fifty-seven members of the Senate signed a letter to the administration asking the administration to use the correct analysis. 

Those are only two of dozens of efforts that we have made to get 

this highlighted, but we must do better. There needs to be dramatic 

reform of our trade policy. 

Mr. Chairman, Ranking Member, members of the committee, enforcement of trade laws is good, but if we are trying to enforce bad 

laws, it does not make much difference. I want to compliment the 

administration for a lot of the enforcement they have done, but I 

also say that too much of the trade law is antiquated and does not 

serve our purpose. 

I want to skip some of my testimony to make a case that I have 

come to understand just recently. 

Congress could inform the International Trade Commission of 

what it deems to be the definition of the term ‘‘actual and potential.’’ ‘‘Actual and potential’’ is in the trade law of actual and potential harm. And, as I said, currently under trade law, for the USTR, 

16 

for Commerce, we have to demonstrate that we have been injured, 

substantially injured. And right now, with just the preliminary decision that Commerce has made, we have hundreds of our members, if not thousands, who are either laid off, working shorter 

hours, or waiting to be laid off because the market is being distorted by Korea and the faulty assumption. 

So I want to just close—I know my time is up—but I want to just 

close by saying we believe that enforcement is important. We believe there should be aggressive enforcement. But we also believe 

enforcement is not the remedy for bad trade laws in the first place. 

It is time that we fix our trade regime. 

Thank you very much, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Gerard. 

[The prepared statement of Mr. Gerard appears in the appendix.] 

The CHAIRMAN. Mr. Longhi? 

STATEMENT OF MARIO LONGHI, PRESIDENT AND CHIEF EXECUTIVE OFFICER, UNITED STATES STEEL CORPORATION, 

PITTSBURGH, PA 

Mr. LONGHI. Good afternoon, Mr. Chairman. Good afternoon, 

members of the Congress. Thank you, Senator Casey, for the kind 

introduction. 

I am Mario Longhi, president and CEO of United States Steel 

Corporation. I want to thank you for this opportunity to share the 

significant role U.S. trade laws play in the American steel industry 

and our industry’s urgent need for a level playing field. 

I am proud to be here with my friend, Leo Gerard, international 

president of the United Steelworkers. Together we share the responsibility of ensuring our workers have a fair chance at a fulfilling job and living a fruitful life. 

I personally came to this great country when I was a teenager. 

My parents wanted me to learn, live, and sleep under the blanket 

of American freedom, to understand and to live by the rule of law, 

and to embrace the American sense of fair play. 

Today I am privileged to lead an iconic American company, that 

is, United States Steel Corporation. As the largest integrated steel 

producer headquartered in the United States, our more than 

21,000 American employees produce the backbone of our America. 

But our industry is under attack. 

The U.S. manufacturing industry is one of the most successful 

and vital global markets in the world, but foreign companies are 

abusing our trade laws. In the case of steel, they are dumping 

thousands of tons of products into the U.S. market unchecked. 

These actions demonstrate that American steel companies are 

being targeted potentially for elimination. 

One such product that is being dumped is Oil Country Tubular 

Goods, or OCTG. OCTG pipes are among the most sophisticated 

high-tech products that we manufacture, meeting the highest safety and quality standards. They are used 10,000 feet under water, 

10,000 feet carved into the earth for the extraction of oil and natural gas. The use of American-made pipe for American energy production directly impacts our Nation’s economic and energy security. 

Last year, U.S. Steel and other domestic OCTG manufacturers 

filed a trade case against nine countries for abusing U.S. trade 

17 

laws, for dumping their products into our markets. From 2010 to 

2012 alone, there was an enormous 113-percent increase of OCTG 

products dumped into our market. Last month, total OCTG imports 

hit in excess of 400,000 net tons, a more than 77-percent change 

year over year. The most notable abusers are South Korean companies that dump 98 percent of their products into the U.S. They do 

this because they have no home market for their product and are 

taking direct aim at companies such as U.S. Steel. 

This is an important product for us. In the past few years, U.S. 

Steel has invested more than $2 billion across our facilities, including $200 million in a few quarters alone in our Lorain tubular operations in Ohio. These investments are definitely at risk from the 

unprecedented surge of unfairly dumped products. Unfortunately, 

Leo’s and my fellow employees in my company, as well as countless 

related industries, will be the ones who will bear the financial burden, because U.S. Steel and other domestic manufacturers cannot 

stop foreign companies from abusing U.S. trade laws. We must rely 

upon you, Congress, and the administration to enforce our trade 

laws. 

Earlier this year, the Department of Commerce issued disappointing preliminary findings. They failed to recognize illegally 

dumped South Korean products. South Korean gamesmanship of 

our system of laws is very disquieting. Their efforts are unchecked 

and, sadly, very effective. They have routinely abused the process, 

and, as a result, the investigators are forced to review incomplete 

information in an untimely manner. This almost assures that the 

adjudicators formulate their decisions based upon misleading information. It is not only an economic imperative to open new markets 

for both American goods and services, it is a moral imperative to 

provide for the greater economic good by ensuring that the rules 

governing trade in our own markets are respected. 

The laws of this country can and should be used to help the rest 

of the world better understand fair play. Specifically, we must 

clearly showcase that, when our trade laws are followed, companies 

around the world can succeed in the global marketplace, showing 

that, when everyone follows the rules, everyone can compete and 

win. But this must be done under the rule of law. 

Unfortunately, Mr. Chairman, this is not the world in which we 

are operating. Your leadership in introducing the ENFORCE legislation is certainly most welcome, and this should be one of many 

powerful tools in our trade toolbox. 

We are very grateful to Senators Brown, Portman, and Sessions 

for their continued commitment to our industry as we fight currency manipulation and promote other measures to strengthen our 

trade laws. These trade law initiatives and others are desperately 

needed to stop the abuses and level our playing field. 

I want to thank you for holding today’s hearing on this critical 

issue, for certainly the livelihoods of thousands of Americans and 

the future of the steel industry hang in the balance. 

Thank you. 

The CHAIRMAN. Thank you all. It has been an excellent panel, 

and I know Senators are going to have questions. 

[The prepared statement of Mr. Longhi appears in the appendix.] 

18 

The CHAIRMAN. My first question is for you, Mr. Gerard and Mr. 

Longhi. Given the fact that you basically outlined how it seems 

that Congress and the administration are basically getting there 

too late in the game, my question would be, what can Congress do 

so that unfair trade is identified and remedied sooner? For either 

one of you. 

Mr. GERARD. Let me come back to the point that I was making 

in a rush while I was trying to close. I think Congress could certainly give much clearer direction—and I do not know that there 

needs to be necessarily legislative change—but much clearer direction on what is already in the international trade rules about the 

term ‘‘actual and potential’’ injury. 

We could look at actual and potential decline in output sales, 

market share, profitability, productivity, return on investment, utilization. We can prove that day in and day out in the Oil Country 

Tubular Goods case we started. 

You can see what happened with China. We filed cases against 

China. It took them 3 years because they could not play on a level 

playing field. They basically left the market, and, as they were 

leaving the market, the Koreans came in and did the exact same 

thing as China, except they did not use any of the OCTG in their 

own market. 

So we knew potentially what was going to happen, but, because 

of the trade law, the ITC demands that you prove injury first. We 

have to lose jobs first, and, as I say, we have to lose in order to 

win. That is something that Congress could do right away, and the 

Senate could lead on it. 

The CHAIRMAN. Let us relate this to another matter, and we will 

get you in on this, Mr. Longhi, if we might. Obviously, this is a lot 

about priorities. It is about choices. I think the administration 

made the right choice recently in successfully challenging China’s 

restriction on rare earths. 

My question would be, should there not be a more systematic 

system of identifying the enforcement priorities? For you, Mr. 

Longhi. 

Mr. LONGHI. Absolutely, Mr. Chairman. The technology available 

today should grant us the ability to facilitate the effort at our borders, whenever something arrives there, so that we can easily 

check whether it is in violation by circumventing specifications or 

through which systems it is being brought into the country. 

But the other point is that we should change the way the rule 

applies. If importers are found creating that condition, they should 

be immediately punished, not allowed to go 2 years unpunished— 

creating all the harm that we feel today—before anything can be 

done. 

The CHAIRMAN. Very good. 

On IP, for you, Mr. Peterson—this is something of enormous importance in the Pacific Northwest that we hear about with respect 

to counterfeit computer chips, fake Nikes, all of this flowing 

through the ports of the Pacific Northwest. 

My question to you is, obviously, the pharmaceutical industry 

cares about this matter. Are there specific proposals that you would 

like to see the Congress consider in the IP area? 

19 

Mr. PETERSON. I think the major concern we have about counterfeit drugs is, first of all, it is an enormous business, estimated to 

be in excess of $200 billion now annually in counterfeit drugs. 

Counterfeit drugs, obviously, not only have an enormous economic impact, but they affect human health. The likelihood that 

someone ordering medicines from a website or responding to an ad 

on satellite radio will get something that is either not efficacious 

or potentially even dangerous to them is very significant. 

These drugs tend not to come from where they are supposed to 

be coming from. So what we want to do—what we would recommend, Mr. Chairman—is, first of all, to encourage greater cooperation among nations in this battle against counterfeit drugs. 

INTERPOL and the collaborative team they have put together 

under this Operation Pangea, which is focused on cracking down 

across the world on counterfeit drugs, has shown some real impact. 

So encouraging that kind of thing and then providing the funding 

necessary for it, as well as the funding necessary for increased resources for Customs officials, would be helpful. Now, I know this 

is not a great time to be talking about additional resources, but I 

think that clearly our Customs services could do better if they had 

additional resources to combat counterfiet drugs. 

The CHAIRMAN. I am going to see if I can get one other question 

in. 

Mr. Gerard, I gather you wanted to comment on this question of 

the systematic process for identifying enforcement priorities as 

well. 

Mr. GERARD. Well, one of the things, Mr. Chairman, I think that 

could be done is that the Commerce Department could also establish guidelines so that the Commerce Department could self-initiate 

complaints, self-initiate that way. 

Then we go on top of what Mr. Longhi just said about, when the 

products come in, we can monitor them right there when they 

enter into the country to make sure that they are not being transshipped or make sure that they actually are what they say they 

are. 

There are a number of ideas that we could give you on that, and 

we will put them in a follow-up response to you, because I know 

time is limited. 

The CHAIRMAN. That would be helpful. 

Let me see if I can get one other question in for Mr. Brosch and 

Mr. Wilkins with respect to agriculture, which is so important to 

the Pacific Northwest. 

My take is, as the country negotiates down a lot of the traditional barriers to American agricultural exports, basically what you 

have is our trading partners erecting new ones, new back-door 

ways to close their markets. And one of the most pernicious ways 

they do this is they impose new barriers purportedly to prevent the 

entry of pests that could cause harm to crops and livestock. 

Can you all just—because I am 40 seconds over my time—give 

me any suggestions that you have to deal with this problem, because I know it is pressing to American agriculture. Either of you? 

Mr. BROSCH. Well, I think the idea that we would have is simply 

to press forward with the rights that we have today. The WTO has 

shown to be a pretty successful place to pursue SPS issues. 

20 

I was privileged to be one of the two U.S. negotiators of the SPS 

agreement. I think we did a pretty good job, and the track record 

since that time, in the hormone case against the E.U., in the salmon case against Australia, shows that if you bring these cases before the WTO, you can prevail, and then we can put the pressure 

on the other governments. 

So, in the case of chicken in the E.U., we would just like that 

case to be brought forward and to be pursued, and it has not been, 

as I have explained. 

The CHAIRMAN. My colleagues are all on a tight schedule. Senator Brown has to preside at 4 pm. 

Senator Hatch, what is your timing? Could we go—normally, it 

would, of course, be Senator Hatch next. Can we go with Senator 

Brown? 

Senator HATCH. Sure. 

The CHAIRMAN. And then we will go right to Senator Hatch. 

Senator Brown? 

Senator BROWN. Thank you. Thank you always for being such a 

gentleman and giving me that chance. I appreciate that. Thanks. 

Thank you to all the witnesses. It was interesting. Sorry for the 

truncated way we had to do this today. 

I will start with Mr. Gerard. The Commerce Department, as you 

point out, will make the final determination in the Oil Country Tubular Goods case with South Korea, they say on July 10th. I have 

heard you say that if this Korea case goes in the wrong direction, 

it will be a template, a model, a blueprint, if you will, for more and 

more countries to do what Korea has done. 

Even though they have no domestic Oil Country Tubular Goods 

market, as you pointed out—they do not drill for oil and gas, the 

point of the Oil Country Tubular Goods production—they have an 

industry designed solely to take advantage of other markets, primarily our market, the most lucrative market, if you will, in the 

history of the world. 

If we lose this, if we lose on this, if Commerce decides in the opposite way—a loss for American companies and American workers—what is to stop other countries from doing the same thing? 

Mr. GERARD. Nothing. The reality of what South Korea has done 

is, as I said, when they saw what was happening with the Oil 

Country Tubular Goods issue with China, where we demanded 

China play on a level playing field, South Korea went and designed 

an industry for export, and they designed it in a way where they 

brag around Washington that they have designed it so that they 

cannot be found guilty. 

So the way they have designed their industry, there is no domestic consumption. They have no iron ore, they have no coal, they 

have no limestone. They have modern mills, and their workers get 

paid close to about 90 percent of what our workers get, and they 

have designed it simply so they can export it. 

So now we have a case we filed yesterday on tires. All that country has to do to make that tire is make a unique tire that they will 

not sell in their own market and then chew up our market and be 

better at it. 

We filed a case—somebody mentioned rare earth. That rare earth 

case was our case, because you need rare earth to make everything. 

21 

We had China cornering the market on rare earth and, in fact, 

holding Japan hostage because they would not sell them the rare 

earth. 

So the model that has been built by South Korea in Oil Country 

Tubular Goods can be reintroduced in almost any product. 

Let me just say this about the steel industry, for people who do 

not know it. You drive by a steel plant and you will see all those 

rows of steel out there, and, from a distance, they all look the 

same. Every one of them could be different. Every one of those 

steel rolls that you see could be scientifically different, chemically 

different, made for a specific product. 

So there is nothing that stops any of that stuff going on in any 

country that wants to target us for export. They could build a mill 

in Thailand and decide, we are going to build a mill to take out 

this piece of their market and do it the same way that South Korea 

did. 

So what the Commerce Department does between now and July 

10th, when they make their determination, in many ways is going 

to predict the future not only of the steel industry, but lots of manufacturing in this country, and I, for one, am petrified about it. 

If Commerce does not do its job, and if they give us some ridiculous margin of 4 percent or 5 percent, South Korea will just eat 

that. They need to be treated the same way the Chinese were 

treated, with a duty of 95 percent or 96 percent, because they are 

cheating just like China did. 

Senator BROWN. Thank you. 

Mr. Longhi, I have a very simple question. It seems to me that 

passing currency manipulation legislation—you have talked about 

it; a number of people have—is the single most effective thing we 

can do to boost U.S. manufacturing. Do you agree with that? 

Mr. LONGHI. I agree with that. Congress should pass legislation 

right now. I believe you may have a moment where it can occur at 

this point. But it is a very important piece of legislation to give us 

the chance to apply the very same circumventing duties that apply 

in other circumstances to countries that play against the rules. 

Senator BROWN. Thank you. The chairman certainly has been 

very helpful on this whole issue, and a number of members of this 

committee in both parties have signed onto that—either that legislation or pushing in that direction on currency overall. 

Let me ask you one question about enforcement. One of the most 

poignant parts of your testimony, Mr. Longhi, was about putting 

together a trade case, whether it is filed by industry, by unions, or 

by the government, and how much damage is done when a country 

violates our trade laws. 

We put these cases together month after month after month after 

month. These companies are in our country; their products are 

being sold into the United States. The damage has been done. Our 

laws are slow, they are complicated, and often relief comes too late. 

So answer this pretty simple question. When the U.S. files a 

trade petition, whether it is you or Mr. Gerard or the government, 

do you feel the process favors foreign respondents over domestic 

producers? 

Mr. LONGHI. There is no question about it, Senator. And I would 

like to make sure that the timelines that you refer to are properly 

22 

addressed. This is not about one country or one company out there. 

This has been doing on for more than a decade. 

So, when we are able to succeed against one rogue country out 

there, immediately somebody else is positioned to fill in that vacuum, and we have found ourselves, over a period of 15 years, where 

we cannot invest the necessary amounts to keep competing, to keep 

bringing forth the R&D that is required. 

So this is why this is a generational issue that may destroy the 

industries that we have. You cannot survive. We just shut down 

two plants in the last month because of the issues that we are facing, and we cannot take 3 years, millions of dollars, to try to put 

together a case, especially with the highly sophisticated schemes 

that some of these companies and countries have in place today to 

circumvent our laws. 

Mr. GERARD. If I could just add to what Mario said about that. 

Currently in the world, there is an excess of 500 million tons of 

steel capacity. More than 35 percent of that comes from China. Almost 75 percent of it comes from Asian countries. And, if you go 

back 10 years, 10 years ago, the global oversupply of steel was 182 

million tons. This year it is over 500 million, and this year China 

will produce 1 billion tons of steel—1 billion tons—when the world 

consumption is about 1.4 billion. 

Do not tell me that they are not planning to put us out of the 

market. That is their plan. 

Senator BROWN. Thank you for that, Mr. Gerard. And I will 

close. 

I just particularly thank Senator Hatch again for his gentlemanliness, if you will. 

The comments you made about the arduousness of this process— 

I have seen the coated paper industry in Ohio basically almost disappear, and paper industries in many of our States, with what has 

happened. 

The chairman asked, I think, the right question: what do we do 

to make this process quicker? How do we self-enforce in a better 

way so there is not the damage to far too many of our industries, 

and the layoffs of too many workers, and the devastation of towns 

that have these paper mills, steel mills, and other production? 

Thank you, Mr. Chairman and Senator Hatch. 

Mr. GERARD. We will send a supplement to our presentation to 

answer that question. 

Senator BROWN. We need real answers on that. That would be 

really helpful. 

The CHAIRMAN. Thank you, Senator Brown. 

Senator Hatch? 

Senator HATCH. Thank you, Mr. Chairman. 

Mr. Peterson, I share the concern about India’s international 

property rights practices. Just last month I apprised Ambassador 

Froman—or pressed him, I would have to say, on why the administration was not pursuing our rights against India. Ambassador 

Froman assured me that once India’s new government was in 

place, and it is a brand new government, he planned to increase 

engagement on these issues. 

Now, I want to give the new government a chance, but I also 

want to make sure that there is progress. That is why I sent a letVerDate Mar 15 2010 16:48 Feb 25, 2015 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 R:\DOCS\92444.000 TIMD
23 

ter to Ambassador Froman this morning requesting that, immediately following the conclusion of their out-of-cycle review, they inform me in writing what actions are being taken to address these 

serious problems. Now, at a minimum, I would expect such action 

to include the development of a written, meaningful, and effective 

action plan with definite timetables for implementation. 

Now, do you agree that India’s policies are undermining U.S. 

holders of intellectual property rights and that USTR must take action to ensure that we see rapid progress from the new government 

in India? 

Mr. PETERSON. Yes, Senator Hatch. I do agree that India’s approach to intellectual property has been harmful to innovative industries, U.S. companies and others trying to do business in India. 

And I do believe that, and hope that, with the new Indian government there is an opportunity, with action from our government, 

represented by the United States Trade Representative, to make a 

real difference in a country that has been among the most challenging in the world for creators of innovative products. 

Senator HATCH. Thank you. 

Mr. Gerard, I have been very interested in your testimony here 

today. 

Mr. GERARD. Thank you. 

Senator HATCH. And you are a very good representative of the 

industry. 

Intellectual property, in my opinion, is fundamental to the U.S. 

economy. It is just one of the things, but it is important. In my 

home State of Utah, in particular, more than half a million jobs 

and 67 percent of Utah’s exports depend on strong intellectual 

property protections for their existence. 

Now, I was pleased to read in your testimony that you too agree 

that we need to place a greater priority on intellectual property 

protection. You noted the link between intellectual property and 

production and manufacturing, which I think is important. That is 

why I am so concerned that U.S. holders of intellectual property 

rights find themselves under attack around the globe in places 

such as India and China. 

As I mentioned in my opening statement, I have introduced a bill 

establishing a Chief Innovation and Intellectual Property Negotiator at USTR to ensure that protecting and enforcing intellectual 

property rights are not secondary issues, but are at the forefront 

of our trade policy. 

Now, Mr. Gerard, what additional steps would you suggest that 

we can take to improve the U.S. response to the challenges we face 

overseas in the area of intellectual property rights? 

Mr. GERARD. Let me say that I support your view about having 

a chief negotiator on intellectual property rights, and I think, as I 

said earlier, enforcement is a very important part of trade agreements, but we have to look at the trade agreement first. If you are 

enforcing a bad trade agreement, you are going to get bad results. 

But I agree that 70 percent of all patents come from manufacturing. By the way, most of R&D comes from manufacturing of one 

kind or another. 

Senator HATCH. Right. 

24 

Mr. GERARD. Certainly, one of the things I would like us to investigate further is—you might have read a few weeks ago that a 

number of steel companies and our union got hacked by Chinese 

computer hackers, and we know what they were trying to steal. 

And I tell you that United States Steel, when you see those rolls, 

almost everything that they make did not exist 10 years ago. It is 

scientifically different. So all of those are different patents. If they 

can hack into our computer systems and steal those patents, there 

ought to be an economic penalty for that. 

If that is something that the intellectual property negotiator 

does, that is fine, but we need to have, not only strong enforcement, but better trade rules. Ranking Member Hatch, I cannot 

stress how deadly it is that our trade laws mean that we have to 

lose jobs, lose market share, lose profitability, do all of that so that 

we can get a win at the International Trade Commission. Then, if 

they appeal that win to the WTO, as they could do with intellectual 

property, we continue to have our market destroyed. 

And I give credit to U.S. Steel; they have continued to invest in 

the industry and modernize the industry against that onslaught, 

and I will not talk about how many hundreds of patents I know 

they have for the number of products they make. But a trade negotiator with an Intellectual Property Negotiator who would also enforce those laws would be useful. 

Senator HATCH. Thank you. I have other questions for all of you 

on this panel, but my time is up. I will submit those questions in 

writing. 

The CHAIRMAN. Senator Hatch, you were very gracious to all of 

us. Did you want to ask another question at this time? We will 

have a second round too. 

Senator HATCH. Yes. I think that I will forego, because I will 

submit my questions in writing. But you have all been excellent, 

as far as I am concerned, and very helpful to the committee. 

I am not sure I agree with everything in your statements, but 

by gosh, they have been very, very important statements, as far as 

I am concerned. But thank you for being here, and thanks for your 

patience in waiting for us while we voted those three times. 

Mr. GERARD. Let me just say, before you leave, so that you know, 

our union has members in both the soybean industry and the 

chicken industry, and we are on their side too. [Laughter.] 

Senator HATCH. You are everywhere. That is the problem. 

[Laughter.] 

Mr. GERARD. Well, I saw you passing through the Pittsburgh airport. I thought you might stay. It is one of the greatest cities in 

the country. 

Senator HATCH. Well, I happen to know a lot about it, since I 

was born and raised there and was a member of the AFL–CIO, by 

the way, and learned a trade. 

Mr. GERARD. Come on back home. [Laughter.] 

Senator HATCH. I am home. [Laughter.] 

All I can say is, I have not forgotten Pittsburgh either. I was a 

young kid born under very trying circumstances, and Pittsburgh 

was a wonderful place to be raised, as far as I am concerned. But 

I am home in Utah, I want you to know that. It is a wonderful 

State. 

25 

We are sorry we lost our steel mill out there. We would love to 

have both of you out there again. 

Mr. GERARD. Fix this, and we may come back. 

Senator HATCH. Well, we will be looking forward to that. I certainly appreciate the way you have your eyes on the steel industry, 

Mr. Longhi. I am sorry that I did not have questions, but I will 

submit questions in writing, and we support you very strongly. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Hatch. 

The two Pennsylvania Senators arrived in order of appearance, 

but I understand Senator Toomey is very much under the gun. 

Senator Casey, would that be inconvenient to you? 

Senator Toomey, let us go with you. 

Also, Mr. Gerard, you should know, apropos of the cyber-hacking 

matter, Solar World in Oregon was also cyber-hacked when they 

stood up for their trade rights. So it is an important point. 

Senator Toomey? 

Senator TOOMEY. Thank you, Mr. Chairman. And I thank my colleague, the senior Senator from Pennsylvania, for allowing me to 

go ahead in line here. 

First, Mr. Longhi, let me just state something that should go 

without saying, but I think it is worth saying. I know that you are 

very sorry, as I was when I heard about the announcement of 

idling the plant in McKeesport. A lot of Pennsylvanians are going 

to be out of work as a result of that, and it is a very, very painful 

decision. 

I just want to be very clear that your employees should feel free 

to reach out to my office so that we can help them in any way possible, navigating various Federal bureaucracies, dealing with unemployment benefits, whatever it might be. I hope you will make 

sure that they know that. 

Mr. LONGHI. We appreciate your support, and that is in the 

works already. 

Senator TOOMEY. Terrific. Thank you. 

You spoke about the pending case against the imports from 

South Korea, and, as you know, I spoke with Commerce Secretary 

Pritzker about this very matter. But, as you alluded to in your testimony, there are some technical aspects to this, and specifically 

there is apparently a practice that has been highly refined by the 

South Koreans in creating corporate vehicles that allow them to 

hide information and make the investigation that Commerce needs 

to conduct very, very difficult for them, difficult for Commerce to 

get the facts that they need. 

Could you please explain for the committee in a little bit more 

detail about how that works, what they are doing, and why that 

is so problematic? 

Mr. LONGHI. Thank you, Senator. The simple version of that is 

that they have created a very sophisticated cross-shareholding 

structure through which information such as cost of production, research and development, marketing, logistics, transportation, and 

transactions in general occur in a very shadowy manner, so much 

so that when Commerce first made their assessment, they clearly 

stated in their preliminary report that they could not make sense 

of the information that was being provided to them. 

26 

Now, when you add to this dimensions of being tardy in responding to the requests of Commerce to explain some of the topics, and 

the way that they were managing them, and requests for delays, 

it reduces the time in which the investigators can properly do their 

investigation. 

Also, what happens is that they are coming up with a very significant level of aggression in so many different products and fronts 

that, potentially today, two-thirds of all of the Department of Commerce investigators are being consumed in dealing with steel cases, 

again, reducing the ability for proper investigation to take place. 

Senator TOOMEY. Just to follow up, you mentioned that, apparently, one of the tactics is intentionally delaying the time for responding to legitimate requests from Commerce. 

Is there any recourse that Commerce has in this process? What 

do they do if they are getting stonewalled? 

Mr. LONGHI. The primary flexibility that Commerce has is that, 

within their statute, they have discretion to slap a fee on top of the 

country that is not responding in a timely manner nor with clarity 

to Commerce’s requests, which is one of the reasons why we are so 

very surprised when all of a sudden South Korea comes across with 

a 0-percent fee as a determination. 

Senator TOOMEY. But that also suggests a possible avenue for 

going forward. If these delays are contributing to the inability of 

Commerce to come to that conclusion, then maybe there is another 

response that is appropriate. I appreciate the input. 

Mr. Peterson, I wanted to just quickly touch on something I 

think you had mentioned specifically, as well as Mr. Gerard: the 

danger of ongoing cyber-attacks, including from China. 

I think this is a huge national security issue, as well as a commercial concern. But as a general matter, I am very concerned 

about whether we have adequate IP protections in a wide range of 

industries. 

You had touched on some of the challenges you faced with Canada. Is there anything that we can be doing here in this committee 

to help improve the dangers we face in that regard? 

Mr. PETERSON. I think the key is to continue to keep focusing on 

enforcement, because, in the situation with Canada, just as an example, the agreement is clear, and one branch of the Canadian government, in this case the courts, has taken these actions. But by 

virtue of the fact that we do have the opportunity as a private company to be able to undertake the action that we have, we are able 

to protect our property rights if we are successful through that 

process. 

So I think the encouragement of those kinds of enforcement 

mechanisms in free trade agreements is critical. And then the encouragement of strong statements and strong enforcement action 

by the USTR is what is key in these areas where we otherwise 

have good agreements, but they are being violated by the country 

that entered into them freely in the past. 

Senator TOOMEY. Thank you. I want to thank the panel. Thank 

you, Mr. Chairman, and thank you, Senator Casey. 

The CHAIRMAN. Senator Thune, Senator Casey was here ahead 

of Senator Toomey, but he gave way because of Senator Toomey’s 

27 

schedule. Would it be possible for Senator Casey to go next, and 

then you would go right after Senator Casey? 

The collegial Senator Thune—I thank you. 

Senator Casey? 

Senator CASEY. Mr. Chairman, thank you very much. I appreciate Senator Thune’s indulgence. 

It is good to be with all of you. I will direct my questions to this 

end of the table, if you do not mind, our other three witnesses. 

Mr. Gerard, I wanted to ask you—I have known you a long time, 

and you and I have talked about this in one way or another. But 

one of the concerns that I have, when we step back from the current issues, is the challenge that you face on the question of illegal 

imports and all the adverse job impact and adverse economic impact that has. 

I think we also have to step back and ask ourselves, do we not 

need, in addition to better enforcement and better strategies, do we 

not need an overall trade policy, what you might call a unified 

trade, manufacturing, and job-creation strategy, or maybe, for 

short, a real trade policy just like we have when it comes to national security? 

A lot of Americans, if you ask them what our national security 

strategy is, you might hear variations, but most people would say 

that we want to promote democracy, we want to protect human 

rights, we want to make sure that people have basic rights, and we 

also want to make sure that we are undertaking efforts to track 

down and destroy terrorists before they come to us—things like 

that that we all kind of agree upon. 

With trade, I am not sure we can enunciate that, and I am not 

sure our policy or our legislative enactments are consistent with 

our undergirded strategies. 

So, if you had to design or articulate or outline what a policy 

would be for the United States of America on trade, similar to what 

I articulated as it relates to national security or defense policy, 

what would the pillars of that be, or what are the elements that 

you would put forth? 

Mr. GERARD. Well, I guess this is probably a good time to quote 

Senator Obama before he became President, and what he said is 

that we ought to measure our progress on trade not by the amount 

of trade agreements we negotiate, but by the quality of them and 

how many jobs they create at home. 

So, if I was to be able to help design a new trade policy—let me 

start off by saying that our union is not against trade. We are just 

against trade that is designed to give away our jobs. And, when I 

make the comment that, since PNTR with China, we have had a 

$7-trillion trade deficit with China, that should say it all. 

So I think that, starting down that path, we should be looking 

at developing our energy sector and our trade and our manufacturing sector so they are integrated, and looking at our education 

system. 

If you look at what is happening now in the oil and gas industry, 

you would know that in Pennsylvania we had to go and put on special schools to get people trained to go into that industry, because 

we did not plan ahead. We did not have a strategy. 

28 

Now we are having to talk about exporting liquefied natural gas. 

We are not against exporting LNG, but we ought to take care of 

America first. 

So I think you need an integrated strategy. Some people would 

panic, but I would call that an industrial strategy. Of the major 

OECD countries, we are one of the only countries that does not 

have a strategy. 

So when you come to trade, I think, as I said in my testimony, 

enforcement is a very, very important component of that. We negotiate trade deals. We ought to demand that they be enforced. It is 

like imagining that you put up a series of stop signs in a school 

district, but you do not tell people to stop. You inevitably know 

what is going to happen, and I think this is a complicated question 

with a complicated answer. 

But I would start by looking at our trade agreements and quit 

BSing us. Why do we need a trade agreement with Bernai? It has 

nothing to do with trade. It has something to do with the State Department. 

So we need to have an honest discussion about what we are 

doing with trade, and is it really bringing jobs home. 

Senator CASEY. Well, I appreciate that. I will submit some questions for the record for other issues. 

But, Mr. Longhi, one of the concerns that you raise, when it 

comes to the fundamental challenge of illegal imports that lead to 

job loss, is what we have to do to engage with the Department of 

Commerce. 

I know that a number of us have made it very clear to Department of Commerce Secretary Pritzker not just what our concerns 

are about, but what we hope and expect that they will do to be responsive. 

I know we are at a point now where it is in the hands of Commerce and the International Trade Commission, but we will keep 

working together with you and with the steelworkers to put forth 

an ongoing strategy so we can continue to work together to prevent 

some of the job loss. 

But I will try to submit some more questions to you for the 

record. 

Mr. GERARD. If I could just say for the record, Mr. Chairman and 

members of the committee, I really want to thank you, Senator. As 

you said, you and I have been talking about this since way before 

you were a Senator, and you have been a champion for us, not just 

in the steel industry, but across a number of industries of manufacturing, and this is my first chance to publicly acknowledge it. 

So thank you. 

Senator CASEY. I appreciate it. Thank you. 

The CHAIRMAN. Mr. Gerard, you should know that there are a lot 

of us in the Senate whom Senator Casey has talked about these 

issues with, and it reflects the urgency that you and Mr. Longhi 

are talking about, and we appreciate it. 

Senator Thune? 

Senator THUNE. Thank you, Mr. Chairman. Thanks for having 

the hearing today. I think it is an important hearing. I appreciate 

the panelists who are here to testify. 

29 

I do wish, however, we were talking about enacting an updated 

and strengthened Trade Promotion Authority bill so that we could 

actually close some of these ongoing trade deals rather than simply 

talking about them. But that said, I am pleased the committee is 

holding the hearing, and I would agree that effective trade enforcement is an important component of any successful trade agenda. 

Any administration, regardless of political party, should seek to 

ensure that our trading partners live up to their commitments, 

whether it is in the area of market access for agriculture or production or intellectual property rights. So I hope this committee, Mr. 

Chairman, will soon consider the Customs modernization bill that 

was introduced last year so that we can give our Customs agents 

at ports of entry better tools to enforce our trade laws. 

Mr. Wilkins, it has been a year since China last approved a new 

type of biotech corn or soybean. I am very concerned about these 

barriers that some of our trading partners around the world are 

putting up in terms of sanitary or phytosanitary measures, and 

there probably is not a more important market to the people whom 

I represent in South Dakota when it comes to soybeans than is 

China. As you know, last year, 28 percent of total U.S. soybean 

production, which was worth over $13 billion, was exported to 

China. 

So tell me what you make of what they are doing now. Could you 

elaborate on what that is going to mean for soybean production and 

the soybean farmers in this country and then, also, how you believe 

the United States can best address that situation? 

Mr. WILKINS. Thank you, Senator. The enormous amount of soybean trade with China is, in a way, a two-edged sword. They are 

a wonderful trading partner. Their people are having an increase 

in their standard of living. As their standard of living is increasing, 

the first thing they want to do is improve their diet, and what better way to improve their diet than with the miracle protein of soy? 

The two-edged part of it is that the Chinese regulatory process 

is such that they will not begin to entertain the deregulation of a 

new biotech trait until the exporting country, which in our case is 

the United States, deregulates the trait. 

The way that our efficient agricultural system in the United 

States aggregates production into an efficient infrastructure system, we fear that if we commercialize new traits that are approved 

in the United States, there is a possibility that those traits could 

unintentionally find their way in a very minute amount into a 

cargo destined for China. China could then use that unregulated 

trait as a way of providing an artificial trade barrier to manipulate 

market prices or to turn away cargos when it does not suit them 

to receive cargos. 

The asynchrony of the global biotech deregulatory process is frustrating to us as farmers. We want the opportunity to be able to 

start to use these tremendous new genetic enhancements to our 

crops, allowing us to use less pesticides, allowing us to control our 

pests in safer ways, and to be able to continue to provide safe and 

abundant food for our trading partners around the world. 

Senator THUNE. Well, I am interested in not only what is happening there, but also, as we look at the U.S.-E.U. trade agreeVerDate Mar 15 2010 16:48 Feb 25, 2015 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 R:\DOCS\92444.000 TIMD
30 

ment, about the future of biotech and whether or not that ought 

to be part of the negotiated outcome there. 

I believe that we need to ensure, as we negotiate that agreement, 

that it is as comprehensive as possible when it comes to issues of 

market access and regulatory cooperation. So I am just curious. Is 

that something that you believe ought to be a priority for the U.S.- 

E.U. trade agreement as well? 

Mr. WILKINS. Absolutely. The renewable energy directive that 

the E.U. has established in the case for biofuels, that is hindering 

the export of our United States biofuels into the European marketplace. 

Their labeling requirements of food stuffs that contain or may 

contain genetically enhanced molecules is an egregious point. 

The European Food Safety Administration, EFSA, they review 

the biotech traits. They give them a clear bill of health that they 

present no concerns for safety, but the E.U. parliament’s political 

system of not wanting to vote to approve new biotech traits is substantially hindering the advancement of agricultural production 

here in the United States. 

Senator THUNE. Thank you. 

Mr. Chairman, I guess I would simply say that, as we talk about 

these issues, it is really important that we tear down these types 

of barriers for a lot of reasons, of course, the obvious one being the 

health and economic vitality of American agriculture. 

But there is also the issue that these types of biotech corn and 

soybean seeds that he is talking about, also significantly increase 

yields. You get greater productivity, and that is going to help us 

feed the world. And right now we are adding 70 million to 80 million people to the world’s population every single year, and the 

American farmer is going to be looked to to help meet that demand, 

and this issue is really critical in that regard. 

When you run into these barriers that are artificial barriers imposed by the Europeans and China and other countries around the 

world, it is going to be increasingly difficult for us, and it will be 

difficult for those other countries around the world that need the 

food to get it. 

So I really hope this will be a priority for our negotiating teams 

in the U.S.-E.U. trade agreement, but also as we continue to try 

to drill down on some of these relationships that we have with 

other countries around the world, and specifically right now China, 

which, as I mentioned earlier, for over a year now, has not approved a new type of biotech corn or soybean. That is very problematic for agriculture, not only here in America, but, again, for the 

world’s population. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Thune. You and I have been 

working on these trade issues for a long time, going back to the 

days when I was chair of the subcommittee and you were the ranking minority member. 

I think about our work on low-value imports and Customs and 

the digital trade issue. And I am struck—and I am not sure you 

were here for this part of it, but it is something we have always 

worked together on, these bipartisan issues, trade issues in particular—that it was not a coincidence that we chose enforcement 

31 

today as our first issue after Mike Froman came to talk to us, because what I find again and again is, even in a State as dependent 

on trade as mine, so many workers, particularly middle-class workers, come up and say, ‘‘Hey, Ron, why are you talking about a new 

agreement before you enforce the laws that are already on the 

books with respect to the existing trade agreements?’’ 

Of course, TPA is about facilitating new trade agreements, and 

my judgment was that, when we can work together in a bipartisan 

way to enforce what is on the books, we build credibility for the future trade challenges, and it has been great to work with you on 

these kinds of issues in the past, and I know we are going to do 

a lot of bipartisan work together on them as well. 

Senator Cardin? 

Senator CARDIN. Thank you, Mr. Chairman. I first want to identify myself with your strong opening statement, which is that we 

first need to start with the enforcement of our trade laws. It starts 

with our existing trade remedies that we have, and, in too many 

cases, our antidumping laws or countervailing duty laws have been 

compromised through negotiation. 

That is one thing we do not want to see happen. We want a 

strengthening of these laws, not a weakening. This is one of the 

areas where the United States has been a victim of being naı ̈ve at 

times, because—particularly on steel—we have entered into certain 

understandings only to find that as we reduce capacity, other countries increase capacity, then they dump into our market and we try 

to use remedies and they yell they cannot do it. 

So it starts with enforcing and strengthening our current laws. 

But as you mentioned, and I just really want to underscore this 

point, we have expanded the trade agreements to go beyond traditional barriers. It used to be we would try to reduce tariffs, then 

we went to the non-tariff barriers. 

Then we started recognizing that to have a level playing field for 

American companies, to help our competitive situation globally, we 

had to look beyond just the traditional trade issues, and we got 

into environment, we got into labor, and we thought that we could 

do either sidebar agreements or action plans and that that would 

be adequate. 

And we did that. We did it in NAFTA. We did that in the trade 

agreements in our hemisphere, only to find that the countries violated those provisions, but there was no real enforcement. So the 

truck issues with Mexico or the labor agreements issues with South 

American countries went uncorrected, because there was no real 

enforcement within the terms that we negotiated. 

I think the lesson that was learned from that is that, if it is 

going to work, you have to make enforcement part of the core trade 

agreement. You are going to need ways to try to resolve issues before you impose sanctions, but it has to end up with the threat and 

power to impose trade sanctions if it is going to be enforceable. I 

think that is the lesson we learned. 

So now we are working on the Trans-Pacific Partnership, TPP, 

and the struggle here is that we are dealing for the first time with 

a trade agreement that deals with countries that are market economies—developed countries and developing countries. 

32 

In many cases, we hopefully are going to demand in these trade 

agreements that there be good governance so that our companies 

that will not participate in corruption are protected; that for countries that have state-operated enterprises, we make sure that their 

provisions for opening up these state-operated enterprises are actually done, and, if they are not, that we have enforcement; that we 

have anticorruption provisions; that we have government contract 

provisions to level the playing field. All of that is in good governance. We are seeing progress in the countries that are developing 

countries in TPP. But once an agreement is signed, if it is signed 

and ratified, past practice shows us that that progress will slow 

down, if not stop, unless there is enforcement in the trade agreement to make sure these countries carry out their commitments. 

So that, I think, is the real lesson. And I know we had Ambassador Froman here, and we talked to Ambassador Froman about 

these issues. I think he understands it. 

In the recent days, I have met with the prime ministers of New 

Zealand and Singapore, two countries that are part of the TPP, to 

urge them to understand that you are not doing anyone any service 

unless we have a quality agreement, as I think some of you have 

mentioned. 

Mr. Brosch, I want you to know that on poultry, we have 

weighed in on the issues, and we have a major poultry industry in 

our State, and I thank you very much for your leadership on that. 

We are not going to forget the traditional problems that we have. 

Mr. Gerard, you have been really our leader in trying to focus on 

where the priorities need to be in enforcement, and I know that we 

do not know what this agreement looks like. We have not even had 

a TPA bill here. But I would appreciate your help in identifying 

areas where we could advance true enforcement as we look towards 

these trade agreements. 

Mr. GERARD. We would be happy to do that. I think the first area 

that you could move on is recovering Congress’s ability to approve 

the agreement in detail rather than through fast-track. 

We have seen what the results of fast-track are, and I think that 

Congress should have never ceded its authority to review those 

agreements and make sure they do what the President said that 

they should do, which is create jobs in America. Unequivocally, I 

challenge anybody to prove me wrong. We have had no net job 

gains from any trade agreement that has been negotiated since 

NAFTA. 

So put that to the side. The one thing I do want to stress—it is 

good to see you. We lost one of the most important steel mills to 

the United Steel Workers Union in Baltimore, MD, and we lost 

that mill primarily because the trade laws do not work, and I say 

this with all due respect. 

The other countries surge our market. By the time we file a 

trade case—and you know how many we file; you have been part 

of them. When we file those trade cases, we will win, but we have 

already lost a bunch, and they will come down a bit. Then they will 

nail us in another part of our industry in steel, and we will surge 

again and countervail again and subsidize again and we will file 

another case and we will win, and we slowly starve the capital 

until our companies cannot earn the cost of capital. 

33 

The only steel industries that are left standing in America were 

the strongest ones, and we are on the verge of—this is quite emotional for us in the Steelworkers Union. We are on the verge, if 

Commerce does not do the right thing, of losing the most important 

value-added part of the steel industry to two countries that have 

deliberately set about to cheat us out of our own market—China 

and South Korea. 

So we are happy to help and submit more in detail in writing, 

because I think you are on the right track. But you have to recognize that you should not cede your authority to make sure the 

agreement does what it is supposed to do. 

Senator CARDIN. I thank you for your testimony, and you know 

I agree with you on Bethlehem. That was a tragic loss for our country and certainly for our community. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Cardin. You have made a 

number of important points, and I very much look forward to working with you on these issues and trade generally. 

I think you could hear—and I say this to all of the witnesses— 

that Senators do feel strongly that our country needs rules in trade 

agreements that have teeth, and they have to be enforced. A variety of Senators have said it in a variety of different ways, but it 

seems to me that is what this is really all about. 

I simply would close by saying, again, the topic of today’s hearing 

was not randomly chosen. Trade enforcement is central to protecting what I call red, white, and blue jobs, and it seems to me 

we have made some headway here recently. 

That is why I specifically referenced the rare earth minerals, the 

efforts at USTR. Mr. Gerard, we appreciate your involvement in 

this, and it is why I and others talked about making sure that unfair trade is identified and remedied sooner in the process, and 

what we have talked about here, at least a couple of times, is that 

there should be a more systematic system of identifying enforcement issues. 

So you all have given us a big agenda, and really it is reflected 

in concerns all the way from the wheat fields of eastern Oregon, 

where we have been concerned about some of the agriculture issues 

that we have talked about here today and how those practices affect our State, to some of the steel mills that are thousands of 

miles away. 

I think what we are united on is that enforcement, making sure 

that there are rules, number one, and meaningful rules, and that 

they are adequately enforced, is something that cannot be given 

short shrift. And it goes right to the heart of our ability in the future to grow things in America, to make things in America, to add 

value to them in America, and then ship them somewhere. Nowhere is this more important than Oregon, where one out of six 

jobs depends on international trade, where the trade jobs often pay 

better than do the non-trade jobs. 

You all have, I think, laid out the enforcement issue very well, 

and we appreciate your patience with Senators, on a particularly 

hectic day, having to be out for votes. 

I know we are going to be calling on you, and we are going to 

be calling on others who may not share your views, because I think 

34 

there is an opportunity here, and trade is so important to our country and to our economy. 

We are determined to get it right. We are determined to get it 

right on a bipartisan basis. 

With that, the Finance Committee is adjourned. 

Mr. GERARD. Mr. Chairman, could I just—I missed one point, 

and I do not want to be an apologist for USTR, but a bipartisan 

increase in their budget so they could do more enforcement would 

be wonderful. 

The CHAIRMAN. Very good. 

[Whereupon, at 4:39 p.m., the hearing was concluded.] 

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