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THE TRANS–PACIFIC PARTNERSHIP:

PROSPECTS FOR GREATER U.S. TRADE

HEARING

BEFORE THE

SUBCOMMITTEE ON ASIA AND THE PACIFIC

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTEENTH CONGRESS

FIRST SESSION

MARCH 4, 2015

Serial No. 114–14

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

PAUL COOK, California 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

CURT CLAWSON, Florida 

SCOTT DESJARLAIS, Tennessee 

REID J. RIBBLE, Wisconsin 

DAVID A. TROTT, Michigan 

LEE M. ZELDIN, New York 

TOM EMMER, Minnesota 

ELIOT L. ENGEL, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON ASIA AND THE PACIFIC

MATT SALMON, Arizona Chairman 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

SCOTT PERRY, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

BRAD SHERMAN, California 

AMI BERA, California 

TULSI GABBARD, Hawaii 

ALAN S. LOWENTHAL, California 

GERALD E. CONNOLLY, Virginia 

GRACE MENG, New York 

(III)

C O N T E N T S 

Page

WITNESSES 

Claude Barfield, Ph.D., resident scholar, American Enterprise Institute .......... 4

Ms. Tami Overby, senior vice president for Asia, U.S. Chamber of Commerce . 21

Mr. Scott Miller, senior adviser and William M. Scholl Chair in International 

Business, Center for Strategic and International Studies ................................ 33

Ms. Celeste Drake, trade and globalization policy specialist, The American 

Federation of Labor and Congress of Industrial Organizations ....................... 40

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Claude Barfield, Ph.D.: Prepared statement ......................................................... 7

Ms. Tami Overby: Prepared statement .................................................................. 23

Mr. Scott Miller: Prepared statement .................................................................... 35

Ms. Celeste Drake: Prepared statement ................................................................ 42

APPENDIX 

Hearing notice .......................................................................................................... 80

Hearing minutes ...................................................................................................... 81

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: Prepared statement .............................................. 82

The Honorable Tom Marino, a Representative in Congress from the Commonwealth of Pennsylvania: Questions submitted to the witnesses for the 

record .................................................................................................................... 84

(1)

THE TRANS–PACIFIC PARTNERSHIP: 

PROSPECTS FOR GREATER U.S. TRADE 

WEDNESDAY, MARCH 4, 2015

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON ASIA AND THE PACIFIC,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The committee met, pursuant to notice, at 3 o’clock p.m., in room 

2172 Rayburn House Office Building, Hon. Matt Salmon (chairman 

of the committee) presiding. 

Mr. SALMON. The hearing will come to order. I would like to 

thank the witnesses for participating in what promises to be a lively hearing. I look forward to hearing from you about our trade opportunities in Asia. And I want to thank Ranking Member Sherman. We approach trade quite differently, but I am looking forward 

to having this debate and having a great group of testimonies from 

the members of the panel. 

The scale of our economic ties with Asia is vast. Three of seven 

of our top trading partners are in Asia. Three of our top six holders 

of U.S. Treasury bonds are in Asia, where their combined ownership exceeds $2.5 trillion. Trade, especially U.S. economic and 

trade policy in the Asia Pacific will be one of the major issues this 

Congress will deliberate. Increased U.S. presence in the region 

through the Trans-Pacific Partnership would greatly improve the 

American economy as well as provide considerable diplomatic and 

strategic benefits. 

Let me start off by saying we live in a globalized world. That has 

already happened. Nothing is going to change that whether anybody here likes it or not. It is only right for the United States to 

take advantage of the opportunities that globalization can afford 

us, especially as it can improve the livelihoods of Americans and 

improve trade and labor conditions abroad. Excluding ourselves 

from a monumental trade agreement that has clearly distinguished 

itself from previous FTAs would be unproductive and detrimental 

to our interests in Asia. The TPP would provide comprehensive and 

high standard guidelines for trade and commerce in the Asia Pacific. A robust and comprehensive TPP has the potential to improve 

our economy and provide consistency and stability in Asia. 

When Congress passes TPP, the world will know we are dedicated to economic prosperity through the facilitation of strong and 

inclusive rules-based, market-oriented economic growth. While the 

details of the trade agreement are still not public, I am confident 

that TPP will address issues such as preventing state-owned enterVerDate 0ct 09 2002 15:51 Apr 28, 2015 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\WORK\_AP\030415\93670 SHIRL
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prises from having an unfair advantage in a market, or setting 

clear rules of origin, or constructing safeguards to protect intellectual property. I am also confident that TPP will foster job creation 

by incentivizing industry to invest in domestic production and manufacturing. 

Opponents of free trade will say our country will be flooded with 

low cost imports. It is important to note the United States already 

has relatively low tariffs and minimal other trade barriers, with 70 

percent of our imports already duty free. 

We should not be worried about imports flooding our market 

after TPP has passed. Instead, TPP will help lower trade barriers 

for U.S. manufacturers and companies that are seeking access to 

other countries, providing U.S. trade and investment opportunities 

with other countries. 

If the United States does not participate in a comprehensive multilateral agreement in Asia, we may lose out on opportunities for 

growth and influence in the region. China is leading the way in 

pushing for an alternative regional economic and trade agreement 

called the Regional Comprehensive Economic Partnership, or 

RCEP, which excludes the United States. Reports have indicated 

that negotiations may focus on broad issues and avoid sensitive 

areas, so it will likely to be a lower standard trade agreement. Additionally, the agreement would facilitate intra-RCEP trade by lowering tariffs among participating countries, but it would the exclude the United States from those trade benefits. 

As China takes the lead in proposing alternative economic futures for Asia at the exclusion of the United States, the TPP would 

reassert our presence in the region. Through TPP, we would be 

able to shape rules and introduce U.S. practices to countries like 

Vietnam to improve conditions for human rights and labor practices, or provide environmental protection and intellectual property 

rights protection clauses. We would not see those types of provisions in a China-led trade agreement, I can assure you. 

China can allege that the United States is rebalancing to Asia 

purely to achieve military outcomes, but the successful negotiation 

and implementation of a TPP agreement will counter Beijing’s notions that we are only focused on the security rebalance to Asia as 

well as reassure allies and our friends in the region that we are 

a reliable economic partner. After all, the United States has been, 

and will continue to be a Pacific power. 

I look forward to hearing our distinguished witnesses this morning and hope they will be able to address how the TPP would set 

guidelines that would improve our economic strength both at home 

and abroad and tell us what steps are necessary for a successful 

outcome. 

I now yield to Mr. Sherman, the ranking member of the subcommittee, for his opening remarks, and then we will move quickly 

to questions because we have a few members that have to get to 

airplanes. Thank you, Mr. Sherman. 

Mr. SHERMAN. Mr. Chairman, we are having this hearing as 

many of our colleagues are leaving. Just because all the seats are 

not filled does not mean that this matter is not of critical importance. 

3

A look at the economics of the various trade deals leaves a stark 

picture. We were told that giving most favored nation status permanently to China would increase our trade deficit by $1 billion. 

That estimate was off by over 30,000 percent. We were told that 

the Korea deal would reduce our trade deficit. It increases it. And 

now we can’t even find an economist who says that this deal will 

reduce our trade deficit or increase jobs, so instead they are telling 

us that somehow this increases national income. But of course not 

the income of those who need jobs. 

The economic case for this agreement is so incredibly weak that 

even with the vast majority of economists already on the payroll of 

those who are pushing it they can’t make an economic case. And 

so we are given other reasons. We are told isn’t it wonderful to 

have a deal with the rules that came from the United States? And 

it is true that many of the approaches behind this agreement were 

written on Wall Street. 

That we should take pride in such rules is like turning to citizens 

from Madrid and saying take pride in the Spanish flu, because 

these rules have decimated millions and millions of American middle class families. We need fair trade, not what is called free trade. 

And the choice is not between the status quo and digging in further. But instead we have the lowest tariffs; many of them we can 

raise in an effort to force countries to adopt fair trade, results-oriented trade agreements. When you are in a hole, and we have the 

biggest trade deficit hole imaginable, it is time to stop digging. 

Then we are told, oh well, yes, it is a terrible economic deal, but 

think of how it helps us geopolitically against China. No, this is a 

deal that helps China. First, look at the rules of origin in the Korea 

agreement, and what we would expect to see is rules of origin here. 

Goods that are 65 percent admitted made in China, which means 

they may be 70, 80, 90 percent made in China, they get a ‘‘Made 

in Korea’’ tag put on them that is the value added in Korea; they 

come into our country duty free and we get no benefits, no access 

to the Chinese market. This is a free trade agreement on steroids 

with China one way. 

Then the agreement says nothing about currency manipulation, 

so it enshrines the Chinese idea that currency manipulation is just 

fine. And those who violate the law by refusing to designate China 

as a currency manipulator come up with a PowerPoint presentation 

to show me that China is cheating but they are cheating less so 

let us not do anything about that. Folks, imagine trying that on 

your spouse. Honey, I am cheating less. Here is my PowerPoint 

demonstration, mistresses per month sharply declining. Wouldn’t 

work. Cheating less is not a good way to argue that we should continue this process. So the idea that we can give away jobs and that 

proves how geopolitically strong we are is rather crazy. 

And finally we look at statistics. Every time a statistic points in 

the direction this costs jobs, I hear, they hire a dozen economists 

to tell me, well that statistic, you don’t like that statistic. It has 

a flaw. What you also see is that if a deal increases our imports 

by 2 billion and increases our exports by 1 billion, we are told it 

is a great deal because it is 3 billion more in trade. Or told it is 

a great deal because it is $1 billion more in exports. Nobody—I 

mean I am a CPA. I don’t expect everybody to be CPA, but even 

4

in elementary school you learn how to add but you also learn how 

to subtract. And that fact is that if exports help, imports have the 

opposite effect. 

Finally, Secretary Kerry in this room said that this deal will not 

be a race to the bottom. Then why are we including Vietnam? Thirty cents an hour, that is the bottom. And we are told, well this deal 

will get us free access to their markets. Vietnam has no freedom 

and has no markets. And so finally Secretary Kerry says, oh, but 

we will have labor standards in this agreement. I will want to hear 

from our witnesses whether they would sell a life insurance policy 

to someone trying to exercise labor rights in Vietnam. And if so, 

I am going to make sure that they are never allowed to work for 

an insurance company or an insurance regulator. 

I yield back. 

Mr. SALMON. Thank you, Mr. Sherman. 

We have a very distinguished panel of four experts today, and we 

are just thrilled that you could be here. Thank you, and thank you 

for your patience. 

Dr. Claude Barfield is a resident scholar at the American Enterprise Institute. Dr. Barfield covers trade, intellectual property and 

technology policy, and was previously a consultant for the Office of 

the U.S. Trade Representative. 

Ms. Tami Overby currently serves as Senior Vice President for 

Asia at the U.S. Chamber of Commerce. She is also the president 

of U.S-Korea Business Council and has spent decades living in 

Asia. Thank you. 

Mr. Scott Miller is a senior advisor at the Center for Strategic 

and International Studies. He holds the Center’s William M. Scholl 

Chair in International Business and previously served in roles with 

the U.S. Trade Representative and Department of State. Thank 

you, Mr. Miller. 

And Ms. Celeste Drake is the Trade and Globalization Policy 

Specialist at the American Federation of Labor and Congress of Industrial Organizations. Ms. Drake, a lawyer, previously served on 

congressional staff and as a judicial clerk. Thank you, Ms. Drake. 

And we are going to start with you, Dr. Barfield, and then we 

will move to my right, to your left, and that is not a political spectrum or anything like that necessarily. But we are really appreciative to have you here. You all understand the lighting system. 

When it goes amber you have a minute left. We are going to try 

to stick to those times because we would like to get as many questions as we have, and we have a couple of members who are trying 

to beat the snowstorm. So thank you very much, Dr. Barfield. 

STATEMENT OF CLAUDE BARFIELD, PH.D., RESIDENT 

SCHOLAR, AMERICAN ENTERPRISE INSTITUTE 

Mr. BARFIELD. Thank you very much, Mr. Chairman, and thank 

you very much for inviting me. I will be happy to answer some of 

your and Mr. Sherman’s questions on the economic side, but because in talking with the staff and because this is the foreign relation committee and not the Ways and Means Committee my testimony is largely on the geostrategic implications of the Trans-Pacific Partnership and other regional agreements. 

5

And I will be very brief. And I want to start with a quotation 

from Thomas Schelling, a Nobel prize winner of a couple of decades 

ago, who said that the stakes of U.S. trade policy have always 

reached beyond the economic realm. Trade is what most international relations are about. For that reason, trade policy is national security policy. 

The point in my longer testimony that I try to make is summed 

up in this kind of theme. Whatever Mr. Schelling thought about 

trade policy and economic policy, trade policy really stands at the 

intersection between what one might say is the high diplomatic 

and security policy, our national interests in that regard whether 

it is in terms of an individual other nation or a region and domestic 

politics. 

How will these trade agreements affect our workers, our businesses? And that juxtaposition is something that Presidents since 

the late 1980s when the United States moved away from just having a trade policy that was with the GATT, and then ultimately the 

WTO, to trade policies that really affected individual nations and 

now the regions. 

And so in the 1980s and through the Obama administration, 

when the Obama administration is trying to decide who we will 

have a trade agreement with and for what reasons, yes, the Trade 

Representative is there, but so is representatives from the Secretary of Defense, the Secretary of Commerce, from EPA, from 

other cabinets and other sub-cabinet representatives. The point is 

that this affects interests that are beyond just our economic interest. 

And this goes back just—and I will briefly, quickly come up to 

the Obama administration—I mean this started particularly with 

what we are looking at today with the TPP in terms of Asia with 

the Secretary of State James Baker under the first George Bush 

who reacted to a proposal by Japan and Malaysia to have an intraAsian regional agreement by saying famously that the United 

States does not intend to allow a line to be drawn down the middle 

of the Pacific with us on one side of it and the nations of Asia on 

the other. 

And you move forward from the Bush administration to the Clinton administration where with NAFTA, with APEC, with the Free 

Trade of the Americas you had a strong push also to push democratic values, changing political institutions as well as the economic 

underpinning. With the Bush administration and the post-9/11 period, trade policy became a part of the white Defense paper in 

2003. So you have had across different administrations this connection between geostrategic policy on the one hand and the trade policy on the other. 

Let me just briefly talk about the Obama administration because 

it is the most fascinating, I think, example. Famously, Mr. Obama 

came into office saying that he would have opposed NAFTA. He did 

not agree with the Bush trade agreements that had been negotiated after 2001. And yet within several years, the President himself and his administration turned around. Part of that admittedly, 

the first year they were dealing with an economic crisis, part of 

that was economic. 

6

The President’s advisors kept pushing him saying that trade and 

certainly exports and more trade agreements will really help our 

economy as a plus to what we are doing domestically. But the other 

thing that occurred was that in the Pacific area the diplomatic and 

security situation was deteriorating. It was when Mr. Obama came 

to office that you began to have this increased activity of North 

Korea, the launching of missiles across the East and South China 

Sea, of threatening Japan, and at the same time that China 

changed from this so-called peaceful development to a much more 

vigorous and assertive and belligerent policy. 

So it was actually cutting across our relations with some of our, 

and as we see even today with some of our chief allies—with the 

Japanese, with the Philippines, with even Vietnam, Malaysia and 

Indonesia. So that really what the administration faced was as it 

preached to the world that we were pivoting and that we were rebalancing in Asia, if you did not have an economic component, 

which is what the TPP really stands for, the Asians would really 

not take you as quite seriously as they do now with the TPP and 

if it becomes a successful agreement. 

So that we find the Obama administration really in some ways 

has come full circle, and this starts with the President himself who 

to his credit today, I think, is really, he said a year or so ago that 

he was all in for the United States as a Pacific power. He is, I 

think, all in for the TPP, and I congratulate him for that. Thank 

you. 

[The prepared statement of Mr. Barfield follows:]

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Mr. SALMON. Thank you. 

Ms. Overby? 

STATEMENT OF MS. TAMI OVERBY, SENIOR VICE PRESIDENT 

FOR ASIA, U.S. CHAMBER OF COMMERCE 

Ms. OVERBY. Thank you very much for the opportunity to speak 

on behalf of the U.S. Chamber of Commerce and share our views 

of our members. I believe all of us can agree that economic growth 

and creating good jobs are the nation’s top economic priorities. 

Approximately 17 million Americans are unemployed, underemployed or have given up looking for work. Participation in the 

workforce stands at 63 percent, the lowest level since 1978, reflecting a significant level of discouragement. There are many policy options Congress will consider to improve this dire situation. International trade should be prominent among them. After all, outside 

our borders are markets that represent 80 percent of the world’s 

purchasing power, 92 percent of its economic power, and 95 percent 

of its consumers. 

The most immediate and important trade opportunity before us 

is the topic of this hearing, the 12-country Trans-Pacific Partnership Agreement. This agreement would link countries in North and 

Latin America with important markets in Asia representing nearly 

40 percent of global GDP. As U.S. companies scour the globe looking for consumers, Asia stands out as brimming with opportunity. 

Over the last two decades, the region’s middle class grew by 2 billion people and their spending power is greater than ever. That 

number is expected to rise by another 1.2 billion people by 2020. 

According to the IMF, the world economy will grow by over $21 

trillion in the next 5 years with nearly half of that growth in Asia. 

U.S. businesses, workers and farmers need better access to those 

lucrative markets if they are going to share in this dramatic 

growth. 

But American companies are falling rapidly behind in Asia. 

While U.S. exports to Asia increased steadily from 2000 to 2010, 

America’s share of the region’s imports declined by about 43 percent. In fact, the growth in U.S. exports to Asia lagged overall U.S. 

growth in that period. 

One reason many companies have lost market share in Asia is 

that many countries maintain steep barriers against U.S. exports. 

A typical Southeast Asian country imposes tariffs that are five 

times higher than the U.S. average while its duties on our ag products soar into the triple digits. In addition, a web of non-tariff and 

regulatory barriers block market access in many of these countries. 

Trade agreements are crafted to overcome these barriers, and without them U.S. goods and services and the workers that provide 

them will continue to be blocked from these lucrative opportunities. 

But the U.S. disadvantages do not end there. Other countries are 

plowing ahead with trade deals that are leaving America on the 

outside looking in. China, India and 14 countries are negotiating 

a trade deal called the Regional Comprehensive Economic Partnership that does not include America. This agreement does threaten 

to draw a line down the Pacific and put American workers, farmers 

and businesses that you represent on the wrong side of history. 

22

The TPP is not only America’s best chance, it is our only chance 

to ensure that America is not left out as these countries in the 

most economically dynamic region of the world pursue new trade 

accords among themselves. Unlike RCEP or the many 350-plus 

trade agreements already in force around the globe, the TPP promises to set high new standards and establish new rules for trade 

and investment that will generate greater benefits for all participating countries. 

TPP is a chance to introduce ground breaking disciplines in 

emerging areas so that trade and investment rules can keep pace 

with a rapidly evolving global economy and increasingly sophisticated behind-the-border measures that governments are increasingly using to block our access and obstruct market-based competition. 

In order to provide American workers, farmers and companies 

with these opportunities, Congress must first approve legislation to 

renew trade promotion authority. With TPA we simply cannot 

enter into new agreements. We are excited to see that Congress 

and the administration are focused on TPA and working hard to 

prepare legislation to renew it in the coming weeks. TPA is a critical element of an economic policy which spurs economic growth 

and job creation in America. 

The agenda is clear. The U.S. cannot afford to sit on the sidelines 

while others design a new trade architecture for Asia. A comprehensive, ambitious and enforceable market opening TPP has the 

potential to create an explosion of trade and new American jobs 

and would demonstrate continued U.S. leadership across this important region. It is an exciting vision which on the right terms can 

be an economic shot in the arm for the United States and for our 

friends and allies in the region. It can send a clear, unmistakable 

message that Americans’ leadership is in the Pacific to stay. 

The U.S. Chamber of Commerce looks forward to working with 

the members of this committee to secure a commercially strong 

TPP as soon as possible. Thank you. 

[The prepared statement of Ms. Overby follows:]

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Mr. SALMON. Thank you. 

Mr. Miller? 

STATEMENT OF MR. SCOTT MILLER, SENIOR ADVISER AND 

WILLIAM M. SCHOLL CHAIR IN INTERNATIONAL BUSINESS, 

CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES 

Mr. MILLER. Thank you, Mr. Chairman and Mr. Ranking Member, for the opportunity to present my thoughts on prospects for the 

TPP. 

I believe a completed TPP would be beneficial to U.S. interests. 

First, it would form the largest free trade area in which the U.S. 

participates with the opportunity to expand its membership. Second, it would establish a modern set of commercial rules for the 

Asia Pacific where U.S. firms have a large and growing interest. 

Third, it would reinforce U.S. presence in the region. It is an important economic complement to our security posture. 

The United States has compelling economic interest in the Asia 

Pacific. The Asia Pacific as defined by the 21 APEC economies 

would be home to three largest economies in the world—the United 

States, China and Japan. In addition, there are 15 economies 

worldwide with over $1 trillion of gross domestic product. Eight of 

those fifteen are APEC members. 

This is an area that which over the past decade or two has demonstrated very strong economic growth and relative stability. 

Among the 21 APEC economies there is already a high level of economic integration. There are many regional trading arrangements 

of which the United States is a party to a few of them, but there 

is about $10 trillion a year in goods and services traded around the 

Asia Pacific. 

TPP holds the promise of three major benefits to the U.S. economy—modernized rules, improved market access and a durable 

new commercial architecture in this fast-growing region. Let me 

focus in particular on the rules because it came up in your opening 

comments. 

Mr. Chairman, you mentioned globalization and the fact that this 

economic change is a given in our lives. I think the point that I 

would make is over time trade rules made for a different time become either outmoded or incomplete for changes wrought by this 

technology. We certainly live in a time of great technological 

progress. The technological progress particularly in transportation, 

communication and information flows have led to rapidly falling 

barriers in the flow of goods, people, ideas and culture. 

It is something, globalization is the usual way to refer to it, but 

this technological change has changed both the way we trade and 

what we trade. How has it changed the way we trade? Well, 50 

years ago when the GATT was founded and shortly after, most 

international exchange took in the form of arms length transactions between unrelated parties. What technology allows today, 

particularly communication and information technology, is a very 

high degree of firm to firm coordination in trade. The UNCTAD estimates that 80 percent of global merchandise trade is actually firm 

directed, so the unrelated party transactions that were the basis of 

the GATT are no longer the reality of modern trade. 

34

So how we trade today and the way we operate is organized 

around the global value chains and firm communication, so it is a 

very different mode of operation. 

In addition, what we trade has changed because of technology. 

Some goods and services previously thought non-tradeable including, say, accounting services, are now in fact tradeable goods. More 

importantly, there are goods that frankly didn’t exist 20 years ago 

when the last round of the GATT was completed that are now in 

the traded system. 

A good example is digital services. In 1994, there was essentially 

no commercial use of the Internet. At that time digital trade exports or digital services exports from the United States were insignificant. Today, digital services exports are roughly double agricultural exports for the United States. In 2011, digital services exports 

were $356 billion versus $136 billion of total farm exports. 

So we have types of trade today that were unimagined even at 

the time of the last GATT round. Modernizing rules in areas like 

cross-border data flows and regulatory cooperation are critical to 

the way the modern trading system functions. That is really one 

of the important reasons for being at the table in TPP. They are 

vital to the U.S. firms which are often on the leading edge of this 

commercial innovation. As Tami mentioned, TPP will also improve 

market access for U.S. exporters particularly in the five partner 

economies where we do not have FTAs now. 

And finally, TPP is intended to have an open architecture expected to incorporate new members which will help reinforce U.S. 

high standards for commerce in the region and have positive spillover effects for the United States, our allies and our partners in 

the region. 

I thank you for your attention and I look forward to your questions. Thank you. 

[The prepared statement of Mr. Miller follows:]

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Mr. SALMON. Thank you. 

Ms. Drake? 

STATEMENT OF MS. CELESTE DRAKE, TRADE AND 

GLOBALIZATION POLICY SPECIALIST, THE AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS 

Ms. DRAKE. Thank you. Chairman Salmon, Ranking Member 

Sherman, members of the committee, good afternoon. I appreciate 

this opportunity to testify in the prospects for greater trade under 

the proposed Trans-Pacific Partnership. I have submitted written 

testimony for the record and will summarize my comments here. 

I am going to start with the premise that some of you might find 

surprising, and that is that American workers support trade and 

in fact we want more of it. While it is true that we oppose the recent Colombia and Korea trade deals, it is also true that we strongly support GSP and AGOA which promote imports through tariff 

reductions. 

For us, the real question is not whether to trade but how to 

trade. In other words, what rules will govern and who benefits? 

Some say the TPP is a fight between the U.S. and China to write 

trade rules. It is not that simple. Is the ‘‘we’’ really the people of 

the United States, writ large, or is it global corporations, many of 

whom invest in and produce in China, and other economic elites 

who hold about 90 percent of the U.S. trade advisor seats? For 

China, a real problem is getting it to abide by any rules. Fourteen 

years after China joined the WTO it is still not compliant and why 

would new rules be any different? 

For the nearly 13 million working families the AFL–CIO represents, the question we ask is whether taken as a whole the 

Trans-Pacific Partnership will make lives better for people who 

work. There is little doubt that a completed TPP will increase trade 

flows, which do not necessarily mean better lives for workers. Better wages and working conditions do. Trade rules from NAFTA onward have contributed to stagnant wages and increasing inequality. 

How can a trade deal help? The most important thing the TPP 

can do to help create jobs and raise wages is to address currency 

manipulation. A Japanese official recently warned that such a 

move would kill the TPP. But we have real doubts about the value 

of a TPP that fails to address currency. This is critical. If the TPP 

leaves countries free to use currency to create trade advantages, 

the mammoth, job-killing $500 billion U.S. trade deficit is only likely to grow. 

We are also looking for commercial rules that will help reduce 

the deficit. This means strong rules of origin on everything from 

cars and car parts to aerospace parts and clothing. It also means 

meaningful, easy-to-use rules to prevent unfair competition from 

government subsidized firms that compete against our firms, for instance, by producing steel products. It also means intellectual property provisions that strongly support American innovation and creativity without putting health at risk or bleeding taxpayers dry. 

We support balanced investment rules, not investor to state dispute settlement. ISDS sets up a separate but unequal system of 

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justice that operates outside U.S. courts and U.S. law available to 

foreign investors only. This corporate court undermines the ability 

of elected officials to make policy choices. 

And though the quality of a trade deal does not turn solely on 

labor provisions, inadequate standards, poor enforcement or both 

contribute to an economic imbalance that leaves workers behind. 

The TPP’s labor rules must require compliance on day one or it 

sends the message that the commitments aren’t serious. If the 

TPP’s labor rules are entirely discretionary, allow for infinite 

delays or no action at all, they will not help workers gain the voice 

they need to raise wages and make their jobs safer. 

The GAO has already recognized inadequate U.S. oversight and 

monitoring of labor provisions in prior trade deals, even ones using 

the so-called May 10th Standard. Workers, whether in Mesa, Arizona, Mexico City or Hanoi, cannot afford to have their governments ignore fundamental human rights, including the right to join 

together and seek a better life. 

Some of the TPP countries are extremely troublesome in this regard whether that means restricting the right to free speech, to 

join a union, arresting people who wear Santa hats or stoning homosexuals, all of these raise concerns about the ability of these 

countries to be fair trading partners, to meet international standards and to develop an economy with the basic fairness to create 

a functioning middle class. 

These are human rights questions, moral questions, but also 

deeply economic questions. To us, the questions about the TPP are 

far too complex to merit a grant of Fast Track which requires Congress to commit sight unseen to an up or down vote with limited 

debate. That is why we urge you to increase your leverage over the 

TPP by rejecting the unaccountable Fast Track model. We cannot 

afford to get this wrong. 

I thank the committee for its time and would be pleased to answer any questions you may have. 

[The prepared statement of Ms. Drake follows:]

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Mr. SALMON. Thank you, Ms. Drake. 

I am going to start it off with a round of questions. My first question would be that the administration often mentions 21st century 

trade issues as a goal of TPP. What are these issues and why are 

they important to the U.S. economy? 

Dr. Barfield, would you like to take a first crack at it? 

Mr. BARFIELD. I think Scott went into this in some degree. There 

are issues that he talked about in terms of the new digital economy, of moving—and I should say that what has happened is that 

as the trade negotiations have gone over, over the decades, you 

have gone from trade barriers such as tariffs that were outside the 

border to the kinds of things that you find inside the border of regulations. And now we have new technologies such as the new digital economy which trade rules to date have not handled. 

And so the term ‘‘20th century agreement’’ means that you are 

really looking at issues that have not been looked at before or only 

briefly looked at such as regulatory issues whether it is health and 

safety, whether it is environment or whatever. So it is in inside the 

border and regulatory framework that you are trying to change in 

the direction of allowing the free flow of trade and investment. 

Mr. SALMON. Thank you. 

Ms. Overby, did you, or Mr. Miller did you want——

Mr. MILLER. If I could add briefly. Yes, I agree with Claude. 

Classically defined as the electronic commerce and telecom issues, 

cross-border data flows being the most important for business operations, not just Internet firms and high tech firms but all firms operate with a lot of coordination. And free flow of data is critical to 

operation. 

Second, in competition policy, which has been an older subject of 

trade, one of the things that is added in the TPP is the consideration of state-owned enterprises and how to treat state-owned enterprises and how to manage their competitive neutrality to make 

sure they operate the way that normal competitive companies do. 

I would also add regulatory cooperation or regulatory coherence is 

an important part. This is one of the behind the border issues that 

is a bigger part of trade frictions today than it was one or two decades ago. 

Finally, in the intellectual property chapter, there is good work 

going on for safe harbors for Internet service providers which is 

consistent with U.S. law and practice, as well as measures to protect high technology innovators in foreign markets. 

Mr. SALMON. One other question, Mr. Miller. Would those safeguards on these issues, whether for intellectual property or any of 

the other issues that you mentioned, would they happen if we are 

not part of it? 

Mr. MILLER. It is unlikely. The United States has raised these 

issues. Frankly it is U.S. firms that are on the frontier of commercial innovation in these sectors. Mostly, in most trade negotiations 

economies raise the issues that are most important to their industries, and for the U.S. companies these come to a high level that 

probably wouldn’t happen if we were absent from the TPP negotiations. 

Mr. SALMON. One of the arguments against TPP is that our trade 

deficit with FTA partners has actually increased in aggregate. 

59

However, my understanding is our overall trade deficit peaked in 

2006 at $760 billion. Since then it has actually decreased to $505 

billion. So trade balances with FTA partners have actually improved at least as far as I am reading the statistics. Is the trade 

deficit issue of particular concern to the negotiators? And should it 

be? 

Ms. Overby, would you like to address that? 

Ms. OVERBY. Thank you. Mr. Chairman, the trade balance is actually a poor measure of success of U.S. agreements. In macroeconomic terms, the U.S. overall trade deficit reflects an imbalance 

in our consumption and our savings, not our trade agreements. 

Until we save more than we consume, the U.S. will continue to run 

a deficit on a global basis. However, if we take as a group, the U.S. 

ran an aggregate trade surplus with its FTA partner countries in 

2012 and 2013, and this surplus has grown since then. In fact, the 

U.S. has recorded a trade surplus in manufactured goods with its 

FTA partners for each of the past 5 years according to our Department of Commerce. This surplus reached $27 billion in 2009 and 

has expanded to $61 billion by 2013. 

Mr. SALMON. Thank you. 

I just have time for one more question. The issue of currency manipulation, is there any evidence that by itself currency manipulation is damaging to our economy? 

Mr. MILLER. I am no expert on this matter, but I will take the 

advice of Fed Chairman Janet Yellen who was asked about currency manipulation and trade agreements at a recent Senate Banking Committee hearing. She mentioned, acknowledged the issue 

was an issue, but said that it was the United States had defensive 

issues here and that managing, doing her job of managing U.S. fiscal policy might be constrained if we were to negotiate this in trade 

agreements. 

I would note also there are certain things that are important to 

trade and affect trade that we don’t consider in trade agreements. 

I would note farm subsidies is one of those. I don’t think there is 

any debate that farm subsidies do have an effect on farm pricing, 

but the United States has never negotiated them within a bilateral 

free trade agreement. 

Mr. SALMON. Ms. Overby? 

Ms. OVERBY. Yes. On currency we agree. Currency manipulation 

is a very serious problem in international trade, and we are encouraged that the administration and Congress are working to find solutions. The Chamber’s view is that disputes over currency deserve 

a full airing, but the questions are what is the right forum, and 

what measures can be effective? Historically, governments have 

tackled currency matters in a very broad fora such as the IMF, G20 

or G7. This is because governments have seen currency valuation 

and current account imbalances as global in nature and not effectively addressed with a single partner or a small collection of partners. 

Most international policymakers and experts want to be sure 

that we don’t tie the hands of the Fed or the Treasury Department 

with enforceable currency provisions in TPP or any U.S. trade 

agreement. Our institutions need to be able to determine our own 

monetary and fiscal policies and be able to respond in a crisis. The 

60

other TPP partners have as Mr. Sherman mentioned indicated that 

they do not want currency provisions in an agreement. 

Mr. SALMON. Thank you, I have run out of time. 

Mr. Sherman? 

Mr. SHERMAN. Just for the record, using ITC data, our trade relationship with our FTA partners most recent statistics, $180 billion deficit in merchandise plus 70—see, I can add and subtract—

billion in services. That is $110 billion trade deficit with the FTA 

countries. 

I do serve on the House Financial Services Committee, and have 

for 18 years. There is a huge difference between setting your interest rates for your own national economic growth on the one hand, 

and intervening in currency markets to push down your currency 

and steal jobs on the other. And only when those two are conflated 

could somebody say, oh, we better not talk about currency manipulation, somebody will try to tie the hands of the Fed. 

And I would point out that the statistics I gave you don’t even 

count the re-exports, situations where goods are brought into the 

United States for transit often to a Latin American country. We are 

told that this agreement is going to help us vis-a`-vis our national 

security relationship with China, but we are also told China might 

join the agreement. You can’t argue it both ways. 

But when it comes to national security in China and the idea of 

binding us to other Asian nations let us look at the situation. We 

are already devoting all of our procurement and research dollars at 

the Pentagon to figure out how to fight China for the benefit of 

Japan, Korea, et cetera, over some relatively useless Pacific islets, 

rocks. And so we are going to spend and perhaps die for their territory and now we have to give them a lot of jobs to get them to let 

us do it. That is, if being their security is not enough and we have 

to give up jobs, I would be surprised. 

First, I want to thank the first three witnesses for not asserting 

that this agreement under consideration would lead to more jobs 

or would reduce the trade deficit, because it obviously won’t. Ms. 

Overby has made the point that workers are discouraged and they 

are not entering the workforce. The reason for that is for low 

wages, and the reason for that is the trade policy that we have suffered. 

For every job we lose in these trade agreements there are ten 

others where people don’t get raises because their employer is able 

to say I may move to China or I have to compete with China, or 

I have to compete with the free trade agreement from Korea, et 

cetera, and so wages are low and you end up with low participation 

rates. 

As to national security, national security is not just figuring out 

how to fight over rocks on the Pacific. It is also Iran. And there 

is one thing that Obama and Netanyahu agree on, and that is the 

key thing here is sanctions, they just disagree on how to modulate 

them in order to get what they hope is a good deal. Under these 

fair trade agreements, those provisions of our sanctions aimed at 

U.S. contractors could be swept away. 

Dr. Barfield, is there anything in the agreement that you are 

aware of that will say that those U.S. sanctions, particularly govVerDate 0ct 09 2002 15:51 Apr 28, 2015 Jkt 000000 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 F:\WORK\_AP\030415\93670 SHIRL
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ernment procurement sanctions, will be fully enforced notwithstanding the FTA? 

Mr. BARFIELD. Well, the government procurement is one of the 

things being negotiated in the TPP. 

Mr. SHERMAN. Okay. All of our past free trade agreements open 

giant loopholes in the number one national security effort of this 

country and that is imposing sanctions on Iran until we get a good 

deal. 

Ms. Drake, what is it like to be a labor organizer in Vietnam? 

And I realize just because you work for the AFL–CIO doesn’t mean 

you are in the organizing department. But you might know some 

of those folks. 

Ms. DRAKE. Good question. I mean the real thing that you are 

risking that you are not necessarily risking here in the United 

States is you can be arrested. And when you are arrested there are 

issues of extrajudicial killings and beatings by the police in Vietnam. But, really, you just don’t have the opportunity to say we 

want our own union, we want an independent union, we want to 

get together and work with each other for better. There is one national federation, the VGCL, and it is really an arm of the government. And while it does function, it doesn’t function as a union. It 

sort of makes sure that you get birthday cake at work when it is 

your birthday and things of this nature. It doesn’t really function 

as a tool to say workers here need more safety, they need more 

money, they need better benefits. These are the things that workers need. 

Mr. SHERMAN. A number of the witnesses gave us a tremendous 

picture of how Asia is big, important, dynamic, and growing in 

every respect. Couldn’t agree with you more. That is why we needed to use the threat of dramatically increased tariffs, and even with 

the WTO we can, whether we choose to our not, just impose them 

or threaten to impose them in order to secure free trade agreements. And so I look forward to us having the right trade policy 

toward this important and dynamic region. 

And finally, we have a huge trade deficit. We used to blame the 

U.S. Federal deficit. Well, we ran a surplus under Clinton, we had 

a huge trade deficit. We had deficits at the Federal level. We have 

a huge trade deficit. On rainy days we have a trade deficit. On 

sunny days we have a trade deficit. 

And so ultimately we are told it is because your workers aren’t 

producing products at a good price that the world wants to buy. 

And I would say we have the best workers in the world. We have 

the best scientists in the world. We have the best entrepreneurs in 

the world. But we have the largest trade deficit in the world because we have the worst trade policy in the world. 

I yield back. 

Mr. BARFIELD. I would like to challenge that if I could. 

Mr. SHERMAN. I believe my time has expired. 

Mr. BARFIELD. All right, I will do it on somebody else’s. 

Mr. SALMON. Mr. Emmer? 

Mr. EMMER. Why don’t you go ahead, Mr. Barfield, and then 

thank you, Mr. Chair. 

Mr. BARFIELD. Well, the point is that nobody has said that the 

trade deficit causes jobs or that the trade, not here at any rate. I 

62

don’t know what the AFL–CIO, what my colleague there would say. 

But to keep coming back to something that this trade agreement 

ignored was Tami’s point that we have to keep coming back to. It’s 

economics 101 that we will run the trade deficit with the rest of 

the world overall as long as we do not save, invest and save enough 

both privately and publicly to cover our investments and what we 

are spending. And the United States has for the last several decades not been able to do that. 

So you can change the trade deficit with China or shift it toward 

Japan or whatever way you want to do but overall, as Tami pointed 

out, it is the macroeconomic factors. You are still going to have a 

large trade deficit unless you change that. And we have been unwilling to do that. This is not to let China fall free. 

Mr. EMMER. Mr. Barfield, if you don’t mind, and I appreciate it. 

Maybe you can filter it in to some of the others. I have just a couple minutes left, and I thank the chair for letting me ask a couple 

of questions. 

I am from the state of Minnesota, and in 2013 Minnesota goods 

exported were 20.8 billion. Nationally, and this is not just Minnesota, jobs supported by exports reached more than 11 million in 

2013, and every billion dollars of United States exports of goods 

supported an estimated 5,400 jobs in that same year. By the way, 

jobs supported by exports, goods that were exported, paid an estimated 13 to 18 percent above the national average. It is important 

to my state because 47 percent of Minnesota’s exports, again in 

that year, almost $10 billion went to countries that are currently 

part of this negotiation. 

Mr. Barfield, very quickly I want to cover a couple of areas if I 

have time. First, I hear a lot of people, and I see some T-shirts here 

about Fast Track authority. Under the Constitution it is my understanding, Article I Section 8, that Congress has the sole authority 

to enter into agreements with foreign nations whether they be treaties or trade agreements, and that the executive has only authority 

to negotiate. Is my understanding correct? 

Mr. BARFIELD. Yes. 

Mr. EMMER. Now the idea that this is going to be sight unseen—

and I am going to move to Ms. Overby. There was a statement 

made, I think by Ms. Drake, that Congress if it passes trade promotion authority which is nothing more than legislation that tells 

the executive branch this is what the expectations are; this is what 

we can do, what we can’t do; this is what we will accept, what we 

won’t; this is what Congress is doing to exercise its constitutional 

authority over trade; the testimony was made that this will somehow come to Congress sight unseen. 

In fact, the TPP legislation that would be part of this if this is 

going to go forward would require that you have full transparency. 

Isn’t that right, Ms. Overby? And could you please explain what 

that would mean. 

Ms. OVERBY. Thank you. Yes, you are absolutely correct. I also 

find it somewhat ironic that critics of the TPP negotiations and 

specific chapters or provisions always criticize the lack of transparency in the negotiations, but in the very next breath they say 

it is about agreement. If it is not transparent, I am not sure how 

one knows whether it is good or bad. 

63

Also calls to make confidential negotiating text public are, in my 

view, misguided. Disclosure of negotiating text would risk giving 

foreign governments a road map to U.S. sensitivities and red lines 

that could be used to our disadvantage. I was actually in Korea 

working for the American Chamber of Commerce in Korea when 

the U.S. and Korea were negotiating the KORUS FTA. And an opponent of the KORUS FTA from the Korean National Assembly 

leaked some text, and I saw it firsthand that it provided our negotiators a clear picture of their strategy and frankly it helped us. We 

got a better deal, from our perspective, because of that. 

Mr. EMMER. Quickly, can you address the other claim that this 

is somehow going to affect jobs in this country? Because my understanding is the tariffs, in other words the barriers to products coming into our country are among the lowest in the world. And actually we want to make sure that our labor, our greatest workers on 

the face of the planet, are able to produce and sell their products 

fairly in markets outside of our country. 

Ms. OVERBY. You are exactly right. The U.S. already has one of 

the lowest tariffs in the world and most of Asia has very high. In 

fact, in Southeast Asia five times the tariff level to Americans. So 

our market is already open. If we do nothing, what that means is 

they keep selling to the U.S. and we can’t sell to them. 

Mr. EMMER. Wouldn’t that affect the trade deficit? 

Ms. OVERBY. In a very negative way, exactly. And your point 

about jobs, you are absolutely right. It will have an impact. This 

agreement is a job creating agreement because it is going to allow 

us to sell more, and when we sell more we have to hire more people 

to do it. Thank you. 

Mr. EMMER. Thank you very much. Thank you, Mr. Chair. 

Mr. SALMON. Thank you. 

Ms. Gabbard? 

Ms. GABBARD. Thank you very much, Mr. Chairman. Obviously 

this entire discussion is very important, and you mentioned looking 

at this. This is macroeconomics. There have been a lack of details 

that members have been able to share with people at home who 

have not a background in economics but who are very interested 

specifically in how this will affect me and my family, our ability to 

support them, and to be able to have opportunity to create jobs. 

I want to touch on the compliance issue because I think it is a 

valid one. When we are talking about whether it is labor standards 

or environmental standards or other things that the administration 

has put out there saying, hey, don’t worry, we are going to ensure 

that these standards are included—really, there is not a great 

track record in history of such standards having been enforced either recently or in previous history. 

So I would like to ask you what gives you such great confidence 

that these standards if met in the agreement would be enforced 

and what is the enforcement mechanism? 

Mr. MILLER. Well, I would just note that with regard to labor 

and environmental standards we have actually come a very long 

way since the NAFTA. In the NAFTA in 1994, the labor and environmental provisions were so-called side agreements. They were 

not in the body of the text. They were basically voluntary cooperation agreements. 

64

Since that time there have been a number of iterations in U.S. 

policy. We moved to a standard in 2001–2002 so-called the ‘‘enforce 

your own laws.’’ Thanks to the leadership of at that time Chairman 

Levin and others, in the May 10th, 2007 agreement there was a 

higher standard promulgated which first tied the standards for 

labor and environment to international obligations; and second, allowed the same kind of dispute settlement mechanism as for any 

other violation of the free trade agreement. 

So the way our current law and our current negotiating policy 

operates is that the labor and environment chapter have equal 

standing with every other chapter in the trade agreement in terms 

of access to dispute settlement. There is a current live dispute settlement for the labor provision of the Central America Free Trade 

Agreement which is happening in real time right now so that 

would be the easiest one to follow. 

But I would note importantly on the environmental side, an important advance is if any two parties to, say, the TPP are parties 

to a separate environmental accord, like the CITES agreement or 

some other environmental accord, and there is an alleged violation 

of that separate accord that those parties can use the TPP dispute 

settlement chapter to settle the dispute of an outside agreement. 

So I think we made progress. Thank you. 

Ms. GABBARD. Thank you. 

Ms. Drake? 

Ms. DRAKE. Thank you very much. I think in terms of compliance 

it is a particularly important question. We have under CAFTA a 

complaint against Guatemala. There is actually several live complaints. The one against Guatemala has been going on for 6 years, 

and that means for 6 years employers in Guatemala have been 

freely driving down wages by failing to pay minimum wage, by firing workers who try to form a union, by specifically not following 

the law. 

And while they are driving down wages in Guatemala that 

means they are also driving down wages in nearby Honduras and 

El Salvador and Costa Rica because it is one labor market. And by 

the way they are also driving down wages here because employers 

here say if you don’t take pay cuts, if you don’t give back seniority 

rights, if you don’t give up your pension plan we are going to move 

production to Central America. So it is a critical issue. 

On the Honduras issue, which is also an open complaint, that 

one was open for 3 years even before the administration responded. 

And they just put out a report last Friday. It is a great report. 

They may do some things to improve labor rights in Honduras, but 

meanwhile workers on the ground are being abused every single 

day. And that sends the wrong message to our TPP partners about 

how seriously the labor commitments will be taken. 

But also if the chapter doesn’t include specific timelines, requirements to act on complaints that have merit, then the problem is, 

is that any government that doesn’t want to act, if it has unlimited 

discretion, can just ignore it. They can do far worse than delay for 

3 years. This is an administration that cares about labor rights. 

What if we have an administration, President X, in 2017 who 

doesn’t care at all about labor rights? 

Ms. GABBARD. Thank you. 

65

Thank you, Mr. Chairman. 

Mr. SALMON. Mr. Connolly? 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

I thank you all for being here today. I must confess part of my 

problem with this topic is we now have taken theological positions. 

So largely, the AFL, almost no free trade agreement could ever be 

good. They are all bad. They all create dislocations. They kill jobs. 

They haven’t worked out. And there is no reason to be confident 

that any enforcement mechanism would ever really work. 

Similarly, the Chamber of Commerce hasn’t found one it doesn’t 

like. And Ms. Overby you have heard me give this sermon before, 

but Ms. Drake’s last point, what confidence does somebody on my 

side of the aisle have that the Chamber would ever really seriously 

care about labor suppression overseas when the Chamber is actively engaged in funneling money to campaigns for labor suppression here at home? 

And so is someone like me who is inclined intellectually to be 

open to free trade, I couldn’t possibly trust the Chamber, politically 

or substantively, to take that issue Ms. Drake has just given us as 

seriously. You have given, not you personally, Ms. Overby, but the 

Chamber, I mean if you have a D after your name then the Chamber is going to go after you. It might pick one or two, and I mean 

one or two token Democrats, and other than that it doesn’t matter 

what our free trade record is. There is no reward whatsoever coming out of your organization and Mr. Donohue, and so we vote for 

free trade at our peril. 

And I think framing this issue theologically and the political sort 

of brittleness that attends to that does not contribute to a rational 

debate or discussion about the real merits and real problems associated with any free trade agreement. 

Mr. Miller, I take your point. I mean if you listen to the critics 

of NAFTA it is a complete failure and it didn’t address these 

issues, and if that critique conceded, if that is true, then why would 

anybody have confidence in the argument, well, this time we got 

it right, trust us. 

Mr. BARFIELD. I would like to turn that around if I could. 

Mr. CONNOLLY. Okay, go ahead, Dr. Barfield. 

Mr. BARFIELD. Sorry. I would turn that around and give the example that I did just in terms of geostrategic, but I would also do 

it in terms of the economics. Why was it that President Obama 

turned around? Why does he think—this is a very progressive, a 

very liberal administration. And the President came into office saying that he would not have voted for NAFTA and he didn’t like the 

free trade agreements that the Bush administration. The TPP is 

building on that tradition which causes the AF of L–CIO a good 

deal of heartburn, but the President has turned around because he 

thinks that it is possible. 

Mr. CONNOLLY. Well, Dr. Barfield——

Mr. BARFIELD. And it is not the Chamber we are talking about 

here. This is the leader of your party. 

Mr. CONNOLLY. Well, he is also the leader of the country. He is 

your President as well as mine. 

Mr. BARFIELD. I was not implying he wasn’t. 

Mr. CONNOLLY. I understand. 

66

Mr. BARFIELD. I have defended——

Mr. CONNOLLY. I just thought I would say that. But I would also 

point out to you that is not unique to this President. Name a President, Democrat or Republican, who hasn’t come around to the idea 

that free trade makes sense and hasn’t gotten behind free trade 

on——

Mr. BARFIELD. Why do you think that is the case? It is not——

Mr. CONNOLLY. Ms. Drake may have a point of view about that. 

Do you want to answer that? 

Ms. DRAKE. I would like to answer that. I think that candidates 

in general, writ large, are saying what voters want to hear when 

they are running. And they get it. They hear people. They say my 

wages have been stagnant. They say my uncle was laid off from a 

good factory job. They go to main streets and they see what is happening when a factory closes and a town dies out. And then you 

get into a position of power and the choices that you make are different, and the influences on you are different. So it is disappointing when candidate after candidate runs in a particular 

way and then votes differently. 

But I would like to get to your question of, the AFL–CIO is ideological on this and I don’t think——

Mr. CONNOLLY. And so is the Chamber. 

Ms. DRAKE. Well, look, we——

Mr. CONNOLLY. And if you are going to answer that Ms. Overby 

has to have the opportunity too. 

Ms. DRAKE. We submitted 34 pages in January 2010 of this is 

what the TPP should like if we are going to support it, which by 

the way I also want to challenge Ms. Overby’s comment that we 

are always saying it is a bad deal. What I said was the questions 

about the TPP are far too complex to merit a grant of Fast Track. 

The AFL–CIO has not taken a position for or against the TPP. 

We are certainly against using NAFTA as a model, using Korea as 

a model, using failed models as a model. And from what has been 

said publicly about the TPP, which is frankly very little in comparison to the voluminous number of pages, it is using NAFTA and 

Korea as a model. 

Mr. CONNOLLY. Okay, thank you. And by the way the word was 

‘‘theological’’ not ‘‘ideological.’’ My background, I hear theology. 

If the chairman would just allow the Chamber rep to respond 

similarly and then I am done. 

Mr. SALMON. Yes, that is fine. 

Mr. CONNOLLY. I thank the chair. 

Ms. OVERBY. It is always a pleasure to see, as a constituent in 

Mr. Connolly’s district it is always a pleasure to see my member. 

So how are you? 

Mr. CONNOLLY. Yes, every day is a holiday around here. 

Ms. OVERBY. Isn’t it? I just want to make a couple of very brief 

comments. You know where the Chamber stands. You know how 

the Chamber determines their political donations. I am not the person to address that. But I do want to talk about failed agreements 

and why so little has been written about TPP. 

Again the reality is the negotiation is ongoing and frankly a lot 

of what has been written from America is not helping America’s neVerDate 0ct 09 2002 15:51 Apr 28, 2015 Jkt 000000 PO 00000 Frm 00070 Fmt 6633 Sfmt 6633 F:\WORK\_AP\030415\93670 SHIRL
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gotiators. And if we all want the best deal America can get I would 

think we would be standing behind the United States. 

To my colleague on the right, Dr. Barfield, why did President 

Obama change his view? Well, we worked very closely with the administration on KORUS, on the Korea FTA, and I believe he 

changed his view because he felt he got a deal he could sell. A deal 

that improved the auto piece, and he was able to get not only Ford 

Motor Company, but if I am not wrong the UAW actually supported KORUS. 

But I will make, and certainly admit that no trade agreement is 

perfect. We continue to try to improve upon it. I will say that the 

KORUS agreement is better than earlier agreements particularly 

in the area of enforcement. Nineteen committees were set up under 

KORUS and each one of those committees has a senior government-to-government working level meeting where we are able to 

raise our issues much faster. I believe the TPP will have even better enforcement mechanisms. I think our USTR representative is 

well aware that other countries are not always playing with the 

same level playing field and so they are giving us our opportunity 

to try to improve it faster. 

Mr. CONNOLLY. I think I am going to have to cut that off, otherwise Ms. Drake is—I will say my point about the Chamber was 

much broader than who you contribute to. It was a pattern of exclusion that I think impinges on our ability up here to have a reward and punishment system that is a little more rational than it 

otherwise is on this subject. Thank you. 

Mr. SALMON. Thank you. 

Mr. Grayson? 

Mr. GRAYSON. Thank you. 

Ms. Drake, will the Trans-Pacific Partnership decrease or increase America’s trade deficit? 

Ms. DRAKE. It is impossible to know because it is mostly secret, 

but it seems likely poised to increase the U.S. trade deficit. 

Mr. GRAYSON. What makes you say that? 

Ms. DRAKE. Well, for one thing it doesn’t deal, according to the 

President, with currency. And as Mr. Barfield was explaining before with trade deficits, what he didn’t mention was that basic 

trade 101 theory says if a country is running trade deficits over 

time, currencies will fluctuate to account for that and it will eventually even out. The United States is the only country that we 

know of in the history of the world that has had such large and 

sustained trade deficits over time. 

And while it is true that the United States has very low tariffs 

and very low trade barriers, the reason that we think we have seen 

floods of imports back in from certain trade agreements is not because the firms, the domestic firms in those countries are now exporting more than they could, it is often that production that used 

to happen in the U.S. has moved to a trading partner country and 

then that offshore production is taking advantage of the lower tariffs to get those goods back into the U.S. 

Mr. GRAYSON. Ms. Overby, will the Trans-Pacific Partnership decrease or increase the U.S. trade deficit? 

68

Ms. OVERBY. I believe it will decrease it because the studies seem 

to show that with our FTA trading partners we tend to have surpluses. 

Mr. GRAYSON. Well, but isn’t it true, Ms. Overby, that since 

NAFTA went into effect, the first of these major trade agreements, 

the United States has run a trade deficit of at least $135 billion 

every single year, and therefore doesn’t it follow that if we continue 

to expand these trade agreements we will have higher and higher 

not lower and lower trade deficits? 

Mr. BARFIELD. No. 

Mr. GRAYSON. No, no. I am still with Ms. Overby there. 

Ms. OVERBY. I am not an expert in the NAFTA numbers, but everything I have heard and been told, no, those numbers are inaccurate. 

Mr. GRAYSON. You are saying that the numbers I just gave you 

are inaccurate? 

Ms. OVERBY. May I——

Mr. GRAYSON. The fact that since NAFTA went into effect, every 

single year we have had a trade deficit of $135 billion or more, you 

are saying that is inaccurate? 

Mr. BARFIELD. I don’t——

Mr. GRAYSON. No, sorry. Still with Ms. Overby. Sorry. Let us 

stick with the witness here. 

Ms. OVERBY. I am sorry, I don’t have that information. 

Mr. GRAYSON. Okay. Now here is another little tidbit for you. In 

the last 14 years we have run the largest trade deficits in the history of the planet. And in the last 14 years we have followed these 

trade agreements and had an open trade policy. What makes you 

think that that would reverse itself under the Trans-Pacific Partnership? 

Ms. OVERBY. Okay, may I answer? 

Mr. GRAYSON. I am asking you to answer. 

Ms. OVERBY. I would love to. Again in macroeconomic terms, the 

trade deficit reflects the imbalance in consumption and savings. It 

is not our trade agreements. If you want America to have a trade 

surplus, may I suggest that Congress pass a budget that is saving 

more than we spend. 

Mr. GRAYSON. Listen, I am talking to you about the trade deficit 

not the Federal deficit, so don’t change the subject. But let us continue it in this vein if we can. 

Since we adopted the trade policy starting with NAFTA and entered into these free trade agreements, our cumulative trade deficit 

is $11 trillion. That is over $35,000 for every single man, woman 

and child in this country. For me and my five children that is 

about $200,000. What makes you think that the Trans-Pacific Partnership, which is something like the tenth or eleventh in a long series of these trade giveaways, is somehow magically going to reverse that pattern? 

Ms. OVERBY. I don’t think I can give you an answer that is going 

to change your mind. 

Mr. GRAYSON. Why don’t you give me an answer that is accurate? 

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Ms. OVERBY. Okay. Again I believe that the overall trade deficit 

has nothing to do with the trade agreement. I think it is about the 

imbalance in our consumption and savings. 

Mr. GRAYSON. Okay, so you do think it is just this magnificent 

coincidence that since we adopted these policies we have had these 

enormous, staggering trade deficits year after year? 

Ms. OVERBY. No, I think it is the way we spend more than, we 

consume more than we save. And also the U.S. dollar is the currency around the world. I mean we are the reserve currency. 

Mr. GRAYSON. We were the reserve currency for the past 100 

years, and it is only since NAFTA went into effect that this happened. 

What about you, Mr. Miller? What do you have to say about this 

subject? 

Mr. MILLER. Well, I would observe that the United States trade 

deficit fell by 46 percent in 2009 versus 2008. 

Mr. GRAYSON. That has something to do with the fact that we 

had a worldwide depression in 2008. 

Mr. MILLER. It certainly did. It had everything to do with it. 

Mr. GRAYSON. Okay, but you are not playing fair. 

Mr. MILLER. If I could finish. 

Mr. GRAYSON. You are coming up with a factoid that has nothing 

to do with my question. 

Mr. MILLER. My point is there was no change in trade policy year 

on year. 

Mr. GRAYSON. No, just a collapse of the world economy and——

Mr. MILLER. Yes, so that is—I am suggesting there are other factors involved in the overall trade deficit. 

Mr. GRAYSON. All right, my time is up. Thank you. 

Mr. SALMON. Now that the committee members both majority 

and minority have had an opportunity to question the witnesses, 

I ask unanimous consent to recognize Representative Marcy Kaptur. Hearing no objections, I recognize Representative Kaptur. 

Ms. KAPTUR. Chairman Salmon, thank you very much for the opportunity to be here today. And I guess I am just sitting here looking at what is going on in the world and being very thankful that 

we are citizens of this republic, and whether we agree or disagree 

we are going to work this out. It is going to take us time because 

it really isn’t working for America right now, our trade policy, but 

when we look at other places I am just thankful that we live in the 

system that we do. 

Let me say that for those representing the business community, 

Dr. Barfield, Ms. Overby and Mr. Miller, I respect what you do and 

you have to be part of the solution to help us fix what is wrong 

with our trade policy. We can’t do it without you as a country. I 

am in the freedom business, and so it is a different business than 

those you represent are in. 

Ms. Drake, thank you for being here on behalf of many workers 

who live in the district that I represent and understanding the 

travails that they have experienced as a result of these trade 

agreements. Many times having to pack up boxes with the machines in the companies in which they worked and going to a foreign country to train their replacements. Can you imagine how horVerDate 0ct 09 2002 15:51 Apr 28, 2015 Jkt 000000 PO 00000 Frm 00073 Fmt 6633 Sfmt 6633 F:\WORK\_AP\030415\93670 SHIRL
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rible that experience is? And so I appreciate the moment to give 

a little reflection here. 

Dr. Barfield, I agree with you that our trade policy has been used 

for advancing national strategic interests. Oh, do I agree with that 

statement. And the problem with that is that it currently, our 

trade deficits now cut about a fifth, maybe a little bit less than 

that, about 16.5 percent, 16.7 percent off our GDP annually. 

And unfortunately trade in the aggregate is not helping us domestically. In places like I represent, the average worker has lost 

$7,000 a year in wages, and what families are facing is extraordinarily difficult. And what is dangerous for liberty is these people 

aren’t voting. They are not voting for Republicans. They are not 

voting for Democrats. They are stopping their belief that this country can work for them. 

So in our conversation today, I wanted to place on the record since 1975 the country has accumulated $9.5 trillion in trade deficit. Congressman Grayson used an $11 trillion figure, so depending on which year you start with that is pretty significant. It has 

never happened in this country before. That translates, using 5,000 

jobs per billion, into a loss of 47,500,000 jobs. Some of the workers 

who haven’t been able to find work live in the district that I represent. 

When you have something that cuts nearly a fifth of your GDP 

and loses that many jobs, we have a budget deficit because we have 

a trade deficit. And for what Ms. Overby said about savings, if you 

are an individual why would you put any money in a bank today? 

You can’t even earn 1 percent interest on it. So there is no incentive for savings anymore because we have doled out almost a fifth 

of our ability to produce. 

So on Mexico let me just say I was here when NAFTA first 

passed. They said we would have trade balance. We have had trade 

deficits every year from Mexico. This past year 2014 there was a 

$99 billion, a nearly $100 billion trade deficit with Mexico. That 

has been the same over the last 3 years hovering around $100 billion. 

For Korea, last year it was 26 billion. We were supposed to have 

more exports to Korea. We were supposed to get 50,000 cars into 

Korea while they sent 500,000 here. We never got to 50,000. I don’t 

even know if we are up to 5,000 yet. We may be at 500. My point 

is that the numbers aren’t working for us. If we had done it right 

under George Bush the first and Bill Clinton, to be a freedom lover 

we should have had a major Trans-Atlantic free trade agreements 

with countries that abide by rule of law. We didn’t do that. We 

didn’t do that. We signed agreements with places that have closed 

markets; that don’t believe in liberty; and I can’t tell you how many 

companies I represent that have had trouble in their dealings in 

China. There is no rule of law. 

So I am just saying to you, as patriotic Americans we have got 

to fix this. We have got to first support liberty and we have got to 

create economic agreements that work for our people, and that isn’t 

happening. And the tragedy in the street with these people who 

think about national strategic interests and so forth, they forget 

about what happens within our own borders. The people at the National Security Council, they know every other country in the 

71

world. They sort of forget about us and what happens to the people 

that we represent. 

So I wanted to place that statement on the record. I hope that 

this won’t be the last hearing that this committee holds. I can’t believe in TPP because I have been here long enough to see what 

happened with NAFTA, what happened with Korea. The Jordan accord I voted for and that one we are still in balance. That had labor 

provisions. It had environmental. That might be a better measure, 

a better type of agreement, but we basically failed as a country 

when we did not uphold the rule of law. 

Many of you are lawyers, and when we got into agreements with 

countries that don’t abide by the rule of law we really got in a culde-sac and we are in it until today. So I put that on the record. 

I hope you all have ideas about how to restore trade balance to this 

country, because we can’t continue to hemorrhage this way. It is 

hurting our republic deeply. It is hurting it, not, ma’am, only 

macroeconomically, but microeconomically. On the street. The 

places that each of us represents a piece of the puzzle. 

So I appreciate the graciousness of this committee for allowing 

me to place that statement on the record. If anybody wants to respond and there is still time, certainly they can. Thank you. 

Mr. BARFIELD. Well, I guess I am heartened to know that it 

sounds as if you will support the U.S.-European Free Trade Agreement when it comes to force over the next year. 

But I would like to go back to the point, I know we have been 

over this again and again, but I think on my side I do not represent the business community. I am a think tank. Sometimes they 

don’t like what we say. Sometimes they do, sometimes they don’t. 

I would like to—I know we have said it, but coming back to 

whether it was NAFTA or other agreements where Jordan was in 

balance that it somehow that had to do with the standard of living 

in the United States that is simply not true. As we have said, 

where the United States has to look in terms of our trade deficit 

is not with trade agreements but our own internal policies. 

And the other odd thing that I will throw in as a ringer here 

right at the end is that trade deficits are not necessarily evidence 

of noncompetitiveness nor of killing jobs. We were in, in the 1990s 

which is supposedly a golden period under Bill Clinton, increasing 

trade deficits where we had increasing job creation in the United 

States. 

Trade deficit, you have to find the circumstances. The reason we 

did, which is another reason we will probably have an increased 

trade deficit over the next couple of years if things go well for us, 

is that the United States was outgrowing, outperforming other nations. We were consuming more and we were creating more jobs. 

And so the trade deficit did not in that case translate into some 

lack of competitiveness. It is likely not to do the same thing in the 

next couple of years if the United States keeps on the same——

Ms. KAPTUR. I would love to invite you all to the district that I 

represent and we can talk trade on the street. 

Mr. BARFIELD. Happy to do that. 

Ms. KAPTUR. And it would be very enlightening. Very, very enlightening. So——

Mr. SALMON. Sounds like it might make for a good Town Hall. 

72

Ms. KAPTUR. How about that? 

Mr. SALMON. There you go. 

Ms. Overby? 

Ms. KAPTUR. Meet the street. Mr. Chairman, if I could just say, 

because you have been so generous to me, I just want to say that 

in terms of the Transatlantic Alliance, if we had formed it, those 

nations that are unfree by any measure could have been invited to 

join in and we would have raised the potential for liberty globally. 

We haven’t done that. 

Look at what has happened to Mexico. Just look what has happened there. And we didn’t address closed markets. Go to Japan, 

less than 3 percent of the cars on their street today are from anyplace else in the world but Japan. And we have the most open market in the world. You can’t have free trade agreements when you 

have closed markets and when you have state-run capitalism like 

is happening in China. 

We are really living in a false world in some ways. We are not 

looking at the values of liberty and rule of law in these agreements 

and it is hurting us greatly. And it is hurting liberty. It is hurting 

liberty globally. So I thank you, Mr. Chairman, very much. 

Mr. SALMON. Thank you. 

Ms. Overby, it is back to my time but I am going to let you answer. 

Ms. OVERBY. Two brief comments on Japan and it being a closed 

market, and the numbers on cars. I do think that TPP provides us 

the best opportunity that we are going to see in our lifetime to try 

to crack open that market. And referring to job loss, I think everyone here really needs to take a look at the fact that—one of my colleagues loves to say, yes, jobs have been lost to that country called 

productivity. Technological innovations. The market, the world has 

changed. The number of people needed to make products is shrinking dramatically. That is not trade’s fault. That is the technology 

growth that we are, we live in a technological age. Thank you. 

Mr. SALMON. So I have a couple of questions to ask. But before 

I do, the absolutism that Representative Grayson mentioned a few 

minutes ago, that all these terrible things with our trade deficit 

have coincided with the trade agreements, it is like saying—we created the Federal Department of Education in 1979. At the time in 

the 1970s we were at the top of the charts in every field and now 

we are 14th in math and sciences in the world. Does that mean 

that the creation of the Department of Education actually made us 

do worse in education? I don’t think that anybody is necessarily 

going to make that argument. I think that there are a whole host 

of issues that impact our trade deficit and that is what we are talking about. You talked about a few of the issues. 

But I want to ask another question. If we don’t participate in 

TPP, if the United States does not agree to participate in TPP and 

China goes ahead with its plans with RCEP and their free trade 

agreement, is there anything that stops American companies from 

exporting jobs overseas or outsourcing then, even if we don’t participate? Anybody care to respond to that? 

Mr. MILLER. There are important consequences to not concluding 

the Trans-Pacific Partnership. We would walk away from potential 

market access gains in economies that we do not now have FTAs 

73

with. There are five of them. There would be an immediate loss in 

reputation. My belief is the Obama administration has staked a 

great deal of prestige on the completion of the Trans-Pacific Partnership, and our Asian allies and friends and partners would look 

differently at us. 

In the long run, my view is that the world economy will continue 

to grow and——

Mr. SALMON. As it always has. 

Mr. MILLER. As it always has. And the world won’t wait for us. 

And that I think American firms and workers are best served when 

America leads in writing the rules. That has been true since the 

Bretton Woods Conference. The U.S. has been the defender of an 

open rules-based trading system. It is vitally important. And for 

me, that is what TPP and TTIP with Europeans is a real continuation of. 

Mr. SALMON. So as far as my question though, I mean if we 

didn’t do TPP does that mean that jobs won’t still continue to go 

overseas? 

Mr. MILLER. Well, you will still have globalization. 

Mr. SALMON. That is my point. 

Mr. MILLER. It will be easier. With TPP it makes it easier for us 

to compete, I think. 

Mr. SALMON. Right. 

Mr. MILLER. Because as we have said several times here, we 

have lower tariffs, we have more open borders than others with 

certain exceptions we want to be clear about, in sugar and things 

like that but we are the ones who are more open. So it is the rest 

of world, not entirely but to some degree. 

I would like though come back to a point I made at the beginning 

in terms of what would happen if we don’t do the TPP. I keep coming back to the fact that the geostrategic and the geoeconomic are 

linked. The United States in the next few years, whoever the new 

President is or whatever the new, whichever party has the Congress, has a good deal of heavy responsibilities around the world 

that are security responsibilities. There are those who argue that 

now we are not really committing enough resources to live up to 

the so-called pivot or balance. Scholars at my institute believe that. 

But wherever one stands on that question it is certainly true 

that the United States has got a lot of difficult questions to work 

through in terms of where it is going to put its resources both domestic and in terms of national security over the next few years. 

I think this is where the trade agreements does link in. I think it 

will be a lot easier to persuade the Congress and the American people to support a leadership role in Asia if we are a part of a regional economic structure that is thriving and is successful for U.S. 

businesses and U.S. workers. And that is where they are tied together. 

Mr. SALMON. And finally, Ms. Kaptur made some very impassioned points and I appreciate them. As far as liberty and freedom 

and the principles that we stand for maybe Ronald Reagan said it 

best, the shining city on a hill. If we are not at the table, how are 

they impacted by the things that we believe? 

I think that the most important thing that we export is not a 

commodity, it is actually an ideal. And that ideal is freedom. It is 

74

the thing that we stand for. And I don’t know any relationship that 

I have ever had with anybody—my wife, my children, friends, enemies—that I have ever improved one iota by not being at the 

table, by not engaging, by not being there communicating and actively working with them. 

Heaven help us if what we stand for and what we believe is not 

a part of the equation and if RCEP which China is pushing ends 

up being the free trade agreement for the region instead of what 

we are pushing. I far more trust the values that we advocate and 

the things that we stand for rather than what China stands for. 

Anyway go ahead, Ms. Overby. 

Ms. OVERBY. Yes, Mr. Chairman, I just wanted to make the comment that what happens if TPP fails? Well, then the small and medium sized companies in America lose. Many opponents always 

talk about the large multinational American companies and they 

will be okay one way or another. But the SMEs——

Mr. SALMON. They always seem to be. 

Ms. OVERBY. They seem to survive. But the small and medium 

sized companies they will be grossly disadvantaged. Because as we 

all know our market is open. All TPP is going to do is to try to 

knock down some of the barriers on the other side. Tariffs are a 

big part of it but it is more than tariffs. The problems these days 

are behind the border. Countries have gotten very creative in 

throwing up new non-tariff barriers, whether it is standards or 

rules it makes it so hard for American companies to compete. 

So all we are asking for is simply our Government to help us try 

to knock down those barriers, and if we do nothing America loses 

because the rest of the world is not going to stand by. I am in Asia 

most of the year and China is everywhere. They are very aggressive. They are pushing RCEP. They are doing all kinds of soft diplomacy. And America will lose if we do nothing. 

Mr. SALMON. Thank you. 

Mr. Sherman? 

Mr. SHERMAN. We are told that we need to be proud of these 

trade rules because they were made in America. These are trade 

rules made in America that make sure that nothing else will be 

made in America. We should be as proud of these trade rules as 

the Spaniards are of the Spanish flu, both have wrecked incredible 

destruction. 

We are told that the President’s credibility and prestige is on the 

line. No, his credibility and prestige is on the line with Obamacare. 

And those who want to say that should be advocating every day for 

whatever technical fixes are necessary to make sure that 

Obamacare goes on and subsidies are provided regardless of how 

the Supreme Court interprets the current draft. 

We are told that the only choice is between the failure we currently have and the failure that is being proposed. No one here 

with the exception of Ms. Drake even acknowledges the fact that 

I proposed a different trade approach. That is to say to threaten 

to raise dramatically our tariffs with or without compliance in 

WTO as necessary to force countries to enter into fair trade agreements. 

We are told that there are these non-tariff barriers. And so our 

response is to eliminate the only barriers we have and get killed 

75

one at a time with these non-tariff barriers as if we can change this 

one, and oh, they have got that one. And we only see the ones they 

published. Most of them are on the phone where individual companies are told not to buy American goods. 

The way to deal with the non-tariff barriers is to have results or 

in trade agreements. Buy our stuff or don’t sell in our markets. 

Don’t think that you can benefit by playing with a procedure game 

and then having many of your procedures under the table. We are 

an open society. They can have commissars as they do in Vietnam 

tell their companies not to buy American goods. If American congressmen were to call companies and tell them not to buy goods we 

would be laughed at. Whereas, there, if there is any laughter businesses can be sent to re-education camps, business people can be 

sent to re-education camps. 

We are told that sometimes the trade deficit is higher—well, the 

trade deficit keeps going up or is substantially and persistently 

high. That is true when we save, it is true when we fail to save. 

It is true when we have a budget deficit of over $1 trillion. It is 

true when we have a huge surplus. It is true when we have a huge 

surplus and are saving and our trading partners are running 3, 4, 

5 percent of GDP deficits and they are not saving. The only thing 

that remains the same is we always have a trade deficit no matter 

what we do if we keep the same trade policies. One exception. If 

we are willing to have a calamity of the type we had in 2008, then 

we get to keep our same trade policies and see a reduction in the 

trade deficit. 

I suggest that we find a different way to bring down the trade 

deficit. I am amazed that there is no discussion in this country of 

moving in a new direction. All the choice is, keep the policies that 

have failed or double down on the policies that have failed. 

And finally, I think at least one witness suggested that huge 

trade deficits have nothing to do with jobs. The huge increases in 

imports cannot displace American workers. Ms. Drake, is it possible that huge increases in imports could adversely affect American workers? 

Ms. DRAKE. It is really disingenuous to say that exports create 

jobs but imports have no effect on jobs. As you said, you have to 

look at both sides of the equation, and quite frankly our trade deficit represents the fact that we are consuming more than we 

produce. And that means there is an opportunity cost for lost jobs, 

either real jobs that we had that are gone or jobs that we could 

have had if we produced things here. So we really do have to look 

at net exports and that is the number we want to increase if we 

want to have good trade policy. 

To the chairman’s point about is there anything that is preventing companies from offshoring now? No, that is the status quo. 

But the danger of the TPP is that it provides additional incentives 

to offshore so that we actually speed it. And it can do that through 

the ISDS mechanism by saying to those who offshore, you now 

have additional influence over the rules this economy makes and 

if you would like to threaten it in the case that it passes a food 

safety law or worker protection law or you don’t like the zoning decision that it made you can do that. 

76

And we know that that is being used and it is being used for exactly those kinds of things. So what we want to make sure is that 

the TPP provides the right rules that actually incentivize manufacturing here. And trade can be done right. Congressman Kaptur 

said she supported the U.S.-Jordan Free Trade Agreement. So did 

the AFL–CIO. I think if we look at how Germany does trade, if we 

look at how Sweden does trade, they do a lot of exporting in an advanced economy and they haven’t seen the extensive job losses that 

we have. 

When you look at productivity, to Ms. Overby’s point, when productivity increases workers should do better. They are contributing 

more, their firm is making more money, they should get a part of 

it. But what we have seen is a complete decoupling of worker productivity and wages. And that is not, it is in the United States but 

it is not just here. 

And it does have to do with globalization, because if we set up 

rules that make it much easier for firms to say, hey, take this pay 

cut or we are moving, and we do that in every country, firms can 

game countries. Who has got the weakest environmental regulations? Who is going to pay the lowest wages? And that is not good 

for workers or businesses. Because in the end what businesses 

want are middle classes who can be consumers who can buy things. 

And when we have such a demand shortage here because of wage 

stagnation and you have it elsewhere, we have a problem exporting 

more goods because there aren’t folks who can buy them. 

And just to one last point on Fast Track and the full transparency. Again I would say be really careful, because Fast Track 

in the past has always been for a time period—4 years or 5 years 

or something like this, so trade agreements can be negotiated that 

weren’t even thought of when the Fast Track was granted. Think 

about how Korea was negotiated right at the very end of President 

Bush’s Fast Track term. That was not something that Congress 

had contemplated when they passed the Fast Track deal, and I 

would dispute that it was well negotiated. We think it was rushed. 

We think it left jobs on the table. And we think the extraordinarily 

increase in deficits that we have seen just in the first couple of 

years of Korea are evidence that something is really wrong with 

that agreement. So I think we can do better, and that is really 

what we are here to say. 

One last thing. I don’t think the question is if the TPP fails. I 

think the question is how to do the TPP. The U.S. has entered into 

trade negotiations before that have failed with Malaysia, with 

Thailand, with Europe a couple of times, and we still have stature. 

And think the question is how do we do this right? Not pull out, 

not cede space to China, but do things that are good for workers 

in China and the U.S. and that will be good for all of us. 

Mr. SHERMAN. I think my time is expired. 

Ms. KAPTUR. Mr. Chairman, I can’t thank you enough, and the 

ranking member, for allowing me to be here today and to listen to 

the witnesses. I appreciate your collegiality. 

Mr. SALMON. Thank you. I am going to just close by saying that 

I got this from the Korea Economic Institute of America. This is 

just my district not the entire country, but the Arizona Fifth District merchandise exports to Korea grew to 18.6 million. It grew 28 

77

percent, up 25 percent from 2013. In the service sector exports 

grew 13.2 percent to 24.3 million from 2012, and the jobs related 

to trade with Korea in my district are 297. 

So I understand. There is going to be other dialogue. This isn’t 

the last hearing on TPP. We will have lots of other hearings. I really appreciate the comments. I appreciate the loyal opposition. That 

is the way it is supposed to be. And we appreciate the wonderful 

job that everybody on the panel did. And without objection——

Mr. SHERMAN. Mr. Chairman, just make them get you import 

statistics for your district as well so you can lay them next to each 

other. And with that, thank you very much. 

Mr. SALMON. Thank you. This meeting is adjourned. Thank you. 

[Whereupon, at 4:51 p.m., the subcommittee was adjourned.] 

(79)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE RECORD

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[NOTE: The subcommittee received no responses to the above questions prior to 

printing.] 

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