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70–866 2011

SECOND IN A SERIES OF THREE HEARINGS 

ON THE PENDING, JOB–CREATING 

TRADE AGREEMENTS: PANAMA TRADE 

PROMOTION AGREEMENT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TRADE 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MARCH 30, 2011

Serial No. 112–TR2 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

GEOFF DAVIS, Kentucky 

DAVID G. REICHERT, Washington 

WALLY HERGER, California 

DEVIN NUNES, California 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

JIM MCDERMOTT, Washington 

RICHARD E. NEAL, Massachusetts 

LLOYD DOGGETT, Texas 

JOSEPH CROWLEY, New York 

JOHN B. LARSON, Connecticut 

JON TRAUB, Staff Director 

JANICE MAYS, Minority Staff Director 


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C O N T E N T S 

Page 

Advisory of March 30, 2011 announcing the hearing ........................................... 2 

WITNESSES 

PANEL 1: 

Ambassador Miriam Sapiro, Deputy U.S. Trade Representative, Office 

of the United States Trade Representative ................................................ 7 

PANEL 2: 

Doug Oberhelman, Chairman and Chief Executive Officer, Caterpillar 

Inc., on behalf of Caterpillar Inc., the U.S. Chamber of Commerce, 

the National Association of Manufacturers, the Business Roundtable 

and the Latin America Trade Coalition ...................................................... 28 

Gary LaGrange, President and Chief Executive Officer, Port of New 

Orleans ........................................................................................................... 40 

Doug Wolf, President, National Pork Producers Council .............................. 44 

Jasper Sanfilippo, President and Chief Operating Officer, John B. 

Sanfilippo & Son, Inc. ................................................................................... 52 

Hal S. Shapiro Partner, Akin Gump Strauss Hauer & Feld LLP, Testifying in an individual capacity .................................................................... 60 

SUBMISSIONS FOR THE RECORD 

Port of New Orleans ................................................................................................ 72 

International Trademark Association .................................................................... 75 

National Pork Producers Council ........................................................................... 76 

Public Citizen’s Global Trade Watch ..................................................................... 83 

Akin Gump Strauss Hauer & Feld ......................................................................... 87 


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SECOND IN A SERIES OF THREE HEARINGS 

ON THE PENDING, JOB–CREATING 

TRADE AGREEMENTS: PANAMA TRADE 

PROMOTION AGREEMENT 

WEDNESDAY, MARCH 30, 2011 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

Washington, DC. 

The subcommittee met, pursuant to call, at 2:10 p.m., in Room 

1100, Longworth House Office Building, the Honorable Kevin 

Brady [chairman of the subcommittee] presiding. 

[The advisory of the hearing follows:] 


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HEARING ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

Brady Announces Second in a Series of 

Three Hearings on the Pending, 

Job-Creating Trade Agreements: Panama 

Trade Promotion Agreement 

March 23, 2011 

Congressman Kevin Brady (R–TX), Chairman, Subcommittee on Trade of the 

Committee on Ways and Means, today announced that the Subcommittee will hold 

a hearing on the pending trade agreement with Panama. This hearing is the second 

in a series of hearings on the pending trade agreements with Colombia, Panama, 

and South Korea. The hearing will take place on Wednesday, March 30, 2011, 

in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 1:30 P.M. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. However, any individual or organization 

not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. A 

list of invited witnesses will follow. 

BACKGROUND: 

In 2007, the United States signed a trade agreement with Panama, which still 

awaits Congressional consideration. On January 25, 2011, the Ways and Means 

Committee held its first hearing on this agreement, along with the pending Colombia and South Korea trade agreements. 

The Panama trade agreement was also discussed at the Ways and Means Committee hearing with the United States Trade Representative, Ambassador Ron Kirk, 

on February 9, 2011. At that hearing, Ambassador Kirk noted Panama’s important 

steps in addressing certain labor and tax issues considered outstanding. In his testimony, as well as in response to Chairman Camp’s request that Ambassador Kirk 

set forth a concrete timeline for Congressional consideration of the Panama trade 

agreement within the first six months of the year, Ambassador Kirk said that the 

President directed him to immediately intensify engagement with Panama, like Colombia, to resolve outstanding issues as soon as possible. Ambassador Kirk soon 

after held consultations with the Panamanian government. 

The U.S.-Panama Trade Promotion Agreement would open new markets to U.S. 

exports and, in turn, benefit American businesses, farmers, workers, and consumers. 

The independent U.S. International Trade Commission (ITC) estimates that implementing the agreement would increase U.S. exports of key products to Panama by 

up to 145 percent. Under the agreement, over 88 percent of U.S. exports of consumer and industrial goods and over 50 percent of U.S. agriculture exports would 

immediately become duty-free. Such benefits will be long-lasting. Indeed, since 2000, 

U.S. exports to the 13 countries with which we have implemented trade agreements 

have grown nearly twice as fast as our worldwide exports. 

The agreement also increases access to the Panamanian services market. Services 

already account for 76 percent of Panama’s GDP and promise further growth as 

Panama increases its role as a Latin American and global trade and logistics hub, 

creating new opportunities for U.S. businesses and workers. 

Concerns have been raised about Panama’s refusal to provide the United States 

with certain information needed to enforce U.S. tax laws. In November 2010, the 

United States and Panama signed a Tax Information Exchange Agreement to adVerDate Nov 24 2008 03:50 Dec 22, 2011 Jkt 070866 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\70866.XXX GPO1 PsN: 70866

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dress those concerns. In announcing the agreement, Treasury Secretary Timothy 

Geithner said that it ‘‘usher[ed] in a new era of openness and transparency for tax 

information between the United States and Panama.’’ Panama has also made several changes to its labor laws. 

Panama has already concluded trade agreements with major trading partners and 

U.S. export competitors, such as Canada and the European Union, which remove 

barriers to exports from those countries. Failure to implement our own trade agreement with Panama could thus severely disadvantage U.S. exporters and in turn 

jeopardize U.S. job creation. 

In announcing this hearing, Chairman Brady said, ‘‘Opening up dynamic new 

markets like Panama for American goods and services must be a priority 

for robust U.S. long-term growth. That is why we need to move forward 

with the U.S.-Panama trade agreement to create good U.S. jobs and increase the competitiveness of U.S. exporters, as well as to preserve U.S. influence and leadership in our hemisphere. We will lose this opportunity if 

the United States sits on the sidelines while Panama continues to grow and 

implements trade agreements with our major competitors. American workers, farmers, ranchers, manufacturers, service providers, and other exporters will simply be left behind. We need a concrete plan now from the Administration for moving forward with the Panama agreement to allow Congressional consideration of all three pending trade agreements by July 1.’’ 

FOCUS OF THE HEARING: 

The focus of the hearing is on Congressional consideration of the pending trade 

agreement with Panama. The hearing will address the economic benefits this agreement will bring to American businesses, farmers, workers, consumers, and the U.S. 

economy. In addition, the hearing will examine the national security and geopolitical implications of the agreement, as well as Panama’s tax transparency. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you 

would like to submit, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by the close 

of business on Wednesday, April 13, 2011. Finally, please note that due to the 

change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical 

problems, please call (202) 225–6649. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing 

record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, 

but we reserve the right to format it according to our guidelines. Any submission 

provided to the Committee by a witness, any supplementary materials submitted for 

the printed record, and any written comments in response to a request for written 

comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will 

be maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 


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not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone, and fax numbers of each witness. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available at http:// 

www.waysandmeans.house.gov/. 

f 

Chairman BRADY. Good afternoon. 

I would like to welcome you all here, including the Panamanian 

Ambassador. 

This is the second in a series of three hearings: Panama, Colombia, and South Korea. It is no secret that I strongly believe we 

should consider all three pending agreements by July 1st. There 

are bipartisan calls in Congress to do that. And we are hopeful the 

President moves forward with all three. 

He has already talked about and made the case why we should 

move the Panama and Colombia agreements now. As you know, on 

his recent trip to Latin America, the President noted that we export three times more to Latin America than to China because of 

our trade agreements across the region. He also stated, ‘‘Our exports to the region will soon support more than 2 million U.S. jobs.’’ 

And yet, even though the President explained why we need to 

move forward with the agreements, we wait. In the case of Panama, it has been almost 4 years. 

Not only has the delay caused American companies, workers, 

farmers, and ranchers to miss opportunities to sell more to Panama, we also run the risk of falling behind. Panama has concluded 

trade agreements with our major competitors, such as Canada and 

the European Union, and more are in the pipeline. If these agreements go into effect before ours, we will face even greater competitive challenges. 

And the opportunities lost to these competitors could be gone for 

a very long time. Panama is experiencing an infrastructure building boom due to $5.25 billion investment in the expansion of the 

Panama Canal and Panama’s growing role as a logistics hub for 

Latin America. If U.S. companies lose out on those infrastructure 

contracts, they cannot hope to bid again later. These contract opportunities will be lost for good. 

Panama’s expansion as a logistics hub also offers unique opportunities for American service providers in addition to our manufacturers. Services already make up over 75 percent of Panama’s economy. This sector will swell as Panama develops greater capabilities 

in information technology, finance, and insurance. U.S. service providers are well-positioned to meet this growing demand, but their 

market access depends on having our agreement in place. 

The economic reasons for the Panama agreement are, by themselves, significant, but the need to strengthen our relationship with 


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Panama and engagement in the region is just as compelling. I was 

heartened by the President’s trip to Latin America and his words 

about the importance of Latin America to the United States, but 

we need to provide tangible evidence of our commitment. 

Panama is obviously a vital ally in terms of port and maritime 

security. It is also an important partner in combatting drug trafficking and terrorism. And, of course, there is the Panama Canal. 

The United States is the largest user of the Canal, and Canal security is paramount to our national security and broadly to open sea 

routes. Panama’s cooperation in maintaining security of the canal 

has been vital to our security in the region. 

The significance of our relationship with Panama is obvious. Now 

is the time for action and for the President to send the Panama 

agreement to Congress. 

Ambassador, I was encouraged by your positive remarks regarding the status of the Panama agreement in our last hearing, but 

we have yet to hear from the Administration a defined timetable 

for bringing this agreement into force. 

But, in the meantime, Panama has made extraordinary strides 

in meeting U.S. demands. First of all, the Panamanian legislature 

approved the agreement to include the provisions of the bipartisan 

May 10th, 2007, deal back in July of 2007. Then there were concerns raised regarding Panama’s tax transparency, and, in response, Panama signed a TIEA with us in November and passed 

all implementing legislation. Concerns have been raised about Panama’s labor law, and Panama has implemented substantial labor 

protections and is undertaking even more just this week in its legislature. 

In my opinion, the substantive action by Panama is more than 

enough to allow congressional consideration of the agreement. 

Ambassador Sapiro, I want to ask you again, just as I did 2 

weeks ago at our previous hearing, to present us a specific timetable as to how the administration plans to proceed. In addition, 

I would call again on the administration to begin the technical 

drafting with us on the Panama and Colombia agreements, just as 

we have begun with the South Korea agreement. 

I would like to welcome all of our witnesses today and thank 

them for being with us. I look forward to the testimony. 

At this time, I will yield to Ranking Member McDermott for the 

purposes of an opening statement. 

Mr. MCDERMOTT. Thank you very much, Mr. Chairman. 

At our last hearing on the Colombia Free Trade Agreement, I expressed my disappointment that we were not holding a mock markup on the Korean Free Trade Agreement. I am even more disappointed today that 2 weeks have gone by and the Republican 

leadership is still blocking the Korean FTA. This Korean FTA is 

done. It has the support of business, labor, Democrats, Republicans, and the administration. 

We should have had a mock markup of the Korean Free Trade 

Agreement weeks ago. Every week that the Republicans wait costs 

Americans jobs and jeopardizes our global competitiveness. Every 

week the Republicans wait is more pain on American families and 

hurts our geo-strategic interests with Korea and across Asia. 


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While we are here to talk about Panama, the Republicans are silent on helping middle-class Americans with renewing trade adjustment assistance programs, the Andean preference programs, and 

the general system of preferences. The Republicans are also doing 

nothing on the miscellaneous tariff bill or on currency legislation. 

They have decided that we can’t do anything on trade until Colombia FTA is ready. That makes them really important. 

And if stopping the entire legislative agenda on trade is not 

enough, the Senate Republicans have announced they intend to 

block the appointment of trade-related officials, even Cabinet secretaries, until the Colombia Free Trade Agreement is passed. 

While I wish we were moving the Korean Free Trade Agreement 

and a real job agenda forward, we are here talking about Panama’s 

FTA today. The administration’s work on the Panama FTA, like its 

work on the Korean FTA, is an example of how to do a trade agreement right. 

There were legitimate and serious concerns with Panama’s status as a tax haven and with the fact that Panama’s labor laws fell 

short of international standards. Rather than ignoring those concerns, the Obama administration addressed them. For example, the 

United States and Panama finally signed a tax information exchange agreement last November after 8 years of negotiation. And 

Panama has made a number of changes to its labor laws already. 

Still, Panama needs to ratify that tax agreement and make a few 

important changes in labor laws. Panama is our partner and understands what it needs to do. It is willing to make the necessary 

changes to the laws, and it is expected to do so very soon. 

Congress would undermine the administration’s effort to resolve 

the outstanding issues if it were to consider the FTA before Panama takes action. On the flip side, once Panama takes action, the 

Panama FTA should be submitted to Congress without delay, not 

held hostage to unrelated issues that are outside Panama’s control. 

Panama and Korea FTAs provide a clear roadmap for the Colombia FTA. Rather than setting artificial deadlines and ignoring serious breaches, such as labor-related violence and impunity, those 

issues should be resolved before the agreement moves forward. 

Many Republicans criticize the administration for taking the 

time to get the substance right on all three of these trade agreements. They want to just get them done with quickly, rather than 

get them done right. They wanted to pass the Korea deal before the 

auto provisions were fixed. They wanted to ignore the fact that 

Panama was a tax haven. And they want to ignore the fact that 

murdering union organizers and human rights activists in Colombia goes unpunished. I don’t understand that, and I really don’t 

think the American people do either. 

The American people expect us to work to lift the labor standards of our trading partners, to insist that our trading partners not 

operate as tax havens, and to ensure that our trade agreements do 

all they can to ensure two-way trade, as the administration did 

with the Korean auto deal. 

In my view, this is the best way to rebuild strong and lasting 

support for trade agreements, and I hope my Republican colleagues 

will support that effort. 


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The rules require a week’s notice for a hearing, so I just want 

to encourage the Republicans to schedule this mock markup for the 

Korean Free Trade Agreement for next Wednesday. 

I yield back the balance of my time. 

Chairman BRADY. Today, we will have two panels of witnesses. 

The first panel is compromised of our witness from the administration, Ambassador Miriam Sapiro, Deputy U.S. Trade Representative from the Office of the U.S. Trade Representative. 

Ambassador Sapiro, welcome again. And we look forward to your 

testimony. As always, I am going to ask you to keep your testimony 

to 5 minutes. And your written statement—that goes for all the 

witnesses—will be made part of the record. And you are recognized 

for 5 minutes. 

Ambassador. 

STATEMENT OF AMBASSADOR MIRIAM SAPIRO, DEPUTY U.S. 

TRADE REPRESENTATIVE, OFFICE OF THE UNITED STATES 

TRADE REPRESENTATIVE 

Ms. SAPIRO. Thank you. And good afternoon, Chairman Brady, 

Ranking Member McDermott, Members of the Committee. It is a 

great pleasure to be back here and to testify today about the U.S.- 

Panama Trade Promotion Agreement. 

Two weeks ago, I highlighted the importance of a robust trade 

policy that creates jobs for America’s workers and advances the 

President’s goal of doubling exports by the end of 2014. We would 

like to see all three pending agreements, once their outstanding 

issues have been addressed, approved by Congress as early as possible this year. 

Earlier this month, we notified the full committee that we are 

ready to begin work on the text of the implementing bill for the 

Korea FTA as soon as you are able to schedule those sessions. We 

are working to advance the Panama agreement, too, within the 

broadest possible bipartisan and stakeholder support so that its 

true importance to the United States will be apparent to all. 

Panama is one of the fastest-growing economies in Latin America, expanding by over 6 percent in 2010. Its strategic location as 

a major shipping route is clear. Approximately two-thirds of the 

14,000 annual transits through the Panama Canal are bound to or 

from U.S. ports. 

Currently, the U.S. market is already largely open to imports 

from Panama. This agreement will level the playing field by giving 

American workers, farmers, ranchers, and businesses greater reciprocal access to Panama’s growing market, including nearly $10 billion in new infrastructure projects and an $18 billion services market. 

As important as these benefits are, President Obama has made 

it clear that any trade agreement we present to Congress must be 

consistent with our key values and in the clear interests of Americans. The administration has therefore been working very hard 

with Congress and with stakeholders since they came into office to 

identify specific steps that Panama could take to improve its protection of internationally recognized labor rights. 

As a result of this work, Panama has taken several steps to address our concerns. With respect to enforcement of its labor laws, 


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Panama has issued executive decrees to address the misuse of subcontracting and temporary work contracts, to strengthen collective 

bargaining and the right to strike, and to prevent employer interference in union activities. In addition, Panama’s Labor Ministry 

has issued a resolution to increase labor inspections in the maritime sector and to ensure that maritime workers are aware of their 

rights and the means to address any problems. 

As Panama has strived to improve its tax transparency practices, 

we have worked with its government to address impediments in its 

domestic law that have prevented the conclusion of a tax information exchange agreement, known as a TIEA, with the United 

States. Such an agreement was signed in November and is consistent with internationally agreed standards as established by the 

OECD. We expect that Panama will ratify the TIEA in the near future. 

On February 9th, Ambassador Kirk announced that we would intensify our efforts and our discussions with Panama to complete remaining work. And we have done so. I am pleased to announce 

that Panama is now in the process of completing work on the last 

few steps. 

The government introduced legislation this week to ensure that 

companies in the Baru Special Economic Zone will no longer be exempt from key labor rights provisions. Also pending before Panama’s National Assembly is legislation to ensure labor rights are 

respected in export-processing zones and to eliminate restrictions 

on collective bargaining in companies less than 2 years old. Last 

evening, both pieces of legislation passed their second reading. 

Once all of the outstanding issues are addressed, the administration will be ready to prepare the agreement for congressional consideration. Together, we will ensure that American workers enjoy 

a level playing field with a trading partner that has adopted strong 

worker protections and sound tax transparency policies. 

I also want to update you briefly on our efforts to intensify our 

work with Colombia to address outstanding concerns regarding the 

protection of internationally recognized labor rights, the prevention 

of violence against labor leaders, and impunity from prosecution. I 

am pleased to say that this afternoon I will resume high-level discussions with senior advisors from President Santos’ administration on how best to advance these goals. 

In the meantime, I ask you to keep faith with America’s workers 

by renewing trade adjustment assistance as soon as possible. I urge 

you also to renew the GSP and the ATPA programs for as long as 

possible. 

We look forward to working with all of you on the aspects of our 

trade agenda in a manner that builds bipartisan support and that 

creates new opportunities for the Americans that we serve. 

Thank you. 

[The prepared statement of Ms. Sapiro follows:] 


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f 

Chairman BRADY. Ambassador, thank you. 

For planning purposes for the lawmakers, witnesses, and the audience, we will be recessing now so that Members can attend the 

bipartisan classified briefing on Libya conducted by the Administration’s Cabinet. 

We will reconvene promptly at 3:30. And, Ambassador, thank you 

for your willingness to hang tight with us. And then we will go to 

questions. And then, at 4:15, we will bring the second panel forward. Again, Ambassador, thank you for your flexibility today. 

So we will recess until 3:30. 

[Recess.] 

Chairman BRADY. Thank you. The hearing will convene. Thank 

you again for your patience. 


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The chair recognizes Ranking Member McDermott. 

Mr. MCDERMOTT. Madam Ambassador, I have a practical question. We are trying to ramp up exports in this country. And there 

is a certain feeling that public employees are of no use to the people of America, that we really could get rid of the government and 

we would still have a system that functioned. 

And I would like you to explain what goes on when somebody 

wants to export something from the United States of America to 

any country. Can they just walk down to a boat and throw it up 

on the boat and away it goes? Or do they have to get documents 

from public officials? 

I am thinking in terms of the government shutdown that we are 

moving toward here shortly. Some people are acting as though that 

doesn’t mean anything. And I remember a call I got in 1995 from 

a guy who was trying to export grass seed to Saudi Arabia and was 

going to lose a $500,000 line of credit because he couldn’t get one 

simple export document from the Department of State. 

I would like to hear what actually goes into exporting things and 

what role government employees play in that. 

Ms. SAPIRO. Thank you, Congressman. 

We are also keeping an eye on the possibility of a shutdown with 

some concern, as we are working intensively to be able to resolve 

the outstanding issues with respect to both Panama and also Colombia and hopefully be in a position to present these agreements 

to the Congress for their consideration. 

So we hope very much, for a variety of reasons—and this, obviously, is just one small part of the government, but it is an important priority right now at USTR. So we certainly are keeping an 

eye on the budget talks and hope that they will be successful so 

that we will be able to keep working on these FTAs at an intensive 

pace. 

You are quite right, Congressman, that exporting a commodity, 

for example, from the United States is not as simple as putting it 

on a boat headed toward Panama or any other country. One of the 

many benefits of a free-trade agreement is the ability to streamline 

that process and to make it easier for our exporters, whether they 

be farmers or ranchers or businesses, to be able to take advantage 

of the tremendous opportunities that we see in markets in Latin 

America and elsewhere. 

So we, like you, are keeping an eye on the budget talks and hope 

very much that there will be a resolution soon. 

Mr. MCDERMOTT. What do you mean, to streamline the process? What are you thinking? I mean, now we have a free-trade 

agreement, so if I want to ship something to Oman or Israel or 

someplace, I just take it down and put it on the ship, right? It is 

a free-trade agreement; I can send it anywhere I want anytime I 

want, right? 

Ms. SAPIRO. Well, there are customs rules and forms. And what 

we do through our free-trade agreements is try to standardize 

those so that it is easier to have convergence between our systems 

and the system of the foreign trade partner. So we do a variety of 

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We also want to make sure that, for example, with respect to an 

agricultural commodity, that this is something that the other country has already agreed to accept, that it meets certain SPS—sanitary and phytosanitary standards. 

And so, as you know, a tremendous amount of effort goes into 

making sure that the process works as smoothly as possible. But 

it is complex, and these free-trade agreements do play a role in 

simplifying the procedures and ensuring common standards in both 

countries so that we can boost our exports and we can meet the 

target that the President has set for us. 

Mr. MCDERMOTT. What does it mean to the country if the government shuts down, if the ports shut down their ability to move 

goods for a week or a month? 

Ms. SAPIRO. It could certainly be challenging, quite challenging. 

Mr. MCDERMOTT. Is that all you think, is just challenging? 

There would be no economic consequences of that? 

Ms. SAPIRO. I believe that there would be. And, as I mentioned, 

I am concerned about it with respect to the specific issue of the 

work we are trying to accomplish at USTR but, also, obviously, the 

broader implications for our economy. 

Mr. MCDERMOTT. Thank you. 

Chairman BRADY. The chair recognizes Mr. Doggett. 

Mr. DOGGETT. Thank you, Mr. Chairman. 

And thank you, Ambassador. 

Is it correct that we have been attempting to get a tax exchange 

agreement with Panama since 2002? 

Ms. SAPIRO. That is correct, Congressman. 

Mr. DOGGETT. And as of today, we don’t have an agreement 

that is ratified. 

Ms. SAPIRO. We signed—the Department of Treasury—— 

Mr. DOGGETT. Right. 

Ms. SAPIRO [continuing]. Secretary Geithner, did sign the 

TIEA—— 

Mr. DOGGETT. Yes, I read his announcement about it. But the 

Panamanians have not ratified it. 

Ms. SAPIRO. The Panamanians have informed us that they are 

taking steps to ratify that, and—— 

Mr. DOGGETT. Well, they have had it—— 

Ms. SAPIRO [continuing]. They expect to—if I may finish, sir—— 

Mr. DOGGETT. Surely. 

Ms. SAPIRO [continuing]. They expect to do that soon. 

Mr. DOGGETT. Well, they have had it there since November. 

When you say ‘‘soon,’’ they will be completing their current session 

in April. Will they have it ratified in April? 

Ms. SAPIRO. I have every reason to believe that Panama will 

ratify the TIEA as part of its broader efforts to remove itself from 

the OECD list of gray zones, and that they will do it promptly. 

Mr. DOGGETT. All right. And so, are you expecting them to 

complete it before they recess at the end of April? 

Ms. SAPIRO. I have every reason to believe that they will do it 

before they recess. 

Mr. DOGGETT. Great. Because if we were to seek information 

from them today, we would be in no better position than we were 

in 2002, would we, without the ratification of that agreement? 


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Ms. SAPIRO. That is an interesting question, Congressman. 

They have taken steps to enact laws with respect to bearer shares. 

And, also, they have enacted a law that they call ‘‘Know Your Client,’’ which enables them to exchange information with other governments that they had not previously been able to. 

So I would have to look a little bit further into that to give you 

a more precise answer to your question. 

Mr. DOGGETT. Okay, I welcome you doing that, because I don’t 

believe, without an information exchange agreement, that unless 

we wanted to go into Panamanian courts and attempt to enforce 

our rights there, that we would be in any different position than 

7 years through which the Panamanians have drug this thing out. 

And you mentioned their desire to get out of the gray zone with 

OECD. They do not have a tax information exchange agreement 

with any country other than ours, do they? 

Ms. SAPIRO. My understanding, Congressman, is that they have 

negotiated almost a dozen treaties already. Most of them are called 

double-taxation treaties—— 

Mr. DOGGETT. Right, those are tax treaties. But they don’t— 

and they incorporate a tax exchange provision similar to this, but 

we chose not to go that route since they apparently have little, if 

any, taxes on foreign entities in Panama, correct? 

Ms. SAPIRO. I would have to refer that question, Congressman, 

to the Department of the Treasury because of its relationship to 

our Tax Code and tax policies. 

Mr. DOGGETT. You don’t know what the status is, then, with 

reference to OECD that you referenced earlier. 

Ms. SAPIRO. What I was suggesting we respectfully ask the Department of Treasury to address is the decision to pursue a TIEA 

rather than a double-taxation treaty. 

With respect to the OECD list, my understanding is that, when 

a country negotiates and signs a total of 12 tax transparency agreements, which I believe can be defined either as double taxation or 

as a TIEA as long as they deal with the transparency question, 

then such a country is removed from the list. My understanding, 

in addition, is that Panama has come very close because it has already signed a total of 11 agreements and has already negotiated 

an additional 4 agreements that await signature. So I would anticipate that they may well be off the list in the near future. 

Mr. DOGGETT. Do those agreements require ratification? 

Ms. SAPIRO. I can’t speak to the nature of those agreements 

with other countries. I do know that, in the case of the TIEA, the 

Department of Treasury concluded it as an executive agreement. 

Panama does need to go through a ratification process, which it 

has, I am pleased to say, already started. 

Mr. DOGGETT. Okay. And one last question in a different area: 

From your experience there at USTR, are you aware of any experience that would suggest that public interest representatives, to the 

modest extent that they have been involved in industry trade advisory committees, have ever caused a problem for USTR or any of 

its goals? 

Ms. SAPIRO. We share, Congressman, your goal of ensuring that 

there is broad representation across the ITACs, the advisory committees. And we have been working closely with your staff on some 


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concrete recommendations in order to achieve that goal. We already have an unprecedented formal and informal way of ensuring 

that we include a broad range of voices in our policies—— 

Mr. DOGGETT. That wasn’t my question, though. I just wanted 

to know if you have experienced any problem—— 

Chairman BRADY. If I may, since time has expired, perhaps, 

Ambassador, if you could complete your response in writing to Mr. 

Doggett. 

Ms. SAPIRO. I would be happy to do that. 

Chairman BRADY. Thank you. 

Ms. JENKINS. is recognized. 

Ms. JENKINS. Thank you, Mr. Chairman. 

And thank you, Ambassador, for being back to join us again. 

As you know, when the U.S.-Panama agreement goes into effect, 

more than half of current U.S. farm exports will become duty-free 

immediately. The American Farm Bureau estimates that U.S. farm 

exports to Panama will then exceed $195 million, doubling our U.S. 

exports. And as you well know, many of the items that will benefit 

are processed or semi-processed products, such as high-quality beef, 

chicken, pork, soybeans, and wheat. 

Now, in Kansas, we raise a lot of high-quality beef, chicken, 

pork, soybeans, and wheat. In fact, we pride ourselves on feeding 

the world. So I am anxious to see these agreements, as well as the 

agreements with Colombia and South Korea, approved as soon as 

possible. 

But my question is, how does reducing tariffs on these products 

prevent U.S. agriculture exports from losing market share to exporters from other countries like Canada, Brazil, and Argentina, as 

they have done in the case of Colombia? And how will this agreement ensure U.S. competitiveness in years to come? 

Ms. SAPIRO. Thank you very much, Congresswoman, for that 

question. I am very glad that you didn’t ask me to compare beef 

from Kansas to beef from Texas. I was very—— 

Chairman BRADY. And you know the answer to that. 

Ms. JENKINS. Yeah, we tried that the last time. 

Ms. SAPIRO. I remember. And, fortunately, none of you asked 

me for my opinion, so I am going to stay neutral. I enjoy beef from 

all States in our country that produce it. 

But, no, you are quite right to point out the benefits to our agriculture sector from this agreement. It is not currently a two-way 

street, because much of what Panama exports to us comes in dutyfree because it is a CBI beneficiary, whereas our farmers and 

ranchers face tariffs on their exports to Panama. 

So when this agreement is in force, they will benefit greatly, especially in the beef area. The high cuts of beef are going to be dutyfree immediately, and additional beef exports will become duty-free 

over time. So this is an important agreement for your State, in particular. 

Ms. JENKINS. Okay. Thank you for that. 

As we have seen with Colombia, it is clear that U.S. agriculture 

producers and exporters will lose valuable markets if these trade 

agreements are not passed, which will most certainly hurt farmers, 

ranchers, and other workers in the agriculture sector. 


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And while the agriculture industry has been one of the few 

bright spots in our economy, a further delay in implementing these 

pending agreements will impact not only that industry but also 

rural America as a whole. In places like my little hometown of Holton, Kansas, a strong agriculture industry is the basis of our economy. And that includes businesses ranging from those that sell and 

repair equipment, to the Holton Country Mart, Ron’s IGA, and Barbara’s Beauty Bar. 

Can you explain to us what the effect is likely to be on all of 

those businesses and small communities like my little hometown if 

we don’t pass these agreements? 

Ms. SAPIRO. This agreement will benefit U.S. exporters, whether they are large, established companies or small and medium enterprises struggling to get a foothold. 

One of the things that the President feels very strongly about is 

making sure that we have a national export initiative that cuts 

across all sectors of the economy as well as embraces the SMEs 

that sometimes can otherwise get left out. So USTR, for example, 

works closely with SBA and also with Ex-Im and other parts of our 

government, especially the Department of Commerce, to make sure 

that we are not overlooking the smaller companies and that, 

whether they are small farms or they are service providers, if they 

want to establish a market overseas, that we have the ability to 

help them do that. 

And we would very much like to see the small and medium enterprises across our country reach out to more markets. And for 

those companies that already are in a market, they typically have 

only one customer. We would very much like to work with them 

and see if we can’t double, triple, or quadruple the number of customers they have as well as the number of countries that they are 

exporting to. 

Ms. JENKINS. Well, thank you. And I just hope you will be 

mindful of the effect that these trade agreements have on rural 

America. We all struggle with the whole issue of rural economic development, and these free-trade agreements will have such a 

compounding effect in many small, rural communities all across 

this Nation. They are critical. 

So, with that, I would yield back. Thank you. 

Chairman BRADY. Thank you. 

The chair recognizes Mr. Smith. 

Mr. SMITH. Thank you. And I appreciate the opportunity to 

have a dialogue here. 

I would like to begin by associating my concerns with my colleague from Kansas, knowing that we probably have a good partnership in producing high-quality beef, among other products—I 

guess we will leave it at that. 

Now, in technical respects, what would you say are the major differences between the South Korea Trade Agreement and the Panama Trade Agreement? 

Ms. SAPIRO. I would say that both agreements embrace high 

standards across the board. The Panama agreement, in particular, 

I think, will benefit the relationship because of the infrastructure 

projects that Panama is already beginning with respect to the 


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Canal and the additional infrastructure projects that we see coming down the road. 

There is also a growing market for service providers. And, frankly, Panama has a growth rate that I am envious of. It is one of the 

fastest-growing economies in Latin America and Central America 

today. 

So I think there is great potential for our exporters from Nebraska, from Kansas, from Texas, from other States to really make 

the most of this agreement once it—— 

Mr. SMITH. Right. I mean, you suggested that there are high 

standards in both agreements. Are there not high enough standards, then, to buy in here so that we can get this passed? 

Ms. SAPIRO. We are working very hard, as I mentioned, to be 

able to present these agreements to Congress for your consideration. 

With respect to the labor chapter of the Panama agreement, 

there were some concerns, which are now being addressed, with regard to their enforcement in certain sectors, such as maritime, construction, and a few other sectors as well. I am pleased to say that 

Panama has been addressing those concerns and is even now taking legislative action that, once completed, will put it in a very 

good position to be able to easily implement the labor chapter. 

Mr. SMITH. Is it conceivable that we could get this passed by 

July 1st? 

Ms. SAPIRO. We are working very hard, and so is Panama. The 

ball is really in their court right now. And I am very encouraged 

by the actions that they took as late as last evening. So I think 

they are working at a quick clip. And we are doing everything possible that we can to support them doing that, because this is an 

agreement that is important to many exporters in this country. 

Mr. SMITH. And, finally, do you feel that there might be some 

downside to delaying? 

Ms. SAPIRO. Our market share in Panama has been remarkably 

stable over the last few years. Our closest competitors are Canada 

and Europe, and their share is currently a lot lower than ours. 

But we are not sitting back, I assure you, Congressman, we are 

not sitting back and celebrating those statistics. We are working 

very hard because we share your sense of urgency. This agreement 

and the other agreements are important to Americans who export. 

So we are doing everything possible to work with Congress, to 

work with our stakeholders, to address the issues that had been 

identified earlier and that we believe the Panamanian Government 

is now taking steps to address, and believe that they will do so fairly soon. 

Mr. SMITH. Okay. All right. 

Thank you, Mr. Chairman. I yield back. 

Chairman BRADY. Thank you. 

Mr. Buchanan. 

Mr. BUCHANAN. Yes, thank you, Mr. Chairman, for holding 

this. 

And, Ambassador, I appreciate your coming. 

I represent part of Florida, but being the only Ways and Means 

member in Florida, we have 14 ports; exports are a huge part of 

our business there. I know, in my port, it is the closest port to the 


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Panama Canal. We think we can create 20,000 more jobs just out 

of our port in Manatee County. 

I have been down there; we have met with the Ambassador at 

the port. I have been down to Panama. I met with the President 

down in Panama. But it just seems like it has gone on for 4 years, 

not just this administration but the last 2 years before that. 

They seem like they have jumped through a lot of hoops. They 

love America. They want to do business. They have done a fullcourt press in terms of this trade agreement. And it seems like it 

is just some special interests, you know, on our side that are driving the agenda. 

And we keep moving the goal post. I mean, you talk about 

human rights, and I know that is important to everybody, but, at 

the same token, you could throw that out anyplace, anytime, anywhere. And, obviously, the unions are concerned. 

But I can tell you, for States like Florida and Texas, we need to 

have Panama on line in a bigger way. And we are really losing our 

credibility, frankly, down there. I have been in business 30 years; 

I am not a career politician. But if it takes 4 years to get something 

done, there has to be a question of good faith on our part. And it 

is really more of a political agenda than it is about doing what is 

right. 

So I don’t want to ramble on, but I want to get your comments 

on that. 

Ms. SAPIRO. Thank you, Congressman, for your question. 

We share your sense of urgency, and we do want to see this done 

as quickly as possible. Since we took office in 2009, we have been 

working with the Panamanian Government to identify the issues of 

concern. And some of it was with respect to enforcement in the subcontracting area, with respect to temporary workers, and I mentioned maritime workers. 

They have been working diligently to address the issues that 

they could through administrative decrees. There are a few issues 

that they needed to address through legislation, and they are now 

in a position where they can move that legislation forward. And I 

believe they will be able to do so fairly quickly. 

One of the laws refers to Baru, which is the special economic development zone where they had had certain exemptions from core 

labor provisions. And they are now taking steps to remedy that. 

Mr. BUCHANAN. What timeframe do you feel like, realistically, 

we are talking about given where we are with Korea? Korea looks 

like that is going to get done, we are going to get something here 

to the Congress. But in terms of Panama, you know, can we get 

that done before June. Will you get it back to us? I mean, what 

timeframe are we on? 

Because I am concerned, if it gets past this summer and August 

recess, this thing is going to get much more political and it is not 

going to get done. Then we drag it on another year and a half. And 

I just think it is the wrong direction. 

Do you have a sense, what would be your commitment or your 

sense of when we can get this done? 

Ms. SAPIRO. Congressman, we would like to see Panama take 

these final steps as soon as possible, and I have every reason to 


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believe that they are doing so. I believe we are pushing on an open 

door, as the saying goes, and that they are working rapidly. 

The fact that the Baru legislation and the other piece of legislation dealing with export-processing zones and some restrictions in 

place on companies that are less than 2 years old, these two pieces 

of legislation are now moving very quickly through their national 

assembly. So I am hopeful that they will be able to—— 

Mr. BUCHANAN. Well, I came here in 2007, and we have been 

talking about Panama ever since I have been here. And I think it 

is really a shame that we are not finding a way to, you know, put 

this thing together. And I would be very, very disappointed if this 

thing ran on, because it would affect a lot of jobs. Florida has 12 

percent unemployment; the country has 9 percent. We need those 

good-paying jobs. We need to get this deal wrapped up with Panama. We needed it yesterday. 

It would be great if we could do it with Korea. I think the 

mindset is, for one reason or another, you are not going to do it 

that way. But we need to get this done. It means a lot of jobs to 

Florida. Export opportunities for Florida companies, small and 

large, are huge. And I hear that from so many people all over the 

State. I can’t tell you the level of frustration among the business 

community in Florida at our lack of ability to get this thing 

wrapped up. 

Ms. SAPIRO. We share your concern and fully appreciate how 

important this agreement is, in particular, to Florida. 

Mr. BUCHANAN. Okay. Are you going to give me a timeframe? 

Are you going to tell me when we are going to get it done? 

Ms. SAPIRO. We are working quickly. The ball right now is in 

Panama’s court. 

Mr. BUCHANAN. How about May? 

Ms. SAPIRO. I don’t want to give you a date and be wrong. Let 

me just assure you that we share your sense of urgency and we are 

working, sometimes around the clock, to encourage Panama to take 

these final steps. And we believe they will do so. 

Mr. BUCHANAN. We really need it for jobs. 

I appreciate the opportunity. Thank you, Mr. Chairman. I yield 

back. 

Chairman BRADY. Thank you. 

She is dying to say it will be here by July 1st for consideration, 

so we will just assume that that is the answer. 

And, obviously, the reason you get bipartisan support for moving 

all three is, together, they represent $13 billion in new sales for 

American companies and farmers and workers. And, you know, in 

this economy, every customer counts, every sale counts, every job 

counts. And so the goal of continuing to move all three is because, 

together, all three are very important to our economy. 

Let me ask you, on labor issues, you made reference to Panama 

having laws made more than a dozen changes to its labor—first, 

it reopened the agreement, signed and included the bipartisan May 

10th agreement on labor, environment, and there were other 

issues. It has made more than a dozen changes to its labor code; 

is in the process of moving legislation, as you said, to address other 

issues. So, clearly, Panama is making additional commitments, and 

impressive commitments, on labor. 


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But on tax information and transparency issues, my understanding is that, since 2002, Panama has been a committed jurisdiction, according to OECD, which means they are cooperative regarding tax information. We have had a longstanding mutual legal 

assistance treaty that covers the exchange of tax information if the 

question is effectively tied to illegal activities. 

Panama has signed a TIEA, has begun to implement it, is in the 

process of creating a new international tax unit, a unit for international exchange of tax information. It is enhancing its cooperation with double-taxation agreements with 15 countries, sharing 

tax information. Secretary Geithner recently remarked, with the 

signing of the TIEA, ‘‘this ushers in a new era of openness and 

transparency for tax information between the United States and 

Panama.’’ 

So, in your view, is Panama taking impressive strides to improve 

tax transparency? 

Ms. SAPIRO. Panama has taken very important steps in the 

right direction. And I believe that they will follow through on what 

they have promised to do with respect to the TIEA and with respect to completing the other taxation treaties that will then enable 

them to be off of the gray list. 

We are truly encouraged by their progress, no doubt in part not 

just because of the FTA but because of the emphasis that the G– 

20, with U.S. leadership, has put on the need to fight tax havens 

around the world. 

So Panama, for its own reasons, is taking very important steps. 

And we do welcome what they have done. And we do believe that 

they will quickly be able to finish their work, both with respect to 

tax transparency issues and also with respect to the labor code 

changes that are important to see done. 

Chairman BRADY. Thank you, Ambassador. Panama really is a 

key trading ally, and the improvements they have made and commitments they have made are impressive. And, again, our goal is 

to accelerate the passage and implementation of all three agreements, and look forward to working with you to do so this summer. 

So thank you again for being with us today. 

Ms. SAPIRO. Thank you, Mr. Chairman. 

Chairman BRADY. At this point, since votes have been called 

and it is a fairly long series of votes, we will recess this hearing 

until immediately after the last vote and proceed with the second 

panel. 

Thank you. 

Chairman BRADY. The subcommittee will reconvene. 

I would like to welcome our second panel. And thank you for 

your patience today. We don’t always control our voting schedule 

nor the classified briefings, but thank you. We know how busy— 

Mr. McDermott and I know how busy your lives are, so thank you 

for sharing time with us today. 

Our first witness will be Doug Oberhelman, chairman and chief 

executive officer of Caterpillar, Inc. He is also testifying on behalf 

of the U.S. Chamber of Commerce, the National Association of 

Manufacturers, the Business Roundtable, and the Latin American 

Trade Coalition. 


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After him, we will hear from Mr. Gary LaGrange, president and 

chief executive officer of the Port of New Orleans. 

Our third witness will be Mr. Doug Wolf, President of the National Pork Producers Council and also owner and operator of Wolf 

L&G Farms. 

Fourth, we will hear from Mr. Jasper Sanfilippo, president and 

chief operating officer of John B. Sanfilippo & Son, Incorporated. 

And, last, we will hear from Mr. Hal Shapiro, who is a partner 

at Akin Gump Strauss Hauer & Feld. 

Before we begin, I understand that our colleague Mr. Schock, 

who has been a tremendous advocate in the trade area, would like 

to give further introduction to Mr. Oberhelman, who is from his 

district. 

Mr. Schock. 

Mr. SCHOCK. Thank you, Chairman Brady. 

I have the great pleasure this afternoon to introduce to the committee a great friend of my hometown from Peoria, the chairman 

and CEO of Catepillar, Doug Oberhelman. 

Doug joined Caterpillar fresh out of college as a financial analyst. 

And, over his 35-year career, he has held a variety of positions, including senior finance representative based in South America, district manager for the company’s North American Commercial Division, and managing director and vice general manager for strategic 

planning at Caterpillar Japan, Limited, in Tokyo, Japan. 

He was elected as vice president and chief financial officer in 

1995. In 1998, he became vice president with responsibility for Caterpillar’s engine business. He became a group president and member of Caterpillar’s executive office in 2002. And, as group president, he had responsibility for a vast number of functions, from financial products to HR to remanufacturing, just to name a few. 

In October 2009, he was named vice chairman and CEO-elect. 

During this time, he led a team that developed the future strategic 

plan for the company. And, in 2010, Doug was elected chairman 

and chief executive officer. 

In addition to his work at Caterpillar, he serves as a director for 

the boards of Eli Lilly and Company, World Resources Institute, 

Wetlands America Trust, and The Nature Conservancy’s Illinois 

chapter. He is also a member of the board of directors of the Association of Equipment Manufacturers and the Manufacturing Institute. In addition, he is vice chairman and a member of the executive committee of the National Association of Manufacturers. 

On a personal note, Doug and Caterpillar have been great citizens of Peoria and the State of Illinois. They take their corporate 

citizenship responsibility seriously and have provided a foundation 

for employment in Peoria, Illinois, and our country for decades. In 

fact, Caterpillar employs 23,000 of its 104,000 employees worldwide 

in Illinois, with many living and working in the Peoria area. And 

if you have ever traveled to Peoria—I would encourage to you do 

so, if you haven’t—there is no doubt that their positive presence is 

felt and seen all over our community. 

The truth is, Caterpillar has been an integral part of our country 

since the company’s founding. Cat is the world’s largest manufacturer of construction and mining equipment, diesel and natural gas 

engines, industrial gas turbines, and diesel electric locomotives. 


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Cat products touch every continent, serving 180 countries. So there 

may not be a better representative to have before us today to attest 

to the success of open markets and free trade than Caterpillar. 

Once against, Mr. Oberhelman, I appreciate your willingness to 

testify before our committee. And I look forward to the conversation this committee will have you with about the significance of the 

U.S.-Panama Free Trade Agreement. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Schock. 

We also have another key leader of the House Ways and Means 

Committee, Dr. Boustany, whom I have asked to say a few words 

to introduce his home State witness, Mr. LaGrange. 

Doctor? 

Mr. BOUSTANY. Well, Chairman Brady, thank you. It is a great 

privilege to introduce a real leader in the State of Louisiana. 

Gary LaGrange has served as president and CEO of the Port of 

New Orleans since 2001. And, under his direction, we have seen a 

tremendous expansion of the port activities, despite a number of 

adversities, including something called Hurricane Katrina. In fact, 

Gary, with his leadership on the ground, got that port back up and 

operational within 2 weeks of the hurricane coming through, which 

was vital to getting New Orleans relief and moving the city forward in a recovery effort. 

Gary has overseen a number of many expansions since taking his 

lead position at the Port of New Orleans, but he has also held a 

number of leadership positions at the State and national level, as 

well, including chairman of the National Waterways Conference; he 

serves on the board of the Waterways Council, as well. He is past 

chairman of the American Association of the Port Authorities, 

which is an alliance of 350 ports in the Western Hemisphere; 

serves on the board of Gulf Ports Association of the Americas and 

is past chairman and past president of the Gulf Intracoastal Canal 

Association. 

He also was named to the Federal Reserve Bank of Atlanta’s Advisory Council on Trade and Transportation. And Gary has also received international recognition, in that he was named to the Hall 

of Fame by the International Maritime Association at the United 

Nations. 

Gary has been a great leader on maritime issues and international trade. 

And it is a real privilege, Gary, to have you here today. Thank 

you. 

Chairman BRADY. Thank you, Dr. Boustany. 

And, welcome, Mr. LaGrange. 

We welcome all of you, look forward to your testimony. I would 

also ask our witnesses to keep their testimony to 5 minutes. 

Mr. Oberhelman, your written statement, like all those of the 

witnesses, will be made part of the record. And you are recognized 

for 5 minutes. 


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STATEMENT OF DOUGLAS R. OLBERHELMAN, CHAIRMAN AND 

CHIEF EXECUTIVE OFFICER, CATERPILLAR, INC., ON BEHALF OF CATERPILLAR, INC., THE U.S. CHAMBER OF COMMERCE, THE NATIONAL ASSOCIATION OF MANUFACTURERS, 

THE BUSINESS ROUNDTABLE, AND THE LATIN AMERICA 

TRADE COALITION 

Mr. OBERHELMAN. Thank you, Chairman Brady and Ranking 

Member McDermott, Congressman Schock, for that very warm welcome and support of our initiatives, including trade and beyond 

trade, for Caterpillar. We really appreciate that from all of you. 

In recent months, Caterpillar has been identified in the press as 

the company leading the charge to ensure that the Obama administration and Congress enact all three—I repeat all three—pending 

free-trade agreements, not just Korea but also Colombia and Panama. I would like to begin by saying, that is a fair characterization 

and one we are quite proud to accept. In fact, our support for expanding trade goes beyond the pending free-trade agreements. We 

also strongly support completing the WTO Doha round, finishing 

the Trans-Pacific Partnership, and bringing Russia into the WTO 

as well. 

But for today’s purposes, I want to focus on the pending Latin 

American agreements, with special emphasis on Panama. 

You may have seen Politico.com today. We ran an ad; it features 

four of our machines. All four were made in the State of Illinois. 

It appears there is a generator set off to the side, which was made 

in the State of Indiana. And, with any luck at all, the ocean 

freighter passing through the canal would have auxiliary power 

from Caterpillar made in Indiana, as well. So, just a reminder of 

how important this really is, and I would like to add this to the 

record, if I could. 

Caterpillar and the organizations I represent strongly support 

the U.S.-Panama Free Trade Agreement, as well as Colombia and 

Korea, because they promote sustainable economic growth, both at 

home and abroad. 

In Latin America, we now have agreements with Mexico, Chile, 

Central America, the Dominican Republic, and Peru. I am pleased 

to report that Caterpillar exports have dramatically increased following the approval of these free-trade agreements. Since the 

agreements have gone into effect, Caterpillar exports last year are 

up fivefold to Mexico, threefold to Chile, and up by more than 60 

percent to Peru. 

Others have benefited, as well, and not just from the Latin 

agreements, but from all of them. Allow me to explain: It is no secret that the United States consistently runs a trade surplus in 

services and agriculture. But what the public and many policymakers don’t realize is that the U.S. also runs a trade surplus in 

manufactured goods, but only with the 17 countries, as a group, 

that have implemented free-trade agreements with the United 

States. 

The important fact is that free-trade surplus gets lost in the discussion because there is a large trade imbalance for manufactured 

goods from non-free-trade-agreement partners, but the message 

about the success of free-trade agreement is—excuse me—is too important to get lost. 


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It is proof that American manufacturers can compete with anyone, provided they have open markets and a level playing field. 

That is exactly what trade agreements like the ones with Panama, 

Colombia, and Korea will provide. 

In addition to helping U.S. manufacturers of industrial goods, the 

Panama Free Trade Agreement will substantially improve market 

access for American farm products, including pork, consumer goods, 

and services. It will bolster the rule of law, investor protections, 

internationally recognized workers’ rights, transparency, and intellectual property protections. 

Some dismiss Panama as a small country that should not be a 

U.S. trade priority. Others take trade with Latin America for 

granted. We think that is incredibly shortsighted. Last year, Caterpillar exported more products to Panama than Korea. We exported 

more products to Colombia than India or Germany. And, as a region, last year, Caterpillar exports to Latin America increased 58 

percent, which is more than any other region of the world. Today, 

6 of our 10, at Caterpillar, largest export markets are in Latin 

America. They are great friends of the United States, as well. 

We are pleased that Congress and many in the administration 

now recognize the importance of trade with Latin America. To demonstrate that commitment, we hope the first order of business will 

be passing the agreements with Colombia and Panama as well as 

the agreement with Korea. 

I would be remiss if I didn’t also emphasize the other reasons to 

support the Panama trade agreement. Most importantly, Panama, 

like Colombia and Korea, is an ally and friend to the United 

States. It has major ports to both the Atlantic and Pacific, and the 

Canal is a major transit point for world trade. 

Panama is a good place to invest. One-third of its population 

speaks English, it is a fully dollarized economy, and it is strategically located, which makes it a good place to locate logistics and 

customer support operations, which we have done. At Cat, we are 

pleased with the success of our investments in Panama and with 

the high quality of our Panamanian workforce. 

For Caterpillar, the Canal expansion is particularly exciting. The 

expansion is one of the biggest public works projects in the world 

in years. We are doing our best to earn business associated with 

the Canal and all other infrastructure projects being built in Panama. 

If we can sell our U.S.-produced products to Panama duty-free, 

it will help our customers provide us with a competitive edge over 

products made elsewhere, like China and Japan. In practical terms, 

the agreement means that Panama’s 10 percent duty on off-highway trucks built in Decatur, Illinois, motor graders built in Arkansas, scrapers built in Decatur, and diesel engines in Indiana would 

be eliminated. 

What does the U.S. have to do in return, as it relates to mining 

and construction equipment? The answer is—— 

Chairman BRADY. Mr. Oberhelman, I apologize—— 

Mr. OBERHELMAN. That is okay. 

Chairman BRADY [continuing]. Since you have waited and been 

patient all day. I would like to give you some time during my questioning to be able to—— 


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Mr. OBERHELMAN. I understand fully. 

Chairman BRADY. No, thank you. You all are so very kind. 

[The prepared statement of Mr. Oberhelman follows:] 


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Chairman BRADY. Mr. LaGrange. 

STATEMENT OF GARY P. LAGRANGE, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, PORT OF NEW ORLEANS 

Mr. LAGRANGE. Thank you, Mr. Chairman. We certainly appreciate the opportunity to be here and speaking on behalf of all of the 

ports in the United States, some 160 strong, not just New Orleans. 

In recent studies completed by Parsons Brinckerhoff, Booz Allen 

Hamilton, the AT Carney Group, and the Marbridge Group—four 

different studies—all studies pointed out that, with the expansion 

of the Panama Canal by 2014, we can expect incremental increases 

in containers coming through the Canal at a rate of about 25 million new TEUs by the year 2028. 

The Port of New Orleans firmly and publicly supports the U.S.- 

Panama agreement to enhance trade and investment activities 

with Panama. Panama has been a longstanding strategic partner 

of the United States, and, as a strong ally of our country, the U.S.- 

Panama agreement will further strengthen our economic relationship with an important regional partner and protect our critical 

strategic interests associated with the Canal. 

Through its direct facilitation of trade and commerce, the Port of 

New Orleans is one of the primary economic engines of the gulf 

coast, along with Houston and the Port of Houston, of course, and 

serves as a key gateway to the mouth of the Mississippi River system for international and domestic trade. Three hundred and 

eighty thousand jobs are accountable because of the Port of New 

Orleans alone. That is direct employment, by the way. 

Approximately $37 billion in national economic benefits comes 

from the transportation and the manufacturing of goods that flow 

through the port. As a container and general cargo port, the Port 

of New Orleans serves approximately 30 States in mid-America, 

the Midwest, and up the Ohio River Valley on a navigable waterway that consists of 14,500 miles. The port is also the home of six 

Class I railroads, which came in the early part of last year when 

they realized the connectivity due to the waterway. 

Mr. Chairman, the continuing development of the American export market would be enhanced through the implementation of the 

U.S.-Panama agreement. International agreements that help facilitate trade are a significant benefit to our Nation’s ports. According 

to the American Association of Port Authorities, United States 

ports are responsible for moving 99 percent of all of our overseas 

cargo in America. And more than 13 million Americans are working in port-related jobs. The completion of the pending agreement 

with Panama will increase the cargo movement through these ports 

and improve employment opportunities for American workers. 

With respect to Panama, American ports play an integral trade 

role, which would be expanded even more under the pending agreement. The United States is a dominant trading partner for Panama. In 2009, the United States exports to Panama were valued 

at $4.3 billion, and almost 30 percent of Panama’s imports came 

from the United States. As exports increased from the United 

States to Panama, the Port of New Orleans and other U.S. ports 

will be called upon to help meet the increase transportation needs. 


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A review of the agricultural product trade provides—and I am 

going to yield to my colleagues up here some insight as to how the 

U.S.-Panama agreement would contribute to domestic economic 

growth. For example, the U.S. Farm Bureau estimates that U.S. 

agricultural exports alone could be increased by more than $195 

million annually with the implementation of the pact. 

Such exports, the United States International Trade Commission 

has predicted that the largest growth will accrue in U.S. exports 

for rice to Panama, which are expected to increase by approximately 145 percent. Other U.S. export gains could be expected in 

the oil, machinery, and other key market areas that already contribute to a robust trade with Panama. In fact, estimates show 

that, when the U.S.-Panama agreement is fully implemented, U.S. 

exports to Panama of passenger vehicles would increase by 43 percent; U.S. exports of beef and pork, 94 and 96 percent, respectively. 

Significantly, when discussions concern Panama, they must necessarily address the impact of the expansion of the Panama Canal, 

as mentioned earlier, on international trade. A significant amount 

of commercial vessel traffic passing through the Canal is engaged 

in trading activities with the United States. 

Furthermore, the Port of New Orleans, in collaboration with 

other river ports, ocean-going, and inland waterway vessel operators, manufacturers, agricultural interests, and other groups have 

been working strenuously to ensure that product dimensions in the 

lower Mississippi River navigation channel are properly maintained by the Army Corps of Engineers to meet the commercial vessel transportation needs of the United States in the future. 

Currently, over 500 million tons of cargo moves from the inland 

waterways of America through New Orleans, and that is why we 

have to keep that plug open in the bathtub. 

I want to thank you for your time on behalf of all of American 

and United States ports, Mr. Chairman. It has been a pleasure to 

be here. And I really appreciate all of you taking this matter so seriously as you are. It is a huge shot in the arm at a time that we 

all need it. 

Thank you. 

[The prepared statement of Mr. LaGrange follows:] 


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Chairman BRADY. Thank you for joining us. 

Mr. Wolf. 

STATEMENT OF DOUG WOLF, PRESIDENT, NATIONAL PORK 

PRODUCERS COUNCIL 

Mr. WOLF. Good afternoon, Chairman Brady, Ranking Member 

McDermott, and distinguished Members of the Subcommittee on 

Trade. I am Doug Wolf, president of the National Pork Producers 

Council and a pork producer from Lancaster, Wisconsin. I appreciate the opportunity to appear before the committee today. 

The future of the U.S. pork industry and the future of America’s 

family hog farms like mine depend on continued expansion of exports. I am highly dependent on exports as a revenue source. WithVerDate Nov 24 2008 03:50 Dec 22, 2011 Jkt 070866 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\70866.XXX GPO1 PsN: 70866

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out industry wide exports, the price I would receive for my hogs 

would not allow me to remain in business. In fact, for every hog 

marketed in 2010, approximately $56 was due to export revenue. 

The U.S. is now the low-cost producer of the safest, most nutritious pork in the world, which has established us as the numberone global exporter. Last year, nearly 20 percent of the pork produced in the United States was exported, compared with only 6 

percent in 2000. In 2010, the United States exported more than 1.9 

million metric tons of pork, valued at $4.8 billion. 

There is no disputing that trade agreements have been a major 

factor in the rapid growth in U.S. pork exports over the last two 

decades. For example, since the year before NAFTA was implemented in 1994, U.S. pork exports to Mexico have increased 780 

percent, now valued at $986 million. Similar growth has been seen 

with Australia, CAFTA, and Peru trade partners. 

Increasing pork exports is important to many more Americans 

than just pork producers. The U.S. pork industry supports an estimated 550,000 domestic jobs; 110,000 of these result from U.S. 

pork exports. Just last year, U.S. pork exports grew by almost $500 

million. 

The USDA estimates that each $1 billion in additional agricultural exports generates approximately 8,400 new U.S. jobs. For the 

meat sector, however, USDA puts the job-creating number at more 

than 12,000. So the increase in pork exports last year created an 

additional 6,000 new jobs. 

According to Iowa State University economist Dermot Hayes, the 

Panama trade promotion agreement, when fully implemented, will 

increase U.S. live hog prices by 20 cents per animal and create approximately 213 full-time positions in the pork industry. We market over 100 million hogs annually in the United States. That 

means that this agreement will generate over 20 million additional 

dollars in the U.S. pork industry. 

I think it would be in the interest of the committee to also know 

that Dermot Hayes, Dr. Hayes, found that both the Colombia and 

Korean FTA, combined, would increase live hog prices by $11.15 

per animal and create over 10,000 direct pork-industry jobs. 

If we fail to implement the FTA with Panama, and Canada implements an FTA with Panama, Dr. Hayes says the U.S. will be 

out of the Panama market in 10 years. Likely, we will be out of 

the Korean market in 10 years and the Colombian market in 10 

years if the U.S. fails to implement these agreements because of 

FTAs that those nations have concluded with the EU and Canada 

respectively. 

The Panama trade promotion agreement will create important 

new opportunities for U.S. pork producers by providing immediate 

duty-free treatment of certain pork products while other pork products will receive immediate expanded market access through tariffrate quotas. In addition to favorable market access provisions, significant sanitary and technical issues have been resolved that ensure that U.S. pork exports will not be blocked by unnecessary sanitary barriers. 

Pork producers are joined by virtually all U.S. food and agriculture producers in supporting the Panama FTA. By a letter dated 

February 14th, 2011, which is included in our submitted statement, 


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50 agricultural trade associations expressed strong support for the 

Panama agreement. Plain and simple, the Panama FTA is good for 

pork producers, good for U.S. Agriculture, and good for the United 

States. 

At this time of very tight budgets, America’s pork producers are 

not asking for U.S. tax dollars. We are simply asking for the opportunity to compete. The National Pork Producers Council calls on 

the Obama administration to send up the implementing legislation 

soon, and urges Congress to approve the Panama trade promotion 

agreement and other pending FTAs before the end of the summer. 

Thank you. 

[The prepared statement of Mr. Wolf follows:] 


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Chairman BRADY. Thank you, sir. 

Mr. Sanfilippo. 

STATEMENT OF JASPER SANFILIPPO, JR., PRESIDENT AND 

CHIEF OPERATING OFFICER, JOHN B. SANFILIPPO & SON, INC. 

Mr. SANFILIPPO. Good afternoon, Chairman Brady, Ranking 

Member McDermott, Members of the Subcommittee. I am Jasper 

Sanfilippo, president and chief operating officer of John B. 

Sanfilippo & Son. And I am honored to testify before the Subcommittee on Trade regarding the benefits of the pending freetrade agreement with Panama. 


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My company strongly supports passage of the agreement, which 

we believe will allow us to reach new customers by removing barriers to trade and investment. 

In 1922, John B. Sanfilippo & Son began as a pecan-shelling 

company in Chicago, Illinois. Over the last 85 years, our company 

has diversified production to include a wide variety of nuts and 

other snack products, both through private label and brands like 

our Fisher Nuts and Orchard Valley Harvest. Headquartered in 

Elgin, Illinois, we employ over 1,500 people. With facilities located 

in Gustine, California; Selma, Texas; Bainbridge, Georgia; and 

Garysburg, North Carolina, JBS is a public company with annual 

sales of over $600 million. 

Our company plays an important role between growers and consumers as we handle nuts throughout the supply chain, from shelling, blanching, roasting, canning, packaging, and distribution. We 

purchase raw walnuts, almonds, pecans, and peanuts from over a 

thousand growers from suppliers in California and throughout the 

lower southern United States, including Florida, Texas, and Kansas. 

Our company began as a small storefront operation, but we are 

now selling to over 50 countries worldwide. Like many American 

companies, JBS sees exports as one of our greatest opportunities 

for growth. Today, exports represent about 10 percent of our total 

sales. Our long-term corporate objective is to diversify globally and 

increase our sales to about 25 percent. We believe our brand, innovation, and our reputation for quality will help us accomplish this 

goal. 

In addition, we have also implemented a strategy to grow with 

our domestic partners as they enter new international markets. For 

example, Walmart, one of our largest retail customers, has a retail 

presence in 14 international markets, offering a global platform for 

market penetration that otherwise does not exist in our industry. 

Twelve years ago, we began selling to Walmart in Mexico, and 

today we are exporting to its stores in Central America, Japan, 

China, and Brazil. In addition to Walmart, we are now selling to 

Comercial Mexicana and Chedraui, local Mexican retail chains that 

may not have considered our products if they had not seen them 

on a Walmart shelf. 

International growth has been positive, increasing demand for 

our 1,000 growers and suppliers. Over the last 15 years, we have 

increased our staff by 700 people and we have modernized four facilities. 

Despite this success, we continue to face barriers to exports. Tariff and non-tariff barriers often affect our ability to compete globally. Tariffs range from 15 percent in Panama to 14 percent in 

Brazil and to over 50 percent for some products in China. These 

duties translate to a significant price premium on the retail shelf, 

often making our products considered a luxury. 

We are pleased, therefore, that the United States has negotiated 

a comprehensive free-trade agreement with Panama. Panama is 

currently one of our best markets in Central America due largely 

to the purchasing power of the customers in the country, the lack 

of currency fluctuations, and the relatively strong recognition of our 


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Fisher brand. We have been in the market for 11 years and currently export between $500,000 to $750,000 annually. 

Under the agreement, duties on our products will be eliminated 

within 10 years of implementation. Several categories, such as almonds and walnuts, will receive immediate duty-free treatment. 

This will allow us to price our products competitively in the market 

and enable us to reach a new class of customers at that lower price. 

Our experience in the Dominican Republic proves that; since the 

CAFTA–DR went into effect, our sales have grown around 20 percent annually. 

The Panama agreement will also allow us to compete more effectively with our Asian competitors, who often enjoy a price advantage due to currency fluctuations or the cost of labor or other inputs. Likewise, we face increased competition from the EU as it negotiates its own agreements with Panama and Colombia. 

The Panama agreement will also eliminate restrictions on foreign 

investment on multi-brand retailers. Currently, foreign retailers 

are prohibited from investing in the grocery retail sector. We are 

hopeful that removing this restriction will allow some of our business partners to open stores in Panama so that we can grow and 

follow them with their business. 

Thank you for the opportunity to present our views before this 

committee. We strongly believe that free-trade agreements will 

help our company to compete in global markets. We hope the committee will have the opportunity to consider and pass this agreement this summer. 

[The prepared statement of Mr. Sanfilippo follows:] 


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Chairman BRADY. Thank you, sir. 

Mr. Shapiro. 

STATEMENT OF HAL S. SHAPIRO, PARTNER, AKIN GUMP 

STRAUSS HAUER & FELD, LLP 

Mr. SHAPIRO. Thank you, Mr. Chairman. 

Chairman Brady, Ranking Member McDermott, Members of the 

Committee, it is an honor to appear before you today. My name is 

Hal Shapiro, and I am a partner at the law firm of Akin Gump in 

Washington, D.C. I formerly served as associate general counsel in 

the Office of the U.S. Trade Representative and as senior advisor 

for international economic affairs at the National Economic Council. 

I think, but I am not sure, the reason I am here today is because 

I wrote a book on fast-track and U.S. trade agreements that skyrocketed into the top 4 million of the Amazon.com best-seller list. 

And, Mr. Chairman, for the record, my wife didn’t even make it 


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through the first chapter, so you can imagine how excited I am that 

someone would actually hear my views on this subject. 

Mr. Chairman, when we gather here today at the most promising 

moment in years to advance the U.S. international trade agenda, 

our economy is emerging from a deep and painful recession, restoring the confidence needed for the United States to lead marketopening initiatives. President Obama has mobilized his administration through the National Export Initiative in order to double U.S. 

exports by 2014. At the end of 2010, U.S. exports had grown by 17 

percent, and administration officials believe the country is on track 

to meet the President’s challenge. 

As this committee well knows, three pending bilateral free-trade 

agreements—those with Korea, Colombia, and the one we are here 

today to discuss, Panama—are central elements in the U.S. trade 

agenda. 

The Korea agreement would be the United States’ most commercially significant free-trade agreement since NAFTA. The ITC has 

estimated that the reduction of Korean tariffs and TRQs on goods 

would annually add $10 billion to $12 billion to U.S. GDP and 

roughly $10 billion to our exports to Korea. Under the agreement, 

95 percent of bilateral trade would become duty-free within 3 

years. Thus, swift action on that agreement would be one of the 

most effective ways to help our economy grow more rapidly. 

As Ambassador Sapiro testified earlier today, the administration 

is also continuing to work with the Governments of Colombia and 

Panama to resolve all outstanding issues. Ambassador Sapiro explained that U.S. and Panamanian negotiators met in February 

and agreed upon actions that, when taken by Panama, will ready 

the agreement for congressional consideration. 

Before turning to the specifics of the Panama agreement, allow 

me, as a former U.S. trade official who has written and taught on 

the subject, to say that I believe U.S. international trade agreements should serve three aims: They should enhance our national 

security, they should strengthen our economy, and they should promote our values. And these three aims are best achieved when our 

agreements have bipartisan input and support. In my view, when 

work on the Panama agreement is completed, it will satisfy all of 

these points. 

First, in terms of our national security, Panama is an important 

and dependable ally of the United States in a critical part of the 

world. The United States and Panama have shared a geopolitical 

and economic interest dating back to the 1800s and to the opening 

of the Panama Canal in 1914. Panama has proved to be a steadfast 

friend to the United States at a time when relations with some 

countries in Latin America have been uneven. The agreement 

would serve to make our ties to Panama stronger and more enduring. 

Second, in terms of economics, the United States has much to 

gain from the agreement. Panama has a rapidly growing economy 

and is one of the few Latin American countries with which the 

United States has a merchandise trade surplus, the largest in the 

region. When the Panama agreement enters into force, 88 percent 

of U.S. merchandise exports will enter Panama duty-free, with remaining tariffs phased out over 5 to 10 years. The ITC has found 


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that the agreement’s main effect would be to increase U.S. exports, 

while causing little growth in U.S. imports from Panama. 

Third, the negotiations appear to address elements that should 

allow the Panama agreement to garner bipartisan support and reflect a wide range of values Members on both sides of the aisle represent. For example, concerns have been raised here and in the 

past about the transparency of tax information and labor laws in 

Panama. 

On taxes, as we have discussed today, Panama and the United 

States have entered into a tax information exchange agreement. 

Panama has not yet ratified that agreement, but I hope it will do 

so very soon. And Ambassador Sapiro indicated that may occur. 

On labor and environment, the Panama agreement does not just 

seek to lock in existing standards, as some past U.S. agreements 

have done. Rather, it calls for enhanced standards, subject to 

strong enforcement mechanisms. Panama has worked hard to make 

progress in the labor area, and I trust it will continue to do that 

rapidly. 

Panama deserves credit for working diligently with the administration to address these issues. It is my hope that the remaining 

steps outlined by the administration are taken swiftly and the 

agreement will forge even closer bonds between the United States 

and this important strategic partner. 

Thank you. 

[The prepared statement of Mr. Shapiro follows:] 


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Chairman BRADY. Thank you very much. 

Great testimony all around. 

Mr. Shapiro, you outlined the importance of the relationship with 

Panama. They are working diligently with us and the White House 

to address labor concerns. The protections, the enhanced labor and 

environmental standards are subject to strong enforcement mechanisms. In fact, Panama—this agreement has the same enforceable 

labor and environmental standards as Peru, which passed Congress with very strong bipartisan support, and the Korea agreement and the Colombia agreement. So, thank you for your comments. 

Mr. Sanfilippo, Mr. Wolf, you made great points about the importance to small businesses, agriculture, farmers, food and processors 


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in this agreement and the cost of delay and the damage from competitive disadvantage. 

Mr. LaGrange, you pointed out the importance of the agreement 

not just to the Port of New Orleans but to many U.S. Ports. 

And, Mr. Oberhelman, thank you for outlining the benefits of all 

three agreements, both to Caterpillar and broadly to our economy. 

I want to give you a chance to make your final point, Mr. 

Oberhelman, about manufacturing and mining, but let me ask you 

this. You know, Panama is undergoing an infrastructure boom. 

Caterpillar isn’t selling copy paper that you reorder every quarter. 

You are selling major pieces of equipment, with, my guess is, service contracts and supply contracts that last for years and years and 

years. 

So, when you miss the opportunity to bid and win contracts on 

a bridge, on a canal, on a road, on any major project what is the 

damage? How long does it take you—when you miss that opportunity, how long does it take you to rebid and catch up? 

Mr. OBERHELMAN. Yeah, thank you, Mr. Chairman. It is a 

great point, because, in our case, we will sell a machine, which may 

live 10 years and actually generate about triple its initial value in 

parts and service volume, which would be exports from the U.S. 

over its lifetime in that 10-year period. 

We are there in Panama today. Every single day, we see a foreign competitor trying to compete for those trucks, those tractors, 

whatever it is we sell. If we miss it today, we may not get another 

round for 3 or 4 years. Obviously, the Canal is kind of a one-timeonly, but there is a subway system, there is lots of development 

going on in Panama, that if we miss this, we may not get another 

opportunity in Panama. I go back to Peoria or Decatur or Aurora, 

Illinois, where these plants are located, and I tell our hourly workers, ‘‘Sorry, we missed the order. We don’t make that tractor today 

to ship.’’ 

Final point: About 90 percent of our heavy volume machines 

today from Illinois are exported. So those machines—— 

Chairman BRADY. Run that by me again? 

Mr. OBERHELMAN. The machines that run down our assembly 

lines in Aurora, Decatur, and Peoria, Illinois, between 80 and 90 

percent right now are exported. And we put a flag on each side of 

those machines with the destination they are going, and it is something to be very proud of. 

But we talk to our people about that all the time. If we didn’t 

have that order and we lost it to a Chinese or Japanese competitor, 

we wouldn’t make that machine today. So it is important to us, important to our hourly workers, our 23,000 people in Illinois and 

elsewhere, 47,000 in the United States. 

Chairman BRADY. Right. Thank you. 

I would note, when I was in Panama City, from my hotel window, I stopped counting at 20 cranes in construction of various 

buildings, both residential, commercial, looked like civic municipal 

buildings as well. So it is a tremendous, dynamic market there. 

Mr. OBERHELMAN. Yeah. A lot of those cranes are built in 

Wisconsin. We don’t own that company; we know them. Same story 

would apply. Fairly massive pieces of equipment that generate lots 


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of parts and service for Wisconsin employees, in this case, for those 

companies. 

Thank you. 

Chairman BRADY. Is there anything you are not manufacturing 

in Wisconsin? It sounds like you have the bases covered. 

Mr. Schock, do you have a question? 

Mr. SCHOCK. Well, I think, for my hometown’s sake, Mr. 

Oberhelman, you did a fine job of clearly articulating why these 

agreements are so important. I was going to ask you about how significant Latin America is to Caterpillar, but I jotted down some of 

your statistics. A 58 percent increase in Latin America alone last 

year—that is huge. And 6 of your 10 largest markets are in Latin 

America. 

I guess, to follow up on your earlier remarks that Chairman 

Brady asked about, missing the sale, or the potential for that, what 

are your concerns about the penetration of some of your competitors? For example, China, I know, is pretty aggressive. But I know, 

when I talk to the ag community, it is Canada’s trade agreement 

right now with Colombia, for example, that is going to risk our 

wheat market. But I know inaction means that you are put at a 

competitive disadvantage with some of your world competitors. 

Maybe you could speak a little bit about the competitive threats 

in Latin America with some of your competitors. 

Mr. OBERHELMAN. Thank you, Congressman Schock, and I 

will. 

The interesting thing is that, where we have free-trade agreements, we can be the favored price leader among those other competitors that don’t have free-trade agreements. It works the other 

way, as well. 

For our mining equipment going to Panama and Columbia, 

which are huge markets for us, all Illinois-built machines for the 

most part, if we don’t have the free-trade agreement and Japan 

would, which houses our number-one competitor, the famous 

Komatsu, we would be price disadvantaged from 5 to 15 percent on 

every product going in if they sign an agreement with Japan, which 

we know they are negotiating. And I am very worried about that, 

because, once we are out of those mines in Colombia and Panama, 

it is hard to get back in, because we like our customers to standardize on our engines, our parts supply, our technicians and mechanics. 

So there is only one way to go in Latin America for us, and that 

is down, if we don’t do free-trade agreements like we have in Peru 

and Chile and elsewhere that have served us so well over time. We 

can be the leader and continue to be for a long time in the future, 

especially that generates jobs for our hourly workers in Illinois. 

Mr. SCHOCK. Uh-huh. Very well said. 

The only other question I would have—I know how much work 

you do educating the employees of Caterpillar, which I think is so 

important as we muster the political support out here in Washington, D.C., in favor of trade agreements. 

I am curious, to the other panelists here, if you might speak to, 

whether it is Mr. LaGrange or whether it is the pork or ag witness, 

what do you do to help educate your employees or your members 

on the significance of these trade agreements to their livelihoods? 


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Mr. LAGRANGE. Well, we work in concert with a number of 

other entities: our board of trade, the World Trade Center in New 

Orleans. We also work with a number of entities here at the Washington level through the American Association of Port Authorities, 

which consists of 164 ports in the United States. It is through 

those organizations we have educational committees that meet on 

a routine basis throughout the United States. And we use that as 

a vehicle or as a mechanism to indicate what the benefits are from 

a free-trade agreement in terms of what that equates to in total 

tonnage, in total dollar amounts, and total volume coming in and 

out of your port. 

We know for a fact that the increase, as I alluded to four studies 

earlier, the increase in cargo incrementally from the Panama Canal 

alone—there was another subpart to that. With the passage of Colombia and Panama free-trade agreements, that subpart also included an incremental amount of 38 percent in the way of exports 

being increased from the east coast and gulf coast ports. 

So it is a good number and it is one that we seize every opportunity we possibly can to get out and mix with the guy on the 

street, the businesspeople, through all the other organizations, 

from the Chamber of Commerce, World Trade Center, Board of 

Trade, and then again across the country through our other sister 

ports. 

Mr. SCHOCK. That is great. 

Mr. WOLF. If I can, in the pork industry, we have always tried 

to explain the value of our export markets by the increased value 

to each producer. And it was a little bit hard to get everybody to 

understand it, until 2008 when H1N1 hit and our export markets 

were stopped and our prices dropped about 30 to 40 percent. We 

lost a fair number of producers due to that economic falldown. So 

it put things in reality of how important these export markets are, 

so we keep pushing that and use that as our example. 

Mr. SANFILIPPO. With us, when we talk to our staff, we really 

drive home the fact that we need to remain competitive, both domestically and globally. And when we look at our operations and 

trying to reduce expenses, you know, we will communicate to them 

the fact that, through our exports, you know, we do have things 

like tariffs that represent a much higher percent of what we could 

ever drive out of our manufacturing operations. So they are educated on that. 

But they recognize, like we do, that, you know, these things are 

important and they need to be handled in a different level other 

than the facility. But, clearly, the more volume that we run 

through our facilities, the better off they are and the more people 

we hire. 

Mr. SCHOCK. Okay. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Schock. 

We just received word that the Colombian Constitutional Court 

has given its approval to the Colombia-Canada trade agreement. 

That ruling marked the last procedural step to clear the way for 

implementation of that agreement on July 1st. This development 

highlights the urgency that we face. 


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Colombia—this agreement is a good, solid agreement that levels 

the playing field for our workers and exporters and respects the 

rights of workers and cements relationships with a loyal ally and 

drives home, I think, the point the witnesses made today that the 

pending trade agreement with Panama offers significant benefits, 

as well as the pending South Korea and Colombia agreements. 

Continued delay will only hurt American interests in the region 

and the ability of American workers, businesses, and farmers to 

compete in these markets as our competitors move ahead. 

I hope the Administration will lay out a clear action plan and 

timetable for considering the Panama agreement. I strongly believe 

we should consider all three by July 1st. I hope we can all work 

together to make that happen. 

I want to thank the witnesses today, the Members for their 

thoughtful questions. 

I would note that Members of Congress may submit questions to 

you for the record. I would encourage you to respond promptly. 

Chairman BRADY. Again, thank you so much for your patience 

today and insight that you provided in this agreement. 

But, for now, the committee is adjourned. 

[Whereupon, at 6:02 p.m., the subcommittee was adjourned.] 

[Submissions for the Record follow:] 


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