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71–032 2012

S. HRG. 112–192 

MANUFACTURING IN THE USA: HOW U.S. TRADE 

POLICY OFFSHORES JOBS 

HEARING 

BEFORE THE

JOINT ECONOMIC COMMITTEE 

CONGRESS OF THE UNITED STATES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

SEPTEMBER 21, 2011 

Printed for the use of the Joint Economic Committee 

( 

(II) 

JOINT ECONOMIC COMMITTEE 

[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress] 

SENATE 

ROBERT P. CASEY, JR., Pennsylvania, 

Chairman 

JEFF BINGAMAN, New Mexico 

AMY KLOBUCHAR, Minnesota 

JIM WEBB, Virginia 

MARK R. WARNER, Virginia 

BERNARD SANDERS, Vermont 

JIM DEMINT, South Carolina 

DANIEL COATS, Indiana 

MIKE LEE, Utah 

PAT TOOMEY, Pennsylvania 

HOUSE OF REPRESENTATIVES 

KEVIN BRADY, Texas, Vice Chairman 

MICHAEL C. BURGESS, M.D., Texas 

JOHN CAMPBELL, California 

SEAN P. DUFFY, Wisconsin 

JUSTIN AMASH, Michigan 

MICK MULVANEY, South Carolina 

MAURICE D. HINCHEY, New York 

CAROLYN B. MALONEY, New York 

LORETTA SANCHEZ, California 

ELIJAH E. CUMMINGS, Maryland 

WILLIAM E. HANSEN, Executive Director 

ROBERT P. O’QUINN, Republican Staff Director 

(III) 

C O N T E N T S 

OPENING STATEMENTS OF MEMBERS

Hon. Robert P. Casey, Jr., Chairman, a U.S. Senator from Pennsylvania ......... 1 

Hon. Kevin Brady, Vice Chairman, a U.S. Representative from Texas .............. 3 

WITNESSES

Dr. Arvind Subramanian, Senior Fellow, Personal Institute for International 

Economics and the Center for Global Development, Washington, DC ............ 6 

Dr. Philip Levy, Resident Scholar, American Enterprise Institute, Washington, DC ............................................................................................................. 8 

Mr. Greg Slater, Director, Global Trade and Competition Policy, Intel Corporation, Washington, DC ................................................................................... 10 

Mr. Rick Bloomingdale, President, Pennsylvania AFL-CIO, Harrisburg, PA .... 12 

SUBMISSIONS FOR THE RECORD

Prepared statement of Representative Kevin Brady ............................................ 28 

Prepared statement of Dr. Arvind Subramanian .................................................. 30 

Prepared statement of Dr. Philip Levy .................................................................. 43 

Prepared statement of Mr. Greg Slater ................................................................. 50 

Prepared statement of Mr. Rick Bloomingdale ..................................................... 62 

Prepared statement of the American Apparel and Footwear Association submitted by Representative Kevin Brady .............................................................. 70 

Prepared statement of Mr. Daniel J. Ikenson ....................................................... 73 

(1) 

MANUFACTURING IN THE USA: HOW U.S. 

TRADE POLICY OFFSHORES JOBS 

WEDNESDAY, SEPTEMBER 21, 2011 

CONGRESS OF THE UNITED STATES, 

JOINT ECONOMIC COMMITTEE, 

Washington, DC. 

The committee met, pursuant to call, at 2:03 p.m. in Room 216 

of the Hart Senate Office Building, the Honorable Robert P. Casey, 

Jr., Chairman, presiding. 

Senators present: Casey and Klobuchar. 

Representatives present: Brady. 

Staff present: Gail Cohen, Will Hansen, Colleen Healy, Jesse 

Hervitz, Dan Neumann, Christina Forsberg, and Robert O’Quinn. 

OPENING STATEMENT OF HON. ROBERT P. CASEY, JR., 

CHAIRMAN, A U.S. SENATOR FROM PENNSYLVANIA 

Chairman Casey. The hearing will come to order. 

We want to thank our witnesses for being here, and I want to 

thank Vice Chairman Brady for being with us again today. We appreciate the time that folks spent arranging the hearing, as well 

as the time the witnesses spent traveling here. 

I will start with an opening statement, and then we will—and 

after Vice Chairman Brady’s statement I will introduce our witnesses, and then we will get into the testimony. 

Today’s hearing is the third in a series that the Joint Economic 

Committee is holding to determine the best strategies for revitalizing manufacturing in the United States. 

Previously we have focused on the need for a comprehensive national manufacturing strategy and examined policies, including 

making the Research and Development Tax Credit permanent. And 

by the way, that has bipartisan support. 

We have also looked at skill building and how to prepare our 

workers to compete and win in a global economy. And with today’s 

hearing we will examine the impact our trade policies have on 

manufacturing and how we can reform those policies to support our 

manufacturing sector. 

Manufacturing is a vital part and an essential part of our Nation’s economic health. Though the share of the workforce employed 

in manufacturing has been cut in half since the 1970s, manufacturing provides high-paying jobs, accounts for more than two-thirds 

of research and development carried out by United States industries, and makes up more than 10 percent of the Gross Domestic 

Product. 

2 

Growth in the manufacturing sector has played a key role in the 

recent economic recovery. In the first eight months of this year, the 

manufacturing sector has added 192,000 jobs, about 17 percent of 

the private sector job gains during that period. 

And manufacturing’s employment impact extends beyond those 

workers employed directly in manufacturing itself. Research has 

shown that employment multipliers are higher in manufacturing 

than in other sectors of our economy. 

Trade policies can have a major impact on the health and vitality 

of the manufacturing sector. Unfortunately, for far too long our 

trade policies have failed our workers and our businesses, stacking 

the deck against U.S. manufacturers. 

There are three key areas where U.S. trade policy needs to be 

changed, in my judgment: 

Number one, we cannot continue to enter into so-called ‘‘free 

trade agreements’’ which leave our companies and our workers exposed to unfair trading practices. 

Number two, it is long past time to crack down on currency manipulation by our trading partners, including, but especially, 

China. 

Three, we must do a better job supporting individuals and communities adversely impacted by international trade. NAFTA and 

other NAFTA-style Free Trade Agreements have cost the United 

States jobs, and certain communities have borne a larger share of 

those job losses. 

I have seen it in Pennsylvania. When NAFTA took effect in January 1994, more than 875,000 Pennsylvanians were employed in 

manufacturing. Today, the same manufacturing sector in Pennsylvania employs some 575,000 workers—a loss of more than, more 

than 300,000 jobs. 

On top of NAFTA-style Trade Agreements, unfair trade practices 

by other countries have also led to job loss in the United States. 

The U.S.’s unwillingness to crack down on currency manipulation 

by China, South Korea, and others has made it more difficult for 

U.S. companies to export their products, costing our country lots 

and lots of jobs. 

A new report by the Economic Policy Institute, so called EPI, 

finds that the U.S. trade deficit with China has cost our country 

2.8 million jobs over the past decade, including 1.9 million manufacturing jobs. The Pennsylvania numbers translate into almost 

107,000 jobs lost from 2001 to 2010 as a result of the trade deficit 

with China. 

This same report, the EPI report, cites China’s undervaluation of 

the yuan as a major cause of the U.S. trade deficit with China, 

which grew from $83 billion in 2001 to $273 billion in 2010. Currency manipulation must be dealt with, and it should be dealt with 

this year. 

We know that, when a job is lost because of global trade, that 

job is usually gone forever. That is why support specifically tailored 

to trade-impacted workers is so important. Workers who lose their 

jobs as a result of trade often have to find new work in a new industry or occupation. Making matters worse, the skills of trade-affected workers often do not easily transfer to new positions. 

3 

A report released this week by this Committee showed that 

trade-impacted workers are out of work longer and experience larger wage loss than other workers. To find new employment, education, and job training programs are critical for these workers. 

In 2009, Congress made improvements to the Trade Adjustment 

Assistance Program. These changes expanded access to workers in 

the service sector and to workers whose jobs were offshored to 

other countries such as China and India, which do not have trade 

agreements with the United States. 

In a little over two years—May of 2009 to June of 2011—the expansions to TAA enabled an additional 185,000 displaced workers 

to benefit from the program. The expansions to Trade Adjustment 

Assistance expired in February of 2011. The amendment we’re considering now in the Senate, the so-called Casey-Brown-Baucus 

Amendment, which we introduced yesterday, retroactively extends 

the Trade Adjustment Assistance Program through 2013, continuing most of the improvements that were made in 2009. I am 

confident that we will be able to pass a TAA extension if not this 

week, very soon. 

To regain our balance on trade, we also need a new approach. 

Part of that requires looking at trade agreements through a different lens, a lens that is focused on job creation, economic fairness, and manufacturing strength. 

Three questions should guide us: 

Will the Agreement create a substantial number of jobs? 

Second, will the Agreement create a level playing field for American businesses and workers? 

Third, does the Agreement provide new opportunities for American manufacturers to export? 

We are not going to rebalance our trade policies overnight, but 

we need to be crafting smarter policies. We also need to be vigilant 

in enforcing these same policies. We are fortunate today to have a 

great panel of experts who have both deep knowledge of trade policy and a commitment to helping us better understand it. 

I want to thank them for their presence here and their testimony, and I would turn the microphone over to our Vice Chairman, 

Congressman Brady. 

OPENING STATEMENT OF HON. KEVIN BRADY, VICE 

CHAIRMAN, A U.S. REPRESENTATIVE FROM TEXAS 

Vice Chairman Brady. Chairman Casey, thank you for convening this important hearing. 

It is long past time to debunk the myth that the economic freedom to trade leads to offshoring of U.S. jobs. The facts are just the 

opposite. 

It is the absence of an aggressive, proactive trade agenda that 

leaves America falling behind its global competitors and places our 

manufacturers at a severe disadvantage when competing for the 95 

percent of the world’s consumers that live outside our borders. 

For American manufacturing, trade means jobs. America is the 

third largest exporting nation in the world, and our share of global 

manufacturing has essentially held steady through the past 30 

years. The concern is that our share of the world’s market in manVerDate Nov 24 2008 11:54 Jan 18, 2012 Jkt 071032 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCS\71032 DPROCT
4 

ufacturing has declined significantly while the Chinese share has 

exploded upward. 

If you examine what America sells and ships overseas, it is manufacturing that accounts for the bulk of U.S. sales abroad. Much 

of these sales are in advanced technology and capital goods such 

as computers, electronics, scientific instruments, and aerospace 

equipment—along with chemicals, oil, and coal, machinery and 

equipment critical to the production of finished products. These are 

high-value items, creating high-paying jobs, and requiring highvalue research and development. 

Trade is important to American workers. Not only is one of every 

five American manufacturing jobs tied to sales overseas, workers in 

the most trade competitive industries earn an average compensation package of $86,000 a year—which is nearly 50 percent higher 

than they would earn in the least trade-competitive industries according to a report by the National Association of Manufacturing. 

Thanks to technology, communications and the internet, more 

and more small- and midsized manufacturing firms in America are 

competing successfully in the global market. 

Make no mistake, the world has changed. It is no longer enough 

to simply ‘‘Buy American.’’ To grow jobs and remain the world’s 

largest economy we must ‘‘Sell American’’ as well. Yet, when American manufacturers compete around the world, they often find 

themselves at a disadvantage: victims of an isolationist trade agenda in Congress and saddled with significantly higher product costs 

due to excessive regulation and an increasingly outdated tax code. 

The bottom line is that America is falling behind. While for the 

past four years Congress has removed America from the global 

trading field, our competitors in Europe, China, and the Western 

Hemisphere have not. They have taken smart advantage of America’s benching itself to the sidelines and they established trade 

agreements that lock in growing overseas markets and lock out 

American manufacturers. 

Today there are 238 bilateral or regional free trade agreements 

in force around the world. The United States is a part to a mere 

11. 

Today our competitors are negotiating more than 100 marketopening trade agreements. The United States is currently participating in only one: the Trans-Pacific Partnership. 

If we want our manufacturers to secure new customers and create new jobs here at home, we must get America back on the trade 

field, fighting for a level playing field so our manufacturers can 

compete and win. 

This cannot happen as long as the White House continues to 

delay submitting the three pending agreements with South Korea, 

Colombia, and Panama. These countries already sell many of their 

products into America with low or no border taxes. It is time to 

turn this one-way trade into two-way trade and secure an estimated $13 billion of new sales for American manufacturers, for 

American agriculture, and American service companies. 

Every day we delay hurts our manufacturers. Europe, China, and 

Canada have moved aggressively to enter into their trade agreements with these three countries in order to land customers and 

5 

contracts in these growing economies. They take market share 

away from American companies as we speak. 

There is bipartisan support for these sales agreements today. We 

can pass these agreements today. As the President is fond of saying 

these days, send Congress these agreements so we can, quote, 

‘‘pass these bills now.’’ 

As in the title of the hearing today, trade is not the cause of 

offshoring jobs; it is the antidote. Landing new customers overseas, 

making our tax code more competitive, reducing the price of disadvantage from excessive regulation and mandates will strengthen 

the hand of America’s local manufacturers and create good-paying 

jobs here at home. 

Final point: It is time to stop blaming trade agreements for the 

loss of manufacturing jobs in America. Technological breakthroughs over the past two decades have made American companies more productive. Like many countries, we are manufacturing 

more with fewer workers. The needed time to locate manufacturing 

facilities overseas is not a function of trade agreements but the 

need to be closer to their customers to successfully compete against 

Europe, against China, and the rest of the world for these sales. 

An estimated 95 percent of the products produced in U.S. manufacturing facilities overseas are for customers overseas. Absent a 

trade agreement with the host country, this at times may be the 

only competitive choice remaining for our companies. 

So why aren’t we making a concerted bipartisan effort to restore 

America’s business climate so that American companies are no 

longer economically punished for locating their manufacturing facilities where the innovation is already occurring—here. 

And while it does not fit on a bumper sticker, the fact is that 

America is running a manufacturing trade surplus with our trade 

agreement partners. Yes, a surplus. Yes, in manufacturing. Even 

with our NAFTA partners. That is because, when you level the 

playing field and you play by the same rules, American manufacturing and its workers win. 

The fact is, our manufacturing trade deficit is wholly with countries with which we do not have a trade agreement. This is because 

our competitors have signed trade agreements in these markets 

and we have left our companies to face tariffs five times higher 

than these countries face when selling into the United States. 

It is time to stop blaming everyone else. It is time to start leading again on trade. 

With that, Mr. Chairman, I look forward to the testimony today. 

[The prepared statement of Representative Kevin Brady appears 

in the Submissions for the Record on page 28.] 

Chairman Casey. Thank you, Vice Chairman Brady. 

What I will do now is provide very brief biographical sketches of 

each of the witnesses, and then we will go to our first witness. 

I would first like to introduce Dr. Arvind Subramanian, who is 

here as a Senior Fellow jointly at the Peterson Institute for International Economics and the Center for Global Development. His expertise is in growth, trade, development, the World Trade Organization, and intellectual property issues. 

His forthcoming book—I shouldn’t say ‘‘forthcoming’’—I have just 

seen it—his book, which is apparently just off the presses today, is 

6 

entitled ‘‘Eclipse: Living In The Shadow Of China’s Economic 

Dominance.’’ 

Previously he was Assistant Director in the Research Department of the International Monetary Fund. 

Doctor, welcome. 

Next we have Dr. Philip Levy, who is currently a Resident Scholar at the American Enterprise Institute for Public Policy. His work 

in AEI’s Program in International Economics ranges from free 

trade agreements and trade with China to antidumping policy. 

Prior to joining AEI, he worked on International Economics 

issues as a member of the Secretary of State’s Policy Planning 

staff. He also serves as an economist for trade on the President’s 

Council of Economic Advisers, and taught economics at Yale University. 

Doctor, thank you as well for being here. 

Third, Mr. Greg Slater is the Director of Global Trade and Competition Policy for the Intel Corporation. In this capacity he is responsible for trade and competitiveness issues affecting the company’s business interests worldwide. In his role as a senior counsel 

at Intel, he also provides legal and policy advice on emerging laws 

and regulations that significantly affect the company’s products 

and manufacturing sites. 

In addition, he is responsible for all government agreements related to Intel’s factory investments worldwide. Prior to joining Intel 

in 1997, he was in private practice here in Washington, DC. 

And finally, Rick Bloomingdale—I call him ‘‘Rick’’ because I have 

known him a long time. I should say ‘‘Richard’’—became the fourth 

President of the Pennsylvania AFL-CIO on June 1st, 2010. Prior to 

that he served as Secretary/Treasurer of the Pennsylvania AFLCIO. He has held multiple positions prior to working with the 

Pennsylvania AFL-CIO, such as Project Staff Representative of 

Local 449 at AFSME International, and State Political Legislative 

Director for AFSME Council 13. He is a member of the Board of 

Directors of Drug-Free Pennsylvania Incorporated and Treasurer of 

the Keystone Research Center. He also sits on the Labor Advisory 

Board of the Union Standard Trust Mutual Fund. 

Rick, great to be with you. I should say, as a matter of full disclosure, I have known him a long time and he is a friend of mine. So 

I just want everyone to know that. 

So we will start with our first witness, Dr. Subramanian. Thank 

you. And as I mentioned in the anteroom, we are trying to keep 

everyone as close to five minutes as we can. For the record, each 

of your statements in full will be made part of the record. 

Doctor. 

STATEMENT OF DR. ARVIND SUBRAMANIAN, SENIOR FELLOW, 

PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS 

AND THE CENTER FOR GLOBAL DEVELOPMENT, WASHINGTON, DC 

Dr. Subramanian. Thank you very much, Chairman Casey, 

Vice Chairman Brady, for inviting me to this important panel, 

which I think comes at a critical moment for the United States and 

the World. 

7 

I want to make a few key points, focusing on how the U.S. should 

engage with the international trading system, and China in particular. 

The first point: Creating and maintaining an open trading system has been good for the U.S., good for the world, and good for 

China, and one of the major achievements of American global leadership. 

Today the U.S. needs the system more than ever before. Why? 

As Vice Chairman Brady said, after the crisis it has become clear 

that U.S. prosperity depends upon transitioning from a growth 

model that is less reliant on consumption and more on investment 

and export, as outlined in President Obama’s Export Initiative. 

Sadly, at the time when the U.S. needs this most, it is also the 

time when public support for open trade is diminishing sharply— 

and especially among those traditionally in favor of free trade. 

To be candid, Distinguished Members, current U.S. trade policy 

vision and strategy, if indeed there is one, is either unclear or ineffective, or both. The United States needs a new strategic vision 

which will have two planks: a domestic plank and an international 

plank. 

International competitiveness begins at home. For the medium 

run, this means strengthening American technological capability, 

improving the education system, and creating a regulatory climate 

that fosters entrepreneurship and innovation. 

The other domestic plank relates to the short run. Increased 

global integration can impose distributional costs domestically, especially on certain relatively low-skilled workers and communities. 

Protecting them is desirable, but it is also vital to shore up the 

fraying support for the important objective of keeping global markets open. 

This requires an effective and strengthened social safety net to 

help those affected by trade and other dislocating forces so that 

they do not suffer overwhelmingly and so that they can be retooled 

and retrained to remain economically engaged and active. This 

safety net would be a worthwhile, even necessary, investment. 

Then, the international plank. The U.S. must also engage internationally to maintain the current rules-based multilateral system 

not just to promote exports in manufacturing, which is very important as Chairman Casey said, but also to foster U.S. competitive 

advantage in tradeable services. 

Now China will be a critical part of this engagement, not least 

because its policies—notably on the exchange rate, but also government procurement services, access to rare earths—will be critical 

for the United States. For example, my colleague Bill Kline estimates that China’s exchange rate is undervalued by about 15 percent, and that, in current conditions of slack resources in the U.S., 

eliminating the undervaluation would add about 500,000 jobs to 

the U.S. economy. 

But one thing I really want to emphasize here—and this flows 

from my book, which you so kindly introduced, Chairman Casey— 

is that China has just become too economically dominant for the 

United States to engage on its own. It is a sobering reality, but one 

that needs to be accepted. 

8 

Fortunately, the desire and concern to ensure that China will remain a force for good is shared amongst other larger trading countries. For example, all these countries have similar concerns on the 

exchange rate. 

This provides an opportunity for the U.S. to embark on a new 

strategy which I would call ‘‘muscular multilateralism’’ which 

would bring together the U.S. and trading partners to engage with 

China on trade issues. 

One concrete way to realize this muscular multilateralism is to 

move beyond the Doha Round and start a new round of trade negotiations which I call ‘‘the China Round’’ because I must emphasize 

that the Doha Round as we know it is dead and beyond rehabilitation. We need a new effort that focuses on the key issues: exchange 

rates, government procurement, services, technology, policy, and 

access to key resources, which are very critical for China’s trading 

relations with the U.S. and other industrial countries. 

Achieving this will not be easy. It will not be quick. But it must 

be tried. And I believe that in the medium term China too will 

have an interest in investing in the open system. 

As a corollary, I think we must be very—the U.S. must be very 

careful about engaging in bilateral regional agreements. In short, 

neither the Doha Round nor the U.S. acting on its own has worked. 

It is time for a new vision and strategy, time for what I call a muscular multilateralism. 

Thank you very much. 

[The prepared statement of Dr. Arvind Subramanian appears in 

the Submissions for the Record on page 30.] 

Chairman Casey. I’ll tell you, you are only 11 seconds over. 

That is pretty good. 

Dr. Levy. 

STATEMENT OF DR. PHILIP LEVY, RESIDENT SCHOLAR, 

AMERICAN ENTERPRISE INSTITUTE, WASHINGTON, DC 

Dr. Levy. Chairman Casey, Vice Chairman Brady, thank you 

very much for the opportunity to testify today on the importance 

of international trade to American wellbeing. 

The United States has a proud bipartisan tradition of leading the 

world in economic integration. The country has benefitted enormously from the open rules-based trading system it helped create. 

In difficult economic times, the remaining shortcomings of the 

system can become particular salient. There are countries who do 

not abide by the letter or spirit of global trade rules. There are important areas of commerce that remain uncovered by international 

agreements where we have yet to set rules to govern fair play. And 

many countries retain significant barriers against U.S. goods and 

services to their detriment and ours. 

This just demonstrates that work remains to be done. U.S. leadership is more important than ever. A well-functioning, open trading system is critical to America’s future prosperity. 

The United States is uniquely positioned to build and sustain 

such a system. Revising U.S. leadership in trade would not only lay 

the foundations for long-term U.S. economic wellbeing, it would 

also send a positive short-term signal to U.S. employers about an 

9 

improved business climate and the prospect for new economic opportunities. 

These are the conditions in which investors in the U.S. economy—both foreign and domestic—will create new jobs. 

Why might we foresee a bright future for the United States in 

trade? While forecasts of economic variables can sometimes be 

sketchy, there are other trends in the world that are much more 

predictable. And I will rely on two. 

The first is demographic. While the U.S. population is aging, it 

is doing so much more slowly than populations in the major surplus countries of the world economy—Germany, Japan, and China. 

As a general rule, an aged population will consume more and 

produce less. As much as China may currently appear an 

unstoppable juggernaut, the size of its labor force is set to peak 

and then begin to decline in the near future. This is an instance 

in which extrapolating from recent experience can be highly misleading. 

The second long-term tendency related to the first is that those 

who have made loans will ultimately wish to be repaid. The United 

States has run a Current Account deficit for decades. The value of 

goods and services that we have imported exceeded the value we 

sent back in exchange. The difference can be thought of as IOUs 

issued abroad. 

These IOUs ultimately are claims on future production of U.S. 

goods and services. When aging populations around the world cash 

in their IOUs, they will be providing a new net demand for U.S. 

goods and services. In such a world, the United States will rely 

heavily on the rules and sureties of a healthy global trading system. 

The prospect of the United States as a surplus country is hardly 

the only reason to support an open trading system. There is a natural tendency to equate exporting with economic success, but this 

sort of mercantilism was discredited long ago. 

In the recent financial crisis, we saw the U.S. Current Account 

deficit decline at the same time that unemployment painfully rose. 

The simple arithmetic whereby exports are proportional to jobs 

gained and imports proportional to jobs lost is both theoretically 

unsound and empirically unsupported. 

Yet international trade remains suspect in the United States, 

frequently seen as an affliction more than an opportunity. In my 

written testimony I discuss a number of popular misconceptions 

about trade, including the different role of trade when there is 

globally integrated production, and the misleading nature of bilateral trade imbalances. 

In the interests of time, I would like to focus here on a third central misperception: the idea that there is a fixed number of manufacturing jobs in the world. If a manufacturing job is lost in the 

United States, it must be found somewhere abroad, the reasoning 

goes; hence, the ‘‘offshoring’’ of U.S. manufacturing jobs. 

Yet, while U.S. manufacturing employment was falling in relative and absolute terms in recent decades, manufacturing output 

was rising dramatically. The difference in the employment and output trends is due to a major increase in manufacturing productivity, as Vice Chairman Brady referenced. 

10 

As production technology has advanced, many countries have 

seen manufacturing shift to less labor-intensive techniques. For the 

U.S. manufacturing jobs that have been lost to technological 

change, no amount of misdirected railing against foreign trade will 

bring them back. 

So far I have argued that trade presents the United States with 

a significant economic opportunity and that many of the common 

popular objections to open trade are flawed. How then can the 

United States take advantage of this opportunity? 

The country must reclaim its role as a leader in global trade liberalization. It can do so through multilateral bodies such as the 

World Trade Organization that Arvind referenced, or through regional groupings such as the TransPacific Partnership. 

To have credibility in any of these fora, however, a prerequisite 

is the passage of the pending Free Trade Agreements with South 

Korea, Colombia, and Panama. Those agreements will benefit the 

U.S. economy directly by lowering barriers to U.S. exporters and 

stimulating economic activity. Even more important, however, will 

be the reassurance to countries around the world that the United 

States is a credible economic partner. 

There is much more to a successful U.S. trade policy than passing the pending FTAs, but it is an indispensable first step. Then, 

serious work must be done to restore trade negotiating authority, 

or TPA, to the Executive Branch. 

Once these two steps are accomplished, the United States will 

then be equipped to reclaim its position of global leadership in economic matters. In that position, it can work to shape global commercial rules and standards in a favorable way and ensure market 

access for the country’s producers and employers. This will work to 

the benefit of all sectors of the U.S. economy, certainly including 

manufacturing. I thank the Committee for the opportunity to discuss these issues and look forward to responding to any questions 

you might have. 

[The prepared statement of Dr. Philip Levy appears in the Submissions for the Record on page 43.] 

Chairman Casey. Doctor, thank you very much. Mr. Slater. 

STATEMENT OF MR. GREG SLATER, DIRECTOR, GLOBAL 

TRADE AND COMPETITION POLICY, INTEL CORPORATION, 

WASHINGTON, DC 

Mr. Slater. Thank you, Chairman Casey, and Vice Chairman 

Brady, I appreciate the opportunity to appear before you and to 

discuss manufacturing and international trade issues. 

Intel is a leading manufacturer of computer communications and 

network products. We currently have 44,000 employees in the U.S. 

We generated over $40 billion in revenue last year from sales to 

customers in more than 120 countries. 

Even during the strained economic climate, Intel has continued 

to invest in the U.S. to stimulate economic and job growth. Since 

2009, the company has announced plans to build two new factories 

in Oregon and Arizona, and upgrade manufacturing facilities in 

those two states, and in New Mexico, which will require $18 to $20 

billion in investment, and create 15,000 construction jobs and thouVerDate Nov 24 2008 11:54 Jan 18, 2012 Jkt 071032 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\DOCS\71032 DPROCT
11 

sands of more permanent jobs, all of which are sustained by sales 

overseas. 

I want to briefly make four points today in support of the need 

for the U.S. Government to pursue an ambitious trade agenda, 

even as it explores ways to improve our manufacturing ecosystem 

at home. Each of these points is discussed in detail in my written 

submission. 

First, many industries are highly dependent on market access 

overseas to maintain and create jobs at home, including ours. 

While Intel manufactures three-quarters of its products here at 

home, we generate more than three-quarters of our revenue overseas. And this operating profile is similar to that of our industry 

colleagues. 

Our ability to export and sell to the 95 percent of customers overseas is critical to our earnings and has led to record earnings during these turbulent times, even as our economy has suffered. Robust FTAs are critical to market access and continued growth. 

Second, we need to implement the pending FTAs with Korea, Colombia, and Panama as soon as possible. These three FTAs will 

provide significant benefits to the U.S. economy that USTR, USITC 

and others have documented. But every day that they are not 

passed, we fall further behind. For example, South Korea is our 

seventh largest trading partner, yet the U.S. share of the Korean 

market has declined over the last several years. China, Japan, and 

Europe all enjoy greater market shares now, and our share will 

continue to decline unless the U.S.-Korea FTA is implemented, because Korea continues to negotiate more trade agreements and already has trade agreements with India, Chile, Singapore, and others, and is negotiating additional ones, putting American companies and workers at a severe competitive disadvantage. 

As a result of the EU-Korea FTA, EU exports to South Korea already have increased 44 percent from the time it was implemented 

on July 1st to July 20th as compared to exports during the same 

time period in 2010, while U.S. exports during the same period 

only increased 8.5 percent. 

Similarly, if you look at the U.S.-Colombia trade, the Colombia 

market being a $32 billion market, our share is expected to drop 

considerably now that the Canada-Colombia FTA is in effect. 

The U.S. share of Colombia’s total imports of wheat, corn, and 

soybeans, for example, has already fallen from 71 percent in 2008 

to 27 percent in 2010 because of the implementation of Colombia’s 

Trade Agreement with Merkerser. 

Third, we need to pursue and enter into other robust free trade 

agreements on an accelerated basis. Vice Chairman Brady already 

cited some statistics here. Let me just say that trade flow data 

shows how important these FTAs are to the U.S. economy. Trade 

with just the 17 countries with which the U.S. has an FTA accounted in effect for approximately $1.1 trillion, or nearly 34 percent of total U.S. trade. And yet, those 17 countries only represent 

7 percent of the world economy. 

U.S. exports have increased dramatically every time an FTA has 

been implemented. U.S. exports create and sustain U.S. jobs, and 

robust FTAs open up new markets to our exports and reduce the 

12 

cost of doing business overseas. We need more FTAs to create more 

U.S. jobs. 

Fourth, as has been mentioned already, USTR needs to improve 

these FTAs. It has done so, but it needs to further refine them to 

address a host of emerging domestic market preferences being used 

by governments to increase domestic R&D innovation, IP, and 

manufacturing. China is no longer the only country developing indigenous innovation policies. Moreover, FTAs also need to take into 

account the trade challenges that arise from rapid technological developments in a digital economy. 

These include discriminatory national standards, which have 

been mentioned, as well as legitimate concerns around security, 

privacy, and intellectual property leakage such as trade secrets 

that are created in part by global data flows. 

The TPP provides a great opportunity to effectively address these 

challenges, but we need to continue to make sure as, Mr. Chairman, you mentioned, that these agreements are looked at through 

the lens of how are they going to protect and create more U.S. jobs. 

Intel thanks you for this opportunity to testify. We look forward 

to working with you to develop a more aggressive and robust trade 

policy to create additional U.S. jobs. 

[The prepared statement of Mr. Greg Slater appears in the Submissions for the Record on page 50.] 

Chairman Casey. Thank you, Mr. Slater. 

Mr. Bloomingdale. 

STATEMENT OF MR. RICK BLOOMINGDALE, PRESIDENT, 

PENNSYLVANIA AFL-CIO, HARRISBURG, PA 

Mr. Bloomingdale. Good afternoon, Chairman Casey, Vice 

Chairman Brady, and Committee Members: 

My name is Rick Bloomingdale. I am President of the Pennsylvania AFL-CIO, a federation of unions representing over 800,000 

union workers. 

It is an honor for me to testify today on behalf of policies that 

will help make the United States of America and Pennsylvania 

more competitive. I propose three steps to achieve this goal: 

The first step is to establish a manufacturing policy that will put 

‘‘Made in the USA’’ back in the forefront of the global economy. 

The second step is to establish an effective assistance program 

for trade-displaced workers. 

The third step is to capitalize on the contributions that unions 

can make to revive our manufacturing foundation. 

The first step to revising America’s manufacturing foundation is 

to put ‘‘Made in the USA’’ back in the forefront of our global economy. I travel around Pennsylvania quite extensively and talk with 

Union members, unemployed workers, and local business leaders 

who wonder why our trade policies seem to encourage outsourcing 

and discourage hiring Americans. 

Our policy of free trade instead of fair trade has caused the flight 

of millions of family-sustaining jobs. NAFTA is an example. It was 

promoted as a way to create hundreds of thousands of jobs in 

America. However, our manufacturing jobs continue to decrease 

and our trade deficits with Canada and Mexico continue to increase. 

13 

NAFTA is only one example of bad trade policies that have contributed to Middle America’s declining incomes. The trade deficit 

with China has eliminated or displaced 2.8 million jobs in America, 

1.9 million of which were in manufacturing. In Pennsylvania, the 

trade deficit with China has eliminated or displaced 107,000 jobs. 

At a recent meeting with Chinese wind industry representatives 

and government officials, I was told that I was the first American 

whom they had heard say that we want to bring manufacturing 

back to the United States. They said everyone else seems to want 

to manufacture in China. I just hope they were being polite to me. 

The point is, most countries have trade policies that aim to protect their citizens and their economies. To protect American citizens and America’s economy we must secure more balanced trade 

policies to promote our manufacturing. Manufacturing must come 

back to the United States. Manufacturing is the foundation of a 

strong economy. It is the highest multiplier of ancillary jobs in our 

economy. Manufacturing creates a demand for raw materials, creates a demand for transportation to move raw materials and finished products, and it creates a demand for commercial media to 

communicate the availability of products. 

Manufacturing creates a demand for wholesalers and retailers. 

All of these foregoing demands are satisfied by a supply of workers. 

America has a great supply of workers, great in numbers and distinguished by a great work ethic and great accomplishment. However, too many Americans are not employed, especially in manufacturing, as they should be. 

Now, too many Americans vie for jobs that yield less disposable 

income and a downward spiral of demand-side recession begins on 

Main Street. Demand decreases, businesses close, unemployment 

increases. 

America’s economy is ailing because products made in the USA 

are decreasing. One way to help restore America’s manufacturing 

foundation is for the United States to legislate trade policies that 

are more balanced. 

The second step to reviving our manufacturing foundation is to 

properly assist trade-displaced workers. So long as American workers lose their jobs to outsourcing, it is vital to our best national interests to continue the Trade Adjustment Assistance Program. 

Trade-displaced workers also deserve training programs for jobs 

in demand that will support a family. The question has become: 

Which jobs will be in demand that will support us? 

This brings us to the third step to revive America’s manufacturing foundation: Capitalizing on contributions that unions can 

make. 

Unions can help revive America’s manufacturing foundation in 

four ways: 

First, unions are in a unique position to satisfy manufacturers’ 

demands for properly trained workers. TAA recipients have told us 

that they want to be trained for jobs that exist now so that they 

can get back to work. That is why it is essential that we work with 

local business organizations to determine what skills they need so 

that we can get people back to work. 

For instance, while working with the Manufacturers Association 

of South Central Pennsylvania, we found that small machine shops 

14 

needed trained machinists and tool and die makers. Unfortunately, 

those small businesses could not do their own training, so we tried 

to find some state and federal funds to help get people trained. 

Now the South Central Manufacturers Association has a terrific 

apprenticeship program that serves both union shops and nonunion 

shops. One of the biggest improvements that we could make in job 

training is matching job needs with that training. 

Manufacturers must invest in current and future workers because they increase premium on skills and high rates of retirement. 

Better wages and benefits would enable manufacturers to compete 

for the most talented new workers. Also important, a revival of 

manufacturing unions could ensure that workers have the voice 

and dignity on the job that helps attract and retain workers. 

Second, skill-based manufacturing unions can also spur innovation in America, including in new markets spawned by ongoing 

technological innovation—for example, robotics and the emergence 

of a clean economy. 

In Pennsylvania, we have begun a partnership with Carnegie 

Mellon University to examine the future of work and job growth 

trends. Pennsylvania AFL-CIO, with some of Pennsylvania’s great 

engineering universities, currently seek how to provide workers 

with the skills they need to develop, manufacture, and commercialize new technology spinoff products. 

Third, unions block the low road. That is, unions make it harder 

for companies to compete using low-wage strategies that are a 

dead-end game for America because low-wage countries can always 

beat us at this game. 

The fourth way by which unions can help revive America’s manufacturing foundation is by enabling middle class wages to keep pace 

with global marketing. The role is simply an update in 

globalization of the national argument circa the 1930s that collective bargaining helped lift us out of the Great Depression. 

At present, the broken link between wages and productivity 

growth means that countries such as China and Mexico cannot consume their own manufacturing output, so they must sell it to us. 

Union revival in America and union growth in our trading partners can help get us to a global New Deal, Made in the USA. I believe one of the best ways to revive U.S. manufacturing was the 

help of labor unions that have a central role in skill development 

and innovation. To distill my point to a sentence: 

We can’t get to a high road in American manufacturing, and we 

can’t rebuild the American Middle Class without the help of broadly based high-road manufacturing unions. 

Thank you very much for your time. 

[The prepared statement of Mr. Rick Bloomingdale appears in 

the Submissions for the Record on page 62.] 

Chairman Casey. Thanks very much. I will start the round of 

questions, and then Vice Chairman Brady will follow me. 

I wanted to start with two experiences I had traveling across 

Pennsylvania, just two products, two companies that get to the 

question—and I will get to China currency in a moment because 

I think that is an important topic—but this whole problem of intellectual property theft, or infringement. 

15 

One is Martin Guitar in the Lehigh Valley, the eastern side of 

our state. They have been making guitars for I think it’s 150 years. 

Only the trained eye could detect or ascertain what has happened 

to their product, but they have got some folks in China who have 

basically stolen that product and made phony knockoff guitars in 

China. That is one example. 

The second was Zippo Lighters. People across the country know 

that product from north central Pennsylvania. I visited there and 

they were able to show me the same problem just in a different 

product. Folks in China have produced a knockoff product. 

I would ask I guess either of our first two witnesses if you have 

any advice for—and maybe Mr. Slater does, as well, and Mr. 

Bloomingdale—if you have advice for any manufacturer who is confronted with that kind of infringement, any advice you would have 

for those who face that kind of infringement. Much of it is persistent, and much of it is without any remedy, or at least any actionable remedy that they can turn to. 

Is there anything you could tell us by way of advice for those 

companies? 

Dr. Subramanian. Thank you, Senator Casey, for that question. 

I used to—in fact, I was one of the people who drafted the Intellectual Property Agreement in the GATT and then the WTO, and it 

seems to me that China has clear obligations not just on the rules 

of intellectual property, but in terms of their enforcement. 

So I think that the U.S. needs to be much more proactive about 

bringing many more disputes to the WTO vis-a-vis China in relation to enforcement of intellectual property rights. I think there are 

a couple that are in the pipeline already, but I think the U.S. needs 

to be much more proactive in bringing these cases to the WTO. 

Chairman Casey. Is there anything about that process, though, 

that you think needs to be improved, amended somehow, or do you 

think it is just a matter of making sure that more of those actions 

are brought in front of the WTO? 

Dr. Subramanian. I think I would just make two observations. 

One is that I think the general reading of the WTO dispute settlement process is that it is a little bit slow, but finally the judgments 

are good. It works reasonably well, as these things go. 

And second, the virtue of bringing a body of cases is that then 

you create, you know, a clear kind of impression that China is falling short in terms of adhering to its international obligations. And 

I think that opprobrium of being in violation of clear international 

norms which the world community abides by, that is a pretty powerful weapon we have, the rest of the world has, vis-a-vis China. 

Chairman Casey. Dr. Levy. 

Dr. Levy. Thank you, Chairman. 

I think I would raise a couple of points. First, I am not a lawyer 

but we do have provisions such as Section 3.37, which provides 

some recourse when there is clear evidence that someone’s intellectual property rights are being violated. And I agree with you completely that that is important and unacceptable when that is happening. 

I guess in addition to what Arvind just said, I would say I think 

we probably do need a strengthening of global trade rules along 

these lines. I think China made quite a few—undertook quite a few 

16 

obligations when it joined the WTO, or the GATT at the time. I 

think the problem is there have been some questions, for example, 

of do they need to go about—what is the level of enforcement domestically that they need to undertake? Do they need to do any 

sort of extraordinary measures relative to the kind of enforcement 

difficulties that many developing countries have. And that is giving 

them something of an out. 

So I think this is the kind of thing where if we had successful 

new global negotiations, it is certainly a point that U.S. negotiators 

would want to stress. 

And the last point I would mention is, I think we sometimes— 

there is a question about enforcement of why we don’t do more at 

the WTO. My experience has been that it is sometimes the case 

that complainants are less than willing to be the public face of a 

complaint against China. That is probably not as true when it is 

a small U.S. manufacturer competing, but for the larger ones who 

would have the resources to press a case like this, that may be an 

obstacle. 

Chairman Casey. Thank you for that. I will ask one more question before my time runs out. 

I would ask Mr. Slater or Rick Bloomingdale about the impact 

as you see it of China’s currency policies, from your own 

vantagepoint, or from your own observations or experience. 

Mr. Slater. Well for us it is a wash. It’s neutral, because we 

have raw materials going into China. We’ve got product coming out 

of China. And we are in probably a different position than some 

other industries. And so it is not—and I think one of the other witnesses said this—we would much rather focus the efforts on some 

of these indigenous innovation policies that are hurting companies, 

and the counterfeiting problem. 

Mr. Bloomingdale. In terms of the currency manipulation, obviously—and I am not an expert on currency or anything like that— 

but I do see the impact in Pennsylvania. You mentioned Martin 

Guitar and the theft of intellectual property, but you also see more 

and more like tools and things made in China coming over. 

In Pennsylvania we make Channellock Pliers, up in Meadville, 

Pennsylvania, but more and more you are seeing knockoffs, counterfeits. I do not know how much of that is due to their currency 

manipulation or the fact that, you know, we cannot sell 

Channellocks in China, but they can sell their stuff here. I mean 

there seems to be an imbalance somewhere, and I think we really 

need to figure out a way to address that so that our products, 

which are the best in the world, can compete globally. 

Dr. Subramanian. Can I—— 

Chairman Casey. I am two minutes over. I will get back to you. 

Dr. Subramanian. Okay. 

Vice Chairman Brady. Thank you, Chairman. 

I have a China question as well that I would like to make in our 

second—are we going to go to a second round? 

Chairman Casey. Oh, sure. 

Vice Chairman Brady. I will reserve that. 

I want to thank all the panelists here. There are a broad range 

of opinions, but this is critical. And each is coming from their personal experience and their organizational educational studies. 

17 

I wanted to ask Mr. Slater, you are a job creator. Your company 

is a job creator in America. You are competing in the global marketplace. Much of your sales is overseas in a growing area. Much 

of your workers are here in America. You do have some manufacturing facilities close to the customers, but you continue to make, 

and have announced multibillion dollar manufacturing facilities 

here in America close to the innovations, the R&D that you as a 

company invest in very heavily. 

So the question is: For a company like yours, how hard is it to 

make that—financially to make the choice to manufacture in America? Is our tax structure punitive for companies like yours? Is it 

harder without trade agreements to have a level playing field to 

compete against, as you do compete around the world? Do we make 

it tough for companies to make that manufacturing decision here 

at home? 

Mr. Slater. Thank you. There are multiple component sets. I 

will try and be brief. 

The corporate tax rate is definitely a disadvantage. We have the 

second-highest rate in the OECD. It is painful. There is at least a 

billion dollar cost difference between setting up a manufacturing 

facility here in the U.S. and one overseas. 

We are able to take that pain, if you will, because we have the 

talent here, and the intellectual property here, and the innovation 

here, and that can compensate for the additional cost. 

But we are a leading manufacturer, and as such make more profit than some of our colleagues. And so the tax difference may hurt 

others more than they hurt us. It certainly hurts us, but we continue to manufacture here because of the reasons that I mentioned. 

Vice Chairman Brady. Can I go back a minute? Did you just 

say it costs you one billion dollars more to locate that manufacturing plant here than in some other locations? 

Mr. Slater. At least one billion dollars. 

Vice Chairman Brady. A billion? 

Mr. Slater. Yes. 

Vice Chairman Brady. And how much of that is due to wages, 

regulation, or tax costs? 

Mr. Slater. Most of it is due to tax. Close to 90 percent—I do 

not have the exact figure; it is the high 80s, 90 percent of it is tax. 

Wages and raw material costs are a small fraction of the actual, 

the additional cost. 

Vice Chairman Brady. Thank you, Mr. Slater. Therein lies the 

problem right there. 

Dr. Levy, it is common to hear around Washington that trade is 

a race to the bottom. Yet with our Free Trade Agreements, the opposite seems to be true. When we insist on two-way trade, when 

our agreements insist on a level playing field, where there are 

rules for investment, environment, labor, where there is incentive 

to create rule of law and a higher standard of a number of issues, 

where expropriation is negligible, does it seem—am I wrong in believing that these agreements actually create a race to the top in 

the sense of establishing rules-based trade that actually raises the 

standard of business trade between the countries? 

Dr. Levy. No, sir, you are not wrong at all. 

18 

I think you have it quite right, especially when we are talking 

about trade agreements between the developed world and the developing world. 

Frequently what the developing world is seeing as an opportunity is the chance to commit to these kinds of higher standards. 

They are trying to do this as a way to promote their own growth 

and to attract investment. That has often been a major foreign policy goal of the U.S. We have devoted substantial sums to try to get 

Colombia to develop in a more positive way. 

So these agreements, such as the one with Colombia, have this 

effect. These countries undertake often more onerous rules in this 

respect, and in exchange they grant us greater market access, 

which means that they are a very beneficial policy from the U.S. 

perspective. 

Vice Chairman Brady. All right. Thank you, Dr. Levy. 

Yield back. 

Chairman Casey. Thanks, Vice Chairman Brady. He was on 

time with his questions. I was over. 

I wanted to—oh, Doctor, did you want to make a point when I 

was wrapping up? 

Dr. Subramanian. A point about currency? 

Chairman Casey. Sure. Sure. 

Dr. Subramanian. On the currency, I want to make two observations, Senator Casey and Vice Chairman Brady. 

One is that, while Dr. Levy is absolutely right in saying that, you 

know, we should export more and not import is outdated, I think 

the difference is that, at a time when we have slack capacity and 

unemployment in the U.S., the trade deficit does matter for output, 

the deficit and jobs. 

The second point I think is actually a very important point. If 

you listen to Dr. Slater, and in fact that is the kind of general position of American—corporate America, that basically the exchange 

rate for them is a bit of a wash, and to me that explains why the 

U.S. has not been able to be more muscular on China currency. Because the domestic political support for that is not very strong. 

So that is why I have always argued that, because the China current affects many, many other emerging market countries as 

badly—Mexico, Brazil—you know, Brazil is imposing antidumping 

duties against Chinese currency; India, Turkey, South Korea—the 

U.S. has tended to rely too much on wanting to do this alone and 

not having the domestic support, and has not spent enough I think 

effort, diplomatic effort, in mounting a coalition on the exchange 

rate, which in my view could be more effective and more legitimate 

in some ways. Because it is not just the U.S. saying, oh, China is 

manipulating its currency, but a multilateral coalition that is saying that. 

Chairman Casey. Let me just ask you as well, just to follow up 

on that: In your testimony, Doctor, you say—and I am quoting 

from, I do not have a page number here, but: ‘‘For a number of domestic reasons, China will want to change its exchange rate policies,’’ and then you go on to describe why. Can you sum that up 

very quickly, why you think on their own they may be moving in 

that direction? 

Dr. Subramanian. Well I think—— 

19 

Chairman Casey. I am not sure I buy it, but it is encouraging. 

Dr. Subramanian. But I want to—you know, I do not want to 

be too kind of rosy-eyed about that, but I think there are at least 

three kinds of pressures on China which might want to change on 

its own. 

One is that it is facing high inflation, and so they need to appreciate the currency to bring down the cost of imported goods. 

Second, China discovered in the global financial crisis in 2008 

that because it was so dependent on foreign markets its economy 

threatened to collapse because exports completely, the bottom went 

out under exports, and they were able to offset it because they 

could bring in a fiscal package to offset that. 

Had they not had the fiscal capability—for example, had they 

been like the U.S. in that situation—it would have been very difficult for them. The exposure created huge vulnerabilities. 

Third, I think there is a constituency in China that wants to 

internationalize the currency, and, you know, to make the 

Renminbi a reserve currency to rival the dollar. And so these are 

three powerful forces which act toward China wanting to act on its 

own. 

But the caveat of this is that it ain’t gonna happen very soon. 

It is going to be very gradual. And that is why any additional external multilateral legitimate pressure that we can bring upon 

that, it would accelerate that process. 

Chairman Casey. I wanted to move to another topic—I know 

we are short on time—to Rick Bloomingdale on Trade Adjustment 

Assistance. 

Just as someone who has spent a lot of time on the ground in 

Pennsylvania talking to workers and representing them and advocating for them, but also working with a lot of good companies, how 

do you view it in terms of the impact that it can have, especially 

at these times? And for those who do not know, one of the things 

we are trying to do now is to keep in place some of the enhancements that were put in place in 2009. 

Mr. Bloomingdale. Thank you, Senator Casey. You know, one 

of the most frustrating things with somebody, and I mean everybody here understands it, we Americans are tied up in our work. 

You know, we are a nation of workaholics, as it were. And when 

somebody loses their job, something they have been doing 20, 30 

years, I mean that is a tremendously unnerving and potentially destructive thing when somebody loses that job. 

And to have something to fall back on, some kind of training assistance, especially if it is trade related, because I think as was 

mentioned earlier a lot of those jobs will not be coming back. So 

to get those folks the training that they need in order to go on with 

their lives and get back to leading productive lives, and raising 

their families, is critical. 

But one of the biggest issues—and we just spent the summer 

talking to a lot of folks who were using TAA, and what is good for 

the system, and what works in the system. And by the way, our 

State got huge marks for our rapid response team, the Governor’s 

group that goes in and works with factories that are closing down, 

to make sure that people know what benefits are available to them. 

But what they are really looking for is to get back to work. 

20 

And they want to find, first of all, what the work is going to be. 

Because if your steel mill just closed down, are you going to be able 

to go to Martin Guitar and make a guitar? Probably not. I mean, 

that is a whole different skill, woodworking versus metalmaking. 

Although, you know, there are jobs in, like I said, tool & die, and 

small manufacturing and machinists. 

So we really need to find a way to match those jobs, that training 

with those jobs that are available. For young workers, for instance, 

you know, we have a lot of linemen retiring for the utility companies. It is hard to climb poles when you are in your late 50s, early 

60s. So those jobs, we need to find kids, young men and women 

who are willing to climb poles when it’s 30 degrees outside, and get 

our electricity back on. 

So matching that training is critical. If there is some way to do 

that in the reauthorization of the law, or the passage of the new 

law, to work with again our local business organizations—we work 

with the South Central Manufacturers Association all the time; we 

work with the Philadelphia Workforce Investment Board—matching those skills with the jobs that are available is critical in order 

to get people back to work. 

Chairman Casey. Thanks. 

Vice Chairman Brady. 

Vice Chairman Brady. Thanks, Chairman. 

China is an important trading partner with us and is becoming 

increasingly more important as a customer source for many American companies. 

I think we have made a mistake, focusing in Congress almost 

solely on currency. Yes, that is an issue. Clearly it needs to rise. 

Although, with quantitative easing ourselves and having devalued 

our own dollar by about 15 percent, it is hard to come to that issue 

with clean hands. 

We do need to continue the pressure on. I agree with Dr. 

Subramanian. It has got to be a multinational effort to be successful in that area. 

My question is: Rather than to focus simply on currency, 

shouldn’t we be looking at the broad range of barriers to full trade 

in China? It seems to me, listening to our companies, it is protection of intellectual property rights. It is indigenous innovation. It 

is directed lending, subsidies to certain companies. Restrictions on 

raw and rare exports. It’s a closed capital account. There are a 

number of those barriers, some obvious, some becoming much more 

subtle going forward. 

If we are to insist that China plays by the rules, shouldn’t we 

be examining the whole broad range of barriers that really stop 

American companies from fully accessing the China markets? 

And, Doctor, I will just go down the line, if you would like. 

Dr. Subramanian. Vice Chairman Brady, I completely agree 

with that, although at this stage the exchange rate has particular 

salience. I think the issues you have identified are much broader 

and very important, and I think we need to engage China on that. 

The question is: How? How do we do that? And my very strong 

plea to you would be to do this multilaterally, because lots of countries out there have very similar concerns. And that would be 

my—— 

21 

Vice Chairman Brady. I agree. I agree. Thank you. And I also 

think we need some metrics. You know, there have been commitments made in dialogues with the U.S., but no real way of measuring. You know, IPR protections, for example. And there may be 

some progress at the national level, but is it being done at the provincial level, but probably not. So we need I think a different way 

of measuring. 

Dr. Levy. 

Dr. Levy. I agree completely with you that we should be focusing on these other issues. I think that the analysis that we have 

to make in our economic diplomacy is, first of course what is the 

impact on the U.S. of these policies? But also, how likely is it that 

we are going to be able to bring about change? 

And we need to be cognizant of the fact that we do not get to 

present an unlimited number of top issues in negotiations with the 

Chinese. And if we dilute our requests too broadly, we achieve absolutely nothing. And I think what experience has shown is that 

policies such as indigenous innovation, rare earth, some of the investment policies, exactly the ones that you mentioned, are perhaps 

more open to change. It doesn’t make them easy, but a much better 

focus of U.S. policy. 

Vice Chairman Brady. Thank you. 

Mr. Slater. The metrics would make the nonbinding commitments made in the GCCT and SNED have more bite. So I agree 

with that point. 

The other point is, there has been multilateral collaboration with 

Europe and Japan on specific issues when they come up, like government procurement linked to domestic IP. It would be nice to 

take a more holistic approach with those same governments. Here 

are the principles, whether they are reflected in WTO commitments 

or not, that need to be lived by. Here is what we are going to hold 

you to. Instead of doing the whack-a-mole game with Japan and 

Europe. 

Vice Chairman Brady. Thank you. 

Mr. Bloomingdale. 

Mr. Bloomingdale. Well, like I said, currency manipulation is 

not a real area of expertise that I have, but again we continue to 

look at policies that China has. They have, obviously, lower wage 

rates. We have all heard about the suppression of workers’ rights. 

Those kind of things that tend to unbalance the fairness of trading. 

And again, you know, the AFL-CIO’s position is we are not opposed to trade, we just want fair trade. And some of the things you 

mentioned earlier, Vice Chairman Brady, about having environmental protections, labor rights, all those things are critical in promoting fair trade. 

Vice Chairman Brady. Thank you. Can I ask a final, with 30 

seconds left. You know, we worked hard to move China into the 

WTO rules-based trading system because it’s like basketball. There 

is a reason a college team, a college the size of 1,500 can compete 

against a college of 50,000 on a basketball court. It is because they 

play by the same rules. 

We have been very successful in taking China to dispute issues 

and settling in advance. Looking back, for America, was it wise to 

move China into the WTO? 

22 

Dr. Subramanian. Oh, unquestionably. Absolutely no doubt 

about that. Unambiguous positive. The question is: Was it enough? 

Has China kind of reversed a little bit on that? And what do we 

need to do going forward? But to continue that process. 

Dr. Levy. Yes, it was absolutely the right move. 

Mr. Slater. We have benefitted a lot from that, personally, our 

company. We just need to move them to WTO-plus now. 

Vice Chairman Brady. Absolutely. I understand. Thank you. 

Yield back, Mr. Chairman. 

Chairman Casey. Senator Klobuchar. 

Senator Klobuchar. Very good. Thank you very much, Chairman, and Vice Chairman. It was nice to take a little break from 

the Google hearing. There is a lot going on in there. 

It is good to be here on such an important topic. I wanted to say 

first, I head up the Subcommittee on Commerce on Innovation, 

Competition, and Export Promotion, and I have been really focused, despite the fact that my State is actually doing much better 

than the rest of the country when it comes to the unemployment 

rate where it is about two points below the national average, and 

a lot of it has to do with exports. Our Ag exports are up 22 percent. 

And then we are now first per capita for Fortune 500 companies. 

But on the other hand, I have seen the small- and medium-sized 

businesses trying to get a piece of that, and make sure that we are 

letting them export, and helping them when they cannot have fulltime experts on Kazakhstan in their company, I have really come 

to be a big believer in the Foreign Commercia Service group that 

works in the Commerce Department in terms of the vetting they 

can do of customers for such a small price and the advice they can 

give them on where their products could sell. 

I don’t know if anyone wants to comment about that, but it 

seems to be worth its price. And it is not that expensive. I don’t 

know if you want to say anything, Dr. Subramanian? No? Anyone? 

[No response.] 

Okay, thank you, Mr. Bloomingdale. 

Mr. Bloomingdale. I will comment on that. A good friend of 

mine is the CEO of a small manufacturer represented by the Mine 

Workers who makes stainless steel exam tables. Through the efforts of the Department of Commerce and our State Department of 

Economic Development, it has had tremendous success exporting 

more and more of her quality-made exam tables—even though she 

has dealt with some counterfeiting with some other countries. 

But those kind of programs are extremely beneficial to our small 

manufacturers and can go a long way towards opening up markets 

for our small manufacturers that employ lots of folks in Pennsylvania. 

Senator Klobuchar. The other thing I wanted to—I will start 

with you, Mr. Bloomingdale, that I have really noticed in going 

around my State, is that there actually is a need for more workers 

in certain areas. 

We had a recent state-wide survey. Forty-five percent of manufacturers in Minnesota said that it is difficult for them to attract 

candidates to fill their firms’ vacancies. I know that sounds unbelievable at this time, but they cannot find a welder at AgCo in 

23 

southern Minnesota because there are not enough people getting 

those type of two-year technical degrees. 

Alexandria Tech in the western part of our State has a 96 percent placement rate right now. And I think one of our issues here 

is how we get high school students and then workers who have 

been displaced workers who don’t have jobs to look at some of these 

two-year technical degrees which can tend to be more tailored to 

where the needs are. They are no longer your grandpa’s tech 

schools. They are running the computer systems that are running 

the assembly lines, that run Boise Cascade Paper Mills. Or they 

are learning to do the robotics that make the medical devices in 

Minnesota with the really quite well-paying job. And that is what 

I have become really focused on that as part of our way out of this 

rut, is making sure that we have the skilled workers to fill the jobs 

we have. 

I know I came in on the tail end of that discussion about skill 

training, but if you want to go at it again with how we integrate 

with our tech schools. 

Mr. Bloomingdale. And it is not only integrating with our tech 

schools, but it is working, as I mentioned earlier, matching skills 

with training, the very thing that you just talked about, and how 

we get those kids into those programs is huge. 

Too often our high schools focus totally on sending kids on to college and not into a four-year degree program. We go through the 

same things in Pennsylvania where some companies and some organizations, along with the labor movement, have started apprenticeship programs for manufacturing in order to get kids, young 

men and women, and older displaced workers, certified for those 

expanding jobs. You may have a need for welders. We do, too, but 

also tool and die makers, machinists, folks that run robots, not just 

make them but run the robotics. 

Senator Klobuchar. That is exactly right. And not just fix them 

when they break, it is running them day to day. 

Mr. Bloomingdale. And even, you know, we still have some garment manufacturing in Pennsylvania. People to repair sewing machines, which is something you would never think about, but it is 

critical that we get those people into those training programs. Because, you know, those kinds of jobs will be around because they 

are here. 

Senator Klobuchar. Right. 

Mr. Bloomingdale. It is hard to export a maintenance guy overseas. 

Senator Klobuchar. Exactly. 

Dr. Levy. 

Dr. Levy. Yes, I just wanted to agree and say I think you have 

hit upon something very important here. Actually a decade ago 

when I was teaching in Connecticut in the midst of a downturn, 

there were similar stories in the Hartford Current about manufacturers who could not fill positions. And it seemed very, very odd 

but I think it is evidence of the fact that part of what we have seen 

in the manufacturing sector is significant change, technological 

change, where there are new skills’ demands. And this is the major 

challenge of how we get our workforce to have these skills. 

24 

Senator Klobuchar. I think part of it is going to be working 

with our high schools around the country to make that transition, 

if students are interested, to show them where those jobs are. 

A lot of these two-year degrees are in community colleges, and 

technical colleges throughout the country. 

The other thing I have found amazing is how they can work, the 

Mayo Clinic can work with their local colleges to say, okay, now we 

are going to need more nurses in this area in one year. Because 

they know. So then they can quickly revamp that curriculum to get 

those nurses. So it is just making that a much higher priority so 

students are getting degrees that they can actually use. 

Okay, very good. Thank you very much. I now get to return to 

fun land over there. 

Chairman Casey. Senator Klobuchar, thanks very much. 

I want to thank our witnesses. We are just about done, but I 

wanted to do something before. I want to make sure this gets into 

the record. 

Vice Chairman Brady had to go to a vote, but I wanted to make 

sure that the written testimony submitted by the American Apparel and Footwear Association, which is testimony for today’s 

hearing, dated September 21st, 2011, I want to make sure that testimony is made part of the record. 

[The prepared statement of the American Apparel and Footwear 

Association appears in the Submissions for the Record on page 70.] 

Chairman Casey. And then secondly, the statement of Daniel 

J. Ikenson, Associate Director for the Herbert Stiefel Center for 

Trade Policy Studies, at the Cato Institute in Washington. His 

statement, as well, will be made part of the record for today’s hearing. 

[The prepared statement of Daniel J. Ikenson appears in the 

Submissions for the Record on page 73.] 

Chairman Casey. I know we have to go, and I know the time 

is short, but I wanted to ask kind of a broader question about we 

are going to have a lot of debates in the days and weeks, and 

maybe even months ahead, on trade policy. 

You heard here both at the witness table from our witnesses and 

also from the Members of Congress who have been here today different approaches to trade, and different strategies, but I would 

hope no matter the outcome of any vote on a specific trade deal 

that we can get away from this ongoing battle we have where we 

have both sides marshalling their forces. We go and have a vote on 

a trade deal, and it goes up or down, and then we move on to something else. 

We have to figure out a way I think to arrive at a policy that 

is bipartisan, that is shared by business and labor, and any interested party, so that any trade deal, any agreement can be judged 

against that policy. 

Unfortunately, the United States of America does not have a 

trade policy. We have periodic battles and different philosophies 

about trade deals. And I am not saying that is unhealthy all the 

time, but I would rather us agree on the foundation and then we 

can have a big debate and a big fight about what comes on top of 

that foundation. 

25 

But I just want to leave it open for the witnesses. We will have 

more questions in writing, but anything before we adjourn? Any 

point you want to make before we adjourn? 

Dr. Subramanian, maybe will just go left to right. 

Dr. Subramanian. I agree entirely with what you just said, 

Senator Casey. I think it is getting a little bit more worrisome than 

just a lack of policy, because actual support, the kind of bipartisan 

centrist support for open trade, if you look at the polls, that is fraying. And that I think needs to be salvaged quickly with a concerted 

bipartisan effort so that at least we are agreed on the basic policy 

that open markets internationally are good for the U.S. and good 

for the world. And that is something that we work towards. 

We can debate the mechanisms, the means, the forums, the instruments, but that basic consensus is too valuable to lose. 

Chairman Casey. Dr. Levy. 

Dr. Levy. I would agree with that point, and very much commend your push towards trying to achieve a bipartisan consensus 

on this. It is something that used to apply in trade policy about two 

decades ago, and it has been very, very unfortunate that we have 

moved away from this and it has become as fractious as it has. 

Chairman Casey. Unfortunately I think we are going to have 

to have a vote on these agreements first in order to begin that conversation, and that conversation, by the way, could take a lot of 

years. But we will look forward at least after the big fight coming 

up. 

Mr. Slater. 

Mr. Slater. I really like the idea of a trade policy. And here is 

one reason why. There are a number of issues that are what I call 

interface issues, where they involve more than USTR. They involve 

the DOJ and FTC, if it is an issue that crosses over between intellectual property and competition, which are are seeing more and 

more of. 

There is the SOE, the State-Owned-Enterprise issue that we 

tend to tackle with specific agreements, rather than apart from the 

agreements where it is a calmer environment, an environment 

where the different views and the data can be considered and the 

judgment is not rushed. 

So the interagency process should happen apart from FTAs and 

develop this trade policy, and then it would be a much cleaner— 

I think a cleaner process. 

Chairman Casey. Rick Bloomingdale. 

Mr. Bloomingdale. Senator, thank you. 

I agree that we need a trade policy, but I also, as I mentioned 

in my testimony, we need a manufacturing policy. Because what 

we have seen, and whether Americans are right to blame trade or 

not, we have seen a decline in their incomes. They have seen a decline in their incomes over the last 20 years, since some of these 

big trade agreements that were highly politicized since NAFTA 

passed, and since then we have seen declining incomes, a decline 

in our manufacturing base, whatever the cases. So that we need to 

make sure that, whatever policies we have, in order to trade with 

other countries, that it be fair and have those protections for workers, have the retraining for workers, have those things that are 

26 

necessary to make sure that America’s middle class continues to 

exist and grow, rather than to decline as incomes decline. 

So I think however we get to a trade policy, we have got to make 

sure it is one that treats the American workers fairly and provides 

a level playing field. Because if they have a level playing field, 

America’s workers are the best in the world. 

Chairman Casey. I couldn’t agree more. Thanks very much everyone. We are adjourned. 

[Whereupon, at 3:21 p.m., Wednesday, September 21, 2011, the 

hearing was adjourned.] 

(27) 

SUBMISSIONS FOR THE RECORD 

28 

PREPARED STATEMENT OF REPRESENTATIVE KEVIN BRADY, VICE CHAIRMAN, JOINT

ECONOMIC COMMITTEE

Chairman Casey, thank you for convening this important hearing. 

It is long past time to debunk the myth that the economic freedom to trade leads 

to offshoring of U.S. jobs. The facts are just the opposite. It is the absence of an 

aggressive, proactive trade agenda that leaves America falling behind its global competitors and places our manufacturers at a severe disadvantage when competing for 

the 95% of the world’s consumers that live outside our borders. 

For American manufacturing, trade means jobs. America is the third largest exporting nation in the world, and our share of global manufacturing has essentially 

held steady through the past 30 years. The concern is that our share of the world’s 

market in manufacturing has declined significantly while the Chinese share has exploded upward. 

If you examine what America sells and ships overseas, it is manufacturing that 

accounts for the bulk of U.S. sales abroad. Much of those sales are in advanced technology and capital goods such as computers, electronics, scientific instruments and 

aerospace equipment—along with chemicals, oil and coal, machinery and equipment 

critical to the production of finished products. These are high-value items, creating 

high-paying jobs and requiring high-value research and development. 

Trade is important to American workers. Not only is one of every five American 

manufacturing jobs tied to sales overseas, workers in the most trade-competitive industries earn an average compensation package of $86,000 a year—which is nearly 

fifty percent higher than they would earn in the least trade-competitive industries, 

according to a report by the National Association of Manufacturing. 

Thanks to technology, communications and the internet, more and more smalland midsized manufacturing firms in America are competing successfully in the 

global market. 

Make no mistake, the world has changed. It is no longer enough to simply ‘‘Buy 

American.’’ To grow jobs and remain the world’s largest economy we must ‘‘Sell 

American’’ as well. Yet when American manufacturers compete around the world 

they often find themselves at a disadvantage—victims of an isolationist trade agenda in Congress and saddled with significantly higher product costs due to excessive 

regulation and an increasingly outdated tax code. 

The bottom line is that America is falling behind. While for the past four years 

Congress has removed America from the global trading field our competitors in Europe, China and the western hemisphere have not. They’ve taken smart advantage 

of America’s benching itself to the sidelines and established trade agreements that 

lock in growing overseas markets and lock out American manufacturers. 

Today there are 238 bilateral or regional free trade agreements in force around 

the world. The United States is a party to a mere 11. 

Today our competitors are negotiating more than 100 market-opening trade agreements. The United States is currently participating in only one: the Trans-Pacific 

Partnership. 

If we want our manufacturers to secure new customers and create new jobs here 

at home we must get America back on the trade field, fighting for a level playing 

field so our manufacturers can compete and win. 

That can’t happen as long as the White House continues to delay submitting the 

three pending agreements with South Korea, Colombia and Panama. These countries already sell many of their products into America with low or no border taxes. 

It’s time to turn this one-way trade into two-way trade and secure an estimated $13 

billion of new sales for American manufacturers, agricultural businesses, and service companies. 

Every day we delay hurts our manufacturers. Europe, China and Canada have 

moved aggressively to enter into their own trade agreements with these countries 

in order to land customers and contracts in these growing economies—they take 

market share away from American companies as we speak. 

There is bipartisan support for these sales agreements today. We can pass these 

agreements today. As the President is fond of saying these days, send Congress 

these agreements so we can ‘‘pass these bills now.’’ 

As long as the White House delays and our global competitors bolster their economies through free trade agreements, we should not be surprised if both American 

and foreign manufacturers decide to build new factories and create new manufacturing jobs outside of the United States. 

Trade isn’t the cause of off shoring jobs—it’s the antidote. Landing new customers 

overseas, making our tax code competitive, and reducing the price disadvantage 

from excessive regulation and mandates will strengthen the hand of America’s local 

manufacturers and create good-paying jobs here at home. 

29 

Final point: It’s time to stop blaming trade agreements for the loss of manufacturing jobs in America. 

Technological breakthroughs over the past two decades have made American companies more productive—like many countries we are manufacturing more with 

fewer workers. 

The need at times to locate manufacturing facilities overseas is not a function of 

trade agreements, but the need to be closer to the customers—to successfully compete against Europe, China and the rest of the world for these sales. An estimated 

95% of the products produced in U.S. manufacturing overseas are for customers 

overseas. Absent a trade agreement with the host country, this may be the only 

competitive choice remaining for our companies. 

Why aren’t we making a concerted, bipartisan effort to restore America’s business 

climate so that American companies are no longer economically punished for locating their manufacturing facilities where the innovation is occurring? 

And while it does not fit on a bumper sticker, the fact is that America is running 

a manufacturing trade surplus with our trade agreement partners—yes a surplus, 

yes in manufacturing—even with our NAFTA partners. That’s because, when you 

level the playing field and play by the same rules, American manufacturing and its 

workers win. 

Our manufacturing trade deficit is wholly with countries with which we do not 

have a trade agreement. This is because our competitors have signed trade agreements in these markets, and we have left our companies to face tariffs five times 

higher than these countries face when selling into the United States. 

It’s time to stop blaming everyone else and time to start leading again on trade. 

Mr. Chairman, I look forward to the testimony today. 

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