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S. HRG. 113–447 

PRESIDENT OBAMA’S 2014 

TRADE POLICY AGENDA 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MAY 1, 2014 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

RON WYDEN, Oregon, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

MARK R. WARNER, Virginia 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JOSHUA SHEINKMAN, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

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

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

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

ADMINISTRATION WITNESS 

Froman, Hon. Michael, U.S. Trade Representative, Executive Office of the 

President, Washington, DC ................................................................................. 6 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Froman, Hon. Michael: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 33 

Responses to questions from committee members ......................................... 41 

Hatch, Hon. Orrin G.: 

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

Prepared statement .......................................................................................... 103 

Wyden, Hon. Ron: 

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

Prepared statement .......................................................................................... 106 

COMMUNICATIONS

AARP ........................................................................................................................ 109 

Advanced Medical Technology Association (AdvaMed) ........................................ 115 

American Chemistry Council (ACC) ...................................................................... 119 

American Council of Life Insurers (ACLI) ............................................................. 121 

American Farm Bureau Federation ....................................................................... 123 

Express Association of America (EAA) .................................................................. 129 

United States Council for International Business (USCIB) ................................. 136 

(III) 

(1) 

PRESIDENT OBAMA’S 2014 

TRADE POLICY AGENDA 

THURSDAY, MAY 1, 2014 

U.S. SENATE, 

COMMITTEE ON FINANCE, 

Washington, DC. 

The hearing was convened, pursuant to notice, at 11:15 a.m., in 

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

(chairman of the committee) presiding. 

Present: Senators Rockefeller, Schumer, Stabenow, Cantwell, 

Nelson, Menendez, Carper, Cardin, Brown, Bennet, Casey, Warner, 

Hatch, Crapo, Roberts, Thune, Isakson, and Portman. 

Also present: Democratic Staff: Joshua Sheinkman, Staff Director; Michael Evans, General Counsel; Jayme White, Chief Advisor 

for International Competitiveness and Innovation; Elissa Alben, 

International Trade Counsel; Jason Park, International Trade 

Counsel; and Lisa Pearlman, International Trade Counsel. Republican Staff: Chris Campbell, Staff Director; Everett Eissenstat, 

Chief International Trade Counsel; Shane Warren, International 

Trade Counsel; Richard Chovanec, Detailee; and Kevin Rosenbaum, 

Detailee. 

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

FROM OREGON, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The Finance Committee will come to order. 

For decades, American trade policy has been a story of adaptation and change. In particular, the extraordinary economic changes 

of the last generation demonstrate how important it is that future 

trade policies are reformed to reflect the times. For example, consider how technology has transformed the American and the global 

economic landscape. In the 1990s, an entire month’s worth of Internet traffic data would fit on a single hard drive that you can buy 

today for 50 bucks at any electronics store. 

More than 2 billion people now log on to the net regularly, but 

Vietnam has a law on its books that calls into question the ability 

of U.S. businesses to move their data in and out of that country. 

Governments in China, Brazil, and Europe are also considering developing systems that would effectively build digital barriers to 

trade that nobody could have foreseen a few decades ago. 

And when it comes to enforcing our trade laws, a key priority, 

enforcement officials used to watch out for criminals fleeing offices 

with armloads of trade secrets printed on sensitive documents. 

Now hackers can break into a company’s servers and steal data 

2 

from the comfort of their own desks and classrooms or military facilities thousands of miles away. 

A generation ago, American workers and businesses competed 

against a smaller, very different China. Today, bolstered by enormous advantages provided to state-owned and -run enterprises, 

Chinese government-backed steel and solar firms are able to take 

entire segments of the American economy out at the knees. They 

can do so because they sit on seemingly bottomless wells of cash, 

hide their paper trails with opaque accounting, and dodge the risks 

and borrowing costs that American companies face. 

A third transformational change was the advent of unfair policies 

like indigenous innovation that target our American innovators. In 

the 1990s, India and China had limited technical capacity. Now 

they can use highly technical standards to advantage their domestic firms and extract American companies’ intellectual property for 

their own use. It is a shakedown, plain and simple. 

Fourth, over the previous decade, currency manipulation has reemerged as a major concern for our economy. China made commitments to follow global trade rules when it joined the World Trade 

Organization in 2000, but, when it comes to currency as in so many 

other areas, China is keeping a finger firmly planted on the scale 

and undermining those commitments. Pick a product manufactured 

in China and imported to our country, pick any product, and currency manipulation makes it artificially cheaper. That is hurting 

our workers’ ability to compete. 

Finally, unlike 20 years ago, the American people expect to easily 

find the information they want on key policy issues like trade. Yet, 

too often there is trade secrecy instead of trade transparency. It is 

time to more fully inform Americans about trade negotiations and 

provide our people more opportunity to express their views on 

trade policy. Bringing the American people into full and open debate on trade agreements that have the effect of law is not too 

much to ask. 

At present, many Americans are questioning if trade developments have contributed to persistent, long-term unemployment, 

stagnant wages for far too many, and the inability of students with 

good degrees to find high-quality jobs while they are saddled with 

debt. Last week’s report showing that America’s middle class is no 

longer the best off in the world raised additional questions. Responding effectively to the trade changes of the last generation is 

absolutely essential to instilling more confidence that trade policy 

will be good for America’s working families and bring more of those 

middle-class Americans into the winner’s circle. 

I am going to wrap up by saying that, fortunately, America has 

big advantages to work with in the trade area. We have the most 

skilled, productive workforce in the world, one that foreign students want to join. The dollar remains the dominant currency of 

the global marketplace. With the Internet’s big bang and the boom 

in high-speed networks, the U.S. exports $350 billion worth of digital goods and services each year on what amounts to a new virtual 

shipping lane. 

The Internet also makes it easier for a craftsman, for example, 

from Fossil, OR, where I was recently, population 470, or a barVerDate Mar 15 2010 17:23 Nov 06, 2014 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 R:\DOCS\90949.000 TIMD
3 

becue sauce maker from Memphis, TN, to reach their customers 

around the world. So, policymakers have a lot to work with. 

We do have classic issues that remain. There are overseas barriers to bring down, and other barriers to eliminate. We have had 

an open market, so clearly, if you do this right when America negotiates, we can get more of an advantage out of it than other trading 

partners. That is particularly good for American products like 

wheat, dairy, and footwear that need to be able to compete on a 

level playing field. 

So, colleagues, here is my bottom line: the new breed of trade 

challenges spawned over the last generation has to be addressed 

with imaginative new policies that are locked into enforceable, ambitious, job-generating trade agreements. They have to reflect the 

need for a free and open Internet and strong labor rights and environmental protections. Nations do not dismantle protectionist barriers or adopt these rules on their own; they do so with reciprocal 

agreements reached through negotiation. America has to establish 

new rules to reflect today’s trade norms and enforcement. 

We are looking forward to hearing from Ambassador Froman. I 

just want to thank my colleague, Senator Hatch. Since I have been 

chair of the committee, he has consistently tried to reach out and 

work in a bipartisan way. I am very appreciative of that. 

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

The CHAIRMAN. Senator Hatch, we welcome your opening statement. Then we will have an introduction for Ambassador Froman. 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Well, thank you, Mr. Chairman. I feel exactly 

the same about you. I think we have a real opportunity to have 

this committee do its work in a way that I think most people on 

the committee would appreciate, under your leadership. 

I appreciate you holding this hearing. I want to thank you, Ambassador Froman, for appearing here today. As you know, we 

hoped to hear from you over 3 months ago when the committee 

held a hearing on the importance of Trade Promotion Authority. 

Now, while I am disappointed that you declined my invitation to 

participate in that hearing, I am glad you are able to be with us 

today, and I appreciate you coming. 

President Obama’s trade agenda is extremely ambitious. If it succeeds, it will help shape global trade patterns for decades to come. 

If it fails, it will result in billions of dollars of missed economic opportunity for American workers and for American job creators. Of 

course, the President’s term is not over yet, and the jury is still 

very much out. 

Even so, I am concerned. First and foremost, the fact that Trade 

Promotion Authority, or TPA, is not renewed creates a serious, and 

perhaps fatal, flaw in the President’s trade agenda. I do not believe 

you can conclude high-standard agreements that will meet Congress’s approval without TPA. I am not the only one who holds this 

view. 

Indeed, in recent months, administration officials like Agriculture Secretary Tom Vilsack and Jason Furman, Chairman of the 

4 

Council of Economic Advisors, have been quoted as saying that 

TPA is a necessary component to conclude and implement our ongoing trade negotiations. 

Ambassador Froman, I have no doubt in your capabilities or 

those of your staff. In fact, I have every reason to believe in those 

capabilities. But history tells us very clearly that, without TPA, 

your trade agenda will almost certainly fail. That is why I am very 

disappointed in the President’s passive approach on this particular 

issue. 

I am sure you can remember the enormous political effort President Clinton put into successful implementation of the North 

American Free Trade Agreement, and I am sure you can also recall 

President Bush’s total political commitment to renewing TPA back 

in 2002. In those cases, war rooms were established and each Cabinet Secretary made congressional approval of those initiatives a 

public priority. 

Put simply, we are not seeing that level of commitment from 

President Obama, which is disappointing to me and I think a lot 

of others as well. Without more effort on the part of the administration, I just do not think we can succeed. 

In addition, I am concerned about the President’s enforcement 

record. Despite a myriad of clear violations, we have yet to see a 

single case brought against Russia in the World Trade Organization. This is the case, despite the fact that the administration told 

Congress during consideration of PNTR that one of the major benefits of having Russia in the WTO would be our ability to bring 

them to dispute settlement. 

I am also profoundly disappointed that the President refuses to 

bring a WTO case against India for its continuing efforts to undermine U.S. intellectual property rights. India knows better. We 

know better, and we ought to be forceful about this. I think it 

would help them as well. This failure to act with regard to India 

exemplifies a pattern of corrosive neglect within this administration when it comes to enforcing American intellectual property 

rights. Countries around the world are taking note of the President’s failure to act in this area, and this is feeding the perception 

that they can refuse to protect, and even actively violate, U.S. intellectual property rights with impunity. 

Finally, I am deeply concerned about the Office of the U.S. Trade 

Representative as an institution. Ambassador Froman, I sincerely 

appreciate the hard work and dedication of you and your staff. I 

have a high opinion of you, as you know. I am also deeply impressed by the caliber of your agency’s career staff and their personal commitment to the work of the USTR. Yet despite your best 

efforts, the agency still ranks dead last in employee job satisfaction 

among small agencies. Part of the problem is USTR’s failure to effectively play its traditional role as a bulwark against other Federal agencies. 

Too often during the interagency process, regulatory agencies are 

just saying ‘‘no’’ to cooperative participation in international trade 

negotiations. For example, it was the Department of Health and 

Human Services that alleged the need for so-called ‘‘policy space,’’ 

resulting in USTR’s proposal to simply carve out tobacco products 

from the Trans-Pacific Partnership negotiations. It was the DepartVerDate Mar 15 2010 17:23 Nov 06, 2014 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 R:\DOCS\90949.000 TIMD
5 

ment of Treasury’s insistence on relegating the financial services 

discussion to preexisting forums that resulted in USTR’s position 

that financial services should be carved out of our trade negotiations with the European Union. 

Despite the strong support of U.S. agricultural and food processor groups for a fully enforceable sanitary and phytosanitary 

chapter in TPP, it was the Food and Drug Administration’s fear of 

dispute settlement that resulted in a weaker USTR proposal which 

excludes certain disciplines from dispute settlement. 

There is a clear pattern here. If this does not change, I am worried that any agreement this administration negotiates will never 

match the President’s rhetoric of concluding high-standard 21stcentury agreements. 

Of course, the history of this administration’s trade agenda has 

yet to be written, and there is still time to correct the course. But 

make no mistake, time is limited. I want to help. That is why I 

worked with my House and Senate colleagues for almost a year to 

negotiate the Bipartisan Congressional Trade Priorities Act, a balanced, bipartisan compromise which will empower our country to 

negotiate high-standard agreements that will get the approval of 

Congress. 

Over 160 leading business and agricultural associations and companies have come out in strong support of this legislation. Like 

them, I strongly believe that approval of our TPA legislation will 

help our Nation succeed in its ambitious trade negotiations. 

That being the case, I am asking once again that the President 

redouble his efforts and help us get this legislation signed into law 

as soon as possible. The political clock is ticking, and it will not be 

long until we lose the small window we have to pass significant 

trade legislation this year. 

Ambassador Froman, I have high regard for you, as you know. 

I look forward to your testimony today. I have to leave shortly after 

we begin, but I appreciate your testimony today and will be working with you to achieve a successful conclusion of a strong, progrowth trade agenda. 

I want to thank you again, Mr. Chairman. I am sorry I took a 

little longer than usual. 

The CHAIRMAN. Thank you, Senator Hatch. 

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

The CHAIRMAN. Ambassador Froman, thank you for your patience. I understand also that you have your family here. Why 

don’t you introduce them to all of us? 

Ambassador FROMAN. Well, thank you. Thank you, Mr. Chairman. My parents are in town, Abe and Suzanne Froman. My wife, 

Nancy Goodman, and our long-time friend, Brenda Schaeffer, are 

also here in town. 

Senator HATCH. Well, welcome. 

The CHAIRMAN. We are glad you are here. [Applause.] 

Public service is not for the faint-hearted, and we really appreciate having family alongside us. 

Ambassador Froman, we have been working closely with you. I 

know recently you have been out talking to Senators. That is much 

6 

appreciated. Why don’t you make your opening remarks, and then 

we will have questions from the Senators. 

STATEMENT OF HON. MICHAEL FROMAN, U.S. TRADE REPRESENTATIVE, EXECUTIVE OFFICE OF THE PRESIDENT, 

WASHINGTON, DC 

Ambassador FROMAN. Well, thank you, Chairman Wyden, Ranking Member Hatch, and members of the Senate Finance Committee. Thank you for the opportunity to testify here today on the 

President’s 2014 trade policy agenda. 

The core of the Obama administration’s economic strategy is to 

create jobs, promote growth, and strengthen the middle class. 

Through our trade policy, we are contributing to that strategy by 

opening markets for Made-in-America exports, leveling the playing 

field for American workers and businesses by raising standards, 

and fully enforcing our trade laws and our trade rights. We are 

unlocking opportunity for American workers, farmers, and ranchers, for manufacturers and service providers, for entrepreneurs and 

innovators, and we are doing so in a way that promotes both our 

interests and our values. 

The Obama administration has made great strides in promoting 

U.S. exports and creating jobs here at home. We increased exports 

to a record high of $2.3 trillion in 2013, contributing to a third of 

our total economic growth. Eleven-point-three million Americans 

now owe their jobs to exports, 1.6 million of those jobs have been 

created in the last 4 years, and those jobs pay 13 to 18 percent 

more on average than non-export-related jobs. 

Building on this success, the administration is pursuing the most 

ambitious trade agenda in decades with negotiation of high-standard trade agreements in the Asia Pacific and with the European 

Union. Together, these negotiations would allow us to access economies representing nearly two-thirds of global GDP. 

Last week during the President’s visit to Japan, the United 

States and Japan crossed an important threshold in our bilateral 

market access discussions. In doing so, we have identified a path 

forward on agriculture and autos, two of the most challenging 

areas of our negotiations with Japan. Although work remains to 

close the gaps, this milestone achievement, spurred on by the 

President’s direct engagement, will provide significant momentum 

to the overall TPP negotiations. 

Through these negotiations, we are working to ensure that TPP 

will open markets for U.S. goods and services, include strong and 

enforceable labor and environmental commitments, promote strong 

intellectual property rights protection and enforcement, and include ground-breaking rules on issues like state-owned enterprises 

and the digital economy. 

Looking across the Atlantic, we will continue this year to make 

significant, steady progress toward a TTIP agreement with the European Union, and later this month we will host the fifth round of 

negotiations. Building on our success at the WTO, in March we notified Congress of our intent to enter negotiations on an environmental goods agreement with countries representing nearly 90 percent of this $1.4-trillion market. 

7 

We will move to conclude negotiations on the trade and services 

agreement and the expansion of the WTO information technology 

agreement. We are also working to conclude a comprehensive review of the African Growth and Opportunity Act, which expires 

next year. We look forward to working closely with you to review 

and revitalize that program. 

Through our trade policy, we seek to promote sectors that are 

vital to the U.S. economy. In 2013, our farmers and ranchers exported a record $148 billion in food and agricultural goods. In 2013, 

we exported nearly $1.4 trillion in manufactured goods and nearly 

$700 billion in services. This year, the administration aims to help 

our farmers and ranchers, our manufacturing workers and service 

providers, build on this record. As the chairman has said, we want 

to make it here, grow it here, and sell it around the world. 

The United States is an innovation economy, and the Obama administration is committed to protecting intellectual property rights 

so that our inventors and creators enjoy the fruits of their labor. 

Just yesterday, we released our 25th annual Special 301 report, a 

tool through which we identify and resolve intellectual property 

rights concerns around the world. 

Thirty million Americans’ jobs rely on intellectual property, and 

we will continue to use our trade agenda in 2014 to defend the intellectual property rights of our creators and innovators by also ensuring access to affordable medicines and a free and open Internet. 

The Obama administration also placed an unprecedented emphasis on trade enforcement. Since 2009, the administration has filed 

17 WTO complaints, doubling the rate of cases filed against China. 

In fact, a little over a month ago, the United States scored an important victory on fair access to rare earth minerals that are essential for maintaining U.S. manufacturing competitiveness, including 

in the area of clean technology. 

Through our ongoing enforcement effort, we are leveling the 

playing field and keeping markets open for agricultural producers, 

manufacturers, and service providers. As we pursue this agenda, 

we are committed to consulting with Congress and seeking input 

from stakeholders, advisors, and the public. We have held over 

1,250 meetings with Congress about TPP alone, and that does not 

include consultations on the rest of our trade agenda. Our congressional partners preview our proposals and give us critical feedback 

every step of the way. Any member of Congress can review the negotiating text and receive detailed briefings by our negotiators, and 

many have. 

We are taking steps to further diversify our advisory committees, 

including opening up our advisory committees for broader representation and launching a new Public Interest Trade Advisory Committee which provides stakeholders focused on consumer, public 

health, and other public interest issues additional opportunities to 

inform our trade policy. 

Finally, let me say a word about Trade Promotion Authority. The 

last TPA legislation was passed over a decade ago, and much has 

changed since then, from the May 10, 2007 bipartisan agreement 

on Labor, Environment, Innovation, and Access to Medicines to the 

rise of the digital economy and the increasing role of state-owned 

enterprises in the global economy. We believe these issues should 

8 

be reflected in a new TPA bill, and we look forward to working 

with this committee and Congress as a whole to secure TPA authority with broad bipartisan support. 

We also look forward to renewing Trade Adjustment Assistance, 

which helps provide American workers with the skills to compete 

in the 21st century, and we urge Congress to expeditiously renew 

authorization of the Generalized System of Preferences (GSP) program. 

In conclusion, our trade agenda will create growth, support wellpaying American jobs, and protect and strengthen the middle class. 

At their core, our trade agreements include strong, enforceable 

rules that promote U.S. values and U.S. interests, and we look forward to continuing our close bipartisan cooperation with Congress 

to accomplish our shared goals and ensure that our trade policy 

creates opportunities for all Americans. 

Thank you again for this opportunity, and I look forward to answering your questions. 

The CHAIRMAN. Thank you very much, Mr. Ambassador. We are 

going to be working very closely with you in the days ahead. 

[The prepared statement of Ambassador Froman appears in the 

appendix.] 

The CHAIRMAN. At this point, I simply want to say to all our 

guests that there are strong views with respect to trade, and certainly everyone has the right to exercise their First Amendment 

rights, but I would like to ask our guests in the back in the green 

shirts to sit down now so that they can respect the rights of others. 

I think it is also worth noting that right now I intend to ask about 

some of these transparency issues that I know people feel strongly 

about. 

Mr. Ambassador, first of all—and I touched on this earlier—this 

is going to generate a lot of heated opinion. I think we all understand that, with respect to trade. The reason I described the 

changes that we have seen over the last generation is that I think 

it is going to be important, on a bipartisan basis, to find fixes to 

deal with those challenges. I believe there is a need for unprecedented transparency in trade, addressing these trade challenges, so 

let me ask you about a couple of specifics about this. 

First of all, I want to make sure that there is enough time for 

the public to review a Trans-Pacific Partnership agreement before 

the President signs it. Can you commit this morning to making the 

text of a Trans-Pacific Partnership agreement available to the public in advance of the President signing it? 

Ambassador FROMAN. Mr. Chairman, we completely agree that 

there needs to be a robust engagement strategy to involve the public in trade policy, and that is why we worked so closely with Congress; why every one of our proposals is previewed by this committee, among others; why we work with the congressionally mandated advisory committee system and are broadening the membership of that committee to be more representative; why we have created a public interest advisory committee; and why we have engaged stakeholders more broadly, having stakeholder events at our 

rounds of negotiation and broad stakeholder calls, and have put 

more information out to the public about our negotiating position. 

9 

So we certainly agree on the importance of robust engagement 

there. 

On the particular suggestion you mentioned, those sorts of time 

lines have been part of TPA processes in the past, and we are glad 

there is a discussion of this beginning. We like to look at what past 

practice was and, on a bipartisan, bicameral basis, work with you 

and the rest of this committee to determine what the right time tables are. 

The CHAIRMAN. So the public can walk out of this hearing knowing that the text of the TPP agreement will be available to the public in advance of the President signing it? That, I believe, is ‘‘yes.’’ 

Ambassador FROMAN. Well, as I said, I think those sorts of time 

tables have been part of the TPA discussion in the past. There has 

been, as I understand, a range of practices in the past, and we 

would like to work with you on a bipartisan, bicameral basis to figure out what the right time tables are. 

The CHAIRMAN. The public also ought to be able to go to the 

Trade Representative website to find out what is going on and not 

to hear about it through leaks and, in effect, what amounts to a 

rumor mill. 

Can you pledge this morning to provide a clear and comprehensive description in plain English of the Trans-Pacific Partnership 

so that the public can be informed about these negotiations? This 

needs to be posted again online promptly, I believe within 30 days. 

Can you commit to that? 

Ambassador FROMAN. Yes, Mr. Chairman. We believe that it is 

important to have public information out there. We have been experimenting with different approaches. We put out blog posts on investment issues and environmental issues. We published a description of all the negotiating objectives of our TTIP initiative. Recently 

we tweeted from the negotiation rounds. We try to find lots of ways 

to ensure that the public has information about that, and we are 

happy to provide a summary of the TPP negotiations as you request. 

The CHAIRMAN. One other issue on transparency. I am going to 

leave this with you, because I want to ask a TPA question as well. 

At your department, there is a point person for intellectual property, there is a point person for agriculture, there is a point person 

for a variety of different matters. It seems to me, to give transparency more prominence, there ought to be a specific person within your agency accountable. You can call them a transparency officer, you can call them whatever you want. I just do not want transparency to get short shrift ever again. Can you commit to that this 

morning? 

Ambassador FROMAN. Well, we have a variety of ways that we 

try to create transparency at the agency. Our Office of Legislative 

Affairs does so with the Congress. We have an Office of Public Engagement that is actively involved, reaching out to stakeholders, 

and an Office of Public Affairs that is putting out information for 

the public. 

Frankly, each one of our negotiators, when they are not negotiating, they are either up here consulting with you and your offices 

or engaging with stakeholders and the public. So your suggestion, 

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10 

text of TPA, in terms of how best to ensure robust, consultative, 

and transparent products. 

The CHAIRMAN. Let me ask a question about TPA, and particularly the relationship between TPP and TPA. It seems to me that 

an upgrade in our trade policy is going to require an upgrade to 

Trade Promotion Authority. You and I have talked a bit in the past 

about what I call smart-track, which I think would allow us to 

have that upgrade in the trade promotion area through greater 

transparency, more strategic enforcement, and a variety of other 

steps. 

It seems to me that when the substance is right, the time will 

be right for TPA. What we want to do is make clear to our trading 

partners that this committee is taking on TPA, that we are going 

to work for the right TPA, we are going to work on a bipartisan 

basis to get the right trade agreements through Congress. So my 

question is, will you commit this morning to work with me and the 

committee on a bipartisan basis to make sure that a strong 21stcentury Trans-Pacific Partnership agreement will be met with an 

equally strong 21st-century TPA agreement so that we can lay out 

how these two critical trade policies fit together? 

Ambassador FROMAN. Yes, Mr. Chairman. I am happy to work 

with you and this committee on a bipartisan basis, and a bicameral 

basis with your colleagues in the House, to develop TPA with as 

broad bipartisan support as possible. 

The CHAIRMAN. Very good. 

Senator Hatch? 

Senator HATCH. Thank you, Mr. Chairman. 

Ambassador Froman, you are negotiating an ambitious trade 

agenda, yet the administration does not have TPA, or Trade Promotion Authority. In my opinion, this is hurting our ability to conclude high-standard agreements which will, again, gain the approval of Congress. 

We introduced a bipartisan, bicameral bill in January which was 

supported by over 160 leading businesses and agricultural associations and companies, a bill which Secretary of Commerce Pritzker 

said will ‘‘help expand market access for American business, ensure 

a level playing field for companies selling their goods abroad, and 

support the creation of American jobs.’’ 

Now, if we are going to succeed in renewing Trade Promotion Authority this year, I believe we need to act by June of this year. For 

that to happen, we need to see a greater sense of urgency and 

much more public engagement from the President and the administration. 

Now, can you work with me and others on this committee to help 

persuade President Obama to make a renewal of Trade Promotion 

Authority a top priority for congressional action within the next 2 

months? 

Ambassador FROMAN. Well, Senator, we welcomed the introduction of that bill in January. 

Senator HATCH. Yes? 

Ambassador FROMAN. We look forward to working with you, with 

Chairman Wyden, and with the House Ways and Means Committee to, as you pursue your legislative process, develop Trade 

11 

Promotion Authority and get a bill that has as broad bipartisan 

support as possible. 

Senator HATCH. Well, as you know, the President called for it in 

his January State of the Union speech, and the next day someone 

on the Democratic side said, well, we are not going to do that. 

Ambassador FROMAN. Well, we are prepared to work with this 

committee, and when it is ready to have a legislative process 

around Trade Promotion Authority, to move that forward in a way 

that can get broad bipartisan support. 

Senator HATCH. Now, intellectual property is fundamental to the 

U.S. economy. I am very concerned that U.S. intellectual property 

rights are under attack around the globe and that your office is not 

doing enough to fight back. India has been pursuing trade policies 

that undermine U.S. intellectual property in order to promote its 

own domestic industries. 

What they are doing seems to me to be a clear violation of their 

World Trade Organization obligations. I believe that enforcement 

action at the WTO may be the most effective tool that we have to 

get India to change its behavior. 

Closer to home, Canada has embraced policies and patent rules 

that undermine research and development investment, upset the 

level playing field for the U.S. innovators, and of course I believe 

that their actions violate Canada’s obligations under NAFTA and 

WTO. 

Now, in your testimony to the House Ways and Means Committee, you spoke about the importance of enforcement. You said, 

‘‘This administration’s view has been that it is not enough to negotiate an agreement and to implement it; you need to make sure 

that it is being fully enforced as well.’’ 

Now, you also said that the administration has ‘‘brought an aggressive agenda to the WTO.’’ I do not understand how you can say 

this when this administration has not brought a single WTO case 

involving intellectual property rights. 

So my question is, why has this administration not brought a 

single case in the WTO on intellectual property, and, in particular, 

why has the administration not brought a WTO case against India 

on their harmful IP policies, and what is this administration doing 

to ensure that Canada, a potential TPP partner, complies with its 

current international trade commitments? 

Ambassador FROMAN. Well, Senator, first of all, thank you for 

your leadership on IP issues and for your encouragement on the 

enforcement front. With regard to those issues, we remain extremely concerned about the deterioration of the innovation environment in India. 

We have been raising this at the highest levels and throughout 

our dialogue with the Indian government about their policies on 

patents and on compulsory licensing, and we have been encouraging them to enter into a dialogue about other mechanisms for addressing legitimate concerns about health care in India and about 

access to medicines that do not violate our intellectual property 

rights. India, as you know, is in the midst of an election and a 

transition, and we look forward to engaging with the new government of India, as soon as it is in place, to pursue this issue with 

them. 

12 

Similarly, on Canada, this is an issue that we have raised with 

the Canadians directly. It is now the subject of litigation in Canada, and we are continuing to engage them bilaterally and in the 

context of other intellectual property rights issues we have with 

them as a way to move this forward. 

Senator HATCH. Well, thank you. My time is up, Mr. Chairman. 

The CHAIRMAN. Senator Schumer? 

Senator SCHUMER. Thank you, Mr. Chairman. 

Thank you, Ambassador Froman. You have a really tough job, 

and you approach it with intelligence, integrity, and calmness. So, 

thank you for your service here. 

I want to talk a little bit about currency manipulation. A bipartisan majority of both the Senate and House have made very clear 

we want strong and enforceable currency manipulation language 

included in any TPP agreement. Strong language on currency manipulation is a vital first step to earning Democratic support to 

passing TPP in the Senate. We will have to take a close look at 

every aspect of the deal, but I think nothing can give TPP a fighting chance of being passed better than strong currency reforms. 

Japan and other countries regularly distort their currency exchange rates to push up trading surpluses with us. In the last year 

alone, the yen has fallen about 25 percent against the dollar. China 

is not part of TPP, but if we did this, it would send a warning shot 

that, if they eventually want into TPP, they will have to reform 

their currency as well, and it might even get them to move on their 

own if they saw we made a strong stand. 

It has real consequences for jobs here at home. A study by the 

Peterson Institute for International Economics found that foreign 

currency manipulation has already cost Americans between 1 and 

5 million jobs. Ending the manipulation would reduce the trade 

deficit by as much as $500 billion in 3 years, increase annual GDP 

by between $300 and $700 billion, and create 2.3 to 5.8 million new 

jobs. So, it matters a whole lot. 

Now, I have long been an advocate in this fight against the type 

of activity that China, Japan, and others do when they manipulate 

their currency. I am not alone. Senators Brown and Stabenow on 

this committee, Senators Graham, Sessions, and Collins on the 

other side of the aisle have joined us. If we brought our bill to a 

vote on the floor of the Senate, it would pass again with broad bipartisan support. We could take legislative action today and win. 

But administration after administration, including, regrettably, 

yours, as well as President Bush, Democratic and Republican, have 

taken the position that this issue can be better dealt with through 

country-to-country negotiations than through legislative changes. It 

has been 18 years since the Treasury Department has designated 

any country a currency manipulator, so I ask: what vehicle do we 

have at our disposal to combat this type of activity which everyone 

says is wrong, if not agreements like TPP? 

I hope the President raised this with the Japanese Prime Minister last week. If he did not do it in strong terms, I hope he will 

do it soon. I want to make very clear I cannot, and will not, support 

a TPP agreement that does not include objective criteria to define 

and enforce against currency manipulation. 

13 

You would not agree to play a game of baseball where your team 

only got two strikes at bat and the other team got four. But, if we 

enter into a TPP agreement without strong currency language, no 

matter what else is in it, that is exactly how we would be hamstringing ourselves. That is because currency manipulation hurts 

our exports to other countries and advantages their exports to us 

across the board, not just in an industry here or there, but in every 

sector of the economy. 

Any country taking this sort of action that is so detrimental to 

our Nation’s economy should not at the same time be granted preferential access to our market. So I guess my question is, has currency manipulation been discussed in the current negotiations on 

TPP, and what do you think the outlook is for getting something 

real in the TPP bill, because it is of great concern to many of us? 

Ambassador FROMAN. Well, thank you, Senator. Thank you for 

your longstanding leadership on this issue. We agree that currency 

manipulation is a critically important issue. 

As you know, from the start of this administration, from the 

President on down, we have been pressing, for example China, bilaterally as well as through the G–20, through the IMF and elsewhere, to move towards a more market-oriented exchange rate and 

to allow the currency misalignment to be adjusted accordingly. 

The Treasury Department, of course, has the lead on this issue, 

and I know you have had an opportunity to see Secretary Lew up 

here as well and to engage with him as well. We are continuing 

to consult ourselves with you, with stakeholders, to determine how 

best to address the underlying issue. 

If you take China, for example, as I mentioned, from the President on down, we have engaged with the Chinese. In June 2010, 

they began to allow their currency to move again, and it has moved 

about 18 percent in real terms. Not fast enough, not far enough, 

but we have made a certain degree of progress there. Through the 

G–7 and the G–20, we make sure that countries are focused on—— 

Senator SCHUMER. My time is running out. Has it been discussed 

in the TPP negotiations yet? 

Ambassador FROMAN. Not as of yet. 

Senator SCHUMER. I hope it will be, because it matters a great 

deal to all of us. I regret that it has not been discussed yet, given 

its level of importance. 

Thank you, Mr. Chairman. My time has expired. 

The CHAIRMAN. Thank you, Senator Schumer. 

Senator Stabenow? 

Senator STABENOW. Thank you very much, Mr. Chairman, for 

this hearing. It is wonderful to see you again, Ambassador Froman. 

I want to follow up on Senator Schumer’s comments. It is no surprise that I want to ask you about currency manipulation as well. 

We have talked extensively about that. 

I am a little surprised to hear it has not come up yet. I thought 

that this had been something that was being discussed. But to emphasize, again, as you know, we have 60 Senators in a bipartisan 

way who have written you a letter asking that we have an inclusion of strong and enforceable currency disciplines in all future 

trade agreements, 60 members, a majority of members, who feel 

very strongly about that. 

14 

So, when we talk about trying to pass TPP, I am not sure how 

that passes, given the strong feelings that people have, unless that 

is addressed. Two hundred and thirty members, 230 in the House, 

wrote a letter also. 

Senator Schumer talked in general terms about this, so let me 

zero right in on one country, although this is certainly not about 

one country. We know about China, we know what has happened, 

the issues related in the past to Singapore, Malaysia, Korea, different places, as you and I have talked about. But let me talk 

about Japan, because we are doing specific negotiations with 

Japan. 

As you know, Japan has not directly intervened in the foreign exchange markets in more than 2 years, but the yen has depreciated 

significantly against the U.S. dollar. And, while the depreciation 

has not shown an impact on the number of U.S. imports of vehicles—you shared some information with me on the numbers—it 

does provide a massive advantage for Japanese auto makers. 

In fact, at today’s exchange rates, there is an estimated benefit of $5,700 on every vehicle, so it is a windfall in operating profits. 

It may end up in advertising, it may end up in research and development, it may end up in cutting prices, it may end up in cutting 

prices on vehicles in other markets where U.S. auto makers are directly competing with the Japanese around the world. So the reality is, $5,700 per vehicle is no small thing. 

I guess to add insult to injury on Japan, on China, and everything else, even though Japan is not currently intervening—and I 

would ask you, if they are not currently intervening in exchange 

markets, why would they not support enforceable currency provisions in TPP; I am not sure why they would not—are you not concerned about the competitive trade advantage that these kinds of 

numbers show? 

Ambassador FROMAN. Well, Senator, yes, we are concerned very 

much about currency and about making sure that there is a level 

playing field. It has been important to the world that Japan get 

back on a path towards economic growth. It is the third-largest 

economy in the world, and it growing means that there is a market 

there for our products as well. 

It has been important that the G–7 has expressed to Japan the 

importance of pursuing domestic demand-led growth and being focused on the domestic part of their economy. But it is something 

that the Treasury Department, which has the lead, of course, in 

this area, engages directly with Japan on and something that we 

monitor very carefully. 

So we are concerned, as I had mentioned to Senator Schumer. 

This is one reason why, from the top down, we have focused on domestic demand-led growth, rebalancing the economy, both in our 

bilateral discussions and through institutions like the G–7 and the 

G–20, as a key part of our overall international economic policy. 

Senator STABENOW. Well, just, again, this is incredibly important. Let me also say that nearly two-thirds of the U.S. trade deficit with Japan is automotive goods, as you know. You and I have 

also talked. I appreciate the focus on non-tariff trade barriers. This 

administration oversaw a highly successful restructuring of the 

automobile industry, saving over 1 million jobs directly. We are 

15 

now in a situation where we cannot even get into the Japanese 

markets. 

If you are an auto dealer in Japan, you cannot put an American 

vehicle or any foreign vehicle on your business, on your car lot. I 

grew up on a car lot, so I recall that. But I guess in closing I would 

just ask that you continue very focused negotiations there as well. 

It does not take the place of currency, but it is incredibly important 

that we open up those markets as well. 

Ambassador FROMAN. Well, thank you, Senator. As you know, we 

negotiated up front an agreement with Japan about the phasing 

out of our tariffs, being the longest staging of any tariffs in TPP, 

being back-loaded and being substantially longer than the KORUS 

agreement. We have a parallel negotiation ongoing about addressing the non-tariff barriers to Japan’s auto market, which, as you 

say correctly, has been historically closed. We are making progress 

in dealing with issues like standards and distribution and dispute 

settlements along those lines. We still have more work to do, but 

we are making progress in those negotiations. 

Senator STABENOW. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Stabenow. 

Senator Cantwell? 

Senator CANTWELL. Thank you, Mr. Chairman. Thanks for holding this hearing. I know we have tried a couple of times and it has 

been delayed, and I certainly appreciate your focus on transparency, because I think this is a key word of our generation, to 

have transparency. 

But I probably do come at this issue a little differently than some 

of my colleagues. I like to say that before Jefferson sent Lewis and 

Clark to the northwest, we were already trading with China, and 

so our region of the country looks at this a little bit differently. 

Probably one in three jobs is related to trade, so I certainly support, for example, the reauthorization of the Ex-Im Bank. 

As we approach this next reauthorization, I hope we do not find 

a bunch of consternation of people who do not want U.S. manufacturers to export and get help in getting U.S. products overseas. I 

support the reauthorization and expansion of a program for the 

small business called STEP, for State Trade and Export Promotion, 

which is helping U.S. manufacturers and other small businesses 

export products and get access to export markets. 

I support the Trade Promotion Authority. I think China has 

done—since our authority has lapsed—something like nine agreements, the European Union 11, Japan eight, Korea six. So, without 

Trade Promotion Authority, our hands are tied. The key thing that 

I am interested in is this news article about the rising middle class 

around the globe. 

To quote this article, it is going to grow from 2 billion to almost 

5 billion by 2030. So in the world market—again, to quote this article—‘‘global middle-class spending will rise from $21 trillion today 

to $51 trillion in 2030.’’ 

Now, most of this is outside the United States of America, so, if 

we do not have these agreements, then how do we get our products 

into these markets? So I wondered if you could comment on that 

16 

and then comment on the point that, when you have TPA, it becomes the standard. 

You could do lots of individual, long-term agreements. My point 

is, while everybody else is doing deals, we are sitting here, and we 

know where the growth opportunity is, and, if you do a TPA, then 

it can set the standard for all these agreements. Even people who 

are very anxious about the situation should know, we want to set 

a standard of labor, or environment, or what have you, and TPA 

helps us do that. Is that correct? 

Ambassador FROMAN. Yes, absolutely. I completely agree, Senator. Just to throw out another figure, right now there are an estimated 500 million middle-class consumers in the Asia Pacific region, and that is expected to grow to 2.7 billion by 2030. 

The question as we engage in TPP is, who is going to serve that 

market? Are they going to be buying Made-in-America products, or 

are they going to be buying products built by somebody else? What 

are going to be the rules of the road for that region? 

As you point out, TPP is an opportunity for us to set certain 

standards for the Asia Pacific, and, more generally throughout the 

international trading system, to raise labor standards, to raise environmental standards, to ensure that the Internet remains free 

and that you do not see a Balkanized Internet or national clouds, 

and to make sure that we are putting disciplines on state-owned 

enterprises and dealing with all the challenges of the digital economy. 

So this is our opportunity to be at the table, to take leadership, 

and to help set the rules of this vitally important region. As you 

mentioned, TPP is intended to be a platform. Right now there are 

12 countries around the table, but there are several more countries 

waiting in the wings that have said they would like to join, when 

the 12 of us have reached an agreement, and to sign on to the high 

standards that we are able to negotiate. 

So it gives us a chance to open markets for our products in this 

vitally important region in which we are going to see a huge 

growth in middle-class consumers ready to buy our agricultural 

products, our manufactured products, and take our services, and at 

the same time to build a larger and larger platform of countries 

that are willing to sign on to high standards. That is a win-win for 

us. 

The alternative, as you say, is that other countries are out there 

negotiating their own agreements at our expense, getting market 

access at our expense. A lot of those other countries do not put the 

same value we do on labor and environment, or on protecting intellectual property, or on putting disciplines around state-owned enterprises, or about maintaining a free Internet. That is what we 

are pressing for with our partners. We have a number of willing 

partners around the table, and this is our opportunity to show 

leadership. 

Senator CANTWELL. Well, market access is a key word, because 

people do not realize that, when you lose market share over a long 

period of time and then you try to go in and compete, it is much 

harder. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

17 

Senator Roberts? 

Senator ROBERTS. Thank you, Mr. Chairman. 

Mr. Ambassador, thank you for your aggressive leadership on behalf of TPP and trade. 

I think I heard you say in your opening comments—and I have 

written it down here—that you have met 1,500 times with members of Congress on trade. Is that right? 

Ambassador FROMAN. Twelve hundred and fifty times just on 

TPP. 

Senator ROBERTS. Twelve hundred and fifty? 

Ambassador FROMAN. Yes. 

Senator ROBERTS. All right. Of the 1,250, have you met with the 

Majority Leader Harry Reid? 

Ambassador FROMAN. I have met with the majority leader. 

Senator ROBERTS. And his response to any movement on trade, 

or TPA, or fast-track during this session of Congress was? 

Ambassador FROMAN. Well, I think Leader Reid’s position on 

trade agreements is well-known, but as a leader he has also 

worked with the administration and worked on a bipartisan basis 

to move trade agreements through the Senate. 

Senator ROBERTS. Did he give you any indication there was any 

wiggle room, that we could do something like this in this session 

like the chairman would like to see, and everybody else would like 

to see? 

Ambassador FROMAN. I think what our view is, is that we would 

like to see TPA move forward when this committee is ready to 

work on it and move it forward. We look forward to working with 

the chairman. 

Senator ROBERTS. The chairman is going to do a great job, and 

so will the ranking member, and all the rest of us as well. I just 

am worried a little bit about the majority leader. I hope you can 

fill his glass. His glass is half empty. Make the glass full if you 

could, sir. I am not going to mention the Vice President’s meeting— 

alleged Vice President’s meeting—with the House, assuring members over there, people worried about union concerns, do not worry, 

we are not going to have any trade bill. 

On April 4th, 44 of us wrote to you and Secretary Vilsack to express our concerns regarding the European Union’s protectionist 

Geographical Indications, or GIs, a brand-new concept which they 

are insisting upon in trade negotiations under TTIP. If the EU 

were to have its way, common products such as parmesan, bologna—and this is a lot of bologna—and Black Forest ham would no 

longer be able to label themselves that way. That is ridiculous. 

I am not interested in the EU dictating how we in America—i.e., 

the bread basket to the world, more especially, Kansas—can and 

cannot label our products. You responded to our letter, and I appreciate that very much. But I would like to hear again what our negotiating position is against the EU in regards to Geographical Indications, and what assurance can you provide the members of this 

committee, and more especially the producers of meat and dairy 

and cheese, that a final agreement with the EU will not prohibit 

these common food names? 

Ambassador FROMAN. Well, we share your concerns completely, 

Senator, and we made very clear to the European Union that we 

18 

oppose their GI system, that we think it is unnecessary and that 

it is inappropriate for our trade agreement. I will just give you an 

example. We have several parmesan reggiano products registered 

here in the United States, and the EU exports billions of dollars 

of cheese and meats to the U.S. under these various names. 

We are not able to export any of our feta cheese or any of our 

parmesan cheese to the EU. So they are able to live quite well 

under our system; we are not able to live nearly as well under their 

system. We have made clear that we think the common name approach and the trademark approach that exists here in the United 

States is the more appropriate one. 

Senator ROBERTS. What was their response to the very logical 

presentation that you have just now defined or explained? 

Ambassador FROMAN. I have not yet convinced them. We will 

continue to work and make clear that we think the common name 

and trademark approach allows room for us to have access to each 

others’ markets. 

Senator ROBERTS. You might have them read ‘‘Green Eggs and 

Ham.’’ That might do something. 

I have one more question with regards to COOL. Many of us here 

who represent agriculture are waiting for a final ruling from the 

WTO regarding mandatory Country of Origin Labeling, or COOL. 

Do you have any idea when we can expect a final ruling? 

Ambassador FROMAN. I will have to get back to you on that. It 

is still in litigation, and Canada and Mexico have not dropped their 

case, so I will get back to you on the precise timing. 

Senator ROBERTS. Well, if the United States were to lose the 

case, again, large sectors of our economy, especially agriculture, 

would be subject to retaliation from Canada and Mexico. Are we 

taking any steps to prevent retaliation if it is found that COOL 

does indeed violate our WTO obligations? 

Ambassador FROMAN. Well, we believe that the rule that has 

been developed is WTO-compliant, and so we have argued that at 

the WTO, and we will await the decision of the WTO. Then, as we 

do in other cases, we will engage with our trading partners. But 

we firmly believe that it is compliant. 

Senator ROBERTS. Thank you, Mr. Ambassador. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Roberts. 

Senator Isakson is next. 

Senator ISAKSON. Thank you, Mr. Chairman. 

Let me start out, not with a question, but with a compliment and 

a comment. First of all, last August I was in Ethiopia with you at 

the African Union, and I had 48 hours of time to watch you work 

with the countries in Africa on the AGOA Act and its possible extension, and I was very impressed and think our country is fortunate to have someone like you as our representative. 

Ambassador FROMAN. Thank you. 

Senator ISAKSON. My comment is, though, without TPA getting 

done, I have little hope that we can get TPP or TTIP done. I think 

what Senator Roberts said, and what some of the others said, is 

something we really need to work on—this is just a comment, not 

the question—to try to raise the visibility. 

19 

Let us have that debate. Sherrod Brown and I will have significant differences on TPA and TAA, but we ought to discuss those 

differences in a debate that achieves a result rather than talking 

about it across the board in terms of comments. So that is just my 

editorial comment. 

My two big points, or questions, are these: you mentioned the 

Trade in Services Agreement in your remarks. TISA is very important in Georgia. There are 3.2 million service-related jobs in our 

State—insurance, financial services, package delivery—that depend 

on good, good, good trade and services agreements with the world. 

First of all, what kind of progress are we making on a TISA agreement? Second of all, what goals, within our goals as a country, affect TPP and TAA in terms of trade services? 

Ambassador FROMAN. Well, thank you, Senator. Thank you very 

much for your involvement and leadership on the Africa issues in 

particular, and we look forward to working with you on the AGOA 

renewal and review that are currently under way. 

On services, we are making good progress in the TISA talks. We 

have countries around the table representing about 70 percent of 

the global services market. We have defined a text that is being 

worked out now, and virtually all the parties around the table have 

tabled offers, and we are working through those offers. So we are 

making good progress, and there is a good work program ahead 

over the course of the next several months. 

Services, as you mentioned, are a vital part of our economy. We 

exported over $700 billion in services last year, and therefore they 

are also a key part of our trade negotiations, both in TPP and in 

TTIP, so we are seeking market access in those negotiations for our 

critical services. 

I would say one more thing, because you mentioned express delivery and logistics. In December, we reached a WTO agreement on 

trade facilitation, which is the first multi-lateral agreement that 

the WTO has reached in its 18-year history. 

It is a very important agreement for reducing the costs of shipping goods around the world. It helps small and medium-sized 

businesses enter the global economy, and it is very good for all 

those companies that are involved in shipping and logistics, and 

many of our companies have an active role to play in that. 

Senator ISAKSON. And your working out that agreement in terms 

of package delivery, by the way, indicates how important a comprehensive agreement like TISA will be for all other types of financial services—insurance and other service products. So WTO has 

not been as successful as I would have liked to have seen it over 

the last 20 years in furthering trade services agreements, so this 

TISA, I think, is going to be very, very important. 

Lastly, and I do not know that this is a question, but I want to 

bring something to your attention. Are you familiar with the Greater Brazil plan? 

Ambassador FROMAN. I am not. 

Senator ISAKSON. Brazil is putting punitive tariffs on U.S. products and limitations on procurement of U.S. goods and services by 

governments in Brazil and subdivisions of the Brazilian government, to the extent that they are shutting us out of their market. 

20 

There are hundreds of U.S. companies that have invested millions of dollars building facilities in Brazil. They employ thousands 

of Brazilians. They build products for the world but also products 

for Brazil. They effectively are being totally shut out from competition in the Brazilian marketplace, and it is beginning to really 

hurt, and it is a bad precedent for the western hemisphere. If we 

do not stand up for those companies that have made those investments and see to it that trade is as fair as we can make it with 

Brazil, then other countries will see it as an opportunity to do the 

same type of thing. 

So I would like to bring it to your attention, which I have, and 

encourage you to get involved in the diplomacy world to see what 

we can do to ratchet up Brazil’s attention that we understand what 

they are doing and that there are consequences to treating the 

United States that way. 

Ambassador FROMAN. Senator, I am happy to follow up on that. 

We are looking for ways to engage with the Brazilians to deepen 

and broaden our economic relationship. We have had a dialogue 

with them about some of their localization policies, which we think 

create adverse barriers to trade, and we are happy to engage on 

this issue as well. 

Senator ISAKSON. The localization policies are a part of the 

Greater Brazil plan, by the way, so I am glad you are on that. 

Thank you very much, Mr. Ambassador. 

Ambassador FROMAN. Thank you. 

The CHAIRMAN. Thank you, Senator Isakson. 

Senator Cardin is next. 

Senator CARDIN. Well, thank you, Mr. Chairman. 

Ambassador Froman, it is always a pleasure to have you here. 

You are not going to be surprised by my question on how we are 

advancing on good governance in the TPP negotiations. The TPP 

countries are a diverse group of countries. Several have real challenges in good governance and basic human rights and in dealing 

with similar issues of corruption. 

I am going to ask you to give me an update as to how the negotiations are proceeding, because I know, when you are dealing with 

trade, you have a country’s attention. They are more likely to do 

things to improve the governance issues and anti-corruption matters when they know that it will have an impact on the willingness 

of a country to open up its markets. We have, of course, very strong 

anti-corruption laws here, so it is difficult for our companies to be 

able to participate in countries where bribery is a standard practice. 

Anticipating that you might give me some glowing progress reports, you could also respond as to whether you are willing for us 

to put into any TPA bill that we might be considering, negotiating 

objectives that are strong on negotiating the rule of law, anticorruption, and similar matters consistent with the U.N. Universal 

Declaration of Human Rights. 

Your comments? 

Ambassador FROMAN. Well, thank you, Senator. And thanks for 

your leadership on these issues. We have worked to address these 

issues in TPP in a number of ways, generally on good governance 

through a series of transparency measures, good regulatory policy, 

21 

opening up processes that could otherwise be susceptible, for example, to corruption. In addition, we have some specific anti-corruption elements of the TPP negotiation that we are still negotiating 

with our partners. 

Then on issues of rights, in particular our focus has been, as you 

and I discussed, on labor rights and focusing on the ILO core principles—forced labor, acceptable conditions of work—making sure 

that countries commit to those and have plans in place to achieve 

those. As you say, this process is an important process for bringing 

countries to the table on issues that they have previously perhaps 

not engaged on. 

I will just mention in the context of Vietnam, which you and I 

had the opportunity to discuss the other day in your office, we are 

engaging with them on labor issues. It is a particularly challenging 

set of issues for that country, as you know. We have also made 

clear the need for them to make progress on other human rights 

issues. They have recently released a couple of dissidents, and we 

are encouraging them to take further action to improve their 

human rights situation. 

Senator CARDIN. I would just point out that basic human rights 

go beyond the labor issues. Labor issues are very, very important 

to me, do not get me wrong, but fighting corruption, fighting for the 

enforcement of rule of law, making some fundamental changes in 

a country that we are going to be competing with, to me, needs to 

be a priority. And since you did not directly respond, I assume that 

you do not object to strong objectives in the negotiations to deal 

with these issues? 

Ambassador FROMAN. We will look forward, in the context of the 

legislative process, to working with you on a bipartisan bill. 

Senator CARDIN. And let me talk about labor for one moment. I 

will start with environment. There was a time when we could not 

talk about environment in trade bills, and then, in NAFTA, we said 

we would use sidebar agreements, and that did not work very well. 

Then we realized we needed to get them into the core agreement 

if we are going to have something that is enforceable. 

Then in Colombia, we decided to use the Labor Rights Action 

Plan. I had offered an amendment so that that would be part of 

the core agreement, so we could take action if they did not follow 

up on it. That was not incorporated into the Colombia agreement. 

Now we have the Congressional Monitoring Group for Labor Rights 

questioning whether Colombia, in fact, is implementing the Labor 

Action Plan as it was anticipated at the time. 

My point is this. If we are going to make progress on environment, on labor, on basic human rights, good governance, et cetera, 

it really needs to be part of a core agreement in order for it to be 

taken seriously. We have their attention until the agreement is executed, but once it is executed, unless it is part of the enforcement 

mechanism, it is very difficult to get the type of action we expect. 

Ambassador FROMAN. Well, Senator, we completely agree. I think 

your description of the history is an important one. Twenty years 

ago, labor and environment were afterthoughts or were side shows, 

side agreements. Now they are central to what we are negotiating 

in TPP, and that is a very important development, because we are 

able to take these labor and environmental standards, that perhaps 

22 

four or five countries have committed to as part of trade agreements, and now have 40 percent of global GDP sign onto it. It becomes more of a global standard as TPP gets done and TTIP gets 

done. 

Senator CARDIN. I agree. And let me thank you for your help on 

the heavy truck issue in Colombia, how their regulations could undermine the exporting of heavy trucks into Colombia. I appreciate 

the cooperation we are receiving from you. 

The CHAIRMAN. Senator Cardin, thank you. Thank you for raising human rights and the rule of law. I think these issues are also 

critical to trade enforcement, and I look forward to working with 

you, and of course the Ambassador. 

Senator Thune is next. 

Senator THUNE. Thank you, Mr. Chairman. 

I will echo what some of my colleagues have said about encouraging you to engage as forcibly as you can with Congress on TPA. 

I think it is really important that we get that done and get it done 

soon. 

I am increasingly concerned about reports from our agricultural 

producers and seed companies about China’s unwillingness to approve new agricultural biotech products. It is a critical market for 

American agriculture—$16 billion last year in corn, beans, and 

dried distillers grains. 

But we are told this year, according to the Feed and Grain Association, that corn exports are down 85 percent from a year ago and 

that corn shipments that Beijing has rejected have cost grain companies $427 million in lost sales and reduced prices. 

So, given the situation in China, I am wondering—I think the 

folks who were impacted by this would like to see this issue elevated as much as possible. Would you support utilizing existing 

venues such as the U.S.-China Joint Commission on Commerce and 

Trade and the U.S.-China Strategic and Economic Dialogue to raise 

these issues in a forceful way with the Chinese government? Perhaps you could talk about other steps that USTR might be taking 

to ensure that agriculture/biotechnology concerns are consistent in 

high-level U.S. trade policy priority. 

Ambassador FROMAN. Yes. Absolutely, Senator. In fact, in December we had a meeting of the Joint Commission on Commerce 

and Trade that Secretary Pritzker and I co-chair, and Secretary 

Vilsack also participates actively in, and this was one of the top 

issues on the agenda, talking about their biotech approval process, 

the need for it to become regularized and more fluid. And it is 

something that we are continuing to work on and continuing to 

raise at the highest levels in China. 

We raised it with the Vice Premier, as well as the Minister of 

Agriculture, and we are going to continue to raise it. We have some 

opportunities in the coming months for engaging China on this and 

other issues. 

Senator THUNE. But some of these venues I mentioned, like the 

U.S.-China Joint Commission on Commerce and Trade, the U.S.- 

China Strategic and Economic Dialogue, are those venues that you 

think would be appropriate to do that? 

Ambassador FROMAN. Absolutely. The JCCT, the first one you 

mentioned, is one we did in December, and we will have an opporVerDate Mar 15 2010 17:23 Nov 06, 2014 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 R:\DOCS\90949.000 TIMD
23 

tunity to do that later this year. I know that Secretary Vilsack has 

also been in touch with his counterpart, following that visit, to talk 

about follow-up on that and some other agriculture-related issues. 

Senator THUNE. All right. Good. I hope you can keep it a high 

priority. 

There are a lot of us in Congress, myself included, who have 

been frustrated by the whole issue of not being able to get the Keystone Pipeline approved. It is something that I believe is clearly in 

America’s economic and national security interest. I was going to 

ask you some questions, and you can probably answer this, hopefully, ‘‘yes’’ or ‘‘no.’’ 

But is USTR providing comments to State as part of the interagency review process for the presidential permit of the Keystone 

XL Pipeline? 

Ambassador FROMAN. I do not believe we are. I do not believe we 

are involved in this. 

Senator THUNE. All right. So there is not anything that you are 

furnishing in terms of comments to the members of the committee 

that is looking at this? 

Ambassador FROMAN. I will come back to you to confirm, Senator, but I do not believe we are involved in this. 

Senator THUNE. All right. If you are, I would be interested in 

knowing. There are concerns that are being raised about whether 

or not any challenge could be brought under NAFTA if the Canadians decided, if the ultimate rejection of the pipeline is the outcome, that they might be able to utilize NAFTA to raise trade considerations. So I would be interested, and I am sure many of my 

colleagues would be too, as to what the implications of that might 

be. 

I have talked to you about this in the past, but I also wanted to 

raise the issue of the EU’s decision last year to impose a 10-percent 

duty on U.S. ethanol exports. You have previously indicated that 

USTR is considering a challenge to the EU tariffs at the World 

Trade Organization, and I am wondering if you could comment 

briefly on where USTR is in the decision-making process and when 

American ethanol producers might expect a decision from the administration. 

Ambassador FROMAN. We are continuing to look into that issue 

and develop our options with regard to that. We have not yet made 

any decision and will certainly consult closely with you as we go 

through that process. 

Senator THUNE. I wanted to mention one other thing, and that 

is—and you have heard this many times from our agricultural 

groups—the importance of market access for agriculture in the Japanese market. 

For those of us from farm country, making sure that TPP results 

in significant new market access opportunities for U.S. agriculture 

is going to be critical, and I am wondering maybe if you could 

elaborate on the President’s discussions on this topic with the Japanese Prime Minister last week, and how would you characterize 

those market access negotiations with Japan following the President’s trip to Asia? 

Ambassador FROMAN. Well, thank you. As you point out, access 

to Japan’s market is a critical part of our overall TPP initiative. 

24 

We have made clear that we have products that we sell into Japan, 

and we need to address their historic barriers. Japan has been a 

market that has had very high barriers in the past. 

While we were there last week, the President and the Prime 

Minister engaged on this and other TPP-related issues, among 

other things, and we made some significant progress in our discussions. We did not reach an agreement, but we reached a milestone 

in terms of beginning to sort out the parameters of how we would 

deal with market access in some of their more sensitive areas. So 

we have further work to do, certainly, but we think that there was 

enough progress there to give further momentum to the TPP negotiations overall. 

Senator THUNE. Thank you. 

Mr. Chairman, my time has expired. Thank you. 

The CHAIRMAN. Thank you, Senator Thune. 

Senator Menendez? 

Senator MENENDEZ. Thank you, Mr. Ambassador, for your service. I want to commend you as well for your outreach and your responsiveness. I cannot always say that about administration officials, but in your case I can, so I want to say it. I appreciate it. 

You are aware of my concerns with India’s pharmaceutical patent violations and my concerns with Canada’s patent utility regime. In the Special 301 report issued by the department yesterday, you issued fairly strong statements about the need for improvement in both countries’ IP regimes, which I both support and 

applaud. 

Nevertheless, as we are looking at TPP and other elements, I am 

convinced that our economy is increasingly based on innovation. I 

am looking for the administration to demonstrate that it has a 

long-horizon, whole-of-government view and strategy on advancing 

international IP policies, one that I and other members can get behind and support. 

So, can you give me a sense of what is the administration’s strategy, specifically with regards to emerging economies, when IP protection and enforcement is inadequate? 

Ambassador FROMAN. Well, first of all, as you know, yesterday 

we issued the Special 301 report. We focused on a number of problem areas. As I mentioned earlier, we have been very concerned 

about the deterioration of the innovation environment in India. 

We are looking forward to them getting through their election 

and for us to be able to engage with the new government on that, 

and to have a real dialogue about how they can address their legitimate public policy interests in public health and access to medicines while still respecting the intellectual property rights of innovative companies, including from the United States. 

Similarly on Canada, we have made clear our concern about 

their utility approach to patents, and we are going to continue to 

engage bilaterally and in our other discussions with them about 

that and other IP-related issues. 

In TPP, we have a robust intellectual property rights agenda 

that enhances innovation, which at the same time takes as its 

touchstone the May 10, 2007 bipartisan agreement which noted 

that there should be differentiation among countries depending on 

levels of development. 

25 

We are working with individual countries to ensure that they are 

strengthening their intellectual property rights regimes consistent 

with their levels of development and that we are able to promote 

innovation and at the same time promote access to medicines. We 

are working individually with each country in TPP, and we are 

very much focused on improving the overall level of intellectual 

property rights protection across the region, including on small 

molecules and on biologics. 

Senator MENENDEZ. And while you are clearly in the lead on this 

because of the trade value that you obviously possess in your portfolio, are there other elements of our government promoting our interests in intellectual property rights—the State Department, Commerce, others? 

Ambassador FROMAN. Yes. We work very closely, for example, 

with the Commerce Department and the Patent and Trademark 

Office. We work with the Intellectual Property Rights Coordinator 

at the White House. We work with the State Department, we work 

with Health and Human Services, and with the Department of Justice. We work with several other agencies on an inter-agency basis 

in the process of this negotiation. 

Senator MENENDEZ. On another matter, Bangladesh submitted 

their latest GSP action plan progress report to USTR in mid-April, 

and I understand that it was reportedly discussed during the Trade 

and Investment Cooperation Forum meeting a few days ago. 

Given recent reports of union suppression in the garment sector, 

how realistic is the Bangladeshi government’s self-assessment of 

their progress on the action plan’s requirement to ensure protection 

of unions and their members from anti-union discrimination and 

reprisal? What is your assessment of their progress on this requirement? 

Ambassador FROMAN. Well, as you know, we suspended GSP 

based on the labor rights and the worker conditions in Bangladesh. 

We developed an action plan with them of the steps necessary for 

them to take. Our view, discussed earlier this week in Bangladesh, 

is that they have taken some steps, but there is still a lot of work 

to be done. So we are going to continue to engage with them on 

the remaining work that needs to be done and encourage them to 

take those actions. 

Senator MENENDEZ. Finally, our trade policy agenda report of 

2014 talked about U.S. goods exports to Latin America and the 

Caribbean increasing about 175 percent from 2003 to 2013, the 

fastest rate of export growth to any region in the world, almost a 

40-percent increase over the previous 3 years, which is pretty dramatic. Are there other opportunities in Latin America that we need 

to pursue based upon that tremendous growth? 

Ambassador FROMAN. Well, Senator, I think there are further opportunities that we can pursue. In TPP, of course, we have not only 

Asian countries at the table, but also countries from Latin America: 

Mexico, Peru, Chile. We are following with great interest the development of the Pacific Alliance in this region as they open up their 

markets to each other. There are other countries in Latin America 

that potentially would like to join TPP in the future. 

In response to Senator Isakson’s question, we are still looking for 

ways to engage with Brazil to deepen and broaden our economic reVerDate Mar 15 2010 17:23 Nov 06, 2014 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 R:\DOCS\90949.000 TIMD
26 

lationship there, and to build upon the network of free trade agreements that we already have with Latin America and the Caribbean, and deepen our relationship with them accordingly. 

The CHAIRMAN. Thank you. 

Senator Carper is next. 

Senator CARPER. Thanks, Mr. Chairman. 

Ambassador Froman, very nice to see you. Thanks for coming. I 

was just leaving as you introduced your wife and your family here. 

It is very nice for you to come here and to have his back. So, thank 

you. 

I know a number of questions that I thought of asking have been 

asked. I am going to go back to one and maybe re-plow some 

ground, but not too much, I hope. 

But, as we negotiate trade agreements, other countries are obviously actively negotiating agreements to reduce barriers and increase the trade between themselves and other nations. For example, Japan and Australia, as you know, both of which are involved 

with us in the Trans-Pacific Partnership, recently concluded a bilateral free trade agreement. Earlier this year, I think Colombia, 

Mexico, Peru, and I think Chile, three of which are also in the 

Trans-Pacific Partnership, concluded their own agreement. 

As you know, many of our negotiating partners are seeking deals 

with China and with Europe. While many of these free trade agreements may not be as ambitious as the Trans-Pacific Partnership is 

expected to be, what do you think is the effect of so much negotiation, so many agreements, even with our own negotiating partners, 

that do not involve our country? What is the effect? 

Ambassador FROMAN. Well, Senator, I do not think these are necessarily mutually exclusive efforts, and I think as countries pursue 

bilateral, trilateral, or other regional arrangements, if it allows 

them to open their markets and liberalize trade, it can be a very 

positive step forward. 

I think it does underscore—and this goes to Senator Cantwell’s 

question earlier—the importance of us being at the table and us 

being engaged, because, if we are not engaged at the same time in 

negotiating market access and helping our partners to establish the 

rules of the road going forward, then we are going to be left out 

of the game, and we are going to be left on the sidelines while 

other people serve those markets, while the rules of the system do 

not necessarily reflect our interests or our values. 

So, if we want a trading system that has higher labor standards, 

higher environmental standards, protects intellectual property 

rights, puts disciplines around state-owned enterprises, protects 

the digital economy and allows for a free Internet, and we want 

market access to the fastest-growing markets in the world, we need 

to take the field, we need to be at the table, we need to be engaged, 

we need to be showing leadership, because, as you point out, other 

countries are not waiting for us. They are moving ahead without 

us. It is not a static situation. That is why TPP and TTIP are so 

important, because it is our way of engaging the global economy in 

a way that is both consistent with our interests and with our values. 

Senator CARPER. Good. Thank you. 

27 

I want to talk a little bit—and I mentioned this to you in the 

anteroom before we came in—about poultry. I have never discussed 

poultry with you before. Actually, I do every time I see you. But 

I do talk about other subjects. Whenever a trade representative is 

here, I am always quick to turn to poultry. 

People say, why do you talk so much about poultry with the 

trade representative? I say, we live in a State where there are 

more chickens per capita than in any other State in the Nation, 

some 300 chickens per capita, and agriculture is a pretty big industry in Delaware. About 80 percent of it is poultry-related. We raise 

corn and soybeans, we feed the chickens, we process the chickens, 

we sell them all over the country and all over the world. 

We used to sell about 1 out of every 100 chickens we raised outside of the U.S.; today it is 20. We do that in spite of the fact that 

countries—oh, gosh, like Canada—continue to impose restrictions 

on part-poultry products. I think Australia, New Zealand, and 

Japan are using non-scientific barriers or quotas to prohibit and restrict trade of U.S. poultry products to those countries. 

So expanding imports into these countries means a whole lot 

more income for our poultry farmers in the U.S. and for those in 

larger supply chains and creates more jobs here in America. I am 

told that if we could actually start selling poultry in the EU, that 

it is about a $600-million market. And we would not have to take 

all of that, but it would be nice to have a piece, maybe a thigh and 

a wing, in that market. 

But as your team negotiates the Trans-Atlantic Trade and Investment Partnership and the Trans-Pacific Partnership, I just 

hope that opening up agricultural exports—I think Senator Thune 

had mentioned this earlier—specifically poultry exports—I do not 

think he mentioned that—is a top priority for some of us on this 

committee. 

Just take a minute or two, if you would, please, to discuss what 

you and your team are doing to increase market access for our agricultural products in the recent trade negotiations. Do you think we 

can find an agreement that opens up the poultry market in some 

of these agreements, and how are you preventing nations from 

erecting new trade barriers to our chickens? Thank you. 

Ambassador FROMAN. Well, Senator, I would be—— 

Senator CARPER. I do not mean to squawk so much. [Laughter.] 

Ambassador FROMAN. I would be disappointed if you did not 

raise chickens. 

The CHAIRMAN. Before we start a pun-o-rama, I want to get Senator Brown in too. 

Senator CARPER. Good. 

Ambassador FROMAN. Let me just say that agriculture is a high 

priority in our market access discussions. It is an area of high 

growth in terms of our exports, both in terms of reducing tariffs 

and other barriers, but also, very importantly as you point out, addressing SPS barriers, non-science-based barriers that have kept 

our poultry, as well as other products, out of certain markets. So 

both in TPP and TTIP, those are high priorities. 

Senator CARPER. Thank you so much. 

The CHAIRMAN. Thank you, Senator Carper. 

Senator Brown? 

28 

Senator BROWN. Thank you, Mr. Chairman. I am so appreciative 

that you are doing this hearing. 

Mr. Ambassador, thank you for working together in cooperation 

in the work you are doing. 

I want to start with a ‘‘yes’’ or ‘‘no’’ question. I have a number 

of things I want to talk about, and I would appreciate your doing 

that. You responded to Senator Stabenow’s and Senator Schumer’s 

questions about currency. Senator Stabenow pointed out that a 

strong majority of House members have insisted, by signing their 

name to a letter, a strong majority of Senators have insisted, that 

currency be part of TPP. 

My question is—and I really want you to answer this ‘‘yes’’ or 

‘‘no,’’ because I want to get into some detailed, kind of in-the-weeds 

investor state questions—are you prepared to risk defeat of TPP by 

not including meaningful currency provisions in this agreement? 

Ambassador FROMAN. I am sorry, I cannot answer that ‘‘yes’’ or 

‘‘no.’’ All I can say is, we are continuing to work, the Treasury Department and ourselves, on this issue to see how best to address 

the underlying concerns. 

Senator BROWN. And you are unwilling—I will ask you ‘‘yes’’ or 

‘‘no’’ this way. Do you plan to include strong currency provisions? 

I know you say you are working on currency, but are you planning 

to put a provision in as strong as the letters that you have received—that you have not yet answered, by the way—about currency? 

Ambassador FROMAN. Again, we are continuing to consult with 

you, with other members, with stakeholders, about how best to address the issue. That is all I can say. 

Senator BROWN. All right. All right. That is the best I am going 

to get. All right. 

I want to talk about investor state dispute settlement. Multinational companies conduct risk assessments—including assessments 

of foreign countries—before they invest there. The Boston Consulting Group, for example, provides risk-management assessments 

that cover regulation, governance, organization, culture, process, 

among others. Multinational corporations can purchase private insurance policies to mitigate risks associated with overseas investment to protect themselves. 

AIG, for example, offers a multinational insurance program with 

coverage options to address multinational exposures. U.S. Overseas 

Private Investment Corporation, OPIC, offers political risk insurance to encourage U.S. investment abroad. OPIC’s services are 

available in more than 150 countries and have supported more 

than $200 billion of investment. 

So, U.S. companies going into these countries are planning for 

every kind of eventual problem through insurance, through risk assessment, through studies, through OPIC’s political risk coverage. 

They are doing this investment in other countries with their eyes 

wide open. 

In addition, we know that ISDS, Investor State Dispute Settlement, has given big tobacco companies the ability to threaten small 

developing nations. Even the threat of a lawsuit from a big tobacco 

company in a small, developing, not very wealthy country has enVerDate Mar 15 2010 17:23 Nov 06, 2014 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 R:\DOCS\90949.000 TIMD
29 

couraged some of these countries not to pass anti-tobacco public 

health laws. 

So we know that the presence of ISDS has empowered big tobacco to go into the developing world and have their way. With all 

the other protections that companies have built in in the private 

sector, we have market-based options for these companies to protect themselves, we have the U.S. OPIC, Overseas Private Investment Corporation, to protect these companies. Why do we need 

ISDS to protect these companies while we are giving that power to 

tobacco, to big tobacco, to undercut public health laws? 

Ambassador FROMAN. Well, Senator, underlying investor state 

dispute settlement is the notion that we provide here in this country, both to domestic and foreign investors, a certain degree of protection under our court system, non-discrimination and the like, 

but not every country around the world does. Our investors have 

been subject, in many countries around the world, to discriminatory practices or expropriation. 

There are 3,300 agreements around the world on investment, the 

vast majority of which have some form of investor state dispute 

settlement. The U.S. is party to 50 of those agreements, but countries all over the world have been signing agreements over the last 

50 years that have some degree of investor state dispute settlement. 

The standards in those agreements vary significantly. What we 

are trying to do through TPP is to raise the overall standards of 

the investor state dispute settlement regime. So provisions that 

would allow the frivolous cases to be dismissed or attorneys’ fees 

to be awarded, provisions that have allowed non-parties, NGOs or 

others, to participate in ISDS procedures by filing briefs, we would 

like to see greater transparency around those. Also, we would include provisions to ensure that governments can regulate in the interest of public health, safety, and the environment and not be unduly subject to those sorts of challenges. 

So through TPP—and I would say this is true of labor, it is true 

of environment, it is true of ISDS—we are trying to take what is 

the status quo and raise standards, improve the standards, and try 

to create new standards that can help strengthen the overall system internationally. 

Senator BROWN. Thank you. For the record, Mr. Chairman, OPIC 

does provide insurance for expropriation, so that flag is often 

raised, I think, a bit less than necessary. Thank you. 

Thank you, Mr. Ambassador. 

The CHAIRMAN. I intend to work very closely with the Senator 

from Ohio on these matters as well. 

We are getting towards the end, Ambassador Froman. I want to 

get at the enforcement issue and then provide a recap, I think particularly on where we are on transparency and Trade Promotion 

Authority. 

A lot of Americans, when they hear the debate about future trade 

agreements, the first thing that they say is, well, you people in 

Washington, DC are not enforcing the ones we have, so why are 

we talking about new ones before we enforce the ones that we 

have? Too often it seems that when we have a trade agreement, we 

honor it, while our trading partners do not. 

30 

There are a variety of excuses. They say that they may not have 

the resources to do it. They may say that there are political concerns. But at the end of the day, we do not have the enforcement 

effort that is so important. Our experiences with China, Korea, 

Russia, and others make clear that we lose out if we let agreements go into force before countries are able to comply with the 

commitments that they have made. 

So my question on the enforcement issue is, outline what steps 

your office is willing to take, the USTR, to put in place a new commitment to trade enforcement. 

Ambassador FROMAN. Well, we are very committed to trade enforcement. We are happy to talk about what further steps we can 

take. I have mentioned that we have brought more WTO cases; we 

have brought cases against China at twice the rate as before. 

We have brought the first-ever case on a labor issue vis-a`-vis 

Guatemala, and we are continuing to pursue that. We have created 

this interagency Trade Enforcement Center at USTR with great 

support from the Commerce Department, as well as from other departments. 

That has allowed us to put together more complex cases than we 

have ever been able to put together before, where we have people 

from all over the government, a whole-government approach—the 

people with language resources, country expertise, domain subject 

knowledge—and are able to put together these very complicated 

cases that can have a systemic impact. 

So we are very much focused, and we agree with you completely, 

that part of the deal of negotiating new agreements is to ensure 

that we are monitoring, implementing, and enforcing our existing 

agreements, and we are very much focused on doing that. 

The CHAIRMAN. And there is no question in my mind that you 

all are stepping up the effort to enforce trade laws. In particular, 

I was pleased with the work the USTR did on the critical minerals 

issue, which I think is almost a model for how to tackle a major 

trade enforcement issue. I just want you to know that, even though 

I think you are stepping it up, I think there is a lot more to do. 

The reason why is that, for those of us who have been supportive 

of trade—and I have voted for every market-opening agreement 

since I have been in public service—we need to have a better response to people who say, why are you talking about new trade 

agreements before you have tougher enforcement of the ones that 

are on the books? 

So let me provide a recap of where I think we are. On the transparency issue—and you and I went back and forth on some of the 

semantics of trade law—the American people are going to insist on 

being able to review the TPP agreement before the President signs 

it, and so am I. I think that the law is very much in sync with that. 

On the TPA issue, it just seems to me—and I think we agree on 

this, and I am just sort of recapping now—that we need a TPA upgrade that reflects the needs of a modern trade agreement. 

For the people whom I have the honor to represent at home, one 

out of six jobs in Oregon depends on international trade. The trade 

jobs often pay better than do the non-trade jobs. They reflect a 

higher level of productivity. So, as we work through these issues, 

these issues of the future, some of which I now call smart-track— 

31 

and we are going to be fleshing that out in the future—I just want 

it understood that we are going to be working closely in partnership with you. 

I think you know that there are strong views on this committee, 

and I happen to think we can forge a bipartisan agreement to do 

trade policy right, here in the U.S. Senate. If you would like to 

have the last word, we are happy to give it to you. You have been 

a patient person. Today has been something of an unorthodox day 

even by Senate scheduling, and we appreciate your patience. 

Ambassador FROMAN. Well, Mr. Chairman, thank you very much. 

We very much look forward to working with you as the legislative 

process on TPA proceeds and very much want to partner with you 

on that. 

On the transparency issue, our goal is to release the terms of the 

agreement as soon as we can. Once we have an agreement, we will 

want to make sure that the terms are made public as early as possible. But of course that means we have to reach an agreement, 

and that is where our focus is right now: trying to reach the best 

possible agreement for the American people on TPP and on TTIP. 

The CHAIRMAN. I understand that. The reason that I have focused on it is that I just returned from seven town hall meetings 

at home in Oregon. This comes up all the time, and it reflects the 

generational changes that we have seen in trade policy that I listed 

earlier. 

I remember supporting those agreements in the 1990s with a full 

head of hair and rugged good looks and that sort of thing. Of 

course, nobody was online and expecting elected officials to give ongoing information. When I talk about transparency—and I want to 

emphasize this point—nobody is talking about making available 

what I call proprietary information. 

In other words, if you are talking about Coca-Cola, of course you 

would not make the secret sauce in Coke available. That is proprietary information. But terms of a trade agreement that affect various policy issues with respect to Coca-Cola and other products is 

what I think the American people are going to insist on. I think, 

based on our conversations, that we are going to be pursuing that 

together and will do so on a bipartisan basis. 

So, the hearing record here in the Senate Finance Committee is 

going to remain open until May 5th. I thank you again, Mr. Ambassador, and I look forward to working with you in the days 

ahead. 

The Finance Committee is adjourned. 

[Whereupon, at 1:50 p.m., the hearing was concluded.] 

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90949.075
(109) 

COMMUNICATIONS


90949076.eps
110 


90949.077
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90949103.eps
137 


90949.104
138 

Æ 


90949105.eps