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THE 2010 TRADE AGENDA 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MARCH 3, 2010 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

BLANCHE L. LINCOLN, Arkansas 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

CHUCK GRASSLEY, Iowa 

ORRIN G. HATCH, Utah 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

JOHN ENSIGN, Nevada 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

RUSSELL SULLIVAN, Staff Director 

KOLAN DAVIS, Republican Staff Director and Chief Counsel 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 3 

ADMINISTRATION WITNESS 

Kirk, Ambassador Ron, U.S. Trade Representative, Executive Office of the 

President, Washington, DC ................................................................................. 5 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

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

Prepared statement .......................................................................................... 39 

Crapo, Hon. Mike: 

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

Grassley, Hon. Chuck: 

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

Prepared statement .......................................................................................... 44 

Kerry, Hon. John F.: 

Prepared statement .......................................................................................... 46 

Kirk, Ambassador Ron: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 47 

Responses to questions from committee members ......................................... 49 

COMMUNICATION

Retail Industry Leaders Association (RILA) ......................................................... 101 

(III) 

(1) 

THE 2010 TRADE AGENDA 

WEDNESDAY, MARCH 3, 2010 

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

The hearing was convened, pursuant to notice, at 11:29 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Kerry, Lincoln, Wyden, Stabenow, Cantwell, 

Nelson, Menendez, Carper, Grassley, Crapo, Roberts, and Enzi. 

Also present: Democratic Staff: Bill Dauster, Deputy Staff Director and General Counsel; Ayesha Khanna, International Trade 

Counsel; Amber Cottle, Chief International Trade Counsel; and Michael Smart, International Trade Counsel. Republican Staff: Stephen Schaefer, Chief International Trade Counsel; David Johanson, 

International Trade Counsel; and David Ross, International Trade 

Counsel. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The committee will come to order. 

Benjamin Disraeli said, ‘‘Free trade is not a principle, it is an expedient.’’ Disraeli is right. Free trade is not an ideology. It is a 

means to an end. Free trade is a tool to create opportunity for the 

American people, and our trade agenda cannot stand in isolation. 

It must serve our broader goals. 

America is emerging from the most wrenching economic crisis 

since the Great Depression. The economy is beginning to recover, 

but unemployment remains high. Fifteen million Americans are out 

of work. Our most urgent economic goal must be to create jobs. Job 

creation must be at the center of our trade agenda. 

History tells us that expanding trade promotes growth. According 

to the Peterson Institute, trade liberalization since 1945 has increased the United States’ national income by 9 percent. That 

9 percent means $1.3 trillion of additional income last year alone. 

We know that opening markets and increasing exports creates jobs. According to the Department of Commerce, every $1 billion in 

manufacturing exports supports almost 7,000 jobs, and every 

$1 billion in agricultural exports supports 8,000 jobs. Last year, America exported more than $1.5 trillion in goods and 

services. Those exports supported nearly 10 million jobs. In 2008, 

my home State of Montana exported more than $2 billion worth of 

agricultural goods, industrial machinery, chemicals, paper, and 

other products. 

2 

Americans are among the most productive people in the world. 

But we are not yet meeting our export potential. We are the 

world’s largest economy, nearly 3 times the size of our nearest competitor. We are only the third-largest exporter, after China and 

Germany. As a share of national income, America exports less than 

all of our major trading partners. We must achieve our export potential; our economic recovery depends on it. 

As a result of the recession, domestic consumption has plummeted. Public spending helped to fill the demand gap in the short 

run, but, as we reduce stimulus to protect our fiscal stability, we 

must find new sources of demand. We must find new buyers 

abroad. 

The President has set a goal of doubling U.S. exports over the 

next 5 years. That increase would support 2 million jobs, and I endorse that goal. But it is ambitious. It would require exports to 

grow nearly 19 percent annually. That is almost double the yearly 

average since 1960. We can meet this goal, but our actions must 

be as ambitious as the goal. We must do everything possible to 

open markets and promote our exports. 

What should we do? I propose five steps. First, we should increase our support for export promotion. Last week, we heard testimony about the export potential of small business. Small businesses represent 97 percent of exporting firms, but only 30 percent 

of exports. There is room for growth. 

In order to grow, small businesses must obtain the necessary resources. As Spencer Williams, the president and CEO of West Paw 

Design in Bozeman, MT, testified, small businesses need financing, 

they need market research, and they need technical assistance. 

If we are committed to increasing exports and creating jobs, we 

should help small businesses acquire these resources just as our 

competitors do. Canada, for example, spends 50 percent more than 

we do on export promotion; the United Kingdom spends 3 times 

more. 

Second, we should approve our pending trade agreements. South 

Korea is our 7th-largest trading partner, Colombia our largest agricultural market in South America, and Panama is a center of global commerce. 

The International Trade Commission estimates that these agreements, once implemented, would increase U.S. exports by approximately $12 billion. We must address the remaining obstacles to 

these agreements, but we must also recognize the consequences of 

delay. Our competitors are signing trade deals that will put our 

farmers and businesses at a competitive disadvantage unless we 

act. 

Third, we should focus on the markets that matter most. I have 

long supported American participation in the Trans-Pacific Partnership, and I applaud the administration for launching these negotiations. A TPP agreement would anchor our position in the AsiaPacific region. It could set a new high standard for transparency, 

for non-discrimination, and open markets in this fast-growing region. 

To reduce barriers in other markets, we must insist on an ambitious Doha Round agreement that creates opportunities for agriculture, manufacturing, and services. The deal on the table is inadVerDate Nov 24 2008 20:40 Jun 24, 2011 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 R:\DOCS\66785.000 TIMD
3 

equate, and we appreciate your efforts, Mr. Ambassador, to push 

for more market access, particularly from China, India, and Brazil. 

Fourth, we must enforce our existing agreements. Even the best 

trade agreement will not meet its export potential if we do not enforce the rules. We must identify barriers and remove them, 

through consultation when possible, or litigation when necessary. 

By the same token, when trade rulings go against us, we should 

strive for compliance. We must also reserve the right to decide the 

appropriate response to these rulings, but we cannot expect our 

trading partners to uphold the rules if we do not. 

Fifth, we must ensure that our trading partners do not gain unfair advantage by failing to adopt or enforce basic labor rights and 

environmental protections. In our pending trade agreements, we 

strengthened labor and environmental standards. These bipartisan 

amendments improved our agreements and should be carried forward in future negotiations. The new opportunities created by 

trade agreements need not, and should not, come at the expense 

of workers or the environment. 

As Disraeli emphasized, free trade is a means to an end. So let 

us commit to increase our exports, enforce our agreements, and 

protect workers and the environment, but let us not forget the ultimate goal of these actions: creating jobs for the American people. 

I will now turn to Senator Grassley. 

OPENING STATEMENT OF HON. CHUCK GRASSLEY, 

A U.S. SENATOR FROM IOWA 

Senator GRASSLEY. Yes. Thank you, Mr. Chairman. 

Welcome, Ambassador Kirk. You are a person whom I feel in 

your heart is really into the issue of trade. You understand it. You 

work hard at it, and I am glad for that. I am glad for the Nation, 

because trade is a very important aspect of turning this country 

out of the recession that we are in. I also hope that you get the 

support within the administration that you deserve. 

This is a very important hearing. It gives us an opportunity, 

through Ambassador Kirk, to review the President’s recently announced trade agenda for 2010. I have looked at the trade policy 

agenda, and I am disappointed by some of the gaps that I see in 

the level of detail provided by the President. That is not questioning his integrity and the optimism he has in that area, but I 

think that we need to point out some of these shortcomings. 

For example, the trade agenda states that our government ‘‘will 

continue to engage with the governments of Panama, Colombia, 

and Korea as the administration further refines its analysis of 

these outstanding issues.’’ And I think you heard from our chairman his desire to move forward on those, and I think it shows, 

with my support for it, a very important bipartisan beginning to 

get those agreements through the U.S. Senate. 

But the President’s statement, which I just stated, does not indicate where we are on that engagement or when future meetings 

are planned with the governments of Colombia and South Korea to 

iron out resolutions to the administration’s concerns. 

But additional emphasis to what I just said about my disappointment is that it has been almost 3 years since each of our pending 

trade agreements was modified to reflect what is commonly known 

4 

as the May 10th agreement between congressional Democrats and 

the then-President, President Bush. 

This delay in implementing hurts U.S. credibility around the 

world, not just economically, but geopolitically as well. On top of 

that, it creates some confusion with respect to our administration’s 

own trade initiatives. 

The administration has articulated forcefully the potential benefits of the Trans-Pacific Partnership trade agreement, and I happen 

to agree with the administration on that. But there is some very 

great disconnect between the enthusiasm for negotiating a TransPacific Partnership agreement and the apparent lack of urgency to 

resolve the outstanding issues cited by the administration as cause 

for delay in implementing the pending free trade agreements. 

There may well be political reasons for this lack of urgency, but 

that does not justify delay as good policy. Quite the opposite. 

Though some may dismiss this focus on our pending trade agreements, the world is not dismissing it because they will not wait for 

us if we sit by the sidelines. 

South Korea has already concluded a trade agreement with the 

European Union, and Colombia has reportedly just done the same. 

So that puts us at a disadvantage if Europe is going to move 

ahead. Such erosion to global U.S. competitiveness concerns me. 

We were left on the sidelines once before, and I will bet, when you 

were in Texas, you realized that during the latter part of the 

1990s. I do not want to see us repeat that experience again. 

The trade agenda also reiterates the President’s goal of doubling 

U.S. exports in the next 5 years, a worthy goal. It also touts the 

President’s National Export Initiative as a means of achieving that. 

But beyond another bureaucratic incarnation in the form of what 

the administration calls the Export Promotion Cabinet, the details 

for achieving that growth in exports are missing. I think it is a little bit of a case of getting the cart before the horse. 

The relative executive departments and agencies have been given 

6 months to submit detailed plans to the President on how they 

will spend monies that have already been accounted for in the 

President’s budget to achieve an increase in U.S. exports. This topdown spending mandate seems to me a recipe for waste. 

Before additional resources are appropriated, this administration 

should provide a detailed justification for why current spending 

levels are insufficient, and the fact that agencies can find ways to 

spend more money is not an acceptable reason. The trade agenda 

does acknowledge the important role that international trade plays 

in creating and sustaining good-paying jobs here in the United 

States, and of course we all must commend the President for that. 

I also agree with the President that we need to remain mindful 

of the needs of American workers who are displaced by trade, but 

we have already done that. Congress enacted a comprehensive 

overhaul and expansion of our Trade Adjustment Assistance program last year. 

So we are left waiting for the President to act on the trade agreements and on some details for his initiative. I look forward, Ambassador Kirk, to your testimony and a response to what I have had 

to say, or questions I will ask. 

The CHAIRMAN. Thank you, Senator. 

5 

Now I would like to introduce our witness, Ambassador Ron 

Kirk, our USTR. We are very happy to have you here, Mr. Kirk. 

You have lots of experience here in the Senate with Senator Bentsen and also particularly as the mayor of Dallas, and you are very 

well-qualified for what you are doing. 

Welcome to the Finance Committee. As is our usual practice, I 

would like to ask you to summarize your statement, please, and we 

will put the entire statement in the record. 

STATEMENT OF AMBASSADOR RON KIRK, U.S. TRADE REPRESENTATIVE, EXECUTIVE OFFICE OF THE PRESIDENT, 

WASHINGTON, DC 

Ambassador KIRK. Thank you so much, Mr. Chairman, Senator 

Grassley, members of the committee. Thank you all for the opportunity to come and discuss with you further the President’s 2010 

trade agenda. 

In 2009, as Chairman Baucus noted, President Obama’s economic strategy helped halt the slide into economic crisis. In 2010, 

the Obama administration is focusing on renewing the American 

economy by laying a sustainable foundation for American prosperity, one that creates opportunities for job growth here at home, 

but also for Americans to compete and succeed around the globe. 

A strong trade policy should lead to good jobs, fair prices, and increased consumer choices. 

This year’s trade policy agenda outlines our commitment to the 

rules-based trading system, our dedication to enforcing America’s 

rights, and our plan to advance U.S. economic interests abroad. 

Taken together, these elements will stimulate export-driven growth 

and help the United States meet the President’s goal to double U.S. 

exports in 5 years, which you have both noted could help support 

2 million additional jobs. 

Over the past years, we have spent quite a bit of time listening 

to the American public and this Congress, and we have acted on 

what we have learned. We have worked to break down barriers to 

agricultural exports by reaching an unprecedented agreement with 

the European Union to expand access for American beef after more 

than 2 decades of being locked out of Europe. 

We are now challenging the EU in the WTO over its unfounded 

ban on poultry exports. We have leveled the playing field for U.S. 

manufacturers by reaching an agreement with China to eliminate 

harmful export subsidies and have won new market access for 

manufactured goods, such as auto parts and wind turbines. We are 

also challenging China in the WTO over its export restraints on 

raw materials that have created a competitive disadvantage for our 

steel, aluminum, and chemical industries. 

We have protected American innovation by winning a WTO decision that found that China was not meeting its intellectual property protection and enforcement obligations, and we have moved 

forward with the anti-counterfeiting trade agreement to step up the 

fight against global counterfeiting and piracy. We have done more 

for small- and medium-sized enterprises, launching a new SME 

business initiative and designating, at the request of so many of 

you, a senior USTR official to serve as our point person in helping 

6 

us to prioritize our aid to small- and medium-sized businesses in 

future trade negotiations. 

We have seized major opportunities for enhanced growth, job creation, and innovation by seeking new and expanded markets for 

our exports. Many of you urged us to step up our engagement in 

the critical Asia-Pacific region. Last fall, the President announced 

the United States would go forward in our negotiations with the 

new Trans-Pacific Partnership. This will expand U.S. export opportunities within the fastest-growing economy in the world under a 

high-standard 21st-century agreement. 

Approval of the three pending free trade agreements is also a 

priority for the Obama administration. As the President said last 

week, we are working diligently to resolve the outstanding issues 

so that we can work with you to move forward on closure of these 

trade agreements with South Korea, Panama, and Colombia. 

Globally, USTR aims to expand rules-based trade opportunities 

for American businesses and workers, and for some of the world’s 

poorest nations, by seeking to achieve an ambitious and balanced 

conclusion to the Doha Round of trade negotiations. This will help 

support job creation here at home and further our commitment to 

bringing the least-developed communities in the world into the 

global trading community. 

Our administration is also working with you and other stakeholders to implement and improve our trade preference programs 

that help developing nations gain a foothold in the international 

marketplace. 

We will work hard to ensure that this administration’s trade 

policies also reflect America’s values, that they promote worker 

rights and increased transparency, and move the United States 

closer to achieving sustainable energy and environmental goals. 

Creating and implementing the policies outlined in the President’s 

trade agenda will require an ongoing dialogue and conversation 

with Congress and the American public. 

I welcome that opportunity and look forward to working with 

you. I believe, working together, we can use common sense to find 

common ground on trade in order to create jobs that Americans 

desperately want and new opportunities for our exporters, workers, 

businesses, farmers, and ranchers. 

Mr. Ranking Member, in the interest of time, I would remind all 

of the members, as well as anyone who may be watching, a complete copy of the President’s trade policy agenda is available on our 

website at ustr.gov. 

Thank you. I am more than ready to entertain your questions. 

[The prepared statement of Ambassador Kirk appears in the appendix.] 

Senator GRASSLEY. The chairman had to temporarily step out, so 

I am next in line to ask questions. 

The first question. I am concerned about the direction that the 

administration is taking in its review of the labor provisions in our 

model bilateral investment treaty. If I am wrong on this, tell me, 

but I understand the administration is considering whether to incorporate the labor provisions from the so-called May 10th agreement into the model. In my opinion, if they are considering doing 

that, that is a mistake. 

7 

The May 10th agreement was a compromise involving four specific trade agreements. It did not involve our bilateral investment 

treaty program. I question whether there are not some who would 

like to see the May 10th provision added as a poison pill to derail 

future consideration of any bilateral investment treaties. Such a 

modification to the model would indeed risk losing consensus support for our bilateral investment trade agreements. I also question 

whether our negotiating partners would even agree to such a modification in the first place. 

So my question is, just some response to my concern. 

Ambassador KIRK. Well, Senator, first of all, thank you so much 

for your leadership in working with Chairman Baucus and others 

in helping to fashion, I think, a reasonable compromise on labor 

and environmental provisions which we refer to as the May 10th 

agreement. You have laid out, I think in fairly reasonable detail, 

the challenges before us. 

We at USTR, along with State and other agencies, have been 

conducting a fairly exhaustive review of our policies so that we can 

update that, and we have reached out and worked with your staff 

and others on this committee, but also heard from stakeholders on 

all sides, particularly on the labor issue. 

We have not made a final resolution of that. We are coming to, 

hopefully, a conclusion of our review, and at that time I will be 

more than happy to share with you the direction that we choose. 

But at this point we are undertaking all of the considerations that 

you laid out in terms of our approach to labor, whether it would 

be included or not. 

Senator GRASSLEY. All right. Then please take my considerations 

and questions into concern on that. 

When was the last time the administration sat down with the 

government of Colombia to try to resolve the concerns that have 

been cited as reasons for delaying the implementation of our bilateral trade agreement with Colombia? Also, the same question with 

respect to sitting down with the government of South Korea. You 

can give me an approximate date. I do not need to know the time 

and exact date, but when is the last time these things have been 

discussed with these two governments? 

Ambassador KIRK. Senator, the good news is, we have had an ongoing and continuous dialogue, not just with Colombia and Korea, 

but with Panama as well. We had a team of our lead negotiators 

who traveled to Colombia, I would say, within the last 3 months. 

Even though I know I am not supposed to turn around before the 

cameras, I can feel the presence of my friend, the Ambassador from 

Colombia. I believe Ambassador Barco is here. We have frequent 

and regular dialogue with her as well. 

I want to make it plain, this administration believes that, properly negotiated, these are an important and critical component of 

our export strategy, and we have not given up on any of those. 

With respect to South Korea, I have met with my colleague, 

Trade Minister Kim, on four or five occasions over the last year. 

As you know, most recently perhaps the most significant contact 

was when President Obama traveled to South Korea at the end of 

his trip to Asia in November and discussed this matter with President Lee directly. 

8 

Senator GRASSLEY. Well, let me just remind you that, while 

unions in this country are delaying Colombia from a lobbying 

standpoint, people in Peoria who want to sell Caterpillars made by 

Peoria workers to Colombia have a very definite disadvantage to 

European workers making Caterpillars sending them to Colombia. 

The chairman wants me to continue, so he is the next one to ask 

questions. 

Does the administration feel any urgency about the erosion of 

our global competitiveness when we see trading partners like the 

European Union conclude trade agreements with Colombia and 

South Korea? 

Ambassador KIRK. Absolutely, Senator. During my visit with 

many of you in preparation for my confirmation, I talked about 

what I hoped was the sense of urgency that I would like to bring 

to this job from my work as a mayor. I very much understand. I 

have talked with the heads of Caterpillar, just as when I traveled 

to your State I talked to your farmers and those who are involved 

in the advanced technologies. 

But it is also important, just as important, for me to go to Senator Stabenow’s district and talk with those workers in Michigan. 

I want to make it plain, I think the last thing that we want is for 

this issue of trade and creating more opportunities for America’s 

exporters and farmers and their workers, to become a partisan 

issue. 

Senator GRASSLEY. Yes. 

Ambassador KIRK. Labor has not delayed our move on this, but 

labor does have a necessary voice and a seat at the table in this 

administration. President Obama and I are both greatly concerned 

that we do not want trade to become the next wedge issue, so it 

means that those of us in Texas and Iowa, and those at Caterpillar, 

have to care and listen to the concerns of those, whether it is in 

Detroit, Pittsburgh, or others who may feel like they have not benefitted from this, because what we want more than anything else 

is to help you create these jobs, but get a good bipartisan support, 

not just for Panama, not just for Korea, but for our overall trade 

agenda, which is focused on helping to expand market access and 

create jobs for all Americans. 

The CHAIRMAN. Thank you, Senator Grassley. 

Ambassador Kirk, we have a problem here. The President’s budget freezes USTR funding, if I understand, for fiscal year 2011. Is 

that correct? 

Ambassador KIRK. Roughly so. Yes, sir. 

The CHAIRMAN. At the same time, the President’s budget requests an additional $87 million for export promotion programs at 

Commerce and an additional $54 million at USDA. Given the importance of your agency with exports and export promotion, what 

effect is the freeze going to have on you, on your agency? You will 

do the best you can, but where will you have to cut, what changes 

will you have to make? 

Ambassador KIRK. Well, Senator, we are going to have to make 

some tough choices, but the President and most of us in the Cabinet realize that nobody is making tougher choices than America’s 

families right now, sitting around the kitchen table and having to 

9 

realize they do not have the resources, the money that they have 

had in the past, and they have been asked to do more with less. 

President Obama especially said to those of us in the Cabinet, 

that within the Executive Office of the President, in which USTR 

resides, that we have to be willing to take a leadership role in 

showing that we are willing to tighten our belts. Now, we are going 

to have to do that. Obviously it is difficult for me to go to our team, 

when we see the resources being allocated for others, but that is 

all right. 

I believe you get the best value proposition for your money 

among the 247 of us employed at the U.S. Trade Representative’s 

Office. We will obviously have to make some tough decisions, but 

working with you and other members of the committee, we will 

make sure we get those priorities right. But we will not yield on 

our efforts to help the President meet this goal of doubling exports 

so that we can create the jobs that Americans want. 

The CHAIRMAN. So how are you going to do that? People think 

that is a little ambitious. That is a good goal. 

Ambassador KIRK. It is ambitious. 

The CHAIRMAN. It is great to be ambitious, but most people who 

look at that scratch their heads. 

Ambassador KIRK. Well, Senator, I know it is very different, having the responsibilities that you have here. But I can tell you, from 

being mayor, unless you aim extra high, many times you do not get 

anywhere close to that goal. 

There are some common-sense things that we can do. You talked 

a lot about our outreach to small businesses. One of the things that 

struck me was the number you threw out: over 97 percent of the 

275,000 businesses that export in America are small businesses. I 

know from my experience, you know, every economist tells us, if we 

want to grow jobs, create jobs, most net new job growth in this 

country is created among the small business community. 

So, one, we are working with SBA, the ITC, and others to better 

understand who those small businesses are and how we can help 

those who are exporting to export more. Second, I do not recall if 

it was you or Senator Grassley who noted, our level of participation 

of small businesses is far behind those of other developed countries, 

particularly the European Union and Canada. So the funds that 

the President has asked for—the SBA and the Department of Commerce will help us to reach out to those other small businesses that 

may be more intimidated by trade. 

Then, finally, we are working with our trading partners from 

NAFTA, APEC, and others to simplify our rules to reduce the cost 

and make it easier for small businesses to participate in global 

commerce. 

The CHAIRMAN. Yes. I believe in benchmarks and metrics. I 

would appreciate it very much if you could present this committee, 

twice a year, with progress you are making in achieving that goal 

of doubling exports in 5 years. You might break it down a little bit 

in whatever way you think makes most sense to you. I am asking 

you to do this so that we can help each other. 

Ambassador KIRK. Yes, sir. 

The CHAIRMAN. So the Congress can help the administration 

achieve that. 

10 

Ambassador KIRK. That is a reasonable request, and that is one 

we will take back through the export— 

The CHAIRMAN. You just, on your own, submit to this committee, 

twice a year, how well you are achieving those goals and what the 

benchmarks you might set are, how much you want to achieve by 

a certain year. You mentioned various areas where you wanted to 

make progress. 

You might break it out in those areas and indicate the degree to 

which you are making progress in each of those areas, and then 

come and talk to us about it so that we can help each other better 

achieve those goals. Because I think it is true that many countries 

have achieved some economic success with export policies that are 

very aggressive. We all know who some of those countries are. 

But we have to export as aggressively if we are going to achieve 

success here and find jobs for people in America, because, as I mentioned in my statement, domestic demand is down a little bit, and 

we just have to really work that much harder to sell wherever we 

can sell. 

Ambassador KIRK. Mr. Chairman, that is a reasonable request, 

and we will do that. Again, we would very much welcome your 

input on those areas. Particularly, you know more about the small 

businesses in your communities than we do, but I think, working 

together, that we can achieve that goal. I do not think it is unreasonable. In your statement, you laid out most of our premise. I 

mean, 95 percent of the world’s consumers live outside of the 

United States. 

The CHAIRMAN. And I appreciate you coming to visit Montana. 

Were you able to see some of the problems we have? It is a little 

bit different from other parts of the country. I do appreciate your 

coming to visit our State. 

Ambassador KIRK. Thank you for that invitation. 

The CHAIRMAN. Thank you very much. 

Senator Hatch? He is not here. 

Senator Stabenow? No. Senator Lincoln, you are next. 

Senator LINCOLN. Thank you, Mr. Chairman. We appreciate you 

bringing us together on this. 

I want to just offer a very warm welcome to Ambassador Kirk. 

It is so good to have you back in the committee. Before I ask my 

questions, I just want to thank you. I want to thank Ambassador 

Kirk for his fine work as our country’s Trade Representative. I 

think you have been very actively engaged with all of us about our 

concerns specifically, and more importantly what you can do for our 

country. You have been a vigilant and energetic advocate for our 

country’s farmers and manufacturers. You are working as hard as 

I know anybody is in putting Americans back to work through 

greater trade opportunities, and I certainly appreciate that, for one. 

So, I am grateful. 

I, too, want to offer a welcome to Ambassador Barco, who was 

a tremendous hostess to me, and I am grateful to all that she does 

here in Washington, but also in my visits to Colombia. 

Ambassador, the current pending text of the Doha agreement is 

certainly unacceptable, in my opinion, as it does lack the proper 

balance between the concessions that are demanded of the United 

States and what we expect our trading partners to demonstrate as 

11 

their commitment to opening up markets and their market access, 

or access to their markets for us. 

I want to say, I am pleased to see you all at USTR, and certainly 

you, Ambassador Kirk, standing up for farmers and for manufacturers in that regard, and I hope we can continue to see that. I 

have always been an advocate of free trade, and I appreciate your 

stance there. 

I am very glad to hear the President, in his State of the Union, 

declare the goal of doubling our exports within 5 years. I have 

joined with many of my Senate colleagues in urging him to send 

up the congressional approval for the South Korea, the Colombia, 

and the Panamanian Free Trade Agreements as soon as possible. 

Not doing so, I think, will certainly put us at a tremendous disadvantage against our competitors. It is a timely issue. This is especially clear, I think, with respect to South Korea. So, I hope that 

we will move forward in that. 

Without a doubt, agriculture is one of the only domestic industries that enjoys a trade surplus, and production of this safe and 

affordable supply of food and fiber creates American jobs, and it is 

something that we should not take for granted. I do not, and I hope 

others do not as well. Our producers have a very quality product 

to offer the rest of the world, and I think it is our job to open up 

those markets to them. I am going to work hard with you to see 

that that happens. 

As chairman of the Senate Agriculture Committee, creating jobs 

and putting our economy back on the right track is my top priority. 

Two immediate steps that we can take to achieve these goals, I 

think, are opening up trade with Cuba. Ninety miles from the U.S. 

border, leveling that playing field is important, making sure that 

we are opening it up. It has been a good market force in the past 

and it can be again, I hope. 

Also, leveling the playing field for our catfish farmers by approving the new inspection rule required by the 2008 Farm Bill. I 

would just like to ask you, on those two issues, both Cuba—I am 

hoping that you can articulate the administration’s position as to 

why our agricultural exports should not be allowed unrestricted access to Cuba and why attempting to restore those exports is not a 

priority within the trade agenda. 

I hope that it will be. I think there is great opportunity there, 

and I certainly think that, as we approach the 50th anniversary of 

our self-imposed ban, we should realize that we have made as big 

an impact there as we are going to and that we need to engage 

there. 

Also, in terms of the catfish industry, I want to thank you for engaging with me and conversing on that. I would certainly like for 

you to please clarify why your office has opposed, during the rulemaking inter-agency process for this congressional mandate, the 

transfer of all catfish to the jurisdiction of USDA. If trade concerns 

are at play, please expand on those, if there is something there. 

Explain how we might interact with these serious health concerns, which is what we have brought up in the farm bill, making 

sure that obviously consumers get the healthiest products that they 

can. So I will start with those two and have a couple of others that 

I might submit for the record, Mr. Chairman. 

12 

Ambassador KIRK. Well, Senator, first of all, thank you so much 

for your kind words. You have been a great friend and counselor, 

and a good neighbor. You almost made me want to bring Arkansas 

back to the Southwest Conference. [Laughter.] 

No. You identified a number of issues that we are excited to work 

with you about, particularly in your dual role on this committee 

and as chair of the Senate Agriculture Committee. Let me say, 

with respect to Cuba, as you know, I think President Obama has 

sent as clear and strong a signal as he could of his willingness to 

move beyond this 50-year embargo. The United States has acted 

unilaterally, under the President’s direction, to loosen the restraints on travel among family members. We do export successfully some agricultural products to Cuba, but, as you know, States 

like Arkansas—I was just, ironically, in Tampa Bay, which is the 

fourth-largest port, which many of your exports flow through to 

Cuba that do not go through the Port of New Orleans. 

But our concerns at USTR—I want to make it sensible on Cuba, 

one, that decision ultimately I think will rest with our broader 

strategy, and the Secretary of State and the President are guiding 

that. I do think we are awaiting some signal, frankly, from the 

leadership of Cuba as to their willingness to engage us in a more 

thoughtful way on the other issues that are important to many of 

your colleagues here, as you know, who are just as passionate 

about this, but that would be a great agricultural market for us. 

I do appreciate you noting that, even last year, when agricultural exports—we had a $30-billion surplus. And that is not just good for 

farmers, that helps every American family at home. Whether I was 

in your State or Senator Grassley’s, Americans have to appreciate 

that almost a third of what we grow in this country is for export. 

If we do not have those export markets, it only increases the cost 

for American consumers. So, we appreciate your support on that. 

On catfish, I want to make it plain, we are working with USDA. 

We want to achieve your principal objective, I know, which is to 

make sure that our food supply for all Americans is safe. We are 

not trying to protect America’s industries. Your farmers and ranchers are as talented as any. But we do want to guarantee that the 

products that are coming to us from other countries meet the same 

safety standards. 

Our number-one concern is just that we do it in a way that we 

do not create a back door, that other countries will then say, well, 

the United States excluded our products and did not use sound acceptable science, so we are going to retaliate against your beef or 

pork industry. I know catfish is important to you, but you sell a 

lot of chickens and a lot of pork, and I have to make sure that, 

whatever we do, we do not unintentionally harm those markets. 

But we appreciate the input we have received from your staff, and 

look forward to continuing to work with you. 

Senator LINCOLN. Thank you. Fairness and safety. That is what 

we are looking for. 

Ambassador KIRK. Yes, ma’am. 

Senator LINCOLN. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Next, Senator Stabenow. 

Senator STABENOW. Thank you, Mr. Chairman. 

13 

Welcome, Mr. Ambassador. It is wonderful to have you here. I 

first want to echo the support for exports, expanding exports. 

Michigan is an export State, exporting manufacturing goods and 

agricultural products across the world. I think, from my perspective, I just want to make sure we are exporting our products and 

not our jobs. That is my focus. 

I also want to thank you for engaging, after we passed the successful Cash for Clunkers program, open to all vehicles sold in the 

United States, and then Japan chose to offer a program excluding 

American vehicles, thank you for working with us to address that. 

We are opening that up, and I appreciate very much your willingness to engage with us on what is simply fairness as we go forward. 

I want to thank you also for coming to Michigan. We are always 

happy to host you there. When you met with me, Mr. Ambassador, 

to talk about what I thought the administration’s trade agenda 

should be, I indicated three things: make manufacturing a priority 

for trade; enforce our trade agreements; and get new trade agreements right. 

I am happy to see that the trade agenda focuses on enforcement 

and on getting new trade agreements right, but frankly I am disappointed that the trade agenda does not make manufacturing a 

priority. I do not know how the administration doubles exports in 

5 years if we do not make a concerted effort to make things here. 

I might just say, on the issue of South Korea that has been 

talked about here today, this is a question of getting a trade agreement right. When 83 percent of what they export is automobiles 

into the United States and we cannot sell to them, that is not 

right. When we cannot sell appliances to them and other manufacturing products, that is not right. 

So I am as anxious as anyone to open up more export opportunities and more markets, but I am going to make sure that my vote 

goes to the right agreement that makes sure that we can sell manufacturing products around the world. 

As you know, in the last 10 years we have lost almost 6 million 

manufacturing jobs in this country, and that was certainly prior to 

this administration. I appreciate them working with us on efforts 

to turn that around with a manufacturing tax credit and other efforts, but this is serious because, frankly, manufacturing built the 

middle-class of this country, not to mention issues of national security and competitiveness. 

So we need a coherent manufacturing policy that is going to combat, for example, our $227-billion trade deficit with China. Some 

believe we have lost the competitive advantage to make things 

here, and that is our challenge, to turn that around together. But 

I do not call Chinese industrial policy of providing huge subsidies 

to industries, disrespect for the rule of law by stealing U.S. intellectual property, and maintaining an under-valued currency a competitive advantage. I call that cheating. So, that is why your efforts 

on trade enforcement are so important. 

So, Mr. Ambassador, I would ask you, I know a smart and fair 

trade policy is good for Michigan and good for America, but help 

me explain to people back home how the USTR is going to be working to make manufacturing a priority. 

14 

Ambassador KIRK. Well, Senator, thank you for your comments, 

and especially thank you for your assistance on my recent trip to 

Detroit, and for the counsel that your staff provided to us when we 

were working on the Cash for Clunkers problem with Japan. I was 

pleased with the progress we made, but I know we are all disappointed Japan has now backtracked from that. 

Senator STABENOW. Right. 

Ambassador KIRK. But I very much appreciate your counsel. The 

first thing, as you know, you represent a number of my in-laws and 

families in Detroit. 

Senator STABENOW. Right. 

Ambassador KIRK. So I think it is important for me. It is helpful 

for me to not only travel to Big Sky, MT and understand the huge 

importance of the agricultural community and also the challenges 

that Chairman Baucus’s lumber and mining industries have, to go 

to Ranking Member Grassley’s State, but also to go to Detroit and 

hear firsthand. 

But remarkably, what I heard was two things. Michigan very 

much understands the importance of trade. Canada, we forget, is 

still one of our largest trading partners. I was surprised to learn 

25 percent of all of our trade with Canada flows across the Ambassador Bridge in Detroit, so Michigan is a State that embraces and 

understands the power of trade to help support those manufacturing jobs. But I think we can be smarter. 

Senator, the reason we have taken the time, as I was saying to 

Senator Grassley, to engage you and members in labor and others, 

is so that we can get to a place that we can pass a Korean Free 

Trade Agreement. But the disparity in the number of automobiles 

imported into the United States, with over 700,000 Korean-made 

automobiles here and less than 7,000 of ours there is not one that 

I think we can defend, but we know that we are working to try to 

correct that. Broadly, what I would encourage you to say to your 

constituents is what President Obama said. First of all, this economic recession can be a great learning lesson for all Americans. 

We cannot be the world’s largest consumer. That is not good for our 

economy, and frankly it is not good for China’s and some of our 

Asian partners. So we have to save more, and we do have to export 

more. 

But as Chairman Baucus says, the good thing is, we still manufacture and have great manufacturing capabilities here in America. 

I can tell you, from my brief stint in office and in traveling around 

the world, the Made in America brand is still a powerful brand. So 

the world wants to do business with us. 

We have to find a way to bridge our domestic differences and approach about trade, Senator, so that we can have trade agreements 

that give you comfort that we have honestly addressed the issues 

of worker rights and making sure we are leveling that playing 

field, and let those of us who want to sort of just put the pedal to 

the metal go forward. 

So I hope your constituents believe that we are listening, we are 

taking your concerns seriously and trying to address them and incorporate them into our broader trade philosophy. 

The CHAIRMAN. Thank you. 

Senator Roberts? 

15 

Senator ROBERTS. Thank you, Mr. Chairman. 

I am always interested in the opening remarks by the chairman, 

who always quotes somebody very unique. I was talking to Prime 

Minister Disraeli just the other day. [Laughter.] 

He indicated that he thought your suggestion on benchmarks 

was a very good one, and would hope that our trade ambassador 

would agree with that, and he has. So I would only add that I hope 

we have hearings when the benchmark news comes in. 

The CHAIRMAN. We can invite both Disraeli and Queen Victoria. 

Senator ROBERTS. Good. I do not think they get along very well, 

but that is just what I heard. 

The CHAIRMAN. Well, it would make it more interesting. 

Senator ROBERTS. All right. 

Thank you, Ambassador Kirk, for your testimony, your hard 

work on behalf of producers. You have been everywhere. You have 

been to Michigan, you have been out to Montana, Big Sky country. 

I know Senator Enzi and I would love to have you come to Wyoming; he could take you to Jackson Hole, I could take you to Dodge 

City and we will make you an honorary marshal. [Laughter.] 

And Miss Kitty will treat you real fine. She is still out there. 

Ambassador KIRK. Senator, given the treatment of my Texas 

Longhorns by the Jayhawks and your Kansas State team, I have 

been a little less excited about going to Kansas. But I will take you 

up on that offer. 

Senator ROBERTS. Well, you could visit Kansas and see a winning 

basketball team. [Laughter.] 

Mr. Chairman? He is gone. Mike Johanns of Nebraska, the great 

Secretary of Agriculture, Governor, mayor, and now Senator, raised 

an issue with Ray LaHood, who used to be in the House and is now 

Secretary of Transportation. Mike raised the linkage of Japan and 

beef safety and car safety, and wondered how Japan would react 

if the U.S. cut off all auto imports from Japan until safety issues 

were satisfactorily addressed. That is what they are doing with 

beef. So, it seems to me you could use that as a catalyst, if you will, 

to point out to Japan. 

If the Japanese are worried about eating beef, think about driving a Camry on 295 and pressing on the gas pedal as you are headed toward the Wilson Bridge. Maybe we could just remind them of 

that. That is a pretty tough statement, but I think we have reached 

the point that we would like to resume full U.S. beef trade. 

I am very pleased with your National Export Initiative, the NEI. 

Everything has to have an acronym. I suppose that is the NEI. 

However, we must be sure to look at all aspects of export promotion, including lowering tariffs on U.S. goods and services. We 

are interested in how you explain to Main Street, and how do you 

explain to the commodity groups and everybody else, how are we 

going to do this? 

I am concerned that it could act as a prism. You catch the sun, 

you cast a rainbow of colors on the wall that grabs our attention 

but diverts us away from the obvious gaps in our trade agenda. 

You know what they are. There is Colombia, there is South Korea, 

and there is Panama. We in Kansas have to export one-third of our 

crop. With wheat, it is one-half of our crop, and that just simply 

has not been done. 

16 

So I hope the NEI does not distract us from the real issue at 

hand, and that is the lack of trade engagement. I am sure it will 

help, but I do not want it to distract us. You are from Dallas. It 

is a lot like sitting there and watching the Dallas cheerleaders as 

opposed to Tony Romo, as to what he is going to call in the huddle. 

Ambassador KIRK. Who are the Dallas cheerleaders, sir? [Laughter.] 

Senator ROBERTS. You have no idea who they are? [Laughter.] 

Never watched them, huh? All right. It is rather amazing, but go 

ahead. 

At any rate, I hope we do not rest on our laurels when we could 

be taking advantage of the 2-way trade opportunities that are provided by the Colombia trade agreement, especially Colombia, because that has national security matters as well. 

So, where are we with the beef trade in the post-BSE environment? 

Ambassador KIRK. Senator, first of all, thank you for all of your 

comments, and particularly your support of the export initiative. I 

want to make it absolutely clear. If you will recall, when I was last 

before the committee when you were considering me for confirmation, I was careful to say over and over again that I did not have 

deal fever. 

It was not that I was not excited about any of these prospective 

free trade agreements, but I believed, and President Obama believed, that it was time for us to just take at least a breath and 

look at our overall trade strategy in the context of what is working 

and what a lot of Americans thought was not working, and see if 

we could not craft a more strategic approach. 

I want to give you every assurance I can that our National Export Initiative is not at all intended to detract from anything else, 

but to in fact bring a sharper focus to our entire export policy, inclusive of all of the pending free trade agreements, as well as what 

we have announced in terms of the Trans-Pacific Partnership and 

others. So I want to give you that assurance, that this is intended 

to bring a more holistic, focused, targeted approach to our entire 

export policy. 

With respect to beef, as you know, Senator, we have met with 

members of the beef and cattle industry since the very beginning. 

They have been incredibly hard hit because of policies other countries have taken to restrict our markets. We had a very good start 

in resolving the dispute with the European Union, and I would say 

this is one case where we are pleased with the strength and continued support of the Koreans opening up their market. We were excited about the prospects of gaining reentry to the market and Taiwan when we announced in December a resumption of that trade, 

but, as you know, their legislature has now acted to overrule it. 

Senator ROBERTS. Right. 

Ambassador KIRK. So, we are working as aggressively as we can 

with Taiwan to see if we cannot get them to come into compliance 

with the OIE standards and their obligations in the World Trade 

Organization. Demetrios Marantis, who is our Ambassador who 

handles Asia and Europe, was in Japan, Taiwan, those communities. We have raised this issue with their agriculture ministries. 

But as you know, Japan is going through a governmental change. 

17 

It is a matter of extraordinary frustration for us. But I assure you, 

we continue to push and utilize every tool, and will use every tool, 

until we get our beef back into those markets. 

Senator ROBERTS. I am way over time here, 3 minutes and 13 

seconds and counting. The very patient gentleman from Wyoming 

is next, as I understand it, in regards to the next person up. 

I just want to say one more thing, and I do not mean this in a 

partisan way, but you have been everywhere. I mean, you have 

been to these countries, you have been to States, you have talked 

to the people involved. You have a new trade initiative. The President says we are going to double our exports. I think if we are 

going to do this, you are going to have to deal with two things. 

Some in the environmental community and some—well, virtually 

all—in the labor movement oppose these trade agreements or demand additional enforcements in the May 10th agreement. I think 

you ought to visit the leadership of the Senate and the House and 

those appropriate committee chairmen and say, hey, wait a minute. 

We need an aggressive trade agenda, and with all due respect to 

the people who believe otherwise, this is not the way to do business. You do not do it with a sovereign country, imposing environmental restrictions or labor restrictions on that country. You can 

do it through whole different ways, but not trade. I think that is 

the hold-up. I am not sure we can do this in this Congress. Here, 

right here is the problem, not this committee and not a lot of people who depend on trade. But I think that is the truth of it. 

I recognize the distinguished Senator from Wyoming. 

Senator ENZI. Thank you. 

Thank you, Ambassador Kirk, for being here this morning and 

mentioning your core principle that the 2010 trade agenda will be 

to promote U.S. exports for job creation. I appreciate the comments 

that you made about beef. I am going to be going after a specific 

industry again in Wyoming because the United States is the largest exporter of natural soda ash in the world. It supports thousands of jobs in States that people identify with mining, like Wyoming and Texas. 

But it is also thousands of jobs in Oregon, New Jersey, Connecticut, Georgia, and California. In April of 2009, the Chinese government imposed a 9-percent rebate on its value-added tax for synthetically produced soda ash. They put a 17-percent tax on it and 

then they give a 9-percent value-added rebate to the Chinese exports. This policy distorts the global market for soda ash, it undermines U.S. exports, and it threatens jobs supported by the American soda ash industry. So I appreciate all the work that you and 

your staff have done on this issue, and I would like to direct my 

questions more along the lines of that. 

In the annual report to Congress on October 28, 2009, the U.S.- 

China Economic and Security Review Commission noted that 

China has consistently used a 17-percent value-added tax as an instrument of industrial policy, and China applies different rules for 

rebating its value-added tax in order to promote select industries. 

One industry, as I mentioned, is the U.S. soda industry. On January 28, the bipartisan group of seven Senators and I wrote you 

asking to take additional action to press China on this policy. What 

steps will you continue to take to engage China on removing that 

18 

value-added tax rebate on soda ash and to increase using the 

value-added rebates as a tool of industrial policy? Also, given the 

impact the China policy has had on other nations producing soda 

ash, is there any hope to pursue multilateral channels to help resolve the issue? 

Ambassador KIRK. Senator, thank you for your comments and 

your question. You and I have had an opportunity to discuss this 

before. This is a matter in the broader context of China’s VAT rebate policy and, as you said, we think the creative application of 

it to give their indigenous industries a competitive advantage over 

American manufacturers/exporters in a number of areas. We are 

extraordinarily concerned about this. 

I think you referenced the report from Secretary Locke’s and 

ours—some of the work we did during the last Joint Commission 

on Commerce and Trade. I will try to abbreviate this somewhat by 

just telling you this is a matter of grave concern for us. 

We have raised it not only within the JCCT, in which we have 

a chance to address this on an industry/sectoral-specific initiative 

as we did with soda ash, but we also address this in the broader 

strategic economic dialogue led by Secretary Clinton and Secretary 

Geithner, in which we are trying to engage and massage China to 

have a more rational export promotion policy. But I can give you 

my assurance, we are well aware of the issue, somewhat thanks to 

the education that you have given us. 

I see Senator Nelson is here. I was just in Tampa at the Port 

of Tampa, and surprised that most of the soda ash that we export 

out of there is exported through the Port of Tampa, going into 

places in South America and Brazil and others, where it is used to 

help make concrete. So we are aware of the importance of it. We 

will continue to work on this. The next strategic economic dialogue 

will be in Beijing in early May, and Secretary Locke and I are 

working with the Chinese on the agenda for the JCCT. 

Senator ENZI. I will have some more specific questions in writing 

so that I can be better informed on what kind of multilateral process you are going through on that. 

Ambassador KIRK. Yes. Forgive me. In a case where there are 

other countries similarly affected—in the raw materials case that 

we filed against China, the European Union joined us—I am not 

sure, but I will take the time to find out from my staff if there are 

other countries that are similarly affected, and we will try to engage them as we have successfully on other issues. 

Senator ENZI. Thanks. Because sometimes other countries get 

more sympathy than we do. But whatever way we do it to get there 

is good. 

I would like to know what the status is of the newly announced 

vice ministerial level working group with China on innovation and 

industrial policy that was announced following last year’s Joint 

Commission on Commerce and Trade, where that is, and whether 

this VAT tax will be a part of the agenda on that? 

Ambassador KIRK. Yes, sir. 

Senator ENZI. Thank you. My time is up. 

Senator NELSON. Senator Kerry? 

Senator KERRY. Thank you. 

19 

I am just going to take 60 seconds, quickly, because the other 

Senators were here. I need to go to a meeting and so will not have 

time. 

If I can just say, I largely support the President’s trade agenda. 

Our balance with China and some of the issues with China remain 

a fundamental issue. I would leave a question for the record regarding the Chinese conditioning market access on companies turning over proprietary information. That is unacceptable. Clearly, we 

need to address this question of the Chinese-U.S. trade relationship. You can perhaps answer it later for the record. 

One issue I would like to raise with you, just very quickly. We 

have troops on the ground in Afghanistan. We have a major center 

of terrorist activity in Pakistan. I believe it is in America’s security 

interest to have trade with Pakistan. If their economy crumbles, all 

our efforts in Afghanistan, our counter-terrorism efforts in Pakistan, fail. 

I know there is some opposition in our country from certain elements who feel it is going to open a floodgate in terms of textiles 

and others. It is just not true. The measure of what that trade 

agreement would do in terms of impacting our industry is minuscule. So I would leave on the table, if I can, the possibility—you 

may address it somewhere down the road—of making our troops 

safer, addressing our national security concerns, improving our 

trade with some kind of trade agreement with Pakistan. 

So I thank the Senator from Florida very much for his graciousness in allowing me just to make that quick comment. 

Ambassador KIRK. Senator, if I just might say— 

Senator KERRY. Could I ask you—I do not want to abuse the Senator. If we get into an answer, then he is in trouble. If you could 

comment on it maybe after his thing as part of the record, I would 

really appreciate that, Ambassador. 

Ambassador KIRK. Yes, sir. 

Senator KERRY. I just want to respect Senator Nelson’s time. 

Ambassador KIRK. Thank you, Mr. Chairman. 

Senator NELSON. Mr. Ambassador, around here we pick up chits. 

Senator KERRY. I do not want to make mine bigger than it has 

to be. [Laughter.] 

Senator NELSON. Mr. Ambassador, a comment was made earlier 

in this hearing about trade with Cuba. Whenever you all consider 

anything having to do with that, remember that we have an American citizen who is being held right now, and the Cuban government has prohibited us from having access to that American citizen 

for a month. His name is Alan Gross. They continue to hold him, 

and we have limited access to him. 

Also the fact that we just had Orlando Zapata Tamayo die in 

prison a political prisoner. Here again is another example of the 

hard hand of a totalitarian regime in any political dissent. So obviously that has to color any question of our trade with a dictatory 

regime like Castro’s regime. 

Now, I want you to pay attention, if you would, Mr. Ambassador, 

to the fact that if we are really going to get Haiti on its feet for 

the long run, that we are going to have to build up their garment 

industry. We have passed, in the past, a HOPE bill, the Haitian 

Hemispheric Opportunity through Partnership Encouragement Act. 

20 

We now have legislation that Senator Wyden and I have filed to 

extend that, which in effect would allow textiles from other parts 

of the world to come into Haiti in addition to U.S. textiles, and that 

the Haiti garment industry could come back to life. It is one of the 

few industries in the past that actually provided some employment 

in Haiti. Of course, those folks are going to need employment. 

Ambassador KIRK. Desperately. 

Senator NELSON. Back in the early 1990s, they had 125,000 people who were employed. That went down to 10,000. Maybe it is a 

little over 10,000 now. The HOPE legislation, the HOPE law, had 

started to bring that back. So, we are going to have to do that. I 

would like to know, does your administration support these initiatives? 

Ambassador KIRK. Senator, we have not had an opportunity to 

weigh in yet on the proposed new legislation, but I think this is a 

good news story. The President talked about it in his State of the 

Union. I think all Americans should be proud of the response that 

we made, both through our faith-based communities, through our 

nonprofit charitable communities, and our government to our colleagues and friends in Haiti. It is probably the best demonstration 

of America’s power that we have. 

Let me specifically say, we will get back to you on the new legislation. I am proud of one initiative that we have worked with, very 

quickly, Senator, with the textile industry. We unveiled it a couple 

of weeks ago at a major textile show, the Magic Conference in Las 

Vegas. But it is called a Plus One Initiative. We have a number 

of retailers, including the Gap, Levi’s, and other apparel makers 

that have committed with our office that they will source up to 

1 percent of their apparel from Haiti. 

The good news, even though I do not want to color this at all— 

Haiti has an extraordinary rebuilding challenge—but as we understand it, most of the textile plants, at least, escaped the major 

damage. But we did this so that we can give those textile manufacturers the assurances that they would have a source for those 

goods. 

So we are working to expand the success of that program, and 

hopefully very quickly, within the next year, American consumers 

will see some products with the HOPE Plus One label on it that 

will let them know that buying those will help support the rebuilding of Haiti. I am more than happy to provide you more information on this, and anyone listening or watching can go to our website and learn more about the Plus One program. 

Senator NELSON. Mr. Ambassador, I do not think that is a sufficient answer for the administration, that the President has come 

out and said that we are going to help Haiti. It is insufficient to 

say that you are going to get back. It ought to be the position of 

the administration that they are ready to do this new legislation 

to extend what has been law in the past to allow Haiti to bring in 

textiles from around the world and make them into garments so 

that it provides jobs in Haiti. 

That ought to be universal throughout the administration, not 

just from the Secretary of State, but all the way down throughout 

the administration. You can imagine the enormous resources that 

we have already spent there, led in large part by the military, now 

21 

U.S. AID, and so forth. The only thing long-term that is going to 

bring them back from the total disaster is an economy that starts 

to function, and it is an economy that is not functioning. The only 

thing that is going to give them an economy is to provide jobs. We 

have done that in the past. Now that legislation needs to be expanded. 

Ambassador KIRK. Senator, I want to be clear that I did not 

mean to imply that we were opposed to that or that this was the 

totality of what we were doing. But it is important that, if we do 

that, and the HOPE Act II has been a very strong component of 

helping Haiti to rebuild, but we do want to do it in a thoughtful 

way and make sure we are not just creating, frankly—most of what 

I have heard today, I think fairly, 80 percent of the questions have 

been about China. 

One of the biggest concerns we have is, we just do not want to 

create a venue that some other countries just come into and flood 

the U.S. with textiles that in no way benefit the people of Haiti or 

help America’s producers. We just want to be smart and thoughtful 

how we do it. But we would be more than willing to work with you 

and the other drafters of that legislation on that. 

The CHAIRMAN. Thank you very much. 

Senator Carper? 

Senator CARPER. Thank you. 

Welcome. Thank you for the wonderful attitude that you bring to 

your job. I have had the pleasure of knowing you for a while, and 

I really find the spirit and attitude that you bring to your responsibilities just very refreshing. 

In my old job, people would say, tell me about the economy of 

Delaware. I would use the letter C and I would say, well, it starts 

with the letter C. It includes corn, chickens, cars, chemicals, corporations, and coasts—the beaches. But it really starts with C. In 

our agricultural industry, it starts with C as well, and it starts 

with chickens. For every person who lives in my State, there are 

300 chickens. They have us badly outnumbered. For anyone in the 

audience who is thinking about what to have for lunch today or 

dinner, eat chicken. 

Ambassador KIRK. Thank God they are peaceful. 

Senator CARPER. It is all the more important because U.S. poultry, as you may be aware, is I think now banned in the European 

Union and in Russia due, I think, to concerns raised about the use 

of chlorine washes that are used to treat U.S. poultry. I am told 

that China has maybe also recently imposed some duties on U.S. 

poultry. As you might imagine, a State with 300 chickens for every 

person, we have some concerns about the restrictions on poultry. 

Roughly 20 percent of the poultry that we raise in the Delmarva 

peninsula—actually in this country—is exported. 

I understand that members of your team may actually be in Russia this week, seeking to negotiate an agreement with the Russians 

to reopen the market in Russia, which is an important one for the 

U.S. I think it may even be the second-largest market for poultry 

exports from this country. 

I was hoping you might be able to give us a little bit of an update 

as to what you folks are doing to take down these barriers to poultry exports to the regions that I have mentioned. 

22 

Ambassador KIRK. Well, Senator, the poultry exports are very 

important to our agricultural industry, not just in Delaware, but as 

Senator Lincoln mentioned, in Arkansas and other parts of the 

U.S. We are very troubled by, we think, the arbitrary action of 

Russia to effectively cut off, not only the poultry market, but our 

pork market into Russia. The concern is over our treatment of 

washing chickens. 

We are trying to get Russia to comply with OIE standards. In 

Russia’s case, we are a little bit hamstrung with Russia not being 

a member of the World Trade Organization. We do not have the 

ability to take this to a different arbitrary panel. But Secretary 

Vilsak and our team have worked hand-in-glove on this. Secretary 

Vilsak and I both spoke directly to our counterparts in Russia. We 

had our deputy-level ministers over. 

Our senior officials were there in early January, but we do have 

a team going back over this week. In the case of the European 

Union, we have sued the European Union and won the right to 

have access, but that has been 14 years ago and they have still not 

allowed our chicken into the European Union over the use of PRTs, 

pathogen reduction treatments. We have taken it to their scientific 

body that has ruled these not to be harmful. 

I will be in Brussels and meeting with the new head of the European Union leadership in 2 weeks, and we will re-urge this, but we 

have filed for new WTO consultations with the European Union to 

try to get this resolved and to try to get resolution sooner rather 

than later, because I know of the importance of this to those industries. 

And if I might, while you were out, Mr. Chairman, Senator Kerry 

had asked a question briefly. Since Senator Nelson yielded to him, 

I waited. I would just only say that—— 

Senator CARPER. Could I ask you a favor? 

Ambassador KIRK. Yes. 

Senator CARPER. Answer that question when my time is expired. 

Ambassador KIRK. Oh, I am sorry. Yes, sir. 

Senator CARPER. Thanks so much. 

I want to just mention, first of all, keep squawking with respect 

to the treatment that we are receiving around the world on our 

chicken exports. Let them hear your voice, and your team as well. 

Thank you very much. Keep it up. 

I want to ask you a question, if I can, about free trade agreements, especially with Panama and Colombia. I remember a conversation that the Governors had with then-President Clinton 

about a decade ago. We were talking about free trade agreements. 

He said, really, a bunch of them are no-brainers. He said, here is 

the deal. We allow other countries to ship their goods and services 

into our country. We do not really provide barriers for them. 

We try to sell into their countries, and they impose tariffs on 

ours. To the extent we have a free trade agreement, basically, he 

said, now finally our stuff can get into those countries largely free 

of tariffs, and already we are letting their stuff come in, so he says 

it is a no-brainer. 

With that in mind, talk to us about the continued delay, if you 

will, of moving forward on, let us just say, Panama and on Colombia. I know there are serious misgivings about whether or not the 

23 

South Koreans will find a way to keep out our goods and services. 

I understand there is concern, but let us just talk about Panama 

and Colombia. 

Ambassador KIRK. First of all, Senator, your analysis of the free 

trade agreements, particularly with countries that we have granted 

preferences, is a correct one. That would be the case in Panama 

and Colombia, since they are both GSP countries, that the majority 

of their goods comes here duty-free. You are correct, the free trade 

agreements then represent essentially our payback. It is what we 

get in return. 

I know that makes it that much more frustrating for some of us 

who want to move quickly, but the reality is, notwithstanding the 

extraordinary progress that President Uribe has made in combatting violence in Colombia—and he has, and President Obama has 

commended him for that—you know there are many, particularly 

within the Democratic party and then labor, who believe that the 

level of violence, while it has gone down, has not been matched by 

concurrent legislative initiative to guarantee at least basic minimum rights of workers to be able to organize and do so without 

the threat of violence. Then we also need to have a judicial legislative regime in place to bring those into punishment. 

The good news. Rather than dealing with this intuitively, we put 

both the Panama and Korea FTAs up for comment on the Federal 

Register. We got over 300 comments back. I think, in fairness to 

our friends from Colombia that have been asking us, tell us what 

we need to do, we thought it was only fair to get that information, 

work with you so that we can present them with a list of those legislative changes we have made, and we are pretty much near the 

end of that process. We have gone through an assimilation review 

of much of those comments and hope to be able to present those 

to our partners in Colombia so that we can move forward more 

quickly. 

Senator CARPER. All right. So, Mr. Ambassador, let me see if I 

understand this. What we are saying, in the case of Colombia, is 

until you further tamp down the violence—and we know it has occurred, we know it is better than it was—but until you tamp down 

the level of violence, we are not going to enter into an agreement 

which allows us to sell our goods and services into your country 

largely duty-free. Who are we punishing? 

Ambassador KIRK. Well, listen. Senator, I think you and I are on 

the same side of this. But you know, in order for us to be able to 

bring this agreement to you, which I would like to do and move it 

forward, I think I have to make an honest effort to listen to those 

on the other side and at least show them that we have—not just 

us, not in terms of an optical sense—but that we have strengthened the legislative and judicial regimes so that we can make a 

good case to go forward. I do not just want to bring these to you, 

I want them to come forward and have the ability to pass so that 

we get access to those markets. 

Senator CARPER. Thanks so much. 

Thank you, Mr. Chairman. 

Ambassador KIRK. And I would quickly just say, in the case of 

Panama, there were a number of changes we had asked them to 

make in terms of being consistent with the ILO. We are making 

24 

good progress. The issue of the transparency of their tax code is 

one that came up midway through the process. 

In fact, Chairmen Baucus and Rangel were with us when we 

were at the Summit of the Americas when this first became an 

issue. But the good news, under the new administration, they have 

demonstrated a new willingness to work with Treasury on implementing a tax information exchange agreement, and I think we are 

beginning to make progress on that. 

Senator CARPER. Thanks so much. 

The CHAIRMAN. Thank you. 

Senator Cantwell, would you like to proceed? 

Senator CANTWELL. Thank you, Mr. Chairman. Thank you for allowing me to ask questions. 

I am sorry I was not here earlier, Mr. Trade Ambassador; I was 

chairing another hearing on NOAA fisheries issues. 

I wanted to ask you, you were obviously very involved in the 

World Trade Organization, the U.S. against Europe, in subsidies to 

Airbus. I am particularly interested in when a final decision will 

be rendered in that area. 

Ambassador KIRK. Senator, first of all, thank you for the continued interest and assistance you and the entire mission delegation 

have given us on the Airbus issue. This was too long in coming, but 

as you know, we got the initial panel ruling last August. It is now 

back for final review. We have submitted our comments, the European Union has, and literally we are hopeful, within the next several weeks, that the appellate body would give us the final ruling 

on the first part of that complaint. The European Union would 

have the right to appeal that, but I know how important this is to 

you, and we will be more than happy to keep your staff apprised 

of further developments of it. 

Senator CANTWELL. Thank you. Well, we think it is important in 

getting a final decision. Given that we are having discussions here 

about the U.S. Government buying basically what you and others 

have fought hard to say has been an illegally subsidized plane, and 

people are concerned that, if that illegal subsidy continues, then 

basically it is putting U.S. manufacturers at a disadvantage. 

That subsidized plane, now declared by WTO as unfairly subsidized, is the government putting a plane that is financed illegally 

on the table, and that could be a disadvantage in the tanker competition because they can make the plane as cheap as they want. 

They can make the plane, the bottom-line number, as cheap as 

they want because the government is continuing to bail them out. 

So getting clarity on this is very important, so I appreciate that. 

I noticed in the President’s 2010 trade agenda that the ROZ bill 

was not part of that, the Reconstruction Opportunity Zones for Afghanistan and Pakistan, so I wondered if it is still part of the trade 

agenda and getting that legislation passed. 

Ambassador KIRK. Senator, it is. It is appropriate you asked 

that. I just want to recognize that Chairman Kerry was here and 

expressed his very strong support for us moving forward on that. 

He had to leave, so this is the first opportunity I have had to respond. But we thank you for your leadership on this and want to 

pledge our continued efforts to see if we cannot work to resolve and 

25 

bridge the differences on how we would treat whatever labor standard so we can move this forward. 

I am well aware and conscious of the fact that I am only here 

because Congress mandated that we create an office, and that I 

look singularly at the trade components as opposed to those that 

affect security or others. But it is not lost on us the importance of 

getting this done in a part of the region in which everyone, from 

our Secretary of Defense to the President, recognizes that having 

some opportunity for employment not only helps achieve a trade 

goal, but could be critical to our national security. 

Senator CANTWELL. Well, I think that is what our defense and 

intelligence agencies are telling us, that if we want to stem the tide 

of future efforts against the United States, that having economic 

opportunity in the region will do that. So you think this year is the 

year to get this done? 

Ambassador KIRK. We said in this environment, I think giving 

time tables is difficult. I believe—I am hopeful—that we are closer, 

and with the dialogue, as you know, we have been having with you 

and Chairman Levin, Senator Grassley, and others, hopefully we 

can find some acceptable compromise that will allow us to. It needed to have been done, frankly, last fall. It needed to have been done 

in December. As long as we have our brave American troops on the 

ground risking their lives, I think we should do everything we can 

to help them. This can be a tool to get it done. 

Senator CANTWELL. It still is a priority then for 2010? 

Ambassador KIRK. Yes, ma’am. 

Senator CANTWELL. Thank you. 

One last question. What is the administration’s plan to help us 

in the Mexican trucking issue? 

Ambassador KIRK. Well, first of all, I want to thank this committee in particular for your leadership in helping us get an appropriations bill that did not have the prohibitory language that created the necessity, unfortunately, about which Mexico levied the retaliations. I was in Mexico just 2 weeks ago and had a conversation 

with my colleague, as well as President Calderon, about this. 

President Obama has asked Secretary LaHood, as you know, to 

help us move forward to see if we cannot work with congressional 

leadership now to come up with an acceptable program to get this 

resolved. But I know it is having a very negative impact, particularly on many of our agricultural industries in California, Washington, and Texas. So, we would like to find a way to come up with 

an acceptable program so we can move forward. 

Senator CANTWELL. Well, I know the administration has said exports are a key part of our economic agenda, and I think that the 

Chamber of Commerce estimates that this dispute has cost us 

somewhere around $2.6 billion and 25,000 American jobs. I think 

if it continues, I know in my State it will cost us more. 

Ambassador KIRK. And it has not been a positive for our trade 

policy. 

Senator CANTWELL. Yes. 

Ambassador KIRK. We want to get it resolved. 

Senator CANTWELL. Thank you very much. 

Ambassador KIRK. Thank you, Senator. 

The CHAIRMAN. Thank you, Senator. 

26 

I would just like, if you could, Mr. Ambassador, tell us in more 

detail how you are ‘‘working to resolve outstanding issues with respect to the FTAs.’’ You mentioned earlier that, at least in the 

views of some, there has not been sufficient progress in Colombia 

in their judicial system to lock up some of the folks who have 

caused all this violence, labor violence, in Colombia. You mentioned 

something about the legislative system there, too. Could you, in 

more detail, explain what it is that the U.S. Government would 

like to see in order to send up an agreement? 

Ambassador KIRK. Well, Senator, as I said, what we have been 

doing, at least the last several months, is we published a notice in 

the Federal Register, I believe in August, for comments on moving 

forward with Colombia. We got, I think, the largest number of responses ever, over 300. We have been trying to winnow those down 

to a workable number of issues, and then, frankly, meet with your 

staff and Ways and Means Committee staff to see if we cannot 

come up with that list. 

Broadly, we are looking at changes, legislative changes, that 

would give workers more rights to organize, protection against violence against them, and looking at strengthening the regime in 

terms of prosecuting those who engage in this violence against 

labor leaders. But we have not finished that process, but we will 

work hand-in-glove with your team and others so that you know 

what that list is when we come to the end of that process in the 

case. 

The CHAIRMAN. When will that be? 

Ambassador KIRK. Senator, we are hopeful that we can come to 

some resolution with members of Congress over the next several 

months, if not weeks, but certainly over the next several months 

so that we can then go back to Colombia with a finite list of what 

we would like to see done. What we do not want to do is keep moving the goalpost. 

We are cognizant of the fact, as you noted, and others, that Colombia has entered 45 of the free trade agreements. Time is of the 

essence. We want to get this done, but we want to engage all of 

those concerns so that we can understand what they are and then 

come up with what we think is a workable list. 

The CHAIRMAN. Do you have precise legislative changes that you 

are looking at? 

Ambassador KIRK. We do not have those at this point. They are 

broadly in those areas of worker rights and protection against persecution. 

The CHAIRMAN. So you got 300 responses. Could you give us a 

breakdown of those responses, those letters? 

Ambassador KIRK. I do not have those with me now, but we will 

be happy to have our team follow up. 

The CHAIRMAN. Was it 50/50? Can you give us some flavor of 

what they were? 

Ambassador KIRK. I would be loathe to tell you that they were 

50/50. I will tell you that I was pleased and surprised that we got 

as many responses saying go, go, go as we did those that, frankly, 

were saying, how could you think of doing anything? 

But one of the things we are trying to do is move beyond just 

the initial emotional reaction of saying, if you do not do it, but findVerDate Nov 24 2008 20:40 Jun 24, 2011 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 R:\DOCS\66785.000 TIMD
27 

ing out, are there really problems that we need to solve? Because 

I think, in fairness to Colombia, we ought to give them a workable 

list of legislative and other issues that we can work through rather 

than just dealing with the raw emotion of those who say we would 

never do the agreement, and trying to take into consideration the 

point made by Senator Carper, that this is almost singularly to the 

benefit of the United States. 

The CHAIRMAN. That is right. 

Ambassador KIRK. Not doing these does nothing to hurt Colombia or Panama. 

The CHAIRMAN. That is right. 

Ambassador KIRK. So we want to get them done. But Senator, 

you know better than others the political environment we are trying to navigate. 

The CHAIRMAN. Well, that is true. But things tend to get stuck 

around here in lots of different areas. You high-centered a bit, but 

there is an opportunity for you to make real progress, that is, get 

these FTAs up here and passed. 

Ambassador KIRK. We would love nothing more than to be able 

to do that. 

The CHAIRMAN. All three of them, the ones that are outstanding. 

That will show we are doing something. I think the American people tend to believe Congress cannot do much. This is one area 

where perhaps— 

Ambassador KIRK. It is probably best that I not comment on 

that. [Laughter.] 

The CHAIRMAN. This is one area where you could do something 

that is positive for our country. I just urge you to burn the midnight oil, just go the extra mile, figure out how to get this done. 

Ambassador KIRK. Yes, sir. 

The CHAIRMAN. As you know, the patience of the Congress is getting a little thin, at least for many of us, on these subjects. 

I wonder if you could comment a little bit about some of the intricacies, the sophistication of the administration’s efforts with respect to China. I noticed in today’s paper that the Deputy Secretary 

of State and other top officials are in China now trying to smooth 

out some of the bumps that have existed in our relationship. 

What is the USTR component of all of this? What are you doing 

to help address some of the difficulties that have occurred between 

our two countries? Because clearly, how we manage this relationship is going to very much determine the livelihood and economic 

fate of peoples of both countries. 

Ambassador KIRK. Yes, sir. 

The CHAIRMAN. So what is the USTR doing about this? 

Ambassador KIRK. Well, Senator, let me start with the end. As 

you know, we have a discrete role working with Secretary Locke at 

the Department of Commerce in that we engage China through the 

JCCT, in which we get at a more granular level than the broad discussion conducted at the Strategic Economic Dialogue to really try 

to make this a problem-solving tool. 

But I think the more important message for you and the American public is that the administration is now working through, not 

only the National Economic Council, but the National Security 

Council to try to come up with a holistic approach to China so that 

28 

you do not just have USTR working in one silo of the State Department and one silo of Treasury. 

We are trying to come up with a holistic approach to address 

China on a number of issues, frankly, raised by many of you on 

this committee, from their industrial policy, to their application 

and use of the VAT tax, to their, we think in many cases, unreasonable restraints on our creative and innovative industries to 

bring products in. We want to make sure that we have a holistic, 

global approach. 

But I would also like to underscore the point that you made, Mr. 

Chairman. Although it is a challenging relationship, potentially, if 

we get it right, as President Obama has said, it can be an extraordinarily great market opportunity for the United States. One element that we are also looking at, not spoken of, is reviewing our 

export control policy so that not just China—there are many economies that, whether they are saying it with any degree of integrity 

or not, believe we could export more if we would have a more 

thoughtful review of our export control. 

The CHAIRMAN. I appreciate that, Mr. Ambassador. You have a 

very, very challenging job, not only with respect to China, but generally. I do look forward to that report that you are going to send 

us on benchmarks and how well you are achieving your goal of doubling our exports over the next 5 years. 

Ambassador KIRK. Yes, sir. 

The CHAIRMAN. The proof is in the pudding. It is deeds, not 

words. I know you mean what you say, but we want to see results 

and work with you so we can achieve that result. 

Senator Nelson, I think, has a question. I have to leave now, but 

Senator Cantwell, you are now in charge. 

Senator CANTWELL. Thank you. 

Ambassador KIRK. Thank you, Mr. Chairman. 

Senator NELSON. Mr. Chairman, as you are walking out the door, 

I am going to follow up on the China question about tainted products that come in from China, including Chinese drywall, that we 

have potentially thousands of homeowners in this country who 

have houses that have to be ripped out and stripped down to the 

studs, and the wiring and appliances replaced—and you can imagine what a costly situation that is—because the Chinese drywall 

has corroded all of the pipes, the air conditioner coils, turned all 

of the metal corroded. 

But interestingly, yesterday there was a report coming out of the 

CPSC, that they think there have even been some deaths now, nine 

deaths, associated with this contamination in the respiratory systems of people, which brings it back to, there is only one deep pocket to solve this problem, and that is the government that allowed 

this Chinese product that was unsafe to be exported in the first 

place into the U.S. 

Now, I know you all have had some conversations with Chinese 

officials, as I have. They tried to blow me off last summer. Tell me, 

what is the latest that you know of, Mr. Ambassador. 

Ambassador KIRK. Well, Senator, it is appropriate that you mention the latest Consumer Product Safety Commission study. When 

this was an issue of concern and you specifically asked us to raise 

it at the last JCCT when we were there last summer, we did that. 

29 

But more importantly, Chairwoman Tenenbaum made a trip to 

China directly, immediately preceding our meeting at the JCCT. So 

they are taking the lead on that. We will support her in every way 

possible. I know they are trying to work a more acceptable protocol, 

not only in terms of testing for the future, but in how we get some 

resolution of the issue that you brought up. But it is still under our 

sort of list of items for us to continue to watch as we prepare for 

our next round of dialogues, which will be here in the United 

States in the fall. 

Senator NELSON. Well, respectfully, I am going to suggest to you 

that China is going to try to sidestep the issue. I tried to get them 

to understand: do you not realize, when you sent in tainted Chinese toys, Chinese toys that were painted with lead paint that 

were going to kill our children, do you not realize this is putting 

a black mark on Chinese goods that are exported from China into 

the United States? Now we have the same thing with this Chinese 

drywall. 

Now, typically we do not bring in Chinese drywall, but we had 

a lack of supply after all those hurricanes in 2004 and 2005 on rebuilding. It is particularly true in my State of Florida. It is Louisiana, it is Virginia, and it is popping up in other parts. 

If there is this connection now, and the CDC and the EPA have 

not come forth with a connection to people’s health, which I fault 

those two agencies for dragging their feet, but if a connection is 

shown between somebody living in a house that has drywall that 

is emitting this gas that smells like rotten eggs and is corroding 

any metallic substance in there, and if that is having an effect on 

their health, then the government of China has to be responsible 

because they are the ones who allowed that defective product to be 

exported out of their country. 

This is going to take the full weight of the U.S. Government in 

dealing with the government of China, otherwise China is going to 

sidestep it, and we are going to be right back in the situation 

where we are. The insurance company for the homeowner says, we 

do not have any obligation. The homebuilder, that normally they 

would go to, is broke. He is bankrupt. The distributor says we do 

not have any obligation. 

So to whom does the poor homeowner turn? They have a house 

they cannot live in, they have a mortgage. They go to the bank to 

work with the bank. The bank says, we are not going to work with 

you. You owe money on this mortgage. They cannot even live in 

their house, or they live in their house at great peril to their 

health. So we have a heck of a mess. At the end of the day, we 

need the U.S. Government slamming its fist on the table in dealing 

with the Chinese. 

Now, after they blew me off when I was there in August, then 

Inez Tenenbaum came and they paid a little more attention to her. 

I thought that the President was going to take this up with the 

President of China in his visit in November. He did not. You all 

did in the delegation. 

Ambassador KIRK. Yes. 

Senator NELSON. But we have to have some fist pounding with 

the government of China in order to get this thing done, because 

otherwise you have thousands of homeowners, at no fault of their 

30 

own, financially in a deep hole as a result of having bought a house 

that they now cannot live in, or they live in at peril to their own 

health. That is the situation, Mr. Ambassador. 

It is just another thorny issue, but it has to have your personal 

attention, socking them between the eyes, to get them to recognize 

their responsibility. That is the Chinese government, because they 

are the ones who allowed, without the safety inspections, the same 

thing with the Chinese toys that occurred about 3 or 4 years ago. 

At that point, that was a defunct CPSC that was not doing its 

job. I think the CPSC now, under Chairman Tenenbaum, is doing 

its job, but that does not solve the problem for the homeowners. 

CPSC is going to come out with a protocol soon that says, all right, 

this is how you remediate to correct the corrosion problems, but 

that does not help the homeowner financially. We have to find a 

responsible financial party, and that has to be the Chinese government. 

Ambassador KIRK. Senator, you have my attention. I think you 

have all of our attentions. 

Senator NELSON. I want you to ball up that big fist of yours, and 

I want you to start pounding it on the table, Mr. Ambassador. 

Ambassador KIRK. Senator, let me tell you, as a former mayor, 

I am much more used to balling up my fist and pounding, but they 

are trying their best to turn me into a diplomat. But the important 

thing is, I know this is serious and it is a health issue. I assure 

you, we will take this seriously and work within the administration 

and with you to see if we cannot find a way to bring some relief 

to these homeowners. 

Senator NELSON. Thank you. 

Senator CANTWELL. If I could follow on that, Mr. Ambassador. 

Thank you so much for your patience today in these important 

questions, but you know, the larger discussion here is so important 

to our economic strategy. 

So on China, what steps are we going to take in the area of IPR 

protection so that we can get China more cooperative with us on 

IPR issues? 

Ambassador KIRK. Well, the good news, Senator Cantwell, is it 

is one of the issues that is regularly a matter of discussion within 

our JCCT, and it is one of the issues in which we have had some 

success in getting some Chinese compliance, as we did in our meeting last fall. But it is one of the issues that we have been most successful, frankly, in pursuing remedies to within the WTO. 

One, because in many cases the obsessive regulations, attempts 

to control content, not only affect the U.S. software industry, but 

those in Europe, Japan, and others. That is one case—I forget 

which of your colleagues raised the issue about taking a more multilateral approach—that at least we have had some success with, 

but it is one we have to continue to engage China on. 

Second, slowly, I would be honest to say—and President Obama 

made this point very deftly in his meeting with the Chinese— 

China is beginning to develop its own sort of entrepreneurial community. As you know, notwithstanding the admonitions for me to 

ball up my fist, and others, having domestic industries realize it is 

in China’s long-term interest to have a strong intellectual property 

31 

rights and copyright regime has been a good resource for us as 

well. 

Senator CANTWELL. Well, I think as we continue to move forward 

on trade, I think this is going to be a higher priority for all of us. 

Ambassador KIRK. Well, it is a place where America competes 

and wins. We are innovative, and we are coming up with products 

that America wants. And we have not talked much about it, but 

as the President talked about us winning the race to go green and 

to come up with new energy technologies and efficiency, we have 

to be able to protect that work product through strong intellectual 

property rights. So our efforts to strengthen our intellectual property rights regime goes hand-in-hand with our commitment to improve research and development. 

Senator CANTWELL. Speaking of that, I appreciate your agenda 

in including acceleration of sound energy and environmental products and the fact that that is part of your trade agenda. 

What can we do to lower the clean energy tariffs? Some of these 

are tariffs as high as 35 percent. When you look at China, its average tariff, I think, is something like 8 percent, but as high as 35 

percent on things like solar water heaters. What can we do to lead 

a charge around the world that, on clean energy products, there 

should be zero tariffs? 

Ambassador KIRK. Well, one of the most exciting initiatives we 

have is right now what we kind of call a coalition of the willing— 

the United States, Canada, the European Union, New Zealand, 

Australia, and others—and we are reaching out to enter as either 

an early harvest of Doha, or separate from it through APEC, an environmental goods and services agreement in which those of us 

who realize the value in what you have articulated would move forward more quickly to reduce the tariffs on those so that those environmental goods and services can be traded freely within those 

countries, but it also then becomes, we think, a valuable tool to 

incentivize further growth and development in these new technologies. 

So that is the first effort of what we are doing. It is an integral 

part of our discussions in the proposed Trans-Pacific Partnership. 

It is an integral part of our discussions as we look to what we can 

do, the next steps, frankly, to strengthen NAFTA, since we are now 

effectively duty- and tariff-free, and it is something that we would 

hope that we can use to invigorate the discussions within the Doha 

Round of talks as well. 

Senator CANTWELL. And if I could, does the administration support the Affordable Footwear Act? This is legislation that my colleague, Senator Ensign, and I have introduced. It previously was 

introduced by myself and Senator Smith from Oregon. But what it 

does is, it gives relief to U.S. consumers who end up paying a 67- 

percent tariff on imported shoes. This is something that would generate thousands of new jobs in the retail sector. I think it was 

Chairman Baucus who pointed out in a speech in 2007, unnecessary tax items on things like sneakers are at a higher tax rate than 

luxury goods. So these are on products the United States does not 

make, and yet we still have a tariff. 

Ambassador KIRK. Right. And Senator, I will have to get back to 

you. I am not sure that I am in a position to say that we support 

32 

it. For the reasons you articulated, we have not found any challenges with it because these are, for the most part, on products 

particularly that most middle-income Americans use every day to 

help their kids go to school, and we do not make them here. So, 

if I could get back to you specifically in terms of whether we have 

made a decision to support it or not, but I think that is more an 

issue of congressional prerogative now than it is our saying yes or 

no. 

Senator CANTWELL. Thank you. 

Senator Menendez? 

Senator MENENDEZ. Thank you very much. 

Ambassador, thank you. Sorry, we were at other hearings before 

we got here. 

Ambassador KIRK. I understand. 

Senator MENENDEZ. But I am glad I got here in time to just 

share a few thoughts with you. 

I am one of 13 of my colleagues in the Senate who encouraged 

the President to work actively towards the development of a joboriented policy and export promotion effort to help us in our challenges here at home. I know that certainly USTR is going to play 

an important role through the NEI, and I look forward to that. I 

wanted to explore that with you a little bit, but I know there is another topic that has risen here which I did not intend to raise, but 

I feel compelled to do so. 

That is, as we promote our trade and want to reduce barriers 

across the globe and want to pursue the opportunity for the export 

of U.S. goods and services to other countries in the world that will 

create jobs here, all of which I am for, I am concerned, however, 

that there are certain standards—for example, I would assume that 

we want to largely deal with countries who observe the rule of law 

so that when we have a contract, we can have that contract observed. Is that a fair statement? 

Ambassador KIRK. Yes, sir. 

Senator MENENDEZ. I would assume that we largely want to deal 

with any market, as long as that market is someone who pays at 

the end of the day, whether that be an individual, company, or government. If there is a history of nonpayment, would that be a concern to us? 

Ambassador KIRK. I think that is fair to say. That is something 

we would look at. 

Senator MENENDEZ. And then finally, I often believe, and some 

disassociate this pillar of our foreign diplomacy, but I often believe 

that human rights and democracy is something that we cannot necessarily be blind to in our trade engagements. All of those things 

bring me to the question of Cuba. 

Rule of law is certainly not something that exists. The difficulty 

is, if you have any type of agreement and that agreement breaks 

apart, it is not quite enforceable under the situation in Cuba. So 

I always say to people, you have to think about any part of the 

world where your agreements are not going to be enforced. 

Second, if you look at the Paris Debtor Club, Cuba has defaulted 

in billions of dollars on obligations that it has, so I get concerned 

about that. Third, I am clearly concerned about the nature of 

human rights and democracy, the most recent being the death of 

33 

an individual on a hunger strike who was being abused in Castro’s 

jails, and was there in the first place simply because he sought to 

speak out and create peaceful change in his country. He died at the 

hands of his jailers as a result of their ultimate abuse and the 

abuse he was protesting that led him to the hunger strike. 

So that, unfortunately, is not an isolated incident. That is an example of hundreds of individuals whom Amnesty International recognizes as prisoners of conscience. So in our drive, which I share, 

for the purposes of opening up markets and creating greater opportunities for goods and services made in America or delivered by 

Americans abroad, I hope that it is not the policy of this administration to do so in the absence of understanding the human rights 

abuses that take place in those countries, in a country that most 

recently had the condemnation of the Organization of American 

States’ International Human Rights Division and that also, in the 

news, was there about assisting individuals from the Basque region 

of Spain to go ahead and attempt to assassinate the Prime Minister. 

So, I look at all these things, and I say there has to be a balance 

in how we pursue it. So I would just like to get your response, both 

to the role you see USTR playing in the NEI, and second, your observations about the situation as it relates to Cuba. 

Ambassador KIRK. Senator, thank you for your comments. Let 

me try to address both briefly. Having worked in this building 25 

years ago as an aide to Senator Lloyd Bentsen, I certainly understand the pull on Senators to be in more than one place at one 

time. I will make sure you have a copy of my previous remarks, 

but I just wanted to note that in not only the President’s trade policy agenda, but in my remarks, we specifically address and make 

it plain that a pillar of our trade policy and an underpinning of 

that is our commitment to the rule of law with all of our trading 

partners, and that is critical to maintaining a global rules-based 

trading system. 

From the very beginning, the Obama administration has made it 

plain that we believe that one of the ways that we can help to recalibrate and answer the cynicism among some Americans about 

the value proposition of our trade policy, is that it has to reflect 

our values about human rights, the rights of workers, and others. 

So, I want to assure you that we will not compromise on those. 

Our role in the U.S. export initiative at USTR is to, frankly, continue to do what we do best, and that is to create more market access for our exporters, for the simple reason that we know that 

businesses that export more tend to grow faster, they create more 

jobs, they pay higher wages. 

So we will continue to focus on market access-opening initiatives, 

whether it is trying to bring to conclusion the pending free trade 

agreements, whether it is bringing into reality the proposed, we 

think exciting, new Trans-Pacific Partnership that would give us 

access to the fastest-growing economic region in the world, and 

whether, frankly, it is through enforcing our rights. 

When I came before this committee during my confirmation, one 

of the concerns I raised was, I think we have gotten to a point that 

we only look at trade ambassadors and measure us on whether or 

not we pass free trade agreements, but as so many of you have 

34 

commented, much of what we lose is because we do not get access 

to the markets that we have agreed on. 

So our enforcement initiatives are not the United States trying 

to be heavy-handed, but it can be a critical component to us getting 

market access that we were promised in existing free trade agreements. In the case of Cuba, as you know, the President has explicitly addressed his belief that he would like to see us move beyond 

the point of this 50-year embargo, but that would be a measured 

approach. 

He did unilaterally offer, I think, the olive branch, if you will, in 

easing the travel restrictions on families. But beyond that, I think, 

Senator, even within the last 2 weeks, we had at least as high a 

level of delegation as we had from the Department of State that 

traveled and met with a delegation from Cuba to begin to address 

some of the other issues that you have laid out. 

Senator MENENDEZ. Well, I appreciate that. 

Let me just close by saying it is really, in my mind, untenable 

that a U.S. citizen has been arrested and detained for months without the ability, until very lately, to get a consular visit, and is detained without any good reason, uncharged. Part of the process is, 

how do you reward a country that detains your citizens, violates 

human rights, and is internationally in default on debt? I think it 

is not the best policy. If that is how we incentivize countries, we 

are definitely incentivizing them in the wrong direction. So I appreciate that and look forward to a continuing dialogue on that. 

Finally, in terms of new trade agreements—and I agree, you 

should not be measured just simply by that—there is one that I 

think I would love to see us move. I think we are all on the beneficiary side of it for the most part, and that is the one with Panama, which has a good rule of law, has good labor rights, and it 

seems to me is a perfect example of trying to begin to build, particularly in a hemisphere that should have some other opportunities as well. 

Thank you very much. 

Ambassador KIRK. Thank you. 

Senator CANTWELL. Mr. Ambassador, I know you have been here 

now for a couple of hours, and I assure you there is not a relentless 

number of members who are going to keep showing up. But trade 

is an important policy area for us, and we appreciate your indulgence. 

Ambassador KIRK. It is very important, and I appreciate the time 

to not only give you our thoughts, but to get your counsel as well. 

Senator CANTWELL. Thank you. 

Senator Wyden? 

Senator WYDEN. Thank you, Senator Cantwell. Thank you, Ambassador Kirk, for your service, and also your patience today. 

As I indicated to you when we had our recent visit, it is my intention, as chairman of the Trade Subcommittee here at the Finance Committee, to work very closely with Chairman Baucus. I 

thought that a number of the suggestions you made this morning, 

particularly in terms of getting some benchmarks and specifics 

about how to achieve this 5-year objective of doubling exports, 

make a lot of sense. So, Chairman Baucus’s thoughts on that have 

my full support. 

35 

I want to get into the issue of China with you, and I want to do 

it in a very specific way, because my sense is a lot of the discussions about China tend to be sort of elliptical and talk about sort 

of general concepts, and I think it is very important to get into specifics. 

My judgment is that China recently instituted a policy that actively discriminates against American intellectual property. This is 

absolutely key to growing our economy here in the United States, 

good-paying jobs. Senator Cantwell and I from the Pacific Northwest, our area is directly affected by the ability of intellectual property and innovators in our part of the world to be on the cutting 

edge of those new technologies, the new intellectual property that 

is going to make a difference. 

So let me outline my concern here. The Chinese recently put in 

place a program that they called the Indigenous Innovation Product Accreditation System. It involves government procurement. My 

reading of this is that this new program actually discriminates 

against American intellectual property, and it moves, in effect, in 

exactly the opposite direction of what China pledged earlier with 

respect to the World Trade Organization, particularly in the case 

of the point that I am outlining, international norms and the WTO 

Government Procurement Agreement. 

So here we have a concrete situation recently put in place. This 

is not something that took place years ago, and people were stalling around and trying to figure out what to do with it. This is 

something they put in place recently that those innovators in our 

country that are generating intellectual property are very troubled 

by. I believe that this new policy will put American intellectual 

property at a serious disadvantage in an extremely important market. 

My question to start with is, does this new Chinese program 

trouble you? If so, what is the Obama administration going to do 

to try to turn it around? 

Ambassador KIRK. I thank you not only for your questions and 

comments, but thank you so much for taking time to visit with me, 

not just a couple of weeks ago, but continually. I want you to know 

that we have heard you and are doing everything we can to expand 

the winner’s circle for trade. 

On the issue of intellectual property, my answer to both of your 

questions is yes. Does this trouble us? Yes. Does this present an 

incredible opportunity where America can win because of our creative edge in information services, in the creative arts? Yes. It is 

one of the issues. I would say I know others. Some, I will not say 

have questioned the value, but maybe begin to question the value 

of the JCCT. I would tell you that it is a critically important tool 

for us to be able to engage China on these issues as they come up. 

I say that for one reason. One of the things that alarmed and 

concerned me most when I came into office was I asked for an immediate review of all the cases we had pending in the WTO, some 

of it driven by my conversations with you all, and frankly Senator 

Snowe, who could not be here, telling me it took 20 years to get 

a softwood lumber agreement, and Senator Cantwell and others’ 

concern about the 14-year fight over Airbus. No disrespect to Airbus or Google. They can maybe survive a 14-year process. Those 

36 

young entrepreneurs, Senator, that you and I talked about who are 

in your State, and Texas, in Florida, in Michigan, do not have 14 

years. 

The value of the JCCT, as difficult as it is, is we have the ability 

to engage China directly, which Secretary Locke and I did, and successfully. We are beginning to win some of these. The level of 

progress is not what any of us would like. It does feel like, in many 

cases in China, frankly, we take one step forward and two steps 

back. 

But maybe, so I can get to your next question, I just want to assure you that the issue of intellectual property rights protection is 

one that receives the highest level of attention from us at every 

level, but I want you to know the value of our approach because 

the first response is, why do you not file a case? I do not want to 

take 3 to 5 years to get a resolution if we can sit down and slug 

it out and try to get a result sooner. But we are particularly concerned about this indigenous innovation effort by China and have 

had very direct discussions with them about it. 

Senator WYDEN. Mr. Ambassador, I appreciate that. I would only 

say that, with respect to intellectual property, which in my view is 

just going to be the foundation for so many good-paying jobs in the 

future, this is a policy that is intolerable. I think it is critically important, and particularly with my friend and colleague Senator 

Cantwell. Senator Cantwell and I, in our time we served in the 

other body and since we have been here, have voted for every 

market-opening agreement that has come before the respective 

bodies. 

I think it is fair to say we have the welts on our back to show 

for it. This is an issue where we have to draw a line in the sand, 

where we have to say that the Congress has only so much patience 

for discussion. This is one—and I say this as someone who is looking forward to working with the administration on these marketopening agreements—when you have a Chinese policy that has 

been recently instituted, knowing about the concern in this country 

for access to markets, for the Chinese to put in place a new policy—this is a fresh policy, not something that happened years 

ago—we must send the strongest possible message, draw a line in 

the sand that we are not going to say that you can just actively 

discriminate against American intellectual property, and folks in 

the U.S. Congress and folks in the executive branch will say, gosh, 

we will be interested in talking to you about this down the road. 

I can assure you, I do not bring this level of passion, and probably 

the decibel level, to very many of these trade issues, but this is 

something I feel very strongly about. 

In Oregon and the Pacific Northwest, where we have risk-takers 

and innovators who put it on the line right now, where they cannot 

get capital, it is very hard to finance their ventures, for them to 

wake up and see that the Chinese have recently put in place a new 

program to discriminate against American intellectual property, 

that is where we draw the line. So, you will be hearing plenty from 

me as chairman of the Trade Subcommittee, working under the 

leadership of Chairman Baucus on this. 

One last question, if I might, Senator Cantwell. I may have 

missed it, Ambassador Kirk, but on the softwood lumber issue, I 

37 

think it would be very helpful if you could give us an update. I feel 

badly; we have all had many hearings this morning, and I may 

have missed it. But could you just briefly give us an indication of 

what additional steps USTR is taking to enforce the terms of the 

agreement and what else might be coming up with respect to it, 

particularly on the possibility of a possible extension of the agreement with Canada? I think we know that the Canadians unfairly 

subsidize their industry. 

We have relied on the competitiveness principles that are so important to our country; that is why the forestay industry in Oregon 

is especially competitive in world markets. But if you could tell us 

what additional steps you all are looking at to enforce the terms 

of the agreement, and also any developments with respect to a possible extension of the agreement with Canada, Ambassador, that 

would be very helpful. 

Ambassador KIRK. Well, Senator, first of all, if I might say quickly, I just want you to know, we take this issue of protecting America’s intellectual property rights just as seriously as you do. Frankly, as outspoken as you have been, coming from Texas, first of all, 

we would still consider you soft-spoken. It helps me for the Chinese 

to hear this from you and other members of the committee, because 

they tend to get tired of Secretary Locke and I doing that. So in 

this case, I want to assure you that we are working in concert on 

that. 

Second, the softwood lumber agreement, I do think, is one good 

story. Again, I really appreciate your educating me on this, along 

with Chairman Baucus and Senator Snowe. Based on that, this is 

one area that we did move very quickly on to enforce the agreement. We got a WTO, a NAFTA ruling. We have been levying a 

tariff on imported softwood lumber from some provinces in Canada 

because they were unfairly undercutting our prices. We won the 

right to levy tariffs. I think it is slightly less, around $55, $56 million. We have been enforcing and collecting that. I think we have 

collected roughly half, maybe a little more, but I will get the specific number back to you. 

So on that part, we have enforced it. We are enforcing it. We are 

getting more compliance. We are concerned, based on my last visit 

to your part of the State, and forgive me, but I think there is a beetle infestation that is attacking some of the trees, and now they are 

taking a number of trees and selling them as diseased at lower 

prices. So, that is of concern to us, and we are working with your 

staff and others to make sure that we combat that. 

Senator WYDEN. Ambassador, thank you. Let me echo Senator 

Cantwell’s point about your patience. A lot of us, literally between 

10 and 12, had three or four separate committee hearings. The fact 

that you have been patient is further indication of the fact that you 

want to work with us, and we appreciate it. 

Ambassador KIRK. I hope it is evidence of our excitement at finally having been let out of the trade box. 

Senator WYDEN. Fair enough. 

Ambassador KIRK. I think we are now talking about how we can 

move forward, aggressively working together. 

Senator WYDEN. Mr. Ambassador, thank you. 

Ambassador KIRK. Thank you, sir. 

38 

Senator CANTWELL. Thank you. And thank you, Senator Wyden, 

for your leadership as the subcommittee chairman. So, we appreciate that. I do agree with you on the IPR issue as it relates to 

China, and I want to emphasize that. It might have been at a different decibel level, but I know that our region does speak with one 

voice on that and is going to be much more active on that point. 

Thank you for presenting the administration’s trade agenda and for 

being here this morning. I know we do not get you up to the Hill 

that often, but we look forward to continuing to work with you on 

these trade priorities of the Finance Committee. 

Ambassador KIRK. Senator, if I might, just because I do think it 

is important. 

Senator CANTWELL. Yes. 

Ambassador KIRK. One of the lessons I have learned, in Senator 

Wyden’s terms of expanding the circle, is that the issue of intellectual property rights, entrepreneurship, I know we tend to think 

that is the providence of the west coast, but it is important in Florida, it is important in Texas. It is the way we are going to help 

bring Michigan and Pennsylvania—we have entrepreneurs all over 

this country that benefit from the efforts we are doing. 

I know it is important to your regions, but it is important also 

that we help the rest of America understand this is how they compete. Senator, I want to thank you for coming over and visiting us 

at USTR. Mr. Chairman, we would welcome you coming over and 

helping encourage the troops as well. Thank you both. 

Senator WYDEN. Thank you. 

Senator CANTWELL. Thank you, Mr. Ambassador. 

The hearing is adjourned. 

[Whereupon, at 1 p.m., the hearing was concluded.] 

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