U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

30–280—PDF 2006

S. HRG. 109–624

UNITED STATES - OMAN FREE TRADE AGREEMENT

HEARING

BEFORE THE

SUBCOMMITTEE ON INTERNATIONAL TRADE

OF THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

MARCH 6, 2006

(

Printed for the use of the Committee on Finance

COMMITTEE ON FINANCE

CHARLES E. GRASSLEY, Iowa, Chairman

ORRIN G. HATCH, Utah

TRENT LOTT, Mississippi

OLYMPIA J. SNOWE, Maine

JON KYL, Arizona

CRAIG THOMAS, Wyoming

RICK SANTORUM, Pennsylvania

BILL FRIST, Tennessee

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

MAX BAUCUS, Montana

JOHN D. ROCKEFELLER IV, West Virginia

KENT CONRAD, North Dakota

JAMES M. JEFFORDS (I), Vermont

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

RON WYDEN, Oregon

CHARLES E. SCHUMER, New York

KOLAN DAVIS, Staff Director and Chief Counsel

RUSSELL SULLIVAN, Democratic Staff Director

SUBCOMMITTEE ON INTERNATIONAL TRADE

CRAIG THOMAS, Wyoming, Chairman

MIKE CRAPO, Idaho

TRENT LOTT, Mississippi

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

ORRIN G. HATCH, Utah

OLYMPIA J. SNOWE, Maine

BILL FRIST, Tennessee

JEFF BINGAMAN, New Mexico

MAX BAUCUS, Montana

JOHN D. ROCKEFELLER IV, West Virginia

KENT CONRAD, North Dakota

RON WYDEN, Oregon

CHARLES E. SCHUMER, New York

(II)

(III)

C O N T E N T S

OPENING STATEMENTS

Page

Thomas, Hon. Craig, a U.S. Senator from Wyoming, chairman, Subcommittee

on International Trade ........................................................................................ 1

Bingaman, Hon. Jeff, a U.S. Senator from New Mexico ...................................... 2

ADMINISTRATION WITNESS

Schwab, Hon. Susan, Deputy U.S. Trade Representative, Office of the U.S.

Trade Representative, Washington, DC ............................................................. 2

PUBLIC WITNESSES

Lee, Thea M., policy director for legislation, AFL–CIO, Washington, DC .......... 9

Hemphill, Robert, executive vice president, AES Corporation, Arlington, VA ... 12

Walker, Hon. Edward S., Jr., president, the Middle East Institute, Washington, DC ............................................................................................................. 14

Hamod, David, president, National U.S.-Arab Chamber of Commerce, Washington, DC ............................................................................................................. 16

ALPHABETICAL LISTING AND APPENDIX MATERIAL

Aossey, Jalel:

Prepared statement .......................................................................................... 21

Baucus, Hon. Max:

Prepared statement .......................................................................................... 24

Bingaman, Hon. Jeff:

Opening statement ........................................................................................... 2

Grassley, Hon. Charles E.:

Prepared statement .......................................................................................... 26

Hamod, David:

Testimony .......................................................................................................... 16

Prepared statement with attachment ............................................................. 28

Hemphill, Robert:

Testimony .......................................................................................................... 12

Prepared statement .......................................................................................... 52

Lee, Thea M.:

Testimony .......................................................................................................... 9

Prepared statement .......................................................................................... 55

Schwab, Hon. Susan:

Testimony .......................................................................................................... 2

Prepared statement with attachment ............................................................. 64

Responses to questions from subcommittee members ................................... 69

Thomas, Hon. Craig:

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

Walker, Hon. Edward S., Jr.:

Testimony .......................................................................................................... 14

Prepared statement .......................................................................................... 72

COMMUNICATIONS

American Council of Life Insurers (ACLI) ............................................................. 75

Dow Chemical Company ......................................................................................... 78

Ranchers-Cattlemen Action Legal Fund–United Stockgrowers of America

(R-CALF USA) ...................................................................................................... 80

(1)

UNITED STATES-OMAN FREE

TRADE AGREEMENT

MONDAY, MARCH 6, 2006

U.S. SENATE, SUBCOMMITTEE ON INTERNATIONAL TRADE, COMMITTEE ON FINANCE, Washington, DC.

The hearing was convened, pursuant to notice, at 2:30 p.m., in

room SD–215, Dirksen Senate Office Building, Hon. Craig Thomas

(chairman of the subcommittee) presiding.

Also present: Senator Bingaman.

OPENING STATEMENT OF HON. CRAIG THOMAS, A U.S. SENATOR FROM WYOMING, CHAIRMAN, SUBCOMMITTEE ON

INTERNATIONAL TRADE

Senator THOMAS. I call the committee to order so we can get

going.

Thank you very much for being here. We welcome all of our witnesses and everyone who is interested in this Subcommittee on

International Trade, U.S.-Oman Free Trade Agreement hearing.

Geographically, of course, the Middle East is a region quite far

removed from the United States. Because of the distance, of course,

U.S. trade interests are at a disadvantage when compared to our

competitors from Europe, Africa, and elsewhere.

We need to reach out to the countries in this region to develop

stronger relations. It is a region that far too long has been ignored

or taken for granted. I am pleased to see a renewed commitment

to the region, and we are here to discuss the Oman FTA.

We cannot ignore the critical role the Middle East has played,

and continues to play, in the world’s history—culturally rich, of

course—a long history of trade and commerce.

Today, the area provides much of the energy that drives the global economic engine and will remain a critical region, certainly, for

some time. Trade will play a key role, as it is increasingly throughout the world.

I believe trade does play an important role in raising the standard of living for everyone. Oman and the United States is not the

largest trading partnership that we have ever talked about, but it

is an important one, both strategically and economically.

I think what we seek to do, certainly, in these trade agreements,

is to find ways to work together in a fair fashion, one that will be

fair to the participants in the two-way agreement. This provides

opportunities for both nations, and I welcome the beginning of the

debate on this FTA.

Senator Bingaman?

2

OPENING STATEMENT OF HON. JEFF BINGAMAN,

A U.S. SENATOR FROM NEW MEXICO

Senator BINGAMAN. Thank you very much, Mr. Chairman. Thank

you for having the hearing. Ambassador Schwab, thank you for

being here.

I was going to just mention three issues before the testimony,

issues that I am particularly interested in focusing on this afternoon.

One is the issue of labor worker standards there, what we have

in the agreement and what we have failed to provide for in the

agreement. I understand that we have, once again, chosen not to

inquire or not to include in the text of the agreement anything on

this issue, other than a requirement that they comply with their

own law.

I believe Congressman Rangel has been trying to get agreement

from Oman to encourage them to take some additional steps with

regard to improving labor standards.

I will be anxious to learn more about that if I can during this

hearing, and what the administration’s position is with regard to

the efforts that Congressman Rangel has been making.

Second, on the issue of the Arab League’s boycott of Israel, it is

my understanding that Oman has a good record of working with

Israel. But again, it strikes me that this perhaps is an issue that

we should go ahead and put in as standard language in our trade

agreements with these countries, rather than just trying to deal

with it on a case-by-case basis. I will want to ask questions about

that.

The final issue is not related to the Oman trade agreement, but

it is one that I wanted to just bring up for Ambassador Schwab’s

attention and ask her help on, and that is related to the NAD

Bank. I am informed that the administration has made some type

of decision with regard to withdrawing funding from the NAD

Bank.

Of course, the NAD Bank was a central part of the package of

provisions that persuaded many of us to support the NAFTA agreement, and I wanted to get any information that Secretary Schwab

had on that and ask for her help in running down additional information, if that is needed.

Thank you very much, Mr. Chairman.

Senator THOMAS. All right. Thank you, Senator.

We will have two panels today. Let me see. I think the Ambassador from Oman was here. There she is in the back. Welcome. We

are very glad to have you here. I know you may have to leave

early, but we are pleased to have you in attendance.

On our first panel we have the Honorable Susan Schwab, Deputy

U.S. Trade Representative, in the U.S. Trade Representative’s office here in Washington.

Ambassador, if you would like to go right ahead, please.

3

STATEMENT OF HON. SUSAN SCHWAB, DEPUTY U.S. TRADE

REPRESENTATIVE, OFFICE OF THE U.S. TRADE REPRESENTATIVE, WASHINGTON, DC

Ms. SCHWAB. Mr. Chairman, Senator Bingaman, thank you very

much.

Let me begin by thanking you and others on this committee who

have been working in such close partnership with us on our free

trade agreements. I very much appreciate the opportunity to discuss the U.S.-Oman Free Trade Agreement with you today.

This and other recent FTAs that the committee has considered

are important elements of U.S. policy in the Middle East. With this

agreement, Oman has made legally binding commitments to liberalize trade with the United States.

The FTA will provide new market access opportunities for U.S.

farmers, manufacturers, service providers, and workers. It will also

help to create an economic environment conducive to additional

employment opportunities for the people of Oman.

Beyond substantial trade liberalization, the FTA will help to support ongoing economic, political, and social reforms in Oman and

promote the benefits of pursuing market liberalizing policies in

other countries in the region as well. Embracing trade will benefit

the people of the Middle East as they strengthen their ties outside

the region and with each other.

The administration’s trade agenda is a fundamental part of the

President’s vision for developing economic growth and democracy in

the Middle East. In May, 2003 the President announced a plan of

graduated steps for Middle Eastern nations to increase trade and

investment with the United States and others in the world economy, and to create a U.S.-Middle East Free Trade Area, MEFTA,

by the year 2013.

Oman is the fifth Middle Eastern country to have negotiated an

FTA with the United States, building on our existing agreements

with Israel, Jordan, Morocco, and, most recently, Bahrain.

We are also negotiating an FTA with the United Arab Emirates

and have Trade and Investment Framework Agreements, TIFA

agreements, with most of the other countries in the region.

These are important steps on the path to implementing the

President’s initiative, and consistent with the 9/11 Commission’s

urging that the United States expand trade with the Middle East

in order to ‘‘encourage development, more open societies, and opportunities for people to improve the lives of their families, and to

enhance prospects for their children’s futures.’’ The President and

USTR take this recommendation very seriously.

As to the agreement itself, on the first day the agreement enters

into force, 100 percent of bilateral trade in industrial and consumer

products, with the exception of certain textile and apparel products,

will flow duty-free.

In addition, Oman will provide immediate duty-free access for 87

percent of U.S. exports of agricultural products. This means there

will be new opportunities for U.S. companies to produce machinery,

automobiles, optic and medical instruments, and it will mean new

opportunities for U.S. producers of vegetable oil, sugars, and sweeteners for beverages.

4

Under the FTA, Oman will provide substantial market access

across its entire services regime, with new opportunities for U.S.

companies involved in banking and securities, insurance, telecommunications, express delivery, distribution, health care, construction, architecture, and engineering.

This agreement will also help ensure a secure and predictable

legal and regulatory environment in Oman that foreign investors

will want to see in 21st-century commerce.

Under the agreement, Oman will provide effective enforcement of

labor and intellectual property rights laws. This will help Oman be

a more attractive place for investors and also create new opportunities for the Omani people.

The agreement also includes important transparency, public notification, and anti-bribery provisions. The application of these provisions will also improve the business and investment environment.

The FTA’s labor and environment provisions fully meet the negotiating objectives set out in the Trade Act of 2002. These provisions

are included in the core text of the agreement. Senator Bingaman,

I would be happy to address more specifically some of the labor

issues later on.

Suffice it to say that the agreement requires each party to effectively enforce its labor and environmental laws. Each party commits to ensure that its laws and policies provide for and encourage

high levels of environmental protection, to strive to ensure that

labor laws provide for labor standards consistent with internationally recognized labor principles, and to strive not to weaken or reduce labor and environmental laws to attract trade and investment.

Oman passed a new labor law in the year 2003 that allows for

the creation of worker representative committees for the first time.

The law details procedures for dispute resolution and removes a

1973 prohibition on strikes.

Oman recognizes the need to continue its efforts on labor rights,

and is working to raise awareness and educate workers about their

rights and to establish new worker representative committees.

Oman is working with the ILO on these efforts.

This agreement enjoys widespread support from our trade advisory committees. The most senior committee, the Advisory Committee for Trade Policy and Negotiations ‘‘unanimously endorses

the U.S.-Oman Free Trade Agreement’’ and found the agreement is

in the best interests of the United States.

The agreement is also supported by an impressive group of businesses, over 100 members, who make up the U.S.-Middle East Free

Trade Coalition. I suspect you will be hearing more from them

later, but they represent construction, energy, services, automobile,

pharmaceutical, IT, and defense companies.

Let me close by noting that, for decades, Oman and the United

States have shared a desire for peace, stability, and economic opportunity in the Middle East. This agreement is an important step

in our partnership that will not only remove trade barriers, but

also cement our longstanding friendship and growing commercial

ties and create new economic opportunities for both of our countries. With your guidance and support, we will continue to pursue

the President’s MEFTA initiative.

5

As the next step in implementing that initiative, we look forward

to working with you and building bipartisan support for legislation

implementing the U.S.-Oman FTA this spring.

I would submit my longer, formal statement for the record, and

would be pleased to respond to any questions or comments that you

would have.

Senator THOMAS. Thank you very much. Your statement will be

included in the record.

[The prepared statement of Ms. Schwab appears in the appendix.]

Senator THOMAS. A little selfishly, 87 percent of agricultural

products are duty-free. What about the other 13 percent? What

products does that represent?

Ms. SCHWAB. Eighty-seven percent of line items in agriculture all

are duty-free upon date of entry. The products that are not dutyfree upon date of entry get unlimited duty-free access within 10

years. They include alcohol, tobacco, and pork. As you might imagine, in a Muslim country, those are obviously very, very sensitive

products.

Senator THOMAS. Good. With the recent discussion here in Washington, I thought we would want to get rid of as much pork as we

could. [Laughter.] A little off the subject.

There has been a lot of discussion on port security lately. Do

these agreements go into the question of safeguards regarding improper transshipment of goods?

Ms. SCHWAB. These agreements do not formally do that. But, as

you know, whether it is through World Trade Organization agreements or any of our free trade agreements, there are specific exceptions for essential security.

No country would give up its ability to protect its own national

security, but we must be careful in the use of this provision so as

not to encourage others to abuse it as an excuse for protectionism.

Senator THOMAS. As we have made various agreements throughout the world and have a number of them in place, and dealing

with others, what is the normal relationship in terms of labor

agreements with other countries?

Do you find that often they are similar? Do you find that our

agreements are quite different, that none compare to what we do?

What is, generally, the situation, comparing our labor agreements

with those that we compete with?

Ms. SCHWAB. In terms of other free trade agreements that other

countries negotiate?

Senator THOMAS. Yes, ma’am.

Ms. SCHWAB. That I am aware of, you find very few labor provisions in free trade agreements negotiated by other countries. In

fact, as a general rule, U.S.-negotiated free trade agreements tend

to be much broader and much deeper in their impact than the free

trade agreements negotiated by other countries with third parties.

Senator THOMAS. I see.

Ms. SCHWAB. And that includes on labor.

Senator THOMAS. All right. Thank you.

Senator?

Senator BINGAMAN. Well, thank you very much.

6

First, just to sort of get the issue on the record here. This NAD

Bank issue that I mentioned before that is not related to the Oman

free trade agreement.

That is something that obviously would be of great concern to us

if, in fact, the administration is taking the action that we have

been advised that they are thinking of taking.

I gather that would be coming out of the Department of the

Treasury, not out of the U.S. Trade Representative’s office. Are you

familiar with this issue, or would you just agree that you will help

us find what the right information is?

Ms. SCHWAB. Absolutely. Senator, I am familiar with the issue.

The Treasury Department does have the lead on NAD Bank. I can

assure you, no decision has been made as to the disposition of NAD

Bank. NAD Bank, as you stated, was created as part of the NAFTA

agreement, designed to provide commercial rate lending to border

States for waste water and other environmental treatment.

I am sure you are also aware that certainly all of the border

States involved, and virtually everyone else, have been quite disappointed in the operation of NAD Bank. NAD Bank has involved

a fair amount of investment set aside by both the United States

and Mexico, and the return on that investment in terms of environment impact has been quite disappointing.

There have been efforts to reform NAD Bank’s administration,

but as I said, while there is a discussion going on about what

should happen next with NAD Bank, no decision has been made.

I can assure you that no decision would be made, absent consultations with Congress, with interested members, including yourself,

on this.

Senator BINGAMAN. All right. I appreciate that. We will look forward to additional conversations with you or with the Treasury Department about this if some change in policy is being contemplated,

because I was not aware of that until today in preparing for this

hearing.

Let me ask about this trade agreement. There is obviously a difference of opinion between you and Ms. Lee, who is the policy director for the AFL–CIO, on this set of issues. I gather she is on the

second panel.

She says, ‘‘Oman’s labor laws are egregiously out of compliance

with the ILO core labor standards,’’ and then goes on to point out

that, in her opinion, ‘‘Oman’s free trade agreement labor provisions

constitute a step backward from existing labor rights provisions in

the U.S.-Jordan FTA and in our Generalized System of Preferences

program.’’

What is your response to that claim?

Ms. SCHWAB. As I noted in my opening statement, Oman enacted

a forward-leaning labor law in 2003. Prior to that time, I think all,

including the Government of Oman, would agree that their labor

laws were not up to standard. They have worked very closely, and

continue to work closely, with the ILO to ensure that workers in

Oman enjoy the same protections and benefits as workers in other

countries.

In terms of our FTA agreement, by some definitions, this is a

stronger provision than that in the Jordan FTA.

7

Senator BINGAMAN. What interpretation would lead you to that

conclusion?

Ms. SCHWAB. In terms of some of the key elements in enforceability, the transparency, and what the Omanis have agreed to do

in terms of ongoing work with the ILO, to improve the standards

and enforcement.

In terms of enforcement activities and evidence that these are

working, recognizing that this law was just enacted in 2003, for example, the Omani government reports that there have been, I believe, 33 strikes or labor stoppages since this law was enacted.

We know that there are worker representative committees.

Oman knows that there needs to be more than one such committee,

if workers in a given enterprise wish to have another one.

So, there are a variety of improvements that were made, dramatic improvements made in 2003, on which the Omanis are building. In terms of where they were and where they’re going, it is a

strong and growing accomplishment.

It is very important to recall that, absent the FTA agreement, a

lot of these efforts might go by the wayside, and they certainly

would not be enforceable through our FTA. So, we believe that this

is the right way to go. Oman is the first to acknowledge that they

have more work to do, and they are working with the ILO and with

us to see that improvements continue to be made.

Senator BINGAMAN. Mr. Chairman, my time is up here. If we are

going to have another round with this witness, I will have a couple

of other questions.

Senator THOMAS. All right. I just have one other sort of general

question, Senator, and then we will get on to our second panel.

I recognize, and I think all of us recognize, the importance of our

trade relationships. The world is changing, and billions of dollars

move around the world, so we need to find ways to ensure that

they move around as fairly as possible, I am sure, if we are interested in having relationships with other countries, and maybe particularly in this area of the Middle East.

Our trade in this instance, I am told—I guess it was in 2004—

is about $330 million, which is a relatively small amount. So how

would you classify this arrangement? Is it more designed for a

trade agreement? Is it more designed for a relationship agreement?

How would you classify this?

Ms. SCHWAB. Senator, you ask a very, very good question. In this

particular case, as I noted, this is yet one more step in seeing the

President’s MEFTA, Mid-East Free Trade Area initiative, become

a reality.

This is the fifth country in the region with which we have negotiated an FTA. It is designed to improve economic growth, development, and commerce, both between the region and the United

States, but also among countries in the region.

So this is a critical step in terms of broadening the base of economic, and ultimately political, liberalization across the region. So,

it is based both on economic and on foreign policy objectives.

Senator THOMAS. I see. All right. Thank you.

Senator, go ahead, if you would like.

8

Senator BINGAMAN. Let me ask about this boycott of Israel. It is

my understanding that Oman has good relations with Israel. Generally, it is not thought to support any type of boycott.

But I guess my question is, if we have this strategy or this plan

of signing agreements with all of these Middle Eastern countries,

and you indicated this was the fifth agreement that you have concluded, why do we not put language in each of these agreements,

in the text of the agreement, that deals with this issue and makes

it clear that that is part of what is being agreed to here, is that

there will not be any involvement or participation in any boycott

of Israel?

Ms. SCHWAB. Senator, I am glad you asked the question about

the boycott. As you note, Oman has a very good record in terms of

the Arab League boycott. We have a letter that I might invite you

to place in the record from the Minister of Commerce and Industry,

which, among other things, assures us that Oman does not apply

any aspect of the boycott, whether primary, secondary, or tertiary,

or have any laws to that effect.

[The letter appears in the appendix.]

Ms. SCHWAB. As a member of the WTO, Oman has not taken a

reservation as to the application of most favored nation status with

other WTO members, which includes Israel, and therefore that obligation, by being a member of the WTO, is there, and it has been

faithful to that obligation.

As part of our free trade agreements in the region, we have also

received assurances about the secondary and tertiary application of

the boycott. In 1994, Oman, as well as other countries of the Gulf

Cooperation Council, eliminated the secondary and tertiary aspects

of the boycott.

As I understand it, in 1996, Oman and Israel signed an agreement to set up trade offices, trade missions, in each other’s countries. These were shuttered after the launch of the second Intifada,

but Oman still has had trade with Israel.

In terms of how one locks these in, we have a written letter of

commitment. In each country, we take a different approach to

fit——

Senator BINGAMAN. And that is my question: why do we take a

different approach with each country? Why do we not just say, this

is what we are going to require if you want to have a free trade

agreement with the United States, on this issue? Here is the language. It is going to be in the text. If you do not like it, we will

move on and negotiate with someone else. I mean, why do we not

take that position?

Ms. SCHWAB. Well, the first part of your statement, we do require that the non-application of the Arab League boycott, whether

it is primary, secondary, or tertiary, non-application is a prerequisite for an FTA.

Senator BINGAMAN. Well, why do we not put that in the FTA?

Ms. SCHWAB. It is in the FTA. It depends where we——

Senator BINGAMAN. You mean, there is language in this free

trade agreement that says that?

Ms. SCHWAB. In each individual free trade agreement, it is memorialized. It depends on the country, and depends on the circumstances.

9

Senator BINGAMAN. But there is language in this free trade

agreement that says that?

Ms. SCHWAB. As part of Oman’s commitment to its accession to

the WTO, it has, by definition, renounced the——

Senator BINGAMAN. So you think that their commitments

through the WTO are adequate to resolve this issue.

Ms. SCHWAB. These are enforceable commitments.

Senator BINGAMAN. All right.

Under the agreement that you have here with regard to labor

rights, is there any explicit agreement by Oman to comply with

ILO standards? I mean, I know you have this language in here

about ‘‘striving’’ in various respects. But is there any commitment

to actually comply with ILO standards?

Ms. SCHWAB. As you know, Senator, as part of the Trade Act of

2002, the negotiating objectives, negotiating responsibilities laid

out for us, whether through WTO negotiations or through FTAs,

are for the enforcement of our own labor laws. That is what we

have built into this particular agreement as well.

In terms of Oman’s labor practices, we obviously spent a lot of

time, and had experts over in Oman studying their law and studying their practices, to assure ourselves that they are striving to

meet ILO core labor standards.

There are a lot of countries, Senator, that are signatories or have

ratified core ILO standards that you would not consider doing an

FTA with, and that certainly do not practice fair treatment and

protections for their workers.

In the case of Oman, it is clear from their own legislation and

from their practices that they are working very hard to make sure

that their labor practices are consistent with core labor standards

of the ILO.

Senator BINGAMAN. Thank you. My time is up, Mr. Chairman.

Senator THOMAS. Thank you very much.

Thank you, Madam Ambassador. We appreciate it. It is always

interesting to take on these issues. When you read about them, a

lot of times, compared to our investment overseas, their investment

here changes the balance of trade, and all these things make it

very difficult. So, I appreciate your work, and thank you for being

here.

Ms. SCHWAB. Mr. Chairman, thank you. Senator Bingaman,

thank you very much.

Senator THOMAS. May we call up our second panel now, please?

I would like to thank all the witnesses on panel two for appearing

before the committee today to testify on this Oman free trade

agreement.

Before I introduce you, and as you are taking your places, I

would like to mention the absence of one of our witnesses, Jalel

Aossey, from Midamar Corporation. Unfortunately, he encountered

flight delays this morning and is unable to reschedule his flights

to be here. So, his statement will be included in the record.

[The prepared statement of Mr. Aossey appears in the appendix.]

Senator THOMAS. We thank all of you for being here, Ms. Lee,

Mr. Hemphill, Mr. Walker, and Mr. Hamod. We appreciate that

very much.

10

I have them listed here, in no particular order, but if you do not

mind, we will just start that way. We will start with you, Ms. Lee.

STATEMENT OF THEA M. LEE, POLICY DIRECTOR FOR

LEGISLATION, AFL–CIO, WASHINGTON, DC

Ms. LEE. Thank you so much, Mr. Chairman, Senator Bingaman.

I appreciate your holding the hearing, and I appreciate the opportunity to testify today on behalf of the 9 million working men and

women of the AFL–CIO on this issue, which is of great interest and

concern to us.

I think you know that we have two sets of concerns about the

Oman FTA. One has to do with the actual agreement itself and the

template of the free trade agreements that the Bush administration has negotiated, and the other set of concerns has to do with

the situation in Oman, and particularly the labor laws.

With respect to the template, our argument has been that the

worker rights provisions in this agreement are entirely inadequate

to ensure that workers’ human rights are respected, and, in addition, the dispute settlement mechanism for workers’ rights and environmental protections is far weaker than that available for commercial provisions.

In our view, that is a violation of the TPA negotiating instructions which called for ‘‘equivalent’’ protection for all the principal

negotiating objectives.

The other concerns have to do with the provisions on services, investment, government procurement, and intellectual property

rights, that those will undermine the ability of both governments

to protect public health, strong communities, and the environment.

But the concerns with respect to Oman’s labor laws are those

that I want to focus on today. As Senator Bingaman noted, in my

testimony we outline our view that Oman’s labor laws are egregiously out of compliance with the ILO core labor standards, and

we are deeply concerned about the lack of protections for Omani

workers in both the law and in practice.

The concerns that we have, have to do with the most fundamental workers’ rights: freedom of association, the right to organize

and bargain collectively.

Under the ILO standards, workers ought to be able to form their

own organizations free of interference from their employers or their

government. Omani labor law, in contrast, provides the government with an entirely inappropriate level of oversight and control

over the activities, meetings, finances, and selection of representatives of both the national and industrial worker representative

committees.

In addition, the laws fail to protect workers who participate in

the worker committees from anti-union discrimination, nor do they

spell out protections for workers who choose to engage in strikes.

When you take the combination of these problematic and flawed

labor laws with the weak provisions contained in the FTA itself, to

us this is an insurmountable obstacle to speedy passage of the

FTA.

I think one of the key concerns we have has to do with the fact

that, even though there are provisions in the FTA that the countries ought to meet the ILO standards and not weaken their labor

11

laws in order to increase trade, the Oman FTA, like all the Bush

FTAs, explicitly excludes those provisions from any possibility of

dispute settlement or enforcement.

So what this means is that, even in the very best of scenarios,

where Oman’s labor laws were brought fully into compliance with

ILO standards over the next couple of months—this is assuming

that there is massive work being done—you still have a huge problem, which is that the U.S. Government has absolutely no recourse

to dispute settlement or enforcement if a future Omani government

were to reverse those gains and weaken or gut Oman’s labor laws

after Congress passed the FTA.

Because the Omani workers do not have any voice in electing

their government, they would not be in a position to vote out of office a government that chose to weaken their labor laws.

I think one way of illustrating how problematic this is, is to take

the situation and to transpose it to the intellectual property rights

provisions.

You ask yourself, if we had an IPR chapter that only required

countries to enforce their existing copyright and patent laws, but

they could change them any time and they do not need to bring

them up to any kind of international standards, I do not think that

there are many business lobbyists who would consider that adequate, even if the government in question were well-meaning and

cooperative.

I wanted to give some specifics about some of the issues in the

Omani labor law that we find problematic in the Ministry of Manpower Decrees 135 and 136, which were issued in 2004, part of the

follow-up to the 2003 labor law. Those decrees outline inappropriate government oversight for the worksite-level committees and

the national committee.

The government reserves the right to be notified 1 month prior

to each meeting of the General Assembly, with a copy of the invitation letter, agenda, documents and papers relating to the issues to

be discussed, and to delegate who it chooses to attend the meeting.

It also requires the committees to provide minutes of all meetings to the government and reserves the right to review the dues

structure. All of these requirements constitute violations of ILO

standards of freedom of association.

I think, again, if you put this in the context of the United States,

it would be as if the Bush administration were to inform the AFL–

CIO that any of our meetings, agendas, minutes, materials, and so

on needed to be provided to them ahead of time, and that they

could attend any meeting if they chose to do so. That would be entirely inappropriate.

Another issue has to do with the main representative committee,

which is the national-level worker representative committee. At the

time, all the appointees, as we understand, to the main representative committee have been appointed by the government, and at

least five of those members are actually management employees

and not worker representatives. Many of them serve as CEOs or

personnel managers.

So, the idea that this somehow is equivalent to a functioning and

independent union is, I think, not credible at this time.

12

In addition, the law prohibits the worker committees from joining

any organization or authority with headquarters outside the Sultanate, from sending delegations outside the Sultanate, or receiving

delegations, and even from holding public festivities or presenting

public lectures without the approval of the Minister.

Again, under ILO standards, worker organizations need to be

able to affiliate with whom they choose internationally and to make

the kinds of choices that they want in terms of where they travel

and when they travel, and what kind of public reports they hold.

So let me just say that our view is that the kinds of concerns

that we have outlined with respect to Oman are pretty serious and

pretty deep, and that it is unlikely that these can be fixed in the

short term.

Even if they could be fixed in the short term, the provisions in

the labor chapter of the agreement are so weak that we would have

no confidence that these would be adequate. So, we ask Congress

to reject the Oman FTA, to continue the negotiations.

We certainly appreciate that there has been progress made by

the government of Oman; we do appreciate the role that the ILO

has played in Oman. We would like to encourage that to go on, but

we think that this process is premature in the sense that Congress

should not be asked to vote on an FTA until these problems are

resolved adequately. Thank you very much for your time. I appreciate the opportunity.

Senator THOMAS. Thank you very much. I appreciate it.

[The prepared statement of Ms. Lee appears in the appendix.]

Senator THOMAS. I would like to introduce the panel. I did not

do that very well. Let me go back and do that again so that everyone knows.

Ms. Lee is the policy director for legislation, AFL–CIO; Mr. Robert Hemphill is executive vice president, AES Corporation, Arlington, VA; Mr. Walker is president of the Middle East Institute in

Washington, DC; and David Hamod is president of the National

U.S.-Arab Chamber of Commerce here in Washington, DC.

So, following the order, Mr. Hemphill, please?

STATEMENT OF ROBERT HEMPHILL, EXECUTIVE VICE

PRESIDENT, AES CORPORATION, ARLINGTON, VA

Mr. HEMPHILL. Thank you very much, Mr. Chairman and Senator Bingaman. I appreciate the opportunity to testify today.

My name is Robert Hemphill. I am the executive vice president

of the AES Corporation. I am here to provide testify on its behalf

and tell the committee why the recently negotiated free trade

agreement between the U.S. and the Government of Oman should

be approved by Congress. I serve as the chief of staff of the AES

Corporation, where I have worked for over the last 23 years. AES is a Fortune 300 company, with some $9.5 billion in annual

revenues from worldwide operations. We were founded in 1981. We

are headquartered in Arlington, VA.

We own and operate power stations, we distribute electricity, and

we operate liquified natural gas facilities here in the United States

and in 25 other countries worldwide, including Oman.

In the U.S., we have power stations or electricity distribution

businesses in Wyoming, California, Texas, Colorado, Indiana, OrVerDate 11-MAY-2000 15:17 Oct 20, 2006 Jkt 095484 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 30280.000 SFIN1 PsN: SFIN1
13

egon, Maryland, Pennsylvania, New Jersey, New York, and Connecticut, as well as the territory of Puerto Rico. Unfortunately,

nothing in New Mexico, but we are trying.

In addition, we have projects under development in Florida, Massachusetts, and elsewhere. Outside the U.S., we operate on four

continents: Europe, Asia, Latin America, and Africa.

We run things from hydroelectric power stations in Argentina to

coal-fired power plants in India, from energy distribution in eastern Kazakhstan, to the National Utility of Cameroon.

We span the globe in providing the world energy and energy

services in the most responsible manner possible, delivering the

best value to all of the stakeholders concerned.

Our interest in Oman specifically began over 10 years ago, when

we first visited the region and saw the tremendous potential that

people in the country had to offer.

Several years ago, the government of Oman began a comprehensive program to restructure and privatize its supply of electricity

and related water industries, and we were eager to participate.

The new structure involves distribution companies, several generation and desalination companies, independent electricity and

water transmission companies, and a central buyer of both water

and power.

In short, the restructuring done by the government of Oman

showed foresight and vision to ensure that both local and foreign

investors were able to compete for projects that bring quality service and sustainable development to the people of Oman.

After a competitive tender process, we were selected to build,

own, and operate a 450-megawatt power station, combined with a

20 million gallon-per-day desal facility. Located some 60 kilometers

south of Muscat, construction was begun in 2001 and completed in

June of 2003, when the facility became fully operational.

Called AES Barka, the facility employs some 53 people and the

output of the facility is under contract with the government of

Oman until 2018. The project company is a public company on the

Omani stock exchange, and, when it was initially offered for trading, it was over-subscribed by almost 17 times. This is a testament

to the faith the Omani stock exchange puts in an American company operating there.

The AES experience in operating in Oman has been a success.

In addition to bringing reliable power and clean water to the people

of Oman, we have integrated our operations into the local economy

and community.

We have supported local schools, added street lighting, and we

have a trainee program in conjunction with Sultan Q University to

develop young Omanis by allowing them to be exposed to a modern

industrial environment.

We have been a good corporate citizen in Oman, and in return

the Omani people have been gracious hosts, good neighbors, as well

as paying customers. Passing the free trade agreement that is before Congress will directly contribute to further advancing economic growth and trade between the two nations.

This agreement will provide substantial market access across the

entire services regime, in addition to providing a stronger legal

14

framework for U.S. investors, like AES Corporation, operating in

Oman.

Elimination of tariffs by the government of Oman will increase

the export opportunities for U.S. companies, including farmers and

ranchers, and it will directly contribute to the creation of jobs here

in the United States.

Our experience of operating in Oman over 6 years has convinced

us Oman is committed to open and free trade. This agreement will

augment the reform made to date and further strengthen the relations between the two countries.

In addition to the obvious economic benefits, the passage of the

U.S.-Oman Free Trade Agreement will directly contribute to increased opportunities not only in Oman, but in the region as well.

With increased business activity comes the need for increased energy and energy services, and the AES Corporation is proud to provide it. Thank you very much.

Senator THOMAS. Very well. Thank you, sir.

[The prepared statement of Mr. Hemphill appears in the appendix.]

Senator THOMAS. Mr. Walker? Who, by the way, for your information, is the former ambassador to Israel, Egypt, and the United

Arab Emirates. Nice to have you, sir.

STATEMENT OF HON. EDWARD S. WALKER, JR., PRESIDENT,

THE MIDDLE EAST INSTITUTE, WASHINGTON, DC

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

Mr. Chairman, Senator Bingaman, I would like to thank you for

giving me the opportunity to address the strategic importance to

the United States of Oman, and the part the Free Trade Area

Agreement might play in that relationship.

Oman’s geographic position facing the Indian Ocean, its access

point to the Persian Gulf, and its share with Iran of guardianship

over the Strait of Hormuz, makes Oman a particularly important

location for protecting American interests; 20 percent of the world’s

oil is shipped through the Strait of Hormuz.

In 1981, Oman signed a 10-year military access agreement with

the United States. It has now been renewed twice since then.

Oman was part of the 1990 Gulf War coalition and, to my personal

knowledge, made a major contribution to the war effort while I was

ambassador to the United Arab Emirates.

Equipment, and particularly massive quantities of ammunition,

were off-loaded in Omani ports along the Gulf of Oman, transported by truck convoy through the UAE up to the front in Saudi

Arabia.

The fact that Oman provides a land bridge to the Arabian peninsula and the Persian Gulf from the Indian Ocean could prove extremely important if for any reason the Hormuz Strait was blockaded, traffic through the Strait was limited, or ports inside the

Gulf were overburdened.

Omani airports have reportedly been freely used on request, with

the permission of the Sultan of Oman, by the U.S. Air Force for its

operations in Afghanistan and Iraq. According to one website,

globalsecurity.org, ‘‘In March, 2002, Vice President Cheney toured

the air base on Oman’s Masirah Island. Neither the United States,

15

nor Oman, acknowledges U.S. use of the base, but it is an open secret in the region that it has been used for bombing runs to Afghanistan.’’

The Global Security report goes further to say that more than

1,100 refueling missions had been mounted from Omani bases by

February, 2002.

According to Global Security, the U.S. Air Force also maintained

three pre-positioning sites in Oman, with support equipment for

26,000 personnel, and the equipment and fuel to maintain three air

bases, including munitions, medical equipment, rations, and various other supplies.

Oman has worked closely on counter-terrorism financing operations, and in 2004 established strong controls to combat money

laundering. The U.S. report, ‘‘Patterns of Global Terrorism’’ for

year 2002 noted that Oman continued to provide public and private

statements of support for the war on terrorism in 2002, and has

been responsive to all coalition requests for military and/or civilian

support.

In an area of deep concern here, Oman has signed an agreement

with the United States’ Departments of Commerce and Energy on

a program to enhance Oman’s ability to detect illicit radiological

cargoes on vessels and in containers under the U.S.-sponsored Container Security Initiative. U.S. Customs officers and the Omani

container port of Salalah will pre-screen certain containers destined for U.S. ports.

Omani support for the United States and its relations with Israel

have not always been popular at home. In October, 2000, serious

demonstrations forced the Omani government to close its trade offices with Israel, but it has quietly maintained that contact since.

Omani popular opinion mirrors the negative mood in the region,

but disquiet over the relationship with the United States has been

relatively subdued compared to other countries in the Gulf. This is

partly due to the very moderate and tolerant Ibadi brand of Islam

that Omanis practice.

According to Valerie J. Hoffman, the Professor of Islamic Studies

at the University of Illinois, ‘‘British observers of Omani rule in

East Africa commented that Ibadis are the least fanatic and sectarian of all Muslims and openly associate with people of all faiths,

and pray together with Sunni Muslims. Hostile action is reserved

for one type of person, the unjust ruler who refuses to mend his

ways or relinquish his power.’’

Omani popular acquiescence in the Sultan’s close relationship

with the United States has also been due to the growing Omani

economy and the government’s ability fully to provide for the welfare and expectations of Omani citizens.

Over the past years, Omani growth has been heavily linked to

its modest oil reserves and its ability to export about 721,000 barrels of crude per day in 2005.

The problem Oman faces is that its oil reserves are decreasing,

while its population is increasing. In the absence of economic diversification, Oman will face increasing problems in fulfilling the

needs of its citizens, which may well lead to destabilizing trends in

the society, trends that could work against U.S. interests.

16

By anyone’s reckoning, Omani reserves at current rates of production will be depleted in from 16 to 22 years. It is, therefore, essential for Oman to diversify its economy in the intervening period.

Oman, having joined the WTO in 2000, is committed to the liberalization of its economy and participation in the larger global market. In this regard, in 1994, Oman terminated support for the secondary boycott of Israel. Oman has no laws on the books supporting a primary, secondary, or tertiary boycott of Israel.

Oman’s plans for diversification and trade depend heavily on its

FTA agreement with the United States. Omani’s anticipate they

will achieve the same measure of success through the FTA as Jordan has achieved. It is in this sense that the FTA would be a critical element in the continuing close strategic relationship we have

enjoyed with Oman.

Thank you, sir.

Senator THOMAS. Thank you, sir. I appreciate your comments.

[The prepared statement of Mr. Walker appears in the appendix.]

Senator THOMAS. Mr. Hamod?

STATEMENT OF DAVID HAMOD, PRESIDENT, NATIONAL

U.S.-ARAB CHAMBER OF COMMERCE, WASHINGTON, DC

Mr. HAMOD. Mr. Chairman, Mr. Ranking Member, and distinguished members of the Senate Finance Subcommittee on International Trade, thank you for the opportunity to testify today, and

thank you for inviting me back.

My name is David Hamod. I serve as president and CEO of the

National U.S.-Arab Chamber of Commerce. I have also been a regular visitor to Oman for most of the past 2 decades.

Our chamber supports FTAs between the U.S. and our trading

partners because we believe that such agreements create win-win

opportunities. In our view, the FTAs that are currently being negotiated with countries of the Arab world will help both sides to increase exports, generate jobs, promote investment, develop business

practices that are well-suited to the international marketplace,

and, over time, improve the quality of life in the United States and

the Middle East.

Under the thoughtful leadership of Sultan Qaboos bin Said alSaid, Oman has been transformed from an economic backwater to

one of the most progressive and attractive nations in the region.

Oman’s remarkable development is borne out in a just-released

special issue of our chamber’s newsletter, which focuses on U.S.-

Oman economic relations.

With your permission, Mr. Chairman, we respectfully request

that this special issue be included in the record of today’s hearing.

Senator THOMAS. Without objection.

Mr. HAMOD. Thank you.

[The newsletter appears in the appendix.]

Mr. HAMOD. According to our chamber’s forecast for 2006, U.S.

merchandise exports to Oman are on track to reach nearly $1 billion this year, which translates into more than 15,000 direct U.S.

jobs.

The 2006 figures represent an increase of nearly 56 percent over

2005, when U.S. merchandise exports totaled $593 million. The

17

U.S. has become the third largest exporter to Oman behind the

UAE and Japan.

As forbes.com reported on February 27, ‘‘Japan, under pressure

from its business community, is moving aggressively to sign its

own FTAs with Oman and other countries in the region.’’

A Japanese trade official said, ‘‘As China has started FTA talks

with the GCC in April last year, and South Korea and India have

similarly started talks, it is inevitable for Japan to start talks with

the GCC nations.’’ It is clear that the United States is not the only

country that is interested in vying for business in Oman and the

GCC.

Mr. Chairman, our chamber encourages the U.S. Congress to

support the U.S.-Oman FTA for a variety of reasons.

Oman is an open economy. According to the Fraser Institute,

Oman has the seventeenth freest economy in the world.

Oman respects the rule of law. According to Transparency International’s Corruption Perception Index, Oman ranked 28th in the

world, tied with Israel, with a low level of perceived corruption—

the best ranking in the Arab world.

Oman prides itself on political stability and investment appeal.

The Sultanate has been one of the most stable nations in the Arab

world for more than 3 decades. In recent years, Oman has implemented a range of investment incentives to attract more business

partners from around the world.

Oman adheres to international agreements. Omani authorities

are keeping the heat on IPR offenders, for example, routinely conducting sting operations on illicit video producers and busting rings

of counterfeiters.

Oman offers strategic support and has been a reliable partner in

the war on terrorism. According to the U.S. Department of Defense,

‘‘Oman’s active participation during the Gulf crisis, and their willingness to allow access to port facilities and air bases, make them

vital to any coalition’s success in the region.’’

Oman’s commitment to human development makes it one of the

most progressive nations in the region. Sultan Qaboos has encouraged women to play a leading role in the development of Oman, on

the grounds that ‘‘to exclude women is to exclude 50 percent of the

country’s potential.’’ Oman has three women in its cabinet, as well

as the only Arab woman ambassador to the United States, Hunana

Al-Mughairy.

When it comes to respect for workers’ rights, our chamber is encouraged by steps that Oman has taken. Oman joined the ILO in

1994, and the labor law that was passed in 2003 enables workers—

Omanis and foreigners—to join worker representative committees.

These committees represent an important step forward in effectively granting workers the right to strike, engage in collective bargaining, and take their employers to court.

In conclusion, Mr. Chairman, our chamber lends its full support

to this win-win agreement, and we urge Congress to act on this

FTA very soon.

Thank you for the opportunity to testify. I would be pleased to

answer any questions you may have.

Senator THOMAS. All right. Thank you. Thank you all very much.

[The prepared statement of Mr. Hamod appears in the appendix.]

18

Senator THOMAS. I have a few questions. I will be fairly quick

with my questions, and perhaps you can do the same with your answers.

Ms. Lee, do you share these same kinds of concerns with all of

the trade agreements that are talked about here that are either up

for consideration or have been considered?

Ms. LEE. Yes. The Jordan agreement was one that we supported

because the worker rights provisions were much stronger. There

was a single dispute settlement provision.

All three of the key commitments in the worker rights chapter—

the commitment to honor the ILO obligations, the commitment to

enforce its own laws, and the commitment not to derogate from or

weaken those laws—were subject to dispute settlement. That was

a crucial difference, and we did enthusiastically support the Jordan

agreement. But all the new agreements have the same problem.

Senator THOMAS. I see.

Mr. Hemphill, you mentioned that you have done business in the

adjoining countries, as well as this country. What difference do you

see in a country where we have an agreement as opposed to—apparently you have done fairly well in this country—where we do

not have an agreement?

Mr. HEMPHILL. I do not know that I can give you some exact specifics, but, by and large, wherever the United States has made sufficient commitments and sufficient agreements, we found that the

business is more open, it is less corrupt. We are far more likely to

be treated fairly than in other sorts of countries. This is another

reason why we support these sorts of agreements.

Senator THOMAS. I see. All right.

Mr. Walker, I guess my question to you is similar. You have

served in several of these countries. What difference or what do

you see is the impact of having a free trade agreement as opposed

to being able to trade, as we apparently do now, with Oman?

Mr. WALKER. I think the impact is that it gives additional support for the Sultan and his policies, and the development of Oman

to maintain a strong economy. Oman has been sort of an exception

in the Arab world. Oman was one of three countries in the Arab

League that supported Anwar Sadat in his peace with Israel.

Oman had a trade mission, until riots made them close it, with

Israel. In my time in Israel, Oman was always cited as being the

one Arab country that was favored by Israel because of its willingness to break the mold and to go against the basic public opinion

in the region. To do that requires a strong leader, a strong economy, and that is why I think the FTA would contribute to it.

Senator THOMAS. I see. All right.

Mr. Hamod, you indicated in your statement that if this agreement can be entered into, that it will increase profits for U.S. exporters by cutting some of the transshippers and middlemen who

drive up the costs. Cutting out the middlemen sounds like a form

of bribery, to say we will reduce some of these costs if you enter

into the agreement?

Mr. HAMOD. I have never heard any Omani officials suggest that

one way or the other. I look at it from a U.S. perspective: that if

we have to pay middlemen to sell our products into Oman or other

countries in the region, it is going to make our products more exVerDate 11-MAY-2000 15:17 Oct 20, 2006 Jkt 095484 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 30280.000 SFIN1 PsN: SFIN1
19

pensive. We are already up against some of the toughest competition in the world, from China, Japan, and elsewhere.

Senator THOMAS. Why do you have to use middlemen now?

Mr. HAMOD. We do not have to use middlemen now, but an FTA

would certainly increase the chances that we could sell with lower

tariffs into Oman. What is happening now, in many instances, is

that we are selling to the UAE, which is then transshipping to

Oman. We can cut out middlemen every step of the way.

Senator THOMAS. I see. All right. That is very good.

Ms. Lee, on a broader issue, as you talk about labor rules, and

laws not being comparable to ours, is that a trade arrangement

with you or is that more your effort to change the way countries

do business? Since other countries operate the same as we do, are

we insisting they ought to do it our way?

Ms. LEE. Well, not at all. In fact, I am not comparing Oman to

the U.S., I am comparing Oman to the International Labor Organization standards and their obligations. Oman is a member of the

ILO, as was mentioned here.

So the question is whether countries meet their international obligation with respect to respecting workers’ rights, and that is the

standard to which we hold them, not whether they look like us or

not. Frankly, U.S. labor laws are not that great. We would like to

see them improved.

But the point is, when you do a trade agreement with a country,

it is the closest economic relationship we have. It is a symbolic relationship. It is one where you are using better access to your consumer market to ask countries to make some changes. One of them

is lowering tariffs.

The question is whether labor rights are a priority for our government or not, whether we really care whether workers in Oman

have the right to organize unions. If we do, we ought to put it into

the trade agreement and make it enforceable.

Senator THOMAS. I understand. As you know, one of the current,

continuing concerns that other people have is that we are seeking

to impose all of our rules on them, so that becomes a little bit of

a problem. All right. I have taken my time.

Senator Bingaman?

Senator BINGAMAN. Thank you all very much for testifying.

Ambassador Walker, let me ask you on this issue that I raised

with the Trade Representative’s office, the question of the boycott

of Israel. Is there a reason why we do not just have a standard requirement in all of these trade agreements with these countries?

I understand that Oman is not involved in this boycott. But is

there a reason why we do not just say, here is the requirement, if

you are going to do a free trade agreement, on this issue?

Mr. WALKER. Well, Senator, I honestly do not know the answer

to that. The USTR would be the appropriate office to make a determination of that. I think that in the case of Oman specifically, such

a provision is not necessary, given the commitments to the ILO and

the fact that Oman has already taken the steps, legally and in

practice, to eliminate the boycott. But as for other countries, I honestly do not know the reasons that they are not negotiated into the

agreement.

20

Senator BINGAMAN. Let me also ask about Ms. Lee’s point there,

that they were pleased with the provisions that were in the U.S.-

Jordan Free Trade Agreement, and that their desire is that those

same provisions be included in these other agreements with countries in that part of the world as well.

Is there any reason you know of why those governments—I will

ask you again, Mr. Ambassador—like the Government of Oman, in

this case, would object to those provisions?

Mr. WALKER. I have no information to indicate they would object

to those provisions.

Senator BINGAMAN. Should it be a change in our own policy?

Mr. WALKER. The fundamental question really is how the negotiations were implemented, and each country has a different set of

problems that it has to deal with. Oman has dealt with the problems that we have identified, or most of the problems that we have

identified, and has promised to deal with the rest of those issues.

So, I think it is country-specific as to what needs to be done, and

that is probably the easiest way to get at the problems directly.

Senator BINGAMAN. But you know of no basis for believing that

the government of Oman, in this case, would object to the agreements that the government of Jordan was agreeable to?

Mr. WALKER. To my personal knowledge, no, Senator. But then

again, I was not in the negotiations, so I cannot speak to that.

Senator BINGAMAN. Right. I understand.

That is all I have, Mr. Chairman.

Senator THOMAS. Thank you all for being here. I think, obviously, all of these agreements are very important. Certainly, every

one of them has different people, different views and different impacts. I represent agriculture, and we often have some difficulties

with certain aspects of agreements.

Obviously, we are all concerned about the trade deficit and trying

to equalize that somewhat throughout the world, and on the other

hand, recognizing that trade is happening, and will happen. What

we need to do is find a way to participate fairly for our country and

our workers, and so on. So, we appreciate that very much.

I would like to remind the members that any questions for the

record should be submitted by tomorrow. I would like to ask all

witnesses to please submit their responses within 2 weeks, if you

should get questions from this.

I thank Ambassador Schwab and all of the witnesses for testifying on this important matter, and thank the members, Senator

Bingaman, for appearing here today.

So with that, the hearing is adjourned.

[Whereupon, at 3:38 p.m., the hearing was concluded.]

(21)

A P P E N D I X

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

(75)

COMMUNICATIONS

76

77

78

79

80

81

82

83

84

Æ